<PAGE>
References to pages in incorporated documents refer to the page numbers in the
paper copy of such documents.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
ANNUAL REPORT
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 1, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file 1-5224
The Stanley Works
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0548860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 Stanley Drive
New Britain, Connecticut 06053
(Address of principal executive offices) (Zip Code)
(203) 225-5111
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock--Par Value $2.50 Per Share New York Stock Exchange
Pacific Stock Exchange
9% Notes due 1998
7 3/8% Notes Due December 15, 2002
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
The aggregate market value of Common Stock, Par Value $2.50 Per Share,
held by non-affiliates (based upon the closing sale price on the New York
Stock Exchange) on March 28, 1994 was approximately $1.75 billion.
As of March 28, 1994, there were 44,848,818 shares of Common Stock, Par
Value $2.50 Per Share, outstanding.<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to shareholders for the year ended January
1, 1994 are incorporated by reference into Parts I and II.
Portions of the definitive Proxy Statement dated March 9, 1994, filed
with the Commission pursuant to Regulation 14A, are incorporated by
reference into Part III.
<PAGE>
FORM 10-K
Part I
Item 1. Business
1(a) General Development of Business. During 1993, the
company acquired several businesses for a total of $24.0 million.
The most significant of the businesses acquired were Friess & Co.
KG, a German manufacturer and marketer of paint rollers and
brushes and Rikkoh-Sha Co. Ltd., a mechanics tools distributor in
Japan. On June 30, 1993, the company sold all of the stock of
Taylor Rental Corporation, franchisor of the nation's largest
system of general rental centers for do-it-yourselfers and
commercial customers.
1(b) Industry Segment Information. Industry segment
information on page 15 of Registrant's Annual Report to
shareholders for the year ended January 1, 1994 is incorporated
herein by reference.
1(c) Narrative Description of Business. Registrant's
operations can be classified into three industry segments:
Tools, Hardware and Specialty Hardware.
Tools. The Tools segment consists of consumer, industrial
and engineered tools. Consumer tools includes hand tools such as
measuring instruments, planes, hammers, knives, wrenches,
sockets, screwdrivers, saws, chisels, boring tools, masonry, tile
and drywall tools, paint preparation and paint application tools.
Industrial tools includes industrial and mechanics hand tools,
including STANLEY-PROTO industrial tools and MAC mechanics
tools and high-density industrial storage and retrieval systems.
Engineered tools includes air tools, hydraulic tools and STANLEY-
BOSTITCH fastening tools and fasteners.
Hardware. The hardware segment consists of hardware such as
hinges, hasps, brackets, bolts, latches, closet hardware and
organizer systems and other shelving, screen and storm door
hardware, hardware for sliding, folding and pocket doors,
residential door hardware, mirrors and mirrored closet doors.
Specialty Hardware. The specialty hardware segment consists
of residential door systems such as original and replacement
garage and entry doors, power-operated doors and gates and home
automation products, including garage door openers, electronic
controls and other similar products.
Competition. The company competes on the basis of its
manufacturing capabilities, extensive distribution system and
merchandising service, the breadth of its product lines, its
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<PAGE>
reputation for product quality, its well-known trademarks and its
electronic data interchange ("EDI") capabilities. The company
believes that its significant long-term investments have made it
an industry leader in the utilization of EDI.
The company encounters active competition in all of its
activities from both larger and smaller companies that offer the
same or similar products and services or that produce different
products appropriate for the same uses. In 1993, the company's
approximately $70 million investment in new equipment and
advanced business systems resulted in improved manufacturing
processes and decreased inventories and transaction costs both
for the company and its customers.
In the company's consumer hand tool and consumer hardware
businesses, a small number of competitors produce a range of
products somewhat comparable to the company's, but the majority
of its competitors compete only with respect to one or more
individual products within a particular line. The company
believes that it is the largest manufacturer of consumer hand
tools in the world and that it offers the broadest line of such
products. The company believes that its market position in the
U.S. and Canada for consumer hardware is comparable to or greater
than that of its major competitors and that it offers the
broadest line of hinges and home hardware, which represents the
most important part of its hardware product sales.
In the company's industrial hand tool business in the U.S.,
the company believes that it is a leading manufacturer of high-
density industrial storage cabinets. In the company's engineered
hand tool business in the U.S., the company believes that it is
the leader in the manufacture and sale of pneumatic fastening
tools and related fasteners to professional contractors and to
the furniture and pallet industries as well as the leading
manufacturer of portable and mounted hydraulic tools.
In the company's non-consumer hardware business in the U.S.,
the company believes that it is a leading manufacturer of
residential and architectural hardware products, mirrored closet
doors and hardware for sliding, folding and pocket doors and
screen and storm door hardware; and a leading supplier of closet
rods, supports, brackets and wall mirrors.
In the company's specialty hardware business, the company
believes that it is a leader in the U.S. with respect to the
manufacture and sale of insulated steel residential entry doors,
garage door openers and automatic sliding and swinging doors and
gate openers for commercial and industrial use.
Customers. A substantial portion of the company's products
are sold through home centers and mass merchant distribution
channels in the U.S. A consolidation of retailers in these
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<PAGE>
channels is occurring. These customers constitute a growing
percent of the company's sales and are important to the company's
operating results. While this consolidation and the geographic
expansion of these large retailers provide the company with
opportunities for growth, the increasing size and importance of
individual customers creates a certain degree of exposure to
potential volume loss. The loss of certain of the larger home
centers as customers could have a material adverse effect on each
of the company's business segments until either such customers
are replaced or the company makes the necessary adjustments to
compensate for the loss of business. The company has addressed
this issue by strategically focusing on excellence in customer
service, new product innovations, and distribution channel
development.
Raw Materials. The company's products are manufactured
primarily of steel and other metals, although some are of wood or
plastic. The raw materials required are available from a number
of sources at competitive prices. The company does not purchase
a significant amount of its supplies under long-term contracts,
however, it has relationships of long standing with many of its
suppliers. The company has experienced no difficulties in
obtaining supplies in recent periods.
Backlog. At February 5, 1994, the company had approximately
$130 million in unfilled orders compared with $126 million in
unfilled orders at February 6, 1993. All these orders are
reasonably expected to be filled within the current fiscal year.
Most customers place orders for immediate shipment and as a
result, the company produces primarily for inventory, rather than
to fill specific orders.
Patents and Trademarks. No segment of Registrant's business
is dependent, to any significant degree, on patents, licenses,
franchises or concessions. The company owns numerous patents,
none of which are material to the company's operations as a
whole. These patents expire from time to time over the next 17
years. The company holds licenses, franchises and concessions,
none of which individually or in the aggregate is material to the
company's operations as a whole. These licenses, franchises and
concessions vary in duration from one to 17 years.
The company has numerous trademarks that are utilized in its
businesses worldwide. The STANLEY and STANLEY (in a notched
rectangle) trademarks are material to all three business
segments. These well-known trademarks enjoy a reputation for
excellence. In addition, in the Tools segment, the Bostitch ,
Powerlock , Tape Rule Case Design (Powerlock) , MAC Tools ,
Proto , and Vidmar trademarks are material to the business.
Environmental Regulations. The company is subject to various
environmental laws and regulations in the U.S. and foreign
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<PAGE>
countries where it has operations. Future laws and regulations
are expected to be increasingly stringent and will likely
increase the company's expenditures related to environmental
matters.
The company is involved with remedial and other
environmental compliance activities at some of its current and
former sites. Additionally, the company, together with other
parties, has been named a potentially responsible party ("PRP")
with respect to nine Superfund sites. Current laws potentially
impose joint and several liability upon each PRP. In assessing
its potential liability at these sites, the company has
considered the following: the solvency of the other PRP's,
whether responsibility is being disputed, the terms of existing
agreements, experience at similar sites, and the fact that its
volummetric contribution at these sites is relatively small.
The company's policy is to accrue environmental
investigatory and remediation costs for identified sites when it
is probable that a liability has been incurred and the amount of
loss can be reasonably estimated. The amount of liability
recorded is based on an evaluation of currently available facts
with respect to each individual site and includes such factors as
existing technology, presently enacted laws and regulations, and
prior experience in remediation of contaminated sites. The
amounts recorded do not take into account any claims for
recoveries from insurance or third parties. As assessments and
remediation progress at individual sites, the amounts recorded
are reviewed periodically and adjusted to reflect additional
technical and legal information which becomes available. As of
year-end 1993, the company had reserves of $18 million, primarily
for remediation activities associated with company-owned
properties as well as for Superfund sites.
Actual costs to be incurred at identified sites in future
periods may vary from the estimates, given the inherent
uncertainties in evaluating environmental exposures. Subject to
the imprecision in estimating future environmental costs, the
company does not expect that any sum it may have to pay in
connection with environmental matters in excess of the amounts
recorded will have a materially adverse effect on its financial
position, results of operations or liquidity.
Power-generating Subsidiary. Under the General Statutes of
Connecticut, the company is deemed to be a "holding company" that
controls an electric company as a result of its being the sole
shareholder of Farmington River Power Co., a power-generating
subsidiary of the company since 1916. Under such statute, no
organization or person may take any action to acquire control of
such a holding company without the prior approval of the
Connecticut Department of Public Utility Control.
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<PAGE>
Employees. During 1993, the company had an average of 18,988
employees, approximately 12,750 of whom were employed in the U.S.
Of these U.S. employees, approximately 23% are covered by
collective bargaining agreements with approximately 12 labor
unions. The majority of the company's hourly- and weekly-paid
employees outside the U.S. are covered by collective bargaining
agreements. Approximately 1,200 of the hourly-paid production
and maintenance employees who are employed by the company's
operations in New Britain, Connecticut are covered by agreements
with the International Association of Machinists and Aerospace
Workers that expire in May 1994. The balance of the company's
labor agreements expire in 1994, 1995 and 1996. There have been
no significant interruptions or curtailments of the company's
operations in recent years due to labor disputes. The company
believes that its relationship with its employees is good.
1(d) Financial information about foreign and domestic
operations and export sales. Geographic area information on page
15 of the Annual Report to shareholders for the year ended
January 1, 1994 is incorporated herein by reference.
Item 2. Properties.
As of January 1, 1994, Registrant and its subsidiaries
operated facilities for manufacturing and distribution in 22
states and 21 foreign countries. The Registrant believes that
its facilities are suitable and adequate for its business. The
Registrant utilizes approximately 14,126,100 square feet of floor
space in its business, of which approximately 3,972,067 square
feet of floor space is leased.
A summary of material locations (over 50,000 square feet)
that are owned by the Registrant and its subsidiaries are:
Tools
Phoenix, Arizona; Visalia, California; Clinton and New
Britain, Connecticut; Atlanta, Georgia; Shelbyville, Indiana;
Kansas City, Kansas; Worcester, Massachusetts; Two Harbors,
Minnesota; Hamlet and Sanford, North Carolina; Claremont, New
Hampshire; Columbus, Georgetown, Sabina and Washington Court
House, Ohio; Allentown and York, Pennsylvania; East Greenwich,
Rhode Island; Cheraw, South Carolina; Pulaski and Shelbyville,
Tennessee; Dallas and Wichita Falls, Texas; Pittsfield and
Shaftsbury, Vermont; Hedelberg West, Ingleburn, Moonah and
Wangaratta, Australia; Sao Paulo, Brazil; Smiths Falls, Canada;
Pecky, Czech Republic; Ecclesfield, Hellaby and Sheffield,
England; Besancon Cedex and Maxonchamp, France; Surabaya,
Indonesia; Puebla, Mexico; Taichung Hsien, Taiwan; and Amphur
Bangpakong, Thailand.
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<PAGE>
Hardware
Chatsworth and San Dimas, California; New Britain,
Connecticut; Richmond, Virginia; Brampton and New Hamburg,
Canada; and Sheffield, England.
Specialty Hardware
Farmington, Connecticut; Birmingham, Novi and Troy, Michigan;
and Covington, Ohio.
A summary of material locations (over 50,000 square feet)
that are leased by the Registrant and its subsidiaries are:
Tools
Costa Mesa and Rancho Cucamonga, California; Covington,
Georgia; Charlotte, North Carolina; Cleveland, Ohio; Milwaukie,
Oregon; Carrollton, Texas; Coburg, Australia; Burlington and
Mississauga, Canada; Northampton, England; and Saverne, France.
Hardware
Chatsworth, California; Lenexa, Kansas; Tupelo, Mississippi;
and Oakville, Ontario.
Specialty Hardware
Rancho Cucamonga, California; Orlando, Florida; Winchester,
Virginia; Langley and Montreal, Canada.
Item 3. Legal Proceedings.
3(a) The company is a party to a number of proceedings before
federal and state regulatory agencies relating to environmental
remediation. Also, the company, along with many other companies,
has been named as a potentially responsible party in a number of
administrative proceedings for the remediation of various waste
sites, including nine Superfund sites. In addition, in the
normal course of business, the company is involved in various
lawsuits and claims. The company does not expect that the
resolution of these matters will have a material adverse effect
on the company's consolidated financial position or results of
operations.
3(b) (i) On May 22, 1990, a federal grand jury sitting in
St. Louis, Missouri indicted four manufacturers and five
individuals, charging each with one count of illegal price fixing
activities in the sale of architectural hinges. Architectural
hinges, which are heavy hinges used for non-residential
applications, constitute a small portion of the business of one
division of the company and do not involve a substantial portion
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<PAGE>
of the company's overall business.
In addition to the company, the companies indicted were
The Hager Hinge Company, McKinney Products Company, and Lawrence
Brothers, Inc. The individuals named in the indictment were John
F. Hollfelder (who left the company's employ in 1988), Robert A.
Haversat and David B. Gibson of McKinney Products Company, and
John A. Lawrence of Lawrence Brothers, Inc. Richard G. Martin
(who left the company's employ in 1992) was also indicted. On
October 29, 1992, a jury acquitted Mr. Martin. The indictment
charged that between 1986 and 1988 the defendants conspired to
raise the price of architectural hinges. On May 16, 1991, the
company, McKinney Products Company and Lawrence Brothers, Inc.
entered pleas of nolo contendere with the U.S. District Court for
the Eastern District of Missouri. On October 14, 1992, Mr.
Hollfelder and The Hager Hinge Company pled guilty as a part of
plea agreements with the government. On July 13, 1993, the
company was sentenced to a fine of $6 million, of which $1
million was to be given to certain educational institutions for
the purpose of establishing courses and seminars on business
ethics.
(ii) In July and August 1990, the company was named as
a defendant in two class actions filed in the California state
court in San Francisco on behalf of a class of indirect
purchasers of architectural hinges in California alleging the
company and others with violations of the California antitrust
statute. On December 18, 1991 and February 18, 1992, the
defendants in these California actions entered into a classwide
settlement agreement with the plaintiff class representatives.
On April 30, 1992, the California state court granted the
plaintiff's motion for final approval of the class action
settlements and dismissed the two class actions with prejudice.
On December 19, 1991, the company was named as a defendant in a
third civil action filed in the California state court in Los
Angeles purporting to sue on behalf of a class of indirect
purchasers of architectural hinges in California for alleged
violation of the California antitrust statute. The plaintiff
subsequently agreed to participate in, and be bound by, the
settlement in the San Francisco actions, and to dismiss the Los
Angeles case voluntarily.
3(c) On or about June 21, 1991, a putative class action
complaint was filed in the U.S. District Court for the District
of Connecticut naming the company and its directors as
defendants. On May 14, 1992, the plaintiffs filed an amended
complaint, and on or about October 19, 1992, the plaintiffs filed
a third amended complaint, alleging that (i) the company's proxy
statement for its 1991 annual meeting violated the federal proxy
rules by failing to disclose in connection with shareholder
approval of the company's 1990 Stock Option Plan (the "Stock
Option Plan"), among other things, the existence of Newell Co.'s
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<PAGE>
("Newell") interest in the company and certain discussions
between Newell and the company's representatives, (ii) the
director defendants breached their fiduciary duty to the
company's shareholders by approving the Stock Option Plan and the
transactions announced on June 7, 1991 solely to thwart a
combination with Newell, (iii) the director defendants wasted
corporate assets by, among other things, authorizing the
prosecution of litigation against Newell, (iv) the director
defendants wrongfully approved the sale of the company's Common
Stock to the Employee Stock Ownership Plans ("ESOPs") on June 7,
1991 without previously disclosing that Newell had made a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
("Hart-Scott") and (v) the director defendants failed to maximize
shareholder values by approving transactions that would thwart
Newell or any other potential acquiror of the company.
In an opinion and order dated October 26, 1992, the
court certified the plaintiffs' federal proxy claims to proceed
on behalf of a class composed of (1) all current shareholders of
the company, and (2) all company shareholders of record as of
February 8, 1991 who were entitled to vote at the 1991 Annual
Meeting of Shareholders or their successors in interest. The
court declined to certify the plaintiffs' state law claims
because these claims were now brought derivatively on behalf of
the company.
On June 3, 1993, the court granted final approval to an
agreement between the parties to settle the class and derivative
action, and the case was dismissed with prejudice.
3(d) From time to time Mac Tools, Inc., a wholly owned
subsidiary of the company ("Mac Tools") has been sued by former
distributors of Mac Tools alleging breach of contract, breach of
fiduciary duty, intentional infliction of emotional distress and
fraud, and claims based on state unfair trade practices, business
opportunity and franchise laws, and seeking compensatory and
punitive damages. In 1991, a jury in such a suit, awarded the
plaintiff former distributor compensatory damages of $40,000 and
punitive damages of $500,000; in 1992, a jury in such a suit,
awarded $129,000 in compensatory damages and $2.2 million in
punitive damages.
As of the end of 1991 there were 22 such cases pending.
During 1992, 38 suits were commenced against Mac Tools and 11
suits were terminated by settlement, judgment or otherwise. As
of the end of 1992, there were 49 such suits pending. During
1993, 32 suits were commenced against Mac Tools, Inc. and 17
suits were terminated by settlement, judgment or otherwise. As
of the end of 1993, there were 64 such suits pending.
The results for 1993 include a fourth quarter charge of
$15 million to reflect both the late January 1994 settlement of
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132 filed and threatened lawsuits by former distributors against
Mac Tools and the accrual of reserves to cover unsettled and
potential claims. After these settlements, there were four
claims outstanding. The company has taken steps to improve its
relationship with its distributors and an ombudsman program has
been established to provide liaison with former distributors.
Management believes that these actions will reduce the number and
size of future settlements and expenses related to this kind of
litigation and that any such expenses will not have a material
adverse effect on the company's financial position, results of
operations or liquidity.
3(e) In May 1988, the U.S. Customs Service (the "Customs
Service") initiated an investigation of possible violations of
the country-of-origin marking provisions of the U.S. customs laws
by National Hand Tool Corporation (then a wholly owned subsidiary
and presently a division of the company) ("NHT"). Section 304 of
the Tariff Act of 1930, 19 U.S.C. Section 1304, requires that foreign-
made goods be marked with their country of origin.
The investigation focused on two types of alleged
activity that they claim began prior to the company's acquisition
of NHT in December 1986 and continued until August 1988. One is
that NHT personnel are claimed to have removed country-of-origin
marks from certain hand tools and components (including
screwdriver shanks, mallets and prybars) that had been imported
by NHT for assembly and resale. The other is the alleged failure
to place foreign origin markings on finished sockets and
components for socket wrench sets that NHT made from imported
forgings.
On March 2, 1993, the U.S. government instituted an
action against the company in the United States Court of
International Trade alleging that NHT had engaged in the
intentional removal of country-of-origin marks from imported
screwdrivers, mallets and prybars and failed to place country-of-
origin markings on forgings that it imported for manufacture into
sockets and other socket wrench components during the period from
December 31, 1986 through August 10, 1988. The suit claimed that
by these actions the company perpetrated a fraud and effectuated
the illegal entry of the imported articles into the United States
in violation of 19 U.S.C. Section 1592, and sought $7,113,951 in civil
penalties and $592,730 in additional marking duties. At issue
were 146 entries, eight of which were of screwdrivers, mallets
and prybars and 138 of which were of sockets and socket wrench
parts.
The company moved to dismiss this action on various
grounds, including a failure by Customs to adhere to statutorily
mandated procedures that are preconditions for judicial actions
for penalties. On December 20, 1993, the Court granted the
company's motion and dismissed the suit, holding that Customs had
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failed to exhaust its administrative remedies and had denied the
company a reasonable opportunity to be heard at the
administrative level. On February 16, 1994 the U.S. government
commenced an appeal of this decision.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the
Registrant's last fiscal year to a vote of security holders.
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Executive Officers. The following is a list of the executive officers
of the Registrant:
Elected
Name, Age, Birthdate Office to Office
J. S. Amtmann (46) Vice President, Corporate Marketing 7/1/93
(10/10/47) Development. Joined Stanley in 1969;
1984 President and General Manager,
Home Automation; 1988 President and
General Manager, Mac Tools; 1992 Vice
President, Corporate Marketing
Development.
R. H. Ayers (51) Chairman, President and Chief Executive 4/19/89
(10/12/42) Officer. Joined Stanley in 1972;
1985 Chief Operating Officer and
President; 1987 President and Chief
Executive Officer.
B. Bennett (50) Vice President, Human Resources. Joined 7/1/92
(6/4/43) Stanley in 1984 as Taylor Rental Train-
ing Manager; 1990 Director, Organi-
zation Development; 1991 Vice President,
Human Resources, Stanley Access
Technologies.
J. P. Callahan (48) Vice President, Taxes. Joined Stanley 1/1/90
(12/10/45) in 1978; 1979 Director of Corporate
Taxes.
T. K. Clarke (62) Vice President, Corporate Development. 5/1/82
(1/21/32)
J. B. Gustafson (50) Vice President, Information Systems. 1/1/90
(5/10/43) Joined Stanley in 1977; 1986 Director
of Information Systems.
R. Huck (49) Vice President, Finance and Chief 7/1/93
(2/22/45) Financial Officer. Joined Stanley
in 1970; 1987 Controller, Stanley Tools;
1990 Vice President and Controller.
R. A. Hunter (47) President and Chief Operating Officer. 7/1/93
(12/15/46) Joined Stanley in 1974. 1987 Vice
President, Finance and Chief Financial
Officer.
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<PAGE>
Elected
Name, Age, Birthdate Office to Office
T. F. Prime (38) Vice President and Controller. Joined 7/1/93
(9/9/55) Stanley in 1989 from Ernst & Young,
certified public accountants; 1989
Director of Consolidations and
Accounting Services; 1990 Director of
Accounting and Financial Reporting.
S. S. Weddle (55) Vice President, General Counsel 1/1/88
(11/9/38) and Secretary.
Executive officers serve at the pleasure of the Board of Directors.
Unless otherwise indicated, each officer has had the same position with
the Registrant for five years.
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<PAGE>
Part II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters. Registrant incorporates by
reference the "Shareholders of record at end of year" from pages
16 and 17 and the "Investor Information" on page 33 of its Annual
Report to shareholders for the year ended January 1, 1994.
Item 6. Selected Financial Data. Registrant
incorporates by reference pages 16 and 17 of its Annual Report to
shareholders for the year ended January 1, 1994.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. Registrant
incorporates by reference pages 18 through 20 of its Annual
Report to shareholders for the year ended January 1, 1994.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements and report of independent
auditors included on pages 21 to 31 and page 14, respectively, of
the Annual Report to shareholders for the year ended January 1,
1994 are incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial
Disclosure. None.
Part III
Item 10. Directors and Executive Officers of the
Registrant. Registrant incorporates by reference pages 2 to 6 of
its definitive Proxy Statement, dated March 9, 1994.
Item 11. Executive Compensation. Registrant
incorporates by reference the material captioned "Executive
Compensation" on pages 6, 8 to 15 of its definitive Proxy
Statement, dated March 9, 1994.
Item 12. Security Ownership of Certain Beneficial
Owners and Management. Registrant incorporates by reference the
material captioned "Security Ownership" on pages 6 and 7 of its
definitive Proxy Statement, dated March 9, 1994.
Item 13. Certain Relationships and Related
Transactions. None.
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<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
14(a) Index to documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement
Schedules.
The response to this portion of Item 14 is submitted as a
separate section of this report (see page F-1).
3. Exhibits
See Exhibit Index on page E-1.
14(b) The following reports on Form 8-K were filed
during the last quarter of the period covered by
this report:
Date of Report Items Reported
1. October 20, 1993 Press release dated October
20, 1993 announcing third
quarter results.
2. October 27, 1993 Press release dated October
27, 1993 announcing the
election of a new director.
3. November 17, 1993 Press release dated November
17, 1993 announcing fourth
quarter dividend.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE STANLEY WORKS
By /s/Richard H. Ayers
Richard H. Ayers, Chairman
and Chief Executive Officer
March 2, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on March 2, 1994 by the
following persons on behalf of the Registrant and in the capacities
indicated.
/s/Richard H. Ayers /s/Eileen S. Kraus
Richard H. Ayers, Chairman, Eileen S. Kraus, Director
Chief Executive Officer and
Director
/s/Gerald A. Lamb
Gerald A. Lamb, Director
/s/Richard Huck
Richard Huck, Vice President,
Finance and Chief Financial /s/George A. Lorch
Officer George A. Lorch, Director
/s/Theresa F. Prime /s/Walter J. McNerney
Theresa F. Prime, Vice President Walter J. McNerney, Director
and Controller (Chief Accounting
Officer)
/s/Gertrude G. Michelson
/s/Merle H. Banta Gertrude G. Michelson, Director
Merle H. Banta, Director
/s/Stillman B. Brown /s/John S. Scott
Stillman B. Brown, Director John S. Scott, Director
/s/Edgar R. Fiedler /s/Hugo E. Uyterhoeven
Edgar R. Fiedler, Director Hugo E. Uyterhoeven, Director
/s/James G. Kaiser /s/Alfred W. Van Sinderen
James G. Kaiser, Director Alfred W. Van Sinderen, Director
/s/Walter W. Williams
Walter W. Williams, Director
-15-<PAGE>
<PAGE>
FORM 10-K--ITEM 14(a) (1) and (2)
THE STANLEY WORKS AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements and report of
independent auditors of The Stanley Works and subsidiaries, included
in the Annual Report of the Registrant to its shareholders for the
fiscal year ended January 1, 1994, are incorporated by reference in
Item 8:
Report of Independent Auditors
Consolidated Statements of Earnings--fiscal years ended January
1, 1994, January 2, 1993 and December 28, 1991.
Consolidated Balance Sheets--January 1, 1994 and January 2,
1993.
Consolidated Statements of Cash Flows--fiscal years ended
January 1, 1994, January 2, 1993 and December 28, 1991.
Consolidated Statements of Changes in Shareholders'
Equity--fiscal years ended January 1, 1994, January 2, 1993 and
December 28, 1991.
Notes to Consolidated Financial Statements.
The following consolidated financial statement schedules of The
Stanley Works and subsidiaries are included in Item 14(d):
F-4,5 Schedule V--Property, Plant and Equipment
F-6 Schedule VI--Accumulated Depreciation, Depletion, and
Amortization of Property, Plant and Equipment
F-7 Schedule VIII--Valuation and Qualifying Accounts
F-8 Schedule IX--Short-Term Borrowings
F-9 Schedule X--Supplementary Income Statement Information
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
F-1<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of The Stanley Works of our report dated January 31,
1994, included in the 1993 Annual Report to Shareholders of The
Stanley Works.
Our audits also included the consolidated financial statement
schedules of The Stanley Works listed in Item 14(a). These
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our
opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set
forth therein.
We also consent to the incorporation by reference in the following
registration statements of our report dated January 31, 1994, with
respect to the consolidated financial statements incorporated herein
by reference, and our report included in the preceding paragraph
with respect to the consolidated financial statement schedules
included in this Annual Report (Form 10-K) of The Stanley Works.
Registration Statement (Form S-8 No. 2-93025)
Registration Statement (Form S-8 No. 2-96778)
Registration Statement (Form S-8 No. 2-97283)
Registration Statement (Form S-8 No. 33-16669)
Registration Statement (Form S-3 No. 33-12853)
Registration Statement (Form S-3 No. 33-19930)
Registration Statement (Form S-8 No. 33-30623)
Registration Statement (Form S-8 No. 33-30629)
Registration Statement (Form S-8 No. 33-39553)
Registration Statement (Form S-8 No. 33-41611)
Registration Statement (Form S-8 No. 33-41612)
Registration Statement (Form S-3 No. 33-46212)
Registration Statement (Form S-3 No. 33-47889)
ERNST & YOUNG
Hartford, Connecticut
March 29, 1994
F-2<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
registration statements pertaining to the Savings Plan for Salaried
Employees of The Stanley Works of our report dated March 18, 1994,
with respect to the financial statements and schedules of the
Savings Plan for Salaried Employees of The Stanley Works for the
year ended December 31, 1993 included in this Annual Report (Form
10-K) as Exhibit 99(i) for the fiscal year ended January 1, 1994.
Registration Statement (Form S-8 No. 2-97283)
Registration Statement (Form S-8 No. 33-30629)
Registration Statement (Form S-8 No. 33-41612)
ERNST & YOUNG
Hartford, Connecticut
March 29, 1994
F-3(i)<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
registration statements pertaining to the Savings Plan for Hourly
Paid Employees of The Stanley Works of our report dated March 18,
1994, with respect to the financial statements and schedules of the
Savings Plan for Hourly Paid Employees of The Stanley Works for the
year ended December 31, 1993 included in this Annual Report (Form
10-K) as Exhibit 99(ii) for the fiscal year ended January 1, 1994.
Registration Statement (Form S-8 No. 2-96778)
Registration Statement (Form S-8 No. 33-30623)
Registration Statement (Form S-8 No. 33-41611)
ERNST & YOUNG
Hartford, Connecticut
March 29, 1994
F-3(ii) <PAGE>
<PAGE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991
(In Millions of Dollars)
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions at Other Changes Balance
Beginning of Cost Add(Deduct) at End of
CLASSIFICATION Period (2) Retirements Describe(1) Period
Fiscal year ended January 1, 1994:
<S> <C> <C> <C> <C> <C>
Land $ 30.7 $ 2.7 $ (0.7) $ (0.3) $ 32.4
Buildings 221.5 17.2 (3.9) (3.1) 239.7
Machinery and equipment 828.6 57.6 (33.2) (3.1) 846.9
---------------------------------------------------------------------
$ 1,088.8 $ 77.5 $ (37.8) $ (9.5) $ 1,119.0
=====================================================================
Fiscal year ended January 2, 1993:
Land $ 30.1 $ 2.3 $ (1.2) $ (0.5) $ 30.7
Buildings 217.8 17.8 (2.9) (3.2) 229.5
Machinery and equipment 797.6 70.4 (20.0) (19.4) 828.6
---------------------------------------------------------------------
$ 1,045.5 $ 90.5 $ (24.1) $ (23.1) $ 1,088.8
====================================================================
Fiscal year ended December 28, 1991:
Land $ 23.5 $ 7.2 $ (0.6) $ 0.0 $ 30.1
Buildings 203.4 16.2 (2.9) 1.1 217.8
Machinery and equipment 752.5 68.7 (22.7) (0.9) 797.6
--------------------------------------------------------------------
$ 979.4 $ 92.1 $ (26.2) $ 0.2 $ 1,045.5
=====================================================================
<FN>
Note: (1) Foreign currency translation adjustments and reclassifications between categories.
(2) Additions in 1993, 1992 and 1991 include $8.8, $25.0, and $28.7 respectively,
related to acquisitions described in Note B to the consolidated financial statements.
Other additions for the years shown consist principally of expenditures for productivity
improvements and expansion for production facilities.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Other Changes Balance
Beginning of at Cost Add(Deduct) at End of
CLASSIFICATION Period (2) Retirements Describe (1) Period
Depreciation rates for financial accounting purposes are based, in general,
on the following estimated lives:
United States Foreign
Companies Companies
------------ ------------
<S> <C> <C>
Factory buildings 15-50 years 15-50 years
Land and Building improvements 4-40 years 5-50 years
Leasehold improvements 2 years to 2 years to
life of lease life of lease
Tools, machinery and equipment 2-30 years 2-25 years
Furniture and office equipment 3-20 years 2-20 years
Automobiles 2- 7 years 2- 7 years
Trucks 3-10 years 3- 7 years
Airplane 7 years
F - 5 <PAGE>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Other Changes Balance
Beginning Charged to Retirements Add(Deduct) at End of
CLASSIFICATION of Period Cost and Expenses Describe (1) Period
Fiscal year ended January 1, 1994:
<S> <C> <C> <C> <C> <C>
Buildings $ 73.0 $ 7.1 $ (0.9) $ (0.4) $ 78.8
Machinery and equipment 449.2 56.0 $ (27.9) $ (3.6) $ 473.7
---------------------------------------------------------------------
$ 522.2 $ 63.1 $ (28.8) $ (4.0) $ 552.5
======================================================================
Fiscal year ended January 2, 1993:
Buildings $ 67.9 $ 6.4 $ (1.1) $ (0.2) $ 73.0
Machinery and equipment 415.9 56.0 (15.4) (7.3) 449.2
----------------------------------------------------------------------
$ 483.8 $ 62.4 $ (16.5) $ (7.5) $ 522.2
======================================================================
Fiscal year ended December 28, 1991:
Buildings $ 62.7 $ 5.7 $ (1.1) $ 0.6 $ 67.9
Machinery and equipment 378.4 55.7 (18.5) 0.3 415.9
----------------------------------------------------------------------
$ 441.1 $ 61.4 $ (19.6) $ 0.9 $ 483.8
======================================================================
<FN>
Note:(1)Foreign currency translation adjustments and reclassifications between
categories.
</TABLE> F - 6
<PAGE>
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993, and December 28, 1991
(In Millions of Dollars)
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
(1) (2)
Balance at Charged Charged Deductions Balance
Description Beginning to Costs to Other -Describe at End
of Period and Expenses Accounts of Period
Fiscal year ended January 1, 1994:
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts:
<S> <C> <C> <C> <C> <C>
Current $22.9 $12.7 $1.6 (C) $18.4 (A) $24.8
(0.1) (B) 6.1 (D)
Noncurrent 0.0 0.0
Fiscal year ended January 2, 1993:
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts:
Current $17.6 $12.0 $1.1 (C) $9.5 (A) $22.9
(0.5) (B) 2.2 (D)
Noncurrent 3.8 3.8 (D) 0.0
Fiscal year ended December 28, 1991:
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts:
Current $14.7 $7.4 $1.6 (C) $6.0 (A) $17.6
(0.1) (B)
Noncurrent 4.9 0.7 0.4 (D) 2.2 (A) 3.8
<FN>
Notes: (A) Represents doubtful accounts charged off, less recoveries of
accounts previously charged off.
(B) Represents foreign currency translation adjustments.
(C) Represents opening balances related to acquired companies.
(D) Represents net transfers from other accounts.
F - 7 <PAGE>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE IX--SHORT-TERM BORROWINGS
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993, and December 28, 1991
(In Millions of Dollars)
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Maximum Average Weighted
Weighted Amount Amount Average
CATEGORY OF AGGREGATE Balance Average Outstanding Outstanding Interest rate
SHORT-TERM BORROWINGS at End of Interest During the During the During the
Period Rate Period Period Period
(2) (3)
Fiscal year ended January 1, 1994:
<S> <C> <C> <C> <C> <C>
Notes payable to banks (1) $42.3 4.6% $89.0 $75.4 4.5%
Fiscal year ended January 2, 1993:
Notes payable to banks (1) $20.2 6.6% $98.7 $62.5 5.0%
Fiscal year ended December 28, 1991:
Notes payable to banks (1) $9.6 13.0% $14.8 $10.3 17.3%
<FN>
Notes: (1) Notes payable to banks represent borrowings under lines of
credit agreements and commercial paper.
(2) The average amount outstanding during the period was computed
by dividing the total of daily outstanding principal balances
during the year by the number of days in the year.
(3) The weighted average interest rate during the period was
computed by dividing the actual interest expense on short-
term notes payable to banks by the average short-term notes
payable outstanding.
</TABLE>
F - 8 <PAGE>
<PAGE>
<TABLE>
SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION
THE STANLEY WORKS AND SUBSIDIARIES
Fiscal years ended January 1, 1994, January 2, 1993, and December 28, 1991
(In Millions of Dollars)
<CAPTION>
COL. A COL. B
ITEM Charged to Costs and Expenses
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $51.9 $50.7 $43.8
Advertising costs 52.3 54.2 48.2
<FN>
Note: Amounts for depreciation and amortization of intangible assets,
royalties and the individual components of "taxes, other than
payroll and income taxes" are not presented, as such amounts
are less than 1% of total sales and revenues.
</TABLE>
F - 9<PAGE>
<PAGE>
EXHIBIT LIST
(3) (i) Restated Certificate of Incorporation
(incorporated by reference to Exhibit (3)(i) to
Quarterly Report on Form 10-Q for quarter ended
June 30, 1990)
(ii) By-laws (incorporated by reference to Exhibit
(3)(i) to Current Report on Form 8-K dated
September 1, 1993)
(4) (i) Indenture defining the rights of holders of 9-
1/4% Sinking Fund Debentures Due 2016, 7-3/8%
Notes Due December 15, 2002 and 9% Notes due 1998
(incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-4344 filed March
27, 1986)
(ii) First Supplemental Indenture, dated as of June
15, 1992 between the company and Shawmut Bank
Connecticut, National Association (formerly known
as The Connecticut National Bank) (incorporated
by reference to Exhibit (4)(c) to Registration
Statement No. 33-46212 filed July 21, 1992)
(a) Certificate of Designated Officers establishing
Terms of 9-1/4% Sinking Fund Debentures
(incorporated by reference to Exhibit (a)(4)(ii)
to Quarterly Report on Form 10-Q for quarter
ended March 29, 1986)
(b) Certificate of Designated Officers establishing
Terms of 9% Notes (incorporated by reference to
Exhibit (4)(i)(c) to Annual Report on Form 10-K
for year ended January 2, 1988)
(c) Certificate of Designated Officers establishing
Terms of 7-3/8% Notes Due December 15, 2002
(incorporated by reference to Exhibit (4)(ii) to
Current Report on Form 8-K dated December 7,
1992)
(iii) (a) Rights Agreement, dated February 26, 1986
(incorporated by reference to Exhibit 1 to
Registration Statement on Form 8-A dated March
18, 1986)
E-1-<PAGE>
<PAGE>
(4) (iii) (b) Rights Agreement Amendment, dated December 16,
1987 to the rights agreement dated February 26,
1986 (incorporated by reference to Exhibit 1 to
Registration Statement on Form 8-A dated December
31, 1987)
(c) Rights Agreement Amendment No. 2, dated July 20,
1990 to the Rights Agreement dated as of February
26, 1986, as amended December 16, 1987
(incorporated by reference to Exhibit (a) (4) (i)
to Quarterly Report on Form 10-Q for quarter
ended June 30, 1990)
(d) Rights Agreement Amendment No. 3, dated October
24, 1991 to the Rights Agreement dated as of
February 26, 1986, as amended December 16, 1987
and July 20, 1990 (incorporated by reference to
Exhibit (4)(i) to Quarterly Report on Form 10-Q
for quarter ended September 28, 1991)
(iv) Facility Agreement providing for the DFL
100,000,000 borrowing by Stanley-Bostitch, S.A.,
S.I.C.F.O.-Stanley S.A., and Societe de
Fabrications Bostitch S.A., guaranteed by The
Stanley Works, dated March 22, 1991 (incorporated
by reference to Exhibit (4)(i) to Quarterly
Report on Form 10-Q for quarter ended June 29,
1991)
(v) Credit Agreement, effective January 1, 1988, with
Shawmut Bank Connecticut, National Association
(formerly known as The Connecticut National Bank)
(incorporated by reference to Exhibit (4)(v) to
Quarterly Report on Form 10-Q for quarter ended
June 29, 1991)
(vi) Credit Agreement, effective June 1, 1991, with
Mellon Bank, N.A. (incorporated by reference to
Exhibit (4)(vi) to Quarterly Report on Form 10-Q
for quarter ended June 29, 1991)
(vii) Credit Agreements, dated as of April 1, 1992,
with seven banks (incorporated by reference to
Exhibit (4) to Quarterly Report on Form 10-Q for
quarter ended March 28, 1992)
(a) Agreements extending the termination date of the
Credit Agreements to April 1, 1996
E-2-<PAGE>
<PAGE>
(4) (viii) Credit Agreement, dated August 25, 1993, between
Societe de Fabrications Bostitch S.A. and
Citibank N.A. guaranteed by The Stanley Works.
(ix) Credit Agreement, dated August 25, 1993, between
Stanley-Bostitch, S.A. and Citibank N.A.
guaranteed by The Stanley Works.
(x) Credit Agreement, dated August 25, 1993, between
S.I.C.F.O. - Stanley S.A. and Citibank N.A.
guaranteed by The Stanley Works.
(10) (i) Executive Agreements (incorporated by reference
to Exhibit 10(i) to Annual Report on Form 10-K
for year ended January 3, 1987)*
(ii) Deferred Compensation Plan for Non-Employee
Directors as amended December 20, 1989
(incorporated by reference to Exhibit 10(ii) to
Annual Report on Form 10-K for year ended
December 30, 1989)*
(iii) 1978 Long-Term Stock Incentive Plan (incorporated
by reference to Exhibit 10(iii) to Annual Report
on Form 10-K for year ended December 31, 1988)*
(iv) Deferred Compensation Plan for Participants in
Stanley's 1978 Long-Term Stock Incentive Plan
(incorporated by reference to Exhibit (10)(iv) to
Annual Report on Form 10-K for year ended
December 31, 1988)*
(v) 1988 Long-Term Stock Incentive Plan (incorporated
by reference to Exhibit 10(v) to Annual Report on
Form 10-K for year ended December 31, 1988)*
(vi) Management Incentive Compensation Plan
(incorporated by reference to Exhibit 10(vi) to
Annual Report on Form 10-K for year ended
December 31, 1988)*
(vii) Deferred Compensation Plan for Participants in
Stanley's Management Incentive Plans as amended
December 2, 1992 (incorporated by reference to
Exhibit 10(vii) to Annual Report on Form 10-K for
year ended January 2, 1993)*
(viii) Restated Supplemental Pension Plan for Salaried
Employees of The Stanley Works effective as of
January 1, 1993*
* Management contract or compensation plan or arrangement
E-3-<PAGE>
<PAGE>
(10) (ix) Term Loan Agreement dated as of May 13, 1988
between the Savings and Retirement Trust for
Salaried Employees and Wachovia Bank and Trust
Company N.A. and related Guaranty dated as of May
13, 1988 from The Stanley Works to Wachovia Bank
and Trust Company, N.A. (incorporated by
reference to Exhibit 10(x) to Annual Report on
Form 10-K for year ended December 31, 1988)
(x) Loan and Guarantee Agreement dated as of June 6,
1989 among The Stanley Works Savings Trust for
Hourly Paid Employees, The Stanley Works and
Wachovia Bank and Trust Company, N.A.,
Massachusetts Mutual Life Insurance Company and
The Lincoln National Life Insurance Company
(incorporated by reference to Exhibit 10(i) to
Quarterly Report on Form 10-Q for quarter ended
July 1, 1989)
(xi) Loan and Guarantee Agreement dated as of June 6,
1989 among The Stanley Works Savings and
Retirement Trust, The Stanley Works and Wachovia
Bank and Trust Company, N.A., Massachusetts
Mutual Life Insurance Company, The Lincoln
National Life Insurance Company, First Penn-
Pacific Life Insurance Company, Security-
Connecticut Life Insurance Company- Universal
Life, Lincoln National Life Reinsurance Company
and American States Life Insurance Company-
Universal Life (incorporated by reference to
Exhibit (10)(ii) to Quarterly Report on Form 10-Q
for quarter ended July 1, 1989)
(xii) Receivables Purchase Agreement dated as of
December 1, 1993, among THE STANLEY WORKS, MAC
TOOLS, INC., STANLEY BOSTITCH, INC., the
PURCHASERS listed on the signature pages hereof,
and WACHOVIA BANK OF GEORGIA, NATIONAL
ASSOCIATION, as Agent.
(xiii)(a) The Stanley Works Non-Employee Directors' Benefit
Trust Agreement dated December 27, 1989 and
amended as of January 1, 1991 by and between The
Stanley Works and Connecticut National Bank
(incorporated by reference to Exhibit
(10)(xvii)(a) to Annual Report on Form 10-K for
year ended December 29, 1990)
E-4-<PAGE>
<PAGE>
(10) (xiii)(b) The Stanley Works Employees' Benefit Trust
Agreement dated December 27, 1989 and amended as
of January 1, 1991 by and between The Stanley
Works and Connecticut National Bank (incorporated
by reference to Exhibit (10)(xvii)(b) to Annual
Report on Form 10-K for year ended December
29,1990)
(xiv) 1990 Stock Option Plan (incorporated by reference
to Exhibit (10)(xviii) to Annual Report on Form
10-K for year ended December 29, 1990)*
(xv) Term Note, dated as of June 7, 1991, by State
Street Bank and Trust Company, as Trustee for the
Savings Plan for Salaried Employees of The
Stanley Works, to Stanley Works Funding
Corporation (incorporated by reference to Exhibit
(10)(xxi) to Current Report on Form 8-K dated
June 7, 1991)
(xvi) Term Note, dated as of June 7, 1991, by State
Street Bank and Trust Company, as Trustee for the
Savings Plan for Hourly Paid Employees of The
Stanley Works, to Stanley Works Funding
Corporation (incorporated by reference to Exhibit
(10)(xxii) to Current Report on Form 8-K dated
June 7, 1991)
(xvii) Master Leasing Agreement, dated September 1, 1992
between BLC Corporation and The Stanley Works
(incorporated by reference to Exhibit (10)(i) to
Quarterly Report on Form 10-Q for quarter ended
September 26, 1992)
(11) Statement re computation of per share earnings
(12) Statement re computation of ratio of earnings to
fixed charges
(13) Annual Report to shareholders for year ended
January 1, 1994
(21) Subsidiaries of Registrant
(23) Consents of Independent Auditors (at page F-2, F-
3(i) and F-3(ii))
* Management contract or compensation
plan or arrangement
E-5-<PAGE>
<PAGE>
(99) (i) Financial Statements and report of independent
auditors for the year ended December 31, 1993, of
the Savings Plan for Salaried Employees
(ii) Financial Statements and report of independent
auditors for the year ended December 31, 1993, of
the Savings Plan for Hourly Paid Employees
(iii) Policy on Confidential Proxy Voting and
Independent Tabulation and Inspection of
Elections as adopted by The Board of Directors
October 23, 1991 (incorporated by reference to
Exhibit (28)(i) to Quarterly Report on Form 10-Q
for quarter ended September 28, 1991)
(iv) Description of Capital Stock (incorporated by
reference to Exhibit 28(iv) to Annual Report on
Form 10-K for the year ended January 2, 1993)
E-6- <PAGE>
<PAGE>
Exhibit (4)(vii)(a)
J.P. MORGAN
Stephen J. Kenneally
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Tel: 212-648-7012
March 5, 1993
Craig A. Douglas
Director, Corporate Finance
The Stanley Works
1000 Stanley Drive
New Britain, Ct. 06053
Dear Craig:
Morgan Guarantee Trust Company of New York ("Morgan") agrees to
extend the Termination Date of the Credit Agreement Between The
Stanley Works and Morgan dated April 1, 1992 to April 1, 1996.
Sincerely,
/s/ Stephen J. Kenneally<PAGE>
<PAGE>
WACHOVIA
Wachovia Bank of Georgia, N.A.
Post Office Box 4148
Atlanta, Georgia 30302
March 8, 1993
Mr. Craig A. Douglas
Director, Corporate Finance
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
Re: Extension of Termination Date of
the Credit Agreement Between The
Stanley Works as Borrower and
Wachovia Bank of Georgia as
Lender Dated as of April 1, 1992
Dear Craig:
Pursuant to Section 2.14 of the subject credit agreement, Wachovia
Bank of Georgia, N.A. agrees to extend by one year to April 1,
1996, the Termination Date of the subject credit agreement.
Sincerely,
/s/ Robert F. Kennedy
Robert F. Kennedy
Assistant Vice President<PAGE>
<PAGE>
BNP BANQUE NATIONALE DE PARIS
499 Park Avenue, New York, N.Y. 10022
Swift Address: BNPAUS3NB
Telephone: (212) 750-1400
Telex: 82759
Fax No: (212) 415-9696
March 19, 1993
The Stanley Works
1000 Stanley Drive
New Britain, CT 06050
Gentlemen:
RE: Amendment #1 to the Credit Agreement Dated 4/1/92
Reference is made to the Credit Agreement dated 4/1/92 between
your company, as Borrower, and our bank, as Lender. In this
connection we hereby amendment the Credit Agreement as follows:
1) In the definition "Termination Date" on page 12 of the Credit
Agreement the word "third" is hereby changed to read
"fourth".
2) The Credit Agreement, as hereby amended, remains in full
force and effect.
Please sign and return to us a copy of this letter confirming your
agreement to this Amendment.
Very truly yours,
AGREED AND ACCEPTED
THE STANLEY WORKS BANQUE NATIONAL DE PARIS
BY /s/ R. Alan Hunter BY /s/ Judith Domkowski
Name: R. Alan Hunter Name: Judith Domkowski
Title: Vice President, Title: Vice President
Finance and Chief
Financial Officer BY /s/ Eric Vigne
Name: Eric Vigne
Title: Sr. Vice President
World Headquarters: 16, Boulevard Des Italiens, 75009 Paris,
France<PAGE>
<PAGE>
ROYAL BANK
OF CANADA
U.S.A. Headquarters
Financial Square
New York, New York
10005-3531
(212) 428-6200
March 24, 1993
Mr. Craig A. Douglas
Director, Corporate Finance
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
RE: $30MM RBC Bi-lateral Facility
Dear Craig:
Please accept this letter as confirmation that the termination
date for the above noted facility has been extended for an
additional year to April 1, 1996.
Regards,
/s/ Sheryl L. Greenberg
Sheryl L. Greenberg
Manager
Corporate Banking East<PAGE>
<PAGE>
Citibank, N.A. 399 Park Avenue
New York, NY
10043 CITIBANK
January 3, 1994
Craig Douglas
Director of Corporate Finance
The Stanley Works
1000 Stanley Drive
New Britain, Connecticut 06050
Dear Craig,
This letter is to confirm our understanding and approval that
pursuant to section 2.14 of the Credit Agreement dated April 1,
1992 ("Credit Agreement"), the Termination Date of the Credit
Agreement has been extended by exactly one year from April 1, 1995
to a new maturity date of April 1, 1996.
All other terms and conditions of the Credit Agreement are the
same and remain in full force, unless otherwise amended and
approved by The Stanley Works and the The Lenders.
Yours truly,
/s/ Paolo de Alessandrini
Paolo de Alessandrini
Vice President
Citibank, N.A. Attorney-in-fact<PAGE>
<PAGE>
BARCLAYS
BARCLAYS BANK PLC
International Corporate Group
P.O. Box No. 544, 54 Lombard Street, London EC3V 9EX
Telephone: 071-621-1888
Mr. C.A. Douglas, Your Ref: MJD/TW
Director, Our Ref: 4438
Corporate Finance Ext. No.:
The Stanley Works Ref: 023417
1000 Stanley Drive,
New Britain,
CT 06053,
U.S.A.
1 April 1993.
Dear Craig,
CREDIT AGREEMENT BETWEEN THE STANLEY WORKS AND BARCLAYS BANK
PLC DATED 1 APRIL 1992
We are pleased to confirm our earlier verbal approval
(Gray/Cronauer) that we have obtained credit approval to
extend the Termination Date of the above agreement 1 April
1996, pursuant to Section 2.14 of the agreement.
We look forward to continuing to be of service to The Stanely
Works.
Yours sincerely,
/s/ Jonathan L. Gray
JONATHAN L. GRAY
CORPORATE MANAGER
NORTH AMERICAN CORPORATE TEAM
INTERNATIONAL CORPORATE GROUP
Facsimile: 071-626 2145/071-588 8210 Telex: 418139 Answerback
BARCGB G <PAGE>
<PAGE>
EXHIBIT 4(viii)
CREDIT AGREEMENT
Between
Societe de Fabrications Bostitch S.A., a limited liability company
with a capital of FRF 6,500,000, having its registered office in
Rupt-sur-Moselle, RCS Epinal, represented by Mr. Jean-Claude
Reggiani, duly entitled to this effect,
Hereafter called the "Borrower",
And
The branch of Citibank N.A., a corporation based on American law,
located at Citicenter, 19 Le Parvis, La Defense 7, 92800 PUTEAUX,
represented by Michael M. Roberts, duly entitled to this effect,
Hereafter called the "Bank",
IT IS NOW AGREED THAT
<PAGE>
Part I- THE FACILITY
1.1. The Facility (the "Credit Line")
In accordance with the terms and conditions hereafter, the Bank
will make available to the Borrower a credit line ("the Credit")
in the sum of DFL 7,500,000 (seven million five hundred thousand
Dutch Guilders), from 30/08/1993 (hereafter called the
"Availability Date") to March 22, 1996 (hereafter called the
"Repayment Date"). The Borrower shall draw on the Credit at one
and only one time from the Availability date.
The Credit, without prejudice to the provisions of Part II
hereafter, shall be automatically reimbursed by the payment of the
promissory note created in accordance with article 3.1., whose
maturity date shall not be later than the Repayment Date .
1.2 Terms
Terms used in this Agreement and not otherwise defined will have
the same definition as those defined in the Syndicated Loan
Agreement dated March 22nd, 1991 (hereafter the "Syndicated Loan
Agreement").
1.3. Purpose
The Credit will be applied, based on the Borrower's statement, to
general corporate purposes, without the Bank being obliged to
verify the stated application.
<PAGE>
Part II- REPAYMENT & PREPAYMENT
2.1. Repayment
The repayment of the Drawdown (as defined in article 3.1) by the
Borrower under this agreement will be made in Dutch Guilders at
the latest on the Repayment Date.
2.2. Prepayment
The Borrower may, by giving the Bank not less than thirty day
prior notice to that effect, prepay the whole or any part (being
an amount or integral multiple of DFL 2,500,000) of the Credit
made to such Borrower, at the end of the Interest Period (as
defined in article 4.1) in which the notice of prepayment is
given; such prepayment being made without prejudice to the
Borrower's obligation pursuant to article 4.5., if any. Any
repayment so made shall satisfy pro tanto the Borrower's
obligations under article 1.1.
Any notice of prepayment given by the Borrower pursuant to the
present article shall be irrevocable, shall specify the date upon
which such prepayment is to take effect and the amount of such
prepayment and shall oblige such Borrower to make such prepayment
on such date. After such a notice is sent to the Bank by the
Borrower, the latter shall not be entitled to reborrow any amount
repaid or to be repaid.
<PAGE>
Part III- AVAILABILITY OF THE CREDIT LINE
3.1. Availability
The line of credit may be drawn at any time from the Availability
Date, in one drawdown, subject to prior notice given to the Bank
by letter or by telex and received by the Bank two (2) business
days at least before the date of the drawdown. A "business day" is
each day during which banks are open all day in Paris.
This prior notice shall oblige the Borrower to borrow the whole
amount of the Credit on the date therein stated (hereafter called
the "Drawdown") under the terms and conditions contained herein.
The Drawdown will be represented by a promissory note issued to
the order of the Bank, in the form of Annex A hereto attached
(hereafter called the "Note"). The date of issue of the Note will
only be a business day; furthermore, if the maturity date of the
Note falls on a non-business day, this maturity date will be
extended to the first following business day. The Maturity Date of
the Note shall not be later than the Repayment Date.
The issuance of the Note will not be considered as a novation of
the obligation resulting from the present contract, but will
represent the monetary obligation of the Borrower arising from the
Drawdown.
3.2. Conditions Precedent
The Drawdown will be conditioned upon:
i) the signature of a first demand guarantee by THE STANLEY WORKS,
covering the obligations of the Borrower under this Agreement;
ii) the prior remittance to the Bank of certified copies of power
of attorney, or board resolutions authorizing the conclusion of
the present contract;
iii) prior remittance to the Bank of all justifications relative
to the authorizations or the accomplishment of all formalities
that may eventually be imposed by French or foreign regulations;
iv) the absence of any Event of Default mentioned in article 5.3.
hereunder,
<PAGE>
v) the accuracy of representations and warranties made by the
Borrower in article 5.1.,
vi) the absence of any material adverse change in the financial
situation of the Borrower since December 31st, 1992 (date of the
most recent audited Financial Statements), which would, in the
reasonable judgment of the Bank, prevent it from meeting all
obligations under this present agreement.
vii) the receipt of the Note provided for above.
<PAGE>
Part IV- INTEREST
4.1. Normal Interest Rate
The Drawdown of the present Credit line will bear interest at an
annual rate equal to the offered rate of Citibank N.A. London, one
business day before the first day of the Interest Period as
hereafter defined, on the London Interbank Market for Dutch
Guilder deposits for the period for which such rate is to be
determined plus a margin of 0.50 % per annum.
The period starting on the date of the Drawdown and ending on the
Repayment Date shall be divided into successive periods each of
which (other than the first) shall start on the last day of the
preceding period (hereafter called "Interest Period").
The first Interest Period shall start on the Drawdown date and end
on September 29, 1993. The duration of this first Interest period,
which is only for the purposes of calculating accrued interest,
shall be one month. The duration of each subsequent Interest
Period shall be determined as referred to the duration of the
interest period of the Advances under the Syndicated Loan
Agreement, provided that:
i) if the Borrower fails to give notice to the Bank regarding
its choice in relation to the Interest Period, the duration of
that Interest Period whether under this Agreement or under the
Syndicated Loan Agreement shall, subject to ii) below, be three
months;
ii) any Interest Period which would otherwise end during the month
preceding, or extend beyond, the Repayment Date shall be of such
duration that it shall end on the Repayment Date.
The duration of an Interest Period by the Borrower shall be
irrevocably binding for the Borrower for that Interest Period.
4.2. Exceptional Interest Rate
In case the Bank considers that circumstances affecting the
monetary market prevent the determination of an applicable
interest rate, the Bank will notify the Borrower at least one
business day before the end of the current Interest Period.
<PAGE>
If, within 30 calendar days following this notification, the
Borrower and the Bank have not determined a mutually satisfactory
interest rate for the concerned Interest Period, the Borrower will
be required to repay to the Bank, within a maximum delay of 10
calendar days following the Bank's request by telex or letter, the
amount of the outstanding Note, as well as all outstanding
interest up to the date of its repayment, at an interest rate
equal to the effective cost incurred by the Bank to keep the
Credit available to the Borrower, plus a margin of 0.50%. This
cost will be determined by the Bank and notified to the Borrower.
4.3. Accrued Interest
On the last day of each Interest Period the Borrower shall pay
accrued interest. The accrued interest due will be calculated on
the basis of a 360 day-year, and will be debited by the Bank in
the Borrower's account with the Bank.
4.4 "Effective Global Rate" (Taux Effectif Global)
The "effective global rate" applicable to the present credit would
be 6.90% (6.40% + 0.50%) on the date of signature of this
Agreement.
4.5. Late Interest
All amounts of principal, interest, fees, accessories, due but
unpaid, will automatically bear interest, in compliance with the
law, at a rate which will be equal to the interest rate calculated
in articles 4.1. or 4.2. above, depending on the case, but with
the substitution of a margin of 1.50 % to that determined in those
paragraphs, and as long as the Borrower is in default, without
prejudice to all other rights the Bank may be entitled to because
of the damages resulting from the default of the Borrower,
including the refinancing costs.
The payment of late interest will be made at the Bank's first
request, who may debit it immediately from the Borrower's account
with the Bank. <PAGE>
<PAGE>
Part V REPRESENTATIONS, COVENANTS & EVENTS OF DEFAULT
5.1. Representations and Warranties
The Borrower represents and warrants: (i) that its obligation to
pay the principal, the interest, the commitment fee and
accessories under the present agreement constitutes a direct,
unconditional and general obligation which ranks pari passu with
the claims of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
(ii) that it will notify the Bank, by remitting to it all its
documents relating to any event affecting its legal existence and
its legal capacity, and all statutory modifications and changes in
persons mandated to represent it; it will also notify the Bank of
any change in the capital ownership, which would result in the
Borrower not being directly or indirectly wholly-owned by THE
STANLEY WORKS;
(iii) that its balance sheet and financials on December 31, 1992
have been established in accordance with current accounting
principles and sincerely and faithfully reflects its assets and
liabilities, and that since January 1, 1993, there has been no
material adverse change in its financial situation;
(iv) that the Borrower is not subject to any kind of legal pursuit
that may seriously affect its ability to meet its financial
obligations under the present Agreement; that it is not, to the
best of its knowledge, threatened by any such procedure.
5.2. Covenants
5.2.1. The Borrower shall:
(i) obtain, comply with the terms of and do all that is necessary
to maintain in full force and effect all authorizations,
approvals, licenses and consents required in or by the laws and
regulations of its jurisdiction of incorporation to enable it
lawfully to enter into and perform its obligations under this
Credit Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of
incorporation of this Credit Agreement;
<PAGE>
(ii) the Borrower shall maintain, in full force and effect,
prudent insurances on and in relation to its business and assets
or self-insure where this is considered appropriate in the opinion
of the Borrower;
(iii) promptly inform the Bank of the occurrence of any event
which is or is likely, in the reasonable opinion of the Borrower,
to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof)
an Event of Default and, upon receipt of a written request to that
effect from the Bank, confirm to the Bank that, save as previously
notified to the Bank or as notified in such confirmation, no such
event has occurred;
(iv) ensure that at all times the claims of the Bank against it
under this Credit Agreement rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation or
other similar laws of general application;
(v) that it will deliver to the Bank within 95 days after the end
of each of its fiscal year its balance sheet, income statement and
financial annexes, as well as the auditor's report certifying the
conformity of the accounting documents communicated with
accounting principles generally accepted in France; that these
documents will be completed by a letter confirming that none of
the events provided for in article 5.3 have occurred;
(vi) that upon request of the Bank, the latter will receive
without delay any additional information concerning the financial
situation or the activity of the Borrower, that may be of interest
to the Bank;
(vii) that it will immediately inform the Bank of the occurrence
of any Event of Default provided for in article 5.3;
5.2.2. The Borrower shall not, without the prior consent of the
Bank:
(i) create or permit to subsist any encumbrance over all or any of
its present or future Principal Property (unless the Borrower
secures the Drawdown made equally and ratably with such
encumbrance) other than:
<PAGE>
(a) any existing encumbrance which has been disclosed in
writing to the Bank prior to the date hereof;
(b) encumbrances on property of any corporation existing at
the time such corporation becomes a subsidiary;
(c) encumbrances securing financial indebtedness of one
member of the Group to another (save for such mortgages securing
financial indebtedness of the Borrower to a member of the Group
which is not the Borrower);
(d) any lien arising solely by operation of law in the
ordinary course of business or which is contained in a contract
for the purchase or sale or goods or services entered into in the
ordinary course of business;
(e) encumbrances on any property existing at the time of
acquisition but only if the amount outstanding and secured thereby
does not exceed the lesser of the fair market value of or the
purchase price of the property as purchased;
(f) any encumbrance securing the purchase price of revenues
or assets purchased after the date hereof or the cost of repairing
or altering, constructing, developing or substantially improving
all or any part of such revenues or assets provided that such
encumbrance attaches only to such revenues or assets and the
financial indebtedness thereby secured does not exceed the lesser
of the fair market value or the purchase price of the revenues or
assets as purchased;
(g) any other encumbrances securing financial indebtedness,
which in aggregate do not exceed 10% of Consolidated Net Tangible
Assets; and
(h) any extension, renewal or replacement of any of the
encumbrances referred to above provided that the financial
indebtedness secured by any such extension, renewal or replacement
does not exceed the principal amount of the financial indebtedness
originally secured thereby plus any fee incurred in connection
with such transaction.
<PAGE>
(ii) make any loans, grant any credit or give any guarantee or
indemnity to or for the benefit of any person or otherwise
voluntarily assume any liability, whether actual or contingent, in
respect of any obligation of any other person save for:
(a) any loans, credits, guarantees or indemnities which
relate directly or indirectly to the carrying on of the business
of the Borrower; and
(b) any loans, credits, guarantees and indemnities made to or
for the benefit of the Borrower; and
(iii) except for sales, transfers or other disposals of stock in
trade, sell, lease, transfer or otherwise dispose of, by one or
more transactions or series of transactions (whether related or
not and whether to another member of the Group or not), the whole
or any part of its revenues or its assets other than sales,
leases, transfers or other disposals in the ordinary course of
business or on arms' length terms or which, in any financial year,
do not exceed 5% of Consolidated Net Tangible Assets as determined
by the most recent financial statements delivered pursuant to
article 5.1.(ii) provided that the proceeds thereof are applied
only in or towards the satisfaction of any financial indebtedness
and/or to the general working capital requirements of the Group
except that up to fifty per cent of the proceeds thereof may be
applied in or towards the repurchasing of any of THE STANLEY
WORKS's common stock or the payment of dividends and distributions
thereon, except that not more than 25% (twenty five percent) of
such proceeds may be applied in or towards the payment of such
dividends and distributions. Furthermore, for the purpose of the
calculation of Consolidated Net Tangible Assets, any proceeds from
the sale of any Taylor Rental stores owned directly or indirectly
by THE STANLEY WORKS will not be taken into account.
5.3. Events of Default
If any of the following events, in addition to those provided for
by law, occurs:
(i) the Borrower does not pay within three business days of
maturity all amounts, in principal, interest, fees, ancillary
expenses, due by virtue of the present contract, or
<PAGE>
(ii) the Borrower does not comply with any other obligation
resulting from this contract, and does not remedy to it within 30
business days after the summons from the Bank to execute the
obligation, or
(iii) the Borrower ceases its activity, defaults, declares
bankruptcy, or a resolution is passed or a petition is presented
or an order is made for the "liquidation amiable", "reglement
judiciaire", "reglement amiable", "redressement judiciaire" or
"liquidation judiciaire" of the Borrower, or a petition is
presented or an order is made for the appointment of an
"administrateur ad hoc" or "administrateur judiciaire" to
administer all or part of the assets of the Borrower, or an event
analogous to any of the foregoing occurs, or
(iv) there shall occur any material adverse change in the
business, assets or conditions of the Group taken as a whole from
that existing at the date hereof which, in the reasonable opinion
of the Bank, is likely to have a material adverse effect on the
ability of the Borrower to comply with any of its obligations
hereunder;
(v) any financial indebtedness of the Borrower, in an amount in
excess of US $ 5,000,000 is not paid when due, or any such
financial indebtedness of the Borrower is declared to be or
otherwise becomes due and payable by reason of default or by
reason of the occurrence of an event of default whether as a
result of culpability or not prior to its specified maturity or
any other creditor or creditors of the Borrower are entitled (and
continue to be so entitled) to declare any such financial
indebtedness of the Borrower due and payable prior to its
specified maturity by reason of the failure of the Borrower to
either (i) make any payment in respect of any such financial
indebtedness upon its due date, (ii) comply with any financial
covenant or (iii) comply with any other financial test in respect
of such financial indebtedness, or
(vi) any representation or statement made by the Borrower in this
Agreement or in any notice or other document certificate or
statement delivered by it pursuant hereto or in connection
herewith is, in the reasonable opinion of the Bank, or proves to
have been incorrect or misleading in any material respect when
made; or
<PAGE>
(vii) the Borrower ceases to be a direct or indirect, wholly-owned
subsidiary of THE STANLEY WORKS (subject to the ability of
directors of such Borrower to hold nominee shares in the capital
of the Borrower), or
(viii) more than 15% of the revenues of the Borrower are derived
from any business wholly and totally unrelated to any of the
businesses, products, distribution channels or services of
Borrower at the date hereof, or
(ix) at any time it is or becomes unlawful for the Borrower to
perform or comply with any of its obligations hereunder or any of
the obligations of the Borrower are not or cease to be legal,
valid and binding.
The Bank may then, by written notification to the Borrower and THE
STANLEY WORKS, declare immediately due all amounts to be paid with
respect to the present contract, in principal, interest, fees,
accessories, and the Bank's commitment resulting from the present
contract will cease immediately.
Notwithstanding the above provisions, the Borrower will indemnify
the Bank for any loss or expense such as but not limited to,
refinancing, legal or other expenses, incurred by the Bank as a
result of the early termination of the Credit, by reasons of the
occurrence of an Event of Default.
Part VI- TAX - RIGHT OF SET-OFF - BANK'S EXPENSES
All payments in principal, interest, fees and accessories in favor
of the Bank will be made without set-off with all the amounts that
may be due by the Bank to the Borrower, and net of all taxes of
any kind, present or future, levied by any fiscal authorities. In
the event where a legal text or regulation would require the
Borrower to deduct from the amounts due to the Bank taxes of any
sort, the Borrower agrees to compensate for the shortfall by way
of additional interest, so that after deduction of all taxes
including those on the additional interest, the Bank will receive
all the amounts due to it under this contract.
More generally, the Borrower agrees to indemnify the Bank, by way
of additional interest, for any increase in expenses resulting
from a change in banking regulations occurring after the signature
of this contract; particularly, if the amount of non-interest
bearing reserves required for deposit at the Banque de France are
<PAGE>
increased, the Borrower undertakes to negotiate in good faith a
new interest rate, which takes into account the aforementioned
increased expenses. In the event that no agreement on the
modification of the interest rate can be reached between the
Borrower and the Bank, the Borrower may terminate the present
Agreement at the maturity date of the outstanding Note without
penalty, but with the payment of the revised interest rate, as
notified in writing to the Borrower by the Bank.
Part VII- MISCELLANEOUS
The fact that the Bank does not exercise action or exercises it
with delay against the Borrower, in no way constitutes a waiver of
the right to this action nor does it result in the novation of the
credit defined in the present contract.
The Bank, with no prejudice to all its other rights, will have the
right, at any time, without prior notice, to set off all the
amounts due by the Borrower as a result of this contract, with all
the amounts the Bank holds in its books on behalf of the Borrower,
in any currency and in any location, for any specific purpose,
even if the amounts are not yet due. In the event these amounts
are in different currencies, the Bank may make all foreign
exchange transactions deemed necessary.
Part VIII EXPENSES
The Borrower agrees to reimburse the Bank at its first request for
all the expenses which may result from the Bank taking action to
defend its rights as described in the present contract, including
expenses and fees of consulting and lawyers.
Part IX- ASSIGNMENTS AND TRANSFERS
The Borrower may not transfer in any way any of the rights or
obligations resulting from the present contract without prior
written approval from the Bank. The Bank may at its sole
discretion and without the prior consent of the Borrower, assign
part or all of the present contract and resulting rights,
benefits, outstanding debt or obligations to any entity it may
elect.
<PAGE>
Part X- LAW AND JURISDICTION <PAGE>
This contract is governed by French law. Any dispute arising over
or resulting from the present agreement will be within the
jurisdiction of the Tribunal de Commerce de Paris, knowing that
the Bank may also pursue any action against the Borrower in front
of any other competent court.
The Borrower and the Bank irrevocably agree that the courts of the
State of New York and the courts of the United States of America
in New York may have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
Part XI- DISCLOSURE OF INFORMATION
(i) The Bank may disclose to any actual or potential assignee or
Transferee or to any person who may otherwise enter into
contractual relations with the Bank in relation to this Agreement
such information supplied by the Borrower or THE STANLEY WORKS
pursuant to the present Agreement, and any other information as
the Bank shall consider appropriate. Any information supplied by
the Borrower or THE STANLEY WORKS hereunder shall only be
disclosed upon the Bank obtaining a confidentiality undertaking,
from the person to whom the information is to be disclosed.
(ii) Without prejudice to the above clause, the Bank will treat as
confidential information received from the Borrower or THE STANLEY
WORKS in relation to the Credit save for that which has been
clearly identified by the Borrower as not being confidential, and
save to the extent that such information may be publicly available
or which the bank may be obliged to disclose by law.
Part XII- NOTICES
(i) Each communication to be made hereunder shall be made in
writing but, unless otherwise stated, maybe made by telex or
letter.
(ii) Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall (unless that
other person has by fifteen days' written notice to the other
party specified another address) be made or delivered to that
other person at the address identified on the first page (or in
the case of a transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) and, in the case of the
<PAGE>
Borrower, with a copy to THE STANLEY WORKS at 1000 Stanley Drive,
New Britain, Connecticut 06053, Attn. Craig A. Douglas, and shall
be deemed to be have been made or delivered when dispatched (in
the case of any communication made by telex) when left at the
address or (in the case of any communication made by letter) ten
days after being deposited in the post postage prepaid in an
envelope addressed to it at that address provided that any
communication or document to be made or delivered to the Bank
shall be effective only when received by the Bank and then only if
the same is expressly marked for the attention of the department
or officer identified with the Bank's signature below (or such
other department or officer as the Bank shall from time to time
specify for this purpose).
(iii) Each communication or document made or delivered by one
party to another pursuant to this Agreement shall be in the
English language or accompanied by a translation thereof in
English certified (by an officer of the person making or
delivering the same) as being a true and accurate translation
thereof.
Done in Paris in two copies
on 25/08/1993
/s/ Michael M. Roberts
________________________ Michael M. Roberts
Vice President
CITIBANK N.A.
/s/ Jean-Claude Reggiani
________________________ Mr Jean-Claude Reggiani
SOCIETE de FABRICATIONS
BOSTITCH S.A.("the Borrower")<PAGE>
<PAGE>
GUARANTEE
The undersigned, THE STANLEY WORKS (hereafter the
"Guarantor"), whose Head-Office is located at 1000 Stanley Drive,
New Britain, CT represented by Mr. Richard Huck, Vice President,
Finance, duly authorized to deliver this guarantee, hereby refers
to:
- the Credit Agreement in an amount of NLG 15,000,000 (fifteen
million of Dutch Guilders) signed on August 26, 1993 between
S.I.C.F.O. Stanley S.A. and Citibank N.A. Paris (hereafter called
"Citibank");
- the Credit Agreement in an amount of NLG 7,500,000 (seven
million five hundred thousand of Dutch Guilders) signed on August
26, 1993 between Societe de Fabrications Bostitch S.A. and
Citibank N.A. Paris;
-the Credit Agreement in an amount of NLG 7,500,000 (seven million
five hundred thousand of Dutch Guilders) signed on August 26, 1993
between Stanley Bostitch S.A. and Citibank N.A. Paris;
(S.I.C.F.O. Stanley S.A., Societe de Fabrications Bostitch S.A.
and Stanley Bostitch S.A. being hereafter called individually the
"Borrower" and collectively the "Borrowers," and the Credit
Agreements listed hereabove being hereafter called individually
the "Agreement" and collectively the "Agreements").
The Guarantor hereby declares being perfectly aware of all
the terms and conditions of the Agreements.
The Guarantor hereby unconditionally and irrevocably without
being able to demur, undertakes to pay Citibank at its first
demand, within two business days following this demand, and in
Dutch Guilders, all amounts up to NLG 30,000,000 (thirty million
of Dutch Guilders) in principal, plus interest, fees and
accessories, payable by the Borrowers under the Agreements.
This guarantee being unconditional, will then remain in full
force in any circumstances whatsoever including if any Borrower
cannot fulfill its obligations under the respective Agreement
because of laws or regulatory measures or any other measures taken
by the authorities of such Borrower's country.
This guarantee being unconditional will remain valid in case
of extension of maturity or amendment, even tacit or any of the
Agreements.
This guarantee will remain in full force until the effective
<PAGE>
and complete payment of any sum due to Citibank by the Borrowers
under the Agreements.
Any delay between the due date of the amounts owing by the
Guarantor by virtue of this guarantee and their effective payment
date, without being necessary to summon the Guarantor, will bear
interest at a rate per annum equal to the offered rate of Citibank
N.A. London on the London Interbank Market for three month Dutch
Guilder deposits plus 1.50%.
The Guarantor will indemnify Citibank at its demand and on
the view of bills, of any fees including attorney fees that it
incurs to obtain the execution of the Guarantor's obligations
under this guarantee.
Any amount due by the Guarantor under this guarantee will be
free and clear of any taxes, imposts, levies of any nature,
whether present or future deducted or withheld by or on behalf of
any fiscal authorities.
This guarantee will be governed by French law. Any dispute
arising out of or in connection with this guarantee will be within
the exclusive jurisdiction of the Tribunal de Commerce de Paris.
New Britain, CT on August 26, 1993
THE STANLEY WORKS
BY: /s/ Richard Huck
Name: Richard Huck
Title: Vice President,
Finance <PAGE>
<PAGE>
EXHIBIT 4(ix)
CREDIT AGREEMENT
Between
Stanley Bostitch S.A., a limited liability company with a capital
of FRF 62,112,900, having its registered office in 112, avenue
Charle-de Gaulle in Morangis 91423, RCS Corbeil B, represented by
Mr. Jean Francois duly entitled to this effect,
Hereafter called the "Borrower",
And
The branch of Citibank N.A., a corporation based on American law,
located at Citicenter, 19 Le Parvis, La Defense 7, 92800 PUTEAUX,
represented by Michael M. Roberts, duly entitled to this effect,
Hereafter called the "Bank",
IT IS NOW AGREED THAT
<PAGE>
Part I- THE FACILITY
1.1. The Facility (the "Credit Line") <PAGE>
In accordance with the terms and conditions hereafter, the Bank
will make available to the Borrower a credit line ("the Credit")
in the sum of DFL 7,500,000 (seven million five hundred thousand
Dutch Guilders), from 30/08/1993 (hereafter called the
"Availability Date") to March 22, 1996 (hereafter called the
"Repayment Date"). The Borrower shall draw on the Credit at one
and only one time from the Availability date.
The Credit, without prejudice to the provisions of Part II
hereafter, shall be automatically reimbursed by the payment of the
promissory note created in accordance with article 3.1., whose
maturity date shall not be later than the Repayment Date .
1.2 Terms
Terms used in this Agreement and not otherwise defined will have
the same definition as those defined in the Syndicated Loan
Agreement dated March 22nd, 1991 (hereafter the "Syndicated Loan
Agreement").
1.3. Purpose
The Credit will be applied, based on the Borrower's statement, to
general corporate purposes, without the Bank being obliged to
verify the stated application.
<PAGE>
Part II- REPAYMENT & PREPAYMENT
2.1. Repayment
The repayment of the Drawdown (as defined in article 3.1) by the
Borrower under this agreement will be made in Dutch Guilders at
the latest on the Repayment Date.
2.2. Prepayment
The Borrower may, by giving the Bank not less than thirty day
prior notice to that effect, prepay the whole or any part (being
an amount or integral multiple of DFL 2,500,000) of the Credit
made to such Borrower, at the end of the Interest Period (as
defined in article 4.1) in which the notice of prepayment is
given; such prepayment being made without prejudice to the
Borrower's obligation pursuant to article 4.5., if any. Any
repayment so made shall satisfy pro tanto the Borrower's
obligations under article 1.1.
Any notice of prepayment given by the Borrower pursuant to the
present article shall be irrevocable, shall specify the date upon
which such prepayment is to take effect and the amount of such
prepayment and shall oblige such Borrower to make such prepayment
on such date. After such a notice is sent to the Bank by the
Borrower, the latter shall not be entitled to reborrow any amount
repaid or to be repaid.
<PAGE>
Part III- AVAILABILITY OF THE CREDIT LINE
3.1. Availability
The line of credit may be drawn at any time from the Availability
Date, in one drawdown, subject to prior notice given to the Bank
by letter or by telex and received by the Bank two (2) business
days at least before the date of the drawdown. A "business day" is
each day during which banks are open all day in Paris.
This prior notice shall oblige the Borrower to borrow the whole
amount of the Credit on the date therein stated (hereafter called
the "Drawdown") under the terms and conditions contained herein.
The Drawdown will be represented by a promissory note issued to
the order of the Bank, in the form of Annex A hereto attached
(hereafter called the "Note"). The date of issue of the Note will
only be a business day; furthermore, if the maturity date of the
Note falls on a non-business day, this maturity date will be
extended to the first following business day. The Maturity Date of
the Note shall not be later than the Repayment Date.
The issuance of the Note will not be considered as a novation of
the obligation resulting from the present contract, but will
represent the monetary obligation of the Borrower arising from the
Drawdown.
3.2. Conditions Precedent
The Drawdown will be conditioned upon:
i) the signature of a first demand guarantee by THE STANLEY WORKS,
covering the obligations of the Borrower under this Agreement;
ii) the prior remittance to the Bank of certified copies of power
of attorney, or board resolutions authorizing the conclusion of
the present contract;
iii) prior remittance to the Bank of all justifications relative
to the authorizations or the accomplishment of all formalities
that may eventually be imposed by French or foreign regulations;
iv) the absence of any Event of Default mentioned in article 5.3.
hereunder,
<PAGE>
v) the accuracy of representations and warranties made by the
Borrower in article 5.1.,
vi) the absence of any material adverse change in the financial
situation of the Borrower since December 31st, 1992 (date of the
most recent audited Financial Statements), which would, in the
reasonable judgment of the Bank, prevent it from meeting all
obligations under this present agreement.
vii) the receipt of the Note provided for above.
<PAGE>
Part IV- INTEREST
4.1. Normal Interest Rate
The Drawdown of the present Credit line will bear interest at an
annual rate equal to the offered rate of Citibank N.A. London, one
business day before the first day of the Interest Period as
hereafter defined, on the London Interbank Market for Dutch
Guilder deposits for the period for which such rate is to be
determined plus a margin of 0.50 % per annum.
The period starting on the date of the Drawdown and ending on the
Repayment Date shall be divided into successive periods each of
which (other than the first) shall start on the last day of the
preceding period (hereafter called "Interest Period").
The first Interest Period shall start on the Drawdown date and end
on September 29, 1993. The duration of this first Interest period,
which is only for the purposes of calculating accrued interest,
shall be one month. The duration of each subsequent Interest
Period shall be determined as referred to the duration of the
interest period of the Advances under the Syndicated Loan
Agreement, provided that:
i) if the Borrower fails to give notice to the Bank regarding
its choice in relation to the Interest Period, the duration of
that Interest Period whether under this Agreement or under the
Syndicated Loan Agreement shall, subject to ii) below, be three
months;
ii) any Interest Period which would otherwise end during the month
preceding, or extend beyond, the Repayment Date shall be of such
duration that it shall end on the Repayment Date.
The duration of an Interest Period by the Borrower shall be
irrevocably binding for the Borrower for that Interest Period. <PAGE>
4.2. Exceptional Interest Rate
In case the Bank considers that circumstances affecting the
monetary market prevent the determination of an applicable
interest rate, the Bank will notify the Borrower at least one
business day before the end of the current Interest Period.
<PAGE>
If, within 30 calendar days following this notification, the
Borrower and the Bank have not determined a mutually satisfactory
interest rate for the concerned Interest Period, the Borrower will
be required to repay to the Bank, within a maximum delay of 10
calendar days following the Bank's request by telex or letter, the
amount of the outstanding Note, as well as all outstanding
interest up to the date of its repayment, at an interest rate
equal to the effective cost incurred by the Bank to keep the
Credit available to the Borrower, plus a margin of 0.50%. This
cost will be determined by the Bank and notified to the Borrower.
4.3. Accrued Interest
On the last day of each Interest Period the Borrower shall pay
accrued interest. The accrued interest due will be calculated on
the basis of a 360 day-year, and will be debited by the Bank in
the Borrower's account with the Bank.
4.4 "Effective Global Rate" (Taux Effectif Global)
The "effective global rate" applicable to the present credit would
be 6.90% (6.40% + 0.50%) on the date of signature of this
Agreement.
4.5. Late Interest
All amounts of principal, interest, fees, accessories, due but
unpaid, will automatically bear interest, in compliance with the
law, at a rate which will be equal to the interest rate calculated
in articles 4.1. or 4.2. above, depending on the case, but with
the substitution of a margin of 1.50 % to that determined in those
paragraphs, and as long as the Borrower is in default, without
prejudice to all other rights the Bank may be entitled to because
of the damages resulting from the default of the Borrower,
including the refinancing costs.
The payment of late interest will be made at the Bank's first
request, who may debit it immediately from the Borrower's account
with the Bank. <PAGE>
<PAGE>
Part V REPRESENTATIONS, COVENANTS & EVENTS OF DEFAULT
5.1. Representations and Warranties
The Borrower represents and warrants: (i) that its obligation to
pay the principal, the interest, the commitment fee and
accessories under the present agreement constitutes a direct,
unconditional and general obligation which ranks pari passu with
the claims of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
(ii) that it will notify the Bank, by remitting to it all its
documents relating to any event affecting its legal existence and
its legal capacity, and all statutory modifications and changes in
persons mandated to represent it; it will also notify the Bank of
any change in the capital ownership, which would result in the
Borrower not being directly or indirectly wholly-owned by THE
STANLEY WORKS;
(iii) that its balance sheet and financials on December 31, 1992
have been established in accordance with current accounting
principles and sincerely and faithfully reflects its assets and
liabilities, and that since January 1, 1993, there has been no
material adverse change in its financial situation;
(iv) that the Borrower is not subject to any kind of legal pursuit
that may seriously affect its ability to meet its financial
obligations under the present Agreement; that it is not, to the
best of its knowledge, threatened by any such procedure.
5.2. Covenants
5.2.1. The Borrower shall:
(i) obtain, comply with the terms of and do all that is necessary
to maintain in full force and effect all authorizations,
approvals, licenses and consents required in or by the laws and
regulations of its jurisdiction of incorporation to enable it
lawfully to enter into and perform its obligations under this
Credit Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of
incorporation of this Credit Agreement;
<PAGE>
(ii) the Borrower shall maintain, in full force and effect,
prudent insurances on and in relation to its business and assets
or self-insure where this is considered appropriate in the opinion
of the Borrower;
(iii) promptly inform the Bank of the occurrence of any event
which is or is likely, in the reasonable opinion of the Borrower,
to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof)
an Event of Default and, upon receipt of a written request to that
effect from the Bank, confirm to the Bank that, save as previously
notified to the Bank or as notified in such confirmation, no such
event has occurred;
(iv) ensure that at all times the claims of the Bank against it
under this Credit Agreement rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation or
other similar laws of general application;
(v) that it will deliver to the Bank within 95 days after the end
of each of its fiscal year its balance sheet, income statement and
financial annexes, as well as the auditor's report certifying the
conformity of the accounting documents communicated with
accounting principles generally accepted in France; that these
documents will be completed by a letter confirming that none of
the events provided for in article 5.3 have occurred;
(vi) that upon request of the Bank, the latter will receive
without delay any additional information concerning the financial
situation or the activity of the Borrower, that may be of interest
to the Bank;
(vii) that it will immediately inform the Bank of the occurrence
of any Event of Default provided for in article 5.3;
5.2.2. The Borrower shall not, without the prior consent of the
Bank:
(i) create or permit to subsist any encumbrance over all or any of
its present or future Principal Property (unless the Borrower
secures the Drawdown made equally and ratably with such
encumbrance) other than:
<PAGE>
(a) any existing encumbrance which has been disclosed in
writing to the Bank prior to the date hereof;
(b) encumbrances on property of any corporation existing at
the time such corporation becomes a subsidiary;
(c) encumbrances securing financial indebtedness of one
member of the Group to another (save for such mortgages securing
financial indebtedness of the Borrower to a member of the Group
which is not the Borrower);
(d) any lien arising solely by operation of law in the
ordinary course of business or which is contained in a contract
for the purchase or sale or goods or services entered into in the
ordinary course of business;
(e) encumbrances on any property existing at the time of
acquisition but only if the amount outstanding and secured thereby
does not exceed the lesser of the fair market value of or the
purchase price of the property as purchased;
(f) any encumbrance securing the purchase price of revenues
or assets purchased after the date hereof or the cost of repairing
or altering, constructing, developing or substantially improving
all or any part of such revenues or assets provided that such
encumbrance attaches only to such revenues or assets and the
financial indebtedness thereby secured does not exceed the lesser
of the fair market value or the purchase price of the revenues or
assets as purchased;
(g) any other encumbrances securing financial indebtedness,
which in aggregate do not exceed 10% of Consolidated Net Tangible
Assets; and
(h) any extension, renewal or replacement of any of the
encumbrances referred to above provided that the financial
indebtedness secured by any such extension, renewal or replacement
does not exceed the principal amount of the financial indebtedness
originally secured thereby plus any fee incurred in connection
with such transaction.
<PAGE>
(ii) make any loans, grant any credit or give any guarantee or
indemnity to or for the benefit of any person or otherwise
voluntarily assume any liability, whether actual or contingent, in
respect of any obligation of any other person save for:
(a) any loans, credits, guarantees or indemnities which
relate directly or indirectly to the carrying on of the business
of the Borrower; and
(b) any loans, credits, guarantees and indemnities made to or
for the benefit of the Borrower; and
(iii) except for sales, transfers or other disposals of stock in
trade, sell, lease, transfer or otherwise dispose of, by one or
more transactions or series of transactions (whether related or
not and whether to another member of the Group or not), the whole
or any part of its revenues or its assets other than sales,
leases, transfers or other disposals in the ordinary course of
business or on arms' length terms or which, in any financial year,
do not exceed 5% of Consolidated Net Tangible Assets as determined
by the most recent financial statements delivered pursuant to
article 5.1.(ii) provided that the proceeds thereof are applied
only in or towards the satisfaction of any financial indebtedness
and/or to the general working capital requirements of the Group
except that up to fifty per cent of the proceeds thereof may be
applied in or towards the repurchasing of any of THE STANLEY
WORKS's common stock or the payment of dividends and distributions
thereon, except that not more than 25% (twenty five percent) of
such proceeds may be applied in or towards the payment of such
dividends and distributions. Furthermore, for the purpose of the
calculation of Consolidated Net Tangible Assets, any proceeds from
the sale of any Taylor Rental stores owned directly or indirectly
by THE STANLEY WORKS will not be taken into account.
5.3. Events of Default
If any of the following events, in addition to those provided for
by law, occurs:
(i) the Borrower does not pay within three business days of
maturity all amounts, in principal, interest, fees, ancillary
expenses, due by virtue of the present contract, or
<PAGE>
(ii) the Borrower does not comply with any other obligation
resulting from this contract, and does not remedy to it within 30
business days after the summons from the Bank to execute the
obligation, or
(iii) the Borrower ceases its activity, defaults, declares
bankruptcy, or a resolution is passed or a petition is presented
or an order is made for the "liquidation amiable", "reglement
judiciaire", "reglement amiable", "redressement judiciaire" or
"liquidation judiciaire" of the Borrower, or a petition is
presented or an order is made for the appointment of an
"administrateur ad hoc" or "administrateur judiciaire" to
administer all or part of the assets of the Borrower, or an event
analogous to any of the foregoing occurs, or
(iv) there shall occur any material adverse change in the
business, assets or conditions of the Group taken as a whole from
that existing at the date hereof which, in the reasonable opinion
of the Bank, is likely to have a material adverse effect on the
ability of the Borrower to comply with any of its obligations
hereunder;
(v) any financial indebtedness of the Borrower, in an amount in
excess of US $ 5,000,000 is not paid when due, or any such
financial indebtedness of the Borrower is declared to be or
otherwise becomes due and payable by reason of default or by
reason of the occurrence of an event of default whether as a
result of culpability or not prior to its specified maturity or
any other creditor or creditors of the Borrower are entitled (and
continue to be so entitled) to declare any such financial
indebtedness of the Borrower due and payable prior to its
specified maturity by reason of the failure of the Borrower to
either (i) make any payment in respect of any such financial
indebtedness upon its due date, (ii) comply with any financial
covenant or (iii) comply with any other financial test in respect
of such financial indebtedness, or
(vi) any representation or statement made by the Borrower in this
Agreement or in any notice or other document certificate or
statement delivered by it pursuant hereto or in connection
herewith is, in the reasonable opinion of the Bank, or proves to
have been incorrect or misleading in any material respect when
made; or
<PAGE>
(vii) the Borrower ceases to be a direct or indirect, wholly-owned
subsidiary of THE STANLEY WORKS (subject to the ability of
directors of such Borrower to hold nominee shares in the capital
of the Borrower), or
(viii) more than 15% of the revenues of the Borrower are derived
from any business wholly and totally unrelated to any of the
businesses, products, distribution channels or services of
Borrower at the date hereof, or
(ix) at any time it is or becomes unlawful for the Borrower to
perform or comply with any of its obligations hereunder or any of
the obligations of the Borrower are not or cease to be legal,
valid and binding.
The Bank may then, by written notification to the Borrower and THE
STANLEY WORKS, declare immediately due all amounts to be paid with
respect to the present contract, in principal, interest, fees,
accessories, and the Bank's commitment resulting from the present
contract will cease immediately.
Notwithstanding the above provisions, the Borrower will indemnify
the Bank for any loss or expense such as but not limited to,
refinancing, legal or other expenses, incurred by the Bank as a
result of the early termination of the Credit, by reasons of the
occurrence of an Event of Default.
Part VI- TAX - RIGHT OF SET-OFF - BANK'S EXPENSES
All payments in principal, interest, fees and accessories in favor
of the Bank will be made without set-off with all the amounts that
may be due by the Bank to the Borrower, and net of all taxes of
any kind, present or future, levied by any fiscal authorities. In
the event where a legal text or regulation would require the
Borrower to deduct from the amounts due to the Bank taxes of any
sort, the Borrower agrees to compensate for the shortfall by way
of additional interest, so that after deduction of all taxes
including those on the additional interest, the Bank will receive
all the amounts due to it under this contract.
More generally, the Borrower agrees to indemnify the Bank, by way
of additional interest, for any increase in expenses resulting
from a change in banking regulations occurring after the signature
of this contract; particularly, if the amount of non-interest
bearing reserves required for deposit at the Banque de France are
<PAGE>
increased, the Borrower undertakes to negotiate in good faith a
new interest rate, which takes into account the aforementioned
increased expenses. In the event that no agreement on the
modification of the interest rate can be reached between the
Borrower and the Bank, the Borrower may terminate the present
Agreement at the maturity date of the outstanding Note without
penalty, but with the payment of the revised interest rate, as
notified in writing to the Borrower by the Bank.
Part VII- MISCELLANEOUS
The fact that the Bank does not exercise action or exercises it
with delay against the Borrower, in no way constitutes a waiver of
the right to this action nor does it result in the novation of the
credit defined in the present contract.
The Bank, with no prejudice to all its other rights, will have the
right, at any time, without prior notice, to set off all the
amounts due by the Borrower as a result of this contract, with all
the amounts the Bank holds in its books on behalf of the Borrower,
in any currency and in any location, for any specific purpose,
even if the amounts are not yet due. In the event these amounts
are in different currencies, the Bank may make all foreign
exchange transactions deemed necessary.
Part VIII EXPENSES
The Borrower agrees to reimburse the Bank at its first request for
all the expenses which may result from the Bank taking action to
defend its rights as described in the present contract, including
expenses and fees of consulting and lawyers.
Part IX- ASSIGNMENTS AND TRANSFERS
The Borrower may not transfer in any way any of the rights or
obligations resulting from the present contract without prior
written approval from the Bank. The Bank may at its sole
discretion and without the prior consent of the Borrower, assign
part or all of the present contract and resulting rights,
benefits, outstanding debt or obligations to any entity it may
elect.
<PAGE>
Part X- LAW AND JURISDICTION <PAGE>
This contract is governed by French law. Any dispute arising over
or resulting from the present agreement will be within the
jurisdiction of the Tribunal de Commerce de Paris, knowing that
the Bank may also pursue any action against the Borrower in front
of any other competent court.
The Borrower and the Bank irrevocably agree that the courts of the
State of New York and the courts of the United States of America
in New York may have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
Part XI- DISCLOSURE OF INFORMATION
(i) The Bank may disclose to any actual or potential assignee or
Transferee or to any person who may otherwise enter into
contractual relations with the Bank in relation to this Agreement
such information supplied by the Borrower or THE STANLEY WORKS
pursuant to the present Agreement, and any other information as
the Bank shall consider appropriate. Any information supplied by
the Borrower or THE STANLEY WORKS hereunder shall only be
disclosed upon the Bank obtaining a confidentiality undertaking,
from the person to whom the information is to be disclosed.
(ii) Without prejudice to the above clause, the Bank will treat as
confidential information received from the Borrower or THE STANLEY
WORKS in relation to the Credit save for that which has been
clearly identified by the Borrower as not being confidential, and
save to the extent that such information may be publicly available
or which the bank may be obliged to disclose by law.
Part XII- NOTICES
(i) Each communication to be made hereunder shall be made in
writing but, unless otherwise stated, maybe made by telex or
letter.
(ii) Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall (unless that
other person has by fifteen days' written notice to the other
party specified another address) be made or delivered to that
other person at the address identified on the first page (or in
the case of a transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) and, in the case of the
Borrower, with a copy to THE STANLEY WORKS at 1000 Stanley Drive,
<PAGE>
New Britain, Connecticut 06053, Attn. Craig A. Douglas, and shall
be deemed to be have been made or delivered when dispatched (in
the case of any communication made by telex) when left at the
address or (in the case of any communication made by letter) ten
days after being deposited in the post postage prepaid in an
envelope addressed to it at that address provided that any
communication or document to be made or delivered to the Bank
shall be effective only when received by the Bank and then only if
the same is expressly marked for the attention of the department
or officer identified with the Bank's signature below (or such
other department or officer as the Bank shall from time to time
specify for this purpose).
(iii) Each communication or document made or delivered by one
party to another pursuant to this Agreement shall be in the
English language or accompanied by a translation thereof in
English certified (by an officer of the person making or
delivering the same) as being a true and accurate translation
thereof.
Done in Paris in two copies
on 25/08/1993
/s/ Michael M. Roberts
________________________ Michael M. Roberts
Vice President
CITIBANK N.A.
/s/ Jean Francois
________________________ Mr. Jean Francois
STANLEY BOSTITCH S.A.
("the Borrower") <PAGE>
<PAGE>
GUARANTEE
The undersigned, THE STANLEY WORKS (hereafter the
"Guarantor"), whose Head-Office is located at 1000 Stanley Drive,
New Britain, CT represented by Mr. Richard Huck, Vice President,
Finance, duly authorized to deliver this guarantee, hereby refers
to:
- the Credit Agreement in an amount of NLG 15,000,000 (fifteen
million of Dutch Guilders) signed on August 26, 1993 between
S.I.C.F.O. Stanley S.A. and Citibank N.A. Paris (hereafter called
"Citibank");
- the Credit Agreement in an amount of NLG 7,500,000 (seven
million five hundred thousand of Dutch Guilders) signed on August
26, 1993 between Societe de Fabrications Bostitch S.A. and
Citibank N.A. Paris;
-the Credit Agreement in an amount of NLG 7,500,000 (seven million
five hundred thousand of Dutch Guilders) signed on August 26, 1993
between Stanley Bostitch S.A. and Citibank N.A. Paris;
(S.I.C.F.O. Stanley S.A., Societe de Fabrications Bostitch S.A.
and Stanley Bostitch S.A. being hereafter called individually the
"Borrower" and collectively the "Borrowers," and the Credit
Agreements listed hereabove being hereafter called individually
the "Agreement" and collectively the "Agreements").
The Guarantor hereby declares being perfectly aware of all
the terms and conditions of the Agreements.
The Guarantor hereby unconditionally and irrevocably without
being able to demur, undertakes to pay Citibank at its first
demand, within two business days following this demand, and in
Dutch Guilders, all amounts up to NLG 30,000,000 (thirty million
of Dutch Guilders) in principal, plus interest, fees and
accessories, payable by the Borrowers under the Agreements.
This guarantee being unconditional, will then remain in full
force in any circumstances whatsoever including if any Borrower
cannot fulfill its obligations under the respective Agreement
because of laws or regulatory measures or any other measures taken
by the authorities of such Borrower's country.
This guarantee being unconditional will remain valid in case
of extension of maturity or amendment, even tacit or any of the
Agreements.
<PAGE>
This guarantee will remain in full force until the effective
and complete payment of any sum due to Citibank by the Borrowers
under the Agreements.
Any delay between the due date of the amounts owing by the
Guarantor by virtue of this guarantee and their effective payment
date, without being necessary to summon the Guarantor, will bear
interest at a rate per annum equal to the offered rate of Citibank
N.A. London on the London Interbank Market for three month Dutch
Guilder deposits plus 1.50%.
The Guarantor will indemnify Citibank at its demand and on
the view of bills, of any fees including attorney fees that it
incurs to obtain the execution of the Guarantor's obligations
under this guarantee.
Any amount due by the Guarantor under this guarantee will be
free and clear of any taxes, imposts, levies of any nature,
whether present or future deducted or withheld by or on behalf of
any fiscal authorities.
This guarantee will be governed by French law. Any dispute
arising out of or in connection with this guarantee will be within
the exclusive jurisdiction of the Tribunal de Commerce de Paris.
New Britain, CT on August 26, 1993
THE STANLEY WORKS
BY: /s/ Richard Huck
Name: Richard Huck
Title: Vice President,
Finance <PAGE>
<PAGE>
EXHIBIT 4(x)
CREDIT AGREEMENT
Between
S.I.C.F.O. Stanley S.A., a limited liability company with a
capital of FRF 56,938,000, having its registered office in B.P.
31, Zornhoff 67102 Saverne, RCS Saverne B, represented by Mr.
William Moore, duly entitled to this effect),
Hereafter called the "Borrower",
And
The branch of Citibank N.A., a corporation based on American law,
located at Citicenter, 19 Le Parvis, La Defense 7, 92800 PUTEAUX,
represented by Michael M. Roberts, duly entitled to this effect,
Hereafter called the "Bank",
IT IS NOW AGREED THAT
<PAGE>
Part I- THE FACILITY
1.1. The Facility (the "Credit Line")
In accordance with the terms and conditions hereafter, the Bank
will make available to the Borrower a credit line ("the Credit")
in the sum of DFL 15,000,000 (fifteen million Dutch Guilders),
from 30/08/1993 (hereafter called the "Availability Date") to
March 22, 1996 (hereafter called the "Repayment Date"). The
Borrower shall draw on the Credit at one and only one time from
the Availability date.
The Credit, without prejudice to the provisions of Part II
hereafter, shall be automatically reimbursed by the payment of the
promissory note created in accordance with article 3.1., whose
maturity date shall not be later than the Repayment Date .
1.2 Terms
Terms used in this Agreement and not otherwise defined will have
the same definition as those defined in the Syndicated Loan
Agreement dated March 22nd, 1991 (hereafter the "Syndicated Loan
Agreement").
1.3. Purpose
The Credit will be applied, based on the Borrower's statement, to
general corporate purposes, without the Bank being obliged to
verify the stated application.
<PAGE>
Part II- REPAYMENT & PREPAYMENT
2.1. Repayment
The repayment of the Drawdown (as defined in article 3.1) by the
Borrower under this agreement will be made in Dutch Guilders at
the latest on the Repayment Date.
2.2. Prepayment
The Borrower may, by giving the Bank not less than thirty day
prior notice to that effect, prepay the whole or any part (being
an amount or integral multiple of DFL 2,500,000) of the Credit
made to such Borrower, at the end of the Interest Period (as
defined in article 4.1) in which the notice of prepayment is
given; such prepayment being made without prejudice to the
Borrower's obligation pursuant to article 4.5., if any. Any
repayment so made shall satisfy pro tanto the Borrower's
obligations under article 1.1.
Any notice of prepayment given by the Borrower pursuant to the
present article shall be irrevocable, shall specify the date upon
which such prepayment is to take effect and the amount of such
prepayment and shall oblige such Borrower to make such prepayment
on such date. After such a notice is sent to the Bank by the
Borrower, the latter shall not be entitled to reborrow any amount
repaid or to be repaid.
<PAGE>
Part III- AVAILABILITY OF THE CREDIT LINE
3.1. Availability
The line of credit may be drawn at any time from the Availability
Date, in one drawdown, subject to prior notice given to the Bank
by letter or by telex and received by the Bank two (2) business
days at least before the date of the drawdown. A "business day" is
each day during which banks are open all day in Paris.
This prior notice shall oblige the Borrower to borrow the whole
amount of the Credit on the date therein stated (hereafter called
the "Drawdown") under the terms and conditions contained herein.
The Drawdown will be represented by a promissory note issued to
the order of the Bank, in the form of Annex A hereto attached
(hereafter called the "Note"). The date of issue of the Note will
only be a business day; furthermore, if the maturity date of the
Note falls on a non-business day, this maturity date will be
extended to the first following business day. The Maturity Date of
the Note shall not be later than the Repayment Date.
The issuance of the Note will not be considered as a novation of
the obligation resulting from the present contract, but will
represent the monetary obligation of the Borrower arising from the
Drawdown.
3.2. Conditions Precedent
The Drawdown will be conditioned upon:
i) the signature of a first demand guarantee by THE STANLEY WORKS,
covering the obligations of the Borrower under this Agreement;
ii) the prior remittance to the Bank of certified copies of power
of attorney, or board resolutions authorizing the conclusion of
the present contract;
iii) prior remittance to the Bank of all justifications relative
to the authorizations or the accomplishment of all formalities
that may eventually be imposed by French or foreign regulations;
iv) the absence of any Event of Default mentioned in article 5.3.
hereunder,
<PAGE>
v) the accuracy of representations and warranties made by the
Borrower in article 5.1.,
vi) the absence of any material adverse change in the financial
situation of the Borrower since December 31st, 1992 (date of the
most recent audited Financial Statements), which would, in the
reasonable judgment of the Bank, prevent it from meeting all
obligations under this present agreement.
vii) the receipt of the Note provided for above.
<PAGE>
Part IV- INTEREST
4.1. Normal Interest Rate
The Drawdown of the present Credit line will bear interest at an
annual rate equal to the offered rate of Citibank N.A. London, one
business day before the first day of the Interest Period as
hereafter defined, on the London Interbank Market for Dutch
Guilder deposits for the period for which such rate is to be
determined plus a margin of 0.50 % per annum.
The period starting on the date of the Drawdown and ending on the
Repayment Date shall be divided into successive periods each of
which (other than the first) shall start on the last day of the
preceding period (hereafter called "Interest Period").
The first Interest Period shall start on the Drawdown date and end
on September 29, 1993. The duration of this first Interest period,
which is only for the purposes of calculating accrued interest,
shall be one month. The duration of each subsequent Interest
Period shall be determined as referred to the duration of the
interest period of the Advances under the Syndicated Loan
Agreement, provided that:
i) if the Borrower fails to give notice to the Bank regarding
its choice in relation to the Interest Period, the duration of
that Interest Period whether under this Agreement or under the
Syndicated Loan Agreement shall, subject to ii) below, be three
months;
ii) any Interest Period which would otherwise end during the month
preceding, or extend beyond, the Repayment Date shall be of such
duration that it shall end on the Repayment Date.
The duration of an Interest Period by the Borrower shall be
irrevocably binding for the Borrower for that Interest Period.
4.2. Exceptional Interest Rate
In case the Bank considers that circumstances affecting the
monetary market prevent the determination of an applicable
interest rate, the Bank will notify the Borrower at least one
business day before the end of the current Interest Period.
<PAGE>
If, within 30 calendar days following this notification, the
Borrower and the Bank have not determined a mutually satisfactory
interest rate for the concerned Interest Period, the Borrower will
be required to repay to the Bank, within a maximum delay of 10
calendar days following the Bank's request by telex or letter, the
amount of the outstanding Note, as well as all outstanding
interest up to the date of its repayment, at an interest rate
equal to the effective cost incurred by the Bank to keep the
Credit available to the Borrower, plus a margin of 0.50%. This
cost will be determined by the Bank and notified to the Borrower.
4.3. Accrued Interest
On the last day of each Interest Period the Borrower shall pay
accrued interest. The accrued interest due will be calculated on
the basis of a 360 day-year, and will be debited by the Bank in
the Borrower's account with the Bank.
4.4 "Effective Global Rate" (Taux Effectif Global)
The "effective global rate" applicable to the present credit would
be 6.90% (6.40% + 0.50%) on the date of signature of this
Agreement.
4.5. Late Interest
All amounts of principal, interest, fees, accessories, due but
unpaid, will automatically bear interest, in compliance with the
law, at a rate which will be equal to the interest rate calculated
in articles 4.1. or 4.2. above, depending on the case, but with
the substitution of a margin of 1.50 % to that determined in those
paragraphs, and as long as the Borrower is in default, without
prejudice to all other rights the Bank may be entitled to because
of the damages resulting from the default of the Borrower,
including the refinancing costs.
The payment of late interest will be made at the Bank's first
request, who may debit it immediately from the Borrower's account
with the Bank. <PAGE>
<PAGE>
Part V REPRESENTATIONS, COVENANTS & EVENTS OF DEFAULT
5.1. Representations and Warranties
The Borrower represents and warrants: (i) that its obligation to
pay the principal, the interest, the commitment fee and
accessories under the present agreement constitutes a direct,
unconditional and general obligation which ranks pari passu with
the claims of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
(ii) that it will notify the Bank, by remitting to it all its
documents relating to any event affecting its legal existence and
its legal capacity, and all statutory modifications and changes in
persons mandated to represent it; it will also notify the Bank of
any change in the capital ownership, which would result in the
Borrower not being directly or indirectly wholly-owned by THE
STANLEY WORKS;
(iii) that its balance sheet and financials on December 31, 1992
have been established in accordance with current accounting
principles and sincerely and faithfully reflects its assets and
liabilities, and that since January 1, 1993, there has been no
material adverse change in its financial situation;
(iv) that the Borrower is not subject to any kind of legal pursuit
that may seriously affect its ability to meet its financial
obligations under the present Agreement; that it is not, to the
best of its knowledge, threatened by any such procedure.
5.2. Covenants
5.2.1. The Borrower shall:
(i) obtain, comply with the terms of and do all that is necessary
to maintain in full force and effect all authorizations,
approvals, licenses and consents required in or by the laws and
regulations of its jurisdiction of incorporation to enable it
lawfully to enter into and perform its obligations under this
Credit Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of
incorporation of this Credit Agreement;
<PAGE>
(ii) the Borrower shall maintain, in full force and effect,
prudent insurances on and in relation to its business and assets
or self-insure where this is considered appropriate in the opinion
of the Borrower;
(iii) promptly inform the Bank of the occurrence of any event
which is or is likely, in the reasonable opinion of the Borrower,
to become (with the passage of time, the giving of notice, the
making of any determination hereunder or any combination thereof)
an Event of Default and, upon receipt of a written request to that
effect from the Bank, confirm to the Bank that, save as previously
notified to the Bank or as notified in such confirmation, no such
event has occurred;
(iv) ensure that at all times the claims of the Bank against it
under this Credit Agreement rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation or
other similar laws of general application;
(v) that it will deliver to the Bank within 95 days after the end
of each of its fiscal year its balance sheet, income statement and
financial annexes, as well as the auditor's report certifying the
conformity of the accounting documents communicated with
accounting principles generally accepted in France; that these
documents will be completed by a letter confirming that none of
the events provided for in article 5.3 have occurred;
(vi) that upon request of the Bank, the latter will receive
without delay any additional information concerning the financial
situation or the activity of the Borrower, that may be of interest
to the Bank;
(vii) that it will immediately inform the Bank of the occurrence
of any Event of Default provided for in article 5.3;
5.2.2. The Borrower shall not, without the prior consent of the
Bank:
(i) create or permit to subsist any encumbrance over all or any of
its present or future Principal Property (unless the Borrower
secures the Drawdown made equally and ratably with such
encumbrance) other than:
<PAGE>
(a) any existing encumbrance which has been disclosed in
writing to the Bank prior to the date hereof;
(b) encumbrances on property of any corporation existing at
the time such corporation becomes a subsidiary;
(c) encumbrances securing financial indebtedness of one
member of the Group to another (save for such mortgages securing
financial indebtedness of the Borrower to a member of the Group
which is not the Borrower);
(d) any lien arising solely by operation of law in the
ordinary course of business or which is contained in a contract
for the purchase or sale or goods or services entered into in the
ordinary course of business;
(e) encumbrances on any property existing at the time of
acquisition but only if the amount outstanding and secured thereby
does not exceed the lesser of the fair market value of or the
purchase price of the property as purchased;
(f) any encumbrance securing the purchase price of revenues
or assets purchased after the date hereof or the cost of repairing
or altering, constructing, developing or substantially improving
all or any part of such revenues or assets provided that such
encumbrance attaches only to such revenues or assets and the
financial indebtedness thereby secured does not exceed the lesser
of the fair market value or the purchase price of the revenues or
assets as purchased;
(g) any other encumbrances securing financial indebtedness,
which in aggregate do not exceed 10% of Consolidated Net Tangible
Assets; and
(h) any extension, renewal or replacement of any of the
encumbrances referred to above provided that the financial
indebtedness secured by any such extension, renewal or replacement
does not exceed the principal amount of the financial indebtedness
originally secured thereby plus any fee incurred in connection
with such transaction.
<PAGE>
(ii) make any loans, grant any credit or give any guarantee or
indemnity to or for the benefit of any person or otherwise
voluntarily assume any liability, whether actual or contingent, in
respect of any obligation of any other person save for:
(a) any loans, credits, guarantees or indemnities which
relate directly or indirectly to the carrying on of the business
of the Borrower; and
(b) any loans, credits, guarantees and indemnities made to or
for the benefit of the Borrower; and
(iii) except for sales, transfers or other disposals of stock in
trade, sell, lease, transfer or otherwise dispose of, by one or
more transactions or series of transactions (whether related or
not and whether to another member of the Group or not), the whole
or any part of its revenues or its assets other than sales,
leases, transfers or other disposals in the ordinary course of
business or on arms' length terms or which, in any financial year,
do not exceed 5% of Consolidated Net Tangible Assets as determined
by the most recent financial statements delivered pursuant to
article 5.1.(ii) provided that the proceeds thereof are applied
only in or towards the satisfaction of any financial indebtedness
and/or to the general working capital requirements of the Group
except that up to fifty per cent of the proceeds thereof may be
applied in or towards the repurchasing of any of THE STANLEY
WORKS's common stock or the payment of dividends and distributions
thereon, except that not more than 25% (twenty five percent) of
such proceeds may be applied in or towards the payment of such
dividends and distributions. Furthermore, for the purpose of the
calculation of Consolidated Net Tangible Assets, any proceeds from
the sale of any Taylor Rental stores owned directly or indirectly
by THE STANLEY WORKS will not be taken into account.
5.3. Events of Default
If any of the following events, in addition to those provided for
by law, occurs:
(i) the Borrower does not pay within three business days of
maturity all amounts, in principal, interest, fees, ancillary
expenses, due by virtue of the present contract, or
<PAGE>
(ii) the Borrower does not comply with any other obligation
resulting from this contract, and does not remedy to it within 30
business days after the summons from the Bank to execute the
obligation, or
(iii) the Borrower ceases its activity, defaults, declares
bankruptcy, or a resolution is passed or a petition is presented
or an order is made for the "liquidation amiable", "reglement
judiciaire", "reglement amiable", "redressement judiciaire" or
"liquidation judiciaire" of the Borrower, or a petition is
presented or an order is made for the appointment of an
"administrateur ad hoc" or "administrateur judiciaire" to
administer all or part of the assets of the Borrower, or an event
analogous to any of the foregoing occurs, or
(iv) there shall occur any material adverse change in the
business, assets or conditions of the Group taken as a whole from
that existing at the date hereof which, in the reasonable opinion
of the Bank, is likely to have a material adverse effect on the
ability of the Borrower to comply with any of its obligations
hereunder;
(v) any financial indebtedness of the Borrower, in an amount in
excess of US $ 5,000,000 is not paid when due, or any such
financial indebtedness of the Borrower is declared to be or
otherwise becomes due and payable by reason of default or by
reason of the occurrence of an event of default whether as a
result of culpability or not prior to its specified maturity or
any other creditor or creditors of the Borrower are entitled (and
continue to be so entitled) to declare any such financial
indebtedness of the Borrower due and payable prior to its
specified maturity by reason of the failure of the Borrower to
either (i) make any payment in respect of any such financial
indebtedness upon its due date, (ii) comply with any financial
covenant or (iii) comply with any other financial test in respect
of such financial indebtedness, or
(vi) any representation or statement made by the Borrower in this
Agreement or in any notice or other document certificate or
statement delivered by it pursuant hereto or in connection
herewith is, in the reasonable opinion of the Bank, or proves to
have been incorrect or misleading in any material respect when
made; or
<PAGE>
(vii) the Borrower ceases to be a direct or indirect, wholly-owned
subsidiary of THE STANLEY WORKS (subject to the ability of
directors of such Borrower to hold nominee shares in the capital
of the Borrower), or
(viii) more than 15% of the revenues of the Borrower are derived
from any business wholly and totally unrelated to any of the
businesses, products, distribution channels or services of
Borrower at the date hereof, or
(ix) at any time it is or becomes unlawful for the Borrower to
perform or comply with any of its obligations hereunder or any of
the obligations of the Borrower are not or cease to be legal,
valid and binding.
The Bank may then, by written notification to the Borrower and THE
STANLEY WORKS, declare immediately due all amounts to be paid with
respect to the present contract, in principal, interest, fees,
accessories, and the Bank's commitment resulting from the present
contract will cease immediately.
Notwithstanding the above provisions, the Borrower will indemnify
the Bank for any loss or expense such as but not limited to,
refinancing, legal or other expenses, incurred by the Bank as a
result of the early termination of the Credit, by reasons of the
occurrence of an Event of Default.
Part VI- TAX - RIGHT OF SET-OFF - BANK'S EXPENSES
All payments in principal, interest, fees and accessories in favor
of the Bank will be made without set-off with all the amounts that
may be due by the Bank to the Borrower, and net of all taxes of
any kind, present or future, levied by any fiscal authorities. In
the event where a legal text or regulation would require the
Borrower to deduct from the amounts due to the Bank taxes of any
sort, the Borrower agrees to compensate for the shortfall by way
of additional interest, so that after deduction of all taxes
including those on the additional interest, the Bank will receive
all the amounts due to it under this contract.
More generally, the Borrower agrees to indemnify the Bank, by way
of additional interest, for any increase in expenses resulting
from a change in banking regulations occurring after the signature
of this contract; particularly, if the amount of non-interest
bearing reserves required for deposit at the Banque de France are
<PAGE>
increased, the Borrower undertakes to negotiate in good faith a
new interest rate, which takes into account the aforementioned
increased expenses. In the event that no agreement on the
modification of the interest rate can be reached between the
Borrower and the Bank, the Borrower may terminate the present
Agreement at the maturity date of the outstanding Note without
penalty, but with the payment of the revised interest rate, as
notified in writing to the Borrower by the Bank.
Part VII- MISCELLANEOUS
The fact that the Bank does not exercise action or exercises it
with delay against the Borrower, in no way constitutes a waiver of
the right to this action nor does it result in the novation of the
credit defined in the present contract.
The Bank, with no prejudice to all its other rights, will have the
right, at any time, without prior notice, to set off all the
amounts due by the Borrower as a result of this contract, with all
the amounts the Bank holds in its books on behalf of the Borrower,
in any currency and in any location, for any specific purpose,
even if the amounts are not yet due. In the event these amounts
are in different currencies, the Bank may make all foreign
exchange transactions deemed necessary.
Part VIII EXPENSES
The Borrower agrees to reimburse the Bank at its first request for
all the expenses which may result from the Bank taking action to
defend its rights as described in the present contract, including
expenses and fees of consulting and lawyers.
Part IX- ASSIGNMENTS AND TRANSFERS
The Borrower may not transfer in any way any of the rights or
obligations resulting from the present contract without prior
written approval from the Bank. The Bank may at its sole
discretion and without the prior consent of the Borrower, assign
part or all of the present contract and resulting rights,
benefits, outstanding debt or obligations to any entity it may
elect.
<PAGE>
Part X- LAW AND JURISDICTION <PAGE>
This contract is governed by French law. Any dispute arising over
or resulting from the present agreement will be within the
jurisdiction of the Tribunal de Commerce de Paris, knowing that
the Bank may also pursue any action against the Borrower in front
of any other competent court.
The Borrower and the Bank irrevocably agree that the courts of the
State of New York and the courts of the United States of America
in New York may have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
Part XI- DISCLOSURE OF INFORMATION
(i) The Bank may disclose to any actual or potential assignee or
Transferee or to any person who may otherwise enter into
contractual relations with the Bank in relation to this Agreement
such information supplied by the Borrower or THE STANLEY WORKS
pursuant to the present Agreement, and any other information as
the Bank shall consider appropriate. Any information supplied by
the Borrower or THE STANLEY WORKS hereunder shall only be
disclosed upon the Bank obtaining a confidentiality undertaking,
from the person to whom the information is to be disclosed.
(ii) Without prejudice to the above clause, the Bank will treat as
confidential information received from the Borrower or THE STANLEY
WORKS in relation to the Credit save for that which has been
clearly identified by the Borrower as not being confidential, and
save to the extent that such information may be publicly available
or which the bank may be obliged to disclose by law.
Part XII- NOTICES
(i) Each communication to be made hereunder shall be made in
writing but, unless otherwise stated, maybe made by telex or
letter.
(ii) Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall (unless that
other person has by fifteen days' written notice to the other
party specified another address) be made or delivered to that
other person at the address identified on the first page (or in
the case of a transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) and, in the case of the
Borrower, with a copy to THE STANLEY WORKS at 1000 Stanley Drive,
<PAGE>
New Britain, Connecticut 06053, Attn. Craig A. Douglas, and shall
be deemed to be have been made or delivered when dispatched (in
the case of any communication made by telex) when left at the
address or (in the case of any communication made by letter) ten
days after being deposited in the post postage prepaid in an
envelope addressed to it at that address provided that any
communication or document to be made or delivered to the Bank
shall be effective only when received by the Bank and then only if
the same is expressly marked for the attention of the department
or officer identified with the Bank's signature below (or such
other department or officer as the Bank shall from time to time
specify for this purpose).
(iii) Each communication or document made or delivered by one
party to another pursuant to this Agreement shall be in the
English language or accompanied by a translation thereof in
English certified (by an officer of the person making or
delivering the same) as being a true and accurate translation
thereof.
Done in Paris in two copies
on 25/08/1993
/s/ Michael M. Roberts
________________________ Michael M. Roberts
Vice President
CITIBANK N.A.
/s/ William Moore
________________________ Mr William Moore
S.I.C.F.O. STANLEY S.A.
(the "Borrower") <PAGE>
<PAGE>
GUARANTEE
The undersigned, THE STANLEY WORKS (hereafter the
"Guarantor"), whose Head-Office is located at 1000 Stanley Drive,
New Britain, CT represented by Mr. Richard Huck, Vice President,
Finance, duly authorized to deliver this guarantee, hereby refers
to:
- the Credit Agreement in an amount of NLG 15,000,000 (fifteen
million of Dutch Guilders) signed on August 26, 1993 between
S.I.C.F.O. Stanley S.A. and Citibank N.A. Paris (hereafter called
"Citibank");
- the Credit Agreement in an amount of NLG 7,500,000 (seven
million five hundred thousand of Dutch Guilders) signed on August
26, 1993 between Societe de Fabrications Bostitch S.A. and
Citibank N.A. Paris;
-the Credit Agreement in an amount of NLG 7,500,000 (seven million
five hundred thousand of Dutch Guilders) signed on August 26, 1993
between Stanley Bostitch S.A. and Citibank N.A. Paris;
(S.I.C.F.O. Stanley S.A., Societe de Fabrications Bostitch S.A.
and Stanley Bostitch S.A. being hereafter called individually the
"Borrower" and collectively the "Borrowers," and the Credit
Agreements listed hereabove being hereafter called individually
the "Agreement" and collectively the "Agreements").
The Guarantor hereby declares being perfectly aware of all
the terms and conditions of the Agreements.
The Guarantor hereby unconditionally and irrevocably without
being able to demur, undertakes to pay Citibank at its first
demand, within two business days following this demand, and in
Dutch Guilders, all amounts up to NLG 30,000,000 (thirty million
of Dutch Guilders) in principal, plus interest, fees and
accessories, payable by the Borrowers under the Agreements.
This guarantee being unconditional, will then remain in full
force in any circumstances whatsoever including if any Borrower
cannot fulfill its obligations under the respective Agreement
because of laws or regulatory measures or any other measures taken
by the authorities of such Borrower's country.
This guarantee being unconditional will remain valid in case
of extension of maturity or amendment, even tacit or any of the
Agreements.
<PAGE>
This guarantee will remain in full force until the effective
and complete payment of any sum due to Citibank by the Borrowers
under the Agreements.
Any delay between the due date of the amounts owing by the
Guarantor by virtue of this guarantee and their effective payment
date, without being necessary to summon the Guarantor, will bear
interest at a rate per annum equal to the offered rate of Citibank
N.A. London on the London Interbank Market for three month Dutch
Guilder deposits plus 1.50%.
The Guarantor will indemnify Citibank at its demand and on
the view of bills, of any fees including attorney fees that it
incurs to obtain the execution of the Guarantor's obligations
under this guarantee.
Any amount due by the Guarantor under this guarantee will be
free and clear of any taxes, imposts, levies of any nature,
whether present or future deducted or withheld by or on behalf of
any fiscal authorities.
This guarantee will be governed by French law. Any dispute
arising out of or in connection with this guarantee will be within
the exclusive jurisdiction of the Tribunal de Commerce de Paris.
New Britain, CT on August 26, 1993
THE STANLEY WORKS
BY: /s/ Richard Huck
Name: Richard Huck
Title: Vice President,
Finance<PAGE>
<PAGE>
RESTATED SUPPLEMENTAL PENSION PLAN FOR SALARIED EMPLOYEES
OF THE STANLEY WORKS
WHEREAS, The Stanley Works maintains for its employees who
are employed in salaried positions certain pension, stock bonus
and profit sharing plans designed to meet the requirements of
Section 401(a) of the Internal Revenue Code of 1986; and
WHEREAS, the benefits and contributions that may be provided
under such plans are limited by Sections 401 and 415 of the
Internal Revenue Code and other provisions thereof; and
WHEREAS, the Company maintains the Supplemental Pension Plan
for Salaried Employees of The Stanley Works to provide for certain
employees, in addition to other benefits, benefits that may not be
provided under such plans; and
WHEREAS, the Company now desires to amend and restate such
Supplemental Plan;
NOW, THEREFORE, the Company has adopted the following
Amendment to and Restatement of the Supplemental Plan for Salaried
Employees of the Stanley Works:
A R T I C L E 1
Name and Effective Date
Section 1.1 This Plan shall be known as the "Restated
Supplemental Pension Plan for Salaried Employees of The Stanley
Works".
Section 1.2 This Amendment and Restatement shall be
effective as of January 1, 1993, with respect to salaried
employees of the Company employed on or after such date.
A R T I C L E 2
Definitions
"Affiliate" means any affiliate or subsidiary of The Stanley
Works.
<PAGE>
"Applicable Limitation" means each of:
(i) the limitation on elective contributions under
Sections 401(a)(30) and 402(g)(1) of the Code;
(ii) the limitation set forth in Section 401(a)(17) of the
Code on the compensation that may be taken into account under a
plan;
(iii) the limitation on contributions resulting from the
application of Section 401(k) or (m) of the Code;
(iv) the omission from the definition of "Compensation" set
forth in Article II of the Pension Plan and Article II of the
Retirement Plan of amounts deferred pursuant to Section 3 of the
Deferred Compensation Plan for Participants in Stanley's Manage-
ment Incentive Plans; and
(v) the limitation on contributions or benefits, as the
case may be, set forth in the Savings Plan, the Retirement Plan or
the Pension Plan as required by Section 415 of the Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation and Organization Committee
of The Stanley Works.
"Company" means The Stanley Works and any Affiliate that has
adopted the Qualified Plans.
"Eligible Employee" means a Highly Compensated Employee who
is a participant in the Management Incentive Plan of The Stanley
Works.
"Highly Compensated Employee" means a salaried employee of
the Company who during the applicable Plan Year is a highly
compensated employee, as defined in Section 414(q) of the Code.
For purposes of the preceding sentence, the "applicable Plan Year"
means, in the case of deferrals under Section 4.1, the year in
which an election is made under Section 4.7 and, in the case of a
contribution under Section 4.3, the year for which such
contribution is made.
"Pension Plan" means the Pension Plan for Salaried Employees
of The Stanley Works.
"Plan Year" means the applicable plan year of each of the
Qualified Plans.
"Qualified Plan" means each of the Savings Plan, the Retire-
ment Plan and the Pension Plan.
<PAGE>
"Retirement Plan" means the Retirement Plan for Salaried
Employees of The Stanley Works.
"Savings Plan" means the Savings Plan for Salaried Employees
of The Stanley Works.
"Supplemental Company Contribution Account" means the account
established under the Plan to which amounts are credited under
Section 4.2.
"Supplemental Employee Contribution Account" means the
account established under the Plan to which amounts are credited
under Section 4.1.
"Supplemental Pension Account" means the account established
under the Plan to which amounts are credited under Section 4.3.
"Unrestricted Qualified Plan Benefit" means the sum of (i)
the Participant's Pension Plan Benefit and the Supplemental
Pension Account and (ii) the actuarial equivalent, determined as
of the date on which distribution commences under the Pension
Plan, of the benefit, if any, that would be payable to the
Participant under the Retirement Plan if no Applicable Limitation
applied.
A R T I C L E 3
Participation in the Plan
Section 3.1 Each Eligible Employee of the Company shall
become a participant in the Plan on the date as of which an amount
is first credited to an account established under Article 4 in the
name of such Eligible Employee. Subject to Section 4.6, an
Eligible Employee shall remain a participant until all amounts to
which he is entitled hereunder have been distributed.
Section 3.2 Participation in the Plan shall not give a
participant any right to remain in the service of the Company or
of an Affiliate, and a participant shall remain subject to
discharge to the same extent as if the Plan had not been adopted.
A R T I C L E 4
Crediting of Accounts; Election to Defer
Section 4.1 (a) If for a Plan Year an Eligible Employee's
contributions under Section 4.2 of the Savings Plan are limited by
<PAGE>
reason of the dollar limitation described in paragraph (i) of the
definition herein of Applicable Limitation and such Eligible
Employee has elected, in the manner described in Section 4.7, to
defer a portion of his compensation from the Company (not to
exceed, when added to contributions made under Section 4.2 of the
Savings Plan, 12% of such compensation), there shall be credited
to a Supplemental Employee Contribution Account an amount equal to
the excess of the portion of compensation so elected over such
dollar limitation.
(b) If for a Plan Year an Eligible Employee's contributions
under Section 4.2 of the Savings Plan are limited by reason of an
Applicable Limitation, other than as described in subsection (a),
and such Eligible Employee has elected, in the manner described in
Section 4.7, to defer a portion of his compensation from the
Company, there shall be credited to a Supplemental Employee
Contribution Account an amount equal to the excess (i) over (ii)
where:
(i) is the amount that would have been contributed
under Section 4.2 of the Savings Plan in the
absence of the Applicable Limitation, and
(ii) is the amount actually contributed under Section
4.2 of the Savings Plan.
Section 4.2 (a) If for a Plan Year an amount is credited
to a Supplemental Employee Contribution Account under Section 4.1,
there shall be credited to a Supplemental Company Contribution
Account an amount equal to the excess of (i) over (ii) where:
(i) is the amount that would have been contributed by
the Company under Section 5.2 of the Savings Plan
with respect to the sum of the elective contribu-
tions made to the Savings Plan and the amount
credited under Section 4.1 if all of such amounts
had been contributed to the Savings Plan, and
(ii) is the amount actually contributed by the Company
under Section 5.2 of the Savings Plan.
(b) If the amount that may be contributed by the Company
under Section 5.2 of the Savings Plan is limited by reason of an
Applicable Limitation, otherwise than as described in subsection
(a), there shall be credited to a Supplemental Company Contribu-
tion Account an amount equal to the excess of (i) over (ii) where:
(i) is the amount that would have been contributed by
the Company under Section 5.2 of the Savings Plan
in the absence of the Applicable Limitation, and
<PAGE>
(ii) is the amount actually so contributed by the
Company.
Section 4.3 If the contributions made by the Company on
behalf of an Eligible Employee under Section 4.2 of the Pension
Plan are less than the amount that would have been contributed by
the Company if an Applicable Limitation did not apply, there shall
be credited to a Supplemental Pension Account an amount equal to
the excess of the amount that, in the absence of the Applicable
Limitation, would have been contributed under Section 4.2 of the
Pension Plan over the amount actually so contributed by the
Company.
Section 4.4 If a Participant's Unrestricted Qualified Plan
Benefit exceeds the sum of the amount payable to him under the
Pension Plan and the actuarial equivalent, determined as of the
date on which distribution commences under the Pension Plan, of
the amount payable to him under the Retirement Plan, subject to
Section 5.1, there shall be payable to him under this Plan such
excess.
Section 4.5 (a) A participant's Supplemental Employee
Contribution Account and Supplemental Company Contribution Account
shall be adjusted to reflect the rate of return such accounts
would have earned if they had been invested in accordance with the
provisions of the Savings Plan. Such rate of return shall further
reflect any additional amount that would have been payable under
the Retirement Plan by reason of the rate of return actually
achieved under the Savings Plan.
(b) A participant's Supplemental Pension Account shall be
adjusted to reflect the rate of return such account would have
earned if it had been invested in the trust fund maintained under
the Pension Plan.
(c) For purposes of subsections (a) and (b), the applicable
rate of return shall be calculated from the time when the contri-
butions to the applicable Qualified Plan would have been allocated
to the participant's account thereunder in the absence of the
Applicable Limitation.
Section 4.6 (a) In the event that a participant shall
cease to be an Eligible Employee or the Company, in its sole
discretion, shall determine that a participant may no longer
actively participate in the Plan, any election under Section 4.1
shall be deemed to have been revoked and no election may be made
under such section, and no amounts shall be credited under
Sections 4.2(b) and 4.3.
(b) If a participant described in subsection (a) later
becomes an Eligible Employee or the Company determines that such
<PAGE>
participant may recommence active participation in the Plan, as
the case may be, such participant shall again become an active
participant in the Plan; crediting under Sections 4.2(b) and 4.3
shall recommence; and, upon the filing of an election under
Section 4.7, crediting under Section 4.1 shall recommence.
(c) Any amount credited to an account established under
Article 4 in the name of a participant who was not an Eligible
Employee for the Plan Year with respect to which such amount was
credited shall be distributed in a cash lump sum payment upon the
first to occur of the participant's death, disability or
separation from service with the Company or an Affiliate or the
first day of the calendar year in which the participant attains
age 60. No further amount shall be credited to any account
established in the name of a participant described in this
subsection unless and until such participant becomes an Eligible
Employee. When such a participant becomes an Eligible Employee,
amounts credited to an account established in the name of the
participant after he or she becomes an Eligible Employee shall be
distributed in accordance with Section 6.1 and amounts to which
this subsection applies shall be distributed in accordance with
this subsection.
Section 4.7 An election to defer compensation under
Section 4.1 shall be made, and may be revoked, in such manner as
the Committee may from time to time prescribe. Any such election
shall be effective only as to compensation to be earned after the
date of the election.
A R T I C L E 5
Vesting
Section 5.1 Subject to Section 4.4, a participant shall be
vested in each benefit provided under this Plan in accordance with
the vesting provisions of the Qualified Plan to which such benefit
relates.
A R T I C L E 6
Distributions
Section 6.1 (a) Except as otherwise provided in Section
4.6, amounts credited to a participant's Supplemental Employee
Contribution Account and Supplemental Company Contribution Account
shall be distributed upon a participant's retirement, death,
disability or other separation from service with the Company or an
<PAGE>
Affiliate, or the later date specified in a written election filed
by the participant with the Committee under this subsection.
Except as otherwise permitted by the Committee in its sole
discretion, no election may be filed under this subsection after
the beginning of the one-year period ending on the date on which a
participant retires, dies, becomes disabled or otherwise separates
from service with the Company or an Affiliate. No more than one
election may be filed by a participant under this subsection.
(b) Except as otherwise provided in subsection (c), amounts
payable under Section 4.4 shall be paid on the date on which
distribution commences under the Pension Plan.
Section 6.2 Distributions under the Plan shall be made in
the form of a cash lump sum payment.
Section 6.3 If, at the time of any payment hereunder, the
Committee determines that a participant to whom or on whose behalf
payment is being made is, for any reason, indebted to the Company
or an Affiliate, The Stanley Works shall be entitled to offset
such indebtedness, including any interest accruing thereon,
against the payment otherwise due under the Plan.
Section 6.4 The Stanley Works shall withhold from any
payment due under the Plan the amount of any tax required by law
to be withheld from compensation paid to an employee.
Section 6.5 Any payment of benefits after a participant's
death shall be made to the beneficiary designated by the partici-
pant under the Qualified Plan to which the benefit payable relates
or to the individual entitled to benefits under such plan in the
absence of a beneficiary designation, unless the participant
designates, on a form provided by the Committee, another individ-
ual or entity to receive benefits payable hereunder after his
death.
Section 6.6 No loans shall be permitted under the Plan.
A R T I C L E 7
Miscellaneous
Section 7.1 The Board of Directors of The Stanley Works
may, at any time and from time to time, amend or terminate this
Plan without the consent of any participant or beneficiary.
Section 7.2 The Plan shall be administered by the Com-
mittee. The Committee shall make all determinations as to the
right of any person to a benefit and the amount thereof. Any
<PAGE>
denial by the Committee of a claim by a participant or beneficiary
for benefits under the Plan shall be stated in writing by the
Committee and delivered or mailed to the participant or
beneficiary. Such notice shall set forth the specific reasons for
the denial, written in a manner that may be understood without
legal counsel. The Committee shall afford to any participant or
beneficiary whose claim for benefits has been denied a reasonable
opportunity for a review of the denial of the claim.
Section 7.3 This Plan, including any amendments, shall
constitute the entire agreement between the Company and any
employee, participant or beneficiary regarding the subject matter
of the Plan. There are no covenants, promises, agreements,
conditions or understandings, either oral or written, between the
Company and any such individual relating to the subject matter
hereof, other than those set forth in the Plan. This Plan and any
amendment hereto shall be binding on the parties hereto and their
respective heirs, administrators, trustees, successors and
assigns, and on any beneficiary of a participant.
Section 7.4 If any provision of the Plan shall, to any
extent, be invalid or unenforceable, the remainder of the Plan
shall not be affected thereby, and each other provision of the
Plan shall be valid and enforced to the fullest extent permitted
by law.
Section 7.5 The Company may establish a reserve or make
any investment for purposes of satisfying its obligation to pay
benefits hereunder, and no participant in the Plan shall have any
interest in any such investment or reserve. The right of any
person to receive benefits under the Plan shall be no greater than
the right of any unsecured general creditor of The Stanley Works.
Section 7.6 To the extent permitted by law, the right of
any participant or beneficiary to any benefit hereunder shall not
be subject to attachment or other legal process for the debts of
such participant or beneficiary, and any such benefit shall not be
subject to anticipation, alienation, sale, transfer, assignment or
encumbrance.
Section 7.7 Whenever, in the opinion of the Committee, a
person entitled to receive any benefit hereunder is under a legal
disability or is unable to manage his financial affairs, the
Committee may direct that payment be made to such person or to his
legal representative or to a relative of such person for his
benefit, or the Committee may direct that any payment due here-
under be applied for the benefit of such person in such manner as
the Committee considers advisable. Any payment in accordance with
<PAGE>
this section shall be a complete discharge of any liability for
the making of such payment under the provisions of the Plan.
Dated this 24th day of March, 1994.
THE STANLEY WORKS
By /s/ Barbara Bennett
Title: Vice President
Human Resources
<PAGE>
Exhibit 10(xii)
[Conformed Copy]
******************************************************************
THE STANLEY WORKS
MAC TOOLS, INC.
and
STANLEY-BOSTITCH, INC.
__________________________________________
RECEIVABLES PURCHASE AGREEMENT
dated as of
December 1, 1993
__________________________________________
WACHOVIA BANK OF GEORGIA, NATIONAL ASSOCIATION,
as Agent
******************************************************************
**
R#95355.6 <PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 1
SECTION 1.02. Accounting Terms and Determinations.......... 14
SECTION 1.03. References................................... 14
ARTICLE II
PURCHASE AND SERVICING OF RECEIVABLES
SECTION 2.01. Commitments to Purchase Receivables.......... 15
SECTION 2.02. Receivables Schedules; Method of Offer....... 15
SECTION 2.03. Purchase Price............................... 16
SECTION 2.04. Purchasers' Yield............................ 16
SECTION 2.05. Commitment Reductions . . . . . . . . . . . . 17
SECTION 2.06. Repurchase of Receivables; Corrections for
Errors . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.07. Servicing and Collections . . . . . . . . . . 18
SECTION 2.08. Fees . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.09. Adjustments and Settlement . . . . . . . . . . 22
SECTION 2.10. General Provisions as to Payments . . . . . . 25
SECTION 2.11. Computation of Purchasers' Yield and Facility
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. Financing Statements . . . . . . . . . . . . . 26
SECTION 2.13. Commitment Expiration and Termination . . . . 27
<PAGE>
ARTICLE III
CONDITIONS TO PURCHASES
SECTION 3.01. Conditions to First Purchase . . . . . . . . . 28
SECTION 3.02. Conditions to All Purchases . . . . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power . . . . . . . . 31
SECTION 4.02. Corporate and Governmental Authorization;
Contravention . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . 31
SECTION 4.04. Financial Information . . . . . . . . . . . . 32
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . 32
SECTION 4.06. Requirements of Law . . . . . . . . . . . . . 32
SECTION 4.07. Compliance with ERISA . . . . . . . . . . . . 32
SECTION 4.08. Taxes . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.09. Subsidiaries . . . . . . . . . . . . . . . . . 33
SECTION 4.10. Not an Investment Company . . . . . . . . . . 33
SECTION 4.11. No Default or Repurchase Event . . . . . . . . 33
SECTION 4.12. Full Disclosure . . . . . . . . . . . . . . . 33
SECTION 4.13. Environmental Matters . . . . . . . . . . . . 33
SECTION 4.14. Receivables Not Selected for Creditworthiness 34
SECTION 4.15. Eligible Receivables . . . . . . . . . . . . . 34
[NOT A PART OF THE AGREEMENT]
- xi - R#95355.6<PAGE>
<PAGE>
ARTICLE V
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . 34
(a) Annual Financial Statements
(b) Quarterly Financial Statements
(c) Officer's Certificate
(d) Accountants' Certificate
(e) Receivables Schedule
(f) Notice of Repurchase Event
(g) Notice of Debt Rating Change
(h) SEC Filings
(i) Notice of ERISA Matters
(j) Additional Information
SECTION 5.02. Inspection of Property, Books and Records . . 36
SECTION 5.03. Maintenance of Existence . . . . . . . . . . . 36
SECTION 5.04. Dissolution . . . . . . . . . . . . . . . . . 36
SECTION 5.05. Consolidations, Mergers and Sales of Assets . 37
SECTION 5.06. Ownership of Bostitch and MAC . . . . . . . . 37
SECTION 5.07. Use of Proceeds . . . . . . . . . . . . . . . 37
SECTION 5.08. Compliance with Laws . . . . . . . . . . . . . 38
SECTION 5.09. Payment of Taxes . . . . . . . . . . . . . . . 38
SECTION 5.10. ERISA . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.11. Cash Flow Coverage . . . . . . . . . . . . . . 38
ARTICLE VI
REPURCHASE EVENTS
SECTION 6.01. Repurchase Events . . . . . . . . . . . . . . 39
SECTION 6.02. Purchase or Repurchase Upon a Repurchase
Event . . . . . . . . . . . . . . . . . . . . . . . . . 41
<PAGE>
SECTION 6.03. Billing and Collection of Receivables . . . . 43
SECTION 6.04. Other Rights and Remedies . . . . . . . . . . 43
SECTION 6.05. Security Interest; Offset . . . . . . . . . . 45
SECTION 6.06. Notice of Repurchase Event . . . . . . . . . . 45
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities . . . . . . 45
SECTION 7.02. Reliance by Agent . . . . . . . . . . . . . . 46
SECTION 7.03. Knowledge of Repurchase Events . . . . . . . . 46
SECTION 7.04. Rights of Agent as a Purchaser . . . . . . . . 46
SECTION 7.05. Indemnification . . . . . . . . . . . . . . . 47
SECTION 7.06. Original Purchasers Treated as Owners . . . . 47
SECTION 7.07. Non-Reliance on Agent and Other Purchasers . . 47
SECTION 7.08. Failure to Act . . . . . . . . . . . . . . . . 48
SECTION 7.09. Resignation or Removal of Agent . . . . . . . 48
SECTION 7.10. Transmittal of Documents . . . . . . . . . . . 48
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Euro-Dollar Rate
Inadequate or Unfair . . . . . . . . . . . . . . . . . . 48
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . 49
SECTION 8.03. Increased Cost and Reduced Return . . . . . . 49
SECTION 8.04. Compensation . . . . . . . . . . . . . . . . . 51
<PAGE>
ARTICLE IX
UNCONDITIONAL GUARANTY
SECTION 9.01. Guaranty . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. Absolute, Unconditional Guaranty . . . . . . . 52
SECTION 9.03. Reinstatement . . . . . . . . . . . . . . . . 53
SECTION 9.04. Purchasers' Rights . . . . . . . . . . . . . . 54
SECTION 9.05. Information Concerning Bostitch and MAC . . . 54
SECTION 9.06. Subordination . . . . . . . . . . . . . . . . 54
SECTION 9.07. Subrogation . . . . . . . . . . . . . . . . . 55
SECTION 9.08. Continuing Guarantee . . . . . . . . . . . . . 55
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices . . . . . . . . . . . . . . . . . . . 55
SECTION 10.02. No Waivers . . . . . . . . . . . . . . . . . 55
SECTION 10.03. Expenses; Documentary Taxes; Indemnification 55
SECTION 10.04. Sharing of Set-Offs . . . . . . . . . . . . . 57
SECTION 10.05. Amendments and Waivers . . . . . . . . . . . 57
SECTION 10.06. Margin Stock Collateral . . . . . . . . . . . 58
SECTION 10.07. Successors and Assigns . . . . . . . . . . . 58
SECTION 10.08. Confidentiality . . . . . . . . . . . . . . . 60
SECTION 10.09. Substitute Debt Ratings . . . . . . . . . . . 60
<PAGE>
SECTION 10.10. Purchasers' Sales Without Recourse or
Warranty . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.11. Obligations Several . . . . . . . . . . . . . 61
SECTION 10.12. Georgia Law . . . . . . . . . . . . . . . . . 61
SECTION 10.13. No Setoff . . . . . . . . . . . . . . . . . . 61
SECTION 10.14. Consent to Jurisdiction . . . . . . . . . . . 62
SECTION 10.15. Survival of Obligations . . . . . . . . . . . 62
SECTION 10.16. Severability . . . . . . . . . . . . . . . . 62
SECTION 10.17. Captions . . . . . . . . . . . . . . . . . . 62
SECTION 10.18. Counterparts . . . . . . . . . . . . . . . . 62
<PAGE>
SCHEDULES
SCHEDULE 2.07: Lockbox Accounts and Depositories
SCHEDULE 2.12: Principal Offices, Location of Records, Etc.
EXHIBITS
EXHIBIT A-1: Specimen Contract - Bostitch
EXHIBIT A-2: Specimen Contract - MAC
EXHIBIT B: Form of Receivables Schedule
EXHIBIT C: Form of Notice to Lockbox Depository
EXHIBIT D-1: Form of Settlement Statement
EXHIBIT D-2: Form of Agent's Settlement Statement
EXHIBIT E: Form of Assignment and Bill of Sale
EXHIBIT F-1: Form of Opinion of Stephen S. Weddle
EXHIBIT F-2: Form of Opinion of Vorys, Sater, Seymour and Pease
EXHIBIT F-3: Form of Opinion of Skadden, Arps, Slate, Meagher
and Flom
EXHIBIT G: Form of Opinion of Agent's Special Counsel
EXHIBIT H: Form of Notice to Obligors
EXHIBIT I: Form of Assignment and Acceptance
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
AGREEMENT dated as of December 1, 1993, among THE STANLEY
WORKS, MAC TOOLS, INC., STANLEY BOSTITCH, INC., the PURCHASERS
listed on the signature pages hereof, and WACHOVIA BANK OF
GEORGIA, NATIONAL ASSOCIATION, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any
amendment hereto (except as herein or therein otherwise expressly
provided or unless the context otherwise requires), have the
meanings set forth herein (terms defined in the singular to have
the corresponding meanings when used in the plural, and vice
versa):
"Adjusted Base Rate" means, for any day, a rate per annum
equal to the sum of the Base Rate for such day plus the Applicable
Base Rate Margin for such day, provided that, upon the occurrence
and during the continuance of a Repurchase Event, the Adjusted
Base Rate for any day means a rate per annum equal to the sum of
the Base Rate for such day plus the Applicable Base Rate Margin
for such day plus 2.00% per annum. The "Adjusted Base Rate" for
any Settlement Period means a rate per annum equal to the weighted
average of the Adjusted Base Rate in effect for each day during
such Settlement Period.
"Adjusted London Interbank Offered Rate" applicable to any
Settlement Period means a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/100
of 1%) by dividing (a) the applicable London Interbank Offered
Rate for such Settlement Period by (b) 1.00 minus the Euro-Dollar
Reserve Percentage.
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by,
any Seller and, if such Person is an individual, any member of the
immediate family (including parents, spouse, children and
siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such
member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or
indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns
directly or indirectly securities having 5% or more of the voting
power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership
interests of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or
other Person. Notwithstanding the foregoing, (a) no individual
shall be an Affiliate solely by reason of his or her being a
director, officer or employee of a Seller or any of Stanley's
Subsidiaries and (b) none of the Subsidiaries of Stanley shall be
Affiliates.
<PAGE>
"Agent" means Wachovia Bank of Georgia, National Association,
a national banking association organized under the laws of the
United States of America, in its capacity as agent for the
Purchasers hereunder, and its successors and permitted assigns in
such capacity.
"Agent's Costs and Expenses" shall have the meaning assigned
to such term in Section 2.08(d).
"Agent's Servicing Fee" shall have the meaning assigned to
such term in Section 2.08(d).
"Agent's Settlement Statement" shall have the meaning
assigned to such term in Section 2.07(b)(iii).
"Agency Fees" shall have the meaning assigned to such term in
Section 2.08(b).
"Applicable Base Rate Margin" and "Applicable Euro-Dollar
Margin" (collectively referred to herein as the "Applicable
Margins") mean, for any day during any period set forth in the
following table, those percentages per annum set forth opposite
such period in such table, which percentages shall vary from time
to time as set forth below depending on whether the Debt Rating of
the Unsupported Stanley Debt is High, Medium or Low (the
Applicable Margins to change from time to time on any day on which
there occurs a change in the Debt Rating of the Unsupported
Stanley Debt):
<TABLE>
<CAPTION>
Period Debt Applicable Applicable
Rating Euro- Base
Dollar Rate
Margin Margin
<S> <C> <C>
Prior to the High + 0.2500% + 0.0000%
Commitment
Expiration Date Medium + 0.3750% + 0.1250%
Low + 0.5000% + 0.2500%
From and after the High + 1.0000% + 0.7500%
Commitment
Expiration Date
Medium + 1.1250% + 0.8750%
Low + 1.2500% + 1.0000%
</TABLE>
"Assignee" shall have the meaning set forth in Section
10.07(c).
"Assignment and Acceptance" shall have the meaning set forth
in Section 10.07(c).
"Authority" has the meaning set forth in Section 8.02.
<PAGE>
"Base Rate" means, for any day, the rate per annum equal to
the higher as of such day of (a) the Prime Rate, and (b) one-half
of one percent above the Federal Funds Rate for such day. For
purposes of determining the Base Rate for any day, changes in the
Prime Rate shall be effective on the date of each such change.
"Beneficial Interest" of any Purchaser means, at any time,
such Purchaser's undivided beneficial ownership interest in the
Purchased Receivables in an amount equal to such Purchaser's
Beneficial Interest Percentage multiplied by the Portfolio
Balance.
"Beneficial Interest Percentage" of any Purchaser means, at
any date, a percentage obtained by dividing (a) the sum of (i)
the aggregate amount funded by such Purchaser hereunder, on or
prior to such date, in respect of the Purchase Price for the
Initial Offered Receivables and all Portfolio Increases minus
(ii) the aggregate amount allocated and paid to such Purchaser
pursuant to Section 2.09(c), on or prior to such date, in respect
of all Portfolio Decreases by (b) the Portfolio Balance as of the
Cutoff Date or, if later, the Domestic Business Day next
preceding the Reset Date for the last Settlement Period that
shall have ended on or prior to such date. In the event of a
permitted assignment by a Purchaser of a portion of its
Beneficial Interest, such Purchaser's Beneficial Interest
Percentage shall be allocated proportionately between such
Purchaser and such Purchaser's Assignee.
"Bostitch" means Stanley-Bostitch, Inc., a Delaware
corporation, and its permitted successors and assigns.
"Capital Stock" means any nonredeemable capital stock of
Stanley or any Consolidated Subsidiary (to the extent issued to a
Person other than Stanley), whether common or preferred.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Charged-Off Receivable" shall mean a Receivable (a) that
any Seller or Servicer has charged-off as uncollectible or (b)
with respect to which any accounts, debts or other obligations of
any Obligor thereon any Seller or Servicer has charged-off as
uncollectible.
"Closing Balance" for any Settlement Period means the
Portfolio Balance of the Closing Receivables for such Settlement
Period as of the Domestic Business Day next preceding the Reset
Date for such Settlement Period.
"Closing Date" means the date on which there shall have been
satisfied all of the conditions specified in Article IV to the
purchase of Receivables on the occasion of the first purchase of
Receivables hereunder.
"Closing Receivables" for any Settlement Period shall mean
(a) all Receivables constituting Purchased Receivables as of the
Ending Date for such Settlement Period, excluding all Opening
Receivables for such Settlement Period (i) that any Seller is
required to repurchase on such Ending Date pursuant to Section
2.06 or (ii) that have been fully paid by the Obligors thereon
and with respect to which there remains no Unpaid Balance, and
<PAGE>
(b) all additional Receivables, if any, offered for sale on such
Ending Date to the Purchasers pursuant to Section 2.02, but only
if such Ending Date is prior to the Commitment Expiration Date or
the Commitment Termination Date, as applicable.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor Federal tax code.
"Commission" shall have the meaning set forth in Section
4.05.
"Commitment" means, with respect to each Purchaser, the
amount set forth opposite the name of such Purchaser on the
signature pages hereof, as such amount may be reduced from time
to time pursuant to Section 2.05. The total of the Commitments
initially shall be $80,000,000.
"Commitment Expiration Date" means September 20, 1996 or
such later date as the Sellers and all of the Purchasers may
agree in to writing.
"Commitment Percentage" of any Purchaser means (a) at any
time prior to the Commitment Expiration Date or the Commitment
Termination Date, as applicable, a percentage obtained by
dividing such Purchaser's Commitment by the total Commitments as
at such time and (b) at any time from and after the Commitment
Expiration Date or the Commitment Termination Date, as
applicable, a percentage obtained by dividing such Purchaser's
Commitment by the total Commitments as in effect immediately
prior to the Commitment Expiration Date or the Commitment
Termination Date, as applicable; provided that in the event of a
permitted assignment by a Purchaser of a portion of its
Beneficial Interest, such Purchaser's Commitment Percentage shall
be allocated proportionately between such Purchaser and such
Purchaser's Assignee.
"Commitment Termination Date" shall have the meaning
assigned to such term in Section 2.13(a).
"Consolidated Subsidiary" means at any date any Subsidiary
or other entity the accounts of which, in accordance with
generally accepted accounting principles consistently applied,
would be consolidated with those of Stanley in its consolidated
financial statements as of such date.
"Contract" means, with respect to any Receivable, the
installment sale or other financing contract or lease under or
pursuant to which such Receivable was created or otherwise arose,
between and executed by the seller of such Receivable and all
Obligors on such Receivable, for the sale or lease of goods by
such seller to or for the benefit of such Obligor, and for the
performance of related services, if any, together with each other
accompanying or related purchase order, guarantee, waiver or
other instrument evidencing, securing or otherwise given in
connection with such Receivable.
"Controlled Group" means all members (including Stanley) of
a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control that, together
with Stanley, are treated as a single employer under Section 414
of the Code.
<PAGE>
"Cutoff Date" means the third Euro-Dollar Business Day that
next precedes the Closing Date.
"Debt" of any Person means at any date, without duplication,
(a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person
to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of
business, (d) the principal component of all obligations of such
Person as lessee under leases that are accounted for as capital
leases, (e) all obligations of such Person to reimburse any bank
or other Person in respect of amounts payable under a banker's
acceptance, (f) all obligations of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of
credit or similar instrument, (g) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, and (h) all Debt of others Guaranteed by
such Person. For purposes of clause (h) of this definition, the
amount of Debt attributable to any Guarantee shall be deemed to
be equal to the amount of the Debt so Guaranteed or, if the
amount of such Debt may vary from time to time, the maximum
amount of such Debt, provided that if the amount or maximum
amount of such Debt is not stated or determinable, then the
amount of Debt attributable to such Guarantee shall be the
maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Debt Rating" means, at any time, the rating of the
Unsupported Stanley Debt by Standard & Poor's and Moody's (or, in
circumstances where Standard & Poor's or Moody's is not providing
public ratings of Unsupported Stanley Debt, substitute public
ratings or private credit ratings as specified in Section 10.09).
The Debt Rating shall be "High" at any time when Unsupported
Stanley Debt is rated A minus or higher by Standard & Poor's and A3
or higher by Moody's (or, in either case, the comparable ratings
then in existence). The Debt Rating shall be "Medium" at any
time when Unsupported Stanley Debt is rated (x) BBB+ or higher,
but lower than A minus, by Standard & Poor's and Baa1 or higher by
Moody's, or (y) BBB+ or higher by Standard & Poor's and Baa1 or
higher, but lower than A3, by Moody's (or, in any case, the
comparable ratings then in existence). The Debt Rating shall be
"Low" at any time when Unsupported Stanley Debt is rated lower
than BBB+ by Standard & Poor's or lower than Baa1 by Moody's (or,
in either case, the comparable ratings then in existence). The
Debt Rating shall be "Less Than Investment Grade" at any time
when Unsupported Stanley Debt is rated lower than BBB- by
Standard & Poor's or lower than Baa3 by Moody's (or, in either
case, the comparable ratings then in existence).
"Defaulted Receivable" means, at any time, a Purchased
Receivable (a) with respect to which any required payment thereon
or in respect thereof (including, without limitation, in respect
of principal, interest or taxes) is more than 90 days past due,
or (b) in respect of which any Obligor thereon (i) has committed
any material breach under the Contract giving rise to such
Receivable, which breach has not been cured within 60 days after
written notice thereof from any Seller, any Servicer, or the
Agent (which notice shall be given at the Agent's option or at
the direction of any Purchaser), (ii) has ceased doing business
as a going concern (if such Obligor is a corporation), or (iii)
has become insolvent or bankrupt under any insolvency or
bankrupcy law or has made an assignment for the benefit of
creditors.
<PAGE>
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia or New
York are authorized by law to close.
"Eligible Purchaser" means, at any time, a Purchaser (or an
Assignee or potential Assignee) that at such time (a) is a
commercial or investment bank, insurance company or other
financial institution (but excluding factors) and (b) is not a
Seller or a Subsidiary or an Affiliate of any Seller or
Subsidiary.
"Eligible Receivable" means, at any time, a Receivable:
(a) as to which (i) at the time of its creation and
its conveyance hereunder, the Seller thereof (x) was the
true and sole owner thereof, (y) had good, absolute and
marketable title thereto free and clear of all Liens of any
nature, and (z) had the right to transfer and assign the
same without restriction, and (ii) the full Net Balance, as
shown on the bill of sale or the Receivables Schedule first
identifying the same, is owing;
(b) that was created, and with respect to which at all
times thereafter the Seller thereof, the underlying Contract
and the related sales and services remain in all material
respects, in compliance with all applicable laws, statutes,
rules or regulations (including, without limitation, laws
pertaining to usury, other limitations on interest, truth in
lending, equal credit opportunity, consumer protection and
unfair or deceptive trade practice, as any of such laws are
applicable);
(c) that (i) is payable in Dollars, (ii) is free from
allowances, discounts, credits, adjustments, defenses, set-
offs or counterclaims by any Obligor thereon of any kind
against the Seller thereof, (iii) is secured by a valid
security interest in the goods the sale or lease of which
gave rise to such Receivable, (iv) is not evidenced, in
whole or in part, by any note, trade acceptance, draft or
other instrument constituting an "instrument" or "document"
within the meaning of Article 9 of the UCC as enacted and
then in effect in the States of Connecticut, Ohio, Rhode
Island, Georgia or any other jurisdiction in which any
Seller has its principal place of business or maintains any
books, records, files or other information concerning any of
its Receivables and (v) was created in an created in a
country that is a member of the Organization for Economic
Cooperation and Development.
(d) with respect to which (i) the right to payment has
been fully earned by delivery and acceptance of the goods
involved and by the completed performance of all related
services, if any, (ii) there has been no denial of liability
by any Obligor, and (iii) no Obligor is the United States of
America, any State thereof or any political subdivision or
agency of the United States of America or any such State,
unless the Seller thereof has fully complied with the
Assignment of Claims Act or any similar applicable State law
with respect to such Receivable;
(e)
with respect to which the underlying Contract (i) is
substantially in a form as shown in Exhibit A-1 or Exhibit A-2 or
<PAGE>
(if Stanley is the Seller of such Receivable) in a form approved
by the Purchasers, in each case without material amendments,
modifications or supplements thereto, written or otherwise, (ii)
has been duly and fully executed by the seller or lessor of the
goods sold or leased thereunder and by each Obligor thereon,
(iii) constitutes the valid, genuine and binding obligation of
each such Obligor, enforceable in accordance with its terms, (iv)
constitutes the only Contract with respect to the goods sold or
leased thereunder and the services, if any, related thereto, (v)
correctly states all names, addresses, amounts and other
statements of fact, (vi) has a term no longer than 60 months from
the date of such Contract, (vii) contains no provision
prohibiting assignment of, or the creation of a security interest
in, such Contract or the Receivable arising thereunder, and
(viii) is in the possession of either a Servicer or the Agent in
originally executed form (and not a copy);
(f)
that is not (i) a Charged-Off Receivable or a Defaulted
Receivable, (ii) payable by any Obligor that is an Obligor under
a Defaulted Receivable or a Charged-Off Receivable, or (iii) in
repossession or litigation; and
(g)
that constitutes either an "account" or "chattel paper" under and
as defined in Article 9 of the UCC as enacted and then in effect
in the States of Connecticut, Ohio, Rhode Island, Georgia or any
other jurisdiction in which any Seller has its principal place of
business or maintains any books, records, files or other
information concerning any of its Receivables.
"Ending Date" for any Settlement Period means the last day
of such Settlement Period.
"Environmental Laws" means any Federal, state or local law,
statute, rule or regulation, or any order or decree of any
governmental authority or regulatory body, relating to health,
safety or the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time, or any
successor law. Any reference to any provision of ERISA shall
also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day
on which dealings in Dollar deposits are carried out in the
London interbank market.
"Euro-Dollar Rate" means, for any day during any Settlement
Period, a rate per annum equal to the sum of the Adjusted London
Interbank Offered Rate for such Settlement Period plus the
Applicable Euro-Dollar Margin for such day, provided that, upon
the occurrence and during the continuance of a Repurchase Event,
the Euro-Dollar Rate for any day during any Settlement Period
means a rate per annum equal to the sum of (x) the Adjusted
London Interbank Offered Rate for such Settlement Period plus (y)
the Applicable Euro-Dollar Margin for such day plus (z) 2.00% per
annum. The "Euro-Dollar Rate" for any Settlement Period means a
rate per annum equal to the weighted average of the Euro-Dollar
Rate in effect for each day during such Settlement Period.
<PAGE>
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) that is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities that includes deposits by
reference to which the Purchasers' Yield (when calculated by
reference to the London Interbank Offered Rate) is determined or
any category of extensions of credit or other assets that
includes loans by a non-United States office of any Purchaser to
United States residents). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the effective
date of any change in the Euro-Dollar Reserve Percentage.
"Facility Documents" means this Agreement and any other
document evidencing or securing any Seller's Obligations.
"Facility Fee" shall have the meaning assigned to such term
in Section 2.08(a).
"Facility Fee Rate" means, for any day, a rate per annum
equal to (a) to 0.1500% per annum at all times when the Debt
Rating of Unsupported Stanley Debt is High, or (b) 0.1875% per
annum at all other times.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded, if necessary, to the nearest 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 for such day
(or, if such day is not a Domestic Business Day, for the next
preceding Domestic Business Day) by the Federal Reserve Bank of
New York, provided that if such rate is not so published for any
day, the Federal Funds Rate for such day shall be the average of
the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing
selected by the Agent.
"Fiscal Year" means any fiscal year of Stanley.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (a) to
secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guaranteed Obligations" shall have the meaning assigned to
such term in Section 9.01.
<PAGE>
"Hazardous Materials" means (a) solid or hazardous waste, as
defined in the Resource Conservation and Recovery Act of 1980, or
in any other applicable federal, state or local law, rule or
regulation, (b) hazardous substances, as defined in the
Comprehensive Environmental Response, Compensation and Liability
Act, or in any other applicable federal, state or local law, rule
or regulation, (c) gasoline or any other petroleum product or by-
product (including but not limited to crude oil, diesel oil, fuel
oil, gasoline, lubrication oil, oil refuse, oil mixed with other
waste, oil sludge, and all other liquid hydrocarbons, regardless
of specific gravity), natural or synthetic gas products, urea
formaldehyde, asbestos or polychlorinated biphenyls, (d) toxic
substances, as defined in the Toxic Substances Control Act of
1976, or in any other applicable federal, state or local law,
rule or regulation, (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any other applicable federal,
state or local law, rule or regulation, or (f) any other
hazardous, toxic or dangerous substance, material, waste,
pollutant or contaminant, defined as such in (or for the purposes
of) any other applicable federal or state environmental law, rule
or regulation, in each case as each such Act, statute, law, rule
or regulation may be amended from time to time.
"Initial Offered Receivables" shall have the meaning
assigned to such term in Section 2.02(a).
"Lockbox Account" shall have the meaning assigned to such
term in Section 2.07(a)(vii).
"Lockbox Depository" shall have the meaning assigned to such
term in Section 2.07(a)(vii).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement,
Stanley or any Subsidiary shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale
agreement, capital lease (to the extent accounted for as a
capital lease) or other title retention agreement relating to
such asset.
"London Interbank Offered Rate" applicable to any Settlement
Period means the rate per annum determined on the basis of the
offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of the Opening Balance for
such Settlement Period offered for a term of three months, which
rates appear on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, two (2) Euro-Dollar Business Days prior to the first
day of such Settlement Period, provided that (a) if more than one
such offered rate appears on the Reuters Screen LIBO Page, the
"London Interbank Offered Rate" will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of
such offered rates; and (b) if no such offered rates appear on
such page, the "London Interbank Offered Rate" for such
Settlement Period will be the arithmetic average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of rates quoted by
not less than two major banks in New York City, selected by the
Agent, at approximately 10:00 a.m., Atlanta, Georgia time, two
(2) Euro-Dollar Business Days prior to the first day of such
Settlement Period, for deposits in Dollars offered to leading
European banks for a period of three months in an amount
comparable to the Opening Balance for such Settlement Period.
<PAGE>
"MAC" means Mac Tools, Inc., an Ohio corporation, and its
permitted successors and assigns.
"Margin Stock" means "margin stock" as defined in Regulation
G, T, U or X of the Board of Governors of the Federal Reserve
System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Material Adverse Effect" means a material adverse effect on
the business, financial condition or results of operations of
Stanley and its Consolidated Subsidiaries taken as a whole.
"Moody's" means Moody's Investors Service, Inc. and any
successor thereto that is a nationally recognized rating agency.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Balance" means, with respect to any Receivable at any
time, the Unpaid Balance of such Receivable at such time less the
Unearned Charges (to the extent such Unearned Charges are
included in such Unpaid Balance) with respect to such Receivable
at such time.
"Notice to Lockbox Depository" shall have the meaning
assigned to such term in Section 2.07(a)(vii).
"Notice to Obligor" shall have the meaning assigned to such
term in Section 3.02(b).
"Obligations" of a Seller or the Sellers, as the case may
be, means all indebtedness, obligations and liabilities existing
on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured,
arising by contract, operation of law or otherwise, of such
Seller or Sellers, as applicable, under this Agreement or any
other Facility Document, including, without limitation, all such
indebtedness, obligations and liabilities under Article II,
Section 6.02 and Article IX.
"Obligor" means, with respect to any Receivable, the Person
or Persons obligated to make payments with respect to such
Receivable, including any guarantor thereof, and its or their
heirs, legal representatives, successors and assigns.
"Office" means, as to each Purchaser, its office located at
its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Office) or such
other office as such Purchaser may hereafter designate as its
Office by notice to Stanley and the Agent.
"Opening Balance" for any Settlement Period means the
Portfolio Balance of the Opening Receivables for such Settlement
Period as of the first day of such Settlement Period.
<PAGE>
"Opening Receivables" means (a) for the first Settlement
Period, the Receivables first purchased by the Purchasers under
this Agreement on the Closing Date, and (b) for each other
Settlement Period, the Closing Receivables for the next preceding
Settlement Period.
"Participant" has the meaning set forth in Section 10.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership,
an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
that is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of
any member of the Controlled Group or (ii) maintained pursuant to
a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five
plan years made contributions.
"Portfolio Balance" means, at any time, the aggregate amount
of the Net Balances of all Purchased Receivables at such time.
"Portfolio Decrease" means, for any Settlement Period, the
positive sum, if any, of the Opening Balance for such Settlement
Period minus the Closing Balance for such Settlement Period.
"Portfolio Increase" means, for any Settlement Period, the
negative sum, if any, of the Opening Balance for such Settlement
Period minus the Closing Balance for such Settlement Period. The
Portfolio Increase for any Settlement Period represents the
amount of the aggregate Purchase Price for all Subsequently
Offered Receivables to be purchased by the Purchasers hereunder
on the Ending Date for such Settlement Period, net of the amount
by which the Opening Balance for such Settlement Period exceeds
the aggregate Net Balance of the Opening Receivables for such
Settlement Period as of such Ending Date.
"Potential Repurchase Event" means any act, event, condition
or circumstance that with the giving of notice or lapse of time
or both would, unless cured or waived, become a Repurchase Event.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for
borrowings. The Prime Rate is but one of several interest rate
bases used by Wachovia. Wachovia lends at interest rates above
and below the Prime Rate.
"Principal Subsidiary" means any Subsidiary of Stanley that
has net sales that represent 15% or more of the consolidated net
sales of Stanley and its Consolidated Subsidiaries taken as a
whole.
<PAGE>
"Purchase" means a purchase of Receivables hereunder by the
Purchasers under the Commitments.
"Purchase Price" shall have the meaning assigned to such
term in Section 2.03(a).
"Purchased Receivables" means, at any time, all Receivables
that have then or theretofore been sold hereunder to the
Purchasers and that continue to be beneficially owned by them.
"Purchaser" means each bank listed on the signature pages
hereof as having a Commitment, and its successors and permitted
assigns.
"Purchasers' Yield" for any Settlement Period means an
amount equal to the product obtained by multiplying (a) the
Opening Balance for such Settlement Period times (b) the Yield
Rate for such Settlement Period times (c) a fraction, the
numerator of which is the number of days in such Settlement
Period, including the first but excluding the last, and the
denominator of which is 360.
"Receivable" shall mean the right to receive all or any part
of the payments made or to be made by or for the benefit of any
Obligor under a Contract, which right has been fully earned by
delivery and acceptance of goods and by performance in full of
all related services, if any, in accordance with the terms of
such Contract.
"Receivables Schedule" shall have the meaning assigned to
such term in Section 2.02(a).
"Reportable Event" shall have the meaning given such term in
Section 4043(b) of Title V of ERISA (other than a Reportable
Event as to which the provision of 30 days notice to the PBGC is
waived under applicable regulations).
"Repurchase Event" shall have the meaning set forth in
Section 6.01.
"Required Purchasers" means at any time Purchasers having
Commitments that equal or exceed 66 2/3% of the aggregate amount
of the Commitments or, if the Commitments are no longer in
effect, Purchasers holding at least 66 2/3% of Beneficial
Interests, provided that if any Purchaser's Beneficial Interest
shall have been purchased, pursuant to Section 6.02(a) or
otherwise, or is otherwise owned or held, legally or
beneficially, by any Person that is not an Eligible Purchaser,
then so long as such Beneficial Interest shall be owned or held
by any such Person, such Purchaser's Commitment and Beneficial
Interest shall be zero and shall not be considered for the
determination of the Required Purchasers.
"Reset Date" for any Settlement Period means the second
Euro-Dollar Business Day next preceding the Ending Date for such
Settlement Period.
"Security" shall have the meaning assigned to such term in
Section 2(l) of the Securities Act of 1933, as amended.
"Sellers" means Stanley, Bostitch and MAC.
<PAGE>
"Sellers' Servicing Fee" shall have the meaning assigned to
such term in Section 2.09(f).
"Servicers" means the Sellers in their capacity as servicers
of the Purchased Receivables acting on behalf of and as
independent contractors of the Purchasers.
"Settlement Period" means each period that (i) in the case
of the first Settlement Period, shall commence on Closing Date
and shall end March 20, 1994 or (ii) in the case of each
Settlement Period thereafter, shall commence on the last day of
the immediately preceding Settlement Period and shall end on the
20th day in the third succeeding calendar month (unless such day
is not a Euro-Dollar Business Day, in which event such Settlement
Period shall end on the next succeeding Euro-Dollar Business
Day).
"Settlement Statement" has the meaning assigned to such term
in Section 2.09(b).
"Standard & Poor's" means Standard & Poor's Corporation and
any successor thereto that is a nationally recognized rating
agency.
"Stanley" means The Stanley Works, a Connecticut
corporation, and its permitted successors and assigns, and shall
be deemed to refer to it in its capacity as a Seller hereunder
and as a guarantor of the Guaranteed Obligations pursuant to the
provisions of Article IX.
"Subsequently Offered Receivables" means, with respect to
the Ending Date for any Settlement Period, in the event that on
the Domestic Business Day next preceding the Reset Date for such
Settlement Period the Portfolio Balance of the Opening
Receivables for such Settlement Period (excluding those, if any,
that any Seller is required to repurchase on such Ending Date
pursuant to Section 2.06) is less than the total Commitments then
in effect, all additional Receivables, if any, offered for sale
to the Purchasers on such Ending Date pursuant to Section
2.02(b).
"Subsidiary" of a Person means any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person. Unless
otherwise indicated, all references herein to Subsidiaries refer
to Subsidiaries of Stanley, including, without limitation,
Bostitch and MAC.
"Transferee" has the meaning set forth in Section 10.07(d).
"UCC" or "U.C.C." means, at any time, the Uniform Commercial
Code as enacted and then in effect in any relevant jurisdiction.
"Unearned Charges" means, with respect to any Receivable at
any time, any sales, use or other taxes applicable to such
Receivable plus all interest and other charges applicable to such
Receivable that have not then been earned or accrued, determined
in each case by the terms of the Contract giving rise to such
Receivable.
<PAGE>
"Unpaid Balance" shall mean, with respect to any Receivable
at any time, the aggregate of installments of principal and
interest due and to become due on such Receivable at such time,
plus any and all sales, use or other taxes applicable to such
Receivable.
"Unsupported Stanley Debt" means, at any time (a) the long-
term senior, unsecured Debt of Stanley, the creditworthiness of
which is not supported through defeasance, guarantees, credit
enhancement or otherwise or (b) if at such time no such Debt is
outstanding, Stanley's Obligations under this Agreement.
"Voting Stock" means Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of Stanley's corporate directors (or
Persons performing similar functions).
"Yield Rate" for any Settlement Period means the Adjusted
Base Rate or the Euro-Dollar Rate for such Settlement Period, as
Stanley shall select or be deemed to have selected pursuant to
Section 2.04.
"Wachovia" means Wachovia Bank of Georgia, National
Association, a national banking association and its successors.
"Withdrawal Liability" means a withdrawal liability with
respect to a Multiemployer Plan under Title IV of ERISA.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by Stanley.
SECTION 1.02. 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
generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes
concurred in by Stanley's independent public accountants) with
the most recent audited consolidated financial statements of
Stanley and its Consolidated Subsidiaries delivered to the
Purchasers.
SECTION 1.03. References. Except as otherwise expressly
provided in this Agreement: the words "herein," "hereof,"
"hereunder" and other words of similar import refer to this
Agreement as a whole, including the Schedules and Exhibits
hereto, if any, that are a part hereof, and not to any particular
Section, Article, paragraph or other subdivision; the singular
includes the plural and the plural includes the singular; "or" is
not exclusive; the words "include," "includes" and "including"
are not limiting; a reference to any agreement or other contract
includes past and future permitted supplements, amendments,
modifications and restatements thereto or thereof; a reference to
an Article, Section, paragraph or other subdivision, Schedule or
Exhibit is a reference to an Article, Section, paragraph or other
subdivision of, or Schedule or Exhibit to, this Agreement; a
reference to any law includes any amendment or modification to
such law and any rules and regulations promulgated thereunder; a
reference to a Person includes its permitted successors and
assigns; any right may be exercised at any time and from time to
time; and, except as otherwise expressly provided therein, all
<PAGE>
obligations under any agreement or other contract are continuing
obligations throughout the term of such agreement or contract.
ARTICLE II
PURCHASE AND SERVICING OF RECEIVABLES
SECTION 2.01. Commitments to Purchase Receivables. Each
Purchaser severally agrees, on the terms and conditions set forth
herein, to purchase Receivables, up to such Purchaser's
Commitment, owned by one or more of the Sellers and offered for
sale pursuant to Section 2.02 on the Closing Date and on any
Ending Date for any Settlement Period ending prior to the
Commitment Expiration Date or the Commitment Termination Date, as
applicable; provided that, immediately after each such Purchase
the Portfolio Balance shall not exceed the total Commitments; and
provided further that the aggregate Net Balances, as of the
Cutoff Date, of Receivables so offered for sale on the Closing
Date, shall not be less than $25,000,000. Notwithstanding
anything in this Agreement to the contrary, neither the Agent or
any Purchaser shall assume or be deemed or considered to have
assumed the duties, liabilities or obligations of any Seller or
any other Person under any Contract by reason of any Purchase
hereunder or otherwise.
SECTION 2.02. Receivables Schedules; Method of Offer. (a)
Initial Purchase. Not later than 10:00 a.m. (Atlanta, Georgia
time) on the second Euro-Dollar Day next preceding the Closing
Date, Stanley shall deliver to the Agent a schedule in the form
attached hereto as Exhibit B (a "Receivables Schedule") for the
Closing Date, which Receivables Schedule shall be dated as of
such second Euro-Dollar Business Day next preceding the Closing
Date. Such Schedule so delivered shall identify each Receivable
offered for sale to the Purchasers on the Closing Date (the
"Initial Offered Receivables").
(b) Subsequent Purchases. Stanley shall deliver to the
Agent, for receipt not later than 10:00 a.m. (Atlanta, Georgia
time) on the Ending Date for each Settlement Period, a
Receivables Schedule for such Settlement Period, dated as of
Domestic Business Day next preceding the Reset Date for such
Settlement Period, that identifies each Closing Receivable for
such Settlement Period, including (in the case of any Settlement
Period ending prior to the Commitment Termination Date or the
Commitment Expiration Date, as applicable) all Subsequently
Offered Receivables, if any, offered for sale on such Ending
Date, provided that the aggregate Net Balance of such
Subsequently Offered Receivables shall not exceed the amount, if
any, by which the total Commitments exceed the Portfolio Balance,
as of the Domestic Business Day next preceding such Reset Date,
of the Opening Receivables for such Settlement Period (excluding
those, if any, that any Seller is required to repurchase on such
Ending Date pursuant to Section 2.06). The Closing Balance for
such Settlement Period, as reflected in the Settlement Statement
for such Settlement Period to be delivered for receipt by the
Agent not later than 10:00 a.m. (Atlanta, Georgia) on the Ending
Date for such Settlement Period, shall reflect the aggregate Net
Balance of such Subsequently Offered Receivables as of the
Domestic Business Day next preceding the Reset Date for such
Settlement Period.
<PAGE>
(c) Contents and Effect of Receivables Schedules. No
Receivables Schedule shall list any Receivable that, to the
knowledge of any Seller, after reasonable inquiry, is not or may
not be an Eligible Receivable. With respect to each Receivable
listed on any Receivables Schedule, such Receivables Schedule
shall contain such information as to enable the Purchasers to
determine, with respect to such Receivable, (i) the name of each
Obligor thereon, (ii) the original term (expressed in months) of
the Contract giving rise to such Receivable, (iii) the amount and
frequency (e.g., monthly or quarterly) of, and due date for, each
payment due thereon, (iv) the aggregate number of remaining
payments due thereon as of the Closing Date or such Ending Date,
as applicable, (v) the Net Balance thereof as of the date of such
Receivables Schedule (which, in the case of the Receivables
Schedule for the Closing Date shall be the Cutoff Date and in the
case of a Receivables Schedule for any Settlement Period shall be
the Domestic Business Day next preceding the Reset Date for such
Settlement Period), and (vi) an aging of such Receivable. The
delivery of each Receivables Schedule shall constitute an offer
to sell to the Purchasers hereunder (x) on the Closing Date, each
Initial Offered Receivable and (y) on the Ending Date for any
Settlement Period, each Subsequently Offered Receivable for such
Ending Date.
SECTION 2.03. Purchase Price. (a) The purchase price
payable by the Purchasers for the Initial Offered Receivables and
for the Subsequently Offered Receivables on the Ending Date for
any Settlement Period, as the case may be (the "Purchase Price"),
shall be equal to the aggregate Net Balances of all the Initial
Offered Receivables as of the Cutoff Date or, in the case of such
Subsequently Offered Receivables, the aggregate Net Balances of
all such Subsequently Offered Receivables as of the Domestic
Business Day next preceding the Reset Date for such Settlement
Period.
(b) With respect to the Purchase Price for the Initial
Offered Receivables, on the Closing Date, each Purchaser shall
make available to the Agent its ratable share (determined on the
basis of such Purchaser's Commitment Percentage) of such Purchase
Price. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will,
subject to Section 2.10(c), make the funds so received from the
Purchasers available to Stanley on the Closing Date, on behalf of
and for the account of the Sellers, at the Agent's address
referred to in Section 10.01.
(c) The Purchase Price for any Subsequently Offered
Receivables purchased on the Ending Date for any Settlement
Period shall be credited to the Sellers and accounted for as part
of the settlement reconciliation for such Settlement Period
pursuant to Section 2.09.
SECTION 2.04. Purchasers' Yield. (a) The Sellers hereby
guarantee to the Purchasers a yield on the Opening Receivables
for each Settlement Period equal to the Purchasers' Yield for
such Settlement Period, without regard to the amount of interest
on such Opening Receivables collected from the Obligors thereon
during such Settlement Period. The Purchasers' Yield for each
Settlement Period shall be credited to the Purchasers and
accounted for as part of the settlement reconciliation for such
Settlement Period pursuant to Section 2.09.
(b) Stanley may select, on behalf of the Sellers, for each
Settlement Period whether the Yield Rate for such Settlement
Period shall be the Adjusted Base Rate or the Euro-Dollar Rate
<PAGE>
for such Settlement Period. Such selection shall be made by
written notice from Stanley to the Agent to be received not later
than 10:00 a.m. (Atlanta, Georgia time) on the third Euro-Dollar
Business Day next preceding the first day of such Settlement
Period if Stanley shall elect the Euro-Dollar Rate as the Yield
Rate for such Settlement Period; provided that if the Agent shall
not have received such a notice from Stanley on or prior to 10:00
a.m. (Atlanta, Georgia time) on the third Euro-Dollar Business
day next preceding the first day of such Settlement Period,
Stanley shall be deemed to have selected, on behalf of the
Sellers, the Euro-Dollar Rate as the Yield Rate for such
Settlement Period; and provided further that, upon the occurrence
and during the continuance of a Repurchase Event, Stanley may not
select the Euro-Dollar Rate as the Yield Rate for any Settlement
Period unless all of the Purchasers shall consent thereto in
writing.
SECTION 2.05. Commitment Reductions. If on the Ending Date
for any Settlement Period the total Commitments shall exceed the
Closing Balance for such Settlement Period, Stanley may reduce
the Commitments effective as of such Ending Date by the amount of
such excess by delivering to the Agent, not less than 5 Domestic
Business Days prior to such Ending Date, written notice of such
reduction specifying the total amount of such reduction and the
Settlement Period Ending Date on which such reduction shall be
effective. Any notice of a reduction of the Commitments
delivered pursuant to this Section shall be irrevocable, and on
the Settlement Period Ending Date so specified in such notice the
Commitments shall be reduced, without further action, by the
amount of reduction so specified in such notice. Each such
reduction shall be applied pro rata to the Commitments of the
respective Purchasers based on their respective Commitment
Percentages.
SECTION 2.06. Repurchase of Receivables; Corrections for
Errors. (a) Each Seller shall repurchase from the Purchasers
any Purchased Receivable conveyed hereunder by such Seller (i)
that becomes a Defaulted Receivable or a Charged-Off Receivable,
(ii) with respect to which any Obligor thereon is also an Obligor
on a Defaulted Receivable or a Charged-Off Receivable, (iii) that
was not an Eligible Receivable when conveyed to the Purchasers
hereunder, or (iv) that at any time after such conveyance ceases
to be an Eligible Receivable for any reason (other than solely by
reason of its conveyance to the Purchasers hereunder). Such
repurchase shall be made as of the Ending Date of any Settlement
Period during which any officer or responsible official
(including, without limitation, the credit manager) of such
Seller or any Servicer obtains knowledge of, or during which the
Agent or any Purchaser shall have notified Stanley or such Seller
of, any of the foregoing conditions with respect to such
Purchased Receivable. The repurchase price for each such
Purchased Receivable shall be the Net Balance of such Purchased
Receivable as of the Domestic Business Day next preceding the
Reset Date for such Settlement Period.
(b) If it shall be determined that, as a result of any
error in a Receivables Schedule, a Settlement Statement or
otherwise, the amount paid by the Purchasers in respect of the
Purchase Price for the Initial Offered Receivables or any
Subsequently Offered Receivables exceeded or was less than the
Purchase Price required to be paid hereunder, then on the Ending
Date of any Settlement Period in which such error shall have been
discovered the Sellers and the Purchasers shall make appropriate
adjustments to correct such error, which adjustments may include,
without limitation, the Sellers' repurchase of Purchased
Receivables or a refund of amounts paid in respect of the
Purchase Price, as appropriate.
<PAGE>
(c) With respect to each Purchased Receivable to be
repurchased under this Section on the Ending Date for any
Settlement Period, the repurchase price for such Purchased
Receivable, together with the Purchasers' Yield allocable to such
Purchased Receivable for such Settlement Period shall be credited
to the Purchasers and accounted for as part of the settlement
reconciliation for such Settlement Period pursuant to Section
2.09.
SECTION 2.07. Servicing and Collections. (a) Until such
time as the Agent shall have assumed the responsibility for the
billing and collection of the Purchased Receivables pursuant to
Section 6.03 or paragraph (b) of this Section, the Sellers, in
their capacity as Servicers and acting on behalf of and as
independent contractors of the Purchasers, shall bill and service
the Purchased Receivables and collect all amounts due from
Obligors on the Purchased Receivables. In the performance of
such duties, the Sellers shall use such reasonable commercial
practices, and exercise such care and diligence, as the Sellers
would employ in the billing, servicing and collection of
Receivables owned by them. Subject to and in accordance with the
provisions of Section 2.09, all amounts collected by the
Servicers in respect of the Purchased Receivables during any
Settlement Period shall be credited to the Purchasers and
accounted for as part of the settlement reconciliation for such
Settlement Period pursuant to Section 2.09. As compensation for
the Sellers' performance of their duties as Servicers, the
Sellers shall be entitled to a Sellers' Servicing Fee for each
Settlement Period for which such duties are performed, as
provided in Section 2.08(c), but otherwise the Sellers shall
perform their duties as Servicers hereunder at their own expense.
As part of and included in the Sellers' duties as Servicers, the
Sellers agree as follows:
(i) Sellers shall, on behalf of the Purchasers,
collect payments and all sales/use and other applicable
taxes from Obligors on the Purchased Receivables and will,
at their sole cost and expense, diligently perform all
billing and collecting for amounts due or to become due with
respect to Purchased Receivables. Sellers shall bill
Obligors in accordance with their standard billing
procedures, provided that each invoice sent to an Obligor
with respect to any Purchased Receivable shall separately
list the amount due as such Obligor's payment obligation
under such Purchased Receivable from any other Receivable
that is not a Purchased Receivable.
(ii) Sellers shall maintain books and records
pertaining to all Purchased Receivables.
(iii) To the extent the Sellers are responsible
therefor, the Sellers will, on behalf of the Purchasers,
collect when due, any and all personal property taxes,
license fees, sales, use, excise, or similar taxes now or
hereafter imposed by any governmental authority or
regulatory body on any goods sold or leased, or services
performed, under or pursuant to any Contract giving rise to
any Purchased Receivable or payments due under such
Contract, or such Contract itself or the Purchased
Receivable arising thereunder, together with any penalties
or interest in connection therewith and remit the same to
the appropriate governmental authority or regulatory body.
To the extent any Purchaser is directly assessed any taxes,
penalties or interest on any such goods or services, on any
such payments or on any such Contract or Purchased
Receivable, and such Purchaser notifies Stanley of said
assessment, then such Purchaser and the Sellers agree to
<PAGE>
first attempt (at the Sellers' expense) to have the
governmental authority or regulatory body reassess such
taxes, penalties or interest against the Sellers on behalf
of such Purchaser, failing which, such Purchaser shall pay
such taxes to the appropriate governmental authority or
regulatory body; provided that such taxes, penalty or
interest shall in any event be paid by the Purchasers before
they become delinquent or become a Lien upon any Purchased
Receivable or any goods sold or leased under any Contract
giving rise to any Purchased Receivable. Stanley shall,
promptly upon demand, reimburse each Purchaser for all such
taxes, penalties and interest so assessed against and paid
by such Purchaser. Each Purchaser agrees to cooperate with
and provide reasonable assistance to the Sellers, at the
Sellers' sole cost and expense, in their efforts to obtain a
refund from the appropriate governmental authority or
regulatory body for any duplication of any tax payments.
(iv) Sellers shall maintain and preserve the original
Contracts giving rise to the Purchased Receivables and shall
not permit any other Person to obtain possession thereof,
provided that, if the Agent shall have assumed the Sellers'
duties for the billing and collection of the Purchased
Receivables pursuant to Section 6.03 or paragraph (b) of
this Section, then the Sellers shall promptly deliver to the
Agent the originals (and all original counterparts in any
Seller's possession or control) of all such Contracts.
Further, the Sellers shall file proper financing statements
or (with respect to financing statements theretofore filed)
financing statement amendments under Article 9 of the UCC
(as enacted and then in effect in any relevant jurisdiction)
with the appropriate recording officers showing the Agent,
as assignee of any security interest in the goods sold or
leased under any such Contract, provided that no such filing
shall be required to be made unless (x) the Sellers shall
fail to repurchase the Purchased Receivables or any
Purchaser's Beneficial Interest pursuant to Section 6.02 or
(y) the Agent shall have assumed the Sellers' duties and
responsibilities for the billing and collection of Purchased
Receivables pursuant to paragraph (b) of this Section or
Section 6.03.
(v) Sellers shall preserve and maintain such records
of goods sold or leased under a Contract that are in the
possession of any Obligor under a Purchased Receivable in
accordance with the Sellers' normal business procedures.
Sellers shall give each Purchaser and the Agent, and their
respective representatives, at all reasonable times access
to such records and shall permit such representatives to
inspect, audit and to make extracts therefrom.
(vi) Where required under a Contract giving rise to a
Purchased Receivable, Sellers shall obtain evidence of
insurance covering the goods sold or leased under such
Contract and listing the Seller of such Purchased Receivable
and any of its assigns as co-payee.
(vii) Sellers shall direct that all payments made
by any Obligor on any Purchased Receivable be deposited into
one or more separate lockbox accounts (each a "Lockbox
Account") with a depository that is not a Subsidiary or an
Affiliate (a "Lockbox Depository") for which each Seller
shall have delivered to the Agent, executed in blank, a
notice to such Lockbox Depository (a "Notice to Lockbox
Depository") substantially in the form of Exhibit C attached
hereto. The Sellers warrant and represent that attached
hereto as Schedule 2.07 is a true and correct listing of all
<PAGE>
Lockbox Accounts and the names and addresses of all Lockbox
Depositories. No Seller shall close or make any change of
any Lockbox Account or any Lockbox Depository, or authorize
or direct any Obligor on any Purchased Receivable to remit
its payments to a different Person or account (or, in the
case of Stanley, any Person or account), unless, not less
than 30 days prior to the date thereof, such Seller shall
have delivered written notice thereof to the Agent and shall
have executed and delivered to the Agent a new Notice to
Lockbox Depository, addressed to such new Lockbox Depository
but otherwise executed in blank. Subject to paragraph (b)
of this Section and Section 6.04(c), the Sellers may use and
withdraw funds from any Lockbox Account without restriction.
(b) Sellers' duties as Servicers of the Purchased
Receivables may be terminated unilaterally by the Agent or the
Required Purchasers pursuant to Section 6.03 or by a written
amendment to this Agreement signed by the Required Purchasers,
the Agent and the Sellers. If the servicing arrangement is so
terminated, thereupon the Agent shall assume all rights and
responsibilities for the billing and collection of the Purchased
Receivables, and
(i) from and after such termination (A) Sellers shall
not be entitled to the any Sellers' Servicing Fee, (B) if a
Repurchase Event has occurred, no Seller shall be entitled
to receive or retain any sum collected in respect of any
Purchased Receivable until all of the Purchased Receivables
shall have been repurchased pursuant to Section 6.02, (C) no
Seller shall withdraw or otherwise remove, or permit the
removal by any Person other than the Agent or its agents, of
any funds in any Lockbox Account (provided that, subject to
Section 6.05, the Agent shall pay to a Seller amounts paid
into a Lockbox Account on a Receivable, owned by such
Seller, that is not a Purchased Receivable (a "Non-Purchased
Receivable") so long as, in each instance, such Seller shall
have (x) notified the Agent in writing of the amount to be
remitted to it and the identity of the applicable Receivable
and of the Obligor thereunder and (y) demonstrated to the
Agent's reasonable satisfaction that the amount proposed to
be removed did not represent any part of a payment made on a
Purchased Receivable, and provided further that the Sellers
may notify Obligors on any Non-Purchased Receivables to make
payments only on such Non-Purchased Receivables as the
Sellers may direct), (D) each Seller shall transmit and
deliver to the Agent, immediately upon receipt thereof, all
payments on account of any Purchased Receivable that such
Seller may receive, (E) the Sellers shall pay to the Agent
for its own account the Agent's Servicing Fee in accordance
with the provisions of Section 2.08(d) and, promptly upon
demand from time to time, the Agent's Costs and Expenses,
and (F) the Sellers will provide the Agent with an ASCII
file containing the names and mailing addresses of the
Obligors on the Purchased Receivables;
(ii) the Sellers shall promptly deliver to the Agent
all books, records, files and insurance policies referred to
in paragraph (a) of this Section and shall execute and
deliver to the Agent instruments of assignment, in form and
substance satisfactory to the Agent and its counsel,
assigning to the Agent all such insurance policies;
(iii) the Agent, in connection with its assumption
of the Sellers' rights and duties for the billing and
collection of the Purchased Receivables, (A) may contract
with third-party independent contractors for the performance
<PAGE>
of any or all of such duties, (B) may direct any or all of
the Obligors on the Purchased Receivables to remit any and
all payments thereon to the Agent or such other Person as
the Agent may designate, and for that purpose the Agent may
date and deliver to the Obligors on Purchased Receivables
the Notices to Obligors delivered to Agent by the Sellers at
various times pursuant to Section 3.02, (C) may assume
control of and dominion over all funds then on deposit in or
thereafter deposited into each Lockbox Account, and for such
purpose the Agent may date, otherwise complete and deliver
to each Lockbox Depository a Notice to Lockbox Depository
delivered to the Agent pursuant to the provisions of clause
(a)(vii) of this Section, (D) shall bill for and collect all
amounts payable under the Purchased Receivables and (E)
shall be responsible for the preparation of a Settlement
Statement in the form of Exhibit D-2 hereto (the "Agent's
Settlement Statement") on the Ending Date of each Settlement
Period ending after the date of such assumption;
(iv) no Seller shall interfere, attempt to interfere,
or communicate in any way with any Obligor concerning the
notices, billing and collection of payments on Purchased
Receivables and other amounts as provided in this Agreement;
and
(v) the Agent may, in any Seller's name (and each
Seller hereby expressly authorizes the Agent and gives the
Agent permission to do so) or in the name of the Purchasers,
(A) endorse all remittances received and all notes (if any)
evidencing obligations under the Purchased Receivables and
any assignments thereof, and (B) release, on terms
satisfactory to Agent or by operation of law or otherwise,
compromise or adjust any and all rights against, and/or
grant extensions of time of payment to, the Obligors on any
Purchased Receivable or agree to the substitution of an
Obligor, without notice to any Seller and without affecting
any Seller's Obligations.
(c) Each Seller does hereby irrevocably constitute and
appoint the Agent and its officers its true and lawful attorney
with full power of substitution, for such Seller and in its name,
place and stead, to ask, demand, collect, receive, receipt for,
sue for, compromise, adjust, and give acquittance for any and all
amounts due or to become due in respect of any Purchased
Receivable, to endorse the name of such Seller on all checks,
collection receipts or instruments given in payment or part
payment thereof, to sign terminations, amendments and assignments
(to the Agent or otherwise) of financing statements referencing
such Seller as secured party given to perfect security interests
under any such Purchased Receivable, and otherwise to take any
and all actions determined by the Agent to be necessary or
desirable in the servicing, billing or collection of the
Purchased Receivables; provided that the power herein conferred
shall be exercisable only if, and from and after such time as,
the Agent shall have assumed the responsibilities for the billing
and collection of the Purchased Receivables pursuant to paragraph
(b) of this Section or under Section 6.03.
SECTION 2.08. Fees. The following fees shall be payable
and (except with respect to the Agent's Servicing Fees unless
otherwise provided in Section 2.09) shall be credited and
accounted for hereunder in accordance with the provisions of
Section 2.09:
(a) Facility Fee. The Sellers shall pay to the Agent,
for the ratable account of each Purchaser, for each
Settlement Period a fee (a "Facility Fee") equal to the
product obtained by multiplying (i) such Purchaser's
<PAGE>
Commitment as of the first day of such Settlement Period
times (ii) the weighted average of the Facility Fee Rate in
effect for each day during such Settlement Period times
(iii) a fraction, the denominator of which is 360 and the
numerator of which is the total number of days (including
the first but excluding the last) during such Settlement
Period; provided that, if a Purchaser shall have failed to
fund its ratable share of the Purchase Price for the Initial
Offered Receivables or a Portfolio Increase and such failure
Closing Date or the applicable Ending Date, as the case may
be, then the amount of Facility Fees due to such Purchaser
shall be subject to adjustment as provided in Section
2.10(c)(ii).
(b) Agency Fees. Stanley shall pay to the Agent, for
its own account, the fees provided for in that letter
agreement, dated November 4, 1993, between the Agent and
Stanley (the "Agency Fees").
(c) Sellers' Servicing Fee. As compensation for the
Sellers' performance of their duties as Servicers under
Section 2.07(a), for each Settlement Period (or portion
thereof) during which the Sellers act as Servicers, the
Sellers shall be entitled to the Sellers' Servicing Fee for
such Settlement Period; provided that if, pursuant to
Section 2.07(b) or Section 6.03, the Agent shall have
assumed the Sellers' duties for the billing and collection
of the Purchased Receivables, the Sellers' right to receive
any Sellers' Servicing Fee shall terminate as of the date of
such assumption, and if such assumption shall occur on a
date other than the first day of a Settlement Period, the
Sellers' Servicing Fee for the Settlement Period during
which such assumption shall occur shall be pro-rated as of
the date of such assumption.
(d) Agent's Servicing Fee. In the event that,
pursuant to Section 2.07(b) or Section 6.03, the Agent shall
have assumed the Sellers' duties for the billing and
collection of the Purchased Receivables, the Sellers shall
pay a monthly fee of $25,000 to the Agent, for its own
account, on the date of such assumption and on the first day
of each month thereafter (an "Agent's Servicing Fee"). The
Agent's Servicing Fee shall be pro-rated for any partial
month. In addition, upon demand from time to time the
Sellers shall also pay to the Agent, and reimburse it for,
all reasonable costs and expenses incurred by the Agent in
connection with the performance of such duties, including,
without limitation, the fees, costs and expenses charged to
the Agent by any third Person engaged to perform all or any
part of such billing and collection tasks (the "Agent's
Costs and Expenses"). The Sellers shall be obligated to pay
the Agent's Servicing Fees and the Agent's Costs and
Expenses until all of the Purchased Receivables have been
sold to one or more third parties or all of the Purchased
Receivables have been finally and indefeasibly paid in full
by the Obligors thereon.
SECTION 2.09. Adjustments and Settlement. (a) The
balances owed to the Sellers on the one hand and to the
Purchasers on the other hand in respect of collections of amounts
due from Obligors in respect of Purchased Receivables, the sale
of Subsequently Offered Receivables, the repurchase of Purchased
Receivables pursuant to Section 2.06, the Facility Fees, the
Agency Fees, the Sellers' Servicing Fees and (to the extent
herein provided) the Agent's Servicing Fees and Agent's Costs and
Expenses, if applicable, shall be evidenced by a mutual open
account that shall be reconciled and settled for each Settlement
Period as of the Ending Date thereof as provided in this Section.
<PAGE>
(b) Prior to 10:00 a.m. (Atlanta, Georgia time) on the
Reset Date for each Settlement Period, the Servicers shall submit
to the Agent a settlement statement, bill of sale and assignment,
substantially in the form attached hereto as Exhibit D-1 (each a
"Settlement Statement"), dated the Ending Date for such
Settlement Period and specifying among other things (i) the
Opening Balance and the Closing Balance for such Settlement
Period, (ii) the Portfolio Decrease, if any, for such Settlement
Period, (iii) the Portfolio Increase, if any, for such Settlement
Period, (iv) the amount and computation of the Purchasers' Yield
for such Settlement Period, (v) the amount and computation of the
Facility Fee for such Settlement Period, and (vi) the amount of
all Agent's Servicing Fees and Agent's Costs and Expenses, if
any, that became due to the Agent on or before, but remain unpaid
as of, such Ending Date. In connection with the Settlement
Statement for each Settlement Period, Stanley shall deliver to
the Agent, for receipt not later than 10:00 a.m. (Atlanta,
Georgia time) on the Ending Date for such Settlement Period, a
Receivables Schedule for such Settlement Period, dated as of the
Domestic Business Day next preceding the Reset Date for such
Settlement Period, conforming to the requirements of Section
2.02. Notwithstanding the foregoing, in the event the Agent
shall have assumed the Sellers' responsibilities for the billing
and collection of Purchased Receivables, such Settlement
Statements shall be prepared by the Agent (with copies furnished
to the Sellers and the Purchasers) and the calculations and
information therein shall be conclusive, absent manifest error.
(c) On the Ending Date for each Settlement Period, the
Sellers shall pay (without regard to the aggregate amount or
sufficiency of collections received by the Sellers during such
Settlement Period of payments made on the Opening Receivables for
such Settlement Period) to the Agent an amount equal to the sum
of (i) the Portfolio Decrease, if any, for such Settlement Period
(subject to adjustment as provided in Section 2.10(c)(i)(B)),
(ii) the Purchasers' Yield for such Settlement Period (subject to
adjustment as provided in Section 2.10(c)(i)(A)), (iii) the
Facility Fees for such Settlement Period (subject to adjustment
as provided in Section 2.10(c)(ii)), and (iv) the amount of all
Agent's Servicing Fees and Agent's Costs and Expenses, if any,
that became due to the Agent on or before, but remain unpaid as
of, the Ending Date for such Settlement Period; provided that, if
as a consequence of a Repurchase Event the Agent shall have
established a date, that is within 5 Domestic Business Days
following such Ending Date, for the repurchase of all of the
Purchased Receivables pursuant to Section 6.02(c), then such
payment otherwise due on such Ending Date shall be deferred until
and shall be due on the date so established for such repurchase,
except that nothing in this proviso shall relieve the Sellers of
their obligation to prepare and deliver a Settlement Statement
for such Settlement Period. Promptly upon receipt of any amount
so paid by the Sellers, the Agent shall apply the same first to
the items identified in clause (iv) of this paragraph (b) and to
any the Agency Fees that shall have become due but which then
remain unpaid by the Sellers, and from the balance, if any,
remaining after such application the Agent shall remit to each
Purchaser (by a credit to an account of such Purchaser maintained
with the Agent for such purpose or by the delivery of Federal or
other funds immediately available to such Purchaser in accordance
with written wiring instructions delivered to the Agent by such
Purchaser) such Purchaser's ratable share of the Portfolio
Decrease (if any), the Purchasers' Yield and the Facility Fees
for such Settlement Period, in each case subject to any necessary
adjustment required by Section 2.10(c). Notwithstanding the
foregoing, if the Agent shall have assumed the Sellers'
responsibilities for the billing and collection of the Purchased
Receivables pursuant to Section 2.07(b) or Section 6.03, then the
amount to be so paid by the Sellers on the Ending Date for any
Settlement Period shall be reduced by the amount of collected
funds in the Agent's possession, as of the Domestic Business Day
next preceding the Reset Date for such Settlement Period,
representing payments made by Obligors in respect of the Opening
Receivables for such Settlement Period and received by the Agent
from and after the Reset Date for the next preceding Settlement
Period. The Sellers' repurchase of any Purchased Receivables on
<PAGE>
the Ending Date of any Settlement Period, under Section 2.06,
Section 2.13, Section 6.02 or otherwise, shall not relieve the
Sellers of their obligation to pay to the Agent any amounts
required to be paid hereunder on such Ending Date.
(d) Subject to Section 3.02, on the Ending Date for each
Settlement Period each Purchaser shall make available to the
Agent, in accordance with the provisions of Section 2.10(c), its
ratable share of the Portfolio Increase, if any, for such
Settlement Period. Subject to Section 2.10(c), the Agent will
make the funds so received from the Purchasers available to
Stanley, on behalf of and for the account of the Sellers, at the
Agent's aforesaid address.
(e) Notwithstanding any provision herein to the contrary,
if on the Ending Date for any Settlement Period any Purchaser's
Commitment or Beneficial Interest shall be held by a Person that
is not an Eligible Purchaser (by reason of a purchase of such
Beneficial Interest pursuant to Section 6.02 or otherwise), then
(i) the amount of the Portfolio Increase, if any, to be paid to
the Sellers for such Settlement Period, and the amount of the
Portfolio Decrease, if any, Purchasers' Yield and Facility Fees
to be so credited for payment to the Agent for such Settlement
Period, each shall be reduced by a percentage equal to the
Beneficial Interest Percentage attributable to the Person that is
not an Eligible Purchaser, (ii) such Person shall account
directly to the Sellers in respect of the amount of such Person's
pro rata share of the Portfolio Increase, if any, that otherwise
would have been so credited for payment to the Sellers (and the
Agent and the Eligible Purchasers shall be relieved of any
obligation to do so), (iii) the Sellers shall account directly to
such Person for the amount of such Person's pro rata share (based
on the Beneficial Interest Percentages) of the Portfolio
Decrease, if any, Purchasers' Yield and Facility Fees that
otherwise would have been so credited for payment to the Agent
for the account of such Person (and the Agent shall be relieved
of any obligation to do so), and (iv) after giving effect to such
reductions, those amounts to be remitted by the Agent to the
Purchasers shall be allocated to the Eligible Purchasers on a pro
rata basis in accordance with the portion of the total Beneficial
Interest Percentage of each such Eligible Purchaser.
(f) Without in any way limiting the obligation to account
for or pay the amounts required to be paid to the Agent pursuant
to paragraph (c) of this Section, until such time as the Agent
have shall assumed, pursuant to Section 2.07(b) or Section 6.03,
the Sellers' duties for the billing and collection of the
Purchased Receivables, to the extent that the collections during
any Settlement Period (or part thereof prior to the date of such
assumption by the Agent) in respect of the Opening Receivables
therefor exceed the sum of (i) the amount by which the Opening
Balance for such Settlement Period exceeds the aggregate Net
Balance of such Opening Receivables as of the Domestic Business
Day next preceding the Reset Date for such Settlement Period,
plus (ii) the Purchasers' Yield for such Settlement Period, plus
(iii) the Facility Fees and Agency Fees for such Settlement
Period, the Sellers may retain such excess collections (herein,
the "Sellers' Servicing Fee" for such Settlement Period) for
their own account as compensation for such Settlement Period (or
portion thereof) in respect of such servicing. In the event the
Agent shall so assume the Sellers' duties for the billing and
collection of the Purchased Receivables, such excess shall be
retained by the Agent, for the ratable benefit of the Purchasers,
<PAGE>
as collateral security for Sellers' Obligations (and for such
purpose and to such extent, each Seller hereby grants to the
Agent, as security for the Sellers' Obligations, a security
interest in such funds).
SECTION 2.10. General Provisions as to Payments. (a) Each
Seller shall make all payments required to be made by it under
this Agreement (including, without limitation, payments of
- 37 - R#95355.6<PAGE>
amounts required under Section 2.09, Section 2.13, Section 6.02
or Article IX) not later than 11:00 A.M. (Atlanta, Georgia time)
on the date when due, in Federal or other funds immediately
available in Atlanta, Georgia, to the Agent at its address
referred to in Section 10.01. To the extent required by this
Agreement, the Agent will promptly distribute to each Purchaser
its share, determined in accordance with the provisions of this
Agreement, of each such payment received by the Agent for the
account of the Purchasers.
(b) Payment of any amount due from any Seller hereunder
(including, without limitation, pursuant to any provision of
Article II, Article VI, Article IX or Article X) that is not paid
when due in accordance with the provisions hereof shall bear
interest, payable upon demand, for each day until paid at a rate
per annum equal to the sum of the Base Rate for such day plus the
Applicable Base Rate Margin for such day plus 2.0% per annum.
(c) Not later than 11:00 A.M. (Atlanta, Georgia time) on
the Closing Date each Purchaser shall make available its ratable
share of the Purchase Price for the Initial Offered Receivables,
and not later than 11:00 A.M. (Atlanta, Georgia time) on each
Ending Date each Purchaser shall make available its ratable share
of the Portfolio Increase, if any, due on such date, in each case
in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address referred to in Section
10.01. Subject to the terms and conditions of this Agreement,
the Agent will promptly distribute to Stanley, for the account of
the Purchasers, such Purchase Price or Portfolio Increase, as
applicable. Unless the Agent receives notice to the contrary
from a Purchaser, at the Agent's address referred to in
Section 10.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day next preceding the Closing
Date or an Ending Date, as applicable, the Agent shall be
entitled to assume that such Purchaser will make available to the
Agent, not later than 11:00 A.M. (Atlanta, Georgia time) on the
Closing Date or such Ending Date, as applicable, such Purchaser's
ratable share of such Purchase Price or Portfolio Increase (if
any), as applicable, to be paid to the Sellers on such date and,
in reliance on such assumption, the Agent may (but shall not be
obligated to) make available such Purchaser's ratable share of
such Purchase Price or Portfolio Increase, as applicable, to
Stanley for the account of such Purchaser. If the Agent makes
such Purchaser's ratable share of such Purchase Price or
Portfolio Increase, as applicable, available to Stanley and such
Purchaser does not in fact make available such ratable share of
such Purchase Price or Portfolio Increase, as applicable, as and
when required hereunder, the Agent shall be entitled to recover
such Purchaser's ratable share of such Purchase Price or
Portfolio Increase from such Purchaser or the Sellers (and for
such purpose shall be entitled to charge such amount to any
account of any Seller maintained with the Agent), together with
interest thereon for each day during the period from the Closing
Date or such Ending Date, as applicable, until such sum shall be
repaid to the Agent in full at a rate per annum equal to the
Federal Funds Rate for each such day during such period, provided
that (x) any such payment by the Sellers of such Purchaser's
ratable share shall be without prejudice to any rights that the
Sellers may have against such Purchaser and shall not affect in
any manner such Purchaser's obligation to fund its ratable share
of such Purchase Price or Portfolio Increase and (y) payments of
<PAGE>
interest for any period to the Agent by the Sellers on any
amounts recovered by the Agent from the Sellers under this
Section 2.10(c) shall be made in lieu of any Purchasers' Yield
(or, in the case of a required purchase of a Purchaser's
Beneficial Interest or required repurchase of the Purchased
Receivables pursuant to Section 6.02, that component of the
purchase price or repurchase price determined by reference to the
Yield Rate) for such period on such recovered amount. If the
Agent does not exercise its option to advance funds for the
account of such Purchaser, it shall forthwith notify Stanley of
such decision. In addition, if on the Closing Date or any Ending
Date a Purchaser shall be required but shall fail to fund its
ratable share of the Purchase Price for the Initial Offered
Receivables or a Portfolio Increase, then in such event
(i) if the Agent does not advance funds for the
account of such Purchaser, or if the Agent advances such
funds to, and thereafter recovers such funds from, the
Sellers, then (A) for each day of any Settlement Period on
which such ratable share remains unfunded, the amount of
Purchasers' Yield for such day otherwise payable by the
Sellers for the account of such Purchaser shall be reduced
to an amount equal to the total Purchasers' Yield for such
day multiplied by such Purchaser's Beneficial Interest
Percentage and (B) for any Settlement Period that shall end
after such failure without such failure having been
remedied, the amount of the Portfolio Decrease (if any) for
such Settlement Period otherwise payable by the Sellers for
the account of such Purchaser shall be reduced to an amount
equal to the Portfolio Decrease for such Settlement Period
multiplied by such Purchaser's Beneficial Interest
Percentage; and
(ii) notwithstanding Section 2.08(a), if such failure
was for a reason within such Purchaser's control and shall
remain unremedied for a period of five (5) Domestic Business
Days, then the amount of the Facility Fee for the Settlement
Period in which such failure occurs otherwise payable by the
Sellers for the account of such Purchaser shall be reduced
to an amount equal to the total Facility Fees of all of the
Purchasers for such Settlement Period (calculated as set
forth in Section 2.08(a)) multiplied by such Purchaser's
Beneficial Interest Percentage.
Notwithstanding clauses (i) and (ii) of this paragraph (c), a
failure by a Purchaser to fund its ratable share of the Purchase
Price on the occasion of the initial Purchase hereunder, or of a
Portfolio Increase on the occasion of any other Purchase
hereunder, shall not be deemed to affect in any manner the number
or amount of Initial Offered Receivables or Subsequently Offered
Receivables sold to the Purchasers hereunder, the Sellers' sole
remedy being to recover from such Purchaser the amount such
Purchaser has failed to fund.
SECTION 2.11. Computation of Purchasers' Yield and Facility
Fees. Purchasers' Yield and Facility Fees hereunder shall be
computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but
excluding the last day).
SECTION 2.12. Financing Statements. In order to evidence
the sale of Receivables under this Agreement, each Seller shall,
from time to time as requested by Required Purchasers or the
<PAGE>
Agent, take such action, and execute and deliver such instruments
(including, without limitation, financing statements under the
UCC as enacted and then in effect in the States of Connecticut,
Ohio, Rhode Island, Georgia or any other jurisdiction in which
any Seller has its principal place of business or maintains any
books, records, files or other information concerning any of its
Receivables) in order to evidence the sale of Receivables under
this Agreement or to record notice of the Purchasers' interest in
the Purchased Receivables. Each Seller represents and warrants
to the Purchasers that Schedule 2.12 attached hereto accurately
sets forth such Seller's federal employment identification
number, the address of such Seller's principal place of business
and the address of each location where such Seller maintains any
books, records, files or other information concerning any of its
Receivables or the Purchased Receivables. No Seller shall change
the location of its principal place of business, the location of
any such books, records files or information, its name, its
identity or its corporate structure unless, in each case, not
less than 30 days prior to such change, such Seller shall have
notified the Agent in writing of the proposed change and shall
have executed, delivered and/or recorded such instruments as the
Agent may determine shall be necessary in order to continue the
effectiveness of any notice of the Purchasers' interest in the
Purchased Receivables.
SECTION 2.13. Commitment Expiration and Termination. (a)
The Commitments shall expire on the Commitment Expiration Date
unless earlier terminated at the Sellers' election. The
effective date of any such termination (the "Commitment
Termination Date") shall be the Ending Date of the Settlement
Period in which the Sellers have notified the Purchasers of their
exercise of such election, which notice to be effective on such
Ending Date shall be given not less than three Euro-Dollar
Business Days prior to such Ending Date. Upon the expiration or
termination of the Commitments (other than a termination
resulting from the occurrence of a Repurchase Event):
(i) The Sellers, upon 30 days prior notice, may at any
time require each of the Purchasers to sell all of its
right, title and interest in all the Purchased Receivables
to a third party or third parties designated in such notice
on the Ending Date of any Settlement Period ending on or
after the Commitment Expiration Date or Commitment
Termination Date, as applicable. The purchase price, which
shall be paid on such Ending Date, shall be equal to the sum
of (A) for each Purchaser, the product obtained by
multiplying such Purchaser's Beneficial Interest Percentage
by the Portfolio Balance on the Domestic Business Day next
preceding the Reset Date for such Settlement Period plus (B)
to the extent not otherwise accounted for and paid pursuant
to Section 2.09, all Purchasers' Yield accrued to such
Ending Date and all Facility Fees for such Settlement
Period, subject to any necessary adjustment required by
Section 2.10(c)(i)(A) and Section 2.10(c)(ii), respectively,
plus (C) all other amounts payable to the Purchasers and the
Agent hereunder and under the other Facility Documents; or
(ii) If upon the expiration or termination of the
Commitments, the Sellers do not require the sale of the
Purchased Receivables to a designated third party, the
Purchasers shall have the right, in addition to and without
waiving all other rights they may have under applicable law:
(A) to sell or otherwise transfer the Purchased
Receivables in any lawful manner that may be
<PAGE>
expeditious or economically advantageous to the
Purchasers, provided that, the Purchased Receivables
must be conveyed as a whole to a purchaser or group of
purchasers acceptable to the Sellers; or
(B) to retain the Purchased Receivables, in which
event, (1) the Sellers shall continue to act as
Servicers and to receive the Sellers' Servicing Fee for
so acting (unless the Agent have shall assumed,
pursuant to Section 2.07(b) or Section 6.03, the
Sellers' duties for the billing and collection of the
Purchased Receivables), (2) the Purchasers shall be
entitled to receive and the Sellers shall be obligated
to pay the Purchasers' Yield and (3) the Agent shall be
entitled to receive and the Sellers shall be obligated
to pay the Agent's Fee. Such obligations shall
continue until (x) there are no longer any amounts
owing on the Purchased Receivables, (y) the remaining
Purchased Receivables have been sold to a third party
(pursuant to clause (i) or clause (ii)(A) above) or (z)
the Sellers shall have repurchased all of the Purchased
Receivables pursuant paragraph (b) of this Section.
(b) If on the Domestic Business Day next preceding the
Reset Date for any Settlement Period ending on or after the
Commitment Termination Date or the Commitment Expiration Date, as
applicable, the Portfolio Balance is less than $12,000,000, the
Sellers shall have the right on the Ending Date for such
Settlement Period, upon notice delivered to the Agent not less
than 5 Domestic Business Days prior to such Ending Date, to
repurchase from the Purchasers all of the Purchased Receivables
for a repurchase price equal to the sum of (i) for each
Purchaser, the product obtained by multiplying such Purchaser's
Beneficial Interest Percentage by the Portfolio Balance on the
Domestic Business Day next preceding such Reset Date, plus (ii)
to the extent not otherwise accounted for and paid pursuant to
Section 2.09, all Purchasers' Yield accrued to such Ending Date
and all Facility Fees for such Settlement Period, subject to any
necessary adjustment required by Section 2.10(c)(i)(A) and
Section 2.10(c)(ii), respectively, plus (iii) all other amounts
payable to the Purchasers and the Agent hereunder and under the
other Facility Documents. Any notice of repurchase delivered
pursuant to this Section shall be irrevocable.
(c) Any conveyance of the Purchased Receivables by the
Purchasers pursuant to paragraph (a)(i) or paragraph (b) of this
Section shall be made without recourse to or warranty by any
Purchaser and shall be free of all liens, claims, encumbrances
and assignments created by the Purchasers.
ARTICLE III
CONDITIONS TO PURCHASES
SECTION 3.01. Conditions to First Purchase. The obligation
of each Purchaser to purchase Receivables on the occasion of the
first Purchase is subject to the satisfaction of the conditions
set forth in Section 3.02 and the following additional
conditions:
(a) receipt by the Agent from each of the parties
hereto of either (i) a duly executed counterpart of this
Agreement, or a facsimile transmission of a duly executed
<PAGE>
signature page from a counterpart of this Agreement, signed
by such party or (ii) if such party is a Purchaser, a telex
or facsimile transmission stating that such party has duly
executed a counterpart of this Agreement and sent such
counterpart to the Agent;
(b) receipt by the Agent from each Seller of financing
statements under the UCC as enacted and then in effect in
the States of Connecticut and Georgia (with respect to those
to be executed by Stanley), the States of Georgia and Rhode
Island (with respect to those to be executed by Bostitch)
and in the States of Ohio and Georgia (with respect to those
to be executed by MAC) or any other jurisdiction in which
such Seller has its principal place of business, identifying
the Agent as secured party and signed by such Seller,
evidencing the sale of Purchased Receivables to the
Purchasers (or, in the event any sale of Receivables
hereunder is considered as or determined to be a secured
transaction, the security interest in the Purchased
Receivables in favor of the Agent for the ratable benefit of
the Purchasers);
(c) receipt by the Agent of an assignment and bill of
sale, substantially in the form attached hereto as Exhibit
E, to which shall be attached a Receivables Schedule,
conforming to the requirements of Section 2.02, setting
forth all Receivables to be sold to the Purchasers on the
occasion of the first Purchase;
(d) receipt by the Agent of a duly executed Notice to
Lockbox Depository from each Seller with respect to each
Lockbox Account;
(e) receipt by the Agent of an opinion of Stephen S.
Weddle, Vice President and General Counsel of Stanley,
substantially in the form of Exhibit F-1 hereto and covering
such additional matters relating to the transactions
contemplated hereby as any Purchaser may reasonably request;
(f) receipt by the Agent of an opinion of Vorys,
Sater, Seymour and Pease, special counsel to MAC, covering
matters of Ohio law, substantially in the form of Exhibit F-
2 hereto;
(g) receipt by the Agent of an opinion of Skadden,
Arps, Slate, Meagher and Flom, special counsel to Bostitch,
covering matters of Delaware law, substantially in the form
of Exhibit F-3 hereto;
(h) receipt by the Agent of an opinion of Womble
Carlyle Sandridge & Rice, special counsel for the Purchasers
and the Agent, substantially in the form of Exhibit G hereto
and covering such additional matters relating to the
transactions contemplated hereby as any Purchaser may
reasonably request;
(i) receipt by the Agent of a certificate, dated the
date of the first Purchase, signed by a principal financial
officer of the Sellers, to the effect that (i) no Potential
Repurchase Event or Repurchase Event has occurred and is
continuing on such date and (ii) the representations and
warranties of the Sellers contained in Article IV hereof are
true on and as of such date; and
<PAGE>
(j) with respect to each Seller, receipt by the Agent
of all documents that the Agent may reasonably request
relating to the existence of such Seller, the corporate
authority for and the validity of this Agreement, and any
other matters relevant hereto, all in form and substance
satisfactory to the Agent, including without limitation a
certificate of incumbency of such Seller, signed by the
Secretary or an Assistant Secretary of such Seller,
certifying as to the names, true signatures and incumbency
of the officer or officers of such Seller authorized to
execute and deliver the Facility Documents, and certified
copies of the following items:
(i) such Seller's Certificate of Incorporation and
Bylaws, certified by the Secretary or any Assistant
Secretary of such Seller,
(ii) a certificate of the Secretary of State (or
equivalent authority) of the jurisdiction of such
Seller's incorporation confirming as to the existence
and the good standing of such Seller as a corporation
of such jurisdiction,
(iii) a certificate of the taxing authority of the
State (or equivalent authority) of the jurisdiction of
such Seller's incorporation confirming that such Seller
has filed all applicable tax returns and filings then
required to have been filed and paid all taxes then
required to have been paid, and
(iv) the action taken by the Board of Directors of
such Seller authorizing such Seller's execution,
delivery and performance of this Agreement and the
other Facility Documents to which such Seller is a
party.
SECTION 3.02. Conditions to All Purchases. The obligation
of each Purchaser to purchase Receivables on the occasion of each
Purchase is subject to the satisfaction of the conditions:
(a) except in the case of the Purchase on the Closing
Date, receipt by the Agent, not later than 10:00 a.m.
(Atlanta, Georgia time) on the Ending Date on which such
Purchase is to be made, of (i) a Settlement Statement for
the Settlement Period ending on such Ending Date and (ii) a
Receivables Schedule for such Settlement Period, conforming
to the requirements of Section 2.02 and setting forth all
Receivables proposed to be sold to the Purchasers on such
Ending Date;
(b) receipt by the Agent, from each Seller that is
selling Receivables as a part of such Purchase, of a notice
to Obligor in the form attached hereto as Exhibit H (each a
"Notice to Obligor"), duly executed by such Seller in blank
with respect to each Initial Offered Receivable or each
Subsequently Offered Receivable that is the subject of such
Purchase (provided that no Notice to Obligor shall be
delivered to any Obligor unless and until the Agent shall
have assumed, pursuant to Section 2.07(b) or Section 6.03,
the Sellers' duties for the billing and collection of the
Purchased Receivables);
(c) the fact that, immediately after such Purchase, no
Potential Repurchase Event or Repurchase Event shall have
occurred and be continuing;
<PAGE>
(d) the fact that the representations and warranties
of the Sellers contained in Article IV of this Agreement
shall be true and correct in all material respects on and as
of the date of such Purchase, both before and after giving
effect to such Purchase; and
(e) the fact that, immediately after such Purchase,
the Portfolio Balance will not exceed the aggregate amount
of the Commitments as then in effect.
Each sale of Receivables hereunder by any Seller shall be deemed
to be a representation and warranty by all of the Sellers on the
date of such sale as to the facts specified in clauses (c), (d)
and (e) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Seller represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each Seller
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
(b) is duly qualified to transact business in every jurisdiction
wherein the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect and (c) has the
corporate power and authority, the legal right and all
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted except where,
with respect to governmental licenses, authorizations, consents
and approvals only, the absence thereof would not have a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by each
Seller of this Agreement, and the other Facility Documents
(a) are within such Seller's corporate powers, (b) have been duly
authorized by all necessary corporate action, (c) require no
action by or in respect of, or notice to, filing with or consent
of, any governmental authority or regulatory body, (d) do not
contravene such Seller's charter or bylaws, (e) do not constitute
a material default under any law, statute, rule or regulation
applicable to such Seller or any of the Principal Subsidiaries or
any agreement, judgment, injunction, order, decree or other
instrument binding upon such Seller or any Principal Subsidiary,
and (f) do not result in the creation or imposition of any
material Lien on any asset of such Seller or any Principal
Subsidiary.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of each Seller, enforceable in
accordance with its terms, and the other Facility Documents, when
executed and delivered in accordance with this Agreement, will
constitute valid and binding obligations of each Seller party
thereto, enforceable in accordance with their respective terms,
except to the extent the enforcement hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect regarding the
enforcement of creditors' rights generally and general principles
of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
<PAGE>
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of Stanley and its Consolidated Subsidiaries as of
January 2, 1993, and the related consolidated statements of
earnings, shareholders' equity and cash flows for the Fiscal Year
then ended, reported on by Ernst & Young, copies of which have
been delivered to each of the Purchasers, and the unaudited
consolidated financial statements of Stanley for the interim
period ended October 2, 1993, copies of which have been delivered
to each of the Purchasers, fairly present in all material
respects, in conformity with generally accepted accounting
principles, the consolidated financial position of Stanley and
its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such
periods stated.
(b) Since January 2, 1993, there has been no material
adverse change in the business, financial condition, assets,
nature of the assets or operations of Stanley and its
Subsidiaries, taken as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending, or to the knowledge of any Seller threatened,
against or affecting any Seller or any of the Subsidiaries before
any court or arbitrator or any governmental authority or
regulatory body that (a) is reasonably likely to result in a
Material Adverse Effect, except as disclosed or otherwise
reflected in Stanley's Annual Report on Form 10-K for the Fiscal
Year ended January 2, 1993, filed with the Securities and
Exchange Commission (the "Commission") or in any quarterly report
on Form 10-Q or current report on Form 8-K subsequently (but
before the date hereof) filed with the Commission, or (b)
purports to affect the validity of this Agreement or any of the
other Facility Documents.
SECTION 4.06. Requirements of Law. Each of the Sellers and
the Subsidiaries is in compliance with all laws, statutes, rules
and regulations (including, without limitation, Environmental
Laws), and all orders, awards, judgments, decrees, writs or
determinations of any arbitrator or a court or other governmental
authority or regulatory body, applicable to it and its business,
where the failure to so comply would have, or could reasonably be
expected to have, a Material Adverse Effect or to affect the
validity of, or to impair the ability of any Seller to perform,
pay or satisfy its Obligations under, this Agreement or any of
the other Facility Documents.
SECTION 4.07. Compliance with ERISA. (a) Stanley and each
member of the Controlled Group have fulfilled their obligations
under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a
Plan under Title IV of ERISA.
(b) Except as reflected in Stanley's annual audited or
quarterly unaudited consolidated financial statements identified
in Section 4.04, neither Stanley nor any member of the Controlled
Group has been assessed any Withdrawal Liability in an amount
that is reasonably likely to result in a Material Adverse Effect,
and neither Stanley or any member of the Controlled Group has
taken, nor does it intend to take, any action that it reasonably
anticipates will result in the assessment of Withdrawal Liability
in an amount that would have a Material Adverse Effect.
<PAGE>
SECTION 4.08. Taxes. Stanley and its Subsidiaries have
filed all United States income tax returns and all other tax
returns material to Stanley and its Consolidated Subsidiaries,
considered as a whole, that are required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to
any assessment received by Stanley or any Subsidiary, except for
(a) taxes in immaterial amounts and (b) such taxes as are being
contested in good faith by appropriate proceedings and for which
adequate reserves have been recorded on the books of Stanley and
its Subsidiaries in accordance with generally accepted accounting
principles. United States income tax returns of Stanley and its
Subsidiaries have been examined by the appropriate taxing
authorities, or closed by the applicable statutes of limitations,
and satisfied for all Fiscal Years ending prior to and including
the Fiscal Year ended December 29, 1984, and no claims have been
assessed and are unpaid with respect to such returns, except as
shown in the financial statements identified in Section 4.04(a).
SECTION 4.09. Subsidiaries. Each of the Principal
Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, (ii) is duly qualified to transact business in
each jurisdiction wherein the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect and
(iii) has the corporate power and authority, the legal right and
all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted except where,
with respect to governmental licenses, authorizations, consents
and approvals only, the absence thereof would not have a Material
Adverse Effect.
SECTION 4.10. Not an Investment Company. None of the
Sellers is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.11. No Default or Repurchase Event. No Seller
nor any Subsidiary is in default under or with respect to any
agreement, instrument or undertaking to which it is a party or by
which it or any of its property is bound which default could have
a Material Adverse Effect or that will materially adversely
affect the ability of any Seller to perform, pay or satisfy its
Obligations hereunder or under any of the other Facility
Documents. No Potential Repurchase Event or Repurchase Event has
occurred and is continuing.
SECTION 4.12. Full Disclosure. No information furnished in
writing by or on behalf of any Seller to the Agent or any
Purchaser in connection with the negotiation, execution and
delivery of this Agreement contains any material misstatement of
fact or omits to state a material fact necessary to make the
statements contained herein and therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.13. Environmental Matters. Except as disclosed
or otherwise reflected in Stanley's Annual Report on Form 10-K
for the Fiscal Year ended January 2, 1993, filed with the
Commission, or in any quarterly report on Form 10-Q or current
report on Form 8-K subsequently (but before the date hereof)
filed with the Commission, neither Stanley nor any Subsidiary has
received notice or otherwise obtained knowledge of any claim,
demand, action, event, condition, report or investigation
indicating or concerning any potential or actual liability that,
individually or in the aggregate, is reasonably likely to result
in a Material Adverse Effect arising in connection with (a) any
non-compliance with or violation of the requirements of any
<PAGE>
Environmental Law or (b) the release or threatened release of any
Hazardous Materials.
SECTION 4.14. Receivables Not Selected for
Creditworthiness. No Receivable sold to or proposed for sale by
any Seller to the Purchasers hereunder has been or will be
selected for sale or repurchase on any basis indicative of the
lack of creditworthiness of any Obligor in respect thereof.
SECTION 4.15. Eligible Receivables. To the best of each
Seller's knowledge and belief as at the date of such Purchase,
each Purchased Receivable is or shall be, as of the date of the
Receivables Schedule that first identifies such Receivable as a
Purchased Receivable, an Eligible Receivable.
ARTICLE V
COVENANTS
Each Seller agrees that, so long as any Purchaser has any
Commitment hereunder or any amount payable by any Obligor under
any Purchased Receivable, or any amount payable by any Seller
hereunder or under any other Facility Document, remains unpaid:
SECTION 5.01. Information. The Sellers will deliver to
each of the Purchasers and the Agent:
(a) Annual Financial Statements. As soon as available
and in any event within 95 days after the end of each Fiscal
Year, a consolidated balance sheet of Stanley and its
Consolidated Subsidiaries as of the end of such Fiscal Year
and the related consolidated statements of earnings,
shareholders' equity and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures
for the previous Fiscal Year, all certified by Ernst & Young
or other independent public accountants of nationally
recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Required
Purchasers.
(b) Quarterly Financial Statements. As soon as
available and in any event within 50 days after the end of
each of the first three quarters of each Fiscal Year, a
consolidated balance sheet of Stanley and its Consolidated
Subsidiaries as of the end of such quarter and the related
statement of earnings and statement of cash flows for such
quarter and for the portion of the Fiscal Year ended at the
end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter
and the corresponding portion of the previous Fiscal Year.
(c) Officer's Certificate. Simultaneously with the
delivery of each set of financial statements referred to in
clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of Stanley
(i) stating whether the Debt Rating was High, Medium, Low or
Below Investment Grade on the date of either of such
<PAGE>
financial statements or such certificate, (ii) certifying
(x) that such financial statements fairly present the
financial condition and the results of operations of Stanley
and its Consolidated Subsidiaries on the dates and for the
periods indicated, and (y) that such officer has reviewed
the terms of this Agreement and has made, or caused to be
made under his or her supervision, a review in reasonable
detail of the business and condition of Stanley and its
Consolidated Subsidiaries during, and matters relevant to
this Agreement for, the accounting period covered by such
financial statements, and that as a result of such review
such officer has concluded that no Repurchase Event or
Potential Repurchase Event has occurred during the period
commencing at the beginning of the accounting period covered
by the financial statements accompanied by such certificate
and ending on the date of such certificate or, if any
Repurchase Event or Potential Repurchase Event has occurred
or is otherwise known to such officer, specifying the nature
and extent thereof and, if continuing, the action the
Sellers propose to take in respect thereof.
(d) Accountants' Certificate. Simultaneously with the
delivery of each set of annual financial statements referred
to in clause (a) above, a statement of the firm of
independent public accountants that reported on such
statements to the effect that nothing has come to their
attention to cause them to believe that any Potential
Repurchase Event or Repurchase Event existed on the date of
such financial statements.
(e) Receivables Schedule. As soon as available and in
any event within 20 days after the 20th day of each calendar
month, a Receivables Schedule dated as of the Domestic
Business Day next preceding the 20th day of such calendar
month.
(f) Notice of Repurchase Event. Promptly, and in any
event within five Domestic Business Days after any Seller
becomes aware of the occurrence of any Potential Repurchase
Event or Repurchase Event, a certificate of the chief
financial officer, the chief accounting officer or the
Director, Corporate Finance of such Seller setting forth the
details thereof and the action that the Sellers are taking
or propose to take with respect thereto.
(g) Notice of Debt Rating Change. Promptly upon, and
in any event within five Domestic Business Days after, any
change in the Debt Rating by Moody's, Standard & Poor's or a
substitute rating agency designated pursuant to Section
10.09, a certificate of the chief financial officer, the
chief accounting officer or the Director, Corporate Finance
of Stanley specifying the new Debt Rating, as so changed, of
Moody's, Standard & Poor's or such rating agency together,
in the case of any such change, with a statement of the date
of such change and a reasonably detailed description of the
facts and circumstances underlying such change known to any
Seller.
(h) SEC Filings. Promptly upon the transmission
thereof, copies of all registration statements (other than
the exhibits thereto and any registration statements on Form
S-8 or its equivalent), periodic financial information,
proxy materials and other information and reports, if any,
that Stanley shall have filed with the Securities and
Exchange Commission or that Stanley shall have sent to its
shareholders.
<PAGE>
(i) Notice of ERISA Matters. Promptly, and in any
event within 30 days, after any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of
any Reportable Event with respect to any Plan that might
constitute grounds for a termination of such Plan under
Title IV of ERISA, which termination could result in a
liability of $1,000,000 or more to any member of the
Controlled Group, or knows that the plan administrator of
any Plan has given or is required to give notice of any such
Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA equal to or in excess of
(or that could reasonably be expected to equal or exceed)
$1,000,000, a copy of such notice; or (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a
copy of such notice.
(j) Additional Information. From time to time such
additional information regarding the financial position or
business of Stanley and its Subsidiaries as the Agent, at
the request of any Purchaser, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records.
Each Seller will maintain financial records in accordance with
generally accepted accounting principles consistently applied,
and will permit representatives of any Purchaser at such
Purchaser's or (after the occurrence of a Repurchase Event)
Stanley's expense to visit the offices where books and records
relating to this Agreement are maintained and, as they relate
directly or indirectly to this Agreement, to examine and make
abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public
accountants. Each Seller agrees to cooperate and assist in such
visits and examinations, in each case at such reasonable times
and intervals as may be reasonably requested.
SECTION 5.03. Maintenance of Existence. (a) Except as
permitted in Section 5.05, each Seller shall maintain its
corporate existence.
(b) Except as permitted in Section 5.05, Stanley shall cause
each Principal Subsidiary to maintain its corporate existence.
(c) Except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect, each Seller shall,
and Stanley shall cause each Principal Subsidiary to, do all
things necessary to preserve, renew and keep in full force and
effect the licenses, permits, rights and franchises necessary to
the proper conduct of its business. Neither Stanley or any of
its Subsidiaries shall engage in any business if, as a result,
the general nature of the business, taken on a consolidated
basis, which would then be engaged in by Stanley and its
Subsidiaries would be substantially changed from the general
nature of the business engaged in by Stanley and its Subsidiaries
on the date of this Agreement.
SECTION 5.04. Dissolution. No Seller shall, nor shall
Stanley permit any Principal Subsidiary to, suffer or permit
dissolution or liquidation either in whole or in part or redeem
or retire any shares of its own stock or that of any Principal
Subsidiary, except through corporate reorganization to the extent
permitted by Section 5.05.
<PAGE>
SECTION 5.05. Consolidations, Mergers and Sales of Assets.
(a) No Seller shall, in a single transaction or series of related
transactions consolidate or merge with or into, or convey, sell,
lease, transfer or otherwise dispose of all or any substantial
part of its business, provided that, in each case, if immediately
after giving effect to such transaction or transactions, no
Repurchase Event or Potential Repurchase Event shall have
occurred and be continuing,
(i) Stanley may merge with another Person (including
its Subsidiaries) if Stanley is the corporation surviving
such merger,
(ii) Bostitch or MAC may merge with another Person
(other than Stanley) if Bostitch or MAC, as the case may be,
is the corporation surviving such merger, and
(iii) Bostitch or MAC may merge into or convey,
sell, lease or transfer all or substantially all of its
assets to, Stanley or to a Wholly Owned Subsidiary so long
as (A) Stanley or such Wholly Owned Subsidiary shall assume
the Obligations of Bostitch or MAC, as the case may be,
under this Agreement by an agreement reasonably satisfactory
to the Purchasers, and (B) the Purchasers shall receive a
written legal opinion confirming the validity and legality
of such assumption and that, in the case of a merger into or
transfer to a Wholly Owned Subsidiary, this Agreement
constitutes the legal, valid, binding and enforceable
obligation of such Wholly Owned Subsidiary, subject to
normal reasonable exceptions.
(b) Stanley will not permit or suffer any Subsidiary (other
than Bostitch or MAC) to enter into any merger or consolidation,
or liquidate, wind-up or dissolve (or suffer any liquidation,
wind-up or dissolution), discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction
or series of transactions, all or substantially all of its
business or property, whether now or hereafter acquired, unless
such action could not reasonably be expected to have a Material
Adverse Effect, provided that, in each case so long as
immediately after giving effect to such transaction or
transactions, no Repurchase Event or Potential Repurchase Event
shall have occurred and be continuing,
(i) any Wholly Owned Subsidiary (other than Bostitch
or MAC) may merge into or convey, sell, lease or transfer
all or substantially all of its assets to, a Seller or any
other Wholly Owned Subsidiary, and
(ii) any Subsidiary (other than Bostitch or MAC) may
enter into any merger or consolidation with another Person
(other than a Seller) if a Subsidiary (other than Bostitch
or MAC) or a Person that, as a result of such transaction or
transactions, becomes a Subsidiary is the corporation
surviving such merger.
SECTION 5.06. Ownership of Bostitch and MAC. Stanley shall
at all times cause each of Bostitch and MAC to be a Wholly Owned
Subsidiary.
SECTION 5.07. Use of Proceeds. No portion of the purchase
price proceeds for Receivables purchased by the Purchasers
hereunder will be used by any Seller (i) in connection with any
tender offer for, or other acquisition of, stock of any
<PAGE>
corporation with a view towards obtaining control of such other
corporation, (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, or (iii) for any purpose in violation
of any applicable law, statute, rule or regulation, or order,
award, judgment, decree, writ or determination of an arbitrator
or a court or other governmental authority or regulatory body.
SECTION 5.08. Compliance with Laws. Each of the Sellers
shall, and Stanley shall cause each of its Subsidiaries to,
comply with all applicable laws, statutes, rules and regulations
(including, without limitation, Environmental Laws), and all
orders, awards, judgments, decrees, writs or determinations of
any arbitrator or a court or other governmental authority or
regulatory body (domestic or foreign) applicable to it, except
such non-compliance that could not reasonably be expected to
result in a Material Adverse Effect or a material adverse effect
on any Seller's ability to perform its obligations hereunder, in
each case at the time of such non-compliance or in the
foreseeable future.
SECTION 5.09. Payment of Taxes. Each of the Sellers shall,
and Stanley shall cause its Subsidiaries to, pay or cause to be
paid, when due, all taxes, charges and assessments and all other
lawful claims required to be paid by such Seller or such
Subsidiary except (a) as contested in good faith and by
appropriate proceedings diligently conducted, if adequate
reserves have been established with respect thereto in conformity
with generally accepted accounting principles and (b) where such
nonpayment could not reasonably be expected to result in a
Material Adverse Effect or a material adverse effect on any
Seller's ability to perform its obligations hereunder.
SECTION 5.10. ERISA. (a) Each Seller will, and Stanley
will cause each member of the Controlled Group to, comply with
ERISA and all rules and regulations thereunder in all material
respects with respect to each Plan.
(b) Stanley shall not, and shall not permit any of its
Subsidiaries to, take any action that it reasonably anticipates
will result in the assessment of a Withdrawal Liability upon
Stanley and members of the Controlled Group that would have a
Material Adverse Effect. For purposes of this Section 5.10(b),
the amount of Withdrawal Liability of Stanley and members of the
Controlled Group at any date shall be the aggregate present value
of the amount claimed to have been incurred less any portion
thereof that Stanley and members of the Controlled Group have
paid or as to which Stanley reasonably believes, after
appropriate consideration of possible adjustments arising under
Sections 4219 and 4221 of ERISA, it and members of the Controlled
Group will have no liability, provided that Stanley shall obtain
prompt written advice from independent actuarial consultants
supporting such determination. Stanley agrees once in each
calendar year, beginning with December 1994, to deliver to the
Agent the most currently available estimate of the Withdrawal
Liability of Stanley and members of the Controlled Group with
respect to each Multiemployer Plan, if any, in which they
participate.
SECTION 5.11. Cash Flow Coverage. Stanley shall cause
Consolidated Cash Flow to equal or exceed 125% of Consolidated
Cash Expenditures at the end of each fiscal quarter for the
twelve-month period then ended. The defined terms used in this
Section shall be construed in accordance with generally accepted
accounting principles consistently applied and as follows:
<PAGE>
(a) "Consolidated Cash Flow" means for any fiscal
period the sum of (i) consolidated earnings before income
taxes of Stanley and its Consolidated Subsidiaries for such
fiscal period (including any earnings representing net gain
on disposition of assets) before extraordinary items and
their tax effects and before income from discontinued
operations; (ii) to the extent such amount is greater than
zero, (x) consolidated interest expense for Stanley and its
Consolidated Subsidiaries for such fiscal period, minus (y)
consolidated interest earnings for Stanley and its
Consolidated Subsidiaries for such fiscal period; and (iii)
consolidated depreciation and amortization for Stanley and
its Consolidated Subsidiaries for such fiscal period; and
(b) "Consolidated Cash Expenditures" means for any
fiscal period the sum of (i) consolidated interest expense
of Stanley and its Consolidated Subsidiaries, (ii)
consolidated capital expenditures of Stanley and its
Consolidated Subsidiaries and (iii) the aggregate amount of
all dividends paid or declared by Stanley on any of its
capital stock during such fiscal period.
ARTICLE VI
REPURCHASE EVENTS
SECTION 6.01. Repurchase Events. The occurrence of any one
or more of the following events shall constitute a "Repurchase
Event" under this Agreement:
(a) any Seller or Stanley shall fail to pay any amount
due and owing by such Seller under this Agreement (other
than an amount referred to in clause (b) below) within 5
Domestic Business Days after the same becomes due; or
(b) any Seller or Stanley shall fail to repurchase any
Purchased Receivable that such Seller is required to
repurchase hereunder and to pay the full Repurchase Price
therefor, in each case when and as required by Section 2.06;
or
(c) Any Seller shall fail to observe or perform any
covenant contained in Section 5.03(a), Section 5.04 (as to
any Seller), Section 5.05(a) or Section 5.11; or
(d) any Seller shall fail to observe or perform any
covenant or agreement contained in this Agreement (other
than those covered by clause (a), (b), or (c) above)
required to be performed or observed by such Seller for
thirty days after written notice thereof has been given to
Stanley by the Agent at the request of any Purchaser; or
(e) any representation, warranty, certification or
statement made by any Seller in Article IV (other than the
representation and warranty in Section 4.15) or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed
made); or
<PAGE>
(f) any Seller shall fail to pay when due (whether by
acceleration or otherwise) any principal of or interest on
any item or items of Debt in an aggregate amount that, when
added to all such other defaulted Debt, shall equal or
exceed $10,000,000, or any event shall occur that would
permit the holder of any such item or items of Debt of any
Seller in such aggregate amount (or any trustee, fiduciary
or agent on behalf of such holder, with or without the
assent of or direction by such holder) to accelerate such
Debt, to terminate its commitment to fund such Debt or to
require Stanley or such Seller to purchase, or cause the
purchase of, such Debt; or
(g) Any Seller or any Principal Subsidiary shall
commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect,
or shall consent to the entry of any order for relief in an
involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of such Seller or such Principal Subsidiary or for
any substantial part of its property, or shall make any
general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action in furtherance of any of the
foregoing; or
(h) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of any Seller
or any Principal Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
other similar official of such Seller or such Principal
Subsidiary or for any substantial part of its property, or
ordering the winding up or liquidation of its affairs and
such decree or order shall remain unstayed and in effect for
a period of 30 consecutive days; or
(i) if (i) there shall be at any time any "accumulated
funding deficiency," as defined in ERISA, with respect to
any Plan or any trust created thereunder, whether or not
waived, which deficiency, when added to all other such
deficiencies, shall equal or exceed $25,000,000; or (ii) a
trustee shall be appointed by a United States District Court
to administer any Plan (other than a Multiemployer Plan); or
(iii) the PBGC shall institute proceedings to terminate any
Plan (other than a Multiemployer Plan); or (iv) any member
of the Controlled Group shall incur any liability to the
PBGC in connection with any Plan (other than a Multiemployer
Plan), which liability, when added to all other such
liabilities, shall equal or exceed $5,000,000; or (v) any
member of the Controlled Group, any Plan (other than a
Multiemployer Plan), or any trust created under any Plan
(other than a Multiemployer Plan) shall engage in a
"prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) that would subject
such Plan or any other Plan, any trust created thereunder,
or any trustee or administrator thereof, or any member of
the Controlled Group or any Person dealing with any such
Plan or trust, to either the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section
4975 of the Code; or (vi) any member of the Controlled Group
shall fail to make full payment when due to all amounts
that, under the provisions of any Plan, any member of the
Controlled Group is required to pay as contributions
thereto, and which amount, when added to all other such
amounts, shall equal or exceed $5,000,000; or
<PAGE>
(j) if any of the following shall occur and such
occurrence would have, or could reasonably be expected to
have, a Material Adverse Effect: (i) a trustee shall be
appointed by a United States District Court to administer
any Plan that is a Multiemployer Plan; or (ii) the PBGC
shall institute proceedings to terminate any such Plan; or
(iii) any member of the Controlled Group shall incur any
liability to the PBGC in connection with any such Plan; or
(iv) any member of the Controlled Group, any such Plan, or
any trust created under any such Plan shall engage in a
"prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) that would subject
such Plan or any other Plan, any trust created thereunder,
or any trustee or administrator thereof, or any member of
the Controlled Group or any Person dealing with any such
Plan or trust, to either the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section
4975 of the Code; or
(k) if there shall remain in force, undischarged,
unsatisfied and unstayed, for more than 30 days any final
judgment against Stanley or any of its Subsidiaries in an
amount that, when added to other outstanding final
judgments, undischarged, unsatisfied and unstayed, against
Stanley or any of its Subsidiaries, exceeds $5,000,000; or
(l) the Unsupported Stanley Debt shall at any time
receive a Debt Rating of Less Than Investment Grade; or
(m) (i) any Person or two or more Persons acting in
concert shall have acquired, in a single transaction or
series of transactions, beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 25%
or more of the outstanding shares of the Voting Stock of
Stanley (other than Voting Stock owned by Stanley's two
existing employee stock ownership plans for its hourly and
salaried employees, respectively, or by an employee stock
ownership plan or plans, sponsored and established by
Stanley, succeeding to the interest of such existing stock
ownership plans); or (ii) as of any date a majority of the
Board of Directors of Stanley consists of individuals who
were not either (A) directors of Stanley as of the
corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of
Stanley of which a majority consisted of individuals
described in clause (A), or (C) selected or nominated to
become directors by the Board of Directors of Stanley of
which a majority consisted of individuals described in
clause (A) and individuals described in clause (B); or
(n) if any of Stanley's obligations under Article IX
ceases to be in full force and effect, or if Stanley shall
contest, or repudiate or deny in writing, the validity or
enforceability of any of its obligations under Article IX.
SECTION 6.02. Purchase or Repurchase Upon a Repurchase
Event. If a Repurchase Event shall occur and be continuing,
(a) If such Repurchase Event is a Repurchase Event set
forth in Section 6.01(l) or Section 6.01(m), any Purchaser
<PAGE>
may, by notice to Stanley, the Agent and the other
Purchasers, (i) terminate and be relieved of all of its
obligations to the Sellers hereunder and under its
Commitment (which obligations shall thereupon terminate,
unless such Purchaser's Commitment is assumed by a third
party that acquires such Purchaser's Beneficial Interest)
and (ii) require the Sellers to, and the Sellers shall,
purchase from such Purchaser such Purchaser's Beneficial
Interest on a date specified in such notice (that shall be
not less than 5 nor more than 15 Domestic Business Days
after such notice is given), at a purchase price (payable to
the Agent for such Purchaser's account in the manner and at
the time set forth in Section 2.10(a)) equal to the sum of
(I) such Purchaser's Beneficial Interest Percentage
multiplied by the Opening Balance for the Settlement Period
during which the date so specified for such purchase shall
occur plus (II) subject to any necessary adjustment required
by Section 2.10(c)(i)(A), the product obtained by
multiplying (A) such Purchaser's Commitment Percentage times
(B) the product of such Opening Balance times the Yield Rate
for such Settlement Period times (C) a fraction, the
denominator of which is 360 and the numerator of which is
the number of days elapsed from (and including) the first
day of such Settlement Period to (but excluding) the date so
specified for such purchase plus (III) subject to any
necessary adjustment required by Section 2.10(c)(ii), an
amount in respect of Facility Fees equal to the product
obtained by multiplying (A) such Purchaser's Commitment
Percentage times (B) the product of the Facility Fee Rate
then in effect times the total Commitments as in effect on
the first day of such Settlement Period times (C) a
fraction, the denominator of which is 360 and the numerator
of which is the number of days elapsed from (and including)
the first day of such Settlement Period to (but excluding)
the date so specified for such purchase, plus (IV) all other
amounts payable to such Purchaser hereunder and under the
other Facility Documents;
(b) if such Repurchase Event is a Repurchase Event set
forth in Section 6.01(g) or Section 6.01(h), (i) all of the
Commitments shall be automatically terminated, immediately
upon the occurrence thereof, without notice or other action
by or on behalf of the Agent or any Purchaser, and (ii) the
Sellers shall purchase from the Purchasers all of the
Purchased Receivables on that date that is 5 Domestic
Business Days after the occurrence of such Repurchase Event
at a purchase price (payable to the Agent for the
Purchasers' account (or the Agent's account, as the case may
be) in the manner and at the time set forth in Section
2.10(a)) equal to the sum of (I) for each Purchaser, such
Purchaser's Beneficial Interest Percentage multiplied by the
Opening Balance for the Settlement Period during which such
fifth Domestic Business Day shall occur plus (II) subject to
any necessary adjustment required by Section 2.10(c)(i)(A),
the product obtained by multiplying (A) the product of such
Opening Balance times the Yield Rate for such Settlement
<PAGE>
Period times (B) a fraction, the denominator of which is 360
and the numerator of which is the number of days elapsed
from (and including) the first day of such Settlement Period
to (but excluding) such fifth Domestic Business Day plus
(III) subject to any necessary adjustment required by
Section 2.10(c)(ii), an amount in respect of Facility Fees
equal to the product obtained by multiplying (A) the product
of the Facility Fee Rate then in effect times the total
Commitments as in effect on the first day of such Settlement
Period times (B) a fraction, the denominator of which is 360
and the numerator of which is the number of days elapsed
from (and including) the first day of such Settlement Period
to (but excluding) such fifth Domestic Business Day, plus
(IV) all other amounts payable to the Purchasers and the
Agent hereunder and under the other Facility Documents; and
(c) if such Repurchase Event is any Repurchase Event
other than those referred to in paragraph (a) or (b) of this
Section, the Required Purchasers may, by notice from the
Agent (given at the direction of the Required Purchasers) to
Stanley (i) terminate all of the Commitments (which shall
thereupon terminate) and (ii) require the Sellers to, and
the Sellers shall, purchase from the Purchasers all of the
Purchased Receivables on a date specified in such notice
(that shall be not less than 5 nor more than 15 Domestic
Business Days after such notice is given), at a purchase
price (payable to the Agent for the Purchasers' account (or
the Agent's account, as the case may be) in the manner and
at the time set forth in Section 2.10(a)) equal to the sum
of (I) for each Purchaser, such Purchaser's Beneficial
Interest Percentage multiplied by the Opening Balance for
the Settlement Period during which the date so specified for
such purchase shall occur plus (II) subject to any necessary
adjustment required by Section 2.10(c)(i)(A), the product
obtained by multiplying (A) the product of such Opening
Balance times the Yield Rate for such Settlement Period
times (B) a fraction, the denominator of which is 360 and
the numerator of which is the number of days elapsed from
(and including) the first day of such Settlement Period to
(but excluding) the date so specified for such purchase plus
(III) subject to any necessary adjustment required by
Section 2.10(c)(ii), an amount in respect of Facility Fees
equal to the product obtained by multiplying (A) the product
of the Facility Fee Rate then in effect times the total
Commitments as in effect on the first day of such Settlement
Period times (B) a fraction, the denominator of which is 360
and the numerator of which is the number of days elapsed
from (and including) the first day of such Settlement Period
to (but excluding) the date so specified for such purchase,
plus (IV) all other amounts payable to the Purchasers and
the Agent hereunder and under the other Facility Documents.
SECTION 6.03. Billing and Collection of Receivables. Upon
the occurrence of any Repurchase Event, the Agent may, and at the
direction of the Required Purchasers shall, assume all the
Sellers' duties for the billing and collection of the Purchased
Receivables. In such event, the provisions of Section 2.07(b)
shall apply, and in performance of such duties, the Agent may
contract with third-party independent contractors for the
performance of any or all of such duties. Upon such assumption,
the Sellers shall pay the Agent's Servicing Fees and the Agent's
Costs and Expenses to the Agent as provided in Section 2.08(d).
SECTION 6.04. Other Rights and Remedies. (a) Without
limiting any Purchaser's other rights and remedies under this
Agreement or otherwise available to such Purchaser at law or in
equity, if the Sellers shall be required to purchase such
Purchaser' Beneficial Interest under Section 6.02(a) and shall
fail to do so or to pay the purchase price therefor when and as
required thereby, such Purchaser may sell such Beneficial
Interest or portions thereof without the consent of any Seller
(notwithstanding the provisions of Section 10.07 hereof) in one
or more separate sales, to any other Person with or without
recourse to the Sellers, or any of them, and with or without the
benefits of and recourse to any Seller under this Agreement, and
apply the proceeds of such sale to the purchase price due to such
Purchaser due under Section 6.02(a). Such Purchaser may commence
an action or, from time to time, actions against Sellers in order
to recover from the Sellers costs and/or losses incurred by such
<PAGE>
Purchaser by reason of the Sellers' failure to purchase such
Beneficial Interest in accordance with the provisions of this
Agreement or to recover from the Sellers amounts otherwise due
and owing to such Purchaser hereunder.
(b) Without limiting the Purchasers' other rights and
remedies under this Agreement or otherwise available to the
Purchasers at law or in equity, if the Sellers shall be required
to repurchase the Purchased Receivables under Section 6.02(b) or
Section 6.02(c) and shall fail to do so or to pay the repurchase
price therefor when and as required thereby, the Purchasers may
sell any or all of the Purchased Receivables without notice to or
consent of any Seller (notwithstanding the provisions of Section
10.07 and provided that if notice shall be required under the UCC
as enacted and then in effect in any relevant jurisdiction, then
10 days prior notice of the time and place of any public sale, or
of the time after which any private sale or other disposition may
be made, shall be sufficient and considered to be commercially
reasonable) in one or more separate sales, to any other Person
with or without recourse to the Sellers, or any of them, and with
or without the benefits of and recourse to any Seller under this
Agreement, and apply the proceeds of such sale to such repurchase
price due to such Purchasers. The Purchasers may commence an
action or, from time to time, actions against Sellers in order to
recover from the Sellers costs and/or losses incurred by the
Purchasers by reason of the Sellers' failure to repurchase the
Purchased Receivables in accordance with the provisions of this
Agreement or to recover from the Sellers amounts otherwise due
and owing to the Purchasers hereunder.
(c) Without regard to whether the Agent shall have assumed
the Sellers' duties and responsibilities for the billing and the
collection of the Purchased Receivables, in the event that the
Sellers shall be required but shall fail to repurchase the
Purchased Receivables when and as required under Section 6.02,
(i) thereafter Sellers shall not be entitled to any Sellers'
Servicing Fee, (ii) no Seller shall be entitled to receive or
retain any sum collected in respect of any Purchased Receivable,
(iii) except as expressly permitted by Section 2.07(b)(i)(C), no
Seller shall withdraw or otherwise remove, or permit the removal
other than by the Agent or its agents, of any funds in any
Lockbox Account, and (iv) each Seller shall transmit and deliver
to the Agent, immediately upon receipt thereof, all payments on
account of any Purchased Receivable that such Seller may receive.
In such event, the Agent may, and at the direction of any
Purchaser shall (x) direct any or all of the Obligors on the
Purchased Receivables to remit any and all payments thereon to
the Agent or such other Person as the Agent may designate, and
for that purpose the Agent may date and deliver to the Obligors
on Purchased Receivables the Notices to Obligors delivered to
Agent by the Sellers at various times pursuant to Section 3.02,
and (y) assume control of and dominion over all funds then on
deposit in or thereafter deposited into each Lockbox Account, and
for such purpose the Agent may date, otherwise complete and
deliver to each Lockbox Depository a Notice to Lockbox Depository
delivered to the Agent pursuant to the provisions of Section
2.07(a)(vii). The Agent may, in any Seller's name, endorse all
remittances received and all notes (if any) evidencing
obligations under the Purchased Receivables and any assignments
thereof. Each Seller does hereby irrevocably constitute and
appoint the Agent and its officers its true and lawful attorney
with full power of substitution, for such Seller and in its name,
place and stead, to endorse the name of such Seller on all
checks, collection receipts or instruments given in payment or
part payment of any Purchased Receivable; provided that the power
herein conferred shall be exercisable only if, and from and after
such time as, the Sellers shall have been required but shall have
<PAGE>
failed to repurchase the Purchased Receivables when and as
required under Section 6.02.
SECTION 6.05. Security Interest; Offset. In addition to,
and not in limitation of, all rights of offset that any Purchaser
may have under applicable law, each Seller hereby grants to each
Purchaser, and to each Participant, Assignee or other Transferee,
as security for the full and punctual payment and performance of
such Seller's or (in the case of Stanley) all of the Sellers'
Obligations, a continuing Lien on all deposits and other sums
credited by or due from such Purchaser (or such Participant,
Assignee or other Transferee) to such Seller or subject to
withdrawal by such Seller; and regardless of the adequacy of any
collateral or other means of obtaining repayment of such Seller's
or (in the case of Stanley) the Sellers' Obligations, such
Purchaser (and each such Assignee and, to the extent permitted by
applicable law, each such Participant and other Transferee) may,
at any time after the failure of the Sellers to repurchase the
Purchased Receivables or to purchase a Purchaser's Beneficial
Interest when and as required under Section 6.02 and without
notice to any Seller, set off the whole or any portion or
portions of any or all such deposits and other sums against such
Obligations, whether or not any other Person or Persons could
also withdraw money therefrom.
SECTION 6.06. Notice of Repurchase Event. The Agent shall
give notice to the Sellers pursuant to Section 6.01(d) promptly
upon being requested to do so by any Purchaser and shall
thereupon notify all the Purchasers thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities. Each
Purchaser hereby appoints and authorizes the Agent to act as its
agent hereunder and under the other Facility Documents with such
powers as are specifically delegated to the Agent by the terms
hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent: (a) shall have no
duties or responsibilities except as expressly set forth in this
Agreement and the other Facility Documents, and shall not by
reason of this Agreement or any other Facility Document be a
trustee for any Purchaser; (b) shall not be responsible to the
Purchasers for any recitals, statements, representations or
warranties contained in this Agreement or any other Facility
Document, or in any certificate or other document referred to or
provided for in, or received by any Purchaser under, this
Agreement or any other Facility Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Facility Document or any other document
referred to or provided for herein or therein or for any failure
by any Seller to perform, pay or satisfy any of its Obligations
hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or
under any other Facility Document except to the extent requested
by the Required Purchasers, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under
any other Facility Document or any other document or instrument
referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-
<PAGE>
in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The provisions of this Article VII are
solely for the benefit of the Agent and the Purchasers, and no
Seller shall have any rights as a third party beneficiary of any
of the provisions hereof. In performing its functions and duties
under this Agreement and under the other Facility Documents, the
Agent shall act solely as agent of the Purchasers and does not
assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for any
Seller. The duties of the Agent shall be ministerial and
administrative in nature, and the Agent shall not have by reason
of this Agreement or any other Facility Document a fiduciary
relationship in respect of any Purchaser.
SECTION 7.02. Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telefax,
telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or
any other Facility Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed
by the Required Purchasers (or all the Purchasers when expressly
required hereby or thereby), and such instructions of the
Required Purchasers in any action taken or failure to act
pursuant thereto shall be binding on all of the Purchasers.
SECTION 7.03. Knowledge of Repurchase Events. The Agent
shall not be deemed to have knowledge of the occurrence of any
Potential Repurchase Event or Repurchase Event (other than the
non-payment of amounts known by the Agent to be due from the
Sellers) unless the Agent has received notice from a Purchaser or
a Seller specifying such Potential Repurchase Event or Repurchase
Event and stating that such notice is a "Notice of Repurchase
Event". In the event that the Agent receives such a notice of
the occurrence of a Potential Repurchase Event or Repurchase
Event, the Agent shall give prompt notice thereof to the
Purchasers. The Agent shall give each Purchaser prompt notice of
each non-payment of monies that the Agent knows are required to
be paid to the Agent by any Seller pursuant hereto, whether or
not it has received any notice of the occurrence of such non-
payment. The Agent shall (subject to Section 10.05) take such
action with respect to such Potential Repurchase Event or
Repurchase Event as shall be directed by the Required Purchasers,
provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with
respect to such Potential Repurchase Event or Repurchase Event as
it shall deem advisable in the best interests of the Purchasers.
SECTION 7.04. Rights of Agent as a Purchaser. With respect
to its Beneficial Interest, the Agent in its capacity as a
Purchaser hereunder shall have the same rights and powers
hereunder as any other Purchaser and may exercise the same as
though it were not acting as the Agent, and the term "Purchaser"
or "Purchasers" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may
(without having to account therefor to any Purchaser) accept
deposits from, lend money to and generally engage in any kind of
banking, trust or other business with any Seller (and any of
Stanley's Subsidiaries or any of any Seller's Affiliates) as if
it were not acting as the Agent, and the Agent may accept fees
and other consideration from any Seller (in addition to any
<PAGE>
agency fees and arrangement fees heretofore agreed to between the
Sellers and the Agent) for services in connection with this
Agreement or any other Facility Document or otherwise without
having to account for the same to the Purchasers.
SECTION 7.05. Indemnification. Each Purchaser severally
agrees to indemnify the Agent, to the extent the Agent shall not
have been reimbursed by the Sellers, ratably in accordance with
its Commitment Percentage, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, counsel
fees and disbursements) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this
Agreement or any other Facility Document or any other documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (excluding, unless a
Repurchase Event has occurred and is continuing, the normal
administrative costs and expenses incident to the performance of
its agency duties hereunder, but including the Agent's Servicing
Fees and the Agent's Costs and Expenses due to the Agent under
Section 2.07(b) or Section 6.03, in the event the Agent shall
assume, pursuant to either of said provisions, the Sellers'
duties and responsibilities for the collection and billing of the
Purchased Receivables and excluding any of such items for which
the Agent is not entitled to reimbursement by the Sellers or any
of them) or the enforcement of any of the terms hereof or thereof
or any such other documents; provided that no Purchaser shall be
liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the
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.
SECTION 7.06. Original Purchasers Treated as Owners. The
Agent may deem and treat each Purchaser identified on the
signature pages hereof as the owner and holder of such
Purchaser's Beneficial Interest for all purposes hereof unless
and until a written notice of the assignment or transfer thereof,
expressly consented to by Stanley (if required by Section 10.07),
shall have been filed with the Agent. Any requests, authority or
consent of any Person who at the time of making such request or
giving such authority or consent is the owner and holder of any
Beneficial Interest shall be conclusive and binding on any
subsequent owner and holder, transferee or assignee of that
Beneficial Interest.
SECTION 7.07. Non-Reliance on Agent and Other Purchasers.
Each Purchaser agrees that it has, independently and without
reliance on the Agent or any other Purchaser, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of the Sellers, the Purchased Receivables and
decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other
Purchaser, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this
Agreement or any of the other Facility Documents. The Agent
shall not be required to keep itself informed as to the
performance or observance by the Sellers of this Agreement or any
of the other Facility Documents or any other document referred to
or provided for herein or therein or to inspect the properties or
books of the Sellers or any other Person. Except for notices,
reports and other documents and information expressly required to
be furnished to the Purchasers by the Agent hereunder or under
<PAGE>
the other Facility Documents, the Agent shall not have any duty
or responsibility to provide any Purchaser with any credit or
other information concerning the affairs, financial condition or
business of any Seller, any of Stanley's Subsidiaries or any
other Person (or any of their Affiliates) that may come into the
possession of the Agent.
SECTION 7.08. Failure to Act. Except for action expressly
required of the Agent hereunder or under the other Facility
Documents, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction by the
Purchasers of their indemnification obligations under Section
7.05 against any and all liability and expense that may be
incurred by the Agent by reason of taking, continuing to take, or
failing to take any such action.
SECTION 7.09. Resignation or Removal of Agent. Subject to
the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving 30 days prior
notice thereof to the Purchasers and Stanley and the Agent may be
removed at any time with or without cause by the Purchasers
holding more than 50% of the Commitments or, if the Commitments
are no longer in effect, more than 50% of the Beneficial
Interests (the "Majority Purchasers"). Upon any such resignation
or removal, the Majority Purchasers shall have the right to
appoint a successor Agent. If no successor Agent shall have been
so appointed by the Majority Purchasers and shall have accepted
such appointment within 30 days after the retiring Agent's notice
of resignation or the Majority Purchasers' removal of the
retiring Agent, then the retiring Agent may, on behalf of the
Purchasers, appoint a successor Agent. Any successor Agent shall
be a bank that has a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
the Agent hereunder.
SECTION 7.10. Transmittal of Documents. Unless otherwise
requested in writing by such Purchaser, promptly upon receipt
thereof the Agent shall transmit to each Purchaser, in the form
received, a copy of all Receivables Schedules, Settlement
Statements, notices or other writings received by the Agent from
any Seller, provided that, unless specifically requested by a
Purchaser, the Agent shall not be required to deliver to the
Purchasers copies of any Notice to Obligor, Notice to Lockbox
Depository or any other material relating to the Agent's billing
or collection of the Purchased Receivables.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Euro-Dollar Rate
Inadequate or Unfair. If on or prior to the first day of any
Settlement Period:
<PAGE>
(a) the Agent determines in good faith that deposits
in Dollars (in the applicable amounts) are not being offered
in the London interbank market for such Settlement Period,
or
(b) the Required Purchasers advise the Agent in good
faith that the London Interbank Offered Rate as determined
by the Agent will not adequately and fairly reflect the cost
to such Purchasers of maintaining the Euro-Dollar Rate as
the Yield Rate for such Settlement Period,
the Agent shall forthwith give notice thereof to Stanley and the
Purchasers, whereupon until the Agent notifies Stanley that the
circumstances giving rise to such suspension no longer exist, the
Yield Rate for each Settlement Period shall be the Adjusted Base
Rate for such Settlement Period. The Agent (in the case of
clause (a) above) and the Purchasers (in the case of clause (b)
above) agree to deliver to Stanley a written explanation, in
reasonable detail, of the basis for their determination.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, regulatory body, central
bank or comparable agency charged with the interpretation or
administration thereof (any such authority, bank or agency being
referred to as an "Authority" and any such event being referred
to as a "Change of Law"), or compliance by any Purchaser (or its
Office) with any request or directive (whether or not having the
force of law) of any Authority shall make it unlawful or
impossible for any Purchaser (or its Office) to maintain the
Euro-Dollar Rate as the Yield Rate, and such Purchaser shall so
notify the Agent, the Agent shall forthwith give notice thereof
to the other Purchasers and Stanley, whereupon until such
Purchaser notifies Stanley and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of
such Purchaser to maintain the Euro-Dollar Rate as the Yield Rate
for any Settlement Period shall be suspended. Before giving any
notice to the Agent pursuant to this Section, such Purchaser
shall designate a different Office if such designation will avoid
the need for giving such notice and will not, in the judgment of
such Purchaser, be otherwise disadvantageous to such Purchaser.
If any Purchaser shall determine that it may not lawfully
continue to maintain the Euro-Dollar Rate as the Yield Rate for
the then-current or any subsequent Settlement Period and shall so
specify in such notice, if the Yield Rate for any such affected
Settlement Period shall be the Euro-Dollar Rate, the Yield Rate
shall then be automatically converted to, and for each Settlement
Period thereafter during the period of such suspension for which
the Stanley shall have selected the Euro-Dollar Rate as the Yield
Rate the Yield Rate shall be, a blended rate based on the
Adjusted Base Rate for such Settlement Period for each such
Purchaser, to the extent of and in proportion to its Beneficial
Interest, and on the Euro-Dollar Rate for such Settlement Period
for each other Purchaser; in such circumstance, the Agent shall
make appropriate adjustments in distributing to the Purchasers
their respective pro rata shares of amounts paid by the Sellers
in respect of the Purchasers' Yield for each such Settlement
Period.
SECTION 8.03. Increased Cost and Reduced Return. (a) If
after the date hereof, a Change of Law or compliance by any
Purchaser (or its Office) with any request or directive (whether
or not having the force of law) of any Authority:
<PAGE>
(i) shall subject any Purchaser (or its Office) to any
tax, duty or other charge with respect to Settlement Periods
for which the Yield Rate is determined by reference to the
London Interbank Offered Rate or its obligation to maintain
the Euro-Dollar Rate as the Yield Rate for any Settlement
Period, or shall change the basis of taxation of payments to
any Purchaser (or its Office) of amounts due to it in
respect of Settlement Periods for which the Yield Rate is so
determined (except for changes in the rate of tax on the
overall net income of such Purchaser or its Office imposed
by the jurisdiction in which such Purchaser's principal
executive office or Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits
with or for the account of, or credit extended by, any
Purchaser (or its Office); or
(iii) shall impose on any Purchaser (or its Office) or
on the London interbank market any other condition affecting
its obligation to maintain the Euro-Dollar Rate as a basis
for the determination of the Yield Rate for any Settlement
Period;
and the result of any of the foregoing is to increase the cost to
such Purchaser (or its Office) of so maintaining the Euro-Dollar
Rate as a basis for determining the Yield Rate for any Settlement
Period, or to reduce the amount of any sum received or receivable
by such Purchaser (or its Office) under this Agreement with
respect any Settlement Period for which the Yield Rate is the
Euro-Dollar Rate for such Settlement Period, by an amount deemed
by such Purchaser to be material, then, within 15 days after
demand by such Purchaser (with a copy to the Agent), Sellers
shall pay to such Purchaser such additional amount or amounts as
will compensate such Purchaser for such increased cost or
reduction.
(b) If any Purchaser shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof, or
compliance by any Purchaser (or its Office) with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any Authority, has or would have the effect of
reducing the rate of return on such Purchaser's capital as a
consequence of its obligations hereunder to a level below that
which such Purchaser could have achieved but for such adoption,
change or compliance (taking into consideration such Purchaser's
policies with respect to capital adequacy) by an amount deemed by
such Purchaser to be material, then from time to time, within
15 days after demand by such Purchaser, Sellers shall pay to such
Purchaser such additional amount or amounts as will compensate
such Purchaser for such reduction.
(c) Each Purchaser will promptly notify Stanley and the
Agent of any event of which it has knowledge, occurring after the
date hereof, that will entitle such Purchaser to compensation
pursuant to this Section (provided that failure to give such
notice shall not affect such Purchaser's right to such
compensation for any period commencing not more than 60 days
before such Purchaser knew of such event) and will designate a
<PAGE>
different Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the
judgment of such Purchaser, be otherwise disadvantageous to such
Purchaser. A certificate of any Purchaser claiming compensation
under this Section and setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder and the
basis therefor shall be conclusive in the absence of manifest
error. In determining such amount, such Purchaser may use any
reasonable averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be applicable
with respect to any Participant, Assignee or other Transferee,
and any calculations required by such provisions shall be made
based upon the circumstances of such Participant, Assignee or
other Transferee.
SECTION 8.04. Compensation. Upon the request of any
Purchaser, delivered to Stanley and the Agent, the Sellers shall
pay to such Purchaser such amount or amounts as shall compensate
such Purchaser for any loss, cost or expense incurred by such
Purchaser as a result of:
(a) any purchase of a Beneficial Interest or repurchase
of any Purchased Receivables pursuant to Section 6.02 or
Section 6.04, in each case on a date other than the last day
of a Settlement Period; or
(b) any failure by the Sellers to sell to the
Purchasers the Initial Offered Receivables or any
Subsequently Offered Receivables on the date for the
Purchase thereof;
such compensation to include, without limitation, any loss, cost
or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Purchaser (i) to
maintain the Euro-Dollar Rate as the Yield Rate for the
Settlement Period in which such payment, Purchase, purchase or
repurchase is made (in the case of clause (a) above), or (ii) to
fund the Purchase Price for such Receivables (in the case of
clause (b) above).
ARTICLE IX
UNCONDITIONAL GUARANTY
SECTION 9.01. Guaranty. Stanley hereby irrevocably and
unconditionally guarantees, as a primary obligor and not merely
as a surety, to the Purchasers and the Agent the due and punctual
payment of the principal of and interest on, and the due and
punctual performance of, the Obligations of Bostitch and of MAC
and any and all other amounts due from, or obligations of,
Bostitch or MAC under or pursuant to this Agreement or any other
Facility Document (collectively, the "Guaranteed Obligations"),
when and as the same shall become due and payable (whether at
maturity or otherwise) or are required to be performed or
observed in accordance with the terms hereof and thereof.
Stanley's guaranty under this Section is an absolute, present and
continuing guaranty of payment and not of collectibility, and is
in no way conditional or contingent upon any attempt to collect
<PAGE>
from, or to obtain or enforce performance by, Bostitch or MAC, or
any other guarantor of the Guaranteed Obligations (or any portion
thereof) or upon any other action, occurrence or circumstances
whatsoever. In the event that Bostitch or MAC shall fail so to
pay, perform or observe any of the Guaranteed Obligations,
Stanley will pay, perform or cause observance of the same
forthwith, without demand, presentment, protest or notice of any
kind (all of which are waived by Stanley to the fullest extent
permitted by law), in Dollars (in the case of payment), to the
Agent at the place for payment specified herein. Stanley further
agrees, promptly after demand, to pay to the Purchasers and the
Agent the reasonable costs and expenses incurred in connection
with enforcing the rights of the Purchasers and the Agent against
Stanley under this Article IX (whether in a bankruptcy proceeding
or otherwise) following any default in payment, performance or
observance of any of the Guaranteed Obligations or the
obligations of Stanley hereunder, including, without limitation,
the reasonable fees and expenses of the Agent's or any
Purchaser's counsel.
SECTION 9.02. Absolute, Unconditional Guaranty. The
obligations of Stanley under this Article IX are and shall be
absolute and unconditional, irrespective of the validity,
regularity or enforceability of this Agreement, any of the
Guaranteed Obligations or any of the Facility Documents, shall
not be subject to any counterclaim, set-off, deduction or defense
based upon any claim Stanley may have against MAC, Bostitch, any
Purchaser or the Agent hereunder or otherwise, and shall remain
in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, to the fullest
extent permitted by law, any circumstance or condition whatsoever
(whether or not Stanley shall have any knowledge or notice
thereof), including, without limitation:
(a) any amendment or modification of or supplement to
this Agreement, any other Facility Document or any other
instrument referred to herein or therein, or any assignment
or transfer of (or any interest) in this Agreement, any
other Facility Document or any other instrument referred to
herein or therein, or any furnishing or acceptance of
additional security for any of the Guaranteed Obligations;
(b) any waiver, consent or extension hereunder or
under any other Facility Document or any such other
instrument, or any indulgence or other action or inaction
under or in respect of, or any extensions or renewals of,
this Agreement, any other Facility Document, any such other
instrument or any Guaranteed Obligation;
(c) any failure, omission or delay on the part of any
Purchaser or the Agent to enforce, assert or exercise any
right, power or remedy conferred on or available to any
Purchaser or the Agent against Bostitch or MAC;
(d) any bankruptcy, insolvency, readjustment,
composition, liquidation or similar proceeding with respect
to Bostitch or MAC or any property of Bostitch or MAC or any
unavailability of assets against which the Guaranteed
Obligations, or any of them, may be enforced;
(e) any merger or consolidation of Bostitch, MAC or
Stanley into or with any other Person or any sale, lease or
transfer of any or all of the assets of Stanley, Bostitch or
MAC to any Person;
(f) any failure on the part of Bostitch or MAC for any
reason to comply with or perform any of the terms of any
other agreement with Stanley;
<PAGE>
(g) any exercise or non-exercise of any right, remedy,
power or privilege under or in respect of any of this
Agreement, any other Facility Document or the Guaranteed
Obligations, including, without limitation, under this
Article IX;
(h) any default, failure or delay, willful or
otherwise, in the performance or payment of any of the
Guaranteed Obligations;
(i) any furnishing or acceptance of security, or any
release, substitution or exchange thereof, for any of the
Guaranteed Obligations;
(j) any failure to give notice to Stanley of the
occurrence of any breach or violation of, or any Repurchase
Event, Potential Repurchase Event or default under or with
respect to, this Agreement, any of the other Facility
Documents or the Guaranteed Obligations;
(k) any partial payment, or any assignment or
transfer, of any of the Guaranteed Obligations; or
(l) any other circumstance (other than indefeasible
payment, performance and satisfaction in full) that might
otherwise constitute a legal or equitable discharge or
defense of a guarantor or that might in any manner or to any
extent vary the risk of a guarantor.
Stanley covenants that its obligations hereunder will not be
discharged except by complete, final and indefeasible payment,
performance and satisfaction in full of the Guaranteed
Obligations. Stanley unconditionally waives, to the fullest
extent permitted by law (A) notice of any of the matters referred
to in this Section, (B) all notices that may be required by
statute, rule of law or otherwise to preserve any of the rights
of any Purchaser or the Agent against Stanley under this Article
IX, including, without limitation, presentment to or demand of
payment from Bostitch, MAC or Stanley with respect to this
Agreement or any other Facility Document, notice of acceptance of
Stanley's guarantee hereunder and/or notice to Bostitch, MAC or
Stanley of default or protest for nonpayment or dishonor, (C) any
diligence in collection from or protection of or realization upon
all or any portion of the Guaranteed Obligations or any security
therefor, any liability hereunder, or any party primarily or
secondarily liable for all or any portion of the Guaranteed
Obligations, and (D) any duty or obligation of any Purchaser or
the Agent to proceed to collect all or any portion of the
Guaranteed Obligations from, or to commence an action against,
Bostitch, MAC or any other Person, or to resort to any security
or to any balance of any deposit account or credit on the books
of any Purchaser in favor of Bostitch, MAC or any other Person,
despite any notice or request of Stanley to do so.
The obligations of Stanley are full recourse obligations of
Stanley and may be enforced against any or all of Stanley's
assets notwithstanding any limitation on enforceability of all or
any of the Guaranteed Obligations, this Agreement or any of the
other Facility Documents against assets of Bostitch or MAC.
SECTION 9.03. Reinstatement. The obligations of Stanley
under this Article IX shall continue to be effective or be
<PAGE>
automatically reinstated, as the case may be, if any payment made
by or on behalf of Bostitch or MAC on, under or in respect of any
of the Guaranteed Obligations (including, without limitation, any
payment made for the repurchase of any Purchased Receivables
under Section 2.06, Section 2.13, Section 6.02 or otherwise, or
for the purchase of a Beneficial Interest under Section 6.02 or
otherwise) is rescinded or must otherwise be restored or returned
by the recipient upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Bostitch or MAC, or upon or as a
result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to Bostitch or MAC
or any substantial part of the property of Bostitch or MAC, or
otherwise, all as though such payment had not been made. If an
event requiring the repurchase of any Purchased Receivable or the
purchase of any Beneficial Interest by the Sellers or any Seller
pursuant to Section 2.06, Section 6.02 or otherwise shall at any
time have occurred and be continuing, and such repurchase or
purchase shall at such time be stayed, enjoined or otherwise
prevented for any reason, including without limitation because of
the pendency of a case or proceeding relating to Bostitch or MAC
under any bankruptcy or insolvency law, for purposes of this
Article IX and the obligations of Stanley hereunder, such
Guaranteed Obligations shall be deemed to have become immediately
due and payable, and such repurchase or purchase shall be deemed
to be immediately required, with the same effect as if such
Guaranteed Obligations had become due and payable, or such
repurchase or purchase had been required, in accordance with the
terms of this Agreement or any other applicable Facility
Document.
SECTION 9.04. Purchasers' Rights. Stanley authorizes each
Purchaser and the Agent, without notice to or demand on Stanley
and without affecting its liability under this Article IX, from
time to time (i) to obtain additional or substitute endorsers or
guarantors; (ii) to exercise or refrain from exercising any
rights against, and grant indulgences to, Bostitch, MAC or
others; and (iii) to apply any sums, by whomsoever paid or
however realized, to the payment of the Guaranteed Obligations.
Stanley waives any right to require any Purchaser or the Agent to
proceed against any additional or substitute endorsers or
guarantors, Bostitch, MAC or any other Person or to pursue any
other remedy available to any Purchaser or the Agent.
SECTION 9.05. Information Concerning Bostitch and MAC.
Stanley assumes all responsibility for being and keeping itself
informed of the financial condition and assets of Bostitch and
MAC and of all other circumstances bearing upon the risk of
nonpayment, non-performance or non-observance of the Guaranteed
Obligations and the nature, scope and extent of the risks that
Stanley assumes or assures hereunder, and agrees that no
Purchaser or the Agent will have any duty to advise Stanley of
- 74 - R#95355.6<PAGE>
information known to any Purchaser or the Agent regarding or in
any manner relevant to any of such circumstances or risks.
SECTION 9.06. Subordination. Stanley agrees that any and
all claims of Stanley against Bostitch, MAC or any endorser or
any other guarantor of all or any part of the Guaranteed
Obligations, or against any of their respective properties, and
all indebtedness of Bostitch or MAC to Stanley, shall be
absolutely and unconditionally subordinate and subject in right
of payment to the prior payment, in full, of all principal and
interest, all costs of collection (including reasonable
attorneys' fees and expenses) and any other Guaranteed Obligation
owing to any Purchaser or the Agent by Bostitch or MAC that may
arise under this Agreement or under any of the other Facility
Documents, provided that, so long as no Repurchase Event or
Potential Repurchase Event shall have occurred and be continuing,
<PAGE>
Stanley may receive and accept payments or other appropriate
performance in respect of such claims and indebtedness due in the
ordinary course.
SECTION 9.07. Subrogation. Notwithstanding anything herein
to the contrary, Stanley hereby waives any right of subrogation
(under contract, Section 509 of the Bankruptcy Code or otherwise)
or any other right of indemnity, reimbursement or contribution
and hereby waives any right to enforce any remedy that any
Purchaser or the Agent now has or may hereafter have against
Bostitch, MAC or any endorser or any other guarantor of all or
any part of the Guaranteed Obligations, and Stanley hereby waives
any benefit of, and any right to participate in, any security or
collateral given to any Purchaser or the Agent to secure payment
or performance of the Guaranteed Obligations or any other
liability of Bostitch or MAC to any Purchaser. The waiver
contained in this Section shall continue and survive the
termination of this Agreement and the final and indefeasible
payment in full of the Guaranteed Obligations.
SECTION 9.08. Continuing Guarantee. The obligations of
Stanley under this Article IX are continuing obligations and
shall continue in full force and effect until such time as all of
the Guaranteed Obligations (and any renewals and extensions
thereof) shall have been finally and indefeasibly paid and
satisfied in full and the Commitments shall have terminated.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party at its notice address
(or, in the case of any Purchaser for which a notice address is
not so set forth, at the address of its Office) or telex number
set forth on the signature pages hereof or such other address or
telex number as such party may hereafter specify for the purpose
by notice to the Agent and each of the other parties hereto.
Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted
to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article II or
Article VIII shall not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by the
Agent or any Purchaser in exercising any right, power or
privilege hereunder or under any other Facility Document shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.03. Expenses; Documentary Taxes;
Indemnification. (a) Stanley shall pay (i) all out-of-pocket
<PAGE>
expenses of the Agent, including reasonable fees and
disbursements of special counsel for the Purchasers and the
Agent, in connection with the preparation of this Agreement and
the other Facility Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any actual or
alleged Potential Repurchase Event or Repurchase Event hereunder
or default or breach hereunder or thereunder and (ii) if a
Repurchase Event occurs, all out-of-pocket expenses incurred by
the Agent or any Purchaser, including reasonable fees and
disbursements of counsel, in connection with such Repurchase
Event and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing
this Agreement and the other Facility Documents. Stanley shall
indemnify each Purchaser against any transfer taxes, documentary
taxes, assessments or charges made by any Authority by reason of
the execution and delivery of this Agreement or the other
Facility Documents.
(b) Except to the extent arising directly from the
negligence, willful misconduct or fraudulent or criminal acts of
the Person seeking indemnity hereunder or such Person's
employees, Stanley agrees to indemnify each Purchaser, the Agent
and their respective officers, directors, employees, and agents
(each an "Indemnitee") against, and hold each Indemnitee harmless
from, any loss, cost, charge, expense (including, without
limitation, reasonable attorney's fees, settlement costs and
expenses of preparing for litigation or preparation therefor,
whether or not the Indemnitee is a party thereto), claims,
demands, suits, damages, penalties, taxes, fines, levies and
assessments that may be imposed against, or suffered or incurred
by, such Indemnitee as a direct or indirect result of: (i) this
Agreement, the other Facility Documents, any Seller's
Obligations, any action or inaction by or of any Seller or any
Subsidiary, the transactions contemplated by this Agreement and
the other Facility Documents, the purchase of any Receivables
hereunder or the direct or indirect use or application, or
proposed use or application, of any proceeds of the purchase
price paid by any Purchaser hereunder for any Purchased
Receivable; (ii) any violation of any Environmental Laws, the
past, present or future operations of Stanley or any Subsidiary
or its predecessors in interest, or the past, present or future
environmental, health or safety condition of any property of
Stanley or any Subsidiary or any "release" (as defined in the
Comprehensive Environmental Response, Compensation and Liability
Act) or threatened such release; (iii) any representation or
warranty of any Seller in this Agreement or any other Facility
Document being untrue or inaccurate in any respect; (iv) the
failure by any Seller to observe, perform or comply with any of
its covenants, undertakings or obligations set forth in this
Agreement or any other Facility Document; and/or (v) any
warranty, negligence, design, product liability or other claim or
demand (whether sounding in tort or contract) of or by any
Obligor or other Person with respect to any goods sold or leased,
or any services provided, by any Seller, any Subsidiary or any
Affiliate of any Seller or any Subsidiary, or any Person that
sold or leased such goods, or performed such services, under a
Contract or otherwise.
(c) Each Purchaser severally agrees to indemnify Stanley,
its officers, directors, employees and agents (each an
"Indemnified Party") against, and hold each Indemnified Party
harmless from, any loss, cost, charge, expense (including but not
limited to reasonable attorney's fees, settlement costs and
expenses of preparing for litigation or preparation therefor,
whether or not the Indemnified Party is a party thereto), claims,
demands, suits, damages, penalties, taxes, fines, levies and
assessments that may be imposed against, or suffered or incurred
by, such Indemnified Party that is caused by or arises from the
gross negligence, willful misconduct or the criminal or
fraudulent acts of such Purchaser or such Purchaser's officers,
directors, employees or agents related to this Agreement, the
other Facility Documents or the transactions contemplated hereby
or thereby, provided that no Purchaser shall have any obligation
<PAGE>
of indemnity with respect to any consequences of the negligence,
willful misconduct or criminal or fraudulent acts of the Agent or
of any other Purchaser or the Agent's or any other Purchaser's
officers, directors, employees and agents.
SECTION 10.04. Sharing of Set-Offs. Each Purchaser agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of
amounts due to such Purchaser hereunder that is greater than the
proportion received by any other Purchaser in respect of the
aggregate amounts due to such other Purchaser hereunder, the
Purchaser receiving such proportionately greater payment shall
purchase such participations in the Beneficial Interests held by
the other Purchasers, and such other adjustments shall be made,
as may be required so that all such payments owing to the
Purchasers shall be shared by the Purchasers pro rata in
accordance with their respective Commitment Percentages (subject
to appropriate adjustments in the event of an unremedied failure
by a Purchaser to fund its ratable share of the Purchase Price
for the Initial Offered Receivables or a Portfolio Increase);
provided that (i) nothing in this Section shall impair the right
of any Purchaser to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to
the payment of indebtedness of any Seller other than its
Obligations hereunder, and (ii) if all or any portion of such
payment received by the purchasing Purchaser is thereafter
recovered from such purchasing Purchaser, such purchase from each
other Purchaser shall be rescinded and such other Purchaser shall
repay to the purchasing Purchaser the purchase price of such
participation to the extent of such recovery together with an
amount equal to such other Purchaser's ratable share (according
to the proportion of (x) the amount of such other Purchaser's
required repayment to (y) the total amount so recovered from the
purchasing Purchaser) of any interest or other amount paid or
payable by the purchasing Purchaser in respect of the total
amount so recovered. Each Seller agrees, to the fullest extent
it may effectively do so under applicable law, that any holder of
a participation in a Beneficial Interest, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were
a direct creditor of such Seller in the amount of such
participation.
SECTION 10.05. Amendments and Waivers. (a) Any provision
of this Agreement or any other Facility Document may be amended
or waived if, but only if, such amendment or waiver is in writing
and is signed by the Sellers and the Required Purchasers (and, if
the rights or duties of the Agent are affected thereby, by the
Agent); provided that, no such amendment or waiver shall, unless
signed by all the Purchasers, (i) change the Commitment of any
Purchaser or subject any Purchaser to any additional obligation,
(ii) change the Yield Rate for any Settlement Period or the
applicable interest rates established hereunder for determining
the Yield Rate for any Settlement Period, (iii) change the
Portfolio Balance or any fees hereunder, (iv) change the date
fixed for any payment due from, or for the repurchase of any
Purchased Receivable or for the purchase of any Beneficial
Interest by, any Seller hereunder, (v) change the amount, due on
any date fixed for the payment thereof, of any payment due from
any Seller on any Ending Date or of the purchase price for the
repurchase of any Purchased Receivable or the purchase of any
Beneficial Interest, (vi) change the percentage of the
Commitments or of the aggregate Commitment Percentages or the
number of Purchasers, that shall be required for the Purchasers
or any of them to take any action under this Section or any other
provision of this Agreement, (vii) change the manner of
application of any payments made under this Agreement, (viii)
release or substitute all or any substantial part of the
<PAGE>
collateral (if any) held as security for any Seller's
Obligations, (ix) release any guaranty given to support payment
of any Seller's Obligations, or (x) amend or otherwise modify
this Section 10.05, Section 6.01(l) or (m) or Section 6.02(a).
(b) No Seller will solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the
provisions of this Agreement unless each Purchaser shall be
informed thereof by the Sellers and shall be afforded an
opportunity of considering the same and shall be supplied by the
Sellers with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver or consent effected pursuant to the
provisions of this Agreement shall be delivered by the Sellers to
each Purchaser forthwith following the date on which the same
shall have been executed and delivered by the requisite
percentage of Purchasers. No Seller shall, directly or
indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional Purchasers' Yield, fee or
otherwise, to any Purchaser as consideration for or as an
inducement to the entering into by such Purchaser of any waiver
or amendment of any of the terms and provisions of this Agreement
unless such remuneration is concurrently paid, on the same terms,
ratably to all such Purchasers.
SECTION 10.06. Margin Stock Collateral. Each of the
Purchasers represents to the Agent and each of the other
Purchasers that it in good faith is not relying upon any Margin
Stock as collateral in the extension or maintenance of the
arrangements provided for in this Agreement.
SECTION 10.07. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns; provided that, no Seller may assign, delegate or
otherwise transfer any of its rights or duties under this
Agreement without the prior written consent of all of the
Purchasers.
(b) Any Purchaser may at any time sell to one or more
Persons (each a "Participant") participating interests in its
Commitment, Beneficial Interest or any other interest of such
Purchaser hereunder; provided that (i) such Purchaser's
obligations under this Agreement shall remain unchanged, (ii)
such Purchaser shall remain solely responsible to the Sellers for
the performance thereof, (iii) such Purchaser shall remain the
owner and holder of its Beneficial Interest for all purposes
under this Agreement, and (iv) the Sellers, the other Purchasers
and the Agent shall continue to deal solely and directly with
such Purchaser in connection with such Purchaser's rights and
obligations under this Agreement. In no event shall a Purchaser
that sells a participation be obligated to the Participant to
take or refrain from taking any action hereunder except with
respect to those matters referenced in the proviso to Section
10.05(a). Each Purchaser selling a participating interest in its
Commitment, Beneficial Interest or other interest under this
Agreement shall, within ten Domestic Business Days of such sale,
provide the Sellers and the Agent with written notification
stating that such sale has occurred and identifying the
Participant and the interest purchased by such Participant. The
Sellers agree that each Participant shall be entitled to the
benefits of Article VIII with respect to its participation.
<PAGE>
(c) No Purchaser shall have the right to sell or assign all
or a proportionate interest of all of its Commitment, Beneficial
Interest or other interest hereunder unless Stanley shall consent
in writing, which consent may be given or withheld in Stanley's
sole and absolute discretion, provided that, without Stanley's
consent a Purchaser may sell or assign its Commitment (if then in
effect), Beneficial Interest and other interest hereunder (x)
pursuant to Section 6.02 or Section 6.04 or (y) in whole or in
part to any affiliate of such Purchaser that is an Eligible
Purchaser. Any sale or assignment to a Person (herein an
"Assignee") shall be made, and such Assignee shall assume all
such rights and obligations, pursuant to an assignment and
acceptance in the form attached hereto as Exhibit I (an
"Assignment and Acceptance"), executed by such Assignee, such
transferor Purchaser and Stanley and acknowledged by the Agent;
provided that no Beneficial Interest or other interest may be
sold by a Purchaser pursuant to this paragraph (c) unless (i) the
Assignee is an Eligible Purchaser (except for an assignment made
pursuant to Section 2.13 or Section 6.02), (ii) the Assignee
shall agree to assume ratably equivalent portions of the
transferor Purchaser's Commitment (if then in effect) and all
other obligations of such Purchaser hereunder, (iii) such
Purchaser shall have fully funded its ratable share of the
Purchase Price for the Initial Offered Receivables and of any
Portfolio Increase (except in the case of an assignment made
pursuant to Section 2.13, Section 6.02 or Section 6.04), and
(iv) the amount of the Beneficial Interest and of the Commitment
(if then in effect) of the assigning Purchaser subject to such
assignment (determined as of the effective date of the
assignment) shall be equal to $10,000,000 (or any whole multiple
thereof) or the entire amount of the assigning Purchaser's
Commitment and Beneficial Interest. Upon (A) execution of the
Assignment and Acceptance by such transferor Purchaser, such
Assignee and Stanley and acknowledgement thereof by the Agent,
(B) delivery of an executed copy of the Assignment and Acceptance
to Stanley and the Agent, (C) payment by such Assignee to such
transferor Purchaser of an amount equal to the purchase price
agreed between such transferor Purchaser and such Assignee, and
(D) payment of a processing and recordation fee of $2,500 to the
Agent (to be paid by Stanley in the event of an assignment
pursuant to Section 2.13), such Assignee shall for all purposes
be a Purchaser party to this Agreement and shall have all the
rights and obligations of a Purchaser under this Agreement to the
same extent as if it were an original party hereto with a
Commitment as set forth in such instrument of assumption, and the
transferor Purchaser shall be released from its obligations
hereunder to a corresponding extent, and no further consent or
action by Stanley, the Purchasers or the Agent shall be required.
(d) Subject to the provisions of Section 10.08, the Sellers
authorize each Purchaser to disclose to any Participant, Assignee
or other transferee (each a "Transferee") and any prospective
Transferee any and all financial information in such Purchaser's
possession concerning any Seller that has been delivered to the
Agent or such Purchaser by any Seller pursuant to this Agreement
or that has been delivered to such Purchaser by any Seller in
connection with such Purchaser's credit evaluation prior to
entering into this Agreement.
(e) Notwithstanding anything in this Agreement to the
contrary, in the event that all or any portion of any Commitment
shall have been assumed or any Beneficial Interest shall be owned
or held, legally or beneficially, by any Person that is not an
Eligible Purchaser (pursuant to Section 6.02 or otherwise), then
for so long as such Commitment or Beneficial Interest shall be
held by any such Person (i) for purposes of voting as a Purchaser
on any matter requiring the action of all of the Purchasers or
the Required Purchasers hereunder, such Commitment and the
Commitment Percentage attributable to such Commitment or
<PAGE>
Beneficial Interest shall be deemed to be zero and such Person
shall not be considered as a Purchaser, and (ii) the amounts to
be credited for payment to the Sellers and for payment to the
Agent shall be adjusted as set forth in Section 2.09(e).
SECTION 10.08. Confidentiality. Each Purchaser agrees to
exercise its best efforts to keep any information delivered or
made available by the Sellers to it that is clearly indicated in
writing to be confidential information, confidential from any one
other than Persons employed or retained by such Purchaser who are
or are expected to become engaged in evaluating, approving,
structuring or administering such Purchaser's participation in
this Agreement; provided that, nothing herein shall prevent any
Purchaser from disclosing such information (i) to any other
Purchaser or the Agent, (ii) upon the order of any court,
regulatory or administrative agency or other governmental
authority, (iii) upon the request or demand of any regulatory or
administrative agency or other governmental authority having
jurisdiction over such Purchaser, (iv) that has been publicly
disclosed, (v) to the extent reasonably required in connection
with any litigation to which the Agent, any Purchaser or their
respective affiliates may be a party, (vi) to the extent
reasonably required in connection with the exercise of any remedy
hereunder, (vii) to such Purchaser's legal counsel and
independent auditors and (viii) to any actual or proposed
Participant, Assignee or other Transferee of all or part of its
rights hereunder that has agreed in writing to be bound by the
provisions of this Section 10.08.
SECTION 10.09. Substitute Debt Ratings. If either or both
of Moody's or Standard & Poor's is not providing public ratings
of the Unsupported Stanley Debt, the Required Purchasers may
substitute another rating agency or other rating agencies of
national reputation, approved by the Required Purchasers, for
Moody's and/or Standard & Poor's, as the case may be, for the
purpose of determining, by reference to the public ratings of two
approved rating agencies (which shall include Moody's or Standard
& Poor's if one of them is providing public ratings of the
Unsupported Stanley Debt), the Debt Rating. If no other rating
agency of national reputation is providing public ratings of the
Unsupported Stanley Debt, the Required Purchasers may request
that Stanley, at Stanley's expense, obtain from either or both of
Moody's and Standard & Poor's, as appropriate, a private credit
rating for the Unsupported Stanley Debt in lieu of a public
rating for the purpose of determining the Debt Rating. In such
event the Debt Rating shall be deemed to be the Debt Rating of
either or both of Moody's or Standard & Poor's in effect at the
time such rating agencies ceased providing public ratings of the
Unsupported Stanley Debt. Upon receipt of any such request,
Stanley shall use its best efforts to obtain a private credit
rating for such purpose as promptly as practicable from either or
both of Moody's and Standard & Poor's, as the case may be (or, if
either of them declines to provide a private credit rating, the
other of them and one rating agency of national reputation, and
if both of them so decline, two rating agencies of national
reputation, in each case approved by the Required Purchasers).
The private credit rating obtained by Stanley shall be deemed to
be the Debt Rating for the period during which a public rating
was not provided by Moody's and Standard & Poor's or any other
rating agency of national reputation and all necessary
adjustments shall be made to the calculation of the Purchasers'
Yield for such period to reflect the difference, if any, in the
Debt Rating deemed to be in effect prior to the receipt of such
private credit rating. If Stanley fails to obtain such private
credit rating within ninety (90) days of the Required Purchasers'
request therefor, the Debt Rating shall be deemed to be Less Than
Investment Grade. In the event another rating agency of national
reputation is substituted for Moody's or Standard & Poor's, the
determination of the Debt Rating shall be made by reference to
<PAGE>
the rating designations of such substituted agency that are most
nearly comparable to the applicable rating designations, as set
forth in the definition of the term "Debt Rating" in Section
1.01, of Moody's or Standard & Poor's, as the case may be (or, in
either case, the comparable rating designations then in
existence).
SECTION 10.10. Purchasers' Sales Without Recourse or
Warranty. Notwithstanding any provision hereof to the contrary
(including, without limitation, anything contained in the form of
Assignment and Acceptance attached as an exhibit hereto), any
sale, transfer or conveyance by a Purchaser of its Beneficial
Interest, or by the Purchasers of any Purchased Receivable, to
any third party, any Seller, any Subsidiary or any Affiliate or
nominee of any Seller or Subsidiary, pursuant to Section 2.06,
Section 2.13, Section 6.02 or otherwise, shall be a sale,
transfer or conveyance only of all such right, title and interest
therein as such Purchaser shall have acquired from the Sellers
hereunder and shall be made without recourse to or any
representation or warranty by such Purchaser (other than
representations to the effect that (a) such Purchaser has the
right, power and authority to make such sale, transfer or
conveyance and (b) the right, title and interest of such
Purchaser in such Beneficial Interest or Purchased Receivables,
as the case may be, is being sold, transferred or conveyed free
and clear of any liens, claims or encumbrances created by such
Purchaser.)
SECTION 10.11. Obligations Several. The obligations of
each Purchaser hereunder are several, and no Purchaser shall be
responsible for the obligations or Commitment of any other
Purchaser hereunder. Nothing contained in this Agreement and no
action taken by Purchasers pursuant hereto shall be deemed to
constitute the Purchasers to be a partnership, an association, a
joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Purchaser shall be a separate and
independent obligation, and each Purchaser shall be entitled to
protect and enforce its rights arising out of this Agreement or
any other Facility Document and it shall not be necessary for any
other Purchaser to be joined as an additional party in any
proceeding for such purpose.
SECTION 10.12. Georgia Law. This Agreement shall be
construed in accordance with and governed by the law of the State
of Georgia.
SECTION 10.13. No Setoff. Except as otherwise expressly
provided in this Agreement, no act of commission or omission of
any kind or at any time upon the part of any Purchaser or the
Agent in respect of any matter whatsoever shall in any way affect
or impair the rights of such Purchaser, any other Purchaser or
the Agent to enforce any right, power or benefit of the
Purchasers or the Agent under this Agreement, and no set-off,
claim, reduction or diminution of any obligation or any defense
of any kind or nature that any Seller has or may have against a
Purchaser or the Agent shall be available to such Seller or any
other Seller or asserted against such Purchaser, any other
Purchaser or the Agent in any suit or action brought by any
Purchaser or the Agent to enforce or collect any Obligation of
any Seller, right, power or benefit under this Agreement.
Nothing in this Agreement shall be construed as a waiver by any
Seller of any rights or claims it may have against a Purchaser or
the Agent under this Agreement or otherwise, but any recovery
upon such rights and claims shall be had from such Purchaser or
the Agent separately, the intent of this Agreement being that
each Seller shall be unconditionally and absolutely obligated to
<PAGE>
perform fully all of its obligations, agreements and covenants
hereunder for the benefit of the Purchasers and the Agent.
SECTION 10.14. Consent to Jurisdiction. Each Seller (a)
submits to personal jurisdiction in the State of Georgia, the
courts thereof and the United States District Courts sitting
therein, for the enforcement of this Agreement and the other
Facility Documents, (b) waives any and all personal rights under
the law of any jurisdiction to object on any basis (including,
without limitation, inconvenience of forum) to jurisdiction or
venue within the State of Georgia for the purpose of litigation
to enforce this Agreement or the other Facility Documents, and
(c) agrees that service of process may be made upon it in the
manner prescribed in Section 10.01 for the giving of notice to
the Sellers. Nothing herein contained, however, shall prevent
the Agent or any Purchaser from bringing any action or exercising
any rights against security, if any, and against any Seller
personally, and against any assets of any Seller, within any
other state or jurisdiction.
SECTION 10.15. Survival of Obligations. The obligations
and covenants of the Sellers under Sections 2.08, 8.03 and 8.04
(collectively, the "Surviving Seller Obligations") shall survive
the payment of the Sellers' Obligations, the purchase of any
Purchaser's Beneficial Interest or the repurchase of any
Purchased Receivables. Except for the Surviving Seller
Obligations, all other obligations, representations, warranties,
covenants and agreements of the parties under the Facility
Documents shall terminate upon the final and indefeasible payment
in full of the Sellers' Obligations.
SECTION 10.16. Severability. This Agreement and the other
Facility Documents are intended to be performed in accordance
with, and only to the extent permitted by, all applicable law.
If any provision of any of this Agreement or any other Facility
Document or the application thereof to any Person or
circumstances shall, for any reason and to any extent, be invalid
or unenforceable, neither the remainder of this Agreement or such
other Facility Document in which such provision is contained nor
the application of such provision to other Persons or
circumstances or other Facility Documents or other instruments
referred to hereinabove shall be affected thereby, but rather,
the same shall be enforced to the greatest extent permitted by
law.
SECTION 10.17. Captions. Captions in this Agreement are
for the convenience of reference only and shall not affect the
meaning or interpretation of the provisions hereof.
SECTION 10.18. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
[Signatures follow on separate pages]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
SELLERS:
THE STANLEY WORKS MAC TOOLS, INC.
By: /s/ Richard Huck By: /s/ Richard Huck
Its: Vice President, Finance Its: Vice President, Finance
STANLEY-BOSTITCH, INC.
By: /s/ Richard Huck
Its: Vice President, Finance
Notice Address (All
Purchasers):
The Stanley Works
1000 Stanley Drive
Post Office Box 7000
New Britain, Connecticut
06050
Attention: Director,
Corporate Finance
Telephone: (203) 827-3838
Telecopy: (203) 827-3962
Telex: N/A
Answerback: N/A
[This is a signature page to the Receivables Purchase Agreement,
signed by the parties named above]
<PAGE>
[Signatures continued from preceding page]
PURCHASERS:
COMMITMENT: WACHOVIA BANK OF GEORGIA, NATIONAL
ASSOCIATION, as a Purchaser
$32,000,000
By: /s/ Linda M. Harris
Its: Senior Vice President
Office:
Wachovia Bank of Georgia, National
Association
28th Floor (MC: G-0373)
191 Peachtree Street NE
Atlanta, Georgia 30303
Attention: U.S. Corporate
Banking
Telephone: (404) 332-1090
Telecopy: (404) 332-6898
Telex: 4611015
Answerback: INT WAGA
[This is a signature page to the Receivables Purchase Agreement,
signed by the party named above]
<PAGE>
[Signatures continued from preceding page]
COMMITMENT: BANQUE NATIONALE DE PARIS, NEW YORK
BRANCH, as a Purchaser
$24,000,000
By: /s/ Eric Vigne
Its: Senior Vice President
By: Nancy L. Stengel
Its: Assistant Treasurer
Office:
Banque Nationale de Paris
499 Park Avenue
New York, New York 10022
Attention: Roy Johnson/Jessie
Griffiths
Telephone: (212) 415-9610/(212)
415-9785
Telecopy: (212) 415-9695/(212) 418-
8206
Telex: 824211
Answerback: WFC UF
Payment Instructions
Federal Reserve Bank of New York
ABA Routing No.: 026007689
Account No.: 19225300157
Account Name: BNP - New York
Reference: Stanley Works
[This is a signature page to the Receivables Purchase Agreement,
signed by the party named above]
<PAGE>
[Signatures continued from preceding page]
COMMITMENT: ROYAL BANK OF CANADA, as a
Purchaser
$24,000,000
By: /s/ Sheryl H. Greenberg
Its: Manager
Office:
Grand Cayman (North America No. 1)
Branch
Royal Bank of Canada
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Attention: Manager, Loans
Administration
Telephone: (212) 858-7168
Telecopy: (718) 522-6292/3
Telex: 420464, 62519
Answerback: RBOCUI Royal Bank,
Royal Bank
with a copy to:
Royal Bank of Canada
Financial Square
New York, New York 10005-3531
Attention: Ms. Sheryl L.
Greenberg
Telephone: (212) 428-6476
Telecopy: (212) 428-6459
[This is a signature page to the Receivables Purchase Agreement,
signed by the party named above]
<PAGE>
[Signatures continued from preceding page]
AGENT:
WACHOVIA BANK OF GEORGIA, NATIONAL
ASSOCIATION, as Agent
By: /s/ Linda M. Harris
Its: Senior Vice President
Notice Address:
Wachovia Bank of Georgia, National
Association
c/o Wachovia Corporate Services,
Inc.
26th Floor (MC: GA-0423)
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Corporate Finance
Department
Telephone: (404) 332-1084
Telecopy: (404) 332-4605
Telex: 4611015
Answerback: INT WAGA
[This is a signature page to the Receivables Purchase Agreement,
signed by the party named above]
<TABLE>
COMPUTATION OF EARNINGS PER SHARE Exhibit 11
THE STANLEY WORKS AND SUBSIDIARIES
(dollars and shares in thousands except per share amounts)
<CAPTION>
Fiscal Year Ended
January 1 January 2 December 28
1994 1993 1991
(52 Weeks) (53 Weeks) (52 Weeks)
Earnings per common share:
<S> <C> <C> <C>
Weighted average shares outstanding 44,935 45,703 43,266
=========== =========== ===========
Earnings before cumulative effect
of accounting changes $92,630 $98,118 $97,112
Cumulative effect of accounting changes:
Postemployment benefits (8,489)
Postretirement benefits (12,508)
----------- ----------- -----------
Net earnings $84,141 $98,118 $84,604
=========== =========== ===========
Per share amounts:
Before cumulative effect of
accounting changes $2.06 $2.15 $2.24
Cumulative effect of accounting changes:
Postemployment benefits (0.19)
Postretirement benefits (0.29)
----------- ----------- -----------
Net earnings $1.87 $2.15 $1.95
=========== =========== ===========
Primary:
Weighted average shares outstanding 44,935 45,703 43,266
Dilutive common stock equivalents -
based on the treasury stock method
using average market price 713 718 510
----------- ----------- -----------
45,648 46,421 43,776
Per share amounts: =========== =========== ===========
Before cumulative effect of
accounting changes $2.03 $2.11 $2.22
Cumulative effect of accounting changes:
Postemployment benefits (0.19)
Postretirement benefits (0.29)
----------- ----------- -----------
Net earnings $1.84 $2.11 $1.93
=========== =========== ===========
Fully Diluted:
Weighted average shares outstanding 44,935 45,703 43,266
Dilutive common stock equivalents -
based on the treasury stock method
using the quarter end market price
if higher than average market price 757 779 572
----------- ----------- -----------
45,692 46,482 43,838
Per share amounts: =========== =========== ===========
Before cumulative effect of
accounting changes $2.03 $2.11 $2.22
Cumulative effect of accounting changes:
Postemployment benefits (0.19)
Postretirement benefits (0.29)
----------- ----------- -----------
Net earnings $1.84 $2.11 $1.93
=========== =========== ===========
<FN>
Note: This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph 14
of APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE>
Exhibit 12
THE STANLEY WORKS AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES
(in Millions of Dollars)
<CAPTION>
Fiscal Year Ended
January 1 January 2 December 28 December 29 December 30
1994 1993 1991 1990 1989
Earnings before income taxes and
cumulative adjustment for
<S> <C> <C> <C> <C> <C>
accounting change $148.0 $158.1 $156.5 $172.0 $193.9
Add:
Portion of rents representative of
interest factor $11.7 $12.2 $11.5 $11.2 $9.2
Interest expense 31.4 32.6 37.2 35.9 34.4
Amortization of expense on
long-term debt 0.4 0.7 0.5 0.8 0.7
Amortization of capitalized interest 0.4 0.4 0.4 0.4 0.3
-------------------------------------------------------- -
Income as adjusted $191.9 $204.0 $206.1 $220.3 $238.5
========================================================
Fixed charges:
Interest expense $31.4 $32.6 $37.2 $35.9 $34.4
Amortization of expense
on long-term debt 0.4 0.7 0.5 0.8 0.7
Capitalized interest 0.1 0.1 0.4 1.3 0.8
Portion of rents representative of
interest factor 11.7 12.2 11.5 11.2 9.2
-------------------------------------------------------
Fixed charges $43.6 $45.6 $49.6 $49.2 $45.1
=======================================================
Ratio of earnings to fixed charges 4.40 4.47 4.16 4.47 5.29
=======================================================
</TABLE>
<PAGE>
Management Report on Responsibility for Financial Reporting
The management of The Stanley Works is responsible for the preparation,
integrity and objectivity of the accompanying financial statements. The
statements were prepared in accordance with generally accepted accounting
principles. Preparation of financial statements and related data involves
our best estimates and the use of judgment. Management also prepared the
other information in the Annual Report and is responsible for its
accuracy and consistency with the financial statements.
The company maintains a system of internal accounting controls which is
designed to provide reasonable assurance, at appropriate cost, as to the
reliability of financial records and the protection of assets. This
system includes monitoring by a staff of internal auditors. It is further
characterized by care in the selection of competent financial managers,
by organizational arrangements that provide for delegation of authority
and division of responsibility and by disseminating policies and
procedures throughout the company.
The Stanley Works also recognizes its responsibility for fostering a
strong, ethical climate so that the company's affairs are conducted
according to the highest standards of personal and business conduct. This
responsibility is reflected in the company's Business Conduct Guidelines
which are publicized throughout the organization. The company has a
long-established reputation of integrity in business conduct and
maintains a systematic program to assess compliance with these policies.
The adequacy of Stanley's internal accounting controls, the accounting
principles employed in its financial reporting and the scope of
independent and internal audits are reviewed by the Audit Committee of
the Board of Directors, consisting solely of outside directors. Both the
independent auditors and our internal auditors have unrestricted access
to the Audit Committee, and they meet with it periodically, with and
without management present.
Richard H. Ayers Richard Huck
Chairman and Vice President, Finance and
Chief Executive Officer Chief Financial Officer<PAGE>
Report of Ernst & Young, Independent Auditors
The Shareholders
The Stanley Works
We have audited the accompanying consolidated balance sheets of The
Stanley Works and subsidiaries as of January 1, 1994 and January 2, 1993,
and the related consolidated statements of earnings, changes in
shareholders' equity, and cash flows for each of the three fiscal years
in the period ended January 1, 1994. 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
The Stanley Works and subsidiaries at January 1, 1994 and January 2,
1993, and the consolidated results of their operations and their cash
flows for each of the three fiscal years in the period ended January 1,
1994, in conformity with generally accepted accounting principles.
As discussed in Note J to the consolidated financial statements, the
company changed its method of accounting for postemployment benefits in
1993 and postretirement benefits other than pensions in 1991.
Hartford, Connecticut
January 31, 1994
Ernst & Young
<PAGE>
Business Segment Information
The Stanley Works and Subsidiaries
Industry Segments
The company groups its sales and operating profit by three major
categories: Tools, Hardware and Specialty Hardware. Sales for Tools are
further divided into Consumer, Industrial and Engineered.
Geographic Areas
The company has manufacturing and distribution facilities and sales
offices in the United States, Europe and Other Areas. The company's
operations in Europe are principally located in the European Economic
Community. Other Areas principally include Canada, Australia, the Far
East and Latin America.
General Information
Intercompany sales between geographic areas and between business segments
were not significant. Segment information includes insignificant
allocations of expenses and assets shared by the segments.
Operating profit represents net sales less operating expenses. In
computing operating profit, the following have been excluded: net
corporate expenses, interest expense, income taxes and the cumulative
effect of accounting changes.
Identifiable assets are those assets used in the company's operations in
each segment or area.<PAGE>
<TABLE>
<CAPTION>
Industry Segments
(Millions of Dollars) 1993 1992 1991
Net Sales
Tools
<S> <C> <C> <C>
Consumer $726.0 $723.0 $624.0
Industrial 411.1 377.7 363.5
Engineered 568.5 540.0 497.2
_______ _______ _______
Total Tools 1,705.6 1,640.7 1,484.7
Hardware 299.4 297.2 225.3
Specialty Hardware 268.1 257.7 232.2
_______ _______ _______
Consolidated $2,273.1 $2,195.6 $1,942.2
======== ======== ========
Operating Profit
Tools $158.1 $171.7 $169.4
Hardware 32.9 25.6 28.9
Specialty Hardware 13.2 18.3 16.5
------- ------- ------
Total 204.2 215.6 214.8
Net corporate expenses (24.0) (24.5) (20.7)
Interest expense (32.2) (33.0) (37.6)
_______ _______ _______
Earnings before income taxes $148.0 $158.1 $156.5
======= ======= =======
Identifiable Assets
Tools $1,238.6 $1,199.3 $1,176.2
Hardware 173.3 171.0 178.0
Specialty Hardware 83.9 91.3 86.6
_______ _______ _______
1,495.8 1,461.6 1,440.8
General corporate assets 81.1 146.0 107.1
_______ _______ _______
Total $1,576.9 $1,607.6 $1,547.9
======== ======== ========
Capital Expenditures
Tools $53.6 $ 47.4 $51.7
Hardware 8.2 10.7 5.9
Specialty Hardware 3.8 3.8 4.6
Depreciation and Amortization
Tools 63.9 63.6 59.7
Hardware 10.6 10.7 8.4
Specialty Hardware 4.4 4.0 4.4<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Geographic Areas
(Millions of Dollars) 1993 1992 1991
Net Sales
<S> <C> <C> <C>
United States $1,680.0 $1,561.5 $1,361.6
Europe 317.3 354.0 324.2
Other Areas 275.8 280.1 256.4
________ _______ ________
Consolidated $2,273.1 $2,195.6 $1,942.2
======== ======== ========
Operating Profit
United States $153.5 $148.8 $145.3
Europe 27.4 38.5 42.8
Other Areas 23.7 27.3 28.9
Eliminations (.4) 1.0 (2.2)
_______ _______ ______
Total $204.2 $215.6 $214.8
======== ======== ========
Identifiable Assets
United States $1,017.6 $1,002.1 $941.0
Europe 270.0 259.9 290.4
Other Areas 247.4 223.1 231.2
Eliminations (39.2) (23.5) (21.8)
_______ _______ _______
Total $1,495.8 $1,461.6 $1,440.8
======== ======== ========
<FN>
Note: In 1993, net corporate expenses include a gain of $29.0 million
from the sale of the company's investment in Max Co., Ltd.
In 1992, net corporate expenses include a gain of $25.8 million from the
sale of a portion of the company's investment in Max Co., Ltd., expenses
of $14.1 million related to planned closings of certain company-owned
stores and reduction of the goodwill of the company's Taylor Rental
operation.
Certain 1992 and 1991 amounts were reclassified to conform with the 1993
presentation.<PAGE>
<PAGE>
</TABLE>
<PAGE>
<TABLE>
Summary of Selected Financial Information (A)
The Stanley Works and Subsidiaries
(Millions of Dollars, except per share amounts)
<CAPTION>
Continuing Operations B
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $2,273 $2,196 $1,942 $1,956 $1,951 $1,888 $1,744 $1,355 $ 992 $ 936 $ 804
Earnings 93 98 97 106 117 102 96 78 70 64 49
Earnings per share$ 2.06 $2.15 $2.24 $2.51 $2.70 $2.37 $2.22 $1.84 $1.70 $1.54 $1.20
Percent of Net Sales:
Cost of sales 68.3% 66.8% 66.0% 65.3% 64.8% 65.6% 64.7% 64.9% 63.2% 63.5% 64.5%
Selling, general
and administrative 22.5% 24.0% 23.8% 23.7% 23.0% 23.0% 23.4% 23.9% 24.3% 24.1% 25.1%
Interest-net 1.1% 1.2% 1.3% 1.3% 1.3% 1.3% 1.7% 1.4% .2% .1% .3%
Earnings before
income taxes 6.5% 7.2% 8.1% 8.8% 9.9% 9.1% 9.5% 9.7% 12.2% 11.9% 10.1%
Earnings 4.1% 4.5% 5.0% 5.4% 6.0% 5.4% 5.5% 5.8% 7.1% 6.8% 6.1%
-------------------------------------------------------------------------------------
Other Key Information
Total assets $1,577 $1,608 $1,548 $1,494 $1,491 $1,405 $1,388 $1,208 $ 755 $ 697 $ 686
Long-term debt 377 438 397 398 416 339 354 363 81 74 85
Shareholders'
equity $ 681 $ 696 $ 689 $ 679 $ 659 $ 684 $ 626 $ 555 $ 503 $ 444 $ 435
Ratios:
Current ratio 2.1 2.4 2.4 2.6 2.6 2.6 2.4 2.9 3.7 2.8 3.0
Total debt to
total capital 38.7% 40.1% 37.6% 38.7% 39.6% 35.0% 40.9% 43.4% 15.7% 19.4% 19.0%
Income tax rate 37.4% 37.9% 38.0% 38.4% 39.6% 40.8% 41.7% 40.7% 42.0% 42.5% 39.2%
Return on average
equity b 13.5% 14.1% 14.1% 15.8% 17.3% 15.5% 14.7% 14.9% 16.5% 16.5% 12.8%
Common Stock Data:
Dividends per
share $1.34 $ 1.28 $ 1.22 $ 1.14 $ 1.02 $ .92 $ .82 $ .73 $ .67 $ .60 $ .52
Equity per share
at year-end $15.23 $15.32 $15.22 $16.50 $15.32 $15.97 $14.59 $13.05 $12.03 $11.00 $10.35
Market price
- high 47 7/8 48 1/8 44 39 3/4 39 1/4 31 1/4 36 5/8 30 7/8 22 1/2 19 5/8 19
- low 37 7/8 32 1/2 26 26 5/8 27 1/2 24 3/8 21 1/4 20 1/2 16 3/8 13 13 1/2
Average shares
outstanding
(in thousands) 44,935 45,703 43,266 42,192 43,378 43,109 43,357 42,279 41,243 41,816 41,465
Other Information:
Earnings from
continuing
operations $ 93 $ 98 $ 97 $ 106 $ 117 $ 102 $ 96 $ 78 $ 70 $ 64 $ 49
Earnings from
discontinued
operations - - - - - - (10) 1 8 8 3
Cumulative effect
of accounting
change (9) - (12) - - (13) - - - - -
Net earnings $ 84 $ 98 $ 85 $ 106 $ 117 $ 89 $ 86 $ 79 $ 78 $ 72 $ 52
Net earnings
per share $ 1.87 $ 2.15 $ 1.95 $ 2.51 $ 2.70 $ 2.07 $ 2.00 $ 1.86 $ 1.90 $1.73 $1.28
Average number
of employees 18,988 18,650 17,420 17,784 18,464 18,988 19,142 16,128 13,069 12,788 12,396
Shareholders of
record at end
of year 20,018 20,661 21,297 22,045 22,376 23,031 23,051 21,752 22,870 23,238 22,656
<FN>
A)Certain amounts were reclassified to conform with the 1993 presentation.
B)Excluding the cumulative after-tax effect of accounting changes for
postemployment benefits of $8.5 million, or $.19 per share, in 1993;
postretirement benefits of $12.5 million, or $.29 per share, in 1991; and
income taxes of $13.1 million, or $.30 per share, in 1988.
</TABLE>
<PAGE>
Management's Discussion and Analysis
Results of Operations
Overview
Improved economic conditions, particularly in the United States,
resulted in record sales of $2.3 billion in 1993, or a 3.5% increase
over 1992. Earnings, excluding the effects of a change in accounting
principle and special charges related to a legal settlement, also
strengthened, increasing 4% over 1992.
Earnings were $93 million, or $2.06 per share, before the cumulative
effect of an accounting change. This compares with $98 million, or $2.15<PAGE>
per share, reported in 1992. Earnings were affected by a $15 million, or
$.21 per share, charge related to the settlement of lawsuits involving
the company's Mac Tools, Inc. subsidiary. The charge reflected these
settlements and the accrual of reserves to cover unsettled claims. In
addition, a stronger U.S. dollar had a negative effect on the
translation of foreign earnings for the year.
Revenues
Sales growth in 1993 was driven by unit volume increases of 4% in our
core businesses, which represented the most significant internal growth
generated since 1988. Acquisitions and minor price increases added 2% to
sales; however, the negative effect of translating foreign revenues
offset these incremental improvements.
The company's U.S. businesses experienced strong internal growth,
reflecting the improvement in U.S. industrial and construction related
markets and the company's efforts in introducing new products. Domestic
unit volume growth was 6% for 1993. While the company's consumer
businesses experienced only modest growth, engineered and industrial
businesses saw higher levels of sales increases. Many of the company's
businesses did not raise prices during the year; consequently, pricing
had no net effect on U.S. sales. The incremental effect of acquisitions
contributed 2% to sales.
European markets, especially continental Europe, remained depressed in
1993, resulting in a 3% volume decline. European currencies also
continued to weaken during the year resulting in an 11% decline in
sales, or approximately $40 million. A combination of small price
increases and acquisitions added 4% to sales. As a result, total
European sales were 10% lower than last year.
Net sales in Other Areas decreased 2% as a result of foreign currency
translation and weak sales in Canada. Sales increases in the Far East
and Latin America continued to exceed the growth rate experienced by the
company overall.
Net sales in 1992 of $2.2 billion were 13% higher than in 1991,
primarily due to the contributions of acquired companies. Excluding
acquisitions, the company achieved only minimal growth in domestic
markets and sales trends in the lagging European, Australian and
Canadian economies were stagnant or negative.
Factors contributing to the year-to-year change in net sales were:
<TABLE>
<CAPTION>
Net Sales Change Comparison
1993 1992 1991
with with with
1992 1991 1990
Unit Volume:
<S> <C> <C> <C>
Existing Operations 4.1% 2.1% (4.8)%
Acquisitions/Divestitures 1.7 10.2 2.4
Price Increase .7 1.1 2.7
Foreign Currency (3.0) (.4) (1.0)
----- ----- ------
3.5% 13.0% (.7)%
===== ===== ======
</TABLE>
During 1993, the highly-inflationary conditions that affect the
company's Brazilian operation, while not material to overall operating
results and financial position, did affect the above price increase and
foreign currency percentages. Price increase and foreign currency
effects on the year-to-year sales change without the Brazilian
operations were .1% and (2.5%), respectively.
Gross Profit
Gross profit margin was 31.7% in 1993, compared with 33.2% in 1992. Much
of the margin decline in 1993 related to costs associated with the
transition from purchasing certain fastening tools from foreign sources
to U.S. in-house manufacture and to abnormally high wood prices
experienced in the company's Door Systems business and the associated
expenses of manufacturing process adjustments. The company has continued
to control costs and to realize productivity gains from its capital
investment programs. These efforts have helped relieve the adverse
margin pressures of a competitive pricing environment.
In 1992, margins were affected by the costs of integrating acquisitions
and the underutilization of the company's mechanics tool capacity which
resulted from the loss of sales to a major retail customer. A portion of
that sales volume has been replaced.
Operating and Other Expenses
Operating expenses were 22.5% of sales in 1993 compared with 24.0% in
1992 and 23.8% in 1991. The improvement in 1993 reflects increased
operating efficiencies, the integration of recent acquisitions and the
absence of non-recurring expenses. The increase in 1992 reflects
non-recurring legal costs and increases in product liability reserves,
both of which more than offset productivity improvements.
<PAGE>
Interest-net expense of $25 million, reduced from $27 million in 1992
and $26 million in 1991, resulted from lower interest rates and the
company's active management of overall borrowing costs.
Other-net expense for 1993 included a $15 million charge for distributor
litigation issues at the company's Mac Tools, Inc. subsidiary. It also
included a gain on the sale of the company's investment in Max Co., Ltd.
of $29 million, which was substantially offset by additional charges for
contingency reserves related to product liability, restructuring
activities and environmental remediation.
Other-net expenses in 1992 included charges of $14 million related to
planned closings of certain company-owned Taylor Rental stores, a
reduction of the goodwill of the company's Taylor Rental business, and
$8 million for reserves for litigation pending at the company's Mac
Tools, Inc. subsidiary. These charges were offset by a $26 million gain
from the sale of a portion of the company's investment in Max Co., Ltd.
Other-net expenses in 1991 were relatively unchanged from 1990.
The effective income tax rates in 1993, 1992 and 1991 were 37.4%, 37.9%
and 38.0%, respectively. In 1993, the effect of an increase in the U.S.
statutory rate from 34% to 35% was largely offset by favorable tax
planning strategies and proportionally lower earnings in high-tax
foreign operations.
Accounting Changes
Net earnings for 1993 reflected an after-tax charge of $8.5 million, or
$.19 per share, for the adoption of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits."
The new standard, which all companies must adopt no later than the first
quarter of 1994, requires accrual of postemployment benefits as they are
earned by employees rather than as they are paid. The one-time charge
represents the cumulative effect of the new accounting standard as of
the beginning of fiscal year 1993.
In 1991, the company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions." The after-tax effect of this standard was a one-time charge
to 1991 earnings of $12.5 million, or $.29 per share.
Business Segments
Tools segment sales of $1.7 billion were 4% higher than in 1992. Unit
volume gains of 4% were primarily the result of strong internal growth
in the industrial and engineered tools categories. Acquisitions, net of
divestitures, accounted for a 2% increase in sales. The net effect of
price increases in some tool categories and decreases in others resulted
in a net 1% increase in sales for the year. A 3% decline in sales due to
currency translation offset price and acquisition gains. Operating
profits of $158 million were down 8% from 1992 and included charges of
$15 million for distributor litigation and $4 million for a plant
closing for the company's Mac Tools, Inc. subsidiary. Profits were also
affected by costs related to the transition of certain fastening
products to in-house manufacture. As a result, operating margins were
9.3% for 1993, compared with 10.5% in 1992.
Tools segment sales in 1992 were $1.6 billion or 11% higher than in
1991. Acquisitions accounted for most of the increase. Operating profits
of $172 million were up 1% from the $169 million reported for this
segment in 1991.
Hardware segment sales increased 1% in 1993 to $299 million, as negative
currency effects partially offset 3% unit volume growth. Operating
profits increased 29% to $33 million and operating margins improved to
11.0% from 8.6% in the prior year. Margin improvements are attributable
primarily to greater operating efficiencies and the integration of
recent acquisitions.
Hardware segment sales in 1992 were $297 million, an increase of 32%
over 1991 results. The sales increase was substantially provided by
acquisitions, the integration costs of which reduced operating profits.
Specialty Hardware segment sales for 1993 were 4% higher than in 1992.
Virtually all of the increase was generated by internal growth, as the
effects of modest price increases were offset by the negative effect of
foreign currency translation. Operating profits were affected by
abnormally high raw material costs and the expenses of related
manufacturing process adjustments at the company's Door Systems
business.
Specialty Hardware segment sales in 1992 increased 11% from 1991 and
reflected unit volume gains in all geographic areas. Operating profits
in 1992 were up 11% for the year, increasing to $18 million with
resulting margins of 7.0%, the same as 1991.
Financial Condition
Liquidity, Sources and Uses of Capital
The company's strong balance sheet, operating cash flows and borrowing
capacity provide the financial flexibility necessary to continue its
record of annual dividend payments, to invest in the capital needs of
its businesses and to make appropriate acquisitions as those
opportunities arise.
Operating cash flows of $147 million generated in 1993 were lower than
in previous years as internal sales growth required additional working
capital. The company continues to place a significant emphasis on
working capital management as evidenced by the managed growth in
accounts receivable and inventories in relation to sales growth.
Borrowings at year-end 1993 were $429 million, down from $467 million at
the end of 1992. The reduction in overall debt
<PAGE>
resulted from the
retirement of certain long-term obligations. Total debt as a percentage
of total capital decreased to 38.7% from 40.1% last year. The debt to
capital ratio, excluding the company's guarantee on its ESOP debt, was
31.2% in 1993 and 32.4% in 1992. The company continues to restructure
its overall debt portfolio, taking advantage of the availability of
lower short-term interest rates in the market. In addition, various
interest rate management strategies have been employed and include the
use of interest rate swap agreements. The company's overall financing
strategy does not expose it to significant market or credit risk.
The company has access to financial resources and borrowing capabilities
around the world. The company has $100 million of unissued debt
securities registered with the Securities and Exchange Commission. In
addition, the company had approximately $265 million of unused lines of
credit at year-end 1993.
Capital Expenditures
The company's capital investment program seeks to improve productivity,
customer service and responsiveness. Capital expenditures for the last
three years are listed below, in millions of dollars:<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Productivity $33 $39 $36
Increased capacity 27 20 19
Regulatory 2 2 2
Other 7 3 6
------ ------ -----
$69 $64 $63
</TABLE>
Capital expenditures in 1994 are expected to be approximately $70
million. Productivity, as measured by net sales per employee in
constant 1993 dollars, increased by 2.3%. Net sales per employee in 1993
were $115,100 compared with $112,500 in 1992.
Other Matters
In the normal course of business the company becomes involved in various
lawsuits and claims. The company has estimated the potential cost of
these activities and has established appropriate reserves. This
litigation activity includes suits and claims associated with the
company's Mac Tools, Inc. subsidiary.
The results for 1993 include a fourth quarter charge of $15 million to
reflect both the late-January 1994 settlement of 132 filed and
threatened lawsuits by former distributors against Mac Tools, Inc. and
the accrual of reserves to cover unsettled claims. After these
settlements, there were four suits outstanding. The company has also
taken steps to improve its relationship with its current distributors
and an ombudsman program has been established to provide liaison with
former distributors. Management believes that these actions will reduce
the number and size of future settlements and expenses related to this
kind of litigation and that any such expenses will not have a material
adverse effect on the company's financial position, results of
operations or liquidity.
The company is subject to various environmental laws and regulations in
the U.S. and foreign countries where it has operations. Future laws and
regulations are expected to be increasingly stringent and will likely
increase the company's expenditures related to environmental matters.
The company is involved with remedial and other environmental compliance
activities at some of its current and former sites. Additionally, the
company, together with other parties, has been named a potentially
responsible party ("PRP") with respect to nine Superfund sites. Current
laws potentially impose joint and several liability upon each PRP. In
assessing its potential liability at these sites, the company has
considered the following: the solvency of the other PRPs, whether
responsibility is being disputed, the terms of existing agreements,
experience at similar sites, and the fact that its volumetric
contribution at these sites is relatively small.
The company's policy is to accrue environmental investigatory and
remediation costs for identified sites when it is probable that a
liability has been incurred and the amount of loss can be reasonably
estimated. The amount of liability recorded is based on an evaluation of
currently available facts with respect to each individual site and
includes such factors as existing technology, presently enacted laws and
regulations, and prior experience in remediation of contaminated sites.
The amounts recorded do not take into account any claims for recoveries
from insurance or third parties. As assessments and remediation progress
at individual sites, the amounts recorded are reviewed periodically and
adjusted to reflect additional technical and legal information which
becomes available. As of year-end 1993, the company had reserves of $18
million, primarily for remediation activities associated with
company-owned properties as well as for Superfund sites.
Actual costs to be incurred at identified sites in future periods may
vary from the estimates, given the inherent uncertainties in evaluating
environmental exposures. Subject to the imprecision in estimating future
environmental costs, the company does not expect that any sum it may
have to pay in connection with environmental matters in excess of the
amounts recorded will have a material adverse effect on its financial
position, results of operations or liquidity.
<PAGE>
<TABLE>
Consolidated Statements of Earnings
The Stanley Works and Subsidiaries
<CAPTION>
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991
(Millions of Dollars, except per share amounts) 1993 1992* 1991*<PAGE>
<S> <C> <C> <C>
Net Sales $2,273.1 $2,195.6 $1,942.2
Costs and Expenses
Cost of sales 1,553.0 1,466.0 1,281.0
Selling, general and administrative 512.3 526.7 462.3
Interest-net 25.2 26.5 25.9
Other-net 34.6 18.3 16.5
------- ------- -------
2,125.1 2,037.5 1,785.7
------- ------- -------
Earnings before Income Taxes and
Cumulative Effect of Accounting Changes 148.0 158.1 156.5
Income Taxes
Currently payable 61.0 72.2 52.3
Deferred (5.6) (12.2) 7.1
----- ----- ----
55.4 60.0 59.4
Earnings before Cumulative Effect
of Accounting Changes 92.6 98.1 97.1
Cumulative effect of accounting changes (8.5) (12.5)
------- ------- ------
Net Earnings $84.1 $98.1 $84.6
======= ======= ======
Earnings Per Share of Common Stock:
Before cumulative effect of accounting changes $2.06 $2.15 $2.24
Cumulative effect of accounting changes (.19) (.29)
------- ------- ------
Net Earnings Per Share of Common Stock $1.87 $2.15 $1.95
======== ======= ======
<FN>
See notes to consolidated financial statements.
* Reclassified to conform with the 1993 presentation.
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
The Stanley Works and Subsidiaries
<CAPTION>
January 1, 1994 and January 2, 1993
(Millions of Dollars) 1993 1992
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $43.7 $81.1
Accounts and notes receivable, net 371.2 354.9
Inventories 308.1 302.0
Other current assets 35.6 40.7
------ ------
Total Current Assets 758.6 778.7
Property, Plant and Equipment 566.5 566.6
Goodwill and Other Intangibles 171.5 175.3
Investments and Other Assets 80.3 87.0
------- --------
Total Assets $1,576.9 $1,607.6
======== ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Notes payable to banks $42.3 $20.2
Current maturities of long-term debt 9.8 8.4
Accounts payable 103.3 114.0
Accrued expenses 197.6 184.2
Income taxes 4.1 3.1
------ -----
Total Current Liabilities 357.1 329.9
Long-Term Debt 377.2 438.0
Deferred Income Taxes 36.0 54.8
Other Liabilities 125.7 88.6
Shareholders' Equity
Preferred Stock, without par value:
Authorized and unissued 10,000,000 shares
Common Stock, par value $2.50 per share:
Authorized 110,000,000 shares;
issued 46,171,705 shares in 1993 and 1992 115.4 115.4
Capital in excess of par value 73.1 75.8
Retained earnings 871.1 843.7
Foreign currency translation adjustment (56.7) (41.5)
ESOP debt (261.5) (268.8)
------- -------
741.4 724.6
Less: cost of common stock in treasury
(1,476,074 shares in 1993 and 732,851
shares in 1992) 60.5 28.3
------- -------
Total Shareholders' Equity 680.9 696.3
--------- ---------
Total Liabilities and Shareholders' Equity $1,576.9 $1,607.6
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
The Stanley Works and Subsidiaries
<CAPTION>
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991<PAGE>
(Millions of Dollars) 1993 1992 1991
<S> <C> <C> <C>
Operating Activities:
Net earnings $84.1 $98.1 $84.6
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 80.7 78.5 74.9
Gain on sale of non-operating asset (29.0) (25.8)
Provision for postemployment and
postretirement benefits 13.6 20.6
Other non-cash items 9.4 16.0 (.6)
Changes in operating assets and liabilities:
Accounts and notes receivable (19.7) 13.1 9.8
Inventories (15.5) (6.6) .5
Accounts payable and accrued expenses 16.0 17.2 (6.1)
Income taxes 1.0 1.8 2.4
Other 5.9 (7.3) (6.1)
------ ------ ------
Net cash provided by operating activities 146.5 185.0 180.0
------ ------ ------
Investing Activities:
Capital expenditures (69.7) (65.1) (61.1)
Proceeds from sales of assets 6.6 8.2 11.8
Proceeds from sale of non-operating asset 38.9 35.2
Business acquisitions (13.3) (105.8) (54.7)
Proceeds from sale of businesses 2.9
Other (13.2) (10.6) (8.0)
------ ------ ------
Net cash used by investing activities (50.7) (138.1) (109.1)
------ ------ ------
Financing Activities:
Payments on long-term debt (133.8) (69.8) (256.3)
Proceeds from long-term borrowings 78.5 120.2 240.3
Loan to ESOP (180.0)
Net short-term bank financing 22.3 5.1 (2.6)
Proceeds from issuance of common stock 4.6 3.6 184.6
Purchase of common stock for treasury (42.3) (25.0) (37.2)
Cash dividends on common stock (60.5) (57.5) (52.3)
------ ------ ------
Net cash used by financing activities (131.2) (23.4) (103.5)
------ ------ ------
Effect of exchange rate changes on cash (2.0) (.7) (3.8)
------ ------ ------
Increase (decrease) in cash and cash equivalents (37.4) 22.8 (36.4)
Cash and cash equivalents, beginning of year 81.1 58.3 94.7
------ ------ ------
Cash and cash equivalents, end of year $43.7 $81.1 $58.3
====== ====== ======
<FN>
See notes to consolidated financial statements.<PAGE>
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Changes in Shareholders' Equity
The Stanley Works and Subsidiaries
<CAPTION>
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991
(Millions of Dollars)
Capital Trans-
In Excess lation Share-
Common of Par Retained Adjust- ESOP Treasury holders
Stock Value Earnings ments Debt Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Bal December 30, 1990 $113.2 $59.3 $756.9 $(8.1) $(102.9) $(139.1) $679.3
Net earnings 84.6 84.6
Cash dividends declared
- $1.22 per share (53.8) (53.8)
Issuance of common stock 1.5 31.4 152.9 185.8
Purchase of common stock (37.2) (37.2)
ESOP debt (173.2) (173.2)
ESOP tax benefit 3.0 3.0
-----------------------------------------------------------
Bal Dec 28, 1991 114.7 90.7 790.7 (8.1) (276.1) (23.4) 688.5
Pooling of interests .7 (13.4) 9.8 12.7 9.8
-----------------------------------------------------------
Bal Dec 29, 1991 115.4 77.3 800.5 (8.1) (276.1) (10.7) 698.3
Net earnings 98.1 98.1
Currency translation adj (33.4) (33.4)
Cash dividends declared
- $1.28 per share (58.5) (58.5)
Issuance of common stock (1.5) 10.1 8.6
Purchase of common stock (27.7) (27.7)
ESOP debt 7.3 7.3
ESOP tax benefit 3.6 3.6
----------------------------------------------------------
Bal Jan 2, 1993 115.4 75.8 843.7 (41.5) (268.8) (28.3) 696.3
Net earnings 84.1 84.1
Currency translation adj (15.2) (15.2)
Cash dividends declared
- $1.34 per share (60.1) (60.1)
Issuance of common stock (2.7) 15.7 13.0
Purchase of common stock (47.9) (47.9)
ESOP debt 7.3 7.3
ESOP tax benefit 3.4 3.4
------------------------------------------------------------
Bal Jan 1, 1994 $115.4 $73.1 $871.1 $(56.7) $(261.5) $(60.5) $680.9
============================================================
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
The Stanley Works and Subsidiaries
A Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
company and all subsidiaries, after the elimination of intercompany
accounts and transactions.
Fiscal Year-End
The company's fiscal year ends on the Saturday nearest to December 31.
Fiscal years 1993 and 1991 were comprised of 52 weeks and fiscal year
1992 was comprised of 53 weeks.
Foreign Currency Translation
For most foreign operations, balance sheet accounts are translated at
the current year-end exchange rate and earnings statement items are
translated at the average exchange rate for the year. Resulting<PAGE>
translation adjustments are made directly to a separate component of
shareholders' equity. Translation adjustments for operations in
highly-inflationary countries and gains and losses on transactions are
included in earnings.
Cash Equivalents
Highly liquid investments with original maturities of three months or
less are considered cash equivalents. Carrying amounts approximate fair
values.
Inventories
Inventories of the parent company and all significant inventories of its
United States subsidiaries are valued at the lower of last-in, first-out
cost or market. The remaining inventories are valued generally at the
lower of first-in, first-out cost or market.
Properties, Equipment and Related Depreciation
Property, plant and equipment are stated on the basis of cost.
Depreciation is provided using a combination of accelerated and
straight-line methods based upon the estimated useful lives of the
assets.
Income Taxes
Deferred taxes are determined based on the difference between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are
expected to reverse. Deferred tax expense represents the change in the
deferred tax asset and liability balances.
Earnings per Share
Earnings per share are based on the weighted average number of shares of
common stock outstanding during each year (44,935,000 shares, 45,703,000
shares and 43,266,000 shares in 1993, 1992 and 1991, respectively). The
issuance of additional shares under employee stock plans would not
result in a material dilution of earnings per share.
Reclassifications
Certain 1992 and 1991 amounts have been reclassified to conform with the
1993 presentation.
B Acquisitions and Divestitures
The company acquired businesses in 1993 for a total of $24.0 million.
The most significant of the businesses acquired were Friess & Co. KG, a
German manufacturer and marketer of paint rollers and brushes and
Rikkoh-Sha Co. Ltd., a mechanics tools distributor in Japan.
The company acquired several businesses in 1992 for $90.4 million. The
acquisitions included: Goldblatt Tool Co., a manufacturer of masonry,
tile and drywall tools; Mail Media (Jensen Tools, Inc. and Direct
Safety), known principally as a marketer of precision tool kits through
catalog sales; American Brush Co., Inc., a U.S. manufacturer of paint
brushes and decorator tools; and a controlling interest in Tona a.s.<PAGE>
Pecky, a major Czech manufacturer of mechanics tools.
The 1993 and 1992 consolidated statements of earnings include the
results of these operations, which were accounted for as purchases, from
the respective dates of their acquisitions. Pro forma results for 1993
and 1992 acquisitions have not been presented as they would not have
been significantly different.
On January 16, 1992, the company exchanged 642,940 shares of common
stock for all of the issued and outstanding common stock of LaBounty
Manufacturing, Inc., a manufacturer of large hydraulic tools. This
business combination was accounted for as a pooling of interests.
Periods prior to 1992 were not restated due to the immaterial effect of
the pooled company on the consolidated financial statements.
During 1991, the company acquired, for $69.6 million, the businesses of
Mosley Stone, Ltd., Sidchrome Tools, Monarch Mirror Door Company and
three smaller companies. These transactions were accounted for as
purchases. The operating results of these companies are included in the
consolidated statements of earnings from their respective dates of
acquisition in 1991.
In connection with the aforementioned purchase transactions, the fair
value of assets acquired and liabilities assumed aggregated $34.5
million and $10.5 million, respectively, for 1993, $115.8 million and
$25.4 million, respectively, for 1992 and $119.3 million and $49.7
million, respectively, for 1991.
On June 30, 1993, the company sold the franchise operations of its
wholly owned subsidiary Taylor Rental Corporation.
<PAGE>
C Accounts and Notes Receivable
Trade receivables are dispersed among a large number of retailers,
distributors and industrial accounts in many countries. No individual
customer balance is material. Adequate provisions have been established
to cover anticipated credit losses. At January 1, 1994 and January 2,
1993, allowances for doubtful receivables of $24.8 million and $22.9
million, respectively, have been applied as a reduction of current
accounts and notes receivable. The company believes it had no
significant concentrations of credit risk as of January 1, 1994.
Throughout the year, the company sold, with recourse, certain domestic
accounts receivable under a revolving sales agreement. The proceeds for
these sales were $39 million in 1993, $64 million in 1992 and $43
million in 1991. At January 1, 1994 and January 2, 1993, the balance of
these receivables subject to recourse was approximately $62 million and
$70 million, respectively. Provisions have been made to cover
anticipated losses.
D Inventories
<TABLE>
<CAPTION>
(Millions of Dollars)
1993 1992
<S> <C> <C>
Finished products $195.7 $190.9
Work in process 61.1 59.6
Raw materials 48.7 49.0
Supplies 2.6 2.5
______ ______
$308.1 $302.0
====== ======
</TABLE>
Inventories in the amount of $158.9 million at January 1, 1994 and
$155.2 million at January 2, 1993 were valued at the lower of last-in,
first-out (LIFO) cost or market. If LIFO inventories had been valued at
FIFO costs, they would have been $118.5 million and $118.4 million
higher than reported at January 1, 1994 and January 2, 1993,
respectively.
E Property, Plant and Equipment
<TABLE>
<CAPTION>
(Millions of Dollars)
1993 1992
<S> <C> <C>
Land $32.4 $30.7
Buildings 239.7 229.5
Machinery and equipment 846.9 828.6
_______ _______
1,119.0 1,088.8
Less: accumulated depreciation 552.5 522.2
_______ _______
$566.5 $566.6
======== ========
</TABLE>
The provisions for depreciation for 1993, 1992 and 1991 were $63.1
million, $62.4 million and $61.4 million, respectively.
F Intangibles
Goodwill and other intangibles, net of accumulated amortization of $73.5
million and $62.8 million, respectively, at the end of each fiscal year
were as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992
<S> <C> <C>
Goodwill, amortized generally
over 40 years $130.9 $129.6
Tradenames and other intangibles
amortized over periods ranging
from 2 to 15 years 40.6 45.7
_______ _______
$171.5 $175.3
====== ======
</TABLE>
G Accrued Expenses
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992<PAGE>
<S> <C> <C>
Salaries and wages $33.4 $33.2
Insurance 39.1 38.9
Taxes, other than income taxes 16.9 16.8
Dividends payable 14.6 15.0
Litigation 24.0 10.5
Other 69.6 69.8
_______ _______
$197.6 $184.2
====== ======
</TABLE>
H Long-Term Debt and Financing Arrangements
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992
<S> <C> <C>
Notes payable in 2002 with interest
at 7.375% $100.0 $100.0
European Currency Unit (ECU) notes
payable in 1993 with interest at 7.75% 66.3
Sinking Fund Debentures due 2016,
with interest at 9.25% 65.5
Commercial Paper with interest at 3.4% 62.3
Dutch Guilder notes payable in 1996
with interest at 6.075% 51.5 55.0
Notes payable in 1998 with
interest at 9.00% 34.8 34.8
Industrial Revenue Bonds at various
interest rates from 5.75% to 7.5%
and due in varying amounts to 2010 30.5 31.1
Dutch Guilder notes payable in 1996
with interest at 6.125% 15.4
ESOP loan guarantees, payable in
varying monthly installments:
due 1993 with interest at 6.78% 1.8
due 2001 with interest at 7.71% 82.8 87.9
Other 9.7 4.0
--- ---
387.0 446.4
Less: current maturities 9.8 8.4
______ ______
$377.2 $438.0
====== ======
</TABLE>
<PAGE>
The company has entered into a variety of foreign currency and interest
rate exchange agreements. As of January 1, 1994, these agreements
established an effective interest rate of 6.97% on notional principal of
$253 million. The counterparties to these agreements are major
international financial institutions. The company is exposed to credit
risk to the extent of nonperformance by these counterparties, however,
the company considers the risk of default to be remote.
Commercial paper outstanding at January 1, 1994, of $62.3 million is
classified as non-current pursuant to the company's intention and
ability to continue to refinance this obligation on a long-term basis.
Commercial paper classified as current as of January 1, 1994 and January
2, 1993, was $36.5 million and $14.4 million, respectively.
In 1992 the company filed a shelf registration statement with the
Securities and Exchange Commission covering the issuance of up to $200
million of debt securities; as of January 1, 1994, $100 million remained
unissued. The company has unused long-term credit arrangements with
several banks to borrow up to $205 million at the lower of prime or
money market rates. Of these lines, $200 million is available to support
the company's commercial paper program. Commitment fees range from .125%
to .15%.
The company has short-term lines of credit with numerous foreign banks
aggregating $60.8 million. At January 1, 1994, the unused portion of
these credit lines was $56.2 million. The arrangements are reviewed
annually for renewal.
The company has guaranteed the long-term notes payable to banks of its
employee stock ownership plans (ESOPs). The notes are secured by shares
of the company's common stock held by the ESOPs. The guarantee is
reflected in the consolidated balance sheets as long-term debt with a
corresponding reduction in shareholders' equity.
Aggregate annual maturities of long-term debt for the years 1995 to 1998
are $9.4 million, $77.9 million, $10.7 million and $112.8 million,
respectively. Interest paid during 1993, 1992 and 1991 amounted to $34.0
million, $33.9 million and $40.0 million, respectively.
The fair values of long-term debt are estimated using discounted cash
flow analysis based on the company's incremental borrowing rates. The
fair values of foreign currency and interest rate swaps are based on
current settlement values. The fair value of long-term debt and
debt-related financial instruments was $393 million and $12 million,
respectively, as of January 1, 1994.
I Capital Stock
Common Stock Share Activity
The activity in common shares for each year, net of treasury stock, was
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Outstanding, beginning
of year 45,438,854 45,240,591 41,176,312
Issued For:
Employee stock plans 387,196 263,805 5,070,247
Acquisitions 642,940
Purchased (1,130,419) (708,482) (1,005,968)
__________ __________ __________
Outstanding, end of year 44,695,631 45,438,854 45,240,591
========== ========== ==========
</TABLE>
Common Stock Reserved
At January 1, 1994 and January 2, 1993, the number of shares of common
stock reserved for future issuance under various employee stock plans
was as follows:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Employee Stock Purchase Plan 3,061,462 3,200,472
Stock Option Plan 2,316,805 2,542,229
Long-Term Stock Incentive Plan 1,507,945 1,950,312
__________ __________
6,886,212 7,693,013
========== ==========
</TABLE>
Long-Term Stock Incentive Plan
The Long-Term Stock Incentive Plan, effective through 1997, provides for
the granting of awards to senior management employees on the basis of
company performance. The Plan is administered by a committee of the
Board of Directors consisting of non-employee directors. Awards are
payable 55% in cash and 45% in shares of common stock or 100% in shares
of common stock. The amounts of $.5 million, $2.2 million and $.3
million were charged to expense in 1993, 1992 and 1991, respectively.
Shares totaling 10,092, 33,067 and 15,782 were issued in 1993, 1992 and
1991, respectively.
Preferred Stock Purchase Rights
Each outstanding share of common stock has two-thirds of a share
purchase right, which, under certain conditions, may be exercised to
purchase one two-hundredth of a share of Series A Junior Participating<PAGE>
Preferred Stock at an exercise price of $125.00, subject to adjustment
to prevent dilution. The rights, which do not have voting rights, expire
on March 10, 1996, and may be redeemed by the company at a price of $.05
per right at any time prior to their expiration or within 30 days
following the acquisition of 10 percent of the company's common stock.
In the event that the company were acquired in a merger or other
business combination transaction, provision shall be made so that each
holder of a right (other than a holder who is 10%-or-more shareholder)
shall have the right to receive, upon exercise thereof, that number of
shares of common stock of the surviving company having a market value
equal to two times the exercise price of the right. Similarly, if anyone
becomes the beneficial owner of more than 10% of the then outstanding
shares of common stock, provision will be made so that each holder of a
right (other than a holder who is a 10%-or-more shareholder) shall
thereafter have the right to receive, upon exercise thereof, common
stock (or, in certain circumstances, cash, property or other securities
of the company) having a market value equal to two times the exercise
<PAGE>
price of the right. At January 1, 1994, there were 44,695,631
outstanding rights. There are 175,000 shares of Series A Junior
Participating Preferred Stock reserved for issuance in connection with
these rights.
Stock Options
The company has a stock option plan to provide nonqualified and
incentive stock options to officers and key employees. Options are
generally for a ten-year term and are granted at the market price of the
common stock on the date of grant. Outstanding options are subject to a
two-year transfer restriction on at least half the shares issued upon
exercise. In the event of a change of control in the company, all
outstanding stock options become immediately exercisable, all transfer
restrictions lapse and optionees have the right to sell options to the
company at market-related values.
Information relative to the stock option plan is summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
At end of year:
<S> <C> <C> <C>
Options outsanding 1,827,936 2,006,305 2,152,076
Options exercisable 1,716,936 1,929,805 2,079,076
Shares available for grants 488,869 535,924 505,000
During the year:
Options granted 111,000 76,500 73,000
Options exercised 225,424 114,847 17,924
Options cancelled 63,945 107,424 17,000<PAGE>
Average price per share:
Options outstanding $31.27 $30.64 $30.36
Options granted 40.25 37.13 37.06
Options exercised 30.47 30.15 30.13
</TABLE>
J Employee Benefit Plans
Employee Stock Purchase Plan
The Employee Stock Purchase Plan enables substantially all employees in
the United States and Canada to subscribe to shares of common stock on
annual offering dates at a purchase price of 85% of the fair market
value of the shares on the offering date or, if lower, 85% of the fair
market value of the shares on the exercise date. A maximum of 4,000,000
shares are authorized for subscription over a ten year period. During
1993, 1992 and 1991, shares totaling 139,010, 106,738 and 179,062,
respectively, were issued under the Plan at average prices of $33.07,
$33.31 and $25.75 per share, respectively. At January 1, 1994,
subscriptions were outstanding for 113,620 shares at $35.59 per share.
Employee Stock Ownership Plans (ESOPs)
The Savings Plans for both Salaried Employees and Hourly-Paid Employees
provide opportunities for tax-deferred savings, enabling eligible U.S.
employees to acquire a proprietary interest in the company. Such
employees may contribute from 1% to 12% of their salary to the Plans.
The company contributes an amount equal to one-half of the first 7% of
employee contributions up to a maximum of 3 1/2%.
Shares of the company's common stock held by the ESOPs were purchased
with the proceeds of external borrowings in 1989 and borrowings from the
company in 1991. The external ESOP borrowings are guaranteed by the
company and are included in long-term debt. Shareholders' equity
reflects both the internal and the external borrowing arrangements.
The company recognizes ESOP activity and makes contributions each year
based on total debt service and share purchase requirements less
employee contributions and dividends on ESOP shares. The company's net
ESOP activity resulted in income of $5.6 million in 1993, $6.1 million
in 1992 and $3.7 million in 1991.
Dividends on ESOP shares were $14.2 million, $13.7 million and $11.9
million for 1993, 1992 and 1991, respectively. Interest costs incurred
by the Plans on external debt for 1993, 1992 and 1991 were $6.7 million,
$7.2 million and $7.6 million, respectively.
Pension Plans
The company sponsors non-contributory defined benefit and defined
contribution plans covering substantially all employees. Upon
retirement, participants in the U.S. generally receive the greater of
their defined contribution account or a guaranteed benefit as calculated
in the defined benefit plan.
Defined benefits for salaried and non-union hourly employees are
generally based on salary and years of service, while those for<PAGE>
collective bargaining employees are based on a stated amount for each
year of service. The company's funding policy is to contribute amounts
determined annually on an actuarial basis that provide for current and
future benefits in accordance with federal law and other regulations.
Plan assets are invested in equity securities, bonds, real estate and
money market instruments. If the plans are terminated or merged with
another plan within three years following a change in control of the
company, any excess plan assets are to be applied to increase the
benefits of all participants.
The company funds the defined contribution plan which covers U.S.
salaried and certain hourly employees, based on 2%, 4% or 6% of an
employee's salary, depending on the employee's length of service.
Additionally, the company contributes to several union-sponsored
multi-employer plans which provide defined benefits.
Total pension expense includes the following components:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
<C> <C> <C> <C>
Defined benefit plans:
Service cost $ 9.0 $ 9.2 $ 8.6
Interest cost 20.3 20.5 19.7
Actual return on plan assets (25.3) (25.9) (50.2)
Net amortization and deferral 1.0 .6 26.4
_______ ______ _______
Net pension expense 5.0 4.4 4.5
Defined contribution plan 8.0 7.8 6.3
Multi-employer plans .5 .5 .5
_______ _______ _______
Total pension expense $ 13.5 $ 12.7 $ 11.3
======== ======= =======
</TABLE>
<PAGE>
The funded status of the company's defined benefit plans at the end of
each fiscal year was as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992
Plans Plans Plans Plans
Where Where Where Where
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets<PAGE>
<S> <C> <C> <C> <C>
Actuarial Present
value of benefit
obligations:
Vested $203.7 $ 9.6 $181.1 $ 12.3
Non-vested 1.5 2.2 1.0 2.3
Accumulated benefit ----- ---- ----- ----
obligation 205.2 11.8 182.1 14.6
Additional amounts
related to projected
pay increases 52.8 3.3 49.0 3.1
Total projected ----- ---- ----- -----
benefit obligation
(PBO) 258.0 15.1 231.1 17.7
Funded assets at
fair value 306.8 7.0 279.1 8.6
Assets in excess of ----- ---- ----- -----
(less than) PBO 48.8 (8.1) 48.0 (9.1)
Unrecognized net
(gain) or loss at
transition (11.2) .4 (13.0) .3
Unrecognized net
(gain) or loss (26.9) .1 (24.1) (.5)
Unrecognized prior
service cost 17.8 1.0 18.9 1.1
Adjustment required
to recognize minimum
liability (1.8) (1.8)
Prepaid (accrued)
pension expense
(long-term) ------ ------ ------ ------
$ 28.5 $ (8.4) $ 29.8 $(10.0)
====== ====== ====== ======
</TABLE>
Assumptions used for significant defined benefit plans were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount rate 7.5% 8.0% 8.0%
Average wage increase 5.0% 5.7% 5.7%
Long-term rate of return
on assets 9.0% 9.0% 9.0%
</TABLE>
Postretirement and Postemployment Benefits
The company provides medical and dental benefits for certain retired
employees in the United States. In addition, domestic employees who
retire from active service are eligible for life insurance benefits.
In 1991, the company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions." The standard requires companies to recognize the estimated
future cost of providing health and other postretirement benefits on an
accrual basis. These benefits had previously been recognized as expense
when paid. The cumulative effect of this accounting change reduced 1991
net earnings by $12.5 million ($20.6 million less related deferred
income taxes of $8.1 million) or $.29 per share.
The status of the company's plans at the end of each fiscal year was as
follows:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992
Accumulated postretirement
benefit obligation:
<S> <C> <C>
Retirees $19.9 $12.5
Fully eligible active
plan participants 2.6 1.0
Other active plan participants 4.7 5.2
----- -----
Accumulated obligation 27.2 18.7
Unrecognized net loss (10.7) (1.8)
Accrued postretirement ----- -----
benefit expense $16.5 $16.9
===== =====
</TABLE>
Net periodic postretirement benefit expense was $3.3 million in 1993 and
$2.2 million in both 1992 and 1991.
The weighted average annual assumed rate of increase in the per-capita
cost of covered benefits (i.e. health care cost trend rate) is assumed
to be 12% reducing to 9% by 1996 and 6% over 20 years. A one percentage
point increase in the assumed health care cost trend rate would have
increased the accumulated benefit obligation by $4.2 million at January
1, 1994 and $1.3 million at January 2, 1993, and net periodic
postretirement benefit expense for fiscal years 1993 and 1992 by $.4
million and $.2 million, respectively. Weighted average discount rates
of 7.5% in 1993 and 8.0% in 1992 were used in determining the
accumulated benefit obligations.
The company provides certain postemployment benefits to eligible
employees and, in some cases, their dependents. These benefits include
severance, continuation of medical coverage and other benefits when
employees leave the company for reasons other than retirement.
In 1993, the company adopted, effective January 3, 1993, Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." Prior to 1993, postemployment benefits were
recognized as expense when paid. The cumulative effect of adopting this
new standard was a one-time charge to 1993 earnings of $8.5 million
($13.6 million less related deferred income taxes of $5.1 million) or
$.19 per share. The effect of this change on 1993 operating results was
immaterial.
K Other Costs and Expenses
Interest-net for 1993, 1992 and 1991 included interest income of $6.8
million, $7.2 million and $12.2 million, respectively.
Other-net in 1993 includes a gain of $29.0 million ($.39 per share) from
the sale of the company's investment in Max Co., Ltd. and a charge of
$15.0 million ($.21 per share) related to the settlement of lawsuits
involving a subsidiary, Mac Tools, Inc. Also included in Other-net were
additional charges for a fine levied by U.S. District Court in Missouri
for $5.0 million ($.07 per share) and contingency reserves of $23.3
million ($.32 per share) related to product liability litigation,
restructuring activities and environmental remediation.
<PAGE>
Other-net in 1992 includes a gain of $25.8 million ($.35 per share) from
the sale of a portion of the company's investment in Max Co., Ltd.,
expenses of $14.1 million ($.21 per share) related to planned closings
of certain company-owned stores and reduction of the goodwill of the
company's Taylor Rental operation, and expense of $7.8 million ($.11 per
share) for reserves for litigation pending at the company's Mac Tools,
Inc. subsidiary.
Fluctuations in foreign currency rates affect the company's financial
statements in several ways. Adjustments resulting from the translation
of most foreign subsidiary financial statements are included as a
separate component of shareholders' equity. The revenues and expenses of
foreign operations are included in U.S. dollar reported results
translated at the average exchange rates for the year.
In addition to the above, the company engages in activities denominated
in currencies other than its own. Fluctuations in the exchange rates of
those currencies expose the company to gains and losses. These
transactional gains and losses, together with the translation
adjustments related to foreign operations in highly-inflationary
economies, amounted to net losses for 1993, 1992 and 1991 of $6.0
million ($.08 per share), $8.5 million ($.12 per share) and $5.9 million
($.08 per share), respectively.
Research and development expenses amounted to $14.6 million in 1993,
$15.2 million in 1992 and $13.9 million in 1991.
L Operations by Industry Segment and Geographic Area
Industry Segment and Geographic Area information included on page 15 of
this report is an integral part of the financial statements.
M Income Taxes
Significant components of the company's deferred tax liabilities and
assets as of the end of each fiscal year were as follows:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991<PAGE>
<S> <C> <C> <C>
Depreciation $73.1 $68.8 $67.8
Amortization 2.6 3.8 2.5
Capitalized interest 1.8 1.9 2.2
Deferred state tax liabilities 5.4 6.8 7.8
Other 3.1 3.5 11.8
------ ------ -----
Total deferred tax liabilities 86.0 84.8 92.1
------ ------ -----
Employee benefit plans (20.4) (12.9) (12.5)
Doubtful accounts (6.9) (7.9) (5.6)
Inventories (4.1) (6.7) (7.7)
Benefit of deferred state taxes (1.9) (2.3) (2.5)
Other (24.6) (13.6) (5.7)
------ ------ -------
Total deferred tax assets (57.9) (43.4) (34.0)
------ ------ -------
Net deferred tax liabilities $28.1 $41.4 $58.1
====== ====== ======
</TABLE>
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
Current:
<S> <C> <C> <C>
Federal $40.2 $47.1 $22.9
Foreign 13.6 18.0 23.8
State 7.2 7.1 5.6
---- ---- ----
Total current 61.0 72.2 52.3
---- ---- ----
Deferred:
Federal (4.8) (12.3) 7.1
Foreign .6 1.2 .4
State (1.4) (1.1) (.4)
----- ----- -----
Total deferred (5.6) (12.2) 7.1
----- ----- -----
Total $55.4 $60.0 $59.4
====== ====== ======
</TABLE>
Income taxes paid during 1993, 1992 and 1991 were $63.4 million, $64.4
million and $56.7 million, respectively.
The reconciliation of the statutory federal income tax rate to the
effective rate was as follows:
<TABLE>
<CAPTION>
1993 1992 1991<PAGE>
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 34.0% 34.0%
State income taxes,
net of federal benefit 2.7 2.9 2.0
Difference between foreign
and federal income tax rates .6 1.0
Other - net (.3) .4 1.0
------ ------ ------
Effective tax rate 37.4% 37.9% 38.0%
====== ====== ======
</TABLE>
The components of earnings before income taxes consisted of the
following:
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
<S> <C> <C> <C>
United States $110.5 $108.1 $101.0
Foreign 37.5 50.0 55.5
------- ------ ------
Total pre-tax earnings $148.0 $158.1 $156.5
======= ====== ======
</TABLE>
Undistributed foreign earnings of approximately $201 million as of
January 1, 1994 are considered to be invested indefinitely or will be
remitted substantially free of additional tax. Accordingly, no provision
has been made for taxes that might be payable upon remittance of such
earnings, nor is it practicable to determine the amount of this
liability.
N Leases
The company leases certain facilities, vehicles, machinery and equipment
under long-term operating leases with varying terms and expiration
dates.
Future minimum lease payments under noncancelable operating leases, in
millions of dollars, as of January 1, 1994, were $28.5 in 1994, $23.3 in
1995, $18.9 in 1996, $12.8 in 1997, $10.4 in 1998 and $28.3 thereafter.
Rental expense for operating leases amounted to $35.0 million in 1993,
$36.7 million in 1992 and $34.5 million in 1991.
<PAGE>
O Contingencies
The company is a party to a number of proceedings before federal and
state regulatory agencies relating to environmental remediation. Also,
the company, along with many other companies, has been named as a
potentially responsible party in a number of administrative proceedings
for the remediation of various waste sites, including nine Superfund
sites. Current laws potentially impose joint and several liability upon
each PRP. In assessing its potential liability at these sites, the
company has considered the following: the solvency of the other PRPs,
whether responsibility is being disputed, the terms of existing
agreements, experience at similar sites, and the fact that the company's
volumetric contribution at these sites is relatively small.<PAGE>
In the normal course of business, the company is also involved in
various lawsuits and claims. The amount recorded for identified
contingent liabilities is based on estimates. Amounts recorded are
reviewed periodically and adjusted to reflect additional technical and
legal information which becomes available. Actual costs to be incurred
in future periods may vary from the estimates, given the inherent
uncertainties in evaluating certain exposures. Subject to the
imprecision in estimating future contingent liability costs, the company
does not expect that any sum it may have to pay in connection with these
matters in excess of the amounts recorded will have a materially adverse
effect on its financial position, results of operations or liquidity.
P Foreign Exchange Contracts
The company enters into forward exchange contracts and options to hedge
certain foreign currency exposures. The options and forward exchange
contracts are used to minimize the impact of foreign currency
fluctuations on the company's revenues and costs and are not used to
engage in speculation. Such contracts generally have maturities of one
year or less and the counterparties are typically major international
financial institutions. Gains and losses on these contracts resulting
from exchange rate movements generally are deferred and included as a
component of the related transaction. At January 1, 1994, the contract
value and fair value of forward exchange contracts and options
outstanding aggregated $44 million and $2 million, respectively. Fair
values were estimated based on quoted market prices of comparable
contracts.<PAGE>
<TABLE>
Quarterly Results Of Operations (Unaudited)
<CAPTION>
(Millions of Dollars,
except per share amounts) Quarter Year
1993 First Second Third Fourth
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Net Sales $553.4 $565.2 $576.3 $578.2 $2,273.1
Gross Profit 178.7 181.7 179.5 180.2 720.1
Selling, General
and Administrative
Expenses 130.1 128.5 126.1 127.6 512.3
Earnings Before
Cumulative Effect of
Accounting Change 23.0 27.0 25.0 17.6 92.6
Net Earnings 14.5 27.0 25.0 17.6 84.1
Per Share:
Earnings Before
Cumulative Effect of
Accounting Change $.51 $.60 $.56 $.39 $2.06
Net Earnings .32 .60 .56 .39 1.87
-----------------------------------------------------------------
1992
Net Sales $497.1 $555.5 $550.4 $592.6 $2,195.6
Gross Profit 165.5 187.7 184.6 191.8 729.6
Selling, General
and Administrative
Expenses 126.8 129.8 132.3 137.8 526.7
Net Earnings 17.5 28.8 25.4 26.4 98.1
Net Earnings Per Share $.38 $.63 $.56 $.58 $2.15
-----------------------------------------------------------------
<FN>
Note: The first quarter of 1993 has been restated to reflect the
cumulative effect of adopting Statement of Financial Accounting
Standards No. 112. The first quarter of 1993 includes a gain of $24.0
million ($.33 per share) from the sale of a portion of the company's
investment in Max Co., Ltd., and additional charges for a fine levied by
U.S. District Court in Missouri for $7.0 million ($.10 per share) and
contingency reserves of $15.7 million ($.21 per share) related to
product liability litigation, restructuring activities and environmental
remediation. The third quarter includes a gain of $5.0 million ($.06
per share) from the sale of the company's investment in Max Co., Ltd.,
which was substantially offset by reserves established for the closing
of a manufacturing facility of the company's subsidiary, Mac Tools, Inc.
The fourth quarter of 1993 includes a charge of $15.0 million ($.21 per
share) related to the settlement of lawsuits involving a subsidiary, Mac
Tools, Inc. The fourth quarter of 1992 includes a gain of $25.8 million
($.35 per share) from the sale of a portion of the company's investment
in Max Co., Ltd., expenses of $14.1 million ($.21 per share) related to
planned closings of certain company-owned stores and reduction of the
goodwill of the company's Taylor Rental operation, and expense of $7.8
million ($.11 per share) for reserves for litigation pending at the
company's subsidiary, Mac Tools, Inc.
Certain 1992 amounts in the consolidated statements of earnings were
reclassified to conform with the 1993 presentation.
</TABLE>
Page 1 of 5 pages
EXHIBIT 21
(All subsidiaries are included in the Consolidated Financial
Statements of The Stanley Works)
Jurisdiction of
Corporate Name Incorporation
The Stanley Works Connecticut
The Farmington River Power Company Connecticut
Mac Tools, Inc. Ohio
Stanley-Vidmar, Inc. Connecticut
Stanley-Vidmar Systems, Inc. Delaware
Stanley Germany Inc. Delaware
Stanley International Sales, Inc. Delaware
Stanley Inter-America Distribution
Center, Inc. Delaware
Stanley Foreign Sales Corporation Virgin Islands
Stanley Works Financial Inc. Delaware
Stanley Door Systems Inc. Michigan
Stanley Structures, Inc. Delaware
Wyoming Prestress Co. Wyoming
Stanley Magic-Door, Inc. Delaware
Stanley Home Automation, Inc. Delaware
General Rental Co., Inc. Florida
Taylor Rental Center, Inc. Massachusetts
Taylor Financial Corp. Nevada<PAGE>
<PAGE> Page 2 of 5 pages
EXHIBIT 21
Jurisdiction of
Incorporation
(The Stanley Works)
J. B. Acquisition Corp. Delaware
JB Supplies, Inc. Minnesota
American Brush Company, Inc. Massachusetts
Jensen Tools, Inc. Delaware
Wondura Products, Inc.
dba Monarch Mirror Door, Inc. New Jersey
Monarch Mirror Door Company
Inc. California
Monarch Norcal, Inc. California
Monarch Mirror Door, Canada, Inc. Ontario, Canada
LaBounty Manufacturing, Inc. Minnesota
LaBounty Manufacturing (60%) Australia
Allied Construction (49%) U.K.
Equipment, Ltd.
Stanley-Bostitch, Inc. Delaware
Stanley-Bostitch Holding Corporation Delaware
Hartco Company Illinois
Halstead Enterprises, Inc. California
The Stanley Works Funding Corporation Delaware
Stanley Canada Inc. Canada
Stanley Acmetrack Limited Canada
Stanley Tools (N.Z.) Ltd. New Zealand
Ferramentas Stanley Ltda. Brazil<PAGE>
<PAGE> Page 3 of 5 pages
EXHIBIT 21
Jurisdiction of
Incorporation
(The Stanley Works)
Herramientas Stanley
S.A. de C.V. Mexico
Herramientas Stanley S.A. Colombia
Stanley-Bostitch, S.A. de C.V. Mexico
Stanley Tools SpA Italy
S.I.C.F.O.-Stanley S.A. France
Stanley Europe B.V. Netherlands
Stanley Atlantic, Inc. Delaware
The Stanley Works Ltd. U.K.
Mosley-Stone Ltd. U.K.
K. J. Tool Company Ltd England
Mosley-Stone (1979) Ltd England
E. Mosley (Brushes) Ltd England
J. C. Hayes (Tools) Ltd England
Faulkner Roller Company Ltd England
Stone Brothers (Brushes) Ltd England
Pear Tree Tools Ltd England
Alpha Handles Ltd England
Sentinal Forge Ltd England
Stanley Works
(Nederland) B.V. Netherlands
Stanley Magic-Door
Netherlands B.V. Netherlands<PAGE>
<PAGE> Page 4 of 5 pages
EXHIBIT 21
Jurisdiction of
Incorporation
(The Stanley Works)
Placements et Rangements
Nirva S.a.R.L. France
Societe Civile Immobiliere WAT France
Stanley Vaerktoej
og beslag Aps Denmark
Stanley Svenskas A.B. Sweden
Suomen Stanley oy Finland
Bostitch G.m.b.H. Germany
Friess G.m.b.H. Germany
Stanley Bostitch S.A. France
Soc. de Fab. Bostitch S.A. France
(Simax)
Bostitch Europe, A.G. Switzerland
Bostitch A.G. Switzerland
S.A. Stanley Works Belgium N.V. Belgium
Stanley International
Holdings Inc. Delaware
Stanley Pacific Inc. Delaware/Australia
Stanley-Bostitch
Pty. Limited Australia
The Stanley Works Pty. Ltd. Australia
Stanley Works Asia Pacific Pte. Ltd. Singapore
The Stanley Works
(Hong Kong) Ltd. Hong Kong
The Stanley Works Sales
(Philippines), Inc. Philippines
The Stanley Works Asia Pacific Ltd. Taiwan
Chiro Tool Manufacturing Corporation Taiwan<PAGE>
<PAGE> Page 5 of 5 pages
EXHIBIT 21
Jurisdiction of
Incorporation
(The Stanley Works)
The Stanley Works (Bermuda) Ltd. Bermuda
The Stanley Works Japan K.K. (95%) Japan
Stanley Tools Thailand Ltd. Thailand
Stanley Tools Poland Ltd. (51%) Poland
Tona a.s. Pecky (78%) Czech Republic
Dudley Shearing Sales Limited U.K.
The names of certain subsidiaries have been omitted because such subsidiaries,
considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary.<PAGE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Audited Financial Statements
and Supplemental Schedules
Years ended December 31, 1993 and 1992
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statement of Financial Condition at December 31, 1993 2
Statement of Financial Condition at December 31, 1992 3
Statement of Income and Changes in Plan Equity for the Year Ended
December 31, 1993 4
Statement of Income and Changes in Plan Equity for the Year Ended
December 31, 1992 5
Notes to Financial Statements 6
Supplemental Schedules
Assets Held for Investment 11
Transactions or Series of Transactions in Excess of 5% of the
Current Value of Plan Assets 12<PAGE>
<PAGE>
Report of Independent Auditors
Pension Committee of the Board of Directors
The Stanley Works
We have audited the accompanying statements of financial condition of the
Savings Plan for Salaried Employees of The Stanley Works as of December
31, 1993 and 1992, and the related statements of income and changes in
plan equity for the years then ended. These financial statements are the
responsibility of the Plan'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 financial statements referred to above present
fairly, in all material respects, the financial condition of the Plan at
December 31, 1993 and 1992, and its income and changes in plan equity for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment as of December 31, 1993, and
transactions or series of transactions in excess of 5% of the current
value of plan assets for the year then ended, are presented for purposes
of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974, and are not a required part of the financial statements. The
supplemental schedules have been subjected to the auditing procedures
applied in our audit of the 1993 financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
1993 financial statements taken as a whole.
Ernst & Young
March 18, 1994
<TABLE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Statement of Financial Condition
December 31, 1993
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
Assets
<S> <C> <C> <C> <C>
Investments, at current market
value:
The Stanley Works
Common Stock:
3,165,104 shares (cost
$77,647,302) $140,847,128 $140,847,128
5,044,086 shares
(cost $181,564,822) $224,461,827 224,461,827
Short-term investments 1,021,005 7,683 1,028,688
-------------------------------------------------
141,868,133 224,469,510 366,337,643
Dividends and
interest receivable 1,073,558 1,724,163 2,797,721
Loans to participants $5,500,195 5,500,195
Due from Savings Plan for
Hourly Paid Employees
of The Stanley Works 157,530 157,530
--------------------------------------------------
$143,099,221 $5,500,195 226,193,673 374,793,089
==================================================
Liabilities and plan equity
Liabilities:
Due to Retirement Plan for
Salaried Employees of
The Stanley Works $ 163,434 $ 163,434
Debt 199,879,591 199,879,591
Deferred employer
contributions 1,088,466 1,088,466
Plan forfeitures 206,022 206,022
Benefits payable 1,402,969 1,402,969
--------------------------------------------------
2,860,891 199,879,591 202,740,482
Plan equity 140,238,330 $ 5,500,195 26,314,082 172,052,607
---------------------------------------------------
$143,099,221 $ 5,500,195 226,193,673 374,793,089
===================================================
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Salaried Employees of The Stanley Works
Statement of Financial Condition
December 31, 1992
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total<PAGE>
Assets
<S> <C> <C> <C> <C>
Investments, at current market
value:
The Stanley Works
Common Stock:
3,009,472 shares (cost
$70,556,560) $127,902,560 $127,902,560
5,352,255 shares
(cost $191,291,733) $227,470,838 227,470,838
Short-term investments 864,000 3,000 867,000
----------------------------------------------------
128,766,560 227,473,838 356,240,398
Cash (overdraft) 716 (165) 551
Dividends and interest
receivable 987,573 1,778,028 2,765,601
Loans to participants $ 5,569,694 5,569,694
Due from Savings Plan for
Hourly Paid Employees
of The Stanley Works 95,753 95,753
-----------------------------------------------------
$129,850,602 $ 5,569,694 $229,251,701 $364,671,997
=====================================================
Liabilities and plan equity
Liabilities:
Due to Retirement Plan for
Salaried Employees of
The Stanley Works $ 163,434 $ 163,434
Debt $204,922,630 204,922,630
Deferred employer
contributions 923,336 923,336
Plan forfeitures 210,772 210,772
Benefits payable 712,775 712,775
--------------------------------------------------
2,010,317 204,922,630 206,932,947
Plan equity 127,840,285 $ 5,569,694 24,329,071 157,739,050
----------------------------------------------------
$129,850,602 $ 5,569,694 229,251,701 364,671,997
====================================================
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Statement of Income and Changes in Plan Equity
Year ended December 31, 1993
<CAPTION>
Stanley Unallocated<PAGE>
Stock Loan Stanley
Fund Fund Stock Fund Total
Investment income:
<S> <C> <C> <C> <C>
Dividends $ 4,188,809 $ 6,921,604 $ 11,110,413
Interest 41,528 $ 384,173 33,853 459,554
----------------------------------------------------
4,230,337 384,173 6,955,457 11,569,967
Net realized and unrealized
appreciation in The Stanley
Works Common Stock 9,730,283 6,717,900 16,448,183
Contributions:
Employee 11,294,400 11,294,400
Employer 5,994,747 5,994,747
Transfers from Savings Plan for
Hourly Paid Employees of
The Stanley Works 139,047 139,047
----------------------------------------------------
17,428,194 17,428,194
Withdrawals:
In cash (10,437,951) (10,437,951)
In The Stanley Works Common
Stock (3,581,491 (3,581,491)
Transfers to Retirement Plan for
Salaried Employees of The
Stanley Works (284,789) (284,789)
---------------------------------------------------
(14,304,231) (14,304,231)
Administrative
expenses (120,533) (120,533)
Plan forfeitures (206,022) (206,022)
Interest expense (16,502,001) (16,502,001)
Interfund
transfers--net (4,359,983) (453,672) 4,813,655
---------------------------------------------------
Net
increase (decrease) 12,398,045 (69,499) 1,985,011 14,313,557
Plan equity at
beginning of year 127,840,285 5,569,694 24,329,071 157,739,050
-----------------------------------------------------
Plan equity at
end of year $140,238,330 $5,500,195 $ 26,314,082 $172,052,607
=====================================================
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Salaried Employees of The Stanley Works
Statement of Income and Changes in Plan Equity
Year ended December 31, 1992
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
Investment income:
<S> <C> <C> <C> <C>
Dividends $ 3,737,041 $ 7,059,682 $ 10,796,723
Interest 38,805 $ 388,759 46,182 473,746
---------------------------------------------------
3,775,846 388,759 7,105,864 11,270,469
Net realized and unrealized
appreciation in The
Stanley Works Common
Stock 9,277,986 4,452,040 13,730,026
Contributions:
Employee 11,061,742 11,061,742
Employer 5,099,206 5,099,206
Transfers from Savings
Plan for Hourly Paid
Employees of
The Stanley Works 359,926 359,926
----------------------------------------------------
16,520,874 16,520,874
Withdrawals:
In cash (8,748,952) (8,748,952)
In The Stanley Works
Common Stock (3,156,367) (3,156,367)
Transfers to Retirement
Plan for Salaried
Employees of The
Stanley Works (362,675) (362,675)
----------------------------------------------------
(12,267,994) (12,267,994)
Administrative expenses (83,734) (83,734)
Plan forfeitures (210,772) (210,772)
Interest expense (16,916,982) (16,916,982)
Interfund transfers--net(4,768,886) (53,186) 4,822,072 -
----------------------------------------------------
Net increase (decrease) 12,243,320 335,573 (537,006) 12,041,887
Plan equity at
beginning of year 115,596,965 5,234,121 24,866,077 145,697,163
-----------------------------------------------------
Plan equity at
end of year $127,840,285 $5,569,694 $24,329,071 $157,739,050
======================================================
<FN>
See accompanying notes.
</TABLE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Notes to Financial Statements
December 31, 1993
1. Significant Accounting Policies
Investments
Plan investments consist primarily of shares of The Stanley
Works Common Stock (hereinafter referred to as Stanley Stock,
Common Stock or shares). The Stanley Works Common Stock is<PAGE>
traded on a national exchange and is valued at the last
reported sales price on the last business day of the plan year.
Short-term investments consist of short-term bank-administered
trust funds which earn interest daily at rates approximating
U.S. Government securities; cost approximates market value.
Dividend Income
Dividend income is accrued on the ex-dividend date.
Gains or Losses on Sales of Investments
Gains or losses realized on the sales of investments are
determined based on average cost.
Expenses
Administrative expenses not paid by The Stanley Works (the
Company) are paid by the Plan.
Reclassifications
Certain amounts for 1992 have been reclassified to conform to
1993 presentation.
2. Description of the Plan
The Plan operates as a leveraged employee stock ownership plan,
is designed to comply with the Internal Revenue Code of 1986,
as amended, and is subject to the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended.
The Plan is a voluntary savings, defined contribution plan for
eligible United States salaried employees of The Stanley Works.
Participants may contribute, through pre-tax payroll
deductions, generally up to 12% of their salary. Participant
contributions are matched in an amount equal to 50% of a
participant's pre-tax contribution to a maximum of 3 1/2% of
the participant's salary.
Effective July 1, 1985, participant and Company matching
contributions are invested in the Stanley Stock Fund with a
guarantee, which, if necessary, is satisfied by the Retirement
Plan for Salaried Employees of The Stanley Works, that the
investment return on such stock acquired with employee
contributions will not be less than an investment return based
on two-year U.S. Treasury notes. This investment return
guarantee also is applicable to total cumulative retirement
account balances and cumulative employee savings account
balances at June 30, 1985.<PAGE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The assets of the Plan are held in trust by an independent
corporate trustee (the Trustee) pursuant to the terms of a
written Trust Agreement between the Trustee and the Company.
State Street Bank and Trust Company has been selected by the
Board of Directors of the Company as Trustee.
Participants are vested in 100% of the value of Company
matching contributions made on their behalf after five years of
service, with no vesting in the matching contributions during
the first through fifth years of service.
Benefits generally are distributed upon termination of
employment from death, disability, retirement or other
termination. Normally, a lump-sum distribution is made in cash
or shares of Common Stock or, in certain cases, a combination
thereof, at the election of the participant.
During active employment, subject to financial hardship rules,
participants may withdraw, in cash only, all or a portion of
vested amounts in their accounts.
Participants may borrow from their savings account up to an
aggregate amount equal to the lesser of $50,000 or 50% of the
value of their vested interest in such accounts with a minimum
loan of $1,000. Each loan is evidenced by a negotiable
promissory note bearing a rate of interest equal to the prime
rate as reported in The Wall Street Journal on the first
business day of the month immediately preceding the calendar
quarter during which the loan was made, which is payable,
through payroll deductions, over a term of not more than five
years. Starting in 1989, a participant may take up to ten years
to repay the loan if the money is used to purchase a principal
residence. Only one loan per participant may be outstanding at
any time.
Effective for loans made after 1986, the $50,000 loan amount
limitation is reduced by the participant's highest outstanding
loan balance during the 12 months preceding the date the loan
is made. If a loan is outstanding at the time a distribution
becomes payable to a participant (or beneficiary), the
distribution is made net of the loan outstanding and the
distribution shall fully discharge the Plan with respect to the
participant's account value attributable to the outstanding
loan balance.
The Plan borrowed $54,500,000 from a group of financial
institutions and $153,500,000 from the Company (see Notes 3 and
4) to acquire 1,683,213 and 4,134,680 shares, respectively, of<PAGE>
Common Stock from the Company's treasury and previously
unissued shares. The shares purchased from the proceeds of the
loans were placed in the Unallocated Stanley Stock Fund (the
Unallocated Fund). Under the loan agreement with the financial
institutions, the Company guaranteed the loan and is obligated
to make annual contributions sufficient to enable the Plan to
repay the loan plus interest.<PAGE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Unallocated Fund makes monthly transfers of shares, in
accordance with Plan provisions, to the Stanley Stock Fund in
return for proceeds equivalent to the closing fair market value
of the shares on the day prior to the transfer date. These
proceeds, along with dividends received on allocated and
unallocated shares and additional Company contributions, if
necessary, are used to make monthly payments of principal and
interest on the debt. Remaining unallocated dividends, if any,
are applied to reduce the Company's matching contributions. As
dividends on the allocated shares are applied to the payment of
debt service, shares having a fair market value at least equal
to the amount of the dividends so applied are allocated to the
savings accounts of participants who would otherwise have
received cash dividends. Forfeitures of nonvested employee
accounts are used to reduce Company matching contributions.
The fair market value of shares released from the Unallocated
Fund pursuant to loan repayments made during any year may
exceed the total of employee contributions and Company matching
contributions for that year. If that occurs, all participants
who made contributions at any time during that year and who are
employed by the Company on the last day of that year receive,
on a pro rata basis, such excess value.
Each participant is entitled to exercise voting rights
attributable to the shares allocated to the participant's
account. The Trustee is not permitted to vote participant
shares for which instructions have not been given by the
participant. Shares in the Unallocated Fund are voted by the
Trustee in the same proportion as allocated shares.
The Company reserves the right to terminate the Plan at any
time, subject to Plan provisions. Upon such termination of the
Plan, the interest of each participant in the trust fund will
be distributed to such participant at the time prescribed by
the Plan terms and the Internal Revenue Code.
The Plan sponsor has engaged The Wyatt Company to maintain
separate accounts for each participant. Such accounts are
credited with each participant's contributions, the allocated
portion of the Company's matching contribution, related gains,
losses and dividend income, and loan activity.
There were 4,547 and 4,532 participants (4,002 and 4,100 of
whom were active employees) in the Plan as of December 31, 1993
and 1992, respectively, of whom 1,127 and 1,128, respectively,
had loans outstanding.<PAGE>
<PAGE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Notes to Financial Statements (continued)
3. Debt
<TABLE>
Debt consisted of the following at December 31:
<CAPTION>
1993 1992
<S> <C> <C>
Note payable in monthly installments to 1993
with interest at 6.78% $1,750,000
Note payable in monthly installments to 2001
with interest at 7.71% $47,496,679 50,406,710
Note payable to the Company in monthly
installments to 2026
with interest at 8.3% 152,382,912 152,765,920
---------------------------
$199,879,591 $204,922,630
==========================
</TABLE>
The scheduled maturities of debt for the next five years are as
follows: 1994--$4,981,000; 1995--$5,718,000; 1996--$5,470,000;
1997--$5,860,000 and 1998--$6,350,000.
The note payable to the Company is secured by shares held in
the Unallocated Stock Fund. The number of shares held as
security is reduced as shares are released to the Stanley Stock
Fund pursuant to principal and interest payments. During the
year, 112,610 shares were released and at December 31, 1993,
3,843,852 shares were pledged as security.
Payment of the Plan's debt has been guaranteed by the Company.
Should the principal and interest due exceed the dividends paid
on shares held in the Stanley Stock and Unallocated Stock
Funds, and employee and Company matching contributions, the
Company is responsible for funding such shortfall.
4. Transactions with Parties-in-Interest
Fees paid during 1993 and 1992 for management and other
services rendered by parties-in-interest were based on
customary and reasonable rates for such services. The majority
of such fees were paid by The Stanley Works. Fees incurred and
paid by the Plan during 1993 and 1992 were $120,533 and
$83,734, respectively.
In 1991, the Plan borrowed $153,500,000 from The Stanley Works,
the proceeds of which were used to purchase 4,134,680 shares of
Company Stock from the Company. The Plan made $13,047,932 of
principal and interest payments related to such debt in 1993;
at December 31, 1993, $152,382,912 was outstanding on such
debt.<PAGE>
<PAGE>
<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Notes to Financial Statements (continued)
5. Income Tax Status
The Internal Revenue Service has ruled (letter dated August 10,
1990) that the Plan and the trust qualify under Sections 401(a)
and 401(k) of the Internal Revenue Code (IRC) and are therefore
not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with
the IRC to maintain its qualification. The Pension Committee is
not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified
status.
Plan participants are not subject to federal income taxes on
employer contributions, employee contributions to the extent
that they are below the IRS limitation, or on dividends
accruing to their accounts until taxable distributions are made
from the Plan. Lump-sum distributions are taxable to the extent
of realized appreciation of the participant's account,
employer's contributions and the employee's contributions.<PAGE>
Savings Plan for Salaried Employees of The Stanley Works
Assets Held for Investment
December 31, 1993
<TABLE>
<CAPTION>
Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor Rate of Interest, Par or Current
or Similar Party Maturity Value Cost Value
<S> <S> <C> <C>
Common Stock:
The Stanley Works* 8,209,190 shares of
Common Stock $259,212,124 $365,308,955
Trust Fund:
State Street Bank and Short-Term Investment
Trust Company* Fund--United States
(GSTIF) Government securities 1,006,073 1,006,073
State Street Bank and
Trust Company* Short-Term Investment
(STIF) Fund--Pooled Bank Fund 22,615 22,615
Loans to participants Promissory notes at prime rate
with maturities of not more
than five years 5,500,195 5,500,195
--------------------------
Total investments $265,741,007 $371,837,838
==========================
<FN>
* Indicates party-in-interest to the Plan.<PAGE>
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Salaried Employees of The Stanley Works
Transactions or Series of Transactions in Excess of 5% of the Current Value of Plan Assets
Year ended December 31, 1993 Current
Expenses Value of
Identity of Purchase Description Selling Lease Rental Incurred Asset on
Party Involved of Assets Price Price with Cost of Transaction Net Gain
Transaction Asset Date (Loss)
Category (iii)--series of transactions in excess of 5 percent of plan assets
<S> <S> <C> <C> <C>
State Street Short-Term Investment
Bank and Trust Fund--United States
Company* Government securities $22,618,301 $22,618,301
State Street Short-Term Investment
Bank and Trust Fund--United States
Company* Government securities $22,417,228 22,417,228 22,417,228
There were no category (i), (ii) or (iv) reportable transactions during 1993.
* Indicates party-in-interest to the Plan.<PAGE>
</TABLE>
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Audited Financial Statements
and Supplemental Schedules
Years ended December 31, 1993 and 1992
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statement of Financial Condition at December 31, 1993 2
Statement of Financial Condition at December 31, 1992 3
Statement of Income and Changes in Plan Equity for the Year Ended
December 31, 1993 4
Statement of Income and Changes in Plan Equity for the Year Ended
December 31, 1992 5
Notes to Financial Statements 6
Supplemental Schedules
Assets Held for Investment 11
Transactions or Series of Transactions in Excess of 5% of the Current Value
of Plan Assets 12<PAGE>
<PAGE>
Report of Independent Auditors
Pension Committee of The Board of Directors
The Stanley Works
We have audited the accompanying statements of financial condition of the
Savings Plan for Hourly Paid Employees of The Stanley Works as of December 31,
1993 and 1992, and the related statements of income and changes in plan equity
for the years then ended. These financial statements are the responsibility of
the Plan'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 financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan at December 31,
1993 and 1992, and its income and changes in plan equity for the years then
ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment as of December 31, 1993, and transactions or series of
transactions in excess of 5% of the current value of plan assets for the year
then ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the
financial statements. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the 1993 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1993 financial statements taken as a whole.
Ernst & Young
March 18, 1994
<PAGE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Statement of Financial Condition
December 31, 1993
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
<S> <C> <C> <C> <C>
Assets
Investments, at current market
value:
The Stanley Works
Common Stock:
1,001,474 shares (cost
$33,098,825) $44,565,593 $ 44,565,593
1,555,538 shares
(cost $53,515,799) $ 69,221,441 69,221,441
Short-term investments 266,786 2,731 269,517
-----------------------------------------------
44,832,379 69,224,172 114,056,551
Dividends and interest
receivable 337,675 533,183 870,858
Loans to participants $ 3,327,218 3,327,218
Due from The Stanley Works 134,930 134,930
-----------------------------------------------
$45,304,984 $ 3,327,218 $69,757,355 $118,389,557
================================================
Liabilities and plan equity
Liabilities:
Due to Savings Plan for Salaried
Employees of The Stanley
Works $ 157,530 $ 157,530
Benefits payable 175,600 175,600
Debt $61,603,171 61,603,171
Plan forfeitures 45,652 45,652
------------------------------------------------
378,782 61,603,171 61,981,953
Plan equity 44,926,202 $3,327,218 8,154,184 56,407,604
------------------------------------------------
$45,304,984 $3,327,218 $69,757,355 $118,389,557
================================================
<FN>
See accompanying notes.
</TABLE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Statement of Financial Condition
December 31, 1992
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
<S> <C> <C> <C> <C>
Assets
Investments, at current market
value:
The Stanley Works
Common Stock:
797,505 shares (cost
$25,502,826) $33,893,963 $ 33,893,963
1,669,556 shares
(cost $57,299,782) $70,956,130 70,956,130
Short-term investments 737,000 1,000 738,000
-----------------------------------------------
34,630,963 70,957,130 105,588,093
Cash 163 1,240 1,403
Dividends and interest
receivable 254,817 554,355 809,172
Loans to participants $2,558,968 2,558,968
Due from The Stanley Works 167,688 167,688
------------------------------------------------
$35,053,631 $2,558,968 $71,512,725 $109,125,324
===============================================
Liabilities and plan equity
Liabilities:
Due to broker for securities
purchased $ 396,147 $ 396,147
Due to Savings Plan for Salaried
Employees of The Stanley
Works 95,753 95,753
Benefits payable 31,338 31,338
Debt $63,831,676 63,831,676
Plan forfeitures 53,527 53,527
---------------------------------------------
576,765 63,831,676 64,408,441
Plan equity 34,476,866 $2,558,968 7,681,049 44,716,883
-----------------------------------------------
$35,053,631 $2,558,968 $71,512,725 $109,125,324
================================================
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Statement of Income and Changes in Plan Equity
Year ended December 31, 1993
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
Investment income:
<S> <C> <C> <C> <C>
Dividends $ 1,222,981 $ 2,155,635 $ 3,378,616
Interest 18,706 $ 230,786 10,999 260,491
-----------------------------------------------------
1,241,687 230,786 2,166,634 3,639,107
Net realized and unrealized
appreciation in The
Stanley Works
Common Stock 3,129,309 2,049,294 5,178,603
Contributions:
Employee 7,068,089 7,068,089
Employer 3,380,681 3,380,681
----------------------------------------------------
10,448,770 10,448,770
Withdrawals:
In cash (2,110,312) (2,110,312)
In The Stanley Works
Common Stock (229,570) (229,570)
Transfers to the
Savings Plan for
Salaried Employees
of The Stanley Works (139,047) (139,047)
------------------------------------------------------
(2,478,929) (2,478,929)
Administrative expenses (39,101) (39,101)
Plan forfeitures (45,652) (45,652)
Interest expense (5,012,077) (5,012,077)
Interfund transfers-net (1,806,748) 537,464 1,269,284 -
----------------------------------------------------
Net increase 10,449,336 768,250 473,135 11,690,721
Plan equity at
beginning of year 34,476,866 2,558,968 7,681,049 44,716,883
------------------------------------------------------
Plan equity at
end of year $44,926,202 $ 3,327,218 $ 8,154,184 $56,407,604
====================================================
<FN>
See accompanying notes.<PAGE>
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Statement of Income and Changes in Plan Equity
Year ended December 31, 1992
<CAPTION>
Stanley Unallocated
Stock Loan Stanley
Fund Fund Stock Fund Total
Investment income:
<S> <C> <C> <C> <C>
Dividends $ 913,144 $2,195,699 $3,108,843
Interest 17,918 $ 202,597 14,330 234,845
------------------------------------------------
931,062 202,597 2,210,029 3,343,688
Realized gain on sales of The Stanley
Works Common Stock:
Proceeds 853,000 853,000
Cost 748,677 748,677
-------------------------------------------------
104,323 104,323
Unrealized appreciation in The
Stanley Works Common Stock 1,914,173 1,932,962 3,847,135
Contributions:
Employee 6,104,979 6,104,979
Employer 2,957,081 2,957,081
-----------------------------------------------
9,062,060 9,062,060
Withdrawals:
In cash (2,003,174) (2,003,174)
In The Stanley Works Common
Stock (158,916) (158,916)
Transfers to the Savings Plan for
Salaried Employees of The
Stanley Works (359,926) (359,926)
-------------------------------------------------
(2,522,016) (2,522,016)
Administrative expenses (28,304) (28,304)
Plan forfeitures (53,527) (53,527)
Interest expense (5,141,425) (5,141,425)
Interfund transfers--net (1,216,172) 193,854 1,022,318 -
-------------------------------------------------
Net increase 8,191,599 396,451 23,884 8,611,934
Plan equity at
beginning of year 26,285,267 2,162,517 7,657,165 36,104,949
-------------------------------------------------
Plan equity at end of year $34,476,866 $ 2,558,968 $ 7,681,049 $44,716,883
=================================================
<FN>
See accompanying notes.<PAGE>
</TABLE>
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Notes to Financial Statements
December 31, 1993
1. Significant Accounting Policies
Investments
Plan investments consist primarily of shares of The Stanley Works Common Stock
(hereinafter referred to as Stanley Stock, Common Stock or shares). The
Stanley Works Common Stock is traded on a national exchange and is valued at
the last reported sales price on the last business day of the plan year.
Short-term investments consist of short-term bank-administered trust funds
which earn interest daily at rates approximating U.S. Government securities;
cost approximates market value.
Dividend Income
Dividend income is accrued on the ex-dividend date.
Gains or Losses on Sales of Investments
Gains or losses realized on the sales of investments are determined based on
average cost.
Expenses
Administrative expenses not paid by The Stanley Works (the Company) are paid
by the Plan.
2. Description of the Plan
The Plan operates as a leveraged employee stock ownership plan, is designed to
comply with the Internal Revenue Code of 1986, as amended, and is subject to
the applicable provisions of the Employee Retirement Income Security Act of
1974, as amended. The Plan is a voluntary savings, defined contribution plan
for eligible United States hourly paid employees of The Stanley Works.
Participants may contribute, through pre-tax payroll deductions, generally up
to 12% of their compensation. Participant contributions are matched in an
amount equal to 50% of a participant's pre-tax contribution to a maximum of
3 1/2% of compensation.
Participant and Company contributions are invested in the Stanley Stock Fund
with a guarantee, which, if necessary, is satisfied by the Pension Plan for
Hourly Paid Employees of The Stanley Works, that the investment return on such
stock acquired with employee contributions will not be less than an investment
return based on two-year U.S. Treasury notes.
The assets of the Plan are held in trust by an independent corporate trustee
(the Trustee) pursuant to the terms of a written Trust Agreement between the
Trustee and the Company. State Street Bank and Trust Company has been selected
by the Board of Directors of the Company as Trustee.
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Employees are fully vested as to amounts in their savings accounts
attributable to their own contributions and amounts transferred from the other
qualified plans on their behalf. Participants with three or more years of
service on January 1, 1987 who terminated employment before January 1, 1989
are vested in the portion of their savings account attributable to the Company
matching contributions as follows: 0% during the first through fourth years of
service, 40% after four years of service, 10% additional for each of the next
six years, to 100% after ten years of service. All other participants are
vested in 100% of the value of the Company matching contributions made on
their behalf after five years of service, with no vesting in the matching
contributions during the first through fifth years of service.
Benefits generally are distributed upon termination of employment resulting
from death, disability, retirement or other termination. Normally, a lump-sum
distribution is made in cash or shares of Common Stock, at the election of the
participant, from the Stanley Stock Fund.
During active employment, subject to financial hardship rules, participants
may withdraw, in cash only, all or a portion of vested amounts in their
accounts.
Participants may borrow from their savings account up to an aggregate amount
equal to the lesser of $50,000 or 50% of the value of their vested interest in
such accounts with a minimum loan of $1,000. Each such loan is evidenced by a
negotiable promissory note bearing a rate of interest equal to the prime rate
as reported in The Wall Street Journal on the first business day of the month
immediately preceding the calendar quarter during which the loan was made,
which is payable, through payroll deductions, over a term of not more than
five years. Starting in 1989, participants are allowed ten years to repay the
loan if the proceeds are used to purchase a principal residence. Only one loan
per participant may be outstanding at any time.
Effective for loans made after 1986, the $50,000 loan amount limitation is
reduced by the participant's highest outstanding loan balance during the 12
months preceding the date the loan is made. If a loan is outstanding at the
time a distribution becomes payable to a participant (or beneficiary), the
distribution is made net of the loan outstanding, and the distribution shall
fully discharge the Plan with respect to the participant's account value
attributable to the outstanding loan balance.
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Plan borrowed $40,500,000 in 1989 from a group of financial institutions
and $26,500,000 in 1991 from the Company (see Notes 3 and 4) to acquire
1,250,831 and 713,804 shares, respectively, of Common Stock from the Company's
treasury and previously unissued shares. The shares purchased from the
proceeds of the loans were placed in the Unallocated Stanley Stock Fund (the
Unallocated Fund). Under the 1989 loan agreement, the Company guaranteed the
loan and is obligated to make annual contributions sufficient to enable the
Plan to repay the loan plus interest.
The Unallocated Fund makes monthly transfers of shares, in accordance with
Plan provisions, to the Stanley Stock Fund in return for proceeds equivalent
to the closing fair market value of the shares on the day prior to the
transfer date. These proceeds, along with dividends received on allocated and
unallocated shares and additional Company contributions, if necessary, are
used to make monthly payments of principal and interest on the debt. Remaining
unallocated dividends, if any, are applied to reduce the Company's matching
contributions. As dividends on the allocated shares are applied to the payment
of debt service, a number of shares having a fair market value at least equal
to the amount of the dividends so applied are allocated to the savings
accounts of participants who would otherwise have received cash dividends.
Forfeitures of nonvested employee accounts are used to reduce future Company
matching contributions.
The fair market value of shares released from the Unallocated Fund pursuant to
loan repayments made during any year may exceed the total of employee
contributions and Company matching contributions for that year. If that
occurs, all participants who made contributions at any time during that year
and who are employed by the Company on the last day of that year receive, on a
pro rata basis, such excess value as an additional allocation of Stanley Stock
for that year, a pro rata portion of such excess value.
Each participant is entitled to exercise voting rights attributable to the
shares allocated to their account. The Trustee is not permitted to vote
participant shares for which instructions have not been given by the
participant. Shares in the Unallocated Fund are voted by the Trustee in the
same proportion as allocated shares.
The Company reserves the right to terminate the Plan at any time, subject to
Plan provisions. Upon such termination of the Plan, the interest of each
participant in the trust fund will be distributed to such participant or his
or her beneficiary at the time prescribed by the Plan terms and the Internal
Revenue Code.
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Plan sponsor has engaged The Wyatt Company to maintain separate accounts
for each participant. Such accounts are credited with each participant's
contributions, the allocated portion of the Company's matching contributions,
related gains, losses and dividend income and loan activity.
There were 4,662 and 4,219 participants (4,405 and 4,058 of whom were active
employees) in the plan as of December 31, 1993 and 1992, respectively, and
1,234 and 1,073, respectively, of whom had loans outstanding.
3. Debt
Debt consisted of the following at December 31:
1993 1992
Note payable in monthly installments to 2001
with interest at 7.71% $ 35,295,697 $ 37,458,202
Note payable to the Company in monthly
installments to 2026 with interest at 8.3% 26,307,474 26,373,474
-------------------------
$61,603,171 $63,831,676
=========================
The note payable to the Company is secured by shares held in the Unallocated
Stock Fund. The number of shares held as security is reduced as shares are
released to Stanley Stock Fund pursuant to principal and interest payments.
During the year 19,436 shares were released and at December 31, 1993, 663,610
shares are pledged as security.
The scheduled maturities of debt for the next five years are as follows:
1994--$3,483,000; 1995--$3,830,000; 1996--$4,026,000; 1997--$4,352,000 and
1998--$4,716,000.
Payment of the Plan's debt has been guaranteed by the Company. Should the
principal and interest due exceed the dividends paid on shares in the Stanley
Stock and Unallocated Stock Funds, and employee and Company matching
contributions, the Company is responsible for funding such shortfall.
<PAGE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Notes to Financial Statements (continued)
4. Transactions with Parties-in-Interest
Fees paid during 1993 and 1992 for management and other services rendered by
parties-in-interest were based on customary and reasonable rates for such
services. The majority of such fees were paid by the Company. Fees incurred
and paid by the Plan during 1993 and 1992 were $39,101 and $28,304,
respectively.
In 1991, the Plan borrowed $26,500,000 from the Company, the proceeds of which
were used to purchase 713,804 shares of stock from the Company. The Plan made
$2,252,476 of principal and interest payments related to such debt in 1993; at
December 31, 1993, $26,307,474 was outstanding on such debt.
5. Income Tax Status
The Internal Revenue Service has ruled (September 13, 1990) that the Plan and
the trust qualify under Sections 401(a) and 401(k) of the Internal Revenue
Code (IRC) and are therefore not subject to tax under present income tax law.
Once qualified, the Plan is required to operate in accordance with the IRC to
maintain its qualification. The Pension Committee is not aware of any course
of action or series of events that have occurred that might adversely affect
the Plan's qualified status.
Plan participants are not subject to federal income taxes on employer
contributions or employee contributions, to the extent that such amounts meet
IRC guidelines, or on dividends accruing to their accounts until distributions
are made from the Plan. Lump-sum distributions are taxable to the extent of
realized appreciation of the participant's account, employer's contributions
and the employee's contributions which have not already been subject to tax.
<PAGE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Assets Held for Investment
December 31, 1993
<CAPTION>
Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor Rate of Interest, Par or Current
or Similar Party Maturity Value Cost Value
<S> <C> <C> <C>
Common Stock:
The Stanley Works* 2,557,012 shares of
Common Stock $86,614,624 $113,787,034
Trust Fund:
State Street Bank Short-Term Investment
and Trust Fund--United States
Company* (GSTIF) Government securities 266,786 266,786
State Street Bank
and Trust Short-Term Investment
Company* (STIF) Fund--Pooled Bank Fund 2,731 2,731
Loans to participants Promissory notes at prime rate
with maturities of not more
than five years 3,327,218 3,327,218
--------------------------
Total investments $90,211,359 $117,383,769
=========================
<FN>
* Indicates party-in-interest to the Plan.
</TABLE>
<PAGE>
<TABLE>
Savings Plan for Hourly Paid Employees of The Stanley Works
Transactions or Series of Transactions in Excess of 5% of the Current Value of Plan Assets
Year ended December 31, 1993
<CAPTION>
Current
Expenses Value of
Incurred Asset on
Identity of Purchase Description Selling Lease with Cost of Transaction Net Gain
Party Involved of Assets Price Price Rental Transaction Asset Date (Loss)
Category (iii)--series of transactions in excess of 5 percent of plan assets
<S> <C> <C> <C> <C>
State Street Bank Short-Term Investment
and Trust Fund-U.S. Government
Company* Securities $11,333,552 $11,333,552
State Street Bank Short-Term Investment
and Trust Fund-U.S. Government
Company* Securities $11,803,766 11,803,766 11,803,766
The Stanley Works* 109,077 shares of The
Stanley Works Common
Stock 4,447,121 4,447,121
<FN>
There were no category (i), (ii) or (iv) reportable transactions during 1993.
* Indicates party-in-interest to the Plan.<PAGE>
</TABLE>
