AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 2002
NMHG HOLDING CO.
(AND ITS SUBSIDIARIES IDENTIFIED ON THE FOLLOWING PAGE)
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 3537 31-1637659
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
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practicable following the effective date of this registration statement.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------------
10% Senior Notes due 2009.............. $250,000,000(1) 100% $250,000,000 $23,000
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Subsidiary guarantees of 10% Senior
Notes due 2009(2).................... n/a n/a n/a n/a
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(1) Represents the maximum principal amount at maturity of 10% Senior Notes due 2009 that may be issued pursuant to the exchange offer described in this registration statement.
TABLE OF ADDITIONAL REGISTRANTS
ADDRESS, INCLUDING
ZIP CODE, AND
TELEPHONE NUMBER,
EXACT NAME OF STATE OR OTHER PRIMARY STANDARD INCLUDING AREA CODE,
REGISTRANT AS JURISDICTION OF INDUSTRIAL IRS EMPLOYER OF REGISTRANT'S
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION CODE IDENTIFICATION PRINCIPAL EXECUTIVE
CHARTER ORGANIZATION NUMBER NUMBER OFFICES
---------------- ---------------- ------------------- --------------------- -------------------------------
NMHG Distribution Co. Delaware 3537 93-1119223 650 N.E. Holladay Street
Portland, OR 97232
(503) 721-6000
NMHG Oregon, Inc. Oregon 3537 93-1320748 650 N.E. Holladay Street
Portland, OR 97232
(503) 721-6000
Hyster Overseas Delaware 3537 52-2212730 650 N.E. Holladay Street
Capital Corporation, Portland, OR 97232
LLC (503) 721-6000
Hyster-Yale Materials Delaware 3537 34-1617886 650 N.E. Holladay Street
Handling, Inc. Portland, OR 97232
(503) 721-6000
NACCO Materials Delaware 3537 93-0160700 650 N.E. Holladay Street
Handling Group, Inc. Portland, OR 97232
(503) 721-6000
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The information in this prospectus is not complete. NMHG Holding Co. may not sell or offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and NMHG is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 28, 2002
PROSPECTUS
$250,000,000
OFFER TO EXCHANGE
ALL OUTSTANDING 10% SENIOR NOTES DUE 2009
FOR
10% SENIOR NOTES DUE 2009
OF
NMHG HOLDING CO.
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
2002.
----------------------
THE EXCHANGE NOTES
- The terms of the notes to be issued are substantially identical to the
outstanding notes that NMHG issued on May 9, 2002, except for transfer
restrictions, registration rights and liquidated damages provisions
relating to the outstanding notes that will not apply to the exchange
notes.
- Interest on the notes accrues at the rate of 10% per year, payable in
cash every six months on May 15 and November 15, with the first payment
on November 15, 2002.
- The notes are not secured by any collateral.
- There is no existing market for the notes, and we do not intend to apply
for their listing on any securities exchange or to seek approval for
quotation through any automated quotation system.
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MATERIAL TERMS OF THE EXCHANGE OFFER
- Expires at 5:00 p.m., New York City time, on , 2002, unless extended.
- All outstanding notes that are validly tendered and not validly withdrawn will be exchanged for an equal principal amount of notes which are registered under the Securities Act of 1933.
- Tenders of outstanding notes may be withdrawn at any time prior to the expiration of the exchange offer.
- NMHG will not receive any cash proceeds from the exchange offer.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. YOU MAY
OBTAIN DOCUMENTS THAT ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS BY REQUESTING THE DOCUMENTS, IN WRITING OR BY TELEPHONE, FROM US AT:
NMHG HOLDING CO.
650 N.E. HOLLADAY STREET
SUITE 1600
PORTLAND, OREGON 97232
ATTN: SECRETARY
IF YOU WOULD LIKE TO REQUEST COPIES OF THESE DOCUMENTS, PLEASE DO SO BY
, 2002 IN ORDER TO RECEIVE THEM BEFORE THE EXPIRATION OF THE
EXCHANGE OFFER. SEE "WHERE YOU CAN FIND MORE INFORMATION."
TABLE OF CONTENTS
PAGE
----
Industry and Market Data.................................... ii
Prospectus Summary.......................................... 1
Risk Factors................................................ 15
Forward-Looking Statements.................................. 23
Use of Proceeds............................................. 24
Capitalization.............................................. 24
Selected Historical Financial Information................... 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 27
Business.................................................... 41
Management.................................................. 56
Security Ownership of Certain Beneficial Owners............. 62
Certain Relationships and Related Party Transactions........ 62
Description of Other Indebtedness........................... 63
The Exchange Offer.......................................... 66
Description of Notes........................................ 75
Federal Income Tax Consequences to Non-U.S. Holders......... 115
Federal Income Tax Consequences of the Exchange Offer....... 117
Plan of Distribution........................................ 118
Legal Matters............................................... 119
Experts..................................................... 119
Other Matters............................................... 119
Where You Can Find More Information......................... 120
Index to Financial Statements............................... F-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS PROSPECTUS MAY ONLY BE ACCURATE ON THE DATE OF THIS PROSPECTUS.
HYSTER(R) AND YALE(R) ARE REGISTERED TRADEMARKS OF NACCO MATERIALS HANDLING GROUP, INC., A WHOLLY OWNED SUBSIDIARY OF NMHG HOLDING CO. YALE(R) IS USED BY NACCO MATERIALS HANDLING GROUP, INC. ON A PERPETUAL ROYALTY FREE BASIS. NAMES OF COMPANIES AND ASSOCIATIONS USED IN THIS PROSPECTUS ARE TRADEMARKS OR TRADE NAMES OF THE RESPECTIVE ORGANIZATIONS.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until , 2002, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
INDUSTRY AND MARKET DATA
We are a participant in the industrial lift truck industry, which we define as comprised of Class I, Class II, Class III, Class IV and Class V lift trucks. We do not consider Class VI lift trucks, which are also known as electric and internal combustion engine tractors, Class VII lift trucks, which are also known as rough terrain lift trucks, or Class VIII lift trucks, which are also known as non-motorized hand pallet trucks, to be a part of the industrial lift truck industry. Therefore, lift truck industry data included in this prospectus does not include data for Class VI, Class VII or Class VIII lift trucks.
Unless otherwise indicated, market share information in this prospectus is based on units and not dollars. We measure units in the Americas by orders. We measure units in the rest of the world by shipments.
Unless otherwise indicated, as used in this prospectus, Americas includes Canada, the United States, Mexico and Latin America; North America includes Canada and the United States; and Europe includes Europe, Africa and the Middle East.
In this prospectus, we rely on and refer to information regarding the industrial lift truck industry from several sources, including internal estimates and industry publications. Although we believe this information is reliable, we cannot guarantee the accuracy and completeness of the information and have not independently verified it.
PROSPECTUS SUMMARY
This summary may not contain all of the information that may be important to you. You should carefully read the entire prospectus, including the "Risk Factors" section and the financial data and related notes before exchanging any notes. As used in this prospectus, unless otherwise indicated if the context otherwise requires, the terms "we," "our," "NMHG," and "Company" refer to NMHG Holding Co., the issuer of the notes, and our subsidiaries. The terms "NACCO" and "parent company" refer to NACCO Industries, Inc., our parent company. References to our "customers" in this prospectus are references to the end-users of our products, and not to our dealers.
OUR COMPANY
We are a leading global manufacturer of industrial lift trucks, which comprise the largest segment of the materials handling equipment industry, with the number one market share in the Americas and the number three market share globally. We design, manufacture and sell a comprehensive line of industrial lift trucks and aftermarket parts on a global basis. We estimate the lift truck market for the Americas in 2001 at approximately $2.6 billion and 161,000 units, and globally in 2001 at approximately $8.6 billion and 560,000 units. For the fiscal year ended December 31, 2001, we generated revenues of $1.7 billion.
We market our lift trucks under the Hyster and Yale brand names, which we believe are among the most widely recognized brands in the industry. Our lift trucks have been marketed under the Hyster and Yale brand names since 1935 and 1923, respectively. Based on third-party market research we commissioned in 1999, the Hyster and Yale brands are among the top five most recognized lift truck brands globally. According to this research, Hyster and Yale were the number one and two most recognized brands of lift trucks in the Americas, respectively, and Hyster was the third most recognized lift truck brand in Europe.
Although we have combined the design, manufacturing, procurement and selected marketing activities for our brands in order to capture operational efficiencies and build upon our global scale, we distribute Hyster and Yale lift trucks through two separate strong dealer networks, one dedicated to each brand. We have maintained each of the brand identities in our distribution strategy because the Hyster and Yale brands have distinct appeal for different customers. Hyster is generally associated with larger, heavy-duty applications while Yale is associated with lighter-duty, warehousing-type applications. We believe this combination of dual brands and dual distribution has allowed us to more effectively penetrate the customer base to establish stronger market positions, as evidenced by our estimated installed population base of approximately 650,000 Hyster and Yale lift trucks. This installed population base provides our dealers and us with recurring revenue from the sale of higher margin aftermarket parts and service.
Our diversified customer base limits our exposure to individual customer or industry risk. In 2001, our top ten customers accounted for only 10% of our new unit volume. We market our lift trucks into over 600 different end-user applications in approximately 900 industries. Our major customers, some of which have chosen us to be their sole lift truck supplier, include The Coca-Cola Company, General Motors Corp., The Lowe's Companies, Inc., Wal-Mart Stores, Inc. and Weyerhaeuser Company.
Demand for lift trucks is cyclical and depends upon capital budgeting in the diverse end markets where lift trucks are sold. We believe our market, like the broader global economy, is poised for growth. Our order backlog has risen from approximately 14,100 units at June 30, 2001 to approximately 16,300 units at March 31, 2002. Our average adjusted EBITDA over the past five years ended December 31, 2001 was $117.9 million, substantially higher than our 2001 adjusted EBITDA of $63.3 million. See "-- Summary Historical Financial and Other Data" for our definition of adjusted EBITDA.
Prior to the recent downturn in the economy, we developed and began implementing our 2001 Restructuring Program, which included the closure of our Danville, Illinois assembly facility, labor and overhead reductions and restructuring of our owned dealers, which resulted in non-recurring items and one-time pre-tax charges of $47.8 million in 2001. This program reduced costs and more closely aligned our operations with the demand for our products and services.
In addition to the 2001 Restructuring Program, we have developed and are implementing a Global Cost Reduction Program which encompasses lean manufacturing, global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reduction and improvements in our owned dealers. These programs are designed to enhance our competitive position and improve our overall cost structure. We expect our Global Cost Reduction Program, once fully implemented, to result in recurring annual pre-tax cost savings of approximately $117.5 million by the end of 2006. Of this amount, we expect to realize annual pre-tax savings of approximately $48.0 million by the end of 2002, and $61.1 million by the end of 2003. We believe this program has positioned us to take advantage of the anticipated recovery in the capital goods market, and will result in reduced fixed overhead costs, lower manufacturing costs and improvements in both our gross margins and operating profit.
INDUSTRY OVERVIEW
The lift truck industry is the largest segment of the materials handling equipment industry. We estimate the global lift truck market in 2001 at approximately $8.6 billion and 560,000 units.
Lift trucks are used in a wide variety of business applications, including manufacturing and warehousing. Lift trucks are separated into five major classes, as set forth in the table below.
GENERAL LIFTING
CLASS DESCRIPTION USE ILLUSTRATIVE APPLICATION CAPACITY RANGE
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Class I Electric Indoors in warehousing Distribution center 1.0 ton to 9.0 tons
rider lift and manufacturing customers would use to
trucks operations where noise move pallets from one
or emission concerns trailer to another
are a factor
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Class II Electric Indoors to handle high- Retail and warehouse 0.5 tons to 6.0 tons
narrow-aisle density storage of customers would use to
lift trucks materials in pick orders off their
narrow-aisled shelves
warehouses
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Class III Electric Indoors for Retail customers would 0.5 tons to 8.0 tons
hand lift applications requiring use to move pallets of
trucks the user to select and goods to their store
transport materials aisles
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Class IV Internal Indoors in warehousing Manufacturing customers 1.0 ton to 7.0 tons
combustion and manufacturing would use to move heavy
engine, or operations and parts on a pallet from
ICE, lift occasionally outdoors the machining area in a
trucks with factory to the assembly
cushion line
(solid)
tires
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Class V ICE lift Indoors and outdoors in Manufacturing customers 1.0 ton to 48.0 tons
trucks with warehousing and would use to move a coil
pneumatic manufacturing of steel from the mill
(air filled) operations (this class to a storage area
tires includes the largest
capacity lift trucks)
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Class I, Class IV and Class V (with a capacity of eight tons or less) lift trucks are referred to as counterbalanced lift trucks. Class II and Class III lift trucks are referred to as warehouse lift trucks. Class V lift trucks with a capacity greater than eight tons are referred to as big trucks. Counterbalanced lift trucks are primarily used in industrial applications. Warehouse lift trucks are primarily used in distribution applications. Big trucks are primarily used in handling shipping containers and in specialized heavy lifting applications.
In recent years, we believe counterbalanced lift trucks represented approximately 62.4% of the total global unit volume and 73.5% of the total global dollar volume for lift trucks; warehouse lift trucks represented approximately 36.5% of the total global unit volume and 19.5% of the total global dollar volume for lift trucks; and big trucks represented approximately 1.1% of the total global unit volume and 7.0% of the total global dollar volume for lift trucks. The market for warehouse lift trucks is generally less cyclical than the market for counterbalanced lift trucks, including big trucks.
Historically, aftermarket parts sales have been less cyclical than sales of new lift trucks. During economic downturns, customers tend to delay new lift truck purchases and instead repair older lift trucks. During economic recoveries, the sales of both new lift trucks and aftermarket parts have historically increased.
Based on units, Europe has historically been the largest market for lift trucks, followed by the Americas, Japan, Asia-Pacific and China. The market for lift trucks, particularly in industrialized nations, is generally mature and has historically been cyclical, although demand cycles may differ across regions.
In North America, the compound annual growth rate of the lift truck industry over the last 20 years has been 4.3%, which is higher than the real gross domestic product compound annual growth rate in North America of 3.2% over the same period. In Western Europe, the compound annual growth rate of the lift truck industry over the last 20 years has been 4.1%, which is higher than the real gross domestic product compound annual growth rate in Western Europe of 2.3% over the same period. We expect the overall growth in the lift truck industry to continue to exceed the overall growth in the North American and Western European economies because the industries that use large numbers of lift trucks are increasing as an overall percentage of these economies.
The lift truck industry is cyclical, reflective of general economic conditions. Recoveries in the lift truck industry and in the overall economy generally result in an increase in the number of units sold in both the Americas and Europe. According to industry forecasts, the North American lift truck industry is at or near the low point of the current downturn, with quarter-on-quarter growth expected for the remainder of 2002. Our backlog has already begun to reflect industry improvement, increasing by 15.6%, from approximately 14,100 units in June 2001 to approximately 16,300 units in March 2002.
COMPETITIVE STRENGTHS
We believe that we have a number of strengths that differentiate us from our competitors:
Leading Market Share Positions with a Large Installed Population Base. For over a decade, we have been the leading manufacturer of Class I through V lift trucks, on a combined basis, in the Americas. Our Hyster and Yale brands had a combined North American market share of 27.4% in 2001. In addition, we are the third largest manufacturer of lift trucks on a global unit basis. Hyster's and Yale's long operating histories, strong market positions and our dual brand distribution strategy have resulted in an installed population base of approximately 650,000 Hyster and Yale lift trucks. This large installed population base provides our dealers and us with recurring revenue from the sale of higher margin aftermarket parts and service.
Globally Integrated Operations with Significant Economies of Scale. We have globally integrated the design, manufacturing, procurement and selected marketing activities for our brands. We believe this provides us with better access to lower cost suppliers, reduced design and overhead costs, improved manufacturing efficiencies and greater purchasing leverage. With respect to many of our products, our global integration also allows us to cost effectively shift production from one geographical region to another to respond to global fluctuations in demand. Our geographically balanced manufacturing structure, with assembly operations in the Americas, Europe and Asia-Pacific, reduces working capital requirements, balances currency exposures and minimizes freight costs.
Comprehensive Global Product Line. We believe we offer the most comprehensive line of lift trucks on a global basis. We provide a comprehensive range of lift trucks to meet the requirements of our customers' diverse applications. We market over 100 models of lift trucks that cover a range of lifting capacities of up to
48 tons for over 600 different end-user applications. We also provide specialized engineering capabilities to tailor our standard products for specific customer needs.
Established Brand Strength. We market our lift trucks and aftermarket parts under two well-recognized brand names, Hyster and Yale. Hyster and Yale have long operating histories of 67 years and 79 years, respectively. We believe that brand recognition is particularly critical in our industry as most customers solicit quote proposals from a limited number of preferred suppliers. Based on third-party market research we commissioned in 1999, the Hyster and Yale brands are among the top five most recognized lift truck brands globally. According to this research, Hyster and Yale were recognized as the number one and two most recognized brands of lift trucks in the Americas, respectively, and Hyster was the third most recognized lift truck brand in Europe. In addition, based on a separate study we commissioned in 2001, Hyster was recognized as the preferred overall lift truck brand in North America, receiving number one rankings in product reliability, performance, durability, availability of aftermarket parts and dealer support.
Strong Dealer Network. Our Hyster and Yale brands are supported by the strength of our global distribution network. Our dealers sell and rent lift trucks, provide aftermarket parts and service lift trucks. The majority of our dealer relationships are long-standing with an average tenure in the Americas of 26 years. We assign our dealers exclusive territories, which allows dealers to invest in long-term relationships with customers. To maintain our dealers' focus on our brands, we prohibit our dealers from selling lift trucks that compete with their Hyster or Yale product offering. We believe the larger of our independent dealers benefit from economies of scale and are able to more effectively penetrate the customer base in their exclusive territories because their size enables them to attract higher-quality employees, invest in more specialized selling and service activities and develop a more professional management structure. In addition, we believe our dual brand distribution provides us with greater market penetration and increased market share for both new lift truck units and higher margin aftermarket parts.
National Account Coverage. We have a strong National Accounts organization in the Americas that is dedicated to establishing national and global account relationships with large customers that have centralized purchasing and geographically dispersed operations in multiple dealer territories. Our National Accounts organization uses direct sales efforts to place large numbers of Hyster and Yale lift trucks into our installed population base through these large customers. Our strong dealer network supports our National Accounts customers by providing aftermarket parts and service at the local level. Some of our key National Accounts, such as General Motors Corp., Costco Wholesale Corp., The Lowe's Companies, Inc. and Saturn Corporation, have entered into exclusive relationships for total fleet management. We provide high value added services to our total fleet management customers, including service, aftermarket parts, planning and comprehensive management of their materials handling needs. We believe we have the largest National Accounts organization in the Americas and are expanding this organization globally.
BUSINESS STRATEGY
We have developed and are implementing strategic programs which we believe will enhance our long-term competitive position. We believe this set of programs will enable us to reduce costs, increase our market share, improve revenues and enhance sustainable profitability while delivering high value-added products and related services to our customers. These long-term initiatives build upon the successes already achieved through our 2001 Restructuring Program.
Implement Global Cost Reduction Program. We have developed and are implementing a Global Cost Reduction Program encompassing lean manufacturing, global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reduction and improvements in our owned dealers. When fully implemented in 2006, we expect this program to result in recurring annual pre-tax cost savings of $117.5 million.
- Lean Manufacturing Strategy. We are implementing a lean manufacturing strategy called Demand Flow(R) Technology in all of our manufacturing facilities. Since first implementing Demand Flow(R) Technology in 1996, we have substantially reduced cycle times, inventory requirements and floor space requirements, and improved on-time delivery and delivered product quality. For example, Demand
Flow(R) Technology has allowed us to assemble all of our lift trucks to order, greatly reducing our finished goods inventory. In addition, recent improvements in throughput created by implementing Demand Flow(R) Technology have allowed us to rationalize our manufacturing operations, resulting in the closure of our Danville, Illinois plant. The Danville closure is expected to result in $10.1 million of pre-tax savings in 2002. In addition, we expect the ongoing implementation of Demand Flow(R) Technology at our remaining facilities to result in $2.0 million in pre-tax savings in 2002. These ongoing Demand Flow(R) Technology programs, including the closure of the Danville plant, are expected to result in an annual pre-tax savings of $21.9 million when fully implemented.
- Global Procurement Initiative. Our global procurement initiative leverages our global scale to capture lower material costs, improve supplier quality, reduce lead times and enhance product innovation. Our global procurement teams work with engineering development centers and personnel at our manufacturing and assembly facilities to identify requirements and secure global supplier contracts. Additionally, the global procurement team works to enhance supplier quality and assists suppliers in reducing their costs. In 2001, our global procurement initiative resulted in $9.8 million of pre-tax savings. In 2002, we expect our global procurement initiative to result in an additional $6.2 million of pre-tax savings compared to 2001. We expect annual pre-tax savings from this initiative to reach $14.7 million in 2006.
- Transferring Processes and Sourcing to Lower Cost Locations. We believe we can reduce product costs by transferring additional processes and sourcing of basic components to lower cost manufacturing locations. As part of this strategy, we continually compare the costs and benefits of outsourcing production versus manufacturing components at our own lower cost facilities. Our recent efforts in this area resulted in $1.7 million of pre-tax savings in 2001. In 2002, we expect to achieve an additional $3.0 million of pre-tax savings from low cost sourcing, with currently planned initiatives reaching an annual pre-tax savings of $3.3 million when fully implemented.
- Component Commonality and Value Improvement Program. As we design new products, we are increasing the utilization of common components across multiple lift truck classes to reduce costs and product complexity, improve product quality, capture procurement cost savings and increase manufacturing efficiency. These components utilize interfaces designed to allow for quicker future design modifications. This strategy is an extension of earlier successful actions to standardize components between similar series of Hyster and Yale products. We have also implemented a Value Improvement Program to support continuous cost reductions and product quality improvements. We expect the combined impact of our component commonality initiative and Value Improvement Program to result in $3.7 million in pre-tax savings in 2002, $17.2 million in 2004, reaching an annual pre-tax savings of $53.9 million when fully implemented.
- European Overhead Cost Reduction Program. Our European overhead cost reduction program is designed to reduce our fixed costs. This program is related to reductions in general and administrative personnel and indirect factory labor in Europe. We expect this program to result in $2.1 million of pre-tax savings in 2002, reaching an annual pre-tax savings of $2.8 million when fully implemented.
- Owned Dealer Improvements. We have implemented, and largely completed, a restructuring of our owned dealers. This program has enhanced operating efficiencies through standardization of systems and processes, realignment of management structures and improved asset utilization. We expect this program to result in $20.9 million of annual pre-tax savings in 2002.
Design Global Products More Closely Tailored to Customer Application Needs. In 2000, we implemented a new design philosophy focused on the development of products tailored to the specific operating requirements of our customers. Historically, we have offered a complex set of options for each of our lift truck series to meet our customers' specialized needs. Our new design philosophy utilizes a modular approach with fewer overall components to more effectively and efficiently address our customers' application needs. This new design approach is expected to improve our cost structure and margins by simplifying our manufacturing operations, improving manufacturing efficiencies and reducing prices for sourced components. In addition, we believe that our product innovations will improve the quality of our products and provide us with opportunities to improve our market share.
Strengthen Our Distribution Capability. We have been encouraging the consolidation of our North American distribution networks around large, strong, professionally managed, well-capitalized independent dealers. We are currently expanding this "anchor dealer" model on a global basis for each of our brands. We believe that anchor dealers are able to more effectively penetrate the customer base in their exclusive territories because their size enables them to attract higher-quality employees, invest in more specialized selling and service activities and develop a more professional management structure. We also believe that anchor dealers are stronger financially, better positioning them to take advantage of dealership consolidation and to weather economic downturns. We strengthen our dealer networks by providing sales and service training, dealer consulting services, information systems support, product launch coordination, direct advertising, specialized selling materials and help desks. We believe that this support system, together with our large installed population base of lift trucks, helps to attract and retain high quality dealers, further strengthening our distribution network.
We are continuing to expand our National Accounts organization globally to capture additional revenues from large customers that have centralized purchasing and geographically dispersed operations in multiple dealer territories. As a result of our strong National Accounts organization, established brands and strong distribution network, we believe we are well-positioned to continue to capitalize on the growth in this customer segment. We expect the combination of our anchor dealer strategy and our National Accounts organization to improve our market share and increase our installed population base.
CORPORATE STRUCTURE AND OWNERSHIP
We are a wholly owned subsidiary of NACCO Industries, Inc., a publicly traded holding company with principal operating subsidiaries in three distinct industries: lift trucks, housewares and lignite coal mining. NACCO's Class A common stock is traded on the New York Stock Exchange under the symbol "NC." As of March 31, 2002, on a fully diluted basis NACCO's market capitalization was approximately $543.4 million.
Yale's operations were acquired in 1985 from Eaton Corporation. In 1989, we acquired Hyster and combined its operations with those of Yale.
[Nacco Industries Flow Chart]
THE EXCHANGE OFFER
THE EXCHANGE OFFER............ We are offering to exchange $250.0 million in
principal amount of our 10% senior notes due
2009, which have been registered under the
federal securities laws, for $250.0 million
principal amount of our outstanding
unregistered 10% senior notes due 2009, which
we issued on May 9, 2002 in a private offering.
You have the right to exchange your outstanding
notes for exchange notes with substantially
identical terms.
In order for your outstanding notes to be
exchanged, you must properly tender them prior
to the expiration of the exchange offer. All
outstanding notes that are validly tendered and
not validly withdrawn will be exchanged. We
will issue the exchange notes on or promptly
after the expiration of the exchange offer.
REGISTRATION RIGHTS
AGREEMENT..................... We issued the outstanding notes on May 9, 2002
to a limited number of initial purchasers. At
that time, we signed a registration rights
agreement with those initial purchasers, which
requires us to conduct this exchange offer.
This exchange offer is intended to satisfy
those rights set forth in the registration
rights agreement. After the exchange offer is
complete, you will not have any further rights
under the registration rights agreement,
including any right to require us to register
any outstanding notes that you do not exchange
or to pay you liquidated damages.
FAILURE TO EXCHANGE YOUR
OUTSTANDING NOTES............. If you do not exchange your outstanding notes
for exchange notes in the exchange offer, you
will continue to be subject to the restrictions
on transfer provided in the outstanding notes
and the indenture governing those notes. In
general, you may not offer or sell your
outstanding notes unless they are registered
under the federal securities laws or are sold
in a transaction exempt from or not subject to
the registration requirements of the federal
securities laws and applicable state securities
laws.
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2002,
unless we decide to extend the expiration date.
CONDITIONS TO THE EXCHANGE
OFFER......................... We will complete this exchange offer only if:
- there is no change in the laws and
regulations that would impair our ability to
proceed with this exchange offer;
- there is no change in the current
interpretation of the staff of the SEC that
permits resales of the exchange notes; and
- there is no stop order issued by the SEC that
would suspend the effectiveness of the
registration statement that includes this
prospectus or the qualification of the
exchange notes under the Trust Indenture Act
of 1939.
PROCEDURES FOR TENDERING
NOTES......................... If you wish to tender your outstanding notes
for exchange, you must:
- complete and sign the enclosed letter of
transmittal by following the related
instructions; and
7
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- send the letter of transmittal, as directed
in the instructions, together with any other
required documents, to the exchange agent,
either (1) with the outstanding notes to be
tendered or (2) in compliance with the
specific procedures for guaranteed delivery
of the outstanding notes.
Brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer.
Please do not send your letter of transmittal
or certificates representing your outstanding
notes to us. Those documents should only be
sent the exchange agent. Questions regarding
how to tender and requests for information
should be directed to the exchange agent. See
"The Exchange Offer -- Exchange Agent."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. If your outstanding notes are registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee, we urge you to
contact that person promptly if you wish to
tender your outstanding notes pursuant to the
exchange offer. See "The Exchange
Offer -- Procedures for Tendering."
WITHDRAWAL RIGHTS............. You may withdraw the tender of your outstanding
notes at any time prior to the expiration date
of the exchange offer by delivering a written
notice of your withdrawal to the exchange
agent. You must also follow the withdrawal
procedures as described under the heading "The
Exchange Offer -- Withdrawal of Tenders."
FEDERAL INCOME TAX
CONSIDERATIONS................ The exchange of outstanding notes for the
exchange notes in the exchange offer should not
be a taxable event for U.S. federal income tax
purposes. See "Federal Income Tax Consequences
of the Exchange Offer."
RESALES OF EXCHANGE NOTES..... We believe that you will be able to offer for
resale, resell or otherwise transfer exchange
notes issued in the exchange offer without
compliance with the registration and prospectus
delivery requirements of the federal securities
laws, unless you are a broker-dealer receiving
exchange notes for your own account, provided
that:
- you are acquiring the exchange notes in the
ordinary course of business;
- you do not have any arrangement or
understanding with any person to participate
in the distribution of the outstanding notes
or the exchange notes;
- you are not engaged in, and do not intend to
engage in, a distribution of the exchange
notes;
- you are not one of our "affiliates," as
defined in Rule 405 of the Securities Act.
Our belief is based on interpretations by the
staff of the SEC, as set forth in no action
letters issued to third parties unrelated to
us. We have not considered this exchange offer
in the context of a no-
8
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action letter, and we cannot assure you that
the staff would make a similar determination
with respect to this exchange offer.
If our belief is not accurate and you transfer
an exchange note without delivering a
prospectus meeting the requirements of the
federal securities laws or without an exemption
from these laws, you may incur liability under
the federal securities laws. We do not and will
not assume, or indemnify you against, this
liability.
Each broker-dealer that receives exchange notes
for its own account in exchange for outstanding
notes, where such outstanding notes were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of exchange notes. See "Plan of
Distribution."
EXCHANGE AGENT................ The exchange agent for the exchange offer is
U.S. Bank National Association. The address,
telephone number and facsimile number of the
exchange agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the letter of
transmittal.
THE EXCHANGE NOTES
ISSUER........................... NMHG Holding Co.
EXCHANGE NOTES................... $250,000,000 aggregate principal amount of
10% Senior Notes due 2009.
MATURITY......................... May 15, 2009.
INTEREST PAYMENT DATES........... May 15 and November 15 of each year,
beginning November 15, 2002.
GUARANTEES....................... Our obligations under the exchange notes
will be fully and unconditionally
guaranteed on a senior basis by
substantially all of our existing and
future domestic subsidiaries. The exchange
notes will not be guaranteed by our foreign
subsidiaries. For the first three months of
2002, the subsidiary guarantors generated
approximately 52% of our adjusted EBITDA,
after elimination of intercompany
transactions. At March 31, 2002, the
subsidiary guarantors represented
approximately 66% of our total assets after
elimination of intercompany accounts and
investments. NACCO, our parent company,
will not guarantee the exchange notes.
NACCO is under no obligation with respect
to any of our or the subsidiary guarantors'
debt obligations.
RANKING.......................... The effective ranking of the exchange notes
and guarantees is as follows:
- the exchange notes will rank equally with
our senior unsecured indebtedness, and
each guarantee will rank equally with
other senior unsecured indebtedness of
the subsidiary guarantors;
- the exchange notes will be senior to all
of our subordinated indebtedness, and
each guarantee will be senior to all
subordinated indebtedness of the
subsidiary guarantors;
- the exchange notes will be effectively
junior to all of our secured indebtedness
to the extent of the value of the
9
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collateral, and each guarantee will be
effectively junior to all secured
indebtedness of the subsidiary guarantors
to the extent of the value of the
collateral; and
- the exchange notes will be effectively
junior to all indebtedness and other
obligations, including trade payables, of
all our non-guarantor subsidiaries.
As of March 31, 2002, after giving effect
to the application of the net proceeds from
the offering of the outstanding notes and
amounts drawn under our new revolving
credit facility to prepay borrowings under
our existing credit facility and other
indebtedness:
- we and the subsidiary guarantors would
have had outstanding $51.0 million of
secured indebtedness that would have
effectively ranked senior to the exchange
notes and the subsidiary guarantees; and
- the non-guarantor subsidiaries would have
had outstanding $39.6 million of
indebtedness that would have effectively
ranked senior to the exchange notes.
OPTIONAL REDEMPTION.............. Prior to May 15, 2005, we can choose to
redeem up to 35% of the original principal
amount of the exchange notes, and any
additional notes issued under the same
indenture governing the exchange notes, at
a redemption price of 110% of the principal
amount thereof, plus accrued and unpaid
interest to the date of redemption, with
money we receive from specified equity
offerings of us or NACCO, as long as:
- at least 65% of the original aggregate
principal amount of the exchange notes
and any additional notes remain
outstanding after each such redemption,
other than notes held, directly or
indirectly, by us or our affiliates; and
- each redemption occurs within 60 days
after the date of the related equity
offering.
On and after May 15, 2006, we can choose to
redeem some or all of the exchange notes at
the redemption prices listed under
"Description of Notes -- Optional
Redemption," plus accrued and unpaid
interest to the date of redemption.
CHANGE OF CONTROL................ If we experience a change of control,
subject to certain conditions, we must give
holders of the exchange notes the
opportunity to sell to us their exchange
notes at 101% of the principal amount, plus
accrued and unpaid interest to the date of
the repurchase. The term "change of
control" is defined under "Description of
Notes -- Change of Control."
RESTRICTIVE COVENANTS............ The indenture governing the exchange notes
will limit our ability and our restricted
subsidiaries' ability to:
- incur additional indebtedness;
- pay dividends on our capital stock or
redeem, repurchase or retire our capital
stock or subordinated indebtedness;
- make investments;
- create restrictions on the payment of
dividends or other amounts to us from our
restricted subsidiaries;
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- engage in transactions with our
affiliates;
- incur liens and enter into sale/leaseback
transactions;
- sell assets, including capital stock of
our subsidiaries; and
- consolidate, merge or transfer assets.
These covenants are subject to important
exceptions and qualifications, which are
described under "Description of Notes --
Certain Covenants."
USE OF PROCEEDS.................. We will not receive any cash proceeds from
the issuance of the exchange notes. See
"Use of Proceeds."
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RISK FACTORS
You should consider carefully all the information set forth in this prospectus and, in particular, should evaluate the specific factors under the section "Risk Factors" beginning on page 15 prior to exchanging your notes.
ADDITIONAL INFORMATION
Our principal executive offices are located at 650 N.E. Holladay Street, Suite 1600, Portland, Oregon 97232, and our telephone number is (503) 721-6000. We were incorporated in Delaware in 1999 to serve as a holding company for Hyster-Yale Materials Handling, Inc., which was incorporated in Delaware in 1991 as part of a holding company reorganization, and NMHG Distribution Co., which was incorporated in Delaware in 1999.
SUMMARY HISTORICAL FINANCIAL AND OTHER DATA
We have derived the following summary historical information from our consolidated financial statements. The statement of income and other data for each of the three years in the period ended December 31, 2001, and the balance sheet data as of December 31, 2000 and 2001, have been derived from our audited consolidated financial statements and related notes, which appear elsewhere in this prospectus. The statement of income and other data for the three months ended March 31, 2001 and 2002, and the balance sheet data as of March 31, 2002, have been derived from our unaudited condensed consolidated financial statements and related notes, which appear elsewhere in this prospectus. The statement of income data for each of the years ended December 31, 1997 and 1998, and the balance sheet data as of December 31, 1997, 1998 and 1999 have been derived from our audited consolidated financial statements and related notes that are not included in this prospectus. You should read the following information together with "Selected Historical Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and related notes appearing elsewhere in this prospectus. The following results are net of intercompany transactions.
(DOLLARS IN MILLIONS) THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------------ ----------------
1997 1998 1999 2000 2001 2001 2002
----------- ----------- -------- --------- --------- ------ -------
STATEMENT OF INCOME DATA:
Revenues....................... $1,517.1 $1,746.1 $1,761.4 $1,932.1 $1,672.4 $495.6 $ 371.8
Cost of sales.................. 1,253.0 1,400.4 1,457.9 1,584.6 1,422.8 406.8 310.1
-------- -------- -------- -------- -------- ------ -------
Gross profit................... 264.1 345.7 303.5 347.5 249.6 88.8 61.7
Selling, general and
administrative expenses...... 173.9 203.4 233.0 257.8 262.4 64.9 55.1
Amortization of goodwill....... 11.7 11.7 12.2 12.6 12.9 3.2 --
Restructuring charges
(credits).................... 8.0 (1.6) -- 13.9 8.8 -- --
Loss on sale of dealers........ -- -- -- -- 10.4 -- --
-------- -------- -------- -------- -------- ------ -------
Operating profit (loss)........ $ 70.5 $ 132.2 $ 58.3 $ 63.2 $ (44.9) $ 20.7 $ 6.6
======== ======== ======== ======== ======== ====== =======
OTHER DATA:
Units sold..................... 66,833 77,636 76,055 84,825 68,929 21,624 14,971
Adjusted EBITDA(1)............. $ 113.5 $ 168.5 $ 112.4 $ 131.7 $ 63.3 $ 38.9 $ 18.6
Adjusted EBITDA margin......... 7.5% 9.7% 6.4% 6.8% 3.8% 7.8% 5.0%
Depreciation and
amortization................. $ 35.0 $ 37.9 $ 54.1 $ 54.6 $ 60.4 $ 14.7 $ 10.6
Capital expenditures........... 25.6 63.9 46.2 51.8 53.5 9.7 6.2
OTHER SUPPLEMENTAL DATA:
Ratio of net debt to adjusted
EBITDA(2).................... 1.2x 1.1x 2.1x 2.1x 4.8x 1.8x 4.0x
Ratio of adjusted EBITDA to
interest expense............. 7.8 12.0 5.9 6.2 2.7 7.5 3.4
Ratio of adjusted EBITDA to pro
forma interest expense(3).... -- -- -- -- 1.7 -- 2.1
Ratio of adjusted EBITDA minus
capital expenditures to
interest expense............. 6.1 7.5 3.5 3.8 0.4 5.6 2.3
Ratio of earnings to fixed
charges(4)................... 4.0 7.9 2.9 2.4 -- 3.1 1.2
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(IN MILLIONS)
AS OF DECEMBER 31, AS OF MARCH 31,
------------------------------------------------------------- ----------------------
1997 1998 1999 2000 2001 2002 2002
----------- ----------- ----------- -------- -------- -------- -----------
AS
ADJUSTED(5)
-----------
BALANCE SHEET DATA:
Cash and cash equivalents...... $ 17.1 $ 22.2 $ 31.1 $ 24.4 $ 59.6 $ 54.9 $ 18.7
Working capital(6)............. 54.5 125.8 146.3 107.4 (150.0) (159.6) 74.8
Total assets................... 942.4 1,100.4 1,178.6 1,241.7 1,205.1 1,186.6 1,183.7
Total debt..................... 156.8 200.2 270.7 304.9 362.4 349.0 346.1
Stockholder's equity........... 384.9 462.0 468.7 463.0 382.0 372.1 372.1
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(1) We have included adjusted EBITDA because we believe that investors find it to be a useful tool for measuring a company's ability to generate cash. Adjusted EBITDA does not represent cash flow from operations, as defined by generally accepted accounting principles, and is not calculated in the same way by all companies. We define adjusted EBITDA as operating profit (loss) before certain unusual items, as identified in the table below, plus depreciation and amortization. You should not consider adjusted EBITDA as a substitute for net income or net loss, as an indicator of our operating performance or cash flow, or as a measure of liquidity. Our definition of adjusted EBITDA is not calculated in the same way EBITDA will be calculated under the indenture governing the notes. In addition, the items described below for 2001 resulted from actions we have taken that are referred to in this offering circular as the 2001 Restructuring Program. See "Description of Notes -- Certain Definitions" for more information on the definition of EBITDA under the indenture governing the notes.
THREE MONTHS
(IN MILLIONS) ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ ---------------
1997 1998 1999 2000 2001 2001 2002
------ ------ ------ ------ ------ ------ ------
Operating profit (loss)....... $ 70.5 $132.2 $ 58.3 $ 63.2 $(44.9) $ 20.7 $ 6.6
Adjustments:
Restructuring charges
(credits)(a)............. 8.0 (1.6) -- -- 8.8 -- --
Danville closure costs(b)... -- -- -- 13.9 12.0 1.8 0.6
Loss on sale of owned
dealers(c)............... -- -- -- -- 10.4 -- --
Operating losses of sold
operations(d)............ -- -- -- -- 9.5 1.7 --
Other non-recurring
items(e)................. -- -- -- -- 7.1 -- 0.8
------ ------ ------ ------ ------ ------ ------
Total adjustments........ 8.0 (1.6) -- 13.9 47.8 3.5 1.4
------ ------ ------ ------ ------ ------ ------
Adjusted operating profit
(loss)...................... 78.5 130.6 58.3 77.1 2.9 24.2 8.0
Add depreciation and
amortization................ 35.0 37.9 54.1 54.6 60.4 14.7 10.6
------ ------ ------ ------ ------ ------ ------
Adjusted EBITDA(f)............ $113.5 $168.5 $112.4 $131.7 $ 63.3 $ 38.9 $ 18.6
====== ====== ====== ====== ====== ====== ======
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(a) Restructuring charges represent the following:
- In 1997, an $8.0 million charge to restructure and consolidate certain engineering, marketing and administrative functions;
- In 1998, a $1.6 million credit representing an adjustment to the 1997 charge above; and
- In 2001, a $4.5 million charge related to restructuring certain manufacturing, marketing and administrative functions in our European business, a $4.7 million charge related to restructuring certain European owned dealers and a $0.4 million credit relating to the adjustment of the 2000 Danville, Illinois closure charge (see note b).
(b) Reflects cash and non-cash charges related to the closure of our Danville, Illinois assembly facilities, the transfer of its assembly activities and idle facility costs (see note a).
(c) Reflects the loss on the sale of owned dealers in Germany and related wind-down costs.
(d) Reflects operating losses related to the German owned dealers sold in 2001.
(e) Reflects non-cash charges to reduce asset values and increase reserves reflective of the weakened capital goods markets, establish full accounting consistency among owned dealers on a global basis and to cause those dealers previously reporting on a one-month lag to report on months consistent with the rest of NMHG. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
(f) For each of the years in the five years ended December 31, 2001, EBITDA before adjustments, or operating profit (loss) before depreciation and amortization, was $105.5 million, $170.1 million, $112.4 million, $117.8 million and $15.5 million, respectively. EBITDA before adjustments was $35.4 million and $17.2 million for the three months ended March 31, 2001 and 2002, respectively.
(2) Net debt is defined as total debt less cash and cash equivalents. Amounts of adjusted EBITDA for the three month periods ended March 31, 2001 and 2002 have been annualized for purposes of calculating the ratio of net debt to adjusted EBITDA.
(3) We have calculated the ratio of adjusted EBITDA to pro forma interest expense as follows:
(IN MILLIONS)
----------------------------------
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 2001 MARCH 31, 2002
----------------- --------------
Adjusted EBITDA:............................................ $63.3 $18.6
Pro forma interest expense:
10% Senior Notes.......................................... 25.0 6.2
New revolving credit facility............................. 2.1 0.3
Other debt................................................ 6.6 1.5
Amortization of debt discount............................. 0.4 0.1
Amortization of financing costs........................... 2.8 0.7
----- -----
$36.9 $ 8.8
Ratio of adjusted EBITDA to pro forma interest expense...... 1.7x 2.1x
===== =====
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(4) The ratio of earnings to fixed charges is determined by dividing income
(loss) before income taxes, minority interest and cumulative effect of
accounting changes, adjusted for equity in earnings and distributions
received from equity investees, interest expense, debt expense amortization,
capitalized interest and the portion of rental expense deemed representative
of an interest factor by the sum of interest expense, debt expense
amortization, capitalized interest and the portion of rental expense deemed
representative of an interest factor. For the year ended December 31, 2001,
earnings were insufficient to cover fixed charges by $66.8 million.
(5) As adjusted data is calculated as if the application of the net proceeds from the sale of the outstanding notes, together with $16.2 million of borrowings under the new revolving credit facility and $36.2 million of available cash, had been used to repay $265.0 million of borrowings outstanding under our existing credit facility, $1.0 million of borrowings outstanding under other revolving lines of credit, $20.8 million under our European receivables discounting facility and $12.5 million in refinancing transaction fees and expenses.
(6) As of December 31, 2001 and March 31, 2002, includes $265.0 million of debt outstanding under our existing credit facility and classified as a current liability in accordance with U.S. generally accepted accounting principles.
RISK FACTORS
An investment in the notes involves risk. In addition to the other information contained in this prospectus, you should carefully consider the following risk factors in deciding whether to exchange any notes.
RISKS RELATING TO OUR BUSINESS
OUR LIFT TRUCK BUSINESS IS CYCLICAL. ANY FURTHER DOWNTURN IN THE GENERAL ECONOMY COULD ADVERSELY AFFECT OUR EARNINGS AND RESULTS OF OPERATIONS FURTHER.
Our lift truck business historically has been cyclical, especially sales of counterbalanced lift trucks, which accounted for 68.4% of all our new unit volume sales in 2001. Fluctuations in the rate of orders for lift trucks reflect the capital investment decisions of our customers, which depend to a certain extent on the general level of economic activity in the various industries that our lift truck customers serve. During economic downturns, customers tend to delay new lift truck purchases. As a result of this cyclicality, we have experienced, and in the future we will experience, significant fluctuations in our revenues and net income. For example, the downturn in the general economy in 2001 adversely affected our business and results of operations as revenues from our customers declined 13.4% in 2001, from $1,932.1 million in 2000 to $1,672.4 million in 2001, and we had a net loss in 2001 of $49.4 million compared to net income of $21.3 million in 2000. General economic conditions continued to negatively impact our results in the first quarter of 2002, with revenues from our customers declining 25% in the first quarter of 2002, from $495.6 million in the first quarter of 2001 to $371.8 million in the first quarter of 2002, and net income in the first quarter of 2002 decreasing to $4.3 million compared to net income of $8.3 million in the first quarter of 2001. If there is further degradation in the general economy, or in the industries our lift truck customers serve, our business, results of operations and financial condition could be adversely affected.
IF THE CAPITAL GOODS MARKET WORSENS, THE COST SAVING EFFORTS WE HAVE IMPLEMENTED MAY NOT BE SUFFICIENT TO ACHIEVE THE BENEFITS WE EXPECT.
The 2001 Restructuring Program, which included the closure of our Danville, Illinois assembly facility, labor and overhead reductions and the restructuring of our owned dealers, was implemented to improve our profits and margins despite decreased revenues. As a result of these actions, we recorded a charge to operations of approximately $13.9 million in 2000 and $47.8 million in 2001. If the economy continues to worsen, or the capital goods market does not improve, our revenues could continue to decline. If revenues are lower than our expectations, the efforts we have implemented may not achieve the benefits we expect. We may be forced to take additional cost savings steps that could result in additional charges and materially affect our ability to compete or implement our business operations.
IF OUR GLOBAL COST REDUCTION PROGRAM DOES NOT PROVE EFFECTIVE, OUR RESULTS OF OPERATIONS WILL BE ADVERSELY AFFECTED.
We have developed and are implementing a Global Cost Reduction Program encompassing lean manufacturing, global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reductions and improvements in our owned dealers. We expect that, when fully implemented by 2006, these programs will result in annual pre-tax cost savings of approximately $117.5 million. If we are unable to successfully implement our Global Cost Reduction Program, our results of operations will be adversely affected.
IF COST SAVING EFFORTS IMPLEMENTED FOR OUR OWNED DEALERS DO NOT PROVE EFFECTIVE, OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.
Since January 1, 1998, we acquired two dealers in the Americas, 12 dealers and one rental company in Europe and 12 dealers and two rental companies in Asia-Pacific. In 2001, our net loss attributable to our owned dealers increased to $35.3 million, from $15.7 million in 2000. To improve the profitability of our owned dealers, we engaged in restructuring activities with respect to our European owned dealers in 2001. These activities were primarily related to lease termination costs, severance and other employee benefits to be
paid to approximately 140 terminated employees at owned dealers in Europe. In the first quarter of 2002, our net loss attributable to our owned dealers decreased to $1.3 million, from $4.1 million in the first quarter of 2001. However, if our restructuring activities for our European owned dealers do not continue to be effective, our results of operations may be adversely affected.
THE PRICING OF OUR PRODUCTS HAS BEEN AND MAY CONTINUE TO BE IMPACTED BY FOREIGN CURRENCY FLUCTUATIONS, WHICH COULD ADVERSELY AFFECT OUR EARNINGS AND RESULTS OF OPERATIONS.
Since we conduct transactions in various foreign currencies, including, among others, the euro, the Japanese yen and the British pound sterling, our lift truck pricing structure and that of some of our competitors is subject to the effects of fluctuations in the value of these foreign currencies and fluctuations in the related currency exchange rates. As a result, costs and sales have historically been affected by, and may continue to be affected by, these fluctuations. These fluctuations historically have adversely affected, and in the future could continue to adversely affect, our earnings and results of operations.
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR SPECIFIC CRITICAL COMPONENTS.
We depend on a limited number of suppliers for some of our critical components, including diesel and gasoline engines and cast-iron counterweights used to counterbalance some lift trucks. Some of these critical components are imported and subject to regulation, such as inspection by the U.S. Department of Commerce. Our results of operations could be adversely affected if we are unable to obtain these critical components, or if the cost of these critical components were to increase significantly, due to costly regulatory compliance or otherwise, and we were unable to pass the cost increases on to our customers.
COMPETITION MAY ADVERSELY AFFECT OUR EARNINGS AND RESULTS OF OPERATIONS.
We experience intense competition in the sale of our lift trucks and aftermarket parts. Competition in the lift truck industry is based primarily on strength and quality of dealers, brand loyalty, customer service, availability of products and aftermarket parts, comprehensive product line offering, product performance, product quality and features and the cost of ownership over the life of the lift truck. We compete with several global full line manufacturers that operate in all major markets. These manufacturers may have greater financial resources and less debt than we have, which may enable them to commit larger amounts of capital in response to changing market conditions. If we fail to compete effectively, our earnings and results of operations could be adversely affected.
WE RELY PRIMARILY ON OUR NETWORK OF DEALERS TO SELL OUR LIFT TRUCKS AND AFTERMARKET PARTS. AS A RESULT WE HAVE NO DIRECT CONTROL OVER SALES BY THOSE DEALERS TO CUSTOMERS.
In 2001, approximately 81% of our new lift truck volume and 99% of our aftermarket parts sales were sold through dealers, who in turn sold the lift trucks and aftermarket parts to the customers. Sales of our products are therefore subject to the quality and effectiveness of the dealers, who are generally not subject to our direct control.
THE RETIREMENT OF EXISTING ANTI-DUMPING DUTIES AND MANUFACTURING BY JAPANESE COMPETITORS IN THE UNITED STATES COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION, REVENUES, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Certain Japanese-built ICE lift trucks imported into the United States are currently subject to an anti-dumping duty. The anti-dumping duty rates in effect through 2001 ranged from 7.39% to 56.81% depending on the manufacturer or importer. If the anti-dumping duty order is retired when it is reviewed again in 2005, our Japanese competitors might be able to import lift trucks for sale at a cost below fair market value. If we were to similarly lower our prices to maintain market share, our results of operations and financial condition could be materially adversely affected. If we did not lower our prices, our competitive position, revenues, results of operation and financial condition could be materially adversely affected. In addition, all of our major Japanese competitors have manufacturing or assembly facilities in the United States. The domestic sourcing of lift truck products by our Japanese competitors may negatively impact our competitive position, revenues, operating results or financial condition.
OUR ACTUAL LIABILITIES RELATING TO PENDING LAWSUITS MAY EXCEED OUR EXPECTATIONS.
We are a defendant in pending lawsuits involving, among other things, product liability claims. We cannot assure you that we will succeed in defending these claims, that judgments will not be rendered against us with respect to any or all of these proceedings or that reserves we have set aside will be adequate to cover any such judgments. We could incur a charge to our earnings if our reserves prove to be inadequate, which could have a material adverse effect on our results of operations and liquidity for the period in which the charge is taken.
WE HAVE GUARANTEED, OR ARE SUBJECT TO REPURCHASE OR RECOURSE OBLIGATIONS WITH RESPECT TO, FINANCING ARRANGEMENTS OF SOME OF OUR CUSTOMERS.
Through arrangements with General Electric Capital Corporation, or GECC, we provide dealer and customer financing of new lift trucks in the United States and in major countries of the world outside of the United States. Through these arrangements, our dealers and certain customers are extended credit for the purchase of lift trucks to be placed in the dealer's floor plan inventory or the financing of lift trucks that are sold or leased to customers. For some of the arrangements, we provide residual value guarantees or standby recourse or repurchase obligations such that we would become obligated in the event of default by the dealer or customer. Total amounts subject to these types of obligations at December 31, 2001 and March 31, 2002 were $158.0 million and $153.4 million, respectively. In substantially all of these arrangements we maintain perfected security interests in the assets financed such that, in the event that we become obligated under the terms of the guarantees or standby recourse or repurchase obligations, we may take title to the assets financed. However, we cannot be certain that the security interest will equal or exceed the amount of the guarantee or recourse or repurchase obligation. In addition, we cannot be certain that losses under the terms of the guarantees or recourse or repurchase obligations will not exceed the reserves that we have set aside in our consolidated financial statements. We could incur a charge to our earnings if our reserves prove to be inadequate, which could have a material adverse effect on our results of operations and liquidity for the period in which the charge is taken.
WE ARE SUBJECT TO RISKS RELATING TO OUR FOREIGN OPERATIONS.
Foreign operations represent a significant portion of our business. For 2001, approximately 7.6% of our revenue was derived from sales in the Americas outside of the United States, approximately 28.1% from sales in Europe and approximately 8.4% from sales in Asia-Pacific. We expect revenue from foreign markets to continue to represent a significant portion of our total revenue. We own or lease manufacturing facilities in Brazil, Italy, Mexico, The Netherlands, Northern Ireland and Scotland, and we own interests in joint ventures with facilities in China, Japan and the Philippines. We also sell domestically produced products to foreign customers. Our foreign operations are subject to risks in addition to the risks of our domestic operations. The risks that relate to our foreign operations include:
- potential political, economic and social instability in the foreign countries in which we operate;
- currency risks, see "--The pricing of our products has been and may continue to be impacted by foreign currency fluctuations, which could adversely affect our earnings and results of operations;"
- imposition of or increases in currency exchange controls;
- potential inflation in the applicable foreign economies;
- imposition of or increases in import duties and other tariffs on our products;
- imposition of or increases in foreign taxation of our earnings and withholding on payments received by us from our subsidiaries;
- regulatory changes affecting our international operations; and
- stringent labor regulations.
Part of our strategy to expand our worldwide market share and decrease costs is strengthening our international distribution network and sourcing basic components in foreign countries. Implementation of this
strategy may increase the impact of the risks described above and we cannot assure you that such risks will not have an adverse effect on our business, results of operations or financial condition.
OUR FORMER PUBLIC ACCOUNTANTS HAVE RECENTLY BEEN INDICTED BY THE U.S. FEDERAL GOVERNMENT, WHICH MAY ADVERSELY AFFECT OUR ABILITY TO COMPLY WITH OUR REGISTRATION OBLIGATIONS, WHETHER CONTRACTUAL OR STATUTORY, AND THE ABILITY OF ARTHUR ANDERSEN LLP TO SATISFY ANY CLAIMS THAT MAY ARISE OUT OF ARTHUR ANDERSEN LLP'S AUDIT OF OUR FINANCIAL STATEMENTS.
Our former independent public accountant, Arthur Andersen LLP, has informed us that on March 14, 2002, an indictment was unsealed charging it with federal obstruction of justice arising from the U.S. government's investigation of Enron Corp. We filed the registration statement of which this prospectus is a part to comply with the provisions of a registration rights agreement we entered into on May 9, 2002 with the initial purchasers of the outstanding notes. If we fail to comply with the registration provisions of the registration rights agreements within the time periods specified therein, we will be required to pay holders of the notes special interest while the failure continues. Our ability to comply with our registration obligations, whether contractual or statutory, in a timely manner could be adversely affected if the SEC ceases accepting financial statements audited by Arthur Andersen LLP, if Arthur Andersen LLP becomes unable to make specified representations to us, as required by the SEC as a condition to accepting Arthur Andersen LLP audited or reviewed financial statements, or if for any reason Arthur Andersen LLP is unable to perform accounting services for us. Further, it is possible that events arising out of the indictment may adversely affect the ability of Arthur Andersen LLP to satisfy any claims that may arise out of Arthur Andersen LLP's audit of our financial statements that are contained in, or incorporated by reference to, this prospectus.
NACCO INDUSTRIES, INC. CONTROLS ALL MATTERS THAT MUST BE SUBMITTED TO A STOCKHOLDER VOTE, AND THIS CONTROL MAY ADVERSELY AFFECT THE NOTEHOLDERS.
NACCO owns 100% of our outstanding capital stock. Therefore, NACCO controls the vote on all matters required to be submitted to a stockholder vote, including the election of our directors, amendments to our certificate of incorporation and our by-laws, and approval of significant change of control transactions. Some decisions about our operations or financial structure may present conflicts of interest between NACCO and the holders of the notes. For example, NACCO may be willing to approve acquisitions, divestitures or transactions undertaken by us that it believes could increase the value of its equity investment in us. These kinds of transactions, however, may increase the financial risk to the noteholders.
NACCO has two classes of common stock. The Class A common stock, which is listed on the New York Stock Exchange, is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. A majority of the NACCO Class B common stock is beneficially owned by certain descendents and relatives of NACCO's founder, which group includes certain executives of NACCO and certain members of the board of directors of both us and NACCO. This concentration of voting power at NACCO may exacerbate the risks described above.
NACCO INDUSTRIES, INC. WILL NOT GUARANTEE THE NOTES AND IS UNDER NO OBLIGATION WITH RESPECT TO ANY OF OUR OR THE SUBSIDIARY GUARANTORS' DEBT OBLIGATIONS.
NACCO is under no obligation with respect to the notes or our subsidiary guarantors' debt obligations. If we or the subsidiary guarantors default on our obligations under the notes, you will have no right to seek payment or other remedies from NACCO.
RISKS RELATING TO OUR DEBT, INCLUDING THE NOTES
OUR SIGNIFICANT AMOUNT OF DEBT MAY LIMIT OUR OPERATIONS AND FLEXIBILITY.
After giving effect to the application of the net proceeds from the sale of the outstanding notes and amounts drawn under the new revolving credit facility, as of March 31, 2002, our total debt would have been approximately $346.1 million.
The level of our indebtedness could have important consequences, including:
- limiting cash flow available for general corporate purposes, including capital expenditures, because a substantial portion of our cash flow from operations must be dedicated to servicing our debt;
- limiting our ability to obtain additional debt financing in the future for working capital, capital expenditures or acquisitions;
- making us more vulnerable in the event of a further downturn in general economic conditions or in our business;
- limiting our flexibility in reacting to competitive and other changes in our industry;
- making it more difficult to satisfy our obligations under the notes, including our repurchase obligation upon the occurrence of specified change of control events; and
- exposing us to risks inherent in interest rate fluctuations because some of our borrowings will be at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.
WE MAY NOT BE ABLE TO SERVICE OUR DEBT, INCLUDING THE NOTES.
Our ability to pay or to refinance our indebtedness, including the notes, will depend upon our future operating performance, which will be affected by general economic, financial, competitive, business and other factors beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated revenue growth and operating improvements will be realized on schedule or at all or that future borrowings will be available to us under the new revolving credit facility in amounts sufficient to enable us to service our debt obligations, to pay our indebtedness, including the notes at maturity or otherwise, or to fund our other liquidity needs. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance our indebtedness or sell assets. We cannot assure you that we will be able to accomplish those actions on satisfactory terms, if at all, which could cause us to default on our obligations and impair our liquidity. Our ability to restructure or refinance will depend on the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations.
DESPITE OUR LEVEL OF INDEBTEDNESS, WE AND OUR SUBSIDIARIES WILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries will be able to incur substantial additional indebtedness in the future. Although the indenture governing the notes and the terms of our new revolving credit facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. To the extent new debt is added to our currently anticipated debt levels, the substantial leverage risks described above would increase. Also, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness. See "Description of Notes" and "Description of Other Indebtedness."
OUR BUSINESS IS CONDUCTED THROUGH OUR SUBSIDIARIES AND WE WILL DEPEND ON THE BUSINESS OF OUR SUBSIDIARIES TO SATISFY OUR OBLIGATIONS UNDER THE NOTES.
Our operations are conducted through our subsidiaries. As a result, we will depend on dividends, loans or advances or payments from our subsidiaries to satisfy our financial obligations and make payments on the notes. The ability of our subsidiaries to make distributions or other payments to us will depend upon their operating results and applicable laws and any contractual restrictions contained in the instruments governing their indebtedness. If money generated by our subsidiaries is not available to us, our ability to repay our indebtedness, including the notes, may be adversely affected.
ALTHOUGH THE NOTES ARE REFERRED TO AS "SENIOR NOTES," THEY ARE EFFECTIVELY SUBORDINATED TO ANY FUTURE SECURED INDEBTEDNESS OF NMHG AND THE SUBSIDIARY GUARANTORS AND ALL OBLIGATIONS OF THE NON-GUARANTOR SUBSIDIARIES.
The notes are our unsecured obligations and are guaranteed by substantially all of our existing and future domestic subsidiaries. The notes are not guaranteed by our other subsidiaries. As a result of this structure, the notes are effectively subordinated to amounts outstanding under the new revolving credit facility and any other future secured indebtedness of NMHG and the subsidiary guarantors, to the extent of the value of the collateral, and all indebtedness and other obligations, including trade payables, of our non-guarantor subsidiaries. The effect of this subordination is that, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving us or a subsidiary, the assets of the affected entity could not be used to pay you until after:
- all secured claims against the affected entity have been fully paid; and
- if the affected entity is a non-guarantor subsidiary, all other claims against that subsidiary, including trade payables, have been fully paid.
For the three months ended March 31, 2002, our non-guarantor subsidiaries constituted approximately 48% of our adjusted EBITDA, after elimination of intercompany transactions, and at March 31, 2002 they represented approximately 34% of our total assets, after elimination of intercompany accounts and investments.
THE TERMS OF OUR DEBT INSTRUMENTS IMPOSE FINANCIAL AND OPERATING RESTRICTIONS.
Our new revolving credit facility and the indenture governing the notes contain restrictive covenants that limit our ability to engage in a variety of transactions, including incurring or guaranteeing additional indebtedness, paying dividends on our capital stock, redeeming, repurchasing or retiring our capital stock, making investments, creating restrictions on the payments of dividends from subsidiaries, engaging in transactions with affiliates, creating liens on our assets, transferring or selling our assets or engaging in mergers, acquisitions or consolidations. These debt instruments will prohibit us from prepaying any subordinated indebtedness we may incur, and our new revolving credit facility requires us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those tests.
A breach of any of the covenants or other provisions in our debt instruments could result in a default thereunder. Upon the occurrence of an event of default under our new revolving credit facility, the lenders could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit, which would adversely affect our ability to fund our operations. An acceleration of the amounts due under our new revolving credit facility would cause us to be in default under the indenture governing the notes, enabling acceleration of amounts outstanding under the indenture. If the lenders under our new revolving credit facility accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay all of our indebtedness. See "Description of Notes" and "Description of Other Indebtedness."
IF A CHANGE OF CONTROL OCCURS, WE MAY NOT HAVE SUFFICIENT FUNDS TO REPURCHASE YOUR NOTES.
Upon the occurrence of specified change of control events, you may require us to repurchase all or a portion of your notes at 101% of their principal amount, plus accrued interest and liquidated damages, if any. If a change of control occurs, we may not be able to pay the repurchase price for all of the notes submitted for repurchase. Our failure to purchase tendered notes would constitute an event of default under the indenture and the terms of our other debt, including our new revolving credit facility. In such circumstances, or if a change of control would constitute an event of default under our new revolving credit facility, we cannot assure you that we will have sufficient assets to repay all of our indebtedness. The term "change of control" is limited to certain specified transactions and may not include other events that may harm our
financial condition. The term "change of control" is defined under "Description of Notes -- Change of Control."
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS.
Substantially all our existing and future domestic subsidiaries guarantee the notes. If, however, any subsidiary becomes a debtor in a case under the United States Bankruptcy Code or encounters other financial difficulty, under federal or state fraudulent transfer law a court might avoid (that is cancel) its guarantee. The court might do so if it found that when the subsidiary entered into its guarantee (or, in some states, when payments became due thereunder), the subsidiary guarantor
- received less than reasonably equivalent value or fair consideration for the guarantee, and
- either (1) was or was rendered insolvent, (2) was left with inadequate capital to conduct its business, or (3) believed or should have believed that it would incur debts beyond its ability to pay.
The court might also avoid a subsidiary's guarantee, without regard to those factors, if it found that the subsidiary entered into its guarantee with actual intent to hinder, delay or defraud its creditors.
A court would likely find that a subsidiary did not receive reasonably equivalent value or fair consideration for its guarantee unless it benefited directly or indirectly from the notes' issuance. If a court avoided a guarantee, you would no longer have a claim against the guarantor. In addition, the court might direct you to repay any amounts already received from the guarantor. If the court were to avoid any subsidiary's guarantee, we cannot assure you that funds would be available to pay the notes from another subsidiary guarantor or from any other source.
The test for determining solvency for these purposes will depend on the law of the jurisdiction being applied. In general, a court would consider an entity insolvent either if the sum of its existing debts exceeds the fair value of all of its property, or if the present fair saleable value of its assets is less than the amount required to pay the probable liability on its existing debts as they become due. For this analysis, "debts" includes contingent and unliquidated debts.
The indenture states that the liability of each subsidiary on its guarantee is limited to the maximum amount that the subsidiary can incur without risk that the guarantee will be subject to avoidance as a fraudulent transfer. We cannot assure you that this limitation will protect the guarantees from fraudulent transfer attack or, if it does, that the guarantees will be in amounts sufficient, if necessary, to pay the notes when due.
BANKRUPTCY MAY DELAY PAYMENT ON THE NOTES.
The Bankruptcy Code generally prohibits the payment of pre-bankruptcy debt by a company that commences a bankruptcy case. If we and all our subsidiaries became debtors in bankruptcy cases, so long as the cases were pending you would likely not receive any payment of principal or interest due under the notes.
WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES.
There is currently no existing public market for the notes. An active public market may never develop for the notes and we will not apply to list the notes on any exchange or Nasdaq. As a result, you may be required to bear the financial risk of your investment in the notes indefinitely. Any notes traded after they are initially issued may trade at a discount from their initial offering price. The trading price of the notes depends on prevailing interest rates, the market for similar securities and other factors, including economic conditions and our financial condition, performance and prospects. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial fluctuations in the prices of these securities.
Although we do not intend to apply for listing or quotation of the notes, the notes have been designated for trading in PORTAL. We have been informed by the initial purchasers that they intend to make a market in the notes after this offering. The initial purchasers are not obligated to do so, and may cease such market-making without notice. See "Description of Notes" and "Plan of Distribution."
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES YOU MAY HAVE DIFFICULTY IN TRANSFERRING THEM AT A LATER TIME.
We will issue exchange notes in exchange for the outstanding notes after the exchange agent receives your outstanding notes, the letter of transmittal and all related documents. You should allow adequate time for delivery if you choose to tender your outstanding notes for exchange. Outstanding notes that are not exchanged will remain subject to restrictions on transfer and will not have any rights to registration.
If you do participate in the exchange offer for the purpose of participating in the distribution of the exchange notes, you must comply with the registration and prospectus delivery requirements of the Securities Act for any resale transaction. Each broker-dealer who holds outstanding notes for its own account due to market-making or other trading activities and who receives exchange notes for its own account must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. If any outstanding notes are not tendered in the exchange or are tendered but not accepted, the trading market for such outstanding notes could be negatively affected due to the limited amount expected to remain outstanding following the completion of the exchange offer.
FORWARD-LOOKING STATEMENTS
A number of statements made in this prospectus are not historical or current facts, but deal with potential future circumstances and developments. Those statements are qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience involving any one or more of these matters and subject areas. We attempted to identify, in context, some of the factors that we currently believe may cause future experience and results to differ from our current expectations regarding the relevant matter or subject area. We have identified some of these forward-looking statements with words such as "anticipates," "estimates," "believes," "expects," "intends," "may," "will," "should" or the negative of those words or other comparable terminology. These statements may be contained in "Prospectus Summary" and "Risk Factors," among other places in this prospectus. The operation and results of our business also may be subject to the effect of other risks and uncertainties, including but not limited to:
- changes in demand for lift trucks and related aftermarket parts and service on a worldwide basis, especially in the United States, where we derive a majority of our sales;
- changes in sales prices;
- delays in delivery or changes in costs of raw materials or sourced products and labor;
- delays in manufacturing and delivery schedules;
- exchange rate fluctuations, changes in foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which we operate and/or sell products;
- product liability or other litigation, warranty claims or returns of products;
- delays in or increased costs of our 2001 Restructuring Program, such as the phase-out of our Danville, Illinois manufacturing plant;
- the effectiveness of our Global Cost Reduction Program;
- acquisitions and/or dispositions of dealerships by us;
- costs related to the integration of acquisitions;
- the impact of the continuing introduction of the euro, including increased competition, foreign currency exchange movements and/or changes in operating costs; and
- uncertainties regarding the impact of the September 11, 2001 terrorist activities and subsequent climate of war may have on the economy or the public's confidence in general.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange notes. Because we are exchanging the exchange notes for the outstanding notes, which have substantially identical terms, the issuance of the exchange notes will not result in any increase in our indebtedness.
CAPITALIZATION
The following table presents our condensed consolidated cash and cash equivalents and capitalization as of March 31, 2002 on an actual basis and as adjusted to reflect completion of the offering of the outstanding notes and the application of the net proceeds, together with borrowings under our new revolving credit facility and available cash, to repay amounts outstanding under our existing credit facility and European receivables discounting facility. The information set forth in the table below should be read together with the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the more detailed consolidated financial statements and related notes appearing elsewhere in this prospectus.
(IN MILLIONS, EXCEPT
SHARE DATA)
AS OF MARCH 31, 2002
---------------------
ACTUAL AS ADJUSTED
------ -----------
Cash and cash equivalents................................... $ 54.9 $ 18.7
====== ======
Debt:
$350.0 million revolving credit facility.................. $265.0 $ --
Capitalized lease obligations and other term loans........ 49.7 49.7
Other revolving lines of credit........................... 34.3 33.3
New revolving credit facility............................. -- 16.2
10% Senior Notes due 2009................................. -- 246.9
------ ------
Total debt............................................. $349.0 $346.1
====== ======
Stockholder's equity:
Common stock, par value $1.00 per share (10,000 shares
authorized; 5,599 shares issued and outstanding) and
capital in excess of par value......................... $198.2 $198.2
Retained earnings and other comprehensive income (loss)... 173.9 173.9
------ ------
Total stockholder's equity............................. 372.1 372.1
------ ------
Total capitalization................................. $721.1 $718.2
====== ======
|
SELECTED HISTORICAL FINANCIAL INFORMATION
The following tables present our selected historical financial data. The statement of income, cash flow and other data for each of the three years in the period ended December 31, 2001 and the balance sheet data as of December 31, 2000 and 2001 have been derived from our audited consolidated financial statements and related notes, which appear elsewhere in this prospectus. The statement of income, cash flow and other data for the three months ended March 31, 2001 and 2002, and the balance sheet data as of March 31, 2002, have been derived from our unaudited consolidated financial statements and related notes, which appear elsewhere in this prospectus. The statement of income, cash flow and other data for each of the years ended December 31, 1997 and 1998, and the balance sheet data as of December 31, 1997, 1998 and 1999 have been derived from our audited consolidated financial statements and related notes that are not included in this prospectus. The balance sheet data as of March 31, 2001 have been derived from our unaudited consolidated financial statements and related notes that are not included in this prospectus. You should read the following information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and related notes appearing elsewhere in this prospectus. The following results are net of intercompany transactions.
(DOLLARS IN MILLIONS)
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------- -------------------
1997 1998 1999 2000 2001 2001 2002
----------- ----------- -------- -------- -------- -------- --------
STATEMENT OF INCOME DATA:
Revenues............................ $1,517.1 $1,746.1 $1,761.4 $1,932.1 $1,672.4 $ 495.6 $ 371.8
Cost of sales....................... 1,253.0 1,400.4 1,457.9 1,584.6 1,422.8 406.8 310.1
-------- -------- -------- -------- -------- -------- --------
Gross profit........................ 264.1 345.7 303.5 347.5 249.6 88.8 61.7
Selling, general and administrative
expenses.......................... 173.9 203.4 233.0 257.8 262.4 64.9 55.1
Amortization of goodwill............ 11.7 11.7 12.2 12.6 12.9 3.2 --
Restructuring charges (credits)..... 8.0 (1.6) -- 13.9 8.8 -- --
Loss on sale of dealers............. -- -- -- -- 10.4 -- --
-------- -------- -------- -------- -------- -------- --------
Operating profit (loss)............. $ 70.5 $ 132.2 $ 58.3 $ 63.2 $ (44.9) $ 20.7 $ 6.6
Interest expense.................... (14.5) (14.0) (19.0) (21.2) (23.1) (5.2) (5.5)
Other income (expense), net......... (3.7) 2.2 1.8 (4.4) 4.6 1.7 2.1
Minority interest income............ -- 1.0 1.0 1.1 0.8 0.2 0.2
Income tax provision (benefit)...... 13.6 46.3 18.4 17.4 (14.5) 7.8 (0.9)
Cumulative effect of accounting
changes, net-of-tax(1)............ -- -- -- -- (1.3) (1.3) --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)................... $ 38.7 $ 75.1 $ 23.7 $ 21.3 $ (49.4) $ 8.3 $ 4.3
======== ======== ======== ======== ======== ======== ========
CASH FLOW DATA:
Provided by operating activities.... $ 127.4 $ 81.0 $ 79.4 $ 62.6 $ 31.0 12.7 28.6
Used for investing activities....... (36.9) (77.1) (116.1) (59.7) (47.2) (10.7) (5.4)
Provided by (used for) financing
activities........................ (114.7) 0.6 47.4 (10.1) 52.3 8.1 (27.9)
OTHER DATA:
Capital expenditures................ $ 25.6 $ 63.9 $ 46.2 $ 51.8 $ 53.5 $ 9.7 $ 6.2
Product development costs........... 32.5 38.6 41.4 43.9 44.7 10.5 9.6
Dividends to NACCO.................. 15.3 -- -- 10.0 5.0 -- 15.0
Ratio of earnings to fixed
charges(2)........................ 4.0x 7.9x 2.9x 2.4x -- 3.1x 1.2x
Units sold.......................... 66,833 77,636 76,055 84,825 68,929 21,624 14,971
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents........... $ 17.1 $ 22.2 $ 31.1 $ 24.4 $ 59.6 $ 34.0 $ 54.9
Working capital(3).................. 54.5 125.8 146.3 107.4 (150.0) 135.6 (159.6)
Total assets........................ 942.4 1,100.4 1,178.6 1,241.7 1,205.1 1,242.1 1,186.6
Total debt.......................... 156.8 200.2 270.7 304.9 362.4 316.9 349.0
Stockholder's equity................ 384.9 462.0 468.7 463.0 382.0 456.1 372.1
|
(footnotes on following page)
(1) As a result of the adoption of Statement of Financial Accounting Standard No. 133, we recognized a cumulative effect of a change in accounting charge for the year ended December 31, 2001 of $0.9 million, net of $0.5 million of tax benefit, relating primarily to certain interest rate swap agreements that did not qualify for hedge accounting treatment at January 1, 2001. On January 1, 2001, we recognized a cumulative effect of a change in accounting charge of $0.4 million, net of $0.3 million of tax benefit, relating to a change in the method of calculating pension costs for our defined benefit pension plan in the United Kingdom. See Note 2 in our consolidated financial statements for the year ended December 31, 2001 included elsewhere in this offering circular for further information on these charges.
(2) The ratio of earnings to fixed charges is determined by dividing income
(loss) before income taxes, minority interest and cumulative effect of
accounting changes, adjusted for equity in earnings and distributions
received from equity investees, interest expense, debt expense amortization,
capitalized interest and the portion of rental expense deemed representative
of an interest factor by the sum of interest expense, debt expense
amortization, capitalized interest and the portion of rental expense deemed
representative of the interest factor. For the year ended December 31, 2001,
earnings were insufficient to cover fixed charges by $66.8 million.
(3) As of December 31, 2001 and March 31, 2002, includes $265.0 million of debt outstanding under our existing credit facility and classified as a current liability in accordance with U.S. generally accepted accounting principles.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Set forth below is a discussion and analysis of our financial condition and results of operations. You should read this discussion and analysis together with the financial statements and the related notes appearing elsewhere in this offering circular. Historical results and percentage relationships set forth in the consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations.
OVERVIEW
We design, manufacture and market industrial lift trucks through our manufacturing and assembly operations and our owned dealers. We operate our manufacturing and assembly operations, which we sometimes refer to as NMHG Wholesale, through our wholly owned subsidiary, NACCO Materials Handling Group, Inc. Our owned dealer operations, which we sometimes refer to as NMHG Retail, are conducted through our wholly owned subsidiary, NMHG Distribution Co. Through NMHG Wholesale and NMHG Retail, we design, engineer, manufacture, sell, service and lease a comprehensive line of lift trucks and aftermarket parts and service marketed globally under the Hyster and Yale brand names.
Demand for lift trucks is cyclical and depends upon capital budgeting in the diverse end markets where lift trucks are sold. We believe our market, like the broader global economy, is poised for growth. Prior to the recent downturn in the economy, we developed and began implementing our 2001 Restructuring Program, which included the closure of our Danville, Illinois assembly facility, labor and overhead reductions and restructuring of our owned dealers, which resulted in non-recurring items and one-time pre-tax charges of $47.8 million in 2001. This program reduced costs and more closely aligned our operations with the demand for our products and services.
In addition to the 2001 Restructuring Program, we have developed and are implementing a Global Cost Reduction Program which encompasses lean manufacturing, global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reduction and improvements in our owned dealers. These programs are designed to enhance our competitive position and improve our overall cost structure. We believe this program has positioned us to take advantage of the anticipated recovery in the capital goods market, and will result in reduced fixed overhead costs, lower manufacturing costs and improvements in both our gross margins and operating profit.
NMHG Retail includes the elimination of intercompany revenues and profits resulting from sales by NMHG Wholesale to NMHG Retail.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to product discounts and returns, bad debts, inventories, income taxes, warranty obligations, product liabilities, restructuring, pensions and other post-retirement benefits and contingencies and litigation. We base our estimates on historical experience, actuarial valuations and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Product liabilities. We provide for the estimated cost of personal and property damage relating to our products. Reserves are made for estimates of the costs for known claims and estimates of the costs of incidents that have occurred but a claim has not yet been reported to us. While we engage in extensive
product quality reviews and customer education programs, our product liability provision is affected by the number and magnitude of claims of alleged product-related damage and the cost to defend those claims. In addition, the provision for product liabilities is also affected by changes in assumptions for medical costs, inflation rates, trends in damages awarded by juries and estimates of the number of claims that have been incurred but not yet reported. Changes to the estimate of any of these factors could result in a material change to our product liability provision causing a related increase or decrease in reported net operating results in the period of change in the estimate.
Revenue recognition. Revenues are generally recognized when customer orders are completed and shipped. Reserves for discounts, returns and product warranties are maintained for anticipated future claims. The accounting policies used to develop these product discounts, returns and warranties include:
- Product discounts. We record estimated reductions to revenues for customer programs and incentive offerings, including special pricing agreements, price competition, promotions and other volume-based incentives. If market conditions were to decline or if competition was to increase, we may take actions to increase customer incentive offerings possibly resulting in an incremental reduction of revenues at the time the incentive is offered.
- Product returns. Based on our historical experience, a portion of products sold is estimated to be returned due to reasons such as buyer remorse, product failure and excess inventory stocked by the customer which, subject to certain terms and conditions, we will agree to accept. We record estimated reductions to revenues at the time of sale based on this historical experience. If future trends were to change significantly from those experienced in the past, incremental reductions to revenues may result based on this new experience.
- Product warranties. We provide for the estimated cost of product warranties at the time revenues are recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is affected by product failure rates, material usage and replacement component costs incurred in correcting a product failure. Should actual product failure rates, material usage or replacement component costs differ from our estimates, revisions to the estimated warranty liability would be required.
Allowances for doubtful accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventory reserves. We write down our inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by our management, additional inventory write-downs may be required.
Deferred tax valuation allowances. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount (including the valuation allowance), an adjustment to the deferred tax asset would increase income in the period such determination was made. Conversely, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be expensed in the period such determination was made.
FINANCIAL REVIEW
The segment and geographic results of our operations were as follows (in millions):
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ---------------
1999 2000 2001 2001 2002
-------- -------- -------- ------ ------
REVENUES
Wholesale
Americas......................... $1,149.5 $1,291.6 $1,031.1 $327.5 $228.3
Europe, Africa and Middle East... 406.3 394.6 363.9 99.6 84.6
Asia-Pacific..................... 63.1 63.8 68.3 15.8 14.8
-------- -------- -------- ------ ------
Total wholesale................ 1,618.9 1,750.0 1,463.3 442.9 327.7
-------- -------- -------- ------ ------
Retail (net of eliminations)
Americas......................... 32.1 33.1 30.9 8.4 7.6
Europe, Africa and Middle East... 83.0 97.3 106.8 24.9 16.1
Asia-Pacific..................... 27.4 51.7 71.4 19.4 20.4
-------- -------- -------- ------ ------
Total retail................... 142.5 182.1 209.1 52.7 44.1
-------- -------- -------- ------ ------
NMHG consolidated................... $1,761.4 $1,932.1 $1,672.4 $495.6 $371.8
======== ======== ======== ====== ======
OPERATING PROFIT (LOSS)
Wholesale
Americas......................... $ 70.4 $ 78.5 $ 10.0 $ 24.1 $ 9.2
Europe, Africa and Middle East... 7.4 2.3 (13.7) 0.7 (2.8)
Asia-Pacific..................... (3.3) (2.3) (1.8) (0.7) --
-------- -------- -------- ------ ------
Total wholesale................ 74.5 78.5 (5.5) 24.1 6.4
-------- -------- -------- ------ ------
Retail (net of eliminations)
Americas......................... (3.9) (0.9) (2.4) (0.9) 0.2
Europe, Africa and Middle East... (10.6) (15.3) (34.8) (3.9) 0.3
Asia-Pacific..................... (1.7) 0.9 (2.2) 1.4 (0.3)
-------- -------- -------- ------ ------
Total retail................... (16.2) (15.3) (39.4) (3.4) 0.2
-------- -------- -------- ------ ------
NMHG consolidated................... $ 58.3 $ 63.2 $ (44.9) $ 20.7 $ 6.6
======== ======== ======== ====== ======
OPERATING PROFIT (LOSS) EXCLUDING
GOODWILL AMORTIZATION
Wholesale
Americas......................... $ 78.2 $ 86.4 $ 17.8 $ 26.1 $ 9.2
Europe, Africa and Middle East... 11.0 5.7 (10.4) 1.5 (2.8)
Asia-Pacific..................... (3.1) (2.0) (1.5) (0.6) --
-------- -------- -------- ------ ------
Total wholesale................ 86.1 90.1 5.9 27.0 6.4
-------- -------- -------- ------ ------
Retail (net of eliminations)
Americas......................... (3.6) (0.8) (2.1) (0.8) 0.2
Europe, Africa and Middle East... (10.3) (14.7) (34.4) (3.8) 0.3
Asia-Pacific..................... (1.7) 1.2 (1.4) 1.5 (0.3)
-------- -------- -------- ------ ------
Total retail................... (15.6) (14.3) (37.9) (3.1) 0.2
-------- -------- -------- ------ ------
NMHG consolidated................... $ 70.5 $ 75.8 $ (32.0) $ 23.9 $ 6.6
======== ======== ======== ====== ======
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THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ---------------
1999 2000 2001 2001 2002
-------- -------- -------- ------ ------
OTHER -- NET
Wholesale........................... $ 4.8 $ (4.6) $ 4.2 $ 1.7 $ 2.1
Retail (net of eliminations)........ (3.0) 0.2 0.4 -- --
-------- -------- -------- ------ ------
NMHG consolidated................... $ 1.8 $ (4.4) $ 4.6 $ 1.7 $ 2.1
======== ======== ======== ====== ======
NET INCOME (LOSS)
Wholesale........................... $ 39.0 $ 37.0 $ (14.1) $ 12.4 $ 5.6
Retail (net of eliminations)........ (15.3) (15.7) (35.3) (4.1) (1.3)
-------- -------- -------- ------ ------
NMHG consolidated................... $ 23.7 $ 21.3 $ (49.4) $ 8.3 $ 4.3
======== ======== ======== ====== ======
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Other -- net for NMHG Wholesale includes equity in earnings (loss) of unconsolidated affiliates and discounts on the sale of accounts receivable. Equity in the earnings (loss) of unconsolidated affiliates, including Sumitomo-NACCO Materials Handling Group, or S-N, a 50%-owned joint venture with Sumitomo Heavy Industries, Ltd., in Japan, were $2.3 million in 1999, ($0.2) million in 2000, $2.6 million in 2001, $1.4 million for the three months ended March 31, 2001 and $1.0 million for the three months ended March 31, 2002. Discounts on the sale of receivables included in other -- net were $3.8 million in 1999, $5.5 million in 2000, $4.7 million in 2001, $1.5 million for the three months ended March 31, 2001 and $0.3 million for the three months ended March 31, 2002. For the year ended December 31, 2001, other -- net includes non-recurring insurance proceeds of $8.0 million relating to flood damage in September 2000 at S-N. For the year ended December 31, 1999, other -- net for NMHG Wholesale included non-recurring income of $0.9 million for settlements from legal proceedings.
FIRST QUARTER OF 2002 COMPARED WITH FIRST QUARTER OF 2001
Our revenues decreased 25% to $371.8 million in the first quarter of 2002 from $495.6 million in the first quarter of 2001. Revenues at NMHG Wholesale decreased to $327.7 million in the first quarter of 2002, down 26.0% from $442.9 million in the first quarter of 2001. This decrease is primarily due to a decline in unit volume period over period. Beginning in the second quarter of 2001, an economic slowdown in the U.S. economy, which was further recessed by the events of September 11, 2001, caused a steep drop in the demand for lift trucks, as well as for other capital goods, in North America. Although worldwide lift truck shipments have increased in the first quarter of 2002 to 14,971 units as compared with 14,452 units in the third quarter of 2001 and 14,451 units in the fourth quarter of 2001, unit volume is down 30.8% as compared with 21,624 units shipped in the first quarter of 2001. NMHG Wholesale's revenues also declined due to lower parts sales resulting from reduced lift truck utilization which is typical in this stage of a capital goods recession.
Revenues at NMHG Retail decreased to $44.1 million in the first quarter of 2002 from $52.7 million in the first quarter of 2001. This decrease is primarily due to the sale of retail dealerships in the fourth quarter of 2001 (the "sold operations"), which were included in the results for the first quarter of 2001, and decreased revenues from rental, service and parts, partially offset by a decrease in the elimination of sales between wholesale and retail.
We recorded operating profit of $6.6 million in the first quarter of 2002 compared to an operating profit of $20.7 million in the first quarter of 2001. Operating profit at NMHG Wholesale decreased to $6.4 million in the first quarter of 2002 from $24.1 million in the first quarter of 2001. The decrease in operating profit was primarily driven by reduced unit and parts volume and the consequent negative impact of lower shipments on manufacturing overhead absorption. The decline in operating profit was partially offset by a shift in mix to higher margin lift trucks; the positive impact from improvement programs initiated in 2001, including the completion of the Danville, Illinois plant closure in the fourth quarter of 2001 and the benefits of procurement, restructuring and cost control programs; and the elimination of goodwill amortization as a
result of the adoption of SFAS No. 142. See Note 3 and Note 4 to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this prospectus for a discussion of the NMHG Wholesale restructuring programs and the adoption of SFAS No. 142, respectively.
NMHG Retail generated an operating profit of $0.2 million in the first quarter of 2002 compared with an operating loss of $3.4 million in the first quarter of 2001. The improved operating results are primarily due to decreased operating expenses at comparable dealerships, the elimination of operating losses incurred by the sold operations in the first quarter of 2001 and operating profit from a rental company acquired subsequent to the first quarter of 2001. These improvements were partially offset by non-cash charges of $0.8 million incurred by Asia-Pacific. Improved operating expenses at comparable dealerships reflect the favorable impact of restructuring programs initiated in 2001, especially in Europe. See a discussion of the NMHG Retail Europe restructuring plan in Note 3 to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this prospectus. In addition to the restructuring program in Europe, NMHG Retail implemented other initiatives in 2001, which are expected to benefit results significantly in 2002.
Net income for the first quarter of 2002 was $4.3 million, as compared with net income of $8.3 million in the first quarter of 2001. NMHG Wholesale's net income decreased to $5.6 million in the first quarter of 2002 from $12.4 million in the first quarter of 2001 as a result of the factors affecting operating profit and increased interest expense partially offset by an increase in other income and a favorable tax benefit of $1.9 million recognized in the first quarter of 2002 relating to previous losses in China. In addition, NMHG Wholesale's first quarter of 2001 net income includes a charge of $1.3 million for the cumulative effect of changes in accounting for derivatives and certain pension costs. Other-net improved in the first quarter of 2002 primarily due to a favorable impact from the mark-to-market adjustment related to certain ineffective interest rate swap agreements and a reduction in the discount on the sale of accounts receivable as a result of the termination of the domestic NMHG Wholesale accounts receivable securitization program during the fourth quarter of 2001.
Net loss at NMHG Retail in the first quarter of 2002 was $1.3 million compared to a net loss of $4.1 million in the first quarter of 2001. Improved net results are due to the factors affecting operating profit combined with a decrease in interest expense, partially offset by decrease in the effective tax rate benefit.
Market demand for lift trucks improved in the first quarter of 2002 compared with the last three quarters of 2001. NMHG Wholesale's worldwide backlog at the end of the first quarter of 2002 increased 8% to 16,300 units, compared with 15,100 units at the end of the fourth quarter of 2001. Backlog increased 16%, compared with 14,100 units at the end of the second quarter of 2001, and increased 13%, compared with 14,400 units at the end of the third quarter of 2001. Backlog at the end of the first quarter of 2001 was 17,800 units.
2001 COMPARED WITH 2000
Our revenues decreased 13.4% to $1,672.4 million in 2001 from $1,932.1 million in 2000. Revenues at NMHG Wholesale decreased 16.4% to $1,463.3 million in 2001 from $1,750.0 million in 2000. A steep drop in the lift truck segment of the broader capital goods market in North America resulted in an 18.7% reduction in worldwide lift truck shipments at NMHG Wholesale. A total of 68,929 units were shipped in 2001 compared with 84,825 units shipped in 2000. The rate of monthly retail orders in the United States and Canada declined approximately 50% from the peak month in 2000 as compared with the lowest month in 2001. NMHG Wholesale's revenues also declined due to lower aftermarket parts sales resulting from reduced lift truck utilization which is typical in this stage of a capital goods recession. The decrease in revenues, which was primarily driven by unit volume, was partially offset by a shift in mix to higher-priced lift trucks.
Revenues at NMHG Retail increased 14.8% to $209.1 million for 2001 from $182.1 million for 2000 largely as a result of the effect of a full year of revenues in 2001 from dealerships acquired in Asia-Pacific in the fourth quarter of 2000. This revenue growth was partially offset by lower aftermarket parts and service revenues and unfavorable pricing and product mix.
We recorded an operating loss of $44.9 million in 2001 compared to an operating profit of $63.2 million in 2000. Operating profit at NMHG Wholesale decreased to an operating loss of $5.5 million for 2001 from an operating profit of $78.5 million for 2000. The decrease in operating profit was largely due to reduced unit and aftermarket parts volume and resulting reductions in the absorption of manufacturing overhead costs and related manufacturing inefficiencies. Additionally, operating profit was adversely affected at NMHG Wholesale by $12.0 million of expenses incurred during 2001 related to the Danville, Illinois plant closure announced in 2000 and a restructuring charge of $4.5 million recognized in 2001 for cost reductions in Europe. These 2001 charges compare with a restructuring charge of $13.9 million recognized in 2000 for the Danville plant closure. See below under "-- Restructuring Plans" for a further discussion of these restructuring charges. The decline in operating profit at NMHG Wholesale was offset somewhat by favorable foreign currency effects, lower incentive compensation costs and an increase in the average sales price per unit.
Operating loss at NMHG Retail in 2001 was $39.4 million compared with an operating loss of $15.3 million in 2000. The increase in operating loss at NMHG Retail was primarily due to several non-recurring special adjustments in 2001. The majority of these special adjustments were recognized in Europe, which accounted for a significant portion of NMHG Retail's 2001 operating loss. The 2001 operating loss includes a charge of $10.4 million for a loss on the sale of certain owned dealers in Germany to ZEPPELIN GmbH and related wind down costs. See Note 4 to the consolidated financial statements for the fiscal year ended December 31, 2001 included elsewhere in this prospectus for a discussion of this transaction. The 2001 operating loss also includes a $4.7 million restructuring charge for downsizing to match current levels of demand at retail operations in Europe that NMHG Retail had acquired over the last few years. In addition, the 2001 operating loss includes charges of approximately $7.1 million to reduce asset values and increase reserves reflective of the weakened capital goods markets, establish full accounting consistency among owned dealers on a global basis and to cause those dealers previously reporting on a one-month lag to report on months consistent with the rest of NMHG.
We recorded a net loss for 2001 of $49.4 million as compared with net income of $21.3 million for 2000. NMHG Wholesale recorded a net loss for 2001 of $14.1 million as compared with net income of $37.0 million for 2000. The decline in net operating results at NMHG Wholesale was due to the factors affecting operating profit at NMHG Wholesale, the effect of nondeductible goodwill amortization and an increase in the valuation allowance on the tax provision and due to a $1.3 million after-tax charge for the cumulative effect of accounting changes in 2001. See Note 2 to the consolidated financial statements for the fiscal year ended December 31, 2001 included elsewhere in this prospectus for a discussion of these accounting changes. The decline in operating results at NMHG Wholesale for 2001 as compared with 2000 was offset somewhat by insurance proceeds resulting in income of $5.0 million after-tax recognized in 2001 relating to flood damage in September 2000 at a facility owned by S-N.
Net loss at NMHG Retail was $35.3 million for 2001 compared with $15.7 million for 2000, primarily due to the factors affecting operating loss combined with an increase in interest expense allocated to NMHG Retail.
Our worldwide backlog level decreased to 15,100 units at December 31, 2001 from 21,800 units at December 31, 2000 primarily due to decreased demand for lift trucks in the Americas. The backlog level at December 31, 2001 increased slightly as compared to the level at September 30, 2001 of 14,400 units primarily due to an increase in lift truck demand in the Americas and Asia-Pacific.
RESTRUCTURING PLANS
In 2001, management committed to the restructuring of certain operations in Europe. As such, NMHG Wholesale recognized a restructuring charge of approximately $4.5 million pre-tax for severance and other employee benefits to be paid to approximately 285 manufacturing and administrative personnel in Europe. NMHG Retail recognized a restructuring charge of approximately $4.7 million pre-tax, of which $0.4 million relates to lease termination costs and $4.3 million relates to severance and other employee benefits to be paid to approximately 140 service technicians, salesmen and administrative personnel at wholly owned dealers in
Europe. As of March 31, 2002, $1.9 million had been paid to approximately 175 employees at NMHG Wholesale, and $1.1 million had been paid to approximately 50 employees at NMHG Retail.
NMHG Wholesale recognized $1.2 million of pre-tax benefits in the first quarter of 2002 as a result of the reduced headcount in Europe, and estimates pre-tax benefits for the remainder of the year at $6.8 million. NMHG Retail recognized pre-tax benefits of approximately $0.5 million in the first quarter of 2002 related to its European restructuring plan and estimates pre-tax benefits for the remainder of the year at $2.3 million. These estimates of future benefits are subject to change during the execution of the restructuring plans.
In 2000, our board of directors approved management's plan to transfer manufacturing activities from our Danville, Illinois, assembly plant to our other global manufacturing plants. The adoption of this plan resulted in $11.7 million of costs accrued in 2000, relating to retirement costs, medical costs and employee severance to be paid to approximately 425 manufacturing and office personnel. In addition, an impairment charge of $2.2 million was recognized in 2000 as a result of the anticipated disposition of certain assets at an amount below net book value. During 2001, payments for severance and other benefits of $1.7 million were made to approximately 350 employees. In addition, the accrual for severance was reduced by $0.4 million. In the first quarter of 2002, severance payments of $1.8 million were made to approximately 200 employees. Approximately $12.0 million of pre-tax costs associated with the Danville phase-out, which were not eligible for accrual as of December 31, 2000, were expensed during 2001.
During the first quarter of 2002, NMHG Wholesale recognized a charge of approximately $0.6 million, which had not previously been accrued, related primarily to idle facility costs for the manufacturing plant in Danville. NMHG Wholesale recognized pre-tax benefits of approximately $3.2 million in the first quarter of 2002 related to this program. Pre-tax benefits, net of idle facility costs, are estimated to be $7.6 million for the remainder of 2002 and $12.5 million thereafter, as a result of anticipated improved manufacturing efficiencies depending on unit volume. These estimates could change during the phase-out period.
2000 COMPARED WITH 1999
Our revenues increased to $1,932.1 million in 2000 from $1,761.4 million in 1999. Revenues at NMHG Wholesale increased to $1,750.0 million in 2000 from $1,618.9 million in 1999. Revenues at NMHG Wholesale increased as a result of unit and service aftermarket parts volume growth, primarily in the Americas, and a shift in mix to higher revenue units, partially offset by adverse currency effects. Worldwide volume increased 11.5% to 84,825 units shipped during 2000 from 76,055 units shipped during 1999. Adverse currency effects on revenues resulted primarily from (i) translating a weakened British pound sterling into U.S. dollars and (ii) transactions denominated in a weakened euro as compared with the British pound sterling, which caused revenues that were invoiced in euros to decline when translated back to the British pound sterling.
Revenues at NMHG Retail increased $39.6 million, or 27.8%, due to acquisitions of dealers in Asia-Pacific and, to a lesser degree, Europe. Revenues from volume growth at comparable dealerships also contributed slightly to the increase in revenues but were entirely offset by adverse currency effects in Europe and an increase in the elimination of intercompany shipments from NMHG Wholesale to NMHG Retail.
Our operating profit for 2000 was $63.2 million, as compared to operating profit in 1999 of $58.3 million. Operating profit at NMHG Wholesale of $92.4 million, which excludes the Danville restructuring charge of $13.9 million discussed above, as a percentage of revenues was 5.3% in 2000. This percentage in 2000 compares with operating profit as a percentage of revenues at NMHG Wholesale in 1999 of 4.6%. Improved operating profit in 2000 as compared with 1999 was primarily due to (i) volume growth and related manufacturing efficiencies and (ii) a shift in the mix of products sold to higher margin units, partially offset by adverse currency effects in Europe. Including the restructuring charge, operating profit as a percentage of revenues at NMHG Wholesale was 4.5% in 2000.
Excluding the Danville restructuring charge, net income at NMHG Wholesale increased as a result of the factors affecting operating profit. However, the increase was partially offset by a decrease in equity in
earnings of unconsolidated affiliates of $2.5 million, primarily due to losses for flood damages at a facility owned by S-N.
Operating results at NMHG Retail for 2000 in the Americas improved as compared with the prior year primarily due to a decrease in administrative support costs. Operating results at NMHG Retail for 2000 in Asia-Pacific improved as compared with the prior year primarily due to favorable operating results contributed by current year acquisitions. Increased net loss was driven by increased losses in Europe, primarily due to increased pricing competition as a result of a weak euro and due to continued integration, infrastructure, interest, amortization and administrative costs necessary to strengthen retail distribution.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2002, we had available $85.0 million of our $350.0 million revolving credit facility, which would have expired in June 2002. We also had separate facilities with availability, net of limitations, of $63.5 million, of which $29.2 million was available at March 31, 2002.
On May 9, 2002, we refinanced our prior financing agreement, an unsecured floating-rate revolving line of credit with availability of $350.0 million, certain other lines of credit with availability of $4.6 million and a program to sell accounts receivable in Europe, with the proceeds from the sale of the outstanding notes and borrowings under a secured, floating-rate revolving credit facility which expires in May 2005.
Availability under the new revolving credit facility is up to $175.0 million and is governed by a borrowing base based on advance rates against the inventory and accounts receivable of the "borrowers." The borrowers, as defined in the new revolving credit facility, include NMHG Holding Co. and certain domestic and foreign subsidiaries of NMHG Holding Co. Borrowings bear interest at a floating rate, which can be either a base rate or LIBOR, as defined, plus an applicable margin. The initial applicable margin, effective through September 30, 2002, for base rate loans and LIBOR loans is 2.00% and 3.00%, respectively. Subsequent to September 30, 2002, the margin will be subject to adjustment based on a leverage ratio. The new revolving credit facility also requires a fee of 0.5% per annum on the unused commitment.
At May 9, 2002, the borrowing capacity under this facility was $109.7 million and the domestic floating rate of interest applicable to this facility was 6.75%, including the applicable margin. The new revolving credit facility will include a subfacility for foreign borrowers to be denominated in British pounds sterling or euro. Included in the borrowing capacity is a $15.0 million overdraft facility available to foreign borrowers. The initial applicable margin, effective through September 30, 2002 for overdraft loans is 3.25% above the London base rate, as defined. The new revolving credit facility is guaranteed by certain domestic and foreign subsidiaries of NMHG Holding Co. and secured by substantially all of the assets, other than property, plant and equipment, of the borrowers and guarantors, both domestic and foreign, under the facility. See "Description of Other Indebtedness" for further information on our new revolving credit facility.
Certain lines of credit and term loans, with availability of $40 million Australian dollars, or approximately $21.7 million U.S. dollars, and facilities totaling $5.5 million in China and Hong Kong, which were not refinanced, reduce the availability under the new revolving credit facility.
As a result of the refinancing, we expect our interest expense to increase significantly as compared with prior periods. In addition, a significant portion of NMHG's interest rate swap agreements will no longer qualify for hedge accounting treatment in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." As such, the mark-to-market of these interest rate swap agreements will be recognized in the statement of operations. Prior to the refinancing, the mark-to-market of these interest rate swap agreements was recognized as a component of other comprehensive income (loss) in stockholders' equity. The balance in other comprehensive income (loss) for all of our interest rate swap agreements was a loss of $2.4 million at March 31, 2002.
We are currently engaged in discussions with a non-U.S. financial institution to obtain a new European revolving credit facility which would provide up to 30 million British pounds sterling (approximately $43 million) of borrowing availability for certain of our European subsidiaries to be used for, among other things, working capital requirements, permitted capital expenditures and other lawful corporate purposes of
those European subsidiaries. Our ability to enter into this European credit facility is subject to the terms and conditions of the new revolving credit facility and the notes and would replace or refinance the foreign subfacilities under the new revolving credit facility. The obligations under this European credit facility are expected to be secured by substantially the same assets that will secure the obligations under the foreign subfacilities of the new revolving credit facility and will contain other customary limitations, covenants and restrictions.
We believe that funds available under the new revolving credit facility, other lines of credit and operating cash flows are sufficient to finance all of our operating needs and commitments arising during the foreseeable future.
Following is a table which summarizes our contractual obligations (in millions) as of December 31, 2001:
CONTRACTUAL OBLIGATIONS PAYMENT DUE BY PERIOD
----------------------------------- ------------------------------------------------------------
TOTAL 2002 2003 2004 2005 2006 THEREAFTER
------ ------ ----- ----- ----- ----- ----------
Revolving credit facility.......... $265.0 $265.0 $ -- $ -- $ -- $ -- $ --
Other lines of credit(1)........... 44.2 44.2 -- -- -- -- --
Term loans(1)...................... 16.0 13.0 1.4 1.6 -- -- --
Capital lease obligations including
principal and interest(1)........ 40.7 12.5 12.7 7.3 4.6 2.5 1.1
Off-balance-sheet operating lease
obligations(1)................... 141.6 40.4 32.1 26.0 19.0 13.3 10.8
Unconditional purchase
obligations...................... 4.3 0.4 0.8 0.6 0.9 0.2 1.4
------ ------ ----- ----- ----- ----- -----
Total contractual cash
obligations................... $511.8 $375.5 $47.0 $35.5 $24.5 $16.0 $13.3
====== ====== ===== ===== ===== ===== =====
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(1) An event of default under the notes, the new revolving credit facility agreement, in our other term loan and revolving agreements or in our operating or capital lease agreements, could cause an acceleration of the payment schedule. No such event of default has occurred or is anticipated to occur.
During the first quarter of 2002, NMHG Retail entered into operating lease agreements, primarily for rental equipment, with future minimum lease payments of approximately $5.5 million in 2002, $4.5 million in 2003, $3.3 million in 2004, $3.0 million in 2005, $2.7 million in 2006 and $1.6 million thereafter, for a total increase in NMHG's operating lease obligations of $20.6 million since December 31, 2001.
In addition, we had the following commitments at March 31, 2002 (in millions):
TOTAL
------
Standby recourse or repurchase obligations.......... $145.6
Guarantees.......................................... 7.8
------
Total commercial commitments...................... $153.4
======
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The guarantees and standby recourse or repurchase obligations primarily represent contingent liabilities assumed by NMHG to support financing agreements made between our dealers and customers and third-party finance companies for the purchase of lift trucks from Hyster and Yale. These contingent liabilities may take the form of guarantees of residual values or standby recourse or repurchase obligations. For transactions involving contingent liabilities, we generally maintain a perfected security interest in the equipment financed, such that we could take possession of the lift truck in the event that we would become liable under the terms of the guarantee or standby recourse or repurchase obligation. Generally, these obligations are due upon demand in the event of default by the dealer or customer.
We have a 20% ownership interest in NMHG Financial Services, Inc., or NFS,
a joint venture with General Electric Capital Corporation, or GECC, formed
primarily for the purpose of providing financial services to independent and
wholly owned Hyster and Yale lift truck dealers in the United States. Our
ownership in NFS is accounted for using the equity method of accounting.
Generally, we sell lift trucks
through our independent dealer network or directly to Hyster or Yale customers. These dealers and customers may enter into financing arrangements with NFS or another unrelated third-party finance company. If the dealer or customer elects to finance lift trucks with NFS, this financing is considered a retail funding activity transaction. The total NFS retail funding activity transactions for 2001 were $127.5 million and $123.7 million for Hyster customers and Yale customers, respectively.
However, for certain transactions, we invoice directly to NFS so that the dealer or customer can obtain operating lease financing from NFS. Sales to NFS related to these types of transactions for the years ended December 31, 1999, 2000 and 2001 were $8.5 million, $17.5 million and $31.2 million, respectively, and sales to NFS related to these types of transactions for the three months ended March 31, 2001 and 2002 were $8.8 million and $7.4 million, respectively. Amounts receivable from NFS at December 31, 2001 and March 31, 2002 were immaterial. From time to time, the credit quality of the customer or concentration issues with GECC necessitate providing standby recourse or repurchase obligations or a guarantee of the residual values of the lift trucks purchased by customers and financed through NFS.
We have reserved for losses under the terms of the guarantees or standby recourse or repurchase obligations in our consolidated financial statements. Historically, we have not had significant losses in respect of these obligations. In the past three years, approximately three customers for which we provided a guarantee or have a standby recourse or repurchase obligation have defaulted under their obligations to NFS. During this period, we exercised our rights in the lift trucks purchased with the borrowed funds on all three occasions. The net losses resulting from these customer defaults did not have a material impact on our results of operations or financial position.
In addition to providing financing to our independent dealers, NFS provides both lease and debt financing to us. Operating lease obligations relate to specific sale-leaseback-sublease transactions for certain of our customers whereby we sell lift trucks to NFS, we lease these lift trucks back under an operating lease agreement and we sublease those lift trucks to customers under an operating lease agreement. Debt financing includes long-term notes payable to NFS primarily to finance certain of our long-term notes receivable from Latin American customers, which arise in the ordinary course of business. In addition, NFS provides, on our behalf, installment billings to the Latin American customers, account balance tracking and an inventory management system to track the equipment covered by the long-term notes payable. Total obligations to NFS under the operating lease agreements and long-term notes payable were $20.3 million and $20.1 million at December 31, 2001 and March 31, 2002, respectively.
In addition, we are reimbursed annually for certain services, primarily administrative functions, provided to NFS. The amount of our expenses reimbursable by NFS were $1.1 million, $1.5 million and $1.8 million for 1999, 2000 and 2001, respectively, and were $0.4 million and $0.5 million for the three months ended March 31, 2001 and 2002, respectively.
CAPITAL EXPENDITURES
Expenditures for property, plant and equipment were $5.4 million for NMHG Wholesale and $0.8 million for NMHG Retail during the first three months of 2002. These capital expenditures include tooling for new products, machinery, equipment and retail lease and rental fleet. NMHG Wholesale anticipates spending approximately $15.1 million for property, plant and equipment in the remainder of 2002, compared with total capital expenditures of $46.6 million in 2001 and $43.3 million in 2000. NMHG Retail anticipates spending approximately $1.7 million for property, plant and equipment in the remainder of 2002, compared with capital expenditures of $6.9 million in 2001 and $8.5 million in 2000. Our planned expenditures in 2002 include further investments in manufacturing equipment, tooling for new products and retail lease and rental fleet. The principal sources of financing for these capital expenditures are expected to be internally generated funds and facility borrowings.
CAPITAL STRUCTURE
NMHG Wholesale's capital structure is presented below:
(DOLLARS IN MILLIONS)
AS OF AS OF
DECEMBER 31, MARCH 31,
2001 2002
------------ ---------
NMHG Wholesale
Total net tangible assets................................. $ 375.2 $ 369.5
Advances to NMHG Retail................................... 70.2 62.1
Goodwill at cost.......................................... 446.0 445.1
------- -------
Net assets before goodwill amortization................ 891.4 876.7
Accumulated goodwill amortization......................... (141.4) (140.5)
Advances from NACCO....................................... (8.0) --
Other debt................................................ (300.9) (300.2)
Minority interest......................................... (2.3) (2.1)
------- -------
Stockholder's equity................................... $ 438.8 $ 433.9
Debt to total capitalization.............................. 41% 41%
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At NMHG Wholesale, there were no significant changes to our financial position since December 31, 2001. However, increased cash flows before financing in the first quarter of 2002 as compared with the first quarter of 2001 enabled NMHG Wholesale to pay off advances from NACCO and to pay a dividend to NACCO in the first quarter of 2002.
NMHG Retail's capital structure is presented below:
(DOLLARS IN MILLIONS)
AS OF AS OF
DECEMBER 31, MARCH 31,
2001 2002
------------ ---------
NMHG Retail
Total net tangible assets................................. $109.5 $ 91.7
Advances from NMHG Wholesale.............................. (70.2) (62.1)
Goodwill and other intangibles at cost.................... 45.2 44.5
------ ------
Net assets before goodwill and other intangibles
amortization......................................... 84.5 74.1
Accumulated goodwill and other intangibles amortization... (5.6) (4.7)
Total debt................................................ (53.5) (48.8)
------ ------
Stockholder's equity................................... $ 25.4 $ 20.6
Debt to total capitalization.............................. 68% 70%
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The decrease in total net tangible assets at NMHG Retail of $17.8 million is primarily due to an $18.2 million decrease in intercompany and other receivables. The decrease in intercompany accounts receivable is primarily due to the settlement of fiscal 2001 intercompany tax advances with NMHG Wholesale. Other receivables decreased primarily due to proceeds received in the first quarter of 2002 relating to the sale of operations in 2001. A portion of these proceeds was used to pay down debt.
UNCONSOLIDATED SUBSIDIARY
We have a 50% ownership interest in S-N, a joint venture with Sumitomo Heavy Industries, Inc., which was formed in 1970 to manufacture and distribute lift trucks in Japan. In addition, we purchase Hyster and Yale branded lift trucks and related components and aftermarket parts from S-N for sale outside of Japan. We purchase products from S-N under normal trade terms. In 1999, 2000 and 2001, purchases from S-N were $91.2 million, $90.5 million and $63.7 million, respectively. Amounts payable to S-N at March 31, 2001 and 2002 were $21.3 million and $14.4 million, respectively. We account for our ownership in S-N using the equity method of accounting.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board, or FASB, issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," and, in October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
SFAS No. 141 requires all business combinations completed after June 30, 2001, to be accounted for under the purchase method. This statement also establishes, for all business combinations made after June 30, 2001, specific criteria for the recognition of intangible assets separately from goodwill. SFAS No. 141 also requires that the excess of the fair value of acquired assets over cost (negative goodwill) be recognized immediately as an extraordinary gain, rather than deferred and amortized. We will account for all future business combinations under SFAS No. 141.
SFAS No. 142 addresses the accounting for goodwill and other intangible assets after an acquisition. Goodwill and other intangibles that have indefinite lives will no longer be amortized, but will be subject to annual impairment tests. All other intangible assets will continue to be amortized over their estimated useful lives, which is no longer limited to 40 years. We adopted this statement effective January 1, 2002, as required. At that time, amortization of existing goodwill ceased on the unamortized portion associated with acquisitions and certain investments accounted for under the equity method. This is expected to have a favorable annual impact of approximately $12.8 million, net of tax, beginning in 2002. SFAS No. 142 also requires a new methodology for the testing of impairment of goodwill and other intangibles that have indefinite lives. During 2002, we will begin testing goodwill for impairment under the new rules, applying a fair-value-based test. The transition adjustment, if any, resulting from the adoption of the new approach to impairment testing as required by SFAS No. 142 will be reported as a cumulative effect of a change in accounting principle. At this time, we have not yet determined what impact, if any, the change in the required approach to impairment testing will have on either our financial position or results of operations.
SFAS No. 143 provides accounting requirements for retirement obligations associated with tangible long-lived assets, including: (i) the timing of liability recognition; (ii) initial measurement of the liability; (iii) allocation of asset retirement cost to expense; (iv) subsequent measurement of the liability; and (v) financial statement disclosures. SFAS No. 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. This standard becomes effective for fiscal years beginning after June 15, 2002. We will adopt the Statement effective January 1, 2003. The transition adjustment, if any, resulting from the adoption of SFAS No. 143 will be reported as a cumulative effect of a change in accounting principle. At this time, we have not yet determined what impact, if any, the adoption of this Statement will have on either our financial position or results of operations.
SFAS No. 144 addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business, as previously defined in that Opinion. SFAS No. 144 provides a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. Many of the provisions of SFAS No. 121 are retained, however, SFAS No. 144 clarifies some of the implementation issues related to SFAS No. 121. SFAS No. 144 also broadens the presentation of discontinued operations to include more disposal transactions. This Statement is effective for fiscal years beginning after December 15, 2001, with early adoption encouraged. We adopted this Statement effective January 1, 2002, as required. The adoption of this Statement did not result in an adjustment to our financial statements on January 1, 2002.
EFFECTS OF FOREIGN CURRENCY AND INFLATION
We operate internationally and enter into transactions denominated in foreign currencies. As a result, we are subject to the variability that arises from exchange rate movements. Our use of foreign currency derivative contracts is discussed under the heading, "-- Quantitative and Qualitative Disclosures about Market Risk."
We believe that overall inflation has not materially affected our results of operations in 2000, 2001 or the first three months of 2002, and do not expect overall inflation to be a significant factor in 2002.
ENVIRONMENTAL MATTERS
Our manufacturing operations are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances. Our policies stress compliance and we believe we are currently in substantial compliance with existing environmental laws. If we fail to comply with these laws or our environmental permits, then we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions. In addition, future changes to environmental laws could require us to incur significant additional expense or restrict our operations. Based on current information, management does not expect compliance with environmental requirements to have a material adverse effect on our financial condition or results of operations.
In addition, our products may be subject to laws and regulations relating to the protection of the environment, including those governing vehicle exhaust. Regulatory agencies in the United States and Europe have issued or proposed various regulations and directives designed to reduce emissions from spark ignited engines and diesel engines used in off-road vehicles, such as industrial lift trucks. These regulations will require us and other lift truck manufacturers to incur costs to modify designs and manufacturing processes, and to perform additional testing and reporting. We believe that the impact of expenditures to comply with these requirements will not have a material adverse effect on our business.
We are investigating or remediating historical contamination caused by our operations or those of businesses we acquired at some of our current and former sites. We have also been named as a potentially responsible party for cleanup costs under the so-called Superfund law at several third-party sites where we (or our predecessors) disposed of wastes in the past. Under Superfund and often under similar state laws, the entire cost of cleanup can be imposed on any one of the statutorily liable parties, without regard to fault. While we are not currently aware that any material outstanding claims or obligations exist with regard to these sites, the discovery of additional contamination at these or other sites could result in significant cleanup costs.
In connection with any acquisition made by us, we could under some circumstances be held financially liable for or suffer other adverse effects due to environmental violations or contamination caused by a prior owner of the business. In addition, under some of the agreements through which we have sold businesses or assets, we have retained responsibility for certain contingent environmental liabilities arising from pre-closing operations. These liabilities may not arise, if at all, until years later.
EURO CONVERSION
On January 1, 1999, 11 of the 15 countries that are members of the European Union introduced a new currency unit called the "euro," which has replaced the national currencies of these 11 countries. The conversion rates between the euro and the participating nations' currencies were fixed irrevocably as of January 1, 1999, and participating national currencies will be removed from circulation between January 1, 2002 and June 30, 2002 and replaced by euro notes and coinage.
Under the regulations governing the transition to a single currency, there
was a "no compulsion, no prohibition" rule which stated that no one was
obligated to use the euro until the notes and coinage were introduced on January
1, 2002. In keeping with this rule, since January 1, 1999 we have been able to
(i) receive euro-denominated payments, (ii) invoice in euros and (iii) perform
appropriate conversion and rounding calculations. Full conversion of all
affected country operations to the euro has been completed and the cost to
achieve such conversion has not been material.
Excluding adverse affects caused by the weakening of the euro against our functional currencies, the introduction of the euro, to date, has not had, and we do not anticipate that the continued use of the euro will
have, a material effect on our foreign exchange and hedging activities or our use of derivative instruments, or a material adverse effect on our operating results or cash flows. However, the ultimate effect of the euro on competition due to price transparency and foreign currency risk cannot yet be fully determined and may have an adverse effect, possibly material, on our operations, financial position or cash flows. Conversely, introduction of the euro may also have positive effects, such as lower foreign currency risk and reduced prices of raw materials resulting from increased competition among suppliers. We continue to monitor and assess the potential risks imposed by the euro.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
We have entered into certain financing arrangements that require interest payments based on floating interest rates. As such, our financial results are subject to changes in the market rate of interest. To reduce the exposure to changes in the market rate of interest, we have entered into interest rate swap agreements for a significant portion of our floating rate financing arrangements. We do not enter into interest rate swap agreements for trading purposes. Terms of the interest rate swap agreements require us to receive a variable interest rate and pay a fixed interest rate. See also Note 2 and Note 10 to the consolidated financial statements for the year ended December 31, 2001 included elsewhere in the prospectus.
For purposes of specific risk analysis, we use sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in interest rates. Assuming a hypothetical 10% decrease in the interest rates as of December 31, 2000 and 2001, the fair market value of interest rate sensitive financial instruments, which primarily represents interest rate swap agreements, would decline by $3.0 million and $1.6 million, respectively, as compared with their fair market value at December 31, 2000 and 2001, respectively.
There has been no material change in our interest rate risk exposure since December 31, 2001.
FOREIGN CURRENCY EXCHANGE RATE RISK
We operate internationally and enter into transactions denominated in foreign currencies. As such, our financial results are subject to the variability that arises from exchange rate movements. We use forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies and not for trading purposes. These contracts mature within one year and require us to buy or sell Japanese yen, Australian dollars, Canadian dollars, Mexican pesos, British pounds sterling or euros for the functional currency in which our subsidiaries operate at rates agreed to at the inception of the contracts. See also Note 2 and Note 10 to the consolidated financial statements included elsewhere in this offering circular.
For purposes of specific risk analysis, we use sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in foreign currency exchange rates. Assuming a hypothetical 10% strengthening of the U.S. dollar as compared with other foreign currencies at December 31, 2000 and 2001, the fair market value of foreign currency-sensitive financial instruments, which primarily represents forward foreign currency exchange contracts, would decline by $4.3 million and $3.3 million, respectively, as compared with their fair market value at December 31, 2000 and 2001, respectively. It is important to note that the loss in fair market value indicated in this sensitivity analysis would be somewhat offset by changes in the fair market value of the underlying receivables, payables and net investments in foreign subsidiaries.
There has been no material change in our foreign currency exchange rate risk since December 31, 2001.
COMMODITY PRICE RISK
We use certain commodities, including steel, in the normal course of our manufacturing operations. As such, our cost of operations is subject to variability as the market for these commodities change. We monitor this risk and, from time to time, enter into derivative contracts to hedge this risk. We do not currently have any such derivative contracts outstanding, nor do we have any significant purchase obligations to obtain fixed quantities of commodities in the future.
There has been no material change in our commodity price risk since December 31, 2001.
BUSINESS
OUR COMPANY
We are a leading global manufacturer of industrial lift trucks, which comprise the largest segment of the materials handling equipment industry, with the number one market share in the Americas and the number three market share globally. We design, manufacture and sell a comprehensive line of industrial lift trucks and aftermarket parts on a global basis. We estimate the lift truck market for the Americas in 2001 at approximately $2.6 billion and 161,000 units, and globally in 2001 at approximately $8.6 billion and 560,000 units. For the fiscal year ended December 31, 2001, we generated revenues of $1.7 billion.
We market our lift trucks under the Hyster and Yale brand names, which we believe are among the most widely recognized brands in the industry. Our lift trucks have been marketed under the Hyster and Yale brand names since 1935 and 1923, respectively. Based on third-party market research we commissioned in 1999, the Hyster and Yale brands are among the top five most recognized lift truck brands globally. According to this research, Hyster and Yale were the number one and two most recognized brands of lift trucks in the Americas, respectively, and Hyster was the third most recognized lift truck brand in Europe.
Although we have combined the design, manufacturing, procurement and selected marketing activities for our brands in order to capture operational efficiencies and build upon our global scale, we distribute Hyster and Yale lift trucks through two separate strong dealer networks, one dedicated to each brand. We have maintained each of the brand identities in our distribution strategy because the Hyster and Yale brands have distinct appeal for different customers. Hyster is generally associated with larger, heavy-duty applications while Yale is associated with lighter-duty, warehouseing-type applications. We believe this combination of dual brands and dual distribution has allowed us to more effectively penetrate the customer base to establish stronger market positions, as evidenced by our estimated installed population base of approximately 650,000 Hyster and Yale lift trucks. This installed population base provides our dealers and us with recurring revenue from the sale of higher margin aftermarket parts and service.
Our diversified customer base limits our exposure to individual customer or industry risk. In 2001, our top ten customers accounted for only 10% of our new unit volume. We market our lift trucks into over 600 different end-user applications in approximately 900 industries. Our major customers, some of which have chosen us to be their sole lift truck supplier, include The Coca-Cola Company, General Motors Corp., The Lowe's Companies, Inc., Wal-Mart Stores, Inc. and Weyerhaeuser Company.
Demand for lift trucks is cyclical and depends upon capital budgeting in the diverse end markets where lift trucks are sold. We believe our market, like the broader global economy, is poised for growth. Our order backlog has risen from approximately 14,100 units at June 30, 2001 to approximately 16,300 units at March 31, 2002. Our average adjusted EBITDA over the past five years ended December 31, 2001 was $117.9 million, substantially higher than our 2001 adjusted EBITDA of $63.3 million.
Prior to the recent downturn in the economy, we developed and began implementing our 2001 Restructuring Program, which included the closure of our Danville, Illinois assembly facility, labor and overhead reductions and restructuring of our owned dealers, which resulted in non-recurring items and one-time pre-tax charges of $47.8 million in 2001. This program reduced costs and more closely aligned our operations with the demand for our products and services.
In addition to the 2001 Restructuring Program, we have developed and are implementing a Global Cost Reduction Program which encompasses lean manufacturing global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reduction and improvements in our owned dealers. These programs are designed to enhance our competitive position and improve our overall cost structure. We expect our Global Cost Reduction Program, once fully implemented, to result in recurring annual pre-tax cost savings of approximately $117.5 million by the end of 2006. Of this amount, we expect to realize annual pre-tax savings of approximately $48.0 million by the end of 2002, and $61.1 million by the end of 2003. We believe this program has positioned us to take advantage of the anticipated recovery in the capital goods market, and will result in reduced fixed overhead costs, lower manufacturing costs and improvements in both our gross margins and operating profit.
2001 RESTRUCTURING PROGRAM
In anticipation of the recent downturn in the economy, we developed and implemented our overall 2001 Restructuring Program. The components of the program consist of:
- closure of our Danville, Illinois assembly facility and transfer of the related assembly operations, resulting in costs of $12.0 million;
- sale of our owned dealers in Germany and related wind-down costs for those dealers, resulting in losses of $10.4 million;
- elimination of operating losses of $9.5 million relating to the German owned dealers sold in 2001;
- reductions in labor and overhead in our European manufacturing and assembly operations resulting in net manufacturing restructuring charges of $4.1 million;
- restructuring charges of $4.7 million related to our owned dealers in Europe; and
- other non-cash charges of $7.1 million related to reduced asset values and increased reserves reflective of the weakened capital goods markets, establishing full accounting consistency among our owned dealers on a global basis and causing owned dealers previously reporting on a one-month lag to report on months consistent with the rest of NMHG.
INDUSTRY OVERVIEW
The lift truck industry is the largest segment of the materials handling equipment industry. We estimate the global lift truck market in 2001 at approximately $8.6 billion and 560,000 units.
Lift trucks are used in a wide variety of business applications, including manufacturing and warehousing. Lift trucks are separated into five major classes, as set forth in the table below.
GENERAL LIFTING
CLASS DESCRIPTION USE ILLUSTRATIVE APPLICATION CAPACITY RANGE
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Class I Electric Indoors in warehousing Distribution center 1.0 ton to 9.0 tons
rider lift and manufacturing customers would use to
trucks operations where noise move pallets from one
or emission concerns trailer to another
are a factor
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Class II Electric Indoors to handle high- Retail and warehouse 0.5 tons to 6.0 tons
narrow-aisle density storage of customers would use to
lift trucks materials in pick orders off their
narrow-aisled shelves
warehouses
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Class III Electric Indoors for Retail customers would 0.5 tons to 8.0 tons
hand lift applications requiring use to move pallets of
trucks the user to select and goods to their store
transport materials aisles
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Class IV ICE lift Indoors in warehousing Manufacturing customers 1.0 ton to 7.0 tons
trucks with and manufacturing would use to move heavy
cushion operations and parts on a pallet from
(solid) occasionally outdoors the machining area in a
tires factory to the assembly
line
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Class V ICE lift Indoors and outdoors in Manufacturing customers 1.0 ton to 48.0 tons
trucks with warehousing and would use to move a coil
pneumatic manufacturing of steel from the mill
(air filled) operations (this class to a storage area
tires includes the largest
capacity lift trucks)
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Class I, Class IV and Class V (with a capacity of eight tons or less) lift trucks are referred to as counterbalanced lift trucks. Class II and Class III lift trucks are referred to as warehouse lift trucks. Class V lift trucks with a capacity greater than eight tons are referred to as big trucks. Counterbalanced lift trucks are primarily used in industrial applications. Warehouse lift trucks are primarily used in distribution applications. Big trucks are primarily used in handling shipping containers and in specialized heavy lifting applications.
In recent years, we believe counterbalanced lift trucks represented approximately 62.4% of the total global unit volume and 73.5% of the total global dollar volume for lift trucks; warehouse lift trucks represented approximately 36.5% of the total global unit volume and 19.5% of the total global dollar volume for lift trucks; and big trucks represented approximately 1.1% of the total global unit volume and 7.0% of the total global dollar volume for lift trucks. The market for warehouse lift trucks is generally less cyclical than the market for counterbalanced lift trucks, including big trucks.
Historically, aftermarket parts sales have been less cyclical than sales of new lift trucks. During economic downturns, customers tend to delay new lift truck purchases and instead repair older lift trucks. During economic recoveries, the sales of both new lift trucks and aftermarket parts have historically increased.
In North America, the compound annual growth rate of the lift truck industry over the last 20 years has been 4.3%, which is higher than the real gross domestic product compound annual growth rate in North America of 3.2% over the same period. In Western Europe, the compound annual growth rate of the lift truck industry over the last 20 years has been 4.1%, which is higher than the real gross domestic product compound annual growth rate in Western Europe of 2.3% over the same period. We expect the overall growth in the lift truck industry to continue to exceed the overall growth in the North American and Western European economies because the industries that use large numbers of lift trucks are increasing as an overall percentage of these economies.
The lift truck industry is cyclical, reflective of general economic conditions. Recoveries in the lift truck industry and in the overall economy generally result in an increase in the number of units sold in both the Americas and Europe. According to industry forecasts, the North American lift truck industry is at or near the low point of the current downturn, with quarter-on-quarter growth expected for the remainder of 2002. Our backlog has already begun to reflect industry improvement, increasing by 15.6%, from approximately 14,100 units in June 2001 to approximately 16,300 units in March 2002.
Based on units, Europe has historically been the largest market for lift trucks, followed by the Americas, Japan, Asia-Pacific and China. The market for lift trucks, particularly in industrialized nations, is generally mature and has historically been cyclical, although demand cycles may differ across regions. The following table shows the estimated annual number of factory shipments for lift trucks in each geographic region (in thousands).
REGION 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Europe.................. 166 150 123 135 175 176 188 220 228 258 275
Americas................ 99 116 122 155 180 162 176 197 191 219 168
Japan................... 103 85 69 69 76 83 87 71 63 69 71
Asia-Pacific............ 25 24 27 33 39 42 40 24 23 32 28
China................... 18 24 28 19 22 24 22 17 18 20 25
--- --- --- --- --- --- --- --- --- --- ---
Total................. 411 399 369 411 492 487 513 529 523 598 567
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COMPETITIVE STRENGTHS
We believe that we have a number of strengths that differentiate us from our competitors:
Leading Market Share Positions with a Large Installed Population Base. For over a decade, we have been the leading manufacturer of Class I through V lift trucks, on a combined basis, in the Americas. Our Hyster and Yale brands had a combined North American market share of 27.4% in 2001. In addition, we are
the third largest manufacturer of lift trucks on a global unit basis. Hyster's and Yale's long operating histories, strong market positions and our dual brand distribution strategy have resulted in an installed population base of approximately 650,000 Hyster and Yale lift trucks. This large installed population base provides our dealers and us with recurring revenue from the sale of higher margin aftermarket parts and service.
Globally Integrated Operations with Significant Economies of Scale. We have globally integrated the design, manufacturing, procurement and selected marketing activities for our brands. Our manufacturing and aftermarket parts distribution capabilities are supported by facilities in 12 countries on five continents around the world. We believe this provides us with better access to lower cost suppliers, reduced design and overhead costs, improved manufacturing efficiencies and greater purchasing leverage. With respect to many of our products, our global integration also allows us to cost effectively shift production from one geographical region to another to respond to global fluctuations in demand. Our geographically balanced manufacturing structure, with assembly operations in the Americas, Europe and Asia-Pacific, reduces working capital requirements, balances currency exposures and minimizes freight costs. In addition, we have a centralized electronic design/manufacturing system accessible by all our manufacturing facilities and engineering centers. We have assembly plants in all major markets for lift trucks, which allows for just-in-time production, reduced working capital requirements and lead times and reduced infrastructure costs.
Comprehensive Global Product Line. We believe we offer the most comprehensive line of lift trucks on a global basis. We provide a comprehensive range of lift trucks to meet the requirements of our customers' diverse applications. We market over 100 models of lift trucks that cover a range of lifting capacities of up to 48 tons for over 600 different end-user applications. We also provide specialized engineering capabilities to tailor our standard products for specific customer needs.
Established Brand Strength. We market our lift trucks and aftermarket parts under two well-recognized brand names, Hyster and Yale. Hyster and Yale have long operating histories of 67 years and 79 years, respectively. We believe that brand recognition is particularly critical in our industry as most customers solicit quote proposals from a limited number of preferred suppliers. Based on third-party market research we commissioned in 1999, the Hyster and Yale brands are among the top five most recognized lift truck brands globally. According to this research, Hyster and Yale were recognized as the number one and two most recognized brands of lift trucks in the Americas, respectively, and Hyster was the third most recognized lift truck brand in Europe. In addition, based on a separate study we commissioned in 2001, Hyster was recognized as the preferred overall lift truck brand in North America, receiving number one rankings in product reliability, performance, durability, availability of aftermarket parts and dealer support.
Strong Dealer Network. Our Hyster and Yale brands are supported by the strength of our global distribution network. Our dealers sell and rent lift trucks, provide aftermarket parts and service lift trucks. Some dealers provide service on a 24-hour-a-day basis. In 2001, the average sales per dealer of our products was $12.0 million. The majority of our dealer relationships are long-standing with an average tenure in the Americas of 26 years. We assign our dealers exclusive territories, which allows dealers to invest in long-term relationships with customers. To maintain our dealers' focus on our brands, we prohibit our dealers from selling lift trucks that compete with their Hyster or Yale product offering. We believe the larger of our independent dealers benefit from economies of scale and are able to more effectively penetrate the customer base in their exclusive territories because their size enables them to attract higher-quality employees, invest in more specialized selling and service activities and develop a more professional management structure. In addition, we believe our dual brand distribution provides us with greater market penetration and increased market share for both new lift truck units and higher margin aftermarket parts.
In North America, our strategy of encouraging the consolidation of our dealers around strong anchor dealers has produced a leading distribution network of 74 dealers, comprised of 29 Hyster and 45 Yale dealerships. In Europe, we have achieved a significant presence in selected countries and we are growing in strategic markets in the region through successful conversion and consolidation of competitor dealers, such as Zeppelin (a Caterpillar construction equipment dealer), selected Steinbock (a Jungheinrich GmbH brand) and
selected Clark Material Handling Co. dealers. In Australia, our products are distributed through the largest national network of wholly owned and independent dealers covering that market.
National Account Coverage. We have a strong National Accounts organization in the Americas that is dedicated to establishing national and global account relationships with large customers that have centralized purchasing and geographically dispersed operations in multiple dealer territories. Our National Accounts organization uses direct sales efforts to place large numbers of Hyster and Yale lift trucks into our installed population base through these large customers. Our strong dealer network supports our National Accounts customers by providing aftermarket parts and service at the local level. In 2001, we had approximately 145 national accounts. These accounts are responsible for approximately 13,000 new lift truck sales. Some of our key National Accounts, such as General Motors Corp., Costco Wholesale Corp., The Lowe's Companies, Inc. and Saturn Corporation, have entered into exclusive relationships for total fleet management. We provide high value added services to our total fleet management customers, including service, aftermarket parts, planning and comprehensive management of their materials handling needs. We believe we have the largest National Accounts organization in the Americas and are expanding this organization globally.
BUSINESS STRATEGY
We have developed and are implementing strategic programs which we believe will enhance our long-term competitive position. We believe this set of programs will enable us to reduce costs, improve our market share, increase revenues and enhance sustainable profitability while delivering high value-added products and related services to our customers. These long-term initiatives build upon the successes already achieved through our 2001 Restructuring Program.
Implement Global Cost Reduction Program. We have developed and are implementing a Global Cost Reduction Program encompassing lean manufacturing, global procurement, the transfer of processes and sourcing to lower cost locations, component commonality, overhead cost reduction and improvements in our owned dealers. When fully implemented in 2006, we expect this program to result in recurring annual pre-tax cost savings of $117.5 million.
- Lean Manufacturing Strategy. We are implementing a lean manufacturing strategy called Demand Flow(R) Technology in all of our manufacturing facilities. Since first implementing Demand Flow(R) Technology in 1996, we have substantially reduced cycle times, inventory requirements and floor space requirements, and improved on-time delivery and delivered product quality. For example, Demand Flow(R) Technology has allowed us to assemble all of our lift trucks to order, greatly reducing our finished goods inventory. We have reduced manufacturing cycle times by 61% and work-in-process inventory by 34%, and improved on-time delivery by 21%. During this period we have also achieved an 11% reduction in manufacturing floor space requirements for the same unit volume. In addition, recent improvements in throughput created by implementing Demand Flow(R) Technology have allowed us to rationalize our manufacturing operations, resulting in the closure of our Danville, Illinois plant. The Danville closure is expected to result in $10.1 million of pre-tax savings in 2002. In addition, we expect the ongoing implementation of Demand Flow(R) Technology at our remaining facilities to result in $2.0 million in pre-tax savings in 2002. These ongoing Demand Flow(R) Technology programs, including the closure of the Danville plant, are expected to result in an annual pre-tax savings of $21.9 million when fully implemented.
- Global Procurement Initiative. Our global procurement initiative leverages our global scale to capture lower material costs, improve supplier quality, reduce lead times and enhance product innovation. Our global procurement teams work with engineering development centers and personnel at our manufacturing and assembly facilities to identify requirements and secure global supplier contracts. Additionally, the global procurement team works to enhance supplier quality and assists suppliers in reducing their costs. In 2001, our global procurement initiative resulted in $9.8 million of cost savings. In 2002, we expect our global procurement initiative to result in an additional $6.2 million of pre-tax savings compared to 2001. We expect annual pre-tax savings from this initiative to reach $14.7 million in 2006.
- Transferring Processes and Sourcing to Lower Cost Locations. We believe we can reduce product costs by transferring additional processes and sourcing of basic components to lower cost manufacturing locations. As part of this strategy, we continually compare the costs and benefits of outsourcing production versus manufacturing components at our own lower cost facilities. For example, we fabricate frames in our Mexican facility for our Americas plants and have chosen to outsource the fabrication of frames to third party providers in Eastern Europe. We are exploring additional opportunities for similar cost savings in Eastern Europe, the Philippines and China. Our recent efforts in this area resulted in $1.7 million of pre-tax savings in 2001. In 2002, we expect to achieve an additional $3.0 million of pre-tax savings from low cost sourcing, with currently planned initiatives reaching an annual pre-tax savings of $3.3 million when fully implemented.
- Component Commonality and Value Improvement Program. As we design new products, we are increasing the utilization of common components across multiple lift truck classes to reduce costs and product complexity, improve product quality, capture procurement cost savings and increase manufacturing efficiency. These components utilize common interfaces designed to allow for quicker future design modifications. This strategy is an extension of earlier successful actions to standardize components between similar series of Hyster and Yale products. We have also implemented a Value Improvement Program to support continuous cost reductions and product quality improvements. We expect the combined impact of our component commonality initiative and Value Improvement Program to result in $3.7 million in pre-tax savings in 2002, $17.2 million in 2004, reaching an annual pre-tax savings of $53.9 million when fully implemented.
- European Overhead Cost Reduction Program. Our European overhead cost reduction program is designed to reduce our fixed costs. This program is related to reductions in general and administrative personnel and indirect factory labor in Europe. We expect this program to result in $2.1 million of pre-tax savings in 2002 and reach an annual pre-tax savings of $2.8 million when fully implemented.
- Owned Dealer Improvements. We have implemented, and largely completed, a restructuring of our owned dealers. This program has enhanced operating efficiencies through standardization of systems and processes, realignment of management structure and improved asset utilization. We expect this program to result in $20.9 million of annual pre-tax savings in 2002.
Design Global Products More Closely Tailored to Customer Application Needs. In 2000, we implemented a new design philosophy focused on the development of products tailored to the specific operating requirements of our customers. Historically, we have offered a complex set of options for each of our lift truck series to meet our customers' specialized needs. Our new design philosophy utilizes a modular approach with fewer overall components to more effectively and efficiently address our customers' application needs. This new design approach is expected to improve our cost structure and margins by simplifying our manufacturing operations, improving manufacturing efficiencies and reducing prices for sourced components. In addition, we believe that our product innovations will improve the quality of our products and provide us with opportunities to improve our market share.
Strengthen Our Distribution Capability. We have been encouraging the consolidation of our North American distribution networks around large, strong, professionally managed, well-capitalized independent dealers. We are currently expanding this anchor dealer model on a global basis for each of our brands. We believe that anchor dealers are able to more effectively penetrate the customer base in their exclusive territories because their size enables them to attract higher-quality employees, invest in more specialized selling and service activities and develop a more professional management structure. We also believe that anchor dealers are stronger financially, better positioning them to take advantage of dealership consolidation and to weather economic downturns. We strengthen our dealer networks by providing sales and service training, dealer consulting services, information systems support, product launch coordination, direct advertising, specialized selling materials and help desks. We believe that this support system, together with our large installed population base of lift trucks helps to attract and retain high quality dealers, further strengthening our distribution network.
We are continuing to expand our National Accounts organization globally to further capture additional revenues from large customers that have centralized purchasing and geographically dispersed operations in multiple dealer territories. As a result of our strong National Accounts coverage, established brands and strong distribution network, we believe we are well-positioned to continue to capitalize on the growth in this customer segment. We expect the combination of our anchor dealer strategy and our National Accounts organization to improve our market share and increase our installed population base.
PRODUCTS AND SERVICES
LIFT TRUCKS
We design and manufacture a comprehensive line of lift trucks under both the Hyster and Yale brand names for global use. Lift truck sales accounted for 82%, 81% and 81% of our net sales in 1999, 2000 and 2001, respectively. Class I, Class IV and Class V (with a capacity of eight tons or less) lift trucks are referred to as counterbalanced lift trucks. Class II and Class III lift trucks are referred to as warehouse lift trucks. Class V lift trucks with a capacity greater than eight tons are referred to as big trucks. The following table illustrates the percentage of our global lift truck units by product line for each of the last three years:
PRODUCT LINE 1999 2000 2001
------------ ---- ---- ----
Counterbalanced............................................. 70.2% 68.2% 68.4%
Warehouse................................................... 28.4 30.4 30.1
Big trucks.................................................. 1.4 1.4 1.5
---- ---- ----
Total....................................................... 100% 100% 100%
==== ==== ====
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We believe that in 2001, on a global basis, we were the second largest producer of counterbalanced lift trucks, the fifth largest producer of warehouse lift trucks and the largest producer of big trucks. We believe that in 2001, on a global basis, we were the third largest producer of lift trucks across all product lines.
AFTERMARKET PARTS
We have one of the largest installed population bases of lift trucks currently in use in the industry. We estimate our population at approximately 650,000 trucks. This installed population base provides our dealers and us with recurring revenue from the sale of higher margin aftermarket parts and service. We offer a comprehensive line of competitively priced aftermarket parts generally deliverable within 24 hours. We offer online technical reference databases to quickly reference the required aftermarket parts for a job and a user-friendly aftermarket parts ordering system. Aftermarket parts sales represented approximately 18%, 19% and 19% of our revenues in 1999, 2000 and 2001, respectively.
We sell Hyster and Yale branded aftermarket parts to our dealers for Hyster and Yale lift trucks. Hyster and Yale branded aftermarket parts accounted for 72% of our revenues from the sale of aftermarket parts in 2001. In the Americas, we believe that our Hyster and Yale dealers sell between approximately 70% to 80% of the aftermarket parts for Hyster and Yale lift trucks.
We also sell aftermarket parts under the UNISOURCE(TM), MULTIQUIP(TM) and PREMIER(TM) brands to our Hyster and Yale dealers for the service of competitor lift trucks. These aftermarket parts accounted for approximately 28% of our revenues from the sale of aftermarket parts in 2001. We recently announced a strategic alliance with Systems Material Handling Co., a distributor of aftermarket parts, to expand the number of aftermarket parts for competitors' lift trucks for the Hyster and Yale dealer networks in North America. To provide a one-stop shopping capability, these parts are made available through the same ordering system that these dealers use for Hyster and Yale aftermarket parts.
FINANCING OF SALES
We are engaged in a joint venture with General Electric Capital Corporation, or GECC, to provide dealer and customer financing of new lift trucks in the United States. We own 20% of the joint venture entity, NMHG Financial Services, Inc., or NFS, and receive fees and remarketing profits under an agreement that expires in 2003. We account for our ownership of NFS using the equity method of accounting. We refer to
programs with NFS as Hyster Capital and Yale Financial Services. At March 31, 2002, NFS was providing $91.8 million of financing to dealers for lift trucks and $543.0 million of financing to customers for lift trucks.
In addition, we have also entered into an International Operating Agreement with GECC under which GECC provides leasing and financing services to Hyster and Yale dealers and their customers outside of the United States. GECC pays us a referral fee once certain financial thresholds are reached. This agreement expires in 2003.
Under our agreements with NFS and with GECC pursuant to the International Operating Agreement, our dealers and certain customers are extended credit for the purchase of lift trucks to be placed in the dealer's floor plan inventory or the financing of lift trucks that are sold or leased to customers. For some of these arrangements, we provide residual value guarantees or standby recourse or repurchase obligations to NFS or to GECC, which totaled approximately $149.6 million at March 31, 2002. In substantially all of these transactions, we maintain perfected security interests in the lift trucks financed, so that in the event of a default, we have the ability to foreclose on the leased property and sell it through the Hyster or Yale dealer network. The residual value guarantees or standby recourse and repurchase obligations we have provided have not caused us to realize losses to date because we have been able to re-sell trucks at values in excess of our gross exposures. Furthermore, we have established reserves for exposures under these agreements.
Historically, NFS has experienced default loss rates (the ratio of annual losses on defaults to total annual financings, expressed as a percentage) of 0.21%, 0.09% and 0.32% in 1999, 2000 and 2001, respectively. During the 1991-1992 recession, default loss rates reached 0.56%.
MARKETING
Our marketing organization is structured in three regional divisions: the Americas; Europe, which includes the Middle East and Africa; and Asia Pacific.
In each region, certain marketing support functions for the Hyster and Yale brands are combined into a single shared services organization to take advantage of regional scale and best practices. These activities include sales and service training, information systems support, product launch coordination, direct advertising, specialized selling materials development, help desks, order entry, marketing strategy and field service support. Only the specific aspects of our sales and marketing activities that interact directly with our dealers and customers, such as dealer consulting and new lift truck units and aftermarket parts transaction support, are brand specific. This supports our dual brand distribution strategy while taking advantage of a single marketing organization.
DISTRIBUTION NETWORK
We distribute through two channels: dealers and our National Accounts organization. In 2001, 82% of our new lift truck volume was sold through dealers and 18% through our National Accounts organization.
DEALERS
Independent Dealers
The majority of our dealers are independently owned and operated. We partner primarily with strong dealers with proven track records of outstanding customer service to create a responsive and stable dealer network.
Americas. The average tenure of our independent dealers is 26 years. In the Americas we have 29 independent Hyster dealers and 45 independent Yale dealers. Since 1995, we have converted six dealers with over 30 locations from competitors to Hyster or Yale. In 2001, our independent dealers acquired eight other dealers with 22 locations. None of our Hyster or Yale dealers have been converted by competitive dealers since we combined Hyster and Yale in 1989.
Europe. In Europe, including the Middle East and Africa, Hyster has approximately 80 independent dealers with locations in 97 countries and Yale has 81 independent dealers with locations in 42 countries. The
average tenure of our European independent dealers is 13 years. We have actively grown our European dealer organization to add strong representation through the conversion of competitive dealers in several key European markets. Since 2001, we have added a net of 10 dealers to our European dealer network through conversions -- the largest Clark Material Handling Co. dealer in Germany, three large German Steinbock (a former Jungheinrich GmbH brand) dealers and six Steinbock dealers in Eastern Europe and Scandinavia.
Asia-Pacific. Hyster has 15 independent dealers in Asia-Pacific with an average length of service of 11 years. Yale is represented by nine independent dealers in Asia-Pacific, with an average length of service of 10 years.
Owned Dealers
From time to time, we have acquired, on an interim basis, certain independent Hyster, Yale and competitor dealers and rental companies to strengthen or protect Hyster's and Yale's presence in select territories. We currently own one Hyster dealer in the Americas, four Yale dealers and one Hyster dealer in Europe, and two Yale dealers and one Hyster dealer in Asia-Pacific. Our long-term strategy is to identify strategic buyers for our owned dealers that represent "best-in-class" dealers to support the Hyster and Yale brands. For example, in December 2001, we sold four owned Hyster retail dealers in Germany to ZEPPELIN GmbH and have designated Zeppelin, a large European Caterpillar construction equipment dealer, as our exclusive Hyster dealer in parts of Germany, Austria and several Central and Eastern European countries. We had acquired these Hyster dealers to maintain Hyster territory coverage in the strategically important German market.
NATIONAL ACCOUNTS
We operate a National Accounts organization for both Hyster and Yale focused on large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. Our National Accounts organization accounted for 18% of our new lift truck unit volume in 2001. Our strong dealer network supports this effort by providing aftermarket parts and service on a local basis. Dealers receive a commission for the support they provide in connection with our National Accounts sales and for the preparation and delivery of lift trucks to customer locations. In addition to selling new lift trucks, the National Accounts organization markets many value added services, including full maintenance leases and total fleet management. Our new unit volume through the National Accounts channel is growing more rapidly than our overall total unit volume, particularly in the Americas, where this volume increased from 15% of our total lift truck unit volume in 1995 to 28% in 2001.
In the Americas, the National Accounts organization is responsible for approximately 120 large national account customers. In Europe, the National Accounts organization is responsible for 25 customers. Our National Accounts coverage in the rest of the world is currently limited but growing in regions such as Europe and Asia-Pacific.
CUSTOMERS
Our customer base is diverse and fragmented, including, among others, food distributors, trucking and automotive companies, lumber, metal products, rental, paper and building materials suppliers, warehouses, light and heavy manufacturers, retailers and container handling companies. In 2001, our top ten customers accounted for only 10% of our new unit volume. Hyster has strong relationships with, among others, General Motors Corp., International Paper Company, The Coca-Cola Company, the Ministry of Defense in the United Kingdom, and Jefferson Smurfit Group plc. Yale has strong relationships with, among others, Dynamit Nobel AG, Homebase, DaimlerChrysler and The Lowe's Companies, Inc.
MANUFACTURING AND ASSEMBLY
We have integrated our global operations to take advantage of our global scale in design, manufacturing and purchasing. We manufacture components, such as masts and transmissions, and assemble products in the market of sale to minimize freight cost and balance currency mix. In some instances, however, we utilize one
worldwide location to manufacture specific components or assemble specific products to leverage our production volumes. For example, we have centralized the worldwide assembly of our 2.0 to 3.2 ton Class V ICE pneumatic counterbalanced lift trucks in our Craigavon, Northern Ireland facility due to the economies provided by dedicating an entire plant to the assembly of a single, global, high volume product line. We operate 14 manufacturing and assembly operations worldwide with six plants in the Americas, five in Europe and three in Asia-Pacific. All but one of our manufacturing and assembly facilities worldwide are ISO 9002 certified.
We are currently operating at about 60% capacity utilization as a result of the market downturn in the Americas market. We believe we have adequate capacity in all markets and product lines to meet our near term projected volume.
SUMITOMO-NACCO JOINT VENTURE
We have a 50% ownership interest in S-N, a joint venture with Sumitomo Heavy Industries, Inc., which was formed in 1970 to manufacture and distribute lift trucks in Japan. In addition, we purchase Hyster and Yale branded lift trucks and related components and aftermarket parts from S-N for sale outside of Japan. We purchase products from S-N under normal trade terms. In 1999, 2000 and 2001, purchases from S-N were $91.2 million, $90.5 million and $63.7 million, respectively. Amounts payable to S-N at March 31, 2001 and 2002 were $21.3 million and $14.4 million, respectively. We account for our ownership in S-N using the equity method of accounting.
BACKLOG
As of March 31, 2002, our backlog of unfilled orders placed with our manufacturing and assembly operations for new lift trucks was approximately 16,300 units, or $292.4 million, of which substantially all is expected to be filled during fiscal 2002. This compares to the backlog as of March 31, 2001 of approximately 17,800 units, or $305.4 million. Decreased product demand, primarily in the Americas, caused the decrease in backlog levels. Backlog represents unfilled lift truck orders to our manufacturing and assembly facilities from dealers, National Accounts customers and contracts with the United States government.
KEY SUPPLIERS
In 2000, we centralized our purchasing activities around a global procurement team reporting directly to our Senior Vice President of Engineering and Procurement. Previously, our purchasing activities were managed within each regional operating division. In 2001, no single supplier accounted for more than 5% of our purchases. We believe there are competitive alternatives to all our suppliers. Some of our key suppliers and the components provided are as follows:
KEY COMPONENT KEY SUPPLIER(S)
------------- ---------------
Axles................ Garraro Group; ArvinMeritor, Inc.
Brakes............... Akebono Brake Industry Co., Ltd.
Cabs................. Fritz Meyer Holding AG
Counterweights....... Kurdziel Industries, Inc.
Electric Motors...... General Electric Company; Iskra Autoelektrika; Schabmuller
GmbH; Thrige-Titan A/S
Electronic Curtis Industries, Inc.; General Electric Company; Zapi SpA
Controls...........
Engines.............. General Motors Corp.; Mazda Motor Corporation; Caterpillar
Inc.
Forks................ Cascade Corporation
Hydraulics........... Hasco International; Kayaba Industry Co., Ltd.
Tires................ Monarch Industrial Tires; Trelleborg AB; Watts Industrial
Tires
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RESEARCH AND DEVELOPMENT
Our research and development capability is organized around four major engineering centers, all coordinated on a global basis from our Portland, Oregon headquarters. Comparable products are designed for
each brand concurrently and generally each center is focused on the global requirements for a single product line. Our counterbalanced development center, which has global design responsibility for Class I, Class IV and Class V (with a capacity of less than eight tons) lift trucks, is located in Portland, Oregon. Our big truck development center is located in Nijmegen, The Netherlands, adjacent to our dedicated global big truck assembly facility. Warehouse trucks are designed based on regional differences in stacking and storage practices. As a result, we design warehouse equipment for sale in the Americas market in Greenville, North Carolina adjacent to the Americas assembly facility for warehouse equipment. We design warehouse equipment for the European market in Masate, Italy at our assembly facility for Class II lift trucks.
Our engineering centers utilize a three-dimensional CAD/CAM system and are electronically connected to one another, to all of our manufacturing and assembly facilities and to some of our key suppliers. This allows for global collaboration in technical engineering designs, collaboration with our key suppliers and leads to shorter product development cycles. Additionally, we solicit customer feedback throughout the design phase to improve our product development efforts. We invested $41.4 million, $43.9 million and $44.7 million on product design and development activities in 1999, 2000 and 2001, respectively, which represented 2.4%, 2.3% and 2.7% of our sales in those years. For the three months ended March 31, 2002, we invested $9.6 million on product design and development activities, which represented 2.6% of our sales for the period.
FACILITIES
The following table presents the principal assembly, manufacturing, distribution and office facilities that we own or lease:
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OWNED/ SQUARE
REGION FACILITY LOCATION LEASED FOOTAGE FUNCTION(S)
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AMERICAS Berea, Kentucky Owned 558,000 Assembly of lift trucks, primarily electric
rider and 3.5 to 8.0 ton ICE lift trucks
Danville, Illinois Owned 234,000 Americas parts distribution center
Greenville, Owned 598,000 Divisional headquarters and marketing and
sales
North Carolina operations for Hyster and Yale in Americas;
Americas warehouse development center;
assembly of lift trucks, primarily narrow
aisle, motorized hand and 1.5 to 3.0 ton ICE
lift trucks
Lenoir, Owned 265,000 Manufacture and assembly of component parts
for
North Carolina lift trucks, primarily masts and cylinders
Portland, Oregon Owned 51,000 Counterbalanced development center for
design and testing of lift trucks, prototype
equipment and component parts
Portland, Oregon Leased 33,000 Manufacture of production tooling and
prototype units
Portland, Oregon Leased 15,000 Global headquarters
Ramos Arizpe, Mexico Owned 72,000 Manufacture of component parts for lift
trucks, primarily frames
Sao Paolo, Brazil Owned 87,000 Assembly of lift trucks and marketing
operations for Brazil
Sulligent, Alabama Owned 301,000 Manufacture of component parts for lift
trucks, primarily transmissions
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EUROPE Craigavon, Northern Owned 388,000 Manufacture of lift trucks, primarily 2.0 to
Ireland 3.2 ton ICE lift trucks; cylinder and
transmission assembly for the world; mast
fabrication and assembly for Europe
Fleet, England Leased 25,000 Hyster and Yale marketing and sales
operations in Europe
Irvine, Scotland Owned 367,000 Divisional headquarters; assembly of lift
trucks, primarily electric rider and 3.5 to
8.0 ton ICE lift trucks; mast manufacturing
and assembly
Modena, Italy Leased 17,000 Assembly of lift trucks, primarily motorized
hand trucks
Masate, Italy Leased 32,000 Assembly of lift trucks, primarily narrow
aisle trucks; European warehouse development
center
Nijmegen, The Owned 361,000 Big trucks development center; manufacture
Netherlands and assembly of big trucks and component
parts; European parts distribution center
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ASIA Shanghai, China Owned(1) 70,000 Assembly of lift trucks by Shanghai Hyster
joint venture, primarily 1.5 to 5.5 ton ICE
pneumatic lift trucks
Sydney, Australia Leased 15,000 Divisional headquarters and sales and
marketing for Asia-Pacific; distribution of
aftermarket parts
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(1) This facility is owned by Shanghai Hyster Forklift Ltd., our Chinese joint venture company.
S-N's operations are supported by two facilities. S-N's headquarters are located in Obu, Japan at an approximately 250,000 square foot facility owned by S-N. The Obu facility also has assembly and distribution capabilities, primarily for 1.5 to 5.5 ton ICE lift trucks. In Cavite, the Philippines, S-N owns an approximately 100,000 square foot facility for the manufacture of frames for S-N products.
Our nine owned dealers operate from 61 locations. Of these 61 locations, eight are in the United States, 22 are in Europe and 31 are in Asia-Pacific, as shown below:
UNITED STATES EUROPE ASIA-PACIFIC ------------- ------ ------------ Kentucky(1) France(14) Australia(30) Ohio(5) Germany(3) Singapore(1) Pennsylvania(1) The Netherlands(1) West Virginia(1) United Kingdom(4) |
Dealer locations generally include facilities for displaying equipment, storing rental equipment, servicing equipment, aftermarket parts storage and sales and administrative offices. We own four of our locations and lease 57 of our locations. Some of the leases were entered into or assumed in connection with acquisitions and many of the lessors under these leases are former owners of businesses that we acquired.
EMPLOYEES
At April 30, 2002, our wholesale operations had approximately 5,700 employees and our owned dealers had approximately 1,400 employees. A majority of the employees in the Danville, Illinois parts depot operations (approximately 135 employees) are unionized, as are tool room employees (approximately 15 employees) located in Portland, Oregon. Our contracts with the Danville and Portland unions each expire in 2003. Employees at the facilities in Berea, Kentucky; Sulligent, Alabama; and Greenville and Lenoir, North Carolina are not represented by unions.
In Europe, some employees in the Craigavon, Northern Ireland facility are unionized. Employees in the Irvine, Scotland and Nijmegen, The Netherlands facilities are not represented by unions. The employees in Nijmegen have organized a works council, as required by Dutch law, which performs a consultative role on employment matters. In Mexico, shop employees are unionized. All of the European employees are part of a European Works Council which performs a consultative role on business and employment matters.
We believe our current labor relations with both union and non-union employees are generally satisfactory. However, there can be no assurances that we will be able to successfully renegotiate our union contracts without work stoppages or on acceptable terms.
COMPETITION
Competition in the lift truck industry is based primarily on strength and quality of dealers, brand loyalty, customer service, availability of products and aftermarket parts, comprehensive product line offering, product performance, product quality and features, and the cost of ownership over the life of the lift truck.
The lift truck industry is made up of the following types of lift truck manufacturers:
- Global full line manufacturers, who have positions in all major geographic markets. Global full line manufacturers include us (with Hyster and Yale brands); Linde AG (with Linde, OM Pimespo and Still brands); and Toyota Industries Corporation (with BT, Raymond and Toyota brands); and
- Product line specialists and regional manufacturers who focus on a narrow product segment and customer type across all geographic regions and/or whose competitive position is relatively concentrated geographically, including Clark Material Handling Co., Crown Equipment Corporation, Daewoo Heavy Industries Ltd., Kalmar Industries, Komatsu Ltd., Jungheinrich GmbH, Mitsubishi Caterpillar Fork Lift America, Inc. and Taylor Machine Works, Inc.
We believe that NMHG, Linde and Toyota are the only manufacturers of a comprehensive line of lift trucks with a global presence. While all of the global full line manufacturers participate in each major geographic market, each is a market-leader in a different geographic region. We believe we are the leading manufacturer of lift trucks in the Americas, but that Linde has the strongest market share in Europe and Toyota the strongest market share in Asia-Pacific. In 2001, the three global full line manufacturers in the industry produced 51% of the total number of lift trucks sold worldwide.
The lift truck industry also competes with alternative methods of materials handling, including conveyor systems and automated guided vehicle systems.
Our aftermarket parts offerings compete with parts manufactured by other lift truck manufacturers as well as companies that focus solely on the sale of generic parts.
The lift truck distribution industry is highly fragmented and competitive. Competitors of our owned dealers include OEM-owned dealers for competing brands, OEM direct sales efforts, independently owned competitive dealerships and forklift rental outlets, independent parts operations, independent service shops and, to a lesser extent, independent Hyster or Yale dealers.
ENVIRONMENTAL MATTERS
Our manufacturing operations are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances. Our policies stress compliance and we believe we are currently in substantial compliance with existing environmental laws. If we fail to comply with these laws or our environmental permits, then we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions. In addition, future changes to environmental laws could require us to incur significant additional expense or restrict our operations. Based on current information, management does not expect compliance with environmental requirements to have a material adverse effect on our financial condition or results of operations.
In addition, our products may be subject to laws and regulations relating to the protection of the environment, including those governing vehicle exhaust. Regulatory agencies in the United States and Europe have issued or proposed various regulations and directives designed to reduce emissions from spark ignited engines and diesel engines used in off-road vehicles, such as industrial lift trucks. These regulations will require us and other lift truck manufacturers to incur costs to modify designs and manufacturing processes, and to perform additional testing and reporting. While there can be no assurance, we believe that the impact of expenditures to comply with these requirements will not have a material adverse effect on our business.
We are investigating or remediating historical contamination caused by our operations or those of businesses we acquired at some of our current and former sites. We have also been named as a potentially responsible party for cleanup costs under the so-called Superfund law at several third-party sites where we (or our predecessors) disposed of wastes in the past. Under Superfund and often under similar state laws, the entire cost of cleanup can be imposed on any one of the statutorily liable parties, without regard to fault. While we are not currently aware that any material outstanding claims or obligations exist with regard to these sites, the discovery of additional contamination at these or other sites could result in significant cleanup costs.
In connection with any acquisition made by us, we could under some circumstances be held financially liable for or suffer other adverse effects due to environmental violations or contamination caused by a prior owner of the business. In addition, under some of the agreements through which we have sold businesses or assets, we have retained responsibility for certain contingent environmental liabilities arising from pre-closing operations. These liabilities may not arise, if at all, until years later.
GOVERNMENT AND TRADE REGULATIONS
Since June 1988, Japanese-built ICE lift trucks imported into the United States, with lifting capacities between 2,000 and 15,000 pounds, including finished and unfinished lift trucks, chassis, frames and frames assembled with one or more component parts, have been subject to an anti-dumping duty order. Anti-dumping duty rates in effect through 2001 range from 7.39% to 56.81% depending on manufacturer or importer. The anti-dumping duty rate applicable to imports from S-N is 51.33%. We do not currently import for sale in the United States any lift trucks or components subject to the anti-dumping duty order. This anti-dumping duty order will remain in effect until the Japanese manufacturers and importers satisfy the U.S. Department of Commerce that they have not individually sold merchandise subject to the order in the United States below fair market value for at least three consecutive years, or unless the Commerce Department or the
U.S. International Trade Commission finds that changed circumstances exist sufficient to warrant the retirement of the order. All of our major Japanese competitors have either built or acquired manufacturing or assembly facilities over the past decade in the United States and any products manufactured at these facilities are not subject to the anti-dumping duty order. The legislation implementing the Uruguay round of GATT negotiations passed in 1994 provided for the anti-dumping order to be reviewed for possible retirement in 2000. We opposed retirement of the order and the 2000 review did not result in retirement of the anti-dumping duty. The anti-dumping order will again be reviewed for possible retirement in 2005.
There are no formal restraints on foreign lift truck manufacturers in the European Union. Several Japanese manufacturers have established manufacturing or assembly facilities within the European Union.
PATENTS, TRADEMARKS AND LICENSES
We are not materially dependent upon patents or patent protection. NMHG Wholesale is the owner of the Hyster trademark, which is currently registered in approximately 65 countries. The Yale trademark, which we use on a perpetual royalty-free basis in connection with the manufacture and sale of lift trucks and related components, is currently registered in approximately 90 countries. We believe that the Hyster and Yale trademarks are material to our business.
LEGAL PROCEEDINGS
Various legal proceedings and claims have been or may be asserted against us relating to the conduct of our business, including product liability, environmental and other claims. These proceedings are incidental to the ordinary course of our business.
We are insured against civil liabilities relating to personal injuries to third parties and for loss of or damage to property and maintain coverage that we believe is appropriate upon terms and conditions and for premiums that we consider fair and reasonable. We believe that we have insurance providing coverage for claims and in amounts that we believe appropriate. We cannot assure you, however, that we will not incur losses beyond the limits or outside the coverage of our insurance.
MANAGEMENT
Our executive officers, directors and other key employees, and their ages and positions are as follows:
NAME AGE POSITION
---- --- --------
Reginald R. Eklund................... 61 President and Chief Executive Officer
Michael P. Brogan.................... 52 Senior Vice President, Product Development and
Procurement
Richard H. Close..................... 43 Vice President and Managing Director, Europe,
Middle East and Africa
Gregory J. Dawe...................... 53 Vice President, Manufacturing and Quality
Strategy
Ron J. Leptich....................... 58 Vice President, Engineering and Big Trucks
Geoffrey D. Lewis.................... 44 Vice President, Corporate Development, General
Counsel and Secretary
Jeffrey C. Mattern................... 49 Treasurer
Frank G. Muller...................... 60 Vice President and President, Americas
Victoria L. Rickey................... 49 Vice President and Chief Strategy Officer
Edward W. Ryan....................... 63 Vice President, Marketing and President,
Asia-Pacific, China and Japan
Raymond C. Ulmer..................... 38 Controller
Alfred M. Rankin, Jr. ............... 60 Director
Owsley Brown II...................... 59 Director
Eiichi Fujita........................ 58 Director
Robert M. Gates...................... 58 Director
Leon J. Hendrix, Jr. ................ 60 Director
David H. Hoag........................ 62 Director
Dennis W. LaBarre.................... 59 Director
Richard de J. Osborne................ 68 Director
Claiborne R. Rankin.................. 51 Director
Ian M. Ross.......................... 74 Director
Britton T. Taplin.................... 45 Director
David F. Taplin...................... 52 Director
Frank F. Taplin...................... 42 Director
John F. Turben....................... 66 Director
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Reginald R. Eklund has been our President and Chief Executive Officer since prior to 1997.
Michael P. Brogan has been our Senior Vice President, Product Development and Procurement since June 2000. Prior to this, he was our Vice President, Warehouse Product Strategy from May 1999 to June 2000. He also served as Managing Director of NACCO Materials Handling S.R.L. (Italy) from prior to 1997 to May 1999.
Richard H. Close has been our Vice President and Managing Director, Europe, Middle East and Africa since August 2001. From February 1999 until August 2001, he was a Managing Director for Lex Service plc, an automotive service and distribution company. He was a Franchise Director for Lex Service from prior to 1997 to February 1999.
Gregory J. Dawe has been our Vice President, Manufacturing and Quality Strategy since January 2002. Prior to this, he was our Vice President Manufacturing, Americas, since prior to 1997.
Ron J. Leptich has been our Vice President, Engineering and Big Trucks since October 1997. Prior to this, he served as Vice President, Engineering and Big Trucks, Worldwide from prior to 1997 to October 1997.
Geoffrey D. Lewis has been our Vice President, Corporate Development, General Counsel and Secretary since June 1999. Prior to this, he served as Vice President, General Counsel and Secretary from prior to 1997 to June 1999.
Jeffrey C. Mattern has been our Treasurer since prior to 1997.
Frank G. Muller has been our Vice President and President, Americas since prior to 1997.
Victoria L. Rickey has been our Vice President and Chief Strategy Officer since August 2001. Prior to this, she was Vice President and Managing Director, Europe, Middle East and Africa from prior to 1997 to August 2001.
Edward W. Ryan has been our Vice President, Marketing and President, Asia-Pacific, China and Japan since prior to 1997.
Raymond C. Ulmer has been our Controller since December 2000. Prior to December 2000, he served as Director of Financial Planning from April 1997 to November 2000. He also served as Plant Controller-Greenville from prior to 1997 to April 1997.
Alfred M. Rankin, Jr. has been a director since prior to 1997. He has served as the Chairman, President and Chief Executive Officer of NACCO Industries, Inc., an operating holding company with principal operating subsidiaries in the lift truck, housewares and lignite coal mining industries, since prior to 1997. Prior to joining NACCO, Mr. Rankin was Vice Chairman and Chief Operating Officer of Eaton Corporation, a diversified industrial manufacturer. He is also a director of Goodrich Corporation, The Vanguard Group and the National Association of Manufacturers.
Owsley Brown II has been a director since prior to 1997. Since prior to 1997 he has been the Chairman and Chief Executive Officer of Brown-Forman Corporation, a diversified producer and marketer of consumer products. He is also a director of Brown-Forman Corporation.
Eiichi Fujita has been a director since 2000. He has been a Senior Executive Vice President of Sumitomo Heavy Industries, Ltd., a manufacturer of heavy machinery, since April 2001. Prior to April 2001, he was a Director and Executive Vice President of Sumitomo Heavy Industries from June 1999. From April 1999 to June 1999, Mr. Fujita was a Managing Director of Sumitomo Heavy Industries and from 1997 to April 1999 he was a Director of Sumitomo Heavy Industries.
Robert M. Gates has been a director since prior to 1997. He is an educator, author and lecturer. From 1999 to 2001, Mr. Gates was the Dean, George Bush School of Government and Public Service, Texas A&M University. Mr. Gates was a Director of Central Intelligence for the United States, a former Assistant to the President of the United States and a Deputy for National Security Affairs for the National Security Council. He is also a director of TRW Inc. and Parker Drilling Company and a trustee of Fidelity Funds.
Leon J. Hendrix, Jr. has been a director since prior to 1997. He is the Chairman of Remington Arms Company, Inc., a manufacturer and marketer of sporting arms and ammunition. Mr. Hendrix was a Principal of Clayton, Dubilier & Rice, Inc., a private investment firm, from prior to 1997 to 2000. He is also a director of Cambrex Corp., Keithley Investments, Inc., Remington Arms Company, Inc. and Riverwood International Corp.
David H. Hoag has been a director since 2000. Now retired, he was the Chairman from 1998 to 1999 and Chief Executive Officer, during 1998, of The LTV Corporation, an integrated steel producer which filed for bankruptcy protection in December 2000. He served as the Chairman, President and Chief Executive Officer of The LTV Corporation from prior to 1997 to 1998. He is also the Chairman of the Federal Reserve Bank of Cleveland and director of The Lubrizol Corporation, The Chubb Corporation, PolyOne Corporation and Brush Engineered Materials, Inc.
Dennis W. LaBarre has been a director since prior to 1997. He is a partner in the law firm of Jones, Day, Reavis & Pogue.
Richard de J. Osborne has been a director since 1998. Now retired, he was the Chairman and Chief Executive Officer of ASARCO, Incorporated, a leading producer of non-ferrous metals, from prior to 1997 to 1999. He also served as the President of ASARCO, Incorporated from prior to 1997 to 1998. He is also a director of Goodrich Corporation, Birmingham Steel Corporation and Schering-Plough Corporation.
Claiborne R. Rankin has been a director since prior to 1997. Since 1997 he has been a partner of Sycamore Partners, LLC, a consulting and venture capital company.
Ian M. Ross has been a director since prior to 1997. He serves as the President Emeritus of AT&T Bell Laboratories, the research and development subsidiary of AT&T.
Britton T. Taplin has been a director since prior to 1997. He is a Principal of Western Skies Group, Inc., a developer of medical office and healthcare-related facilities.
David F. Taplin has been a director since prior to 1997. Mr. Taplin is self-employed in the field of tree farming.
Frank F. Taplin has been a director since 1997. Mr. Taplin is self-employed in the field of real estate consulting.
John F. Turben has been a director since 1997. He serves as the Chairman and Managing Partner of Kirtland Capital Corporation, a private investment partnership. He is also a director of PVC Container Corporation, Unifrax Corporation and Instron Corporation.
Alfred M. Rankin, Jr. and Claiborne R. Rankin are brothers. Britton T. Taplin and Frank F. Taplin are brothers. The Rankin brothers, the Taplin brothers and David F. Taplin are all first cousins.
DIRECTOR COMPENSATION
During 2001, each of our directors who was not an officer of NMHG, NACCO or any other subsidiary of NACCO, and was also a director of NACCO, received a retainer of $40,000 for the calendar year for service on our Board of Directors and the NACCO board of directors. Each of our directors who were not officers of NMHG, NACCO or any other subsidiary of NACCO, and not a director of NACCO, received a retainer of $15,000 for the calendar year for service on our Board of Directors. In addition, each director received $1,000 for attending each meeting of the Board of Directors and each meeting of a committee thereof. Fees for attendance at board meetings (of any of the related companies) could not exceed $2,000 per day. The chairman of each committee of our Board of Directors received $4,000 for the year for service as committee chairman.
Under NACCO's Non-Employee Directors' Equity Compensation Plan, each person who served on our board and on NACCO's board who was not one of our officers or an officer of NACCO or any other subsidiary of NACCO, received 50% of his annual retainer ($20,000) in shares of Class A common stock of NACCO. These shares cannot be assigned, pledged, hypothecated or otherwise transferred by the director, voluntarily or involuntarily, other than (a) by will or the laws of descent and distribution, (b) pursuant to a qualifying domestic relations order or (c) to a trust for the benefit of the director, or his spouse, children or grandchildren. The foregoing restrictions on transfer lapse upon the earliest to occur of:
- the date which is ten years after the last day of the calendar quarter for which such shares were earned;
- the date of the death or permanent disability of the director;
- five years (or earlier with the approval of the board of directors of NACCO) from the date of the retirement of the director from the board of directors of NACCO; and
- the date that a director is both retired from the board of directors of NACCO and has reached 70 years of age.
In addition, each director who is also a director NACCO has the right under the Non-Employee Directors' Plan to receive shares of Class A common stock of NACCO in lieu of cash for up to 100% of the balance of his annual retainer, meeting attendance fees and any committee chairman's fee. These voluntary shares are not subject to the foregoing restrictions.
Each of our directors who are not also directors of NACCO receives 100% of their annual retainer and meeting attendance fees in cash.
EXECUTIVE COMPENSATION
The following table sets forth the compensation for services in all capacities to NMHG of the Chief Executive Officer and four other most highly compensated executive officers of NMHG, the "Named Executive Officers."
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION PAYOUTS
-------------------- ------------ ALL OTHER
NAME AND FISCAL SALARY BONUS LTIP PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($)
------------------ ------ -------- -------- ------------ ------------
Reginald R. Eklund................. 2001 $512,692(1) $ 57,733(2) -- $114,143(4)
President and Chief 2000 494,305(1) 296,373(2) $1,947,811(3) 153,493(4)
Executive Officer 1999 470,016(1) 152,553(2) 759,850(3) 137,314(4)
Frank G. Muller.................... 2001 $334,731(1) $ 29,100(2) -- $ 63,774(6)
Vice President and 2000 320,377(1) 152,350(2) $ 998,513(5) 84,297(6)
President, Americas 1999 302,991(1) 94,681(2) 177,150(5) 77,952(6)
Victoria L. Rickey................. 2001 $350,145(7) $ 18,554(2) -- $ 28,554(8)
Vice President and Chief Strategy
Officer
Edward W. Ryan..................... 2001 $286,476(1) $ 27,987(2) -- $ 38,896(9)
Vice President, Marketing and
President, Asia-Pacific, China
and Japan
Ronald D. Muller................... 2001 $242,890(1) $ 14,112(2) -- 30,474(10)
Former Vice President,
Manufacturing, Quality and IT
Strategy
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(1) Under current disclosure requirements of the SEC, certain of the amounts listed are being reported as "Salary," although we consider them as payments of cash in lieu of perquisites, which are at competitive levels as determined by our Nominating, Organization and Compensation Committee. For Mr. Eklund, the amounts listed for 2001, 2000 and 1999 include payments of cash in lieu of perquisites of $53,292, $52,560, and $51,300, respectively. For Mr. Frank G. Muller, the amounts listed in 2001, 2000 and 1999 include payments of cash in lieu of perquisites of $29,100, $29,300 and $28,390, respectively. For 2001, Mr. Ryan received cash in lieu of perquisites of $19,104 and Mr. Ronald D. Muller received cash in lieu of perquisites of $16,128.
(2) The amounts were paid in cash pursuant to the NACCO Materials Handling Group, Inc. Annual Incentive Compensation Plan.
(3) For Mr. Eklund, the amount listed for 2000 represents the appreciation and interest on the book value units awarded to Mr. Eklund in 1998, 1996, 1994 and 1993 under the NACCO Materials Handling Group, Inc. Long-Term Incentive Compensation Plan (the "LTIP Plan"), which was terminated in 2000. A portion of such amount was paid in cash and the remainder was deferred into the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (the "Unfunded Benefit Plan"). The amount listed for 1999 represents the appreciation on the book value units awarded to Mr. Eklund in 1990 under the LTIP Plan. A portion of such amount was paid in cash and the remainder was deferred into the Unfunded Benefit Plan.
(4) For Mr. Eklund, the amounts listed for 2001, 2000 and 1999 include $16,432, $19,500 and $20,000, respectively, consisting of contributions by NACCO Materials Handling Group, Inc. under the NMHG Profit Sharing Retirement Plan; and $97,711, $133,993 and $117,314, respectively, consisting of amounts credited and interest under the Unfunded Benefit Plan.
(5) For Mr. Frank G. Muller, the amount listed for 2000 represents the appreciation and interest on the book value units awarded to Mr. Frank G. Muller in 1998, 1994 and 1993 under the LTIP Plan, which was terminated in 2000. A portion of such amount was paid in cash and the remainder was deferred into a separate account under the Unfunded Benefit Plan. The amount listed for 1999 represents the appreciation on the book value appreciation units awarded to Mr. Frank G. Muller in 1990 under the LTIP Plan and was deferred into the Unfunded Benefit Plan.
(6) For Mr. Frank G. Muller, the amounts listed for 2001, 2000 and 1999 include $16,432, $19,500 and $20,000, respectively, consisting of contributions by NACCO Materials Handling Group, Inc. under the NMHG Profit Sharing Retirement Plan; and $47,342, $64,797 and $57,952, respectively, consisting of amounts credited and interest under the Unfunded Benefit Plan.
(7) For Ms. Rickey the amount listed for 2001 includes $56,073 as overseas premium payments in lieu of perquisites.
(8) For Ms. Rickey, the amount listed for 2001 includes $6,490 for contributions by NACCO Materials Handling Group, Inc. under the NMHG Profit Sharing Retirement Plan and $22,055 consisting of amounts credited and interest under the Unfunded Benefit Plan.
(9) For Mr. Ryan, the amount listed for 2001 includes $11,682 for contributions by NACCO Materials Handling Group, Inc. under the NMHG Profit Sharing Retirement Plan and $27,208 consisting of amounts credited and interest under the Unfunded Benefit Plan.
(10) For Mr. Ronald D. Muller, the amount listed for 2001 includes $9,864 for contributions by NACCO Materials Handling Group, Inc. under the NMHG Profit Sharing Retirement Plan and $20,605 consisting of amounts credited and interest under the Unfunded Benefit Plan.
LONG-TERM INCENTIVE PLANS
The following table sets forth information concerning awards to the Named Executive Officers during fiscal year 2001, and estimated payouts in the future, under our long-term incentive plans:
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -------------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME ($ OR #) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------ ------------ --------- -------- --------
Reginald R. Eklund.................... $466,300 7 years $0 $821,854 (1)
Frank G. Muller....................... 189,150 7 years 0 333,377 (1)
Victoria L. Rickey.................... 141,735 7 years 0 249,808 (1)
Edward W. Ryan........................ 107,460 7 years 0 189,398 (1)
Ronald D. Muller...................... 70,560 6 years 0 124,362 (2)
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(1) Effective as of January 1, 2000, Messrs. Eklund, Frank G. Muller and Ryan and Ms. Rickey became participants in the NMHG Senior Executive Long-Term Incentive Compensation Plan (the "Executive Long-Term Plan"). Under the Executive Long-Term Plan, participants including Messrs. Eklund, Frank G. Muller and Ryan and Ms. Rickey are eligible for awards for performance against a target which is based upon our adjusted return on equity over two-year periods. Effective January 1, 2001, participants were granted dollar-denominated target awards. Awards, if any, for the two-year performance period will be made in 2003 based upon our adjusted return on equity for the period from January 1, 2001 through December 31, 2002 against a pre-established target. The total award for any period cannot exceed 150% of the target award. Under the Executive Long-Term Plan, awards to participants are made in the form of "book value units" which are subject to a payment restriction of five years from the date of award. Such payment restriction shall automatically lapse upon the participant's death, permanent disability or
retirement, or in the event of any other termination of employment with the approval of our Nominating, Organization and Compensation Committee. Upon the lapse of the payment restriction, the participant is entitled to receive a payment in cash equal to (a) the book value of the units as of the end of the calendar quarter coincident with or immediately preceding the date the payment restriction lapses or (b) for participants who terminated employment for reasons other than death, disability or retirement, the book value of the units as of the end of the calendar quarter coincident with or immediately preceding termination. At any time up to one year prior to the fifth anniversary of the grant date of an award, a participant may elect to defer the payout of the award under the plan for a period not to exceed ten years from the grant date of the award and if the award is deferred for the entire ten years the participant may thereafter elect to further defer receipt of the award, in which case the deferred amount will be paid under the Unfunded Benefit Plan. There is no minimum or maximum value for final award payouts under the Executive Long-Term Plan.
(2) Effective as of January 1, 2000, Mr. Ronald D. Muller became a participant in the NMHG Long-Term Incentive Compensation Plan, which became effective as of January 1, 2000 (the "2000 Long-Term Plan"). Under the 2000 Long-Term Plan, participants, including Mr. Muller, are eligible for awards for performance against a target which is based upon our adjusted return on equity over a one-year period. Effective January 1, 2001, participants were granted dollar-denominated target awards. Awards, if any, for the one-year performance period will be made in 2002 based upon our adjusted return on equity for the period from January 1, 2001 through December 31, 2001 against a pre-established target. The total award for any period cannot exceed 150% of the target award. Under the 2000 Long-Term Plan, awards to participants are made in the form of "book value units" which are subject to a payment restriction of five years from the date of award. Such payment restriction shall automatically lapse upon the participant's death, permanent disability or retirement, or in the event of any other termination of employment with the approval of our Nominating, Organization and Compensation Committee. Upon the lapse of the payment restriction, the participant is entitled to receive a payment in cash equal to (a) the book value of the units as of the end of the calendar quarter coincident with or immediately preceding the date the payment restriction lapses or (b) for participants who terminated employment for reasons other than death, disability or retirement, the book value of the units as of the end of the calendar quarter coincident with or immediately preceding termination. At any time up to one year prior to the fifth anniversary of the grant date of an award, a participant may elect to defer the payout of the award under the plan for a period not to exceed ten years from the grant date of the award and if the award is deferred for the entire ten years the participant may thereafter elect to further defer receipt of the award, in which case the deferred amount will be paid under the Unfunded Benefit Plan. There is no minimum or maximum value for final award payouts under the 2000 Long-Term Plan.
PENSION PLANS
Mr. Ronald D. Muller is covered by our defined benefit cash balance plans and frozen standard pension benefit plans (both qualified and non-qualified).
The standard pension plans were frozen as of January 1, 1992, except for a 4% annual increase on the amount of such frozen benefit which continues until termination of employment. The cash balance plans were frozen as of December 31, 1996. However, cash balance accounts continue to be credited with interest equal to 1% above the one-year constant maturity yield rate, with a minimum of 5% and a maximum of 12%, until benefit commencement. The entire pension benefit may be paid in the form of a lump sum or in an annuity to provide monthly benefit payments.
The estimated annual pension benefit for Mr. Muller under the cash balance plans, based on compensation, service and interest credits through December 31, 2001, which would be payable on a straight life annuity basis at age 65, is approximately $800 per month. Mr. Muller is also entitled to a benefit under a frozen pension plan in the amount of approximately $1,400 per month, payable on a straight life basis at age 65.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
TITLE OF CLASS OWNERSHIP(1) OF CLASS
-------------- ----------------- --------
NACCO Industries, Inc.................... Common Stock 5,599 100%
5875 Landerbrook Drive
Mayfield Heights, Ohio 44124
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(1) We are a wholly owned subsidiary of NACCO Industries, Inc. NACCO has the sole power to vote and dispose of all of our outstanding capital stock.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In 2000, our parent company, NACCO, began charging fees for services provided by the corporate headquarters to its operating subsidiaries, including us. These services include, among other things, strategic consulting, corporate development services, accounting support, tax advisory services, legal advice and internal audit functions. In each of 2000 and 2001, we paid NACCO $5.3 million for the provision of such services, which we believe represents their fair market value.
Our parent company is a holding company with no independent source of revenues. As a result, it relies on dividends and other distributions from its operating subsidiaries, including us, to fund the costs of its operations. In 2000, NACCO began charging each of its operating subsidiaries a management fee generally in proportion to the size of the subsidiary to fund these costs. In each of 2000 and 2001, we paid NACCO $2.3 million in allocated management fees.
In 1999, 2000 and 2001, NACCO declared and paid a dividend on its common stock of $0.85, $0.89 and $0.93, respectively, per share. In 2000 and 2001, we declared and paid a dividend to NACCO of $10.0 million and $5.0 million, respectively, to fund a portion of the common stock dividend paid by NACCO in those years. We did not pay a dividend to NACCO in 1999 but we paid a dividend of $15.0 million to NACCO in the first quarter of 2002.
From time to time we loan money to, or receive loans from NACCO. We had an outstanding note payable to NACCO in the amount of $8.0 million at December 31, 2001, which we have repaid prior to the date of this prospectus. Our intercompany loans with NACCO earn interest at an arm's-length rate and are due upon demand. For 1999, 2000 and 2001, we received interest payments from NACCO of $0.7 million, $0.4 million and $0.3 million, respectively. We had no notes payable to NACCO during 1999, 2000 and almost all of 2001, and therefore did not make any payments in respect of interest to NACCO during those years.
We are party to a tax sharing agreement with NACCO and its other domestic subsidiaries. Under the terms of the tax sharing agreement, we calculate our own tax liability quarterly on a stand-alone basis (our "separate return tax liability"). If a payment is required, we make that payment directly to NACCO. At the close of the consolidated group's tax year, NACCO determines the tax liability of the consolidated group and either remits a payment to, or receives a refund from, the Internal Revenue Service. In addition, we determine our separate return tax liability as of the close of the consolidated group's tax year. If our separate return tax liability is greater than the total amount of quarterly payments made to NACCO, we must make an additional payment to NACCO. If our separate return tax liability is less than the amount of quarterly payments, we receive a refund from NACCO. We advanced $13.7 million and $0.8 million to NACCO in the second and third quarters of 2001, respectively, in respect of tax liabilities we would have otherwise paid directly to the Internal Revenue Service. We received $25.3 million from NACCO in the first quarter of 2002, and expect to receive $3.0 million in the second quarter of 2002 in respect of tax refunds we would otherwise have been entitled to.
Dennis W. LaBarre, one of our directors and a member of our Nominating, Organization and Compensation Committee, is a partner in the law firm of Jones, Day, Reavis & Pogue. Such firm provided legal services on our behalf during 2001 on a variety of matters, and it is anticipated that such firm will provide such services in 2002.
DESCRIPTION OF OTHER INDEBTEDNESS
NEW REVOLVING CREDIT FACILITY
On May 9, 2002, we refinanced our prior financing agreement, an unsecured floating-rate revolving line of credit with availability of $350.0 million, certain other lines of credit with availability of $4.6 million and a program to sell accounts receivable in Europe, with the proceeds from the sale of the outstanding notes and borrowings under a secured, floating-rate revolving credit facility which expires in May 2005.
Availability under the new revolving credit facility is up to $175.0 million and is governed by a borrowing base based on advance rates against the inventory and accounts receivable of the "borrowers," as defined below. At May 9, 2002, the borrowing capacity under this facility was $109.7 million and the domestic floating rate of interest applicable to this facility was 6.75%, including the applicable margin.
Prior to the maturity date, funds borrowed under the new revolving credit facility may be borrowed, repaid and reborrowed without premium or penalty. Borrowings are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.
BORROWERS
The borrowers under the new revolving credit facility are us, NACCO Materials Handling Group, Inc., and NMHG Distribution Co., which are the domestic borrowers under the domestic facility, and certain of our foreign subsidiaries, which are the foreign borrowers under the foreign facility. We refer to the domestic borrowers and foreign borrowers collectively as the "borrowers."
GUARANTEES; SECURITY
The obligations of the domestic borrowers are joint and several and are guaranteed by our domestic subsidiaries (other than the domestic borrowers) and the obligations of the foreign borrowers are joint and several and are guaranteed by the domestic borrowers, the domestic subsidiaries of the domestic borrowers and certain subsidiaries of the foreign borrowers.
The lenders have a first priority perfected lien (or fixed or floating charge, if applicable) upon substantially all assets of the domestic borrowers and their domestic subsidiaries to secure the obligations under the domestic facility and the guaranties of the foreign facility, and substantially all the assets of the foreign borrowers and the foreign guarantors to secure the obligations under the foreign facility, other than assets constituting real estate, equipment, fixtures and improvements thereon, but including, and not limited to, assets constituting accounts, deposit accounts, chattel paper, instruments, investment property, inventory, general intangibles (including intellectual property) and proceeds thereof. The lenders have a pledge of (i) all the stock of the domestic borrowers' and guarantors' domestic subsidiaries and 65% of the stock of the domestic borrowers' first tier foreign subsidiaries to secure the obligations of the domestic borrowers and the domestic guarantors and (ii) all of the stock of certain of the foreign borrowers' and foreign guarantors' subsidiaries to secure the obligations of the foreign borrowers and the foreign guarantors.
INTEREST; FEES
Borrowings under the new revolving credit facility bear interest at a floating rate, which can be either a base rate or a LIBOR rate. With respect to the domestic borrowings, base rate is defined as the highest of (x) Citibank, N.A.'s base rate, (y) the federal funds effective rate, plus one-half of one percent (0.50%) per annum, and (z) the base three-month certificate of deposit rate plus one-half of one percent (0.50%) per annum, plus an applicable margin in each case. LIBOR loans bear interest at LIBOR, as described in the new revolving credit facility, plus an applicable margin. The initial applicable margin for base rate loans and LIBOR loans under the new revolving credit facility will be 2.00% and 3.00%, respectively. Thereafter, the applicable margin will be subject to adjustment based on our leverage ratio. A per annum letter of credit fee of 2.75% will initially be payable and thereafter will be subject to adjustment based on our leverage ratio. A
fronting fee of 0.25% will be payable on each letter of credit issued. The interest rate payable under the new revolving credit facility will increase by 2.00% per annum during the continuance of an event of default.
The borrowers will also be required to pay an unused commitment fee on the difference between committed amounts and amounts actually borrowed under the new revolving credit facility. The initial unused commitment fee will be 0.50% per annum. Thereafter, the commitment fee will be subject to adjustment based on our leverage ratio.
REPAYMENTS
The lenders have full cash dominion over the cash management system of the borrowers and their subsidiaries. The borrowers and the guarantors are required to use all available cash to repay amounts outstanding under the new revolving credit facility. In addition, we are required to repay amounts outstanding under the new revolving credit facility with net cash proceeds from asset sales and equity and debt issuances.
Voluntary payments of principal amounts outstanding and voluntary reductions of the unutilized portion of the new revolving credit facility are permitted at any time, upon the giving of proper notice and subject to minimum dollar amounts. However, if any prepayment is made with respect to a LIBOR loan on a date other than the last day of the applicable interest period, we are required to compensate the lenders for losses and expenses incurred as a result of such prepayment. The lenders have control of the borrowers' bank accounts and of the guarantors' bank accounts and will apply amounts deposited in concentration accounts to repay amounts outstanding under the new revolving credit facility.
COVENANTS
The new revolving credit facility requires us to meet certain financial tests, including, but not limited to, maximum capital expenditures, maximum leverage ratio, minimum fixed charge ratio and minimum liquidity. In addition, the new revolving credit facility contains certain covenants binding on us and our subsidiaries which, among other things, limit our ability to:
- incur additional debt, guarantees and liens;
- make investments, dividends and restricted payments;
- make acquisitions, merge or consolidate;
- change our line of business;
- enter into transactions with affiliates;
- make prepayments, repurchases and redemptions of certain other indebtedness (including the Notes and the Exchange Notes);
- enter into operating leases or sale-leaseback transactions; and
- amend certain material agreements.
For certain of these covenants, the limitations are subject to exceptions, materiality qualifiers and baskets.
EVENTS OF DEFAULT
The new revolving credit facility contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross defaults to certain other agreements or indebtedness, certain events of bankruptcy and insolvency, judgment defaults, certain ERISA events, lack of enforceability of any of the related transaction documents, invalidity of security interests supporting the revolving credit facility and a change of control of NACCO Industries, Inc., us or the other borrowers. Certain of the events of default are subject to cure periods.
EUROPEAN CREDIT FACILITY
We are currently engaged in discussions with a non-U.S. financial institution to obtain a new European revolving credit facility which would provide up to 30 million British pounds sterling (approximately $43 million) of borrowing availability for certain of our European subsidiaries to be used for, among other things, working capital requirements, permitted capital expenditures and other lawful corporate purposes of those European subsidiaries. Our ability to enter into this European credit facility is subject to the terms and conditions of the new revolving credit facility and the notes and would replace or refinance the foreign subfacilities under the new revolving credit facility. The obligations under this European credit facility are expected to be secured by substantially the same assets that will secure the obligations under the foreign subfacilities of the new revolving credit facility and will contain other customary limitations, covenants and restrictions.
OTHER INDEBTEDNESS
We also have separate facilities with availability, net of limitations, of $63.5 million, of which $29.2 million was available at March 31, 2002 and maintain additional uncommitted lines of credit, of which $30.0 million was available at March 31, 2002.
At December 31, 2001 and March 31, 2002, our total obligations under capital leases and other term loans were $53.2 million and $49.7 million, respectively.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On May 9, 2002, we sold $250.0 million in principal amount at maturity of the outstanding notes in a private placement through initial purchasers to a limited number of "qualified institutional buyers," as defined in the Securities Act. In connection with the sale of the outstanding notes, we entered into a registration rights agreement with the initial purchasers, dated as of May 9, 2002. Under that agreement, we must, among other things, file with the SEC a registration statement under the Securities Act covering the exchange offer and use our best efforts to cause that registration statement to become effective under the Securities Act. Upon effectiveness of that registration statement, we must offer each holder of the outstanding notes the opportunity to exchange its securities for an equal principal amount at maturity of exchange notes. You are a holder with respect to the exchange offer if you are a person in whose name any outstanding notes are registered on our books or any other person who has obtained a properly completed assignment of outstanding notes from the registered holder.
We are making the exchange offer to comply with our obligations under the registration rights agreement. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part.
In order to participate in the exchange offer, you must represent to us, among other things, that:
- the exchange notes being acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the person receiving the exchange notes;
- you do not have any arrangement or understanding with any person to participate in the distribution of the outstanding notes or the exchange notes;
- you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and
- you are not one of our "affiliates," as defined in Rule 405 of the Securities Act, or if you are an affiliate, you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.
The exchange offer is not being made to, nor will we accept surrenders for exchange from, holders of outstanding notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of the particular jurisdiction.
RESALE OF THE EXCHANGE NOTES
Based on a previous interpretation by the staff of the SEC set forth in no-action letters issued to third parties, including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc. (available June 5, 1991), Warnaco, Inc. (available October 11, 1991), and K-III Communications Corp. (available May 14, 1993), we believe that the exchange notes issued in the exchange offer may be offered for resale, resold and otherwise transferred by you, except if you are an affiliate of ours, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that you are able to make the representations set forth in "-- Purpose and Effect of the Exchange Offer."
If you tender in the exchange offer with the intention of participating in a distribution of the exchange notes, you cannot rely on the interpretation by the staff of the SEC as set forth in the Morgan Stanley & Co. Incorporated no-action letter and other similar letters and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. In the event that our belief regarding resale is inaccurate, those who transfer exchange notes in violation of the prospectus delivery provisions of the Securities Act and without an exemption from registration under the federal securities laws may incur liability under these laws. We do not assume, or indemnify you against, this liability.
Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of exchange notes. See "Plan of Distribution." In order to facilitate the disposition of exchange notes by broker-dealers participating in the exchange offer, we have agreed, subject to specific conditions, to make this prospectus, as it may be amended or supplemented from time to time, available for delivery by those broker-dealers to satisfy their prospectus delivery obligations under the Securities Act.
Any holder that is a broker-dealer participating in the exchange offer must notify the exchange agent at the telephone number set forth in the enclosed letter of transmittal and must comply with the procedures for brokers-dealers participating in the exchange offer. Under the registration rights agreement, we are not required to amend or supplement the prospectus for a period exceeding 180 days after the expiration date of the exchange offer, except in limited circumstances where we suspend use of the registration statement. We may suspend use of the registration statement if:
- the SEC requests amendments or supplements to the registration statement or the prospectus forming a part thereof or for additional information;
- the SEC issues a stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose;
- we receive notice of the suspension of the qualification of the exchange notes for sale in any jurisdiction or the initiation of any proceedings for that purpose;
- any event occurs that requires us to make changes in the registration statement or the prospectus forming a part thereof in order that the registration statement or prospectus does not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in case of the prospectus, in light of the circumstances under which they were made) not misleading; and
- we determine, in good faith, that it is advisable to suspend use of the registration statement or the prospectus forming a part thereof for a discrete period of time due to pending material corporate developments or similar material events that have not yet been publicly disclosed and as to which we reasonably believe public disclosure would be prejudicial to us.
We have not entered into any arrangement or understanding with any person to distribute the exchange notes to be received in the exchange offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the day the exchange offer expires.
As of the date of this prospectus, $250.0 million in principal amount at maturity of the notes are outstanding. This prospectus, together with the letter of transmittal, is being sent to all registered holders of the outstanding notes on this date. There will be no fixed record date for determining registered holders of the outstanding notes entitled to participate in the exchange offer. Holders, however, of the outstanding notes must tender their certificates therefor or cause their outstanding notes to be tendered by book-entry transfer prior to the expiration date of the exchange offer to participate.
The form and terms of the exchange notes will be the same as the form and terms of the outstanding notes, except that the exchange notes will be registered under the Securities Act and therefore will not bear legends restricting their transfer. Following consummation of the exchange offer, all rights under the registration rights agreement accorded to holders of outstanding notes, including the right to receive additional incremental interest on the outstanding notes, to the extent and in the circumstances specified in the registration rights agreement, will terminate.
We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement and applicable federal securities laws. Outstanding notes that are not tendered for exchange under the exchange offer will remain outstanding and will be entitled to the rights under the related indenture. Any outstanding notes not tendered for exchange will not retain any rights under the registration rights agreement and will remain subject to transfer restrictions. See "-- Consequences of Failure to Exchange."
We will be deemed to have accepted validly tendered outstanding notes when, as and if we will have given oral or written notice of its acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us. If any tendered outstanding notes are not accepted for exchange because of an invalid tender, the occurrence of other events set forth in this prospectus, or otherwise, certificates for any unaccepted outstanding notes will be returned, or, in the case of outstanding notes tendered by book-entry transfer, those unaccepted outstanding notes will be credited to an account maintained with The Depository Trust Company, without expense to the tendering holder of those outstanding notes as promptly as practicable after the expiration date of the exchange offer. See "-- Procedures for Tendering."
Those who tender outstanding notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange pursuant to the exchange offer. We will pay all charges and expenses, other than applicable taxes described below, in connection with the exchange offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date is 5:00 p.m., New York City time on , 2002, unless we, in our sole discretion, extend the exchange offer, in which case, the expiration date will be the latest date and time to which the exchange offer is extended. We may, in our sole discretion, extend the expiration date of, or terminate, the exchange offer.
To extend the exchange offer, we must notify the exchange agent by oral or written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date and make a public announcement of the extension.
We reserve the right:
- to delay accepting any outstanding notes, to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under "-- Conditions" are not satisfied by giving oral or written notice of the delay, extension, or termination to the exchange agent; or
- to amend the terms of the exchange offer in any manner consistent with the registration rights agreement.
Any delay in acceptances, extension, termination, or amendment will be followed as promptly as practicable by oral or written notice of the delay to the registered holders of the outstanding notes. If we amend the exchange offer in a manner that constitutes a material change, we will promptly disclose the amendment by means of a prospectus supplement that will be distributed to the registered holders of the outstanding notes, and we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the registered holders of the outstanding notes, if the exchange offer would otherwise expire during the five to ten business day period.
Without limiting the manner in which we may choose to make a public announcement of any delay, extension, amendment, or termination of the exchange offer, we will have no obligation to publish, advertise, or otherwise communicate that public announcement, other than by making a timely release to an appropriate news agency.
Upon satisfaction or waiver of all the conditions to the exchange offer, we will accept, promptly after the expiration date of the exchange offer, all outstanding notes properly tendered and will issue the exchange notes promptly after acceptance of the outstanding notes. See "-- Conditions" below. For purposes of the
exchange offer, we will be deemed to have accepted properly tendered outstanding notes for exchange when, as and if we will have given oral or written notice of its acceptance to the exchange agent.
In all cases, issuance of the exchange notes for outstanding notes that are accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of certificates for those outstanding notes or a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent's account at The Depository Trust Company, a properly completed and duly executed letter of transmittal, and all other required documents; provided, however, that we reserve the absolute right to waive any defects or irregularities in the tender of outstanding notes or in the satisfaction of conditions of the exchange offer by holders of the outstanding notes. If any tendered outstanding notes are not accepted for any reason set forth in the terms and conditions of the exchange offer, if the holder withdraws such previously tendered outstanding notes, or if outstanding notes are submitted for a greater principal amount of outstanding notes than the holder desires to exchange, then the unaccepted, withdrawn or portion of non-exchanged outstanding notes, as appropriate, will be returned as promptly as practicable after the expiration or termination of the exchange offer, or, in the case of outstanding notes tendered by book-entry transfer, those unaccepted, withdrawn or portion of non-exchanged outstanding notes, as appropriate, will be credited to an account maintained with The Depository Trust Company, without expense to the tendering holder thereof.
CONDITIONS
Without regard to other terms of the exchange offer, we will not be required to exchange any exchange notes for any outstanding notes and may terminate the exchange offer before the acceptance of any outstanding notes for exchange, if:
- any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which, in our reasonable judgment, might materially impair the ability of we to proceed with the exchange offer;
- the staff of the SEC proposes, adopts or enacts any law, statute, rule or regulation or issues any interpretation of any existing law, statute, rule or regulation, which, in our reasonable judgment, might materially impair our ability to proceed with the exchange offer; or
- any governmental approval or approval by holders of the outstanding notes has not been obtained, which approval we, in our reasonable judgment, deem necessary for the consummation of the exchange offer.
If we determine that any of these conditions are not satisfied, we may
- refuse to accept any outstanding notes and return all tendered outstanding notes to the tendering holders, or, in the case of outstanding notes tendered by book-entry transfer, credit those outstanding notes to an account maintained with The Depository Trust Company,
- extend the exchange offer and retain all outstanding notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders who tendered the outstanding notes to withdraw their tendered outstanding notes, or
- waive unsatisfied conditions with respect to the exchange offer and accept all properly tendered outstanding notes that have not been withdrawn. If the waiver constitutes a material change to the exchange offer, we will promptly disclose the waiver by means of a prospectus supplement that will be distributed to the registered holders of the outstanding notes, and we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders of the outstanding notes, if the exchange offer would otherwise expire during this period.
PROCEDURES FOR TENDERING
To tender in the exchange offer, you must complete, sign and date an original or facsimile letter of transmittal, have the signatures thereon guaranteed if required by the letter of transmittal, and mail or
otherwise deliver the letter of transmittal to the exchange agent prior to the expiration date of the exchange offer. In addition, either:
- certificates for the outstanding notes must be received by the exchange agent, along with the letter of transmittal, or
- a timely confirmation of transfer by book-entry of those outstanding notes, if the book-entry procedure is available, into the exchange agent's account at The Depository Trust Company, as set forth in the procedure for book-entry transfer described below, which the exchange agent must receive prior to the expiration date of the exchange offer, or
- you must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the exchange agent must receive the letter of transmittal and other required documents at the address set forth below under "-- Exchange Agent" prior to the expiration of the exchange offer.
If you tender your outstanding notes and do not withdraw them prior to the expiration date of the exchange offer, you will be deemed to have an agreement with us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.
The method of delivery of outstanding notes and the letter of transmittal and all other required documents to the exchange agent is at your risk. Instead of delivery by mail, it is recommended that you use an overnight or hand delivery service, properly insured. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the expiration date of the exchange offer. No letter of transmittal or outstanding notes should be sent to NMHG Holding Co. You may request your respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for you.
Any beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender its outstanding notes should contact the registered holder promptly and instruct that registered holder to tender the outstanding notes on the beneficial owner's behalf. If the beneficial owner wishes to tender its outstanding notes on the owner's own behalf, that owner must, prior to completing and executing the letter of transmittal and delivering its outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in that owner's name or obtain a properly completed assignment from the registered holder. The transfer of registered ownership of outstanding notes may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an eligible institution unless the outstanding notes tendered pursuant thereto are tendered:
- by a registered holder who has not completed the box entitled "Special Payment Instructions" or "Special Delivery Instructions" on the letter of transmittal, or
- for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, each of the following is deemed an eligible institution:
- a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.,
- commercial bank,
- trust company having an office or correspondent in the United States or
- eligible guarantor institution as provided by Rule 17Ad-15 of the Exchange Act.
If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes, the outstanding notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as his, her or its name appears on the outstanding notes.
If trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity sign the letter of transmittal or any outstanding notes or bond power, those persons should so indicate when signing, and unless we waive the requirement, evidence satisfactory to us of their authority to so act must be submitted with the letter of transmittal.
We will determine all questions as to the validity, form, eligibility, including time of receipt, acceptance of tendered outstanding notes, and withdrawal of tendered outstanding notes, in our sole discretion. All of these determinations will be final and binding. We reserve the absolute right to reject any and all outstanding notes not properly tendered or any outstanding notes our acceptance of which would, in the opinion of counsel for us, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular outstanding notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within the time we determine. Although we intend to notify holders of outstanding notes of defects or irregularities with respect to tenders of outstanding notes, neither we, nor the exchange agent, or any other person will incur any liability for failure to give this notification. Tenders of outstanding notes will not be deemed to have been made until defects or irregularities have been cured or waived. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders of outstanding notes, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date of the exchange offer.
In addition, we reserve the right, in our sole discretion, to purchase or make offers for any outstanding notes that remain outstanding subsequent to the expiration date of the exchange offer or, as set forth above under "-- Conditions," to terminate the exchange offer and, to the extent permitted by applicable law and the terms of our agreements relating to our outstanding indebtedness, purchase outstanding notes in the open market, in privately negotiated transactions or otherwise. The terms of any purchases or offers could differ from the terms of the exchange offer.
If the holder of outstanding notes is a broker-dealer participating in the exchange offer that will receive exchange notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, that broker-dealer will be required to acknowledge in the letter of transmittal that it will deliver a prospectus in connection with any resale of the exchange notes and otherwise agree to comply with the procedures described above under "-- Resale of the Exchange Notes"; however, by so acknowledging and delivering a prospectus, that broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
In all cases, issuance of exchange notes pursuant to the exchange offer will be made only after timely receipt by the exchange agent of certificates for the outstanding notes or a timely confirmation of book-entry transfer of outstanding notes into the exchange agent's account at The Depository Trust Company, a properly completed and duly executed letter of transmittal, and all other required documents. If any tendered outstanding notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if outstanding notes are submitted for a greater principal amount of outstanding notes than the holder of outstanding notes desires to exchange, the unaccepted or portion of non-exchanged outstanding notes will be returned as promptly as practicable after the expiration or termination of the exchange offer, or, in the case of outstanding notes tendered by book-entry transfer into the exchange agent's account at The Depository Trust Company pursuant to the book-entry transfer procedures described below, the unaccepted or portion of non-exchanged outstanding notes will be credited to an account maintained with The Depository Trust Company, without expense to the tendering holder of outstanding notes.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect to the outstanding notes at The Depository Trust Company for the purposes of the exchange offer within two business days after the date of this prospectus, and any financial institution that is a participant in The Depository Trust Company's
systems may make book-entry delivery of outstanding notes by causing The Depository Trust Company to transfer the outstanding notes into the exchange agent's account at The Depository Trust Company in accordance with The Depository Trust Company's procedures for transfer. However, although delivery of outstanding notes may be effected through book-entry transfer at The Depository Trust Company, the letter of transmittal or facsimile thereof, with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the exchange agent at the address set forth below under "-- Exchange Agent" on or prior to the expiration date of the exchange offer, unless the holder complies with the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and (1) whose outstanding notes are not immediately available or (2) who cannot deliver their outstanding notes, the letter of transmittal, or any other required documents to the exchange agent prior to the expiration date, may effect a tender if:
- The tender is made through an eligible institution;
- Prior to the expiration date of the exchange offer, the exchange agent receives from such eligible institution a properly completed and duly executed Notice of Guaranteed Delivery, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder, the certificate number(s) of the outstanding notes and the principal amount of outstanding notes tendered and stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the expiration date of the exchange offer, the letter of transmittal, together with the certificate(s) representing the outstanding notes in proper form for transfer or a confirmation of book- entry transfer, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and
- The exchange agent receives the properly completed and executed letter of transmittal, as well as the certificate(s) representing all tendered outstanding notes in proper form for transfer and other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date of the exchange offer.
Upon request to the exchange agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their outstanding notes according to the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided, tenders of outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer.
To withdraw a tender of outstanding notes in the exchange offer, a written or facsimile transmission notice of withdrawal must be received by the exchange agent at its address set forth herein prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer. Any such notice of withdrawal must
- specify the name of the person having deposited the outstanding notes to be withdrawn,
- identify the outstanding notes to be withdrawn,
- be signed by the holder in the same manner as the original signature on the letter of transmittal by which the outstanding notes were tendered or be accompanied by documents of transfer sufficient to have the exchange agent register the transfer of the outstanding notes in the name of the person withdrawing the tender, and
- specify the name in which any outstanding notes are to be registered, if different from that of the person who deposited the outstanding notes to be withdrawn.
We will determine all questions as to the validity, form, and eligibility of the notices, which determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed
not to have been validly tendered for purposes of the exchange offer, and no exchange notes will be issued with respect to those outstanding notes unless the outstanding notes so withdrawn are validly re-tendered.
Any outstanding notes that have been tendered but that are not accepted for payment will be returned to the holder of those outstanding notes, or in the case of outstanding notes tendered by book-entry transfer, will be credited to an account maintained with The Depository Trust Company, without cost to the holder as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be re-tendered by following one of the procedures described above under "-- Procedures for Tendering" at any time prior to the expiration date of the exchange offer.
TERMINATION OF CERTAIN RIGHTS
All rights given to holders of outstanding notes under the registration rights agreement will terminate upon the consummation of the exchange offer except with respect to our duty:
- to keep the registration statement effective until the closing of the exchange offer, and
- to provide copies of the latest version of this prospectus to any broker-dealer that requests copies of this prospectus for use in connection with any resale by that broker-dealer of exchange notes received for its own account pursuant to the exchange offer in exchange for outstanding notes acquired for its own account as a result of market-making or other trading activities, subject to the conditions described above under "-- Resale of the Exchange Notes."
EXCHANGE AGENT
U.S. Bank National Association has been appointed exchange agent for the exchange offer. Questions and requests for assistance, requests for additional copies of this prospectus or the letter of transmittal, and requests for copies of the Notice of Guaranteed Delivery with respect to the outstanding notes should be addressed to the exchange agent as follows:
U.S. Bank National Association U.S. Bank Trust Center 180 East Fifth Street, 2nd Floor St. Paul, MN 55101 Attention: Corporate Trust Services By Telephone (to confirm receipt of facsimile): (651) 244-8677 By Facsimile (for Eligible Institutions only): (651) 244-0711
FEES AND EXPENSES
We will pay the expenses of soliciting tenders in connection with the exchange offer. The principal solicitation is being made by mail. Additional solicitation, however, may be made by facsimile, telephone, or in person by officers and regular employees of NMHG and its affiliates.
We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We, however, will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with the exchange offer.
We estimate that our cash expenses in connection with the exchange offer will be approximately $160,000. These expenses include registration fees, fees and expenses of the exchange agent, accounting and legal fees, and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the outstanding notes for exchange notes. The tendering holder of outstanding notes, however, will pay applicable taxes if certificates representing outstanding notes not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered, or
- if tendered, the certificates representing outstanding notes are registered in the name of any person other than the person signing the letter of transmittal, or
- if a transfer tax is imposed for any reason other than the exchange of the outstanding notes in the exchange offer.
If satisfactory evidence of payment of the transfer taxes or exemption from payment of transfer taxes is not submitted with the letter of transmittal, the amount of the transfer taxes will be billed directly to the tendering holder and the exchange notes need not be delivered until the transfer taxes are paid.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. Holders of the outstanding notes are urged to consult their financial and tax advisors in making their own decisions on what action to take.
Outstanding notes that are not exchanged for the exchange notes in the exchange offer will not retain any rights under the registration rights agreement and will remain restricted securities for purposes of the federal securities laws. Accordingly, the outstanding notes may not be offered, sold, pledged, or otherwise transferred except:
- to NMHG or any subsidiary thereof;
- to a "Qualified Institutional Buyer" within the meaning of Rule 144A under the Securities Act purchasing for its own account or for the account of a qualified institutional buyer in a transaction meeting the requirements of Rule 144A;
- pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder, if available;
- pursuant to an effective registration statement under the Securities Act, and, in each case, in accordance with all other applicable securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of the exchange offer. The exchange notes will be recorded at the same carrying value as the outstanding notes, as reflected in our accounting records on the date of the exchange. The expenses of the exchange offer will be amortized over the remaining term of the exchange notes.
NO APPRAISAL OR DISSENTERS' RIGHTS
In connection with the exchange offer, you do not have any appraisal or dissenters' rights under the General Corporation Law of the State of Delaware or the indenture governing the notes. We intend to conduct the exchange offer in accordance with the registration rights agreement, the applicable requirements of the Exchange Act and the rules and regulations of the SEC related to exchange offers.
DESCRIPTION OF NOTES
NMHG Holding Co. issued the outstanding notes and will issue the exchange notes under an Indenture (the "Indenture") between itself, each of the Subsidiary Guarantors and U.S. Bank National Association, as trustee (the "Trustee"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act").
Certain terms used in this description are defined under the subheading "-- Certain Definitions." In this description, the word "Company" refers only to NMHG Holding Co. and not to any of its subsidiaries and all references to "the Notes" include the outstanding notes and the exchange notes.
The following description is only a summary of the material provisions of the Indenture. We urge you to read the Indenture because it, not this description, defines your rights as holders of these Notes. You may request a copy of the Indenture at our address set forth under the heading "Where You Can Find More Information."
BRIEF DESCRIPTION OF THE NOTES
The Notes:
- are unsecured senior obligations of the Company;
- are senior in right of payment to any future Subordinated Obligations of the Company;
- are guaranteed by each Subsidiary Guarantor; and
- are subject to registration with the SEC pursuant to the Registration Rights Agreement.
PRINCIPAL, MATURITY AND INTEREST
The Company will issue the Notes initially with a maximum aggregate principal amount of $250.0 million. The Company will issue the Notes in denominations of $1,000 and any integral multiple of $1,000. The Notes will mature on May 15, 2009. Subject to our compliance with the covenant described under the subheading "-- Certain Covenants -- Limitation on Indebtedness," we are entitled to, without the consent of the Holders, issue more Notes under the Indenture on the same terms and conditions and with the same CUSIP numbers as the Notes being offered hereby in an unlimited aggregate principal amount (the "Additional Notes"). The Notes and the Additional Notes, if any, will be treated as a single class for all purposes of the Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, for all purposes of the Indenture and this "Description of Notes," references to the Notes include any Additional Notes actually issued.
Interest on these Notes will accrue at the rate of 10% per annum and will be payable semiannually in arrears on May 15 and November 15, commencing on November 15, 2002. We will make each interest payment to the Holders of record of these Notes on the immediately preceding May 1 and November 1. We will pay interest on overdue principal at 1% per annum in excess of the above rate and will pay interest on overdue installments of interest at such higher rate to the extent lawful.
Interest on these Notes will accrue from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Additional interest may accrue on the Notes in certain circumstances under the Registration Rights Agreement.
OPTIONAL REDEMPTION
Except as set forth below, we will not be entitled to redeem the Notes at our option prior to May 15, 2006.
On and after May 15, 2006, we will be entitled at our option to redeem all or a portion of these Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on May 15 of the years set forth below:
PERIOD REDEMPTION PRICE ------ ---------------- 2006........................................................ 105.00% 2007........................................................ 102.50 2008........................................................ 100.00 |
In addition, before May 15, 2005, we are entitled at our option on one or more occasions to redeem Notes (which includes Additional Notes, if any) in an aggregate principal amount of not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 110%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds, to the extent actually received by the Company, from one or more Public Equity Offerings; provided that
(1) at least 65% of such aggregate principal amount of Notes (which includes Additional Notes, if any) remains outstanding immediately after the occurrence of each such redemption (other than Notes held, directly or indirectly, by the Company or its Affiliates); and
(2) each such redemption occurs within 60 days after the date of the related Public Equity Offering.
SELECTION AND NOTICE OF REDEMPTION
If we are redeeming less than all the Notes at any time, the Trustee will select Notes on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate.
We will redeem Notes of $1,000 or less in whole and not in part. We will cause notices of redemption to be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address.
If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. We will issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the holder upon cancelation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION; OFFERS TO PURCHASE; OPEN MARKET PURCHASES
We are not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, we may be required to offer to purchase Notes as described under the captions "-- Change of Control" and "Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock." We may at any time and from time to time purchase Notes in the open market or otherwise.
GUARANTIES
The Subsidiary Guarantors will jointly and severally guarantee, on a senior unsecured basis, our obligations under these Notes. The obligations of each Subsidiary Guarantor under its Subsidiary Guaranty will be limited as necessary to prevent that Subsidiary Guaranty from constituting a fraudulent conveyance under applicable law. See "Risk Factors -- Federal and state statutes allow courts, under specific circumstances, to void guarantees and require noteholders to return payments received from guarantors."
Each Subsidiary Guarantor that makes a payment under its Subsidiary Guaranty will be entitled to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor's pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
If a Subsidiary Guaranty were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable Subsidiary Guarantor, and, depending on the amount of such indebtedness, a Subsidiary Guarantor's liability on its Subsidiary Guaranty could be reduced to zero. See "Risk Factors -- Although the notes are referred to as 'senior notes,' they will be effectively subordinated to any future secured indebtedness of NMHG and the subsidiary guarantors and all obligations of the non-guarantor subsidiaries."
The Subsidiary Guaranty of a Subsidiary Guarantor will be released:
(1) upon the sale or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor;
(2) upon the sale or disposition of all or substantially all the assets of a Subsidiary Guarantor; or
(3) if the Company properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture;
in the case of paragraphs (1) or (2) other than to the Company or an Affiliate of the Company and as permitted by the Indenture.
RANKING
SENIOR INDEBTEDNESS VERSUS NOTES
The Indebtedness evidenced by these Notes and the Subsidiary Guaranties will be unsecured and will rank pari passu in right of payment to the Senior Indebtedness of the Company and the Subsidiary Guarantors, as the case may be. The Notes will be guaranteed by the Subsidiary Guarantors.
As of March 31, 2002, after giving pro forma effect to the offering of the outstanding Notes and the application of the net proceeds therefrom, together with borrowings under our new revolving credit facility and available cash, to repay amounts outstanding under our existing credit facility and European receivables discounting facility:
(1) the Company's Senior Indebtedness would have been approximately $282.6 million, including $35.7 million of secured indebtedness; and
(2) the Senior Indebtedness of the Subsidiary Guarantors would have been approximately $297.9 million, including $51.0 million of secured indebtedness. Virtually all of the Senior Indebtedness of the Subsidiary Guarantors consists of their respective guaranties of Senior Indebtedness of the Company under the Credit Facilities and with respect to the Notes.
The Notes and the Subsidiary Guaranties are unsecured obligations of the Company and the Subsidiary Guarantors. Secured debt and other secured obligations of the Company and the Subsidiary Guarantors (including obligations with respect to the Credit Facilities) will be effectively senior to the Notes and the Subsidiary Guaranties to the extent of the value of the assets securing such debt or other obligations.
LIABILITIES OF SUBSIDIARIES VERSUS NOTES
All of our operations are conducted through our subsidiaries. Claims of creditors of such subsidiaries that are not Subsidiary Guarantors, including trade creditors and creditors holding indebtedness or guarantees issued by such subsidiaries, and claims of preferred stockholders of such subsidiaries generally will have priority with respect to the assets and earnings of such subsidiaries over the claims of our creditors, including holders of the Notes. Accordingly, the Notes will be effectively subordinated to creditors (including trade creditors) and preferred stockholders, if any, of our subsidiaries that are not Subsidiary Guarantors.
At March 31, 2002, the total liabilities of our subsidiaries that are not Subsidiary Guarantors were approximately $241.3 million, including trade payables, but excluding intercompany accounts and investments. Although the Indenture limits the incurrence of Indebtedness and issuance of Preferred Stock of certain of our subsidiaries, such limitation is subject to a number of significant qualifications. Moreover, the
Indenture does not impose any limitation on the incurrence by such subsidiaries of liabilities that are not considered Indebtedness under the Indenture. See "-- Certain Covenants -- Limitation on Indebtedness."
BOOK-ENTRY, DELIVERY AND FORM
The exchange notes will be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess of $1,000.
The exchange notes initially will be represented by one or more notes in registered, global form without interest coupons (collectively, the "Global Notes"). The Global Notes will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in certificated form except in the limited circumstances described below. See "-- Exchange of Global Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered certificated form ("Certificated Notes") if:
(1) DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes and DTC fails to appoint a successor depositary or (b) has ceased to be a clearing agency registered under the Exchange Act;
(2) the Company, at its option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in "Transfer Restrictions," unless that legend is not required by applicable law.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in,
each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of Participants designated by the Initial Purchasers with portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).
Investors in the Global Notes who are Participants in DTC's system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations which are Participants. All interests in a Global Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium and additional interest, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners of the Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Notes as to
which
such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such Notes to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
SAME DAY SETTLEMENT AND PAYMENT
The Company will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, interest and additional interest, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The Company will make all payments of principal, interest and premium and additional interest, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such Holder's registered address. The Notes represented by the Global Notes are expected to be eligible to trade in the PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of Control"), each Holder shall have the right to require that the Company repurchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date):
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of Parent or the Company; provided, however, that the Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of Parent or the Company, as the case may be, than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of Parent or the Company, as the case may be (such person shall be deemed to beneficially own any Voting Stock of a Person (the "specified person") held by any other Person (the "parent entity"), if such person is the beneficial owner (as defined above in this clause (1)), directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent entity);
(2) individuals who on the Issue Date constituted the Board of Directors of the Company or Parent (together with any new directors whose election by such Board of Directors of the Company or Parent, as the case may be, or whose nomination for election by the stockholders of the Company or Parent, as the case may be, was approved by a vote of a majority of the directors of the Company or of Parent, as the case may be, then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of the Company or Parent then in office;
(3) the adoption of a plan relating to the liquidation or dissolution of the Company or Parent; or
(4) the merger or consolidation of Parent or the Company with or into another Person or the merger of another Person with or into Parent or the Company, or the sale of all or substantially all the assets of Parent or the Company (determined on a consolidated basis) to another Person, other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of Parent or the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and in substantially the same proportion as before the transaction and (B) in the case of a sale of assets transaction, the transferee Person becomes the obligor in respect of the Notes and a Subsidiary of the transferor of such assets.
Within 30 days following any Change of Control, we will mail a notice to each Holder with a copy to the Trustee (the "Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the right to require us to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, or premium, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by us, consistent with the covenant described hereunder, that a Holder must follow in order to have its Notes purchased.
We will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
We will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, we will comply with the applicable securities laws and regulations and shall not be deemed to have breached our obligations under the covenant described hereunder by virtue of its compliance with such securities laws or regulations.
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a sale or takeover of the Parent
and the Company and, thus, the removal of incumbent management. The Change of
Control purchase feature is a result of negotiations between the Company and the
Initial Purchasers. Neither the Company nor the Parent has the present intention
to engage in a transaction involving a Change of Control, although it is
possible that we or it could decide to do so in the future. Subject to the
limitations discussed below, we or the Parent could, in the future, enter into
certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect our capital structure or credit ratings.
Restrictions on our ability to Incur additional Indebtedness are contained in
the covenants described under "-- Certain Covenants -- Limitation on
Indebtedness," "-- Limitation on Liens" and "-- Limitation on Sale/Leaseback
Transactions." Such
restrictions can only be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture will not contain any covenants or provisions that may afford holders of the Notes protection in the event of a highly leveraged transaction.
The Credit Agreement will prohibit repurchases of Notes prior to the termination of the Credit Agreement and payment in full of all obligations thereunder. The occurrence of a Change of Control will constitute a default under the Credit Agreement. In the event a Change of Control occurs at a time when we are prohibited from purchasing Notes under the terms of the Credit Agreement or other Senior Indebtedness of the Company, we may seek the consent of our lenders to the purchase of Notes or may attempt to refinance the borrowings that contain such prohibition. If we do not obtain such a consent or refinance such borrowings, we will remain prohibited from purchasing Notes. In such case, our failure to offer to purchase Notes would constitute a Default under the Indenture, which would, in turn, constitute a default under the Credit Agreement.
Future indebtedness that we may incur may contain prohibitions on the occurrence of certain events that would constitute a Change of Control or require the repurchase of such indebtedness upon a Change of Control. Moreover, the exercise by the holders of their right to require us to repurchase the Notes could cause a default under such indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on us. Finally, our ability to pay cash to the holders of Notes following the occurrence of a Change of Control may be limited by our then existing financial resources. There can be no assurance that we will have sufficient funds available when necessary to make any required repurchases.
The definition of "Change of Control" includes a disposition of all or substantially all of the assets of the Company or Parent to certain Persons. Although there is a limited body of case law interpreting "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of "all or substantially all" of the assets of the Company or Parent. As a result, it may be unclear as to whether a Change of Control has occurred and whether a Holder of the Notes may require the Company to make an offer to repurchase the Notes as described above.
The provisions under the Indenture relative to our obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
LIMITATION ON INDEBTEDNESS
(a) The Company will not, and will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company and the Subsidiary Guarantors will be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro forma basis no Default has occurred and is continuing and the Consolidated Coverage Ratio exceeds 2.00 to 1 if such Indebtedness is Incurred prior to May 15, 2003 or 2.25 to 1 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and the Restricted Subsidiaries will be entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by the Company and any Subsidiary Guarantor pursuant to any Credit Facility; provided, however, that, after giving effect to any such Incurrence, the aggregate principal amount of Indebtedness Incurred pursuant to this clause (1) and then outstanding does not exceed the greater of (i) $175.0 million less the sum of all principal payments with respect to such Indebtedness pursuant to paragraph (a)(3)(A) of the covenant described under "-- Limitation on Sales of Assets and Subsidiary Stock" and (ii) the sum of (x) 60% of the book value of the inventory of the Company and its Restricted Subsidiaries and (y) 80% of the
book value of the accounts receivables of the Company and its Restricted Subsidiaries, in each case at the end of the most recent fiscal quarter for which financial statements are publicly available;
(2) Indebtedness owed to and held by the Company or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;
(3)the Notes and the Exchange Notes (other than any Additional Notes);
(4)Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this covenant);
(5)Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company); provided, however, that on the date of such acquisition and after giving pro forma effect thereto, the Company would have been able to Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this covenant;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (3), (4) or (5) or this clause (6); provided, however, that to the extent such Refinancing Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary Incurred pursuant to clause (5), such Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(7) Hedging Obligations directly related to Indebtedness permitted to be Incurred by the Company or the Subsidiary Guarantors pursuant to the Indenture or directly related to the ordinary course of business of the Company and its Restricted Subsidiaries;
(8) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;
(9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence;
(10) Indebtedness consisting of (i) the Subsidiary Guaranty of a Subsidiary Guarantor, (ii) a Guarantee of a Restricted Subsidiary that is not a Subsidiary Guarantor to the extent it Guarantees Indebtedness permitted to be Incurred under the Indenture by any other Restricted Subsidiary that is also not a Subsidiary Guarantor and (iii) any Guarantee by a Subsidiary Guarantor of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (1), (2), (3) or (4) or pursuant to clause (6) to the extent the Refinancing Indebtedness Incurred thereunder directly or indirectly Refinances Indebtedness Incurred pursuant to paragraph (a) or pursuant to clauses (3) or (4);
(11) Indebtedness of the Company or the Subsidiary Guarantors represented by Capital Lease Obligations Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in a Related Business in an aggregate principal amount which, when added together with the amount of Indebtedness Incurred pursuant to this clause (11) and then outstanding, does not exceed $5.0 million (including any Refinancing Indebtedness with respect thereto);
(12) Lift Truck Financing Guarantees;
(13) Indebtedness Incurred by a Receivables Subsidiary in a Qualified
Receivables Transaction that is not recourse to the Company or
any of its Subsidiaries (except for Standard Securitization
Undertakings) in an amount which, when added together with the
aggregate amount of all Indebtedness Incurred pursuant to this
clause (13) and then outstanding, does not exceed the lesser of
(i) $175.0 million and (ii) the maximum principal amount of
Indebtedness that could be Incurred pursuant to clause (1) above
at such time after taking into account all Indebtedness
theretofore Incurred pursuant to clause (1) above and then
outstanding;
(14) Indebtedness of the Company or any Restricted Subsidiary consisting of reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit in response to worker's compensation claims or self-insurance or similar requirements;
(15) Indebtedness consisting of customary indemnification, adjustment of purchase price or similar obligations, including insurance, of the Company or any Restricted Subsidiary, in each case Incurred in connection with the acquisition or disposition of any assets by the Company or any Restricted Subsidiary;
(16) Indebtedness Incurred by any Foreign Subsidiary; provided, however, that, after giving effect to any such Incurrence, the aggregate principal amount of such Indebtedness then outstanding does not exceed the sum of (x) 60% of the book value of the inventory of all Foreign Subsidiaries and their Restricted Subsidiaries and (y) 80% of the book value of the accounts receivables of all Foreign Subsidiaries and their Restricted Subsidiaries, in each case at the end of the most recent fiscal quarter for which financial statements are publicly available; and
(17) Indebtedness of the Company or the Subsidiary Guarantors in an aggregate principal amount which, when taken together with all other Indebtedness of the Company or the Subsidiary Guarantors outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (16) above or paragraph (a)) does not exceed $40.0 million.
(c) Notwithstanding the foregoing, neither the Company nor any Subsidiary Guarantor will incur any Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Company or any Subsidiary Guarantor unless such Indebtedness shall be subordinated to the Notes or the applicable Subsidiary Guaranty to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this covenant, (1) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify such item of Indebtedness at the time of Incurrence and only be required to include the amount and type of such Indebtedness in one of the above clauses and (2) the Company will be entitled at the time of such Incurrence to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above.
(e) For purposes of determining compliance with any U.S. dollar restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is denominated in a different currency, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of the Incurrence of such Indebtedness; provided, however, that if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Agreement. The principal amount of any Refinancing Indebtedness Incurred in the same currency as the Indebtedness being Refinanced will be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that (i) such U.S. Dollar Equivalent was determined based on a Currency Agreement, in which case the Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (ii) the principal amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such excess, as appropriate, will be determined on the date such Refinancing Indebtedness is Incurred.
LIMITATION ON RESTRICTED PAYMENTS
(a) The Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result therefrom);
(2) the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under "-- Limitation on Indebtedness;" or
(3) the aggregate amount of such Restricted Payment and all other Restricted Payments since the Issue Date would exceed the sum of (without duplication):
(A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter prior to the date of such Restricted Payment for which financial statements have been made publicly available (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution received by the Company from its stockholders subsequent to the Issue Date; plus
(C) the amount by which Indebtedness of the Company is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the net reduction in the Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in each case received by the Company or any Restricted Subsidiary and (y) to the extent such Person is an Unrestricted Subsidiary, the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The preceding provisions will not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its stockholders; provided, however, that (A) such Restricted Payment shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above;
(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness which is permitted to be Incurred pursuant to the covenant described under "-- Limitation on Indebtedness;" provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;
(3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or any Subsidiary Guarantor using any Net Available Cash remaining after compliance with the requirements of the covenant described under "-- Limitation on Sales of Assets and Subsidiary Stock;"
(4) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that at the time of payment of such dividend, no other Default shall have occurred and be continuing (or result therefrom); provided further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;
(5) so long as no Default has occurred and is continuing, the repurchase or other acquisition of shares of Capital Stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such repurchases and other acquisitions shall not exceed $2.0 million in any calendar year; provided further, however, that such repurchases and other acquisitions shall be excluded in the calculation of the amount of Restricted Payments;
(6) dividends or other distributions to Parent consistent with past practices (i) to pay franchise taxes and other amounts allocable to the Company required by Parent to maintain its corporate existence, (ii) to pay for all operating and overhead expenses of Parent allocable to the Company (including, without limitation, salaries and other compensation of employees, directors' fees and expenses, and travel and entertainment expenses) incurred by Parent in the ordinary course of its business, (iii) to pay Parent fees for services provided by Parent to the Company that would otherwise have been performed by third parties (including accounting, treasury, tax, legal, strategic consulting and corporate development services) and (iv) to reimburse Parent for the payment of amounts relating to services (including, without limitation, legal, consulting, software, insurance and accounting services) provided by third parties on the Company's or any Restricted Subsidiary's behalf; provided, however, that such dividends or other distributions shall be excluded in the calculation of the amount of Restricted Payments, except for dividends and other distributions described in clause (ii) above which shall be included in the calculation of the amount of Restricted Payments;
(7) so long as no Default has occurred and is continuing, payments to Parent in an amount not in excess of $5.0 million per calendar year; provided, however, that such payments shall be included in the calculation of the amount of Restricted Payments;
(8) so long as no Default has occurred and is continuing, any Investments in joint ventures or similar Persons, including NMHG Financial Services, Inc., Sumitomo-NACCO Materials Handling Co., Ltd., Shanghai Hyster Forklift Ltd., in Related Businesses; provided, however, that the aggregate amount of all Investments made pursuant to this clause (8) to the extent they shall not have at the time been repaid, repurchased, redeemed, sold or returned, does not exceed $5.0 million; provided further, however, that such payments shall be included in the calculation of the amount of Restricted Payments;
(9) payments or repayments of advances to Parent pursuant to the tax sharing agreement among the Company, Parent and Parent's domestic subsidiaries and consistent with past practices; provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments; or
(10) so long as no Default has occurred and is continuing, Restricted Payments in an amount which, when added together with all Restricted Payments made pursuant to this clause (10) to the extent they shall not have at the time been repaid, repurchased, redeemed, sold or returned, does not exceed $10.0 million; provided, however, that such payment shall be included in the calculation of the amount of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions on its Capital Stock to the
Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company,
(b) make any loans or advances to the Company or (c) transfer any of its
property or assets to the Company, except:
(1) with respect to clause (a), (b) and (c),
(i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date or any encumbrance or restriction pursuant to any term sheets for financings attached to the Indenture;
(ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of clause (1) of this covenant or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of clause (1) of this covenant or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the Noteholders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements;
(iv) applicable by reason of law, rule, regulation, order, grant or governmental permit;
(v) any encumbrance or restriction with respect to contractual requirements of a Receivables Subsidiary in connection with a Qualified Receivables Transaction; provided, however, that such restrictions apply only to such Receivables Subsidiary; and
(vi) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition; and
(2) with respect to clause (c) only,
(i) any such encumbrance or restriction consisting of customary nonassignment provisions of any contract, license or lease with any of our Restricted Subsidiaries to the extent such provisions restrict the transfer of the property subject to such contract, license or lease; and
(ii) restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
(a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the senior management of the Company or, in the case of an Asset Disposition in excess of $5.0 million, by the Board of Directors of the Company, of the shares and assets subject to such Asset Disposition;
(2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents; and
(3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) pursuant to one or more of the following:
(A) to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash;
(B) to the extent the Company or such Restricted Subsidiary elects, to acquire Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; and
(C) to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to the holders of the Notes (and to holders of other Senior Indebtedness of the Company designated by the Company) to purchase Notes (and such other Senior Indebtedness of the Company) pursuant to and subject to the conditions contained in the Indenture;
provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions which are not applied in accordance with this covenant exceeds $10.0 million. Pending application of Net Available Cash pursuant to this covenant, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness.
For the purposes of this covenant, the following are deemed to be cash or cash equivalents:
(1) the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; and
(2) securities received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Notes (and other Senior Indebtedness of the Company) pursuant to clause
(a)(3)(C) above, the Company will purchase Notes tendered pursuant to an offer
by the Company for the Notes (and such other Senior Indebtedness of the Company)
at a purchase price of 100% of their principal amount (or, in the event such
other Senior Indebtedness of the Company was issued with significant original
issue discount, 100% of the accreted value thereof) without premium, plus
accrued but unpaid interest (or, in respect of such other Senior Indebtedness of
the Company, such lesser price, if any, as may be provided for by the terms of
such Senior Indebtedness) in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture. If the aggregate
purchase price of the securities tendered exceeds the Net Available Cash
allotted to their purchase, the Company will select the securities to be
purchased on a pro rata basis but in round denominations, which in the case of
the Notes will be denominations of $1,000 principal amount or multiples thereof.
The Company shall not be required to make such an offer to purchase Notes (and
other Senior Indebtedness of the Company) pursuant to this covenant if the Net
Available Cash available therefor is less than $10.0 million (which lesser
amount shall be carried forward for purposes of determining whether such an
offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this clause by virtue of its compliance with such securities laws or regulations.
LIMITATION ON AFFILIATE TRANSACTIONS
(a) The Company will not, and will not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an "Affiliate Transaction") unless:
(1) the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of the Affiliate Transaction in arm's-length dealings with a Person who is not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of $10.0 million, the terms of the Affiliate Transaction are set forth in writing and a majority of the members of the Board of Directors of the Company disinterested with respect to such Affiliate Transaction have determined in good faith that the criteria set forth in clause (1) are satisfied and have approved the relevant Affiliate Transaction as evidenced by a resolution of the Board of Directors of the Company; provided, that for purposes of this paragraph only, in the event of any Affiliate Transaction involving Parent, those members of the Board of Directors of the Company who are not Permitted Holders, whether or not they are also members of the Board of Directors of Parent, shall be deemed disinterested; and
(3) if such Affiliate Transaction involves an amount in excess of (i) $10.0 million in the case of any Affiliate Transaction between Parent, on the one hand, and the Company or any Restricted Subsidiary, on the other hand, or (ii) $20.0 million in the case of any other Affiliate Transaction, the Board of Directors of the Company shall also have received a written opinion
from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate.
(b) The provisions of the preceding paragraph (a) will not prohibit:
(1) any Investment (other than a Permitted Investment) or other Restricted Payment, in each case permitted to be made pursuant to the covenant described under "-- Limitation on Restricted Payments;"
(2) any issuance of securities, or other payments, awards or grants in cash, securities (including securities of Parent) or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors of the Company;
(3) loans or advances to employees in the ordinary course of business in accordance with the past practices of the Company or its Restricted Subsidiaries, but in any event not to exceed $6.0 million in the aggregate outstanding at any one time;
(4) reasonable fees and compensation paid to and indemnity provided on behalf of officers, directors and employees of the Company or any of its Restricted Subsidiaries in the ordinary course of business or as required by law;
(5) any transaction with a Restricted Subsidiary or joint venture or similar entity which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary, joint venture or similar entity;
(6) the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company;
(7) the purchase of or the payment of Indebtedness of or monies owed by the Company or any of its Restricted Subsidiaries for goods or materials purchased, or services received, in the ordinary course of business;
(8) any Qualified Receivables Transaction, and the Incurrence of obligations and acquisitions of Permitted Investments and other rights or assets in connection with a Qualified Receivables Transaction; and
(9) any agreement as in effect or entered into on the Issue Date and described in the Offering Circular or any renewals or extensions of any such agreement (so long as such renewals or extensions are not less favorable to the Company or the Restricted Subsidiaries) and the transactions evidenced thereby.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company
(1) will not, and will not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of any Capital Stock of any Restricted Subsidiary to any Person (other than to the Company or a Wholly Owned Subsidiary), and
(2) will not permit any Restricted Subsidiary to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors' or other legally required qualifying shares) to any Person (other than to the Company or a Wholly Owned Subsidiary),
unless
(A) immediately after giving effect to such issuance, sale or other disposition, neither the Company nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary; or
(B) immediately after giving effect to such issuance, sale or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect thereto is treated as a new Investment by the Company and such Investment would not have been prohibited by the covenant described under "-- Limitation on Restricted Payments" if made on the date of such issuance, sale or other disposition.
LIMITATION ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (the "Initial Lien") of any nature whatsoever on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Indebtedness, other than Permitted Liens, without effectively providing that the Notes shall be secured equally and ratably with (or prior to) the obligations so secured for so long as such obligations are so secured.
Any Lien created for the benefit of the Holders of the Notes pursuant to the preceding sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless:
(1) the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to the covenant described under "-- Limitation on Indebtedness" and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes pursuant to the covenant described under "-- Limitation on Liens;"
(2) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair value (as determined by our senior management or, in the case of a Sale/Leaseback Transaction in excess of $5.0 million, by the Board of Directors of the Company) of such property; and
(3) the Company applies the proceeds of such transaction in compliance with the covenant described under "-- Limitation on Sale of Assets and Subsidiary Stock."
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture;
(2) immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under "-- Limitation on Indebtedness;"
(4) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture; and
(5) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such transaction and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred;
provided, however, that clause (3) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to the Company or (B) the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction.
The Successor Company will be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes.
The Company will not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to any Person unless:
(1) except in the case of a Subsidiary Guarantor that has been disposed of in its entirety to another Person (other than to the Company or an Affiliate of the Company), whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the Company provides an Officers' Certificate to the Trustee to the effect that the Company will comply with its obligations under the covenant described under "-- Limitation on Sales of Assets and Subsidiary Stock" in respect of such disposition, the resulting, surviving or transferee Person (if not such Subsidiary Guarantor) shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary Guarantor was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form reasonably satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor, if any, under its Subsidiary Guaranty;
(2) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement, if any, complies with the Indenture.
Notwithstanding the foregoing, a Restricted Subsidiary may consolidate with or merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Company or another Restricted Subsidiary.
FUTURE GUARANTORS
The Company will cause each Restricted Subsidiary organized under the laws of the United States, any state thereof or the District of Columbia that Guarantees any Indebtedness of the Company or any other Restricted Subsidiary to, at the same time, execute and deliver to the Trustee a Guaranty Agreement pursuant
to which such Restricted Subsidiary will Guarantee payment of the Notes on the same terms and conditions as those set forth in the Indenture.
SEC REPORTS
Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the SEC and provide the Trustee and Noteholders with such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and other reports to be so filed and provided at the times specified for the filings of such information, documents and reports under such Sections.
In addition, the Company shall furnish to the Holders of the Notes and to prospective investors, upon the requests of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act.
DEFAULTS
Each of the following is an Event of Default:
(1) a default in the payment of interest on the Notes when due, continued for 30 days;
(2) a default in the payment of principal of any Note when due at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise;
(3) the failure by the Company to comply with its obligations under "-- Certain Covenants -- Merger and Consolidation" above;
(4) the failure by the Company to comply for 30 days after notice with any of its obligations in the covenants described above under "Change of Control" (other than a failure to purchase Notes) or under "-- Certain Covenants" under "-- Limitation on Indebtedness," "-- Limitation on Restricted Payments," "-- Limitation on Restrictions on Distributions from Restricted Subsidiaries," "-- Limitation on Sales of Assets and Subsidiary Stock" (other than a failure to purchase Notes), "-- Limitation on Affiliate Transactions," "-- Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries," or "-- Limitation on Liens," "-- Limitation on Sale/Leaseback Transactions," "-- Future Guarantors," or "-- SEC Reports;"
(5) the failure by the Company or a Subsidiary Guarantor to comply for 60 days after notice with its other agreements contained in the Indenture;
(6) Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10.0 million (the "cross acceleration provision");
(7) certain events of bankruptcy, insolvency or reorganization of the Company, a Subsidiary Guarantor or a Significant Subsidiary (the "bankruptcy provisions");
(8) any judgment or decree for the payment of money, the portion of which is not covered by insurance is in excess of $10.0 million is entered against the Company, a Subsidiary Guarantor or a Significant Subsidiary, remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed (the "judgment default provision"); or
(9) a Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty) or a Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty.
However, a default under clauses (4) or (5) will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs and is continuing, the principal of and interest on all the Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders of the Notes. Under certain circumstances, the holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of the Notes unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless:
(1) such holder has previously given the Trustee notice that an Event of Default is continuing;
(2) holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;
(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
(5) holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of a Note or that would involve the Trustee in personal liability.
If a Default occurs, is continuing and is known to the Trustee, the Trustee must mail to each holder of the Notes notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of or interest on any Note, the Trustee may withhold notice if and so long as a committee of its trust officers determines that withholding notice is not opposed to the interest of the holders of the Notes. In addition, we are required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. We are required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults, their status and what action we are taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent of the holders of a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or noncompliance with any provisions may also be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding.
However, without the consent of each holder of an outstanding Note affected thereby, an amendment or waiver may not, among other things:
(1) reduce the amount of Notes whose holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the amount payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "-- Optional Redemption" above;
(5) make any Note payable in money other than that stated in the Note;
(6) impair the right of any holder of the Notes to receive payment of principal of and interest on such holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder's Notes;
(7) make any change in the amendment provisions which require each holder's consent or in the waiver provisions;
(8) make any change in the ranking or priority of any Note that would adversely affect the Noteholders; or
(9) make any change in any Subsidiary Guaranty that would adversely affect the Noteholders.
Notwithstanding the preceding, without the consent of any holder of the Notes, the Company, the Subsidiary Guarantors and Trustee may amend the Indenture:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to provide for the assumption by a successor corporation of the obligations of the Company or any Subsidiary Guarantor under the Indenture;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);
(4) to add guarantees with respect to the Notes, including any Subsidiary Guaranties, or to secure the Notes;
(5) to add to the covenants of the Company or a Subsidiary Guarantor for the benefit of the holders of the Notes or to surrender any right or power conferred upon the Company or a Subsidiary Guarantor;
(6) to make any change that does not adversely affect the rights of any holder of the Notes; or
(7) to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act.
The consent of the holders of the Notes is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, we are required to mail to holders of the Notes a notice briefly describing such amendment. However, the failure to give such notice to all holders of the Notes, or any defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The Notes will be issued in registered form and will be transferable only upon the surrender of the Notes being transferred for registration of transfer. We may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection with certain transfers and exchanges.
DEFEASANCE
At any time, we may terminate all our and the Subsidiary Guarantors' obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes.
In addition, at any time we may terminate our obligations under "-- Change of Control" and under the covenants described under "-- Certain Covenants" (other than the covenant described under "-- Merger and Consolidation"), the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries and the judgment default provision described under "-- Defaults" above and the limitations contained in clause (3) of the first paragraph under "-- Certain Covenants -- Merger and Consolidation" above ("covenant defeasance").
We may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option. If we exercise our legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If we exercise our covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8) or (9) under "-- Defaults" above or because of the failure of the Company to comply with clause (3) of the first paragraph under "-- Certain Covenants -- Merger and Consolidation" above. If we exercise our legal defeasance option or our covenant defeasance option, each Subsidiary Guarantor will be released from all of its obligations with respect to its Subsidiary Guaranty.
In order to exercise either of our defeasance options, we must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations or a combination thereof for the payment of principal and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
U.S. Bank National Association is to be the Trustee under the Indenture. We have appointed the Trustee as Registrar and Paying Agent with regard to the Notes.
The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; provided, however, if it acquires any conflicting interest it must either eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.
The Holders of a majority in principal amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. If an Event of Default occurs (and is not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the Indenture.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder (including Parent) of the Company or any Subsidiary Guarantor will have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, any Subsidiary Guaranty or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. Federal securities laws, and it is the view of the SEC that such a waiver is against public policy.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means:
(1) any property, plant or equipment or other tangible assets used in or useful in the operation of a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the covenants described under "-- Certain Covenants -- Limitation on Restricted Payments," "-- Certain Covenants -- Limitation on Affiliate Transactions" and "-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary
other than, in the case of clauses (1), (2) and (3) above,
(A) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(B) for purposes of the covenant described under "-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, (x) a disposition that constitutes a Restricted Payment permitted by the covenant described under "-- Certain Covenants -- Limitation on Restricted Payments" or a Permitted Investment and (y) a disposition of all or substantially all the assets of the Company in accordance with the covenant described under "-- Certain Covenants -- Merger and Consolidation;"
(C) a disposition of assets with a fair market value of less than $2.0 million;
(D) sales of accounts receivable and related assets of the type specified in the definition of Qualified Receivables Transaction to a Receivables Subsidiary for the fair market value thereof;
(E) disposals of equipment in connection with reinvestment in or the replacement of its equipment and disposals of worn-out or obsolete equipment, in each case in the ordinary course of business of the Company or its Restricted Subsidiaries;
(F) the grant in the ordinary course of business of the Company or its Restricted Subsidiaries of any license of patents, trademarks, registrations therefor or similar intellectual property;
(G) any sale, transfer or other disposition of defaulted receivables for collection; and
(H) any sale, transfer or other disposition of lift trucks and related products in which the Company or its Restricted Subsidiaries holds a security interest in connection with its granting of a guarantee or recourse or repurchase obligation under any Lift Truck Financing Guarantee; provided that the net proceeds of any such sale, transfer or other disposition shall be applied to repay the outstanding Indebtedness, if any, associated with such guarantee or recourse or repurchase obligation.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as of the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/ Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby with be determined in accordance with the definition of "Capital Lease Obligation."
"Average Life" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by
(2) the sum of all such payments.
"Board of Directors" means with respect to a Person, the Board of Directors of such Person or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance
with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the ratio of (x) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for which financial statements have been made publicly available prior to the date of such determination to (y) Consolidated Interest Expense for such four fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period;
(2) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and
(5) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the
beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, without duplication:
(1) interest expense attributable to Capital Lease Obligations and the interest expense attributable to leases constituting part of a Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Interest Rate Agreements and, to the extent entered into in connection with financing transactions, currency hedging transactions;
(7) Preferred Stock dividends in respect of all Preferred Stock held by Persons other than the Company or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the issuer of such Preferred Stock);
(8) interest incurred in connection with Investments in discontinued operations;
(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and
(B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income but only to the extent the Company or a Restricted Subsidiary funded such net loss with cash;
(2) any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:
(A) subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income but only to the extent the Company or a Restricted Subsidiary funded such net loss with cash;
(4) any gain or loss realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described under "Certain Covenants -- Limitation on Restricted Payments" only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Credit Agreement" means the Credit Agreement to be entered into as of the Issue Date by and among the Company, certain of its Subsidiaries, the lenders referred to therein, Citicorp North America, Inc., as Administrative Agent, and Credit Suisse First Boston, as Syndication Agent, together with the related documents thereto (including the term loans and revolving loans thereunder, any guarantees and security documents), as such Credit Agreement and/or related documents may be replaced, amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions and whether or not with the same agent, trustee or lenders) from time to time, and any agreement (and related document) governing Indebtedness incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders.
"Credit Facility" means one or more debt facilities (including the Credit Agreement), with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing or letters of credit, in each case, as amended, extended, renewed, replaced, restated, supplemented or otherwise modified in whole or in part from time to time (including any increase in principal amount).
"Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement designed to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if:
(1) the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the Notes and described under "-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock" and "-- Certain Covenants -- Change of Control"; and
(2) any such requirement only becomes operative after compliance with such terms applicable to the Notes, including the purchase of any Notes tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to the Indenture; provided, however, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.
"EBITDA" for any period means the sum of Consolidated Net Income, plus Consolidated Interest Expense, plus the following to the extent deducted in calculating such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated Restricted Subsidiaries;
(2) depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid operating activity item that was paid in cash in a prior period);
(3) all non-recurring gains and losses of the Company and its consolidated Restricted Subsidiaries; and
(4) all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period);
in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended or distributed to the Company or another Restricted Subsidiary by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any Restricted Subsidiary that is not organized and existing under the laws of the United States of America, any State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards Board;
(3) such other statements by such other entity as approved by a significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, 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. The term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company's obligations with respect to the Notes on the terms provided for in the Indenture.
"Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with "-- Certain Covenants -- Limitation on Indebtedness," (1) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security and (2) the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled
dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms will not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/ Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with the Indenture (but excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase by the Company or any Restricted Subsidiary of any business or other assets, the term "Indebtedness" will exclude indemnification or post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter.
The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.
"Independent Qualified Party" means an investment banking firm, accounting firm or appraisal firm of national standing; provided, however, that such firm is not an Affiliate of the Company.
"Interest Rate Agreement" means in respect of a Person any interest rate swap agreement, interest rate cap agreement or other similar financial agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable or deposits on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of "Unrestricted Subsidiary", the definition of "Restricted Payment" and the covenant described under "-- Certain Covenants -- Limitation on Restricted Payments":
(1) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company's "Investment" in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Company's senior management or, in the case of an Investment in excess of $5.0 million, by the Board of Directors of the Company.
"Issue Date" means the date on which the Notes are originally issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).
"Lift Truck Financing Guarantee" means guarantees or repurchase or recourse
obligations of the Company or a Restricted Subsidiary, Incurred in the ordinary
course of business consistent with past practice, of Indebtedness Incurred by a
dealer or customer of a dealer, for the purchase or lease of lift trucks
substantially all of which are manufactured or sold by the Company or a
Restricted Subsidiary, the proceeds of which Indebtedness is used by such dealer
or customer primarily to pay the purchase price of such lift trucks and any
related reasonable fees and expenses (including financing fees), provided,
however, that (1)(A) with respect to lift trucks located in the United States,
the Indebtedness so guaranteed is secured by a perfected first priority Lien on
such lift trucks in favor of the holder of such Indebtedness, the Company or a
Restricted Subsidiary and (B) with respect to lift trucks located outside of the
United States, the Indebtedness so guaranteed is secured by a lien or other
similar security interest in favor of the holder of such Indebtedness, the
Company or a Restricted Subsidiary to the extent commercially practicable in the
jurisdiction in which such lift trucks are located and (2) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
guarantee, the Company or such Restricted Subsidiary will have the right to
either (a) the title to such lift trucks, (b) a valid assignment of a perfected
first priority Lien or other similar security interest in the lift trucks, or
(c) the net proceeds of any resale of such lift trucks.
"Net Available Cash" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions and other fees and expenses (including fees and expenses of counsel, accountants and investment bankers) incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;
(4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition; and
(5) in the case of an Asset Disposition that involves the sale of an owned dealer or dealers, payments required to be made to third parties (other than as set forth in paragraph (3) above) in respect of terminations of lease obligations, dealer exclusivity arrangements or similar obligations necessary, in the good faith judgment of the Company, to complete such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
"Parent" means NACCO Industries, Inc. or its successors.
"Permitted Holders" means, collectively, the parties to the Stockholders' Agreement, dated as of March 15, 1990, as amended from time to time, by and among National City Bank, (Cleveland, Ohio), as depository, the Participating Stockholders, as defined therein, and Parent; provided, however, that for purposes of this definition only, the definition of Participating Stockholders contained in the Stockholders' Agreement shall be such definition in effect on the Issue Date.
"Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to the covenant described under "-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock;"
(9) any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(10) a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person, in each case in connection with a Qualified Receivables Transaction, provided, however, that any Investment in a Receivables Subsidiary is in the form of (a) a Purchase Money Note; (b) any equity interest; (c) obligations of the Receivables Subsidiary to pay the purchase price for assets transferred to it; or (d) interests in accounts receivable generated by the Company or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable;
(11) Hedging Obligations;
(12) negotiable instruments held for deposit or collection in the ordinary course of business;
(13) any Investment in existence on the Issue Date;
(14) Investments in independently held lift truck dealers (consisting of not more than 50% of the total voting power of shares of Voting Stock of any such dealer) which do not exceed, at any one time, $5.0 million; and
(15) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value) which, when taken together with all other Investments made pursuant to this clause (15) that are at the time outstanding (measured on the date such Investment was made and without giving effect to subsequent changes in value), does not exceed $20.0 million.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review and Liens arising solely by virtue of any statutory or common law provision relating to banker's Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, however, that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;
(3) Liens for property taxes not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person; provided, however, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;
(7) Liens to secure Indebtedness permitted under the provisions
described in clauses (b)(1) and (b)(16) under "-- Certain
Covenants -- Limitation on Indebtedness;" provided, however, that
with respect to Liens securing Indebtedness Incurred under clause
(b)(16), such Liens exclude Liens on real property, plant and
equipment;
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Subsidiary of such Person; provided, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(10) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; provided, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(11) Liens securing Indebtedness or other obligations of a Subsidiary of such Person owing to such Person or a wholly owned Subsidiary of such Person;
(12) Liens securing Hedging Obligations so long as such Hedging Obligations relate to Indebtedness that is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligations;
(13) Liens arising from precautionary Uniform Commercial Code financing statement filings relating to operating leases entered into by the Company and its Subsidiaries in the ordinary course or business;
(14) Liens on assets held by Company-owned dealers in connection with Lift Truck Financing Guarantees and limited in each case to the property subject to such Lift Truck Financing Guarantee; and
(15) Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (6), (8), (9) or (10); provided, however, that:
(A) such new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and
(B) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (x) the
outstanding principal amount or, if greater, committed amount
of the Indebtedness described under clause (6), (8), (9) or
(10) at the time the original Lien became a Permitted Lien and
(y) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension,
renewal or replacement.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien described in clauses (6), (9) or (10) above to the extent such Lien applies to any Additional Assets acquired directly or indirectly from Net Available Cash pursuant to the covenant described under "-- Certain Covenants -- Limitation on Sale of Assets and Subsidiary Stock." For purposes of this definition, the term "Indebtedness" shall be deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering of common stock of Parent or the Company pursuant to an effective registration statement under the Securities Act.
"Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Restricted Subsidiary in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Restricted Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any Restated Subsidiary), and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Restricted Subsidiary of the Company, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets that are customarily transferred, or in respect of which security interests are customarily granted, in connection with asset securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company that engages in no activities other than in connection with the financing of accounts receivable and that is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and (1) has no Indebtedness or other obligations (contingent or otherwise) that (a) are guaranteed by the Company or any Restricted Subsidiary, other than contingent liabilities pursuant to Standard Securitization Undertakings, (b) are recourse to or obligate the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; (2) has no contract, agreement, arrangement or undertaking (except in connection with a Purchase Money Note or Qualified Receivables Transaction) with the Company or its Restricted Subsidiaries other than on terms no less favorable to the Company or such Restricted Subsidiaries than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and (3) neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve the Receivables Subsidiary's financial condition or cause the Receivables Subsidiary to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officer's Certificate certifying, to the best of such officer's knowledge and belief after consulting with counsel, that such designation complied with the foregoing conditions.
"Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with the Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights Agreement dated May 9, 2002, among the Company, the Subsidiary Guarantors, Credit Suisse First Boston Corporation and Salomon Smith Barney Inc.
"Related Business" means any business in which the Company or its Subsidiaries was engaged on the Issue Date and any business related, ancillary or complementary to any business of the Company or its Subsidiaries in which the Company or its Subsidiaries was engaged on the Issue Date or a reasonable extension, development or expansion of the business in which the Company or its Subsidiaries was engaged as of the Issue Date.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or distributions payable solely to the Company or a Restricted Subsidiary, and other than pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition); or
(4) the making of any Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person, other than Sale/Leaseback Transactions involving lift trucks placed into the owned operations of the Company or the Restricted Subsidiaries for use or lease.
"SEC" means the U.S. Securities and Exchange Commission.
"Senior Indebtedness" means with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and
(2) accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable
unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are subordinate in right of payment to the Notes or the Subsidiary Guaranty of such Person, as the case may be; provided, however, that Senior Indebtedness shall not include:
(1) any obligation of such Person to any Subsidiary;
(2) any liability for Federal, state, local or other taxes owed or owing by such Person;
(3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities);
(4) any Indebtedness or Guarantee of such Person (and any accrued and unpaid interest in respect thereof) which is subordinate or junior in any respect to any other Indebtedness or Guarantee or other obligation of such Person; or
(5) that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of the Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary that are reasonably customary in securitization transactions involving accounts receivables in connection with any servicing obligations assumed by the Company or any Restricted Subsidiary in respect of such accounts receivable.
"Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a written agreement to that effect.
"Subsidiary" means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means NMHG Distribution Co., Hyster-Yale Materials Handling, Inc., NACCO Materials Handling Group, Inc., NMHG Oregon, Inc. and Hyster Overseas Capital Corporation, LLC and each other Subsidiary of the Company that executes the Indenture as a guarantor and each other Subsidiary of the Company that thereafter guarantees the Notes pursuant to the terms of the Indenture.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the Company's obligations with respect to the Notes.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group; and
(5) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under the covenant described under "-- Certain Covenants -- Limitation on Restricted Payments."
The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under paragraph (a) of the covenant described under "-- Certain Covenants -- Limitation on Indebtedness" and (B) no Default shall have occurred and be continuing. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"U.S. Dollar Equivalent" means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the "Exchange Rates" column under the heading "Currency Trading" on the date two Business Days prior to such determination.
Except as described under "-- Certain Covenants -- Limitation on Indebtedness," whenever it is necessary to determine whether the Company has complied with any covenant in the Indenture or a Default has occurred and an amount is expressed in a currency other than U.S. dollars, such amount will be treated as the U.S. Dollar Equivalent determined as of the date such amount is initially determined in such currency.
"U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or one or more Wholly Owned Subsidiaries.
FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a discussion of the U.S. federal income tax consequences that are anticipated to be material to the ownership and disposition of the exchange notes to non-U.S. holders (as defined below) of exchange notes. This summary is based upon existing U.S. federal income tax law, which is subject to change, possibly retroactively. This discussion is limited to exchange notes held as capital assets within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986 (the "Code"). This summary does not discuss all of the U. S. federal income tax consequences that may be relevant to a particular non-U.S. holder in light of such holder's specific circumstances or to holders subject to special tax rules, such as certain financial institutions, insurance companies, securities dealers, tax-exempt organizations, real estate investment trusts, regulated investment companies, grantor trusts or persons holding exchange notes in connection with a hedging, straddle, conversion or other integrated transaction. This summary also does not address the tax consequences that may be relevant to persons who have ceased to be United States citizens or who are no longer subject to tax as resident aliens or that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. Holders are urged to consult their tax advisors with regard to the application of U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "non-U.S. holder" means a beneficial owner of an exchange note that is for, U.S. federal income tax purposes:
- a nonresident alien individual;
- a foreign corporation;
- a foreign estate; or
- a foreign trust.
Foreign partnerships, including other foreign entities taxable as partnerships for U.S. federal income tax purposes, are subject to special U.S. income and withholding tax rules. The tax treatment of a partner in a foreign partnership will generally depend on the status of the partner and the activities of the foreign partnership. Prospective investors that are foreign partnerships or partners in a foreign partnership are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of the exchange notes.
PAYMENT OF INTEREST
Subject to the discussion below concerning backup withholding, payments of interest on the exchange notes by us or our paying agent to any non-U.S. holder should qualify as portfolio interest under the Code and should not be subject to U.S. federal income or withholding tax, provided that:
- the interest is not effectively connected with the conduct by such holder of a trade or business in the United States;
- the holder (1) does not own, actually or constructively, 10% or more of the total combined voting power of all our classes of stock entitled to vote, (2) is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership, and (3) is not a bank receiving interest from us under a loan agreement entered into in the ordinary course of the bank's business; and
- the certification requirement, as described below, has been fulfilled with respect to the beneficial owner.
The certification requirement referred to above will be fulfilled if the beneficial owner of exchange notes certifies on Internal Revenue Service ("IRS") Form W-8BEN (or successor form) under penalties of perjury that it is not a United States person and provides its name and address and:
- such beneficial owner files such Form W-8BEN with the withholding agent;
- in the case of exchange notes held on behalf of the beneficial owners by a securities clearing organization, bank or other financial institution holding customers' securities in the ordinary course of
its trade or business, such financial institution files with the withholding agent IRS Form W-8IMY (or successor form) certifying that it has received certifications from the beneficial owners of exchange notes, furnishes the withholding agent with copies thereof and otherwise complies with applicable IRS requirements; or
- in the case of exchange notes held by a foreign partnership, such foreign partnership (1) files with the withholding agent IRS Form W-8IMY certifying that it has received certifications from its partners that are non-U.S. holders, furnishes the withholding agent with the required withholding statement, and otherwise complies with applicable IRS requirements, or (2) enters into a withholding agreement with the IRS under which it assumes certain U.S. withholding responsibilities and otherwise complies with applicable IRS requirements.
Alternatively, these certification requirements will not apply if the beneficial owner of the exchange note holds such exchange note directly through a "qualified intermediary" (which is a non-U.S. office of a bank, securities dealer or similar intermediary that has signed an agreement with the IRS concerning withholding tax procedures), the qualified intermediary has sufficient information in its files to indicate that the holder is a non-U.S. holder and the intermediary complies with IRS requirements. Special intermediary rules apply with respect to exchange notes held by a foreign partnership. Prospective investors, including foreign partnerships and their partners and holders who hold their exchange notes through a qualified intermediary, are urged to consult their tax advisors regarding possible reporting and withholding requirements.
Except to the extent that an applicable treaty otherwise provides, a non-U.S. holder generally will be taxed with respect to interest in the same manner as a holder that is a U.S. person if the interest is effectively connected with a United States trade or business of the non-U.S. holder. Effectively connected interest income received or accrued by a corporate non-U.S. holder may also, under certain circumstances, be subject to an additional "branch profits" tax at a 30% rate (or, if applicable, at a lower tax rate specified by a treaty). Even though such effectively connected income is subject to income tax, and may be subject to branch profits tax, it is not subject to withholding tax if the non-U.S. holder delivers a properly executed IRS Form W-8ECI (or successor form) to the withholding agent.
The gross amount of any payments of interest that do not qualify for the exception from withholding described above and that are not effectively connected with the conduct by such holder of a trade or business in the United States will be subject to U.S. withholding tax at a rate of 30% unless a treaty applies to reduce or eliminate withholding and the non-U.S. holder properly certifies on IRS Form W-8BEN that it is entitled to such treaty benefits.
SALE, EXCHANGE, REDEMPTION, OR DISPOSITION OF NOTES
Subject to the discussion below concerning backup withholding, a non-U.S. holder of an exchange note generally will not be subject to U.S. federal income tax on gain realized on the sale, exchange, redemption or other disposition of such exchange note, unless:
- such holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions exist; or
- such gain is effectively connected with the conduct by such holder of a trade or business in the United States; or
- the holder is subject to the special rules applicable to certain former citizens and residents of the United States.
UNITED STATES FEDERAL ESTATE TAX
If interest on the exchange notes is exempt from withholding of U.S. federal income tax under the portfolio interest exemption (without regard to the certification requirement), the exchange notes will not be included in the estate of a deceased non-U.S. holder for U.S. federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
We must report annually to the IRS and to each non-U.S. holder any interest paid to the non-U.S. holder. Copies of these information returns may also be made available under the provisions of a specific treaty or other agreement with the tax authorities of the country in which the non-U.S. holder resides.
Under current U.S. federal income tax law, backup withholding tax will not apply to payments of interest by us or our paying agent on an exchange note if the certifications are received or the qualified intermediary requirements are met as described above under "-- Payment of interest" provided that we or such paying agent, as the case may be, do not have actual knowledge or reason to know that the payee is a U.S. person or that the conditions of any other exemption are not in fact satisfied.
Payments on the sale, exchange or other disposition of an exchange note made to or through a foreign office of a foreign broker generally will not be subject to backup withholding or information reporting. However, if such broker is for U.S. federal income tax purposes a U.S. person, a controlled foreign corporation, a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period or a foreign partnership with certain connections to the United States, then information reporting will generally be required unless the broker has in its records documentary evidence that the beneficial owner is not a U.S. person and certain other conditions are met or the beneficial owner otherwise establishes an exemption. Backup withholding may apply to any payment that such broker is required to report if the broker has actual knowledge or reason to know that the payee is a U.S. person. Payments to or through the U.S. office of a broker will be subject to backup withholding and information reporting unless the holder certifies, under penalties of perjury, that it is not a U.S. person or otherwise establishes an exemption. Treasury Regulations provide certain presumptions under which a non-U.S. holder will be subject to backup withholding and information reporting unless such holder certifies as to its non-U.S. status or otherwise establishes an exemption.
Any amounts withheld from a payment to a non-U.S. holder under the backup withholding rules will be allowed as a credit against such holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS.
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
Because the exchange notes should not differ materially in kind or extent from the outstanding notes, your exchange of outstanding notes for exchange notes should not constitute a taxable disposition of the outstanding notes for United States federal income tax purposes. As a result, you should not recognize income, gain or loss on your exchange of outstanding notes for exchange notes, your holding period for the exchange notes should generally include your holding period for outstanding notes, your adjusted tax basis in the exchange notes should generally be the same as your adjusted tax basis in your outstanding notes and the United States federal income tax consequences associated with owning the outstanding notes should continue to apply to the exchange notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2002, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to the prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the initial purchasers of the outstanding notes up to $5,000, other than commissions or concessions of any brokers or dealers and will indemnify the initial purchasers of the outstanding notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Jones, Day, Reavis & Pogue, Cleveland, Ohio, will pass upon the validity of the exchange notes for us. Dennis W. LaBarre, a director of NMHG Holding Co. and NACCO Industries, Inc., and a member of our Nominating, Organization and Compensation Committee, is a partner in the law firm of Jones, Day, Reavis & Pogue.
EXPERTS
The audited consolidated financial statements and schedule as of December 31, 2001 and 2000, and for each of the three years in the period ended December 31, 2001, included in this prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the report of said firm and upon the authority of said firm as experts in accounting and auditing.
Reference is made to the report, which includes an explanatory paragraph with respect to the change in method of accounting for derivative instruments and hedging activities, and the change in method of calculating pension costs for a defined benefit pension plan in the United Kingdom, as discussed in Note 2 to the audited consolidated financial statements.
OTHER MATTERS
Our former independent public accountant, Arthur Andersen LLP, has informed us that on March 14, 2002, an indictment was unsealed charging it with federal obstruction of justice arising from the U.S. government's investigation of Enron Corp. It is possible that events arising out of the indictment may adversely affect the ability of Arthur Andersen LLP to satisfy any claims that may arise out of Arthur Andersen LLP's audit of our financial statements. See "Risk Factors -- Our public accountants have recently been indicted by the U.S. federal government, which may adversely affect our ability to comply with our registration obligations, whether contractual or statutory, and the ability of Arthur Andersen LLP to satisfy any claims that may arise out of Arthur Andersen LLP's audit of our financial statements."
Effective May 8, 2002, our Board of Directors, based on the recommendation of its Audit Review Committee, dismissed Arthur Andersen LLP as independent auditor for itself and its subsidiaries, and engaged the services of Ernst & Young LLP as its new independent auditors for the fiscal year ending December 31, 2002. This determination followed the decision by NACCO's Board of Directors to seek proposals from independent public accounting firms to audit the consolidated financial statements of NACCO and its subsidiaries, including us. We have continued to utilize Arthur Andersen LLP to perform services as our predecessor independent auditor with respect to our financial statements prior to May 8, 2002.
The audit reports of Arthur Andersen LLP on our consolidated financial statements for the fiscal years ended December 31, 2001 and 2000 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
During the fiscal years ended December 31, 2001 and 2000, and the subsequent interim period through May 8, 2002, there were no disagreements between us and Arthur Andersen LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Arthur Andersen LLP, would have caused them to make reference to the subject matter of the disagreement in connection with their reports.
None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred within our fiscal years ended December 31, 2001 and 2000 or the subsequent interim period through May 8, 2002.
During the fiscal years ended December 31, 2001 and 2000, and the subsequent interim period through May 8, 2002, neither we nor anyone on our behalf consulted with Ernst & Young LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
WHERE YOU CAN FIND MORE INFORMATION
Following completion of this offering, we will be required to file reports and other information with the Securities and Exchange Commission. These reports and other information will be available for reading and copying at the SEC Public Reference Room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. Requests should be directed to: NACCO Materials Handling Group,
Attention: Vice President Corporate Development, General Counsel and Secretary,
650 N.E. Holladay Street Suite 1600, Portland, Oregon 97232, telephone number:
(503) 721-6060.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Audited Financial Statements:
Report of Independent Public Accountants.................... F-2
Consolidated Statements of Operations and Comprehensive
Income (Loss) for the years ended December 31, 2001, 2000
and 1999.................................................. F-3
Consolidated Balance Sheets at December 31, 2001 and 2000... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999.......................... F-6
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 2001, 2000 and 1999.............. F-7
Notes to Consolidated Financial Statements.................. F-8
Financial Statement Schedules:
Valuation and Qualifying Accounts for the years ended
December 31, 2001, 2000 and 1999.......................... F-38
Unaudited Financial Statements:
Condensed Consolidated Balance Sheets at March 31, 2002 and
December 31, 2001......................................... X-1
Unaudited Condensed Consolidated Statements of Operations
for the three months ended March 31, 2002 and 2001........ X-3
Unaudited Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2002 and 2001........ X-4
Unaudited Condensed Consolidated Statements of Stockholder's
Equity for the three months ended March 31, 2002 and
2001...................................................... X-5
Notes to Unaudited Condensed Consolidated Financial
Statements................................................ X-6
|
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholder of NMHG Holding Co. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of NMHG Holding Co. (a Delaware corporation and a wholly owned subsidiary of NACCO Industries, Inc., a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations and comprehensive income (loss), stockholder's equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 position of NMHG Holding Co. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.
As explained in Note 2 to the financial statements, effective January 1, 2001, the Company changed its method of accounting for derivative instruments and hedging activities, and its method of calculating pension costs for a defined benefit pension plan in the United Kingdom.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Cleveland, Ohio,
January 25, 2002.
NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(IN MILLIONS)
YEAR ENDED DECEMBER 31
------------------------------
2001 2000 1999
-------- -------- --------
Revenues.................................................... $1,672.4 $1,932.1 $1,761.4
Cost of sales............................................... 1,422.8 1,584.6 1,457.9
-------- -------- --------
Gross Profit................................................ 249.6 347.5 303.5
Selling, general and administrative expenses................ 262.4 257.8 233.0
Amortization of goodwill.................................... 12.9 12.6 12.2
Restructuring charges....................................... 8.8 13.9 --
Loss on sale of dealers..................................... 10.4 -- --
-------- -------- --------
Operating Profit (Loss)..................................... (44.9) 63.2 58.3
Other income (expense)
Interest expense.......................................... (23.1) (21.2) (19.0)
Insurance recovery........................................ 8.0 -- --
Other -- net.............................................. (3.4) (4.4) 1.8
-------- -------- --------
(18.5) (25.6) (17.2)
-------- -------- --------
Income (Loss) Before Income Taxes, Minority Interest, and
Cumulative Effect of Accounting Changes................... (63.4) 37.6 41.1
Income tax provision (benefit).............................. (14.5) 17.4 18.4
-------- -------- --------
Income (Loss) Before Minority Interest and Cumulative Effect
of Accounting Changes..................................... (48.9) 20.2 22.7
Minority interest income.................................... .8 1.1 1.0
-------- -------- --------
Income (Loss) Before Cumulative Effect of Accounting
Changes................................................... (48.1) 21.3 23.7
Cumulative effect of accounting changes, net of $0.8 tax
benefit in 2001........................................... (1.3) -- --
-------- -------- --------
Net Income (Loss)........................................... $ (49.4) $ 21.3 $ 23.7
======== ======== ========
Other comprehensive income (loss)
Foreign currency translation adjustment................... $ (9.2) $ (15.6) $ (12.6)
Minimum pension liability adjustment, net of: ($8.1) tax
benefit in 2001; ($1.0) tax benefit in 2000; $2.3 tax
expense in 1999........................................ (13.4) (1.4) 3.8
Current period cash flow hedging activity................. (3.3) -- --
Cumulative effect of change in accounting for derivatives
and hedging, net of ($0.4) tax benefit................. (.7) -- --
-------- -------- --------
(26.6) (17.0) (8.8)
-------- -------- --------
Comprehensive Income (Loss)................................. $ (76.0) $ 4.3 $ 14.9
======== ======== ========
|
See Notes to Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
DECEMBER 31
-------------------
2001 2000
-------- --------
ASSETS
Current Assets
Cash and cash equivalents................................. $ 59.6 $ 24.4
Accounts receivable, net of allowances of $8.0 in 2001 and
$7.7 in 2000........................................... 165.6 204.0
Tax advances, parent company.............................. 23.1 --
Notes receivable, parent company.......................... -- 3.0
Inventories............................................... 234.5 283.0
Deferred income taxes..................................... 32.9 30.5
Prepaid expenses and other................................ 12.2 7.4
-------- --------
527.9 552.3
Property, Plant and Equipment, Net.......................... 280.5 286.2
Deferred Charges
Goodwill, net............................................. 344.2 356.1
Deferred costs and other.................................. 1.9 12.3
Deferred income taxes..................................... 15.7 2.7
-------- --------
361.8 371.1
Other Assets................................................ 34.9 32.1
-------- --------
Total Assets........................................... $1,205.1 $1,241.7
======== ========
|
See Notes to Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
DECEMBER 31
-------------------
2001 2000
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable.......................................... $ 176.7 $ 209.8
Revolving credit agreements............................... 36.2 33.1
Revolving credit agreement expected to be refinanced
within 12 months....................................... 265.0 --
Current maturities of long-term debt...................... 25.5 30.3
Notes payable, parent company............................. 8.0 --
Accrued payroll........................................... 20.0 30.3
Accrued warranty obligations.............................. 34.3 36.8
Other current liabilities................................. 112.2 104.6
-------- --------
677.9 444.9
Long-term Debt.............................................. 27.7 241.5
Self-insurance Reserve...................................... 52.7 44.7
Other Long-term Liabilities................................. 62.5 44.5
Minority Interest........................................... 2.3 3.1
Stockholder's Equity
Common stock, par value $1 per share, 10,000 shares
authorized; 5,599 shares outstanding................... -- --
Capital in excess of par value............................ 198.2 198.2
Retained earnings......................................... 229.5 283.9
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment.............. (26.9) (17.7)
Minimum pension liability adjustment................. (14.8) (1.4)
Deferred loss on cash flow hedging................... (3.3) --
Cumulative effect of change in accounting for
derivatives and hedging............................. (.7) --
-------- --------
382.0 463.0
-------- --------
Total Liabilities and Stockholder's Equity............. $1,205.1 $1,241.7
======== ========
|
See Notes to Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEAR ENDED DECEMBER 31
-------------------------
2001 2000 1999
------ ------ -------
OPERATING ACTIVITIES
Net income (loss)......................................... $(49.4) $ 21.3 $ 23.7
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................ 60.4 54.6 54.1
Deferred income taxes................................ (8.5) (12.2) 2.3
Restructuring charges................................ 8.8 13.9 --
Minority interest income............................. (0.8) (1.1) (1.0)
Cumulative effect of accounting changes.............. 1.3 -- --
Loss on sale of assets............................... 10.5 0.7 --
Other non-cash items................................. 1.6 (5.8) .7
Working capital changes, excluding the effect of business
acquisitions:
Intercompany receivable/payable, affiliate........... (17.4) (1.5) (.9)
Accounts receivable.................................. 30.6 (36.3) 12.0
Inventories.......................................... 38.2 (19.0) (10.0)
Accounts payable and other liabilities............... (45.6) 47.1 8.2
Other current assets................................. 1.3 .9 (9.7)
------ ------ -------
Net cash provided by operating activities............ 31.0 62.6 79.4
------ ------ -------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment............ (53.5) (51.8) (46.2)
Proceeds from the sale of property, plant and equipment... 13.0 10.1 (.1)
Acquisitions of businesses, net of cash acquired.......... (3.9) (16.6) (62.4)
Investments in unconsolidated affiliates.................. (0.3) (1.4) 1.7
Acquisition of minority interest.......................... -- -- (11.3)
Other -- net.............................................. (2.5) -- 2.2
------ ------ -------
Net cash used for investing activities............... (47.2) (59.7) (116.1)
------ ------ -------
FINANCING ACTIVITIES
Additions to long-term debt and revolving credit
agreements.............................................. 68.9 38.6 61.7
Reductions of long-term debt and revolving credit
agreements.............................................. (22.0) (46.1) (26.3)
Cash dividends paid....................................... (5.0) (10.0) --
Capital grants............................................ .1 .4 2.6
Notes receivable/payable, parent company.................. 11.0 7.0 8.0
Deferred financing fees and other......................... (0.7) -- 1.4
------ ------ -------
Net cash provided by (used for) financing
activities........................................... 52.3 (10.1) 47.4
------ ------ -------
Effect of exchange rate changes on cash................... (0.9) .5 (1.8)
------ ------ -------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the year.......................... 35.2 (6.7) 8.9
Balance at the beginning of the year...................... 24.4 31.1 22.2
------ ------ -------
Balance at the end of the year.......................... $ 59.6 $ 24.4 $ 31.1
====== ====== =======
|
See Notes to Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
YEAR ENDED DECEMBER 31
------------------------
2001 2000 1999
------ ------ ------
Common Stock................................................ $ -- $ -- $ --
------ ------ ------
Capital in Excess of Par Value.............................. 198.2 198.2 198.2
------ ------ ------
Retained Earnings
Beginning balance......................................... 283.9 272.6 256.8
Net income (loss)......................................... (49.4) 21.3 23.7
Reconsolidation of Brazilian subsidiary................... -- -- 3.4
Repurchase of minority interest and other................. -- -- (11.3)
Cash dividends............................................ (5.0) (10.0) --
------ ------ ------
229.5 283.9 272.6
------ ------ ------
Accumulated Other Comprehensive Income (Loss)
Beginning balance......................................... (19.1) (2.1) 6.7
Foreign currency translation adjustment................... (9.2) (15.6) (12.6)
Minimum pension liability adjustment...................... (13.4) (1.4) 3.8
Current period cash flow hedge activity................... (3.3) -- --
Cumulative effect of change in accounting for derivatives
and hedging............................................ (.7) -- --
------ ------ ------
(45.7) (19.1) (2.1)
------ ------ ------
Total Stockholder's Equity............................. $382.0 $463.0 $468.7
====== ====== ======
|
See Notes to Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS IN MILLIONS, EXCEPT PERCENTAGE DATA)
NOTE 1 -- PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS
The Consolidated Financial Statements include the accounts of NMHG Holding Co. ("NMHG Holding," the parent company), a Delaware corporation, and its wholly owned subsidiaries, NACCO Materials Handling Group, Inc. ("NMHG Wholesale") and NMHG Distribution Co. ("NMHG Retail") (collectively, "NMHG" or the "Company"). NMHG Holding is a wholly owned subsidiary of NACCO Industries, Inc. ("NACCO").
Effective April 1, 1999, NACCO reorganized the Company's legal structure to align with its strategic plan to segregate its business segments into wholesale manufacturing and retail distribution operations. In order to support this new alignment, NACCO created NMHG Holding to serve as the parent company to NMHG Wholesale and NMHG Retail by contributing its investment in Hyster-Yale Materials Handling, Inc. ("H-Y") to NMHG Holding. Also during 1999, NACCO acquired the remaining 2 percent minority interest in H-Y.
NMHG designs, engineers, manufactures, sells, services and leases a full line of lift trucks and service parts marketed worldwide under the Hyster(R) and Yale(R) brand names. NMHG Wholesale includes the manufacture and sale of lift trucks and related service parts, primarily to independent and wholly owned Hyster and Yale retail dealerships. NMHG Retail includes the sale, leasing and service of Hyster and Yale lift trucks and related service parts by wholly owned retail dealerships and rental companies. The sale of service parts represents approximately 19 percent, 19 percent and 18 percent of the total NMHG revenues as reported for 2001, 2000 and 1999, respectively.
The Consolidated Financial Statements include the accounts of NMHG's majority-owned domestic and international manufacturing and retail subsidiaries. Also included is Shanghai Hyster Forklift Ltd., a 55 percent owned joint venture in China. All significant intercompany accounts and transactions among the consolidated companies are eliminated in consolidation.
The Company applies the equity method of accounting for its 25 percent ownership in QFS Holdings (Queensland) Pty Limited ("QFS"), a forklift parts depot located in Australia, which was purchased in May 2000. Investments in Sumitomo NACCO Materials Handling Company, Ltd. ("SN"), a 50 percent owned joint venture, and NMHG Financial Services, Inc., a 20 percent owned joint venture, are also accounted for by the equity method. SN operates manufacturing facilities in Japan and the Philippines from which the Company purchases certain components and internal combustion engine and electric forklift trucks. SN has a 30 percent ownership interest in Shanghai Hyster Forklift Ltd. The Company's percentage share of the net income or loss from its equity investments is reported as a component of other-net in the Other Income (Expense) portion of the Consolidated Statements of Operations and Comprehensive Income (Loss).
In 1989, NMHG acquired a majority interest in Hyster Brasil, Ltda., a Brazilian manufacturer and marketer of Hyster forklift trucks and related service parts. In 1990, NMHG deconsolidated this subsidiary because it did not have effective control, given the uncertain economic and political environment in Brazil at that time. In 1999, management reassessed its ability to influence the performance of Hyster Brasil, Ltda. The stability of the economic environment in Brazil, NMHG's ability to receive dividends from Hyster Brasil, Ltda. during the few years prior to 1999 and NMHG's planned expansion of operations in Brazil at that time were among the factors that led NMHG to determine that it had significant influence over Hyster Brasil, Ltda. and that it was appropriate to consolidate its operations. Undistributed earnings during the periods of deconsolidation, when NMHG did not have effective control, were credited directly to consolidated retained earnings in the amount of $3.4 million at December 31, 1999. The consolidation of Hyster Brasil, Ltda. as of December 31, 1999 was not material to the Company's financial position or results of operations. During 2001 and 2000, NMHG maintained consolidation of this subsidiary, and the Company will periodically assess its ability to control the operations of Hyster Brasil, Ltda.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2 -- ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities (if any) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in banks and highly liquid investments with original maturities of three months or less.
ACCOUNTS RECEIVABLE, NET OF ALLOWANCES
Allowances are maintained against accounts receivable for doubtful accounts. Allowances for doubtful accounts are maintained for estimated losses resulting from the inability of customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined under the last-in, first-out (LIFO) method for manufactured inventories in the United States and for certain retail inventories. The first-in, first-out (FIFO) method is used with respect to all other inventories. Reserves are maintained for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon historical inventory turnover activity.
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are recorded at cost. Depreciation and amortization are provided in amounts sufficient to amortize the cost of the assets, including assets recorded under capital leases, over their estimated useful lives using the straight-line method. Buildings are depreciated using a 40-year life, improvements to land and buildings are depreciated over 20 and 15 years, respectively, and equipment is depreciated over estimated useful lives ranging from 3 to 12 years. Repairs and maintenance costs are generally expensed when incurred.
GOODWILL, NET
Goodwill represents the excess purchase price paid over the fair value of the net assets acquired. The amortization of goodwill is provided on a straight-line basis generally over a 40-year period. Accumulated amortization of goodwill was $147.0 million and $134.2 million at December 31, 2001 and 2000, respectively. Management regularly evaluates its accounting for goodwill, considering such factors as historical and future profitability, and believes that these assets are realizable and the amortization periods remain appropriate.
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 addresses the accounting for goodwill and other intangible assets. The Company adopted this statement on January 1, 2002 as required. Beginning in 2002, goodwill will no longer be amortized in accordance with this Statement. During 2002, the Company will begin testing goodwill for impairment in accordance with SFAS No. 142.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SELF-INSURANCE RESERVES
The Company is generally self-insured for product liability, environmental liability, and medical and workers' compensation claims. For product liability, catastrophic coverage is retained for potentially significant individual claims. An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment. Changes in assumptions for such matters as legal actions, inflation rates, medical costs and actual experience could cause estimates to change in the near term.
REVENUE RECOGNITION
Revenues are generally recognized when customer orders are completed and shipped. For National Account customers, revenue is generally recognized upon customer acceptance of the product. Reserves for sales discounts, returns and product warranty repairs are established and maintained for anticipated future claims.
ADVERTISING COSTS
Advertising costs are expensed as incurred and amounted to $7.6 million, $10.8 million and $10.3 million in 2001, 2000 and 1999, respectively.
PRODUCT DEVELOPMENT COSTS
Expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $44.7 million, $43.9 million and $41.4 million in 2001, 2000 and 1999, respectively.
FOREIGN CURRENCY
Assets and liabilities of foreign operations are translated into U.S. dollars at the fiscal year-end exchange rate. The related translation adjustments are recorded as a separate component of stockholder's equity, except for the Company's Mexican operations. The U.S. dollar is considered the functional currency for the Company's Mexican operations and, therefore, the effect of translating assets and liabilities from the Mexican peso to the U.S. dollar is recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss). Revenues and expenses of all foreign operations are translated using the monthly average exchange rates prevailing during the year.
FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
Financial instruments held by the Company include cash and cash equivalents, accounts receivable, accounts payable, revolving credit agreements, long-term debt, interest rate swap agreements and forward foreign currency exchange contracts. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes.
The Company uses forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies. These contracts hedge primarily firm commitments and, to a lesser degree, forecasted transactions relating to cash flows associated with sales and purchases denominated in currencies other than the subsidiaries' functional currency. Generally, gains and losses from changes in the market value of these contracts are recognized in cost of sales and offset the foreign exchange gains and losses on the underlying transactions.
The Company uses interest rate swap agreements to partially reduce risks
related to floating rate financing agreements which are subject to changes in
the market rate of interest. Terms of the interest rate swap agreements require
the Company to receive a variable interest rate and pay a fixed interest rate.
The
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's interest rate swap agreements and its variable rate financings are predominately based upon the three-month LIBOR (London Interbank Offered Rate). Amounts to be paid or received under the interest rate swap agreements are accrued as interest rates change and are recognized over the life of the swap agreement as an adjustment to interest expense.
Interest rate swap agreements and forward foreign currency exchange contracts held by the Company which qualify as hedges have been designated as hedges of forecasted cash flows. The Company does not currently hold any nonderivative instruments designated as hedges or any derivatives designated as fair value hedges as defined in SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
NMHG Wholesale holds certain interest rate swap agreements that do not
qualify for hedge accounting treatment according to the guidance of SFAS No.
133. As such, the change in the mark-to-market amount of these swaps will be
recognized in the statement of operations every quarter. Although these interest
rate swap agreements do not qualify for hedge accounting, the Company believes
that these interest rate swap agreements are reasonably effective at
economically hedging the Company's risk to changes in the variable rate of
interest. The adjustment to the Consolidated Statements of Operations and
Comprehensive Income (Loss) for those interest rate swap agreements that did not
qualify for hedge treatment and for the ineffective portion of certain interest
rate swap agreements was included in other -- net and amounted to a loss of $1.4
million ($0.9 million after-tax) for the year ended December 31, 2001.
For those interest rate swap agreements that qualify for hedge accounting treatment, the mark-to-market effect has been included in the accumulated other comprehensive income (loss) section ("OCL") of stockholder's equity. Based upon market valuations at December 31, 2001, approximately $2.0 million of the net deferred loss in OCL is expected to be reclassified into the statement of operations over the next 12 months, as cash flow payments are made in accordance with the interest rate swap agreements.
For the year ended December 31, 2001, there was no ineffectiveness of forward foreign currency exchange contracts that would have resulted in recognition in the statement of operations. Forward foreign currency exchange contracts are used to hedge transactions expected to occur within the next 12 months. Based on market valuations at December 31, 2001, the amount of net deferred gain included in OCL at December 31, 2001, totaling less than $0.1 million, is expected to be reclassified into the statement of operations over the next 12 months, as those transactions occur.
Cash flows from hedging activities are reported in the Consolidated Statements of Cash Flows in the same classification as the hedged item, generally as a component of cash flows from operations.
NEW ACCOUNTING STANDARDS
On January 1, 2001, the Company adopted SFAS No. 133, as amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires companies to recognize all derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting.
As a result of the adoption of SFAS No. 133, the Company recognized a cumulative effect of a change in accounting charge to the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2001 of $0.9 million, net of $0.5 million of tax benefit, relating primarily to certain interest rate swap agreements held by NMHG Wholesale which did not qualify for hedge accounting treatment at January 1, 2001. In addition, effective January 1, 2001, the Company recognized a cumulative effect of a change in accounting charge against OCL in the Consolidated Balance Sheet at December 31, 2001 of $0.7 million, net of $0.4 million of tax benefit, relating to net deferred losses on derivative instruments that qualify for hedge accounting treatment under SFAS No. 133.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 1, 2001, the Company recognized a cumulative effect of a change in accounting charge of $0.4 million, net of $0.3 million tax benefit, relating to a change in the method of calculating pension costs for the defined benefit pension plan in the United Kingdom. Prior to January 1, 2001, actuarially determined net gains and losses of the United Kingdom plan were recognized in full as a component of net pension cost in the year incurred. However, actuarially determined net gains and losses of all other defined benefit pension plans of the Company are amortized and included as a component of net pension cost over the next four years. Both of these methods are permissible pursuant to SFAS No. 87, "Employers' Accounting for Pensions." However, effective January 1, 2001, the Company changed the method of recognition of actuarially determined net gains and losses of the United Kingdom plan to conform with the methodology utilized by all other defined benefit plans of the Company. This change in accounting was made to achieve consistency of application of this accounting principle among all members of the consolidated group, which the Company believes is the preferred application of accounting principles generally accepted in the United States.
In September 2000, the Emerging Issues Task Force ("EITF") reached a consensus on Issue Number 00-10, "Accounting for Shipping and Handling Fees and Costs" ("EITF 00-10"), which requires shipping and handling amounts billed to a customer to be classified as revenue. In addition, the EITF's preference is to classify shipping and handling costs as "cost of sales."
For certain shipping and handling fees, the Company netted the charge to the customer with the cost incurred within its Consolidated Statements of Operations and Comprehensive Income (Loss) on the line cost of sales. In the fourth quarter of 2000, the Company changed its method of reporting to comply with EITF 00-10.
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 -- Revenue Recognition in Financial Statements ("SAB 101"). SAB 101 summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company has reviewed its revenue recognition policies and procedures and believes that it has complied with the requirements of SAB 101. No significant changes to the Company's revenue recognition policies were necessary to comply with SAB 101.
As of January 1, 1999, the Company adopted the American Institute of Certified Public Accountants' ("AICPA") Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," and SOP 98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-1 requires capitalization on a prospective basis of certain development costs of software to be used internally. SOP 98-5 requires start-up and organization costs to be expensed as incurred and also requires previously deferred start-up costs to be recognized as a cumulative effect adjustment in the statement of income upon adoption. The change to these new accounting standards did not have a material impact on the Company's financial position or results of operations.
ACCOUNTING STANDARDS NOT YET ADOPTED
In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," and, in October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
SFAS No. 141 requires all business combinations completed after June 30, 2001, to be accounted for under the purchase method. This standard also establishes, for all business combinations made after June 30, 2001, specific criteria for the recognition of intangible assets separately from goodwill. SFAS No. 141 also requires that the excess of the fair value of acquired assets over cost (negative goodwill) be recognized
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
immediately as an extraordinary gain, rather than deferred and amortized. The Company will account for all future business combinations under SFAS No. 141.
SFAS No. 142 addresses the accounting for goodwill and other intangible assets after an acquisition. Goodwill and other intangibles that have indefinite lives will no longer be amortized, but will be subject to annual impairment tests. All other intangible assets will continue to be amortized over their estimated useful lives, which is no longer limited to 40 years. The Company adopted this statement effective January 1, 2002, as required. Amortization of existing goodwill ceased on the unamortized portion associated with acquisitions and certain investments accounted for under the equity method. This is expected to have a favorable annual impact of approximately $12.8 million, net of tax, beginning in 2002. SFAS No. 142 also requires a new methodology for the testing of impairment of goodwill and other intangibles that have indefinite lives. During 2002, the Company will begin testing goodwill for impairment under the new rules, applying a fair-value-based test. The transition adjustment, if any, resulting from the adoption of the new approach to impairment testing as required by SFAS No. 142 will be reported as a cumulative effect of a change in accounting principle. At this time, the Company has not yet determined what impact, if any, the change in the required approach to impairment testing will have on either its financial position or results of operations.
SFAS No. 143 provides accounting requirements for retirement obligations associated with tangible long-lived assets, including: (i) the timing of liability recognition; (ii) initial measurement of the liability; (iii) allocation of asset retirement cost to expense; (iv) subsequent measurement of the liability; and (v) financial statement disclosures. SFAS No. 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. This standard becomes effective for fiscal years beginning after June 15, 2002. The Company will adopt the Statement effective January 1, 2003. The transition adjustment, if any, resulting from the adoption of SFAS No. 143 will be reported as a cumulative effect of a change in accounting principle. At this time, the Company does not expect that the adoption of this Statement will have an impact on either its financial position or results of operations.
SFAS No. 144 addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business, as previously defined in that Opinion. SFAS No. 144 provides a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. Many of the provisions of SFAS No. 121 are retained, however, SFAS No. 144 clarifies some of the implementation issues related to SFAS No. 121. SFAS No. 144 also broadens the presentation of discontinued operations to include more disposal transactions. This Statement is effective for fiscal years beginning after December 15, 2001, with early adoption encouraged. The Company adopted this Statement effective January 1, 2002, as required. The adoption of this Statement did not result in an adjustment to the Company's financial statements on January 1, 2002.
NOTE 3 -- SPECIAL CHARGES
Restructuring Charges
During 2001, management committed to the restructuring of certain operations in Europe for both the Wholesale and Retail segments of the business. As such, NMHG Wholesale recognized a restructuring charge of approximately $4.5 million pre-tax, classified in the 2001 Consolidated Statement of Operations and Comprehensive Income (Loss) on the line restructuring charges, for severance and other employee benefits to be paid to approximately 285 manufacturing and administrative personnel in Europe. NMHG Retail recognized a restructuring charge of approximately $4.7 million pre-tax, classified in the 2001 Consolidated
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Statement of Operations and Comprehensive Income (Loss) on the line restructuring charges, of which $0.4 million relates to lease termination costs and $4.3 million relates to severance and other employee benefits to be paid to approximately 140 service technicians, salesmen and administrative personnel at wholly owned dealers in Europe. During 2001, total payments of $1.7 million have been made to approximately 190 employees for both of these European plans.
During 2000, NMHG made the determination that the consolidation of the Americas' truck assembly activities from three plants to two plants offers significant opportunity to reduce structure costs while further optimizing the use of NMHG's global manufacturing capacity. Accordingly, a decision was made to phase out certain manufacturing activities in the Danville, Illinois, assembly plant. In December 2000, the Board of Directors approved management's plan to transfer manufacturing activities from NMHG's Danville plant to its other global manufacturing plants. The adoption of this plan resulted in a charge to operations of approximately $13.9 million recognized in the 2000 Consolidated Statement of Operations and Comprehensive Income (Loss) on the line restructuring charges. This charge is comprised of a $5.1 million curtailment loss for retirement benefits under a defined benefit plan, $4.0 million for employee severance to be paid to approximately 425 manufacturing and office personnel, $2.2 million of asset impairment charges and $2.6 million for other costs.
As noted above, in connection with the phase-out of activities at the Danville, Illinois, assembly plant, NMHG recognized an impairment charge of $2.2 million in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The impairment charge relates to certain fixed assets and leasehold improvements that will either be disposed of or sold at fair market value, which was estimated to be below the net book value. Fair market value was estimated using current market values for similar assets.
During 2001, payments of $1.7 million to approximately 350 employees have been made. Approximately $12.0 million of pre-tax costs associated with the Danville phase-out, which were not eligible for accrual as of December 31, 2000, were expensed during 2001 and classified as cost of sales in the 2001 Consolidated Statement of Operations and Comprehensive Income (Loss). In addition, the accrual for restructuring was reduced by $0.4 million in 2002.
The changes to the Company's restructuring accruals are as follows:
ASSET LEASE CURTAILMENT
SEVERANCE IMPAIRMENT IMPAIRMENT LOSS OTHER TOTAL
--------- ---------- ---------- ----------- ----- ------
NMHG WHOLESALE
Balance at December 31, 1999.......... $ -- $ -- $ -- $ -- $ -- $ --
Provision........................... 4.0 2.2 -- 5.1 2.6 13.9
Payments............................ -- -- -- -- -- --
----- ----- ----- ----- ----- ------
Balance at December 31, 2000.......... $ 4.0 $ 2.2 $ -- $ 5.1 $2.6 $ 13.9
Provision (reversal), net........... 4.2 -- -- -- (0.1) 4.1
Payments/assets disposed............ (2.9) (2.2) -- -- (0.1) (5.2)
----- ----- ----- ----- ----- ------
BALANCE AT DECEMBER 31, 2001.......... $ 5.3 $ -- $ -- $ 5.1 $2.4 $ 12.8
===== ===== ===== ===== ===== ======
NMHG RETAIL
Balance at December 31, 2000.......... $ -- $ -- $ -- $ -- $ -- $ --
Provision........................... 4.3 -- 0.4 -- -- 4.7
Payments............................ (0.4) -- -- -- -- (0.4)
----- ----- ----- ----- ----- ------
BALANCE AT DECEMBER 31, 2001.......... $ 3.9 $ -- $ 0.4 $ -- $ -- $ 4.3
===== ===== ===== ===== ===== ======
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NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER SPECIAL TRANSACTIONS
In 2001, NMHG recognized income of $8.0 million classified in other income
(expense) in the Consolidated Statements of Operations and Comprehensive Income
(Loss) resulting from the receipt of insurance proceeds relating to flood damage
in September 2000 at NMHG's Sumitomo-NACCO joint venture in Japan.
NOTE 4 -- ACQUISITIONS AND DISPOSITION
In 1998, NMHG announced and began implementation of a strategy to expand into the retail forklift distribution business. As a result, either 100 percent of the stock or substantially all of the assets of several forklift truck retail dealerships were acquired in 2001, 2000 and 1999. The dealerships acquired were either existing independent Hyster or Yale dealerships or were converted to Hyster or Yale dealerships at the time of acquisition. The combined purchase prices of retail dealerships acquired during 2001, 2000 and 1999 were approximately $3.9 million, $16.6 million and $62.4 million, respectively. Funds for the purchases were provided by either borrowings advanced to NMHG Retail by NMHG Wholesale under existing NMHG Wholesale facilities or by internally generated cash flows.
These acquisitions were accounted for as purchases and, accordingly, the results of operations of the acquired businesses are included in the accompanying financial statements from their respective dates of acquisition. Goodwill has been recognized for the amount of the excess of the purchase price paid over the fair market value of the net assets acquired and is amortized on a straight-line basis generally over 40 years. Goodwill recorded in 2001, 2000 and in 1999 as a result of these acquisitions was $2.5 million, $8.9 million and $24.7 million, respectively.
In 2001, NMHG Retail sold certain of its wholly owned dealers. This transaction resulted in initial proceeds of approximately $8.0 million and a preliminary charge for the loss on the sale of assets and related wind-down costs of $10.4 million, of which approximately $2.1 million related to income statement recognition of amounts previously reported in the cumulative translation adjustment. The agreement to sell these dealers allows for a final determination of the purchase price during the first quarter of 2002 whereby the preliminary purchase price received for certain assets and liabilities may be adjusted. The Company does not expect the proceeds or the loss on the sale to change significantly as a result of the final determination of the purchase price. Revenues for these dealers for the three years ended December 31, 2001, 2000 and 1999 were $45.1 million, $46.8 million and $47.4 million, respectively. Net losses for these dealers for the three years ended December 31, 2001, 2000 and 1999 were $18.2 million, $5.5 million and $2.4 million, respectively.
As a result of the acquisitions by NMHG, certain liabilities were assumed as follows:
2001 2000 1999
----- ------ ------
NONCASH INVESTING ACTIVITIES:
Fair value of assets acquired............................. $ 4.2 $ 49.1 $ 89.6
Cash paid for the net assets, net of cash acquired........ (3.9) (16.6) (62.4)
----- ------ ------
Liabilities assumed.................................... $ 0.3 $ 32.5 $ 27.2
===== ====== ======
|
On a pro forma basis, as if the businesses had been acquired on January 1, 2001, 2000 and 1999, respectively, revenues and net income (loss) would not differ materially from the amounts reported in the accompanying consolidated financial statements for 2001, 2000 and 1999.
ACQUISITION OF MINORITY INTEREST
In 1999, NACCO acquired the remaining 2 percent minority interest in H-Y
for its book value of $11.3 million.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- ACCOUNTS RECEIVABLE SECURITIZATION
On December 5, 2001, NMHG Wholesale's domestic accounts receivable securitization program (the "Program") was terminated. Prior to the termination of the program, the transfer of receivables pursuant to the Program were accounted for as a sale in accordance with SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a Replacement of FASB Statement No. 125."
As a result of the termination of the Program, NMHG Wholesale will rely on its revolving credit facility ("Facility") to finance accounts receivable that otherwise would have been sold under the Program prior to December 5, 2001. Additional borrowings from the Facility of $33.4 million were used to finance the outstanding balance of accounts receivable sold pursuant to the Program on December 5, 2001. As a result of the termination of the Program, an increase in interest expense arising from increased outstanding borrowings is expected to be offset by a decrease in the cost of the Program, which is classified in the statement of operations as other -- net.
NMHG Wholesale has agreements with financial institutions outside of the United States which allow for the sale, without recourse, of undivided interests in revolving pools of its foreign trade accounts receivable. The maximum allowable amount of foreign trade receivables to be sold was $72.4 million and $59.6 million at December 31, 2001 and 2000, respectively.
NMHG Wholesale continues to service the receivables sold and maintains an allowance for doubtful accounts based upon the expected collectibility of all NMHG Wholesale accounts receivable, including the portion of receivables sold. The servicing liability incurred in connection with these transactions is not material.
Gross proceeds of $855.7 million, $858.2 million, and $655.0 million were received during 2001, 2000 and 1999 respectively, and the balance of accounts receivable sold at December 31, 2001 and 2000 was $27.7 million and $71.6 million, respectively. The discount and any other transaction gains and losses are included in other -- net in the Consolidated Statements of Operations and Comprehensive Income (Loss) and totaled $4.7 million, $5.5 million and $3.8 million in 2001, 2000 and 1999, respectively.
NOTE 6 -- INVENTORIES
Inventories are summarized as follows:
DECEMBER 31
---------------
2001 2000
------ ------
Manufactured inventories:
Finished goods and service parts.......................... $ 99.6 $103.1
Raw materials and work in process......................... 111.4 157.9
------ ------
Total manufactured inventories......................... 211.0 261.0
Retail inventories.......................................... 35.8 36.8
------ ------
Total inventories at FIFO.............................. 246.8 297.8
LIFO reserve................................................ (12.3) (14.8)
------ ------
$234.5 $283.0
====== ======
|
The cost of certain manufactured and retail inventories has been determined using the LIFO method. At December 31, 2001 and 2000, 68 and 72 percent of total inventories, respectively, were determined using the LIFO method.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net includes the following:
DECEMBER 31
---------------
2001 2000
------ ------
Land and land improvements.................................. $ 15.8 $ 16.8
Plant and equipment:
NMHG Wholesale............................................ 413.2 386.3
NMHG Retail............................................... 109.1 95.7
------ ------
522.3 482.0
------ ------
Property, plant and equipment, at cost...................... 538.1 498.8
Less allowances for depreciation and amortization........... 257.6 212.6
------ ------
$280.5 $286.2
====== ======
|
Total depreciation and amortization expense on property, plant and equipment was $47.0 million, $41.9 million and $41.8 million during 2001, 2000 and 1999, respectively.
NOTE 8 -- REVOLVING CREDIT AGREEMENTS
The following table summarizes the Company's available and outstanding borrowings under revolving credit agreements.
DECEMBER 31
---------------
2001 2000
------ ------
Available borrowings, net of limitations.................... $450.5 $389.6
Current portion of borrowings outstanding................... $301.2 $ 33.1
Unused availability*........................................ $149.3 $147.5
Weighted average stated interest rate....................... 2.8% 7.1%
Weighted average effective interest rate
(including interest rate swap agreements)................. 5.8% 6.4%
|
* Unused availability is determined using the available borrowings, net of limitations, reduced by the current portion and long-term portion (see Note 9) of revolving credit agreements outstanding.
NMHG Wholesale's credit agreement provides for an unsecured revolving credit facility (the "Facility") that permits advances up to $350.0 million and expires in June 2002. The Facility has performance-based pricing which sets interest rates based upon the achievement of certain financial performance targets. The Facility currently provides for, at NMHG Wholesale's option, Euro-Dollar Loans which bear interest at LIBOR plus 0.20 percent and Money Market Loans which bear interest at Auction Rates (as defined in the agreement) and requires a 0.10 percent fee on the available borrowings. The Facility permits NMHG Wholesale to advance funds to NMHG Retail. Advances from NMHG Wholesale are the primary sources of financing for NMHG Retail.
Because the Facility expires in June 2002, NMHG anticipates that a new credit facility will be obtained in or before June 2002. While there can be no assurances as to the specific terms of the refinancing, including the nature of the covenants and restrictions, NMHG expects that interest rates under the new facility will be higher based on its evaluation of the generally higher interest rate spreads charged today versus interest rate spreads in effect when NMHG Wholesale's Facility was structured in 1995. NMHG Wholesale
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expects that the outstanding balance under the Facility at the time of refinancing will be financed with a combination of short-term and long-term financing. However, in accordance with accounting principles generally accepted in the U.S., the outstanding balance under the Facility will be classified as a current liability until the Facility is refinanced. The amount outstanding that is classified as a current liability at December 31, 2001 is $265.0 million.
NMHG also has separate facilities totaling $76.3 million and $66.4 million at December 31, 2001 and 2000, respectively. Outstanding letters of credit reduce amounts available under these facilities. A portion of these facilities is denominated in foreign currencies, primarily the British pound sterling and the Australian dollar. At December 31, 2001 and 2000, unused availability, net of limitations, under these facilities was $34.3 million and $26.5 million, respectively. NMHG also maintains various uncommitted lines of credit, which permitted funding up to $30.0 million at December 31, 2001 and 2000. Under these facilities, unused availability was $30.0 million and $6.0 million at December 31, 2001 and 2000, respectively.
NOTE 9 -- LONG-TERM DEBT
Long-term debt is as follows:
DECEMBER 31
---------------
2001 2000
------ ------
Long-term portion of revolving credit agreements............ $ -- $209.0
Capital lease obligations and other term loans.............. 53.2 62.8
------ ------
Total long-term debt...................................... 53.2 271.8
Less: current portion of capital leases and term loans...... (25.5) (30.3)
------ ------
$ 27.7 $241.5
====== ======
|
Annual maturities of revolving lines of credit and term loans are as follows: $314.2 million in 2002, $1.4 million in 2003 and $1.6 million in 2004. Interest paid on revolving credit agreements and long-term debt was $25.4 million, $19.8 million and $18.8 million during 2001, 2000 and 1999, respectively. Interest capitalized was $0.8 million in 2001.
The Facility contains certain covenants and restrictions. These covenants require, among other things, maintenance of minimum amounts of net worth, and specified ratios of debt to capitalization and interest coverage. At December 31, 2001, the Company was in compliance with these covenants.
NOTE 10 -- FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair values of revolving credit agreements and long-term debt were determined using current rates offered for similar obligations. The fair value of outstanding borrowings against the Facility was approximately $258.1 million at December 31, 2001 compared with a carrying value of $265.0 million, while the fair value of outstanding borrowings against the Facility approximated carrying value at December 31, 2000. The fair value of other revolving credit agreements, long-term debt and notes with NACCO approximated carrying values at December 31, 2001 and 2000. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable and derivatives. The large number of customers comprising the Company's customer base and their dispersion across many different industries and geographies mitigates concentration of credit risk on accounts receivable. To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers, but does not generally require
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
advance payments or collateral. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one institution.
DERIVATIVE FINANCIAL INSTRUMENTS
FOREIGN CURRENCY DERIVATIVES: NMHG held forward foreign currency exchange contracts with a total notional amount of $101.6 million at December 31, 2001, primarily denominated in euros, British pounds sterling, Japanese yen, Canadian dollars, Australian dollars, and Mexican pesos. NMHG held forward foreign currency exchange contracts with a total notional amount of $92.2 million at December 31, 2000, primarily denominated in British pounds sterling, euros, Japanese yen, Canadian dollars, and Australian dollars. The amount of deferred gain at December 31, 2001 and 2000, respectively, was not material. The fair market value of these contracts was estimated based on quoted market prices and approximated a net payable of $0.8 million and $0.6 million at December 31, 2001 and 2000, respectively.
INTEREST RATE DERIVATIVES: The following table summarizes the notional amounts, related rates (including applicable margins) and remaining terms on interest rate swap agreements active at December 31:
AVERAGE
NOTIONAL AMOUNT FIXED RATE
--------------- ----------- REMAINING TERM AT
2001 2000 2001 2000 DECEMBER 31, 2001
------ ------ ---- ---- -----------------
NMHG................... $225.0 $215.0 5.8% 6.3% Various, extending to January 2005
|
Interest rate swap agreements held by NMHG have terms that vary from one-year to seven-year periods from inception. The fair market value of all interest rate swap agreements, which was based on quotes obtained from the Company's counterparties, was a net payable of $10.7 million and $2.5 million at December 31, 2001 and 2000, respectively.
NOTE 11 -- LEASING ARRANGEMENTS
The Company leases certain office, manufacturing and warehouse facilities, retail stores and machinery and equipment under noncancellable capital and operating leases that expire at various dates through 2012. NMHG Retail also leases certain forklift trucks that are held for sale or sublease to customers. Many leases include renewal and/or purchase options.
Future minimum capital and operating lease payments at December 31, 2001 are:
CAPITAL OPERATING
LEASES LEASES
------- ---------
2002........................................................ $ 12.5 $ 40.4
2003........................................................ 12.7 32.1
2004........................................................ 7.3 26.0
2005........................................................ 4.6 19.0
2006........................................................ 2.5 13.3
Subsequent to 2006.......................................... 1.1 10.8
------ ------
Total minimum lease payments................................ 40.7 $141.6
======
Amounts representing interest............................... (3.5)
------
Present value of net minimum lease payments................. 37.2
Current maturities.......................................... (12.5)
------
Long-term capital lease obligation.......................... $ 24.7
======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Aggregate future minimum rentals to be received under noncancellable subleases of forklift trucks as of December 31, 2001 are $29.8 million.
Rental expense for all operating leases consists of the following:
2001 2000 1999
------ ----- -----
Minimum rentals............................................. $ 30.3 $20.2 $10.5
Sublease income............................................. (15.7) (7.8) --
------ ----- -----
Rent expense, net........................................... $ 14.6 $12.4 $10.5
====== ===== =====
|
Assets recorded under capital leases are included in property, plant and equipment and consist of the following:
DECEMBER 31
-------------
2001 2000
----- -----
Plant and equipment......................................... $60.8 $55.4
Less accumulated amortization............................... 26.3 17.9
----- -----
$34.5 $37.5
===== =====
|
During 2001, 2000 and 1999, capital lease obligations of $5.4 million, $22.3 million and $13.6 million, respectively, were incurred in connection with lease agreements to acquire plant and equipment.
NOTE 12 -- CONTINGENCIES
Various legal proceedings and claims have been or may be asserted against the Company relating to the conduct of its business, including product liability, environmental and other claims. These proceedings are incidental to the ordinary course of business of the Company. Management believes that it has meritorious defenses and will vigorously defend itself in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. Although the ultimate disposition of these proceedings is not presently determinable, management believes, after consultation with its legal counsel, that the likelihood is remote that material costs will be incurred in excess of accruals already recognized.
Under various financing arrangements for certain customers, including independently owned retail dealerships, NMHG provides guarantees of the residual values of the lift trucks, or recourse or repurchase obligations such that NMHG would be obligated in the event of default by the customer. Generally, NMHG retains a security interest in the related assets financed such that, in the event that NMHG would become obligated under the terms of the recourse or repurchase obligations, NMHG would take title to the assets financed. Total guarantees and amounts subject to recourse or repurchase obligations at December 31, 2001 and 2000 were $158.0 million and $172.8 million, respectively. The security interest is generally expected to equal or exceed the amount of the recourse or repurchase obligation. Losses anticipated under the terms of the guarantees, recourse or repurchase obligations are not significant and have been reserved for in the accompanying Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 13 -- INCOME TAXES
The components of income (loss) before income taxes and provision for income taxes for the year ended December 31 are as follows:
2001 2000 1999
------ ----- -----
Income (loss) before income taxes, minority interest and
cumulative effect of accounting changes:
Domestic.................................................... $(19.3) $45.5 $50.9
Foreign..................................................... (44.1) (7.9) (9.8)
------ ----- -----
$(63.4) $37.6 $41.1
====== ===== =====
Income tax provision (benefit)
Current tax provision (benefit):
Federal................................................... $ (3.3) $22.1 $19.8
State..................................................... (0.5) 4.7 3.7
Foreign................................................... 0.7 1.6 --
------ ----- -----
Total current.......................................... (3.1) 28.4 23.5
------ ----- -----
Deferred tax provision (benefit):
Federal................................................... 0.8 (3.0) (1.3)
State..................................................... (0.3) (0.9) (0.7)
Foreign................................................... (17.4) (4.0) (4.3)
------ ----- -----
Total deferred......................................... (16.9) (7.9) (6.3)
------ ----- -----
Increase (decrease) in valuation allowance.................. 5.5 (3.1) 1.2
------ ----- -----
$(14.5) $17.4 $18.4
====== ===== =====
|
Substantially all of the Company's interest expense and goodwill amortization has been allocated to domestic income (loss) before income taxes.
The Company made income tax payments of $22.7 million, $34.6 million and $36.7 million during 2001, 2000 and 1999, respectively. During the same period, income tax refunds totaled $6.6 million, $6.9 million and $6.9 million, respectively.
A reconciliation of the federal statutory and effective income tax for the year ended December 31 is as follows:
2001 2000 1999
------ ----- -----
Income (loss) before income taxes, minority interest and
cumulative effect of accounting changes:.................. $(63.4) $37.6 $41.1
====== ===== =====
Statutory taxes at 35.0%.................................... $(22.2) $13.2 $14.4
Valuation allowance....................................... 5.5 (2.3) 1.2
Amortization of goodwill.................................. 4.3 4.1 4.1
Foreign statutory rate differences........................ 0.2 -- (0.2)
Tax credits and capital grants............................ (0.4) (0.7) (1.1)
Earnings reported net of taxes............................ (0.9) 0.1 (0.2)
State income taxes........................................ (0.3) 2.3 2.1
Export benefits........................................... (0.5) (1.0) (1.3)
Other -- net.............................................. (0.2) 1.7 (0.6)
------ ----- -----
Income tax provision (benefit).............................. $(14.5) $17.4 $18.4
====== ===== =====
Effective rate.............................................. 22.9% 46.3% 44.8%
====== ===== =====
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company does not provide for deferred taxes on certain unremitted foreign earnings. Management has decided that the earnings of NMHG's foreign subsidiaries have been and will be indefinitely reinvested in NMHG's foreign operations and, therefore, a reserve for unremitted foreign earnings is not required. As of December 31, 2001, the cumulative unremitted earnings of the Company's foreign subsidiaries are $147.4 million. It is impracticable to determine the amount of unrecognized deferred taxes with respect to these earnings; however, foreign tax credits would be available to reduce U.S. income taxes in the event of a distribution.
A detailed summary of the total deferred tax assets and liabilities in the Company's Consolidated Balance Sheets resulting from differences in the book and tax basis of assets and liabilities follows:
DECEMBER 31
--------------
2001 2000
------ -----
Deferred tax assets
Accrued expenses and reserves............................. $ 51.5 $49.4
Accrued pension benefits.................................. 9.7 --
Other employee benefits................................... 23.7 22.3
Net operating loss carryforwards.......................... 16.1 12.5
Other..................................................... 5.8 3.6
------ -----
Total deferred tax assets.............................. 106.8 87.8
Less: Valuation allowance.............................. 10.1 4.6
------ -----
$ 96.7 $83.2
------ -----
Deferred tax liabilities
Depreciation and amortization............................. $ 24.1 $21.1
Inventories............................................... 9.4 10.1
Pension................................................... -- 5.6
Other..................................................... 14.6 15.3
------ -----
Total deferred tax liabilities......................... 48.1 52.1
------ -----
Net deferred tax asset............................... $ 48.6 $31.1
====== =====
|
The Company periodically reviews the need for a valuation allowance against certain deferred tax assets and recognizes these assets to the extent that realization is more likely than not. Based on a review of earnings history and trends, forecasted earnings and expiration of carryforwards, the Company believes that the valuation allowance provided is appropriate. In 2001, the valuation allowance increased to $10.1 million from $4.6 million at December 31, 2000. At December 31, 2001, the Company had $5.9 million of net operating loss carryforwards which expire, if unused, in years 2002 through 2021 and $10.2 million which are not subject to expiration.
The tax returns of the Company and certain of its subsidiaries are being examined by various taxing authorities. The Company has not been informed of any material assessment resulting from these examinations and will vigorously contest any material assessment. Management believes that any potential adjustment would not materially affect the Company's financial condition or results of operations.
NOTE 14 -- RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS
DEFINED BENEFIT PLANS
The Company participates in the combined defined benefit plan of NACCO for certain employee groups. The Company also maintains a defined benefit plan for those employees who are covered under collective bargaining agreements. The Company's policy is to make contributions to fund these plans within the range allowed by the applicable regulations. Plan assets consist primarily of publicly traded stocks, investment contracts and government and corporate bonds.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In 1996, pension benefits were frozen for employees covered under NMHG's United States plans, except for those NMHG employees participating in collective bargaining agreements. As a result, in the United States only certain NMHG employees covered under collective bargaining agreements will earn retirement benefits under defined benefit pension plans. Other employees of the Company, including NMHG employees whose pension benefits were frozen as of December 31, 1996, will receive retirement benefits under defined contribution retirement plans.
As a result of management's decision to phase out certain manufacturing activities in the NMHG Danville, Illinois, assembly plant, the Company recognized a curtailment loss of $5.1 million in 2000. See also Note 3.
Set forth below is a detail of the net periodic pension (income) expense and the assumptions used in accounting for the United States and the United Kingdom defined benefit plans for the years ended December 31.
2001 2000 1999
------ ----- -----
UNITED STATES PLANS
Service cost.............................................. $ 0.1 $ 0.5 $ 0.6
Interest cost............................................. 4.2 3.5 3.6
Expected return on plan assets............................ (5.3) (4.8) (4.7)
Net amortization and deferral............................. 0.4 0.4 0.6
Curtailment loss.......................................... -- 5.1 --
------ ----- -----
Net periodic pension (income) expense.................. $ (0.6) $ 4.7 $ 0.1
====== ===== =====
Assumptions:
Weighted average discount rates........................ 7.50% 8.00% 7.75%
Rate of increase in compensation levels................ 3.75% 4.25% 4.25%
Expected long-term rate of return on assets............ 9.00% 9.00% 9.00%
UNITED KINGDOM PLAN
Service cost.............................................. $ 2.0 $ 2.0 $ 2.4
Interest cost............................................. 3.2 3.0 3.1
Expected return on plan assets............................ (5.2) (4.3) (3.7)
Amortization of transition asset.......................... (0.1) (0.1) (0.1)
Amortization of prior service cost........................ 0.1 0.1 0.1
Recognized actuarial (gain) loss.......................... (0.5) (0.4) 0.4
------ ----- -----
Net periodic pension (income) expense.................. $ (0.5) $ 0.3 $ 2.2
====== ===== =====
Assumptions:
Weighted average discount rates........................ 6.25% 6.75% 6.25%
Rate of increase in compensation levels................ 3.75% 4.25% 3.50%
Expected long-term rate of return on assets............ 9.00% 9.00% 7.50%
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following sets forth the changes in the benefit obligation and the plan assets during the year and reconciles the funded status of the defined benefit plans with the amounts recognized in the Consolidated Balance Sheets at December 31:
2001 2000
---------------- ----------------
UNITED UNITED UNITED UNITED
STATES KINGDOM STATES KINGDOM
PLANS PLAN PLANS PLAN
------ ------- ------ -------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year.................. $54.7 $49.7 $46.7 $51.4
Service cost............................................. 0.1 2.0 0.5 2.0
Interest cost............................................ 4.2 3.2 3.5 3.0
Actuarial (gain) loss.................................... 1.9 5.5 5.2 (0.6)
Benefits paid............................................ (3.9) (1.4) (2.8) (2.1)
Plan amendments.......................................... -- -- 1.6 --
Foreign currency exchange rate changes................... -- (1.4) -- (4.0)
----- ----- ----- -----
Benefit obligation at end of year..................... $57.0 $57.6 $54.7 $49.7
===== ===== ===== =====
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year........... $60.9 $65.2 $56.5 $59.5
Actual return on plan assets............................. (8.0) (14.0) 6.0 10.4
Employer contributions................................... -- 1.5 1.2 1.7
Employee contributions................................... -- 0.5 -- 0.5
Benefits paid............................................ (3.9) (1.4) (2.8) (2.1)
Foreign currency exchange rate changes................... -- (1.9) -- (4.8)
----- ----- ----- -----
Fair value of plan assets at end of year.............. $49.0 $49.9 $60.9 $65.2
===== ===== ===== =====
NET AMOUNT RECOGNIZED
Plan assets in excess of obligation...................... $(8.0) $(7.7) $ 6.2 $15.5
Unrecognized prior service cost.......................... 0.3 0.7 0.8 0.8
Unrecognized actuarial (gain) loss....................... 11.0 19.1 (4.0) (5.2)
Unrecognized net transition asset........................ -- (0.2) -- (0.3)
Contributions in fourth quarter.......................... -- 0.3 -- 0.3
----- ----- ----- -----
Net amount recognized................................. $ 3.3 $12.2 $ 3.0 $11.1
===== ===== ===== =====
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS
CONSIST OF:
Prepaid benefit cost..................................... $ 5.1 $ -- $ 4.0 $11.1
Accrued benefit liability................................ (8.9) (5.6) (4.1) --
Intangible asset......................................... 0.3 0.7 0.7 --
Accumulated other comprehensive income................... 4.2 10.6 1.4 --
Deferred tax asset....................................... 2.6 6.5 1.0 --
----- ----- ----- -----
Net amount recognized................................. $ 3.3 $12.2 $ 3.0 $11.1
===== ===== ===== =====
|
POSTRETIREMENT HEALTH AND LIFE INSURANCE: The Company also maintains health care and life insurance plans (other benefit plans) which provide benefits to eligible retired employees. The Company funds these benefits on a "pay as you go" basis, with the retirees paying a portion of the costs.
The assumed health care cost trend rate for measuring the postretirement benefit cost was 10.00% in 2001 and 7.50% in 2000, gradually reducing to 5.0% through years 2010 and after. If the assumed health care trend rate were increased or decreased by one percentage point, the effect would be to increase or decrease the Accumulated Postretirement Benefit Obligation by approximately $0.2 million.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Set forth below is a detail of the net periodic expense and the assumptions used in accounting for the postretirement health and life insurance plans for the years ended December 31.
2001 2000 1999
----- ----- -----
Service cost.............................................. $ 0.1 $ 0.1 $ 0.2
Interest cost............................................. 0.8 0.6 0.6
Curtailment loss.......................................... 0.3 2.5 --
----- ----- -----
Net periodic expense................................... $ 1.2 $ 3.2 $ 0.8
===== ===== =====
Assumptions:
Weighted average discount rates........................ 7.50% 8.00% 7.75%
Rate of increase in compensation levels................ 3.75% 4.25% 4.25%
|
The following sets forth the changes in the benefit obligation and reconciles the funded status of the postretirement health and life insurance plans with the amounts recognized in the Consolidated Balance Sheets at December 31:
2001 2000
------ ------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year................... $ 11.0 $ 8.1
Service cost.............................................. 0.1 0.1
Interest cost............................................. 0.8 0.6
Actuarial (gain) loss..................................... 1.4 3.8
Benefits paid............................................. (2.8) (1.6)
------ ------
Benefit obligation at end of year...................... $ 10.5 $ 11.0
------ ------
NET AMOUNT RECOGNIZED
Benefit obligation in excess of plan assets............... $(10.5) $(11.0)
Unrecognized actuarial (gain) loss........................ 3.4 2.2
------ ------
Net amount recognized.................................. $ (7.1) $ (8.8)
====== ======
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEETS CONSIST OF:
Accrued benefit liability................................... $ (7.1) $ (8.8)
|
DEFINED CONTRIBUTION PLANS
The Company has defined contribution (401(k)) plans for substantially all U.S. employees and similar plans for employees outside of the U.S. NMHG matches employee contributions based on plan provisions. In addition, NMHG has defined contribution retirement plans whereby the applicable company's contribution to participants is determined annually based on a formula which includes the effect of actual compared to targeted operating results and the age and compensation of the participants. Total costs, including Company contributions, for these plans were $12.7 million, $14.2 million and $14.6 million in 2001, 2000 and 1999, respectively.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 15 -- BUSINESS SEGMENTS
Financial information for each of NMHG's reportable segments, as defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," is presented in the following table. See Note 1 for a discussion of the Company's operating segments and product lines.
The accounting policies of the segments are the same as those described in Note 2 -- Accounting Policies. NMHG Wholesale derives a portion of its revenues from transactions with NMHG Retail. The amount of these revenues, which are based on current market prices on similar third-party transactions, are indicated in the following table on the line "NMHG Eliminations" in the revenues section.
2001 2000 1999
-------- -------- --------
REVENUES FROM EXTERNAL CUSTOMERS
NMHG Wholesale............................................ $1,463.3 $1,750.0 $1,618.9
NMHG Retail............................................... 298.8 280.3 228.1
NMHG Eliminations......................................... (89.7) (98.2) (85.6)
-------- -------- --------
$1,672.4 $1,932.1 $1,761.4
======== ======== ========
GROSS PROFIT
NMHG Wholesale............................................ $ 189.9 $ 292.9 $ 255.7
NMHG Retail............................................... 54.8 54.1 49.3
NMHG Eliminations......................................... 4.9 0.5 (1.5)
-------- -------- --------
$ 249.6 $ 347.5 $ 303.5
======== ======== ========
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
NMHG Wholesale............................................ $ 179.9 $ 188.9 $ 169.6
NMHG Retail............................................... 84.7 69.8 63.9
NMHG Eliminations......................................... (2.2) (0.9) (0.5)
-------- -------- --------
$ 262.4 $ 257.8 $ 233.0
======== ======== ========
AMORTIZATION OF GOODWILL
NMHG Wholesale............................................ $ 11.4 $ 11.6 $ 11.6
NMHG Retail............................................... 1.5 1.0 0.6
-------- -------- --------
$ 12.9 $ 12.6 $ 12.2
======== ======== ========
OPERATING PROFIT (LOSS)
NMHG Wholesale............................................ $ (5.5) $ 78.5 $ 74.5
NMHG Retail............................................... (46.5) (16.7) (15.2)
NMHG Eliminations......................................... 7.1 1.4 (1.0)
-------- -------- --------
$ (44.9) $ 63.2 $ 58.3
======== ======== ========
OPERATING PROFIT (LOSS) EXCLUDING GOODWILL AMORTIZATION
NMHG Wholesale............................................ $ 5.9 $ 90.1 $ 86.1
NMHG Retail............................................... (45.0) (15.7) (14.6)
NMHG Eliminations......................................... 7.1 1.4 (1.0)
-------- -------- --------
$ (32.0) $ 75.8 $ 70.5
======== ======== ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2001 2000 1999
-------- -------- --------
INTEREST EXPENSE
NMHG Wholesale............................................ $ (12.9) $ (13.4) $ (16.9)
NMHG Retail............................................... (5.0) (4.6) (3.0)
NMHG Eliminations......................................... (5.2) (3.2) .9
-------- -------- --------
$ (23.1) $ (21.2) $ (19.0)
======== ======== ========
INTEREST INCOME
NMHG Wholesale............................................ $ 3.4 $ 2.2 $ 8.2
NMHG Retail............................................... 0.2 0.1 0.2
NMHG Eliminations......................................... -- -- (3.6)
-------- -------- --------
$ 3.6 $ 2.3 $ 4.8
======== ======== ========
OTHER -- NET, INCOME (EXPENSE) -- (EXCLUDING INTEREST
INCOME)
NMHG Wholesale............................................ $ 0.8 $ (6.8) $ (3.4)
NMHG Retail............................................... 0.2 0.2 0.3
NMHG Eliminations......................................... -- (0.1) 0.1
-------- -------- --------
$ 1.0 $ (6.7) $ (3.0)
======== ======== ========
INCOME TAX PROVISION (BENEFIT)
NMHG Wholesale............................................ $ (0.6) $ 24.6 $ 24.4
NMHG Retail............................................... (14.6) (6.7) (4.9)
NMHG Eliminations......................................... 0.7 (0.5) (1.1)
-------- -------- --------
$ (14.5) $ 17.4 $ 18.4
======== ======== ========
NET INCOME (LOSS)
NMHG Wholesale............................................ $ (14.1) $ 37.0 $ 39.0
NMHG Retail............................................... (36.5) (14.3) (12.8)
NMHG Eliminations......................................... 1.2 (1.4) (2.5)
-------- -------- --------
$ (49.4) $ 21.3 $ 23.7
======== ======== ========
TOTAL ASSETS
NMHG Wholesale............................................ $1,164.9 $1,167.2 $1,040.5
NMHG Retail............................................... 215.6 232.8 185.0
NMHG Eliminations......................................... (175.4) (158.3) (46.9)
-------- -------- --------
$1,205.1 $1,241.7 $1,178.6
======== ======== ========
DEPRECIATION AND AMORTIZATION EXPENSE
NMHG Wholesale............................................ $ 47.0 $ 40.6 $ 39.9
NMHG Retail............................................... 13.4 14.0 14.2
-------- -------- --------
$ 60.4 $ 54.6 $ 54.1
======== ======== ========
CAPITAL EXPENDITURES
NMHG Wholesale............................................ $ 46.6 $ 43.3 $ 44.7
NMHG Retail............................................... 6.9 8.5 1.5
-------- -------- --------
$ 53.5 $ 51.8 $ 46.2
======== ======== ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DATA BY GEOGRAPHIC AREA
No single country outside of the United States comprised 10 percent or more of the Company's revenues from unaffiliated customers. The Other category below includes Canada, Mexico, South America and Asia-Pacific. In addition, no single customer comprised 10 percent or more of the Company's revenues from unaffiliated customers.
EUROPE,
UNITED AFRICA AND
STATES MIDDLE EAST OTHER CONSOLIDATED
-------- ----------- ------ ------------
2001
Revenues from unaffiliated customers, based on the
customers' location.............................. $ 934.5 $470.7 $267.2 $1,672.4
======== ====== ====== ========
Long-lived assets.................................. $ 367.9 $184.8 $ 90.1 $ 642.8
======== ====== ====== ========
2000
Revenues from unaffiliated customers, based on the
customers' location.............................. $1,268.9 $491.9 $171.3 $1,932.1
======== ====== ====== ========
Long-lived assets.................................. $ 381.8 $199.1 $ 89.1 $ 670.0
======== ====== ====== ========
1999
Revenues from unaffiliated customers, based on the
customer's location.............................. $1,181.7 $489.3 $ 90.4 $1,761.4
======== ====== ====== ========
Long-lived assets.................................. $ 413.3 $189.8 $ 58.6 $ 661.7
======== ====== ====== ========
|
NOTE 16 -- RELATED PARTY TRANSACTIONS
NMHG has a 20 percent ownership interest in NMHG Financial Services, Inc. ("NFS"), a joint venture with GE Capital Corporation, formed primarily for the purpose of providing financial services to independent and wholly owned Hyster and Yale lift truck dealers and national account customers in the United States. NMHG's ownership in NFS is accounted for using the equity method of accounting.
Generally, NMHG sells lift trucks directly to its customer and that customer may enter into a financing transaction with NFS or another unrelated party. However, for certain customer transactions, NMHG sells directly to NFS so that the customer can obtain operating lease financing from NFS. Sales to NFS related to these types of transactions for the years ended December 31, 2001, 2000 and 1999 were $31.2 million, $17.5 million and $8.5 million, respectively. Amounts receivable from NFS at December 31, 2001 and 2000 were immaterial. Also, from time to time, NMHG provides recourse or repurchase obligations or guarantees the residual values of the lift trucks purchased by customers and financed through NFS. See further discussion in Note 12. At December 31, 2001, approximately $127.1 million of the Company's total guarantees, recourse or repurchase obligations related to transactions with NFS. For these transactions, NMHG generally retains a security interest in the lift truck, such that NMHG would take possession of the lift truck in the event that NMHG would become liable under the terms of the guarantees or standby recourse or repurchase obligations.
In addition to providing financing to NMHG's customers, NFS provides both lease and debt financing to NMHG. Operating lease obligations relate to specific sale-leaseback-sublease transactions for certain NMHG customers whereby NMHG sells lift trucks to NFS, NMHG leases these lift trucks back under an operating lease agreement and NMHG subleases those lift trucks to customers under an operating lease agreement. Debt financing includes long-term notes payable to NFS primarily to finance certain of NMHG's long-term notes receivable from Latin American customers which arise in the ordinary course of business. In addition, NFS
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
provides, on NMHG's behalf, installment billings to the Latin American customers, account balance tracking and an inventory management system to track the equipment covered by the notes. Total obligations to NFS under the operating lease agreements and notes payable were $20.3 million and $14.7 million at December 31, 2001 and 2000, respectively.
In addition, NMHG is reimbursed annually for certain services, primarily administrative functions, provided to NFS. The amount of NMHG's expenses reimbursable by NFS were $1.8 million, $1.5 million and $1.1 million for 2001, 2000 and 1999, respectively.
NMHG has a 50 percent ownership interest in Sumitomo NACCO Materials Handling Group, Inc. ("SN"), a joint venture with Sumitomo Heavy Industries, Inc., formed primarily for the manufacture and distribution of Sumitomo-Yale branded lift trucks in Japan and the export of Hyster and Yale branded lift trucks and related components and service parts outside of Japan. NMHG's ownership in SN is accounted for using the equity method of accounting. NMHG purchases products from SN under normal trade terms. In 2001, 2000 and 1999, purchases from SN were $63.7 million, $90.5 million and $91.2 million, respectively. Amounts payable to SN at December 31, 2001 and 2000 were $16.1 million and $23.6 million, respectively.
On January 1, 2000, NACCO began charging fees to its operating subsidiaries for services provided by the corporate headquarters. NACCO charged fees of $7.7 million and $7.4 million in 2001 and 2000, respectively, which are included as a component of selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss).
The Company expensed $0.8 million, $0.9 million, and $2.5 million in the years ended December 31, 2001, 2000 and 1999, respectively, for legal services rendered by a firm having a partner who is also a director of the Company.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17 -- CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
The following tables set forth the condensed consolidating statements of operations and cash flows for each of the three years in the period ended December 31, 2001 and the condensed consolidating balance sheets as of December 31, 2001 and December 31, 2000. The following information is included as a result of the guarantee of the notes by each of NMHG's wholly owned U.S. subsidiaries ("Guarantor Companies"). None of NMHG Holding's other subsidiaries will guarantee any of these notes. Each of the guarantees is joint and several and full and unconditional. "NMHG Holding" includes the consolidated financial results of NMHG Holding only, with all of its wholly owned subsidiaries accounted for under the equity method.
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (FOREIGN CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Revenues..................... $ -- $ 1,100.2 $ 835.4 $(263.2) $ 1,672.4
Cost of sales.............. -- 968.3 722.6 (268.1) 1,422.8
Restructuring.............. -- (0.4) 9.2 -- 8.8
Loss on sale of dealers.... -- 0.6 11.4 (1.6) 10.4
All other operating
expenses................ -- 144.0 131.9 (0.6) 275.3
------ --------- ------- ------- ---------
Operating profit............. -- (12.3) (39.7) 7.1 (44.9)
Interest expenses.......... (0.9) (13.2) (3.8) (5.2) (23.1)
Other income............... -- 1.3 0.7 -- 2.0
------ --------- ------- ------- ---------
Income (loss) before income
taxes, minority interest,
equity in consolidated
subsidiaries and
unconsolidated affiliates
and cumulative effect of
accounting
changes.................... (0.9) (24.2) (42.8) 1.9 (66.0)
Income tax (expense)
benefit................. 2.6 3.6 9.0 (0.7) 14.5
Minority interest income... -- -- 0.8 -- 0.8
Equity in consolidated
subsidiaries and
unconsolidated
affiliates.............. (51.1) 2.6 -- 51.1 2.6
------ --------- ------- ------- ---------
Income (loss) before
cumulative effect of
accounting changes......... (49.4) (18.0) (33.0) 52.3 (48.1)
Cumulative effect of
accounting changes...... -- (0.9) (0.4) -- (1.3)
------ --------- ------- ------- ---------
Net income (loss)............ $(49.4) $ (18.9) $ (33.4) $ 52.3 $ (49.4)
====== ========= ======= ======= =========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (FOREIGN CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Revenues..................... $ -- $1,374.2 $859.0 $(301.1) $1,932.1
Cost of sales.............. -- 1,162.7 723.5 (301.6) 1,584.6
Restructuring.............. -- 13.0 0.9 -- 13.9
All other operating
expenses................ -- 133.2 138.1 (0.9) 270.4
----- -------- ------ ------- --------
Operating profit............. -- 65.3 (3.5) 1.4 63.2
Interest expenses.......... (1.1) (12.9) (4.0) (3.2) (21.2)
Other expenses............. -- (2.9) (1.3) -- (4.2)
----- -------- ------ ------- --------
Income (loss) before income
taxes, minority interest
and equity in consolidated
subsidiaries and
unconsolidated
affiliates................. (1.1) 49.5 (8.8) (1.8) 37.8
Income tax (expense)
benefit................. 0.5 (17.2) (1.2) 0.5 (17.4)
Minority interest income... -- -- 1.1 -- 1.1
Equity in consolidated
subsidiaries and
unconsolidated
affiliates.............. 21.9 (0.3) 0.1 (21.9) (0.2)
----- -------- ------ ------- --------
Net income (loss)............ $21.3 $ 32.0 $ (8.8) $ (23.2) $ 21.3
===== ======== ====== ======= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (FOREIGN CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Revenues..................... $ -- $1,249.2 $760.2 $(248.0) $1,761.4
Cost of sales.............. -- 1,064.9 639.5 (246.5) 1,457.9
All other operating
expenses................ -- 124.1 121.6 (0.5) 245.2
----- -------- ------ ------- --------
Operating profit............. -- 60.2 (0.9) (1.0) 58.3
Interest expenses.......... (0.6) (12.1) (4.2) (2.1) (19.0)
Other income (expenses).... 0.2 3.0 (1.9) -- 1.3
----- -------- ------ ------- --------
Income (loss) before income
taxes, minority interest
and equity in consolidated
subsidiaries and
unconsolidated
affiliates................. (0.4) 51.1 (7.0) (3.1) 40.6
Income tax (expense)
benefit................. 0.1 (21.5) 2.1 0.9 (18.4)
Minority interest income... -- -- 1.0 -- 1.0
Equity in consolidated
subsidiaries and
unconsolidated
affiliates.............. 24.0 0.6 (0.1) (24.0) 0.5
----- -------- ------ ------- --------
Net income (loss)............ $23.7 $ 30.2 $ (4.0) $ (26.2) $ 23.7
===== ======== ====== ======= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001
GUARANTOR NON-GUARANTOR
NMHG COMPANIES COMPANIES CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) (FOREIGN COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------------- ------------- ------------
Cash and cash
equivalents............ $ -- $ 21.9 $ 37.7 $ -- $ 59.6
Accounts and notes
receivable, net........ -- 211.9 225.8 (272.1) 165.6
Inventories.............. -- 136.9 97.8 (0.2) 234.5
Other current assets..... 2.6 55.4 10.2 -- 68.2
------ -------- ------ --------- --------
Total current
assets............ 2.6 426.1 371.5 (272.3) 527.9
Property, plant and
equipment, net......... -- 163.0 118.0 (0.5) 280.5
Goodwill, net............ -- 307.3 36.9 -- 344.2
Other assets............. 476.7 849.7 31.6 (1,305.5) 52.5
------ -------- ------ --------- --------
Total Assets........ $479.3 $1,746.1 $558.0 $(1,578.3) $1,205.1
====== ======== ====== ========= ========
Accounts payable......... $ 96.3 $ 154.4 $200.7 $ (274.7) $ 176.7
Other current
liabilities............ 0.9 126.8 73.3 (1.0) 200.0
Revolving credit
facilities............. -- 265.0 36.2 -- 301.2
------ -------- ------ --------- --------
Total current
liabilities....... 97.2 546.2 310.2 (275.7) 677.9
Long-term debt........... -- 3.2 24.5 -- 27.7
Other long-term
liabilities............ 0.1 95.0 28.1 (5.7) 117.5
Stockholder's equity..... 382.0 1,101.7 195.2 (1,296.9) 382.0
------ -------- ------ --------- --------
Total liabilities and
stockholder's
equity.............. $479.3 $1,746.1 $558.0 $(1,578.3) $1,205.1
====== ======== ====== ========= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
GUARANTOR NON-GUARANTOR
NMHG COMPANIES COMPANIES CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) (FOREIGN COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------------- ------------- ------------
Cash and cash
equivalents............ $ -- $ 2.8 $ 21.6 $ -- $ 24.4
Accounts and notes
receivable, net........ -- 212.1 232.5 (237.6) 207.0
Inventories.............. -- 173.1 111.2 (1.3) 283.0
Other current assets..... -- 28.8 8.6 0.5 37.9
------ -------- ------ --------- --------
Total current
assets............ -- 416.8 373.9 (238.4) 552.3
Property, plant and
equipment, net......... -- 163.0 121.5 1.7 286.2
Goodwill, net............ -- 318.2 37.9 -- 356.1
Other assets............. 480.2 866.9 34.4 (1,334.4) 47.1
------ -------- ------ --------- --------
Total Assets........ $480.2 $1,764.9 $567.7 $(1,571.1) $1,241.7
====== ======== ====== ========= ========
Accounts payable......... $ 15.8 $ 214.0 $189.5 $ (209.5) $ 209.8
Other current
liabilities............ 1.3 126.6 119.0 (11.8) 235.1
------ -------- ------ --------- --------
Total current
liabilities....... 17.1 340.6 308.5 (221.3) 444.9
Long-term debt........... -- 214.2 27.3 -- 241.5
Other long-term
liabilities............ 0.1 85.2 22.4 (15.4) 92.3
Stockholder's equity..... 463.0 1,124.9 209.5 (1,334.4) 463.0
------ -------- ------ --------- --------
Total liabilities
and stockholder's
equity............ $480.2 $1,764.9 $567.7 $(1,571.1) $1,241.7
====== ======== ====== ========= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001
GUARANTOR NON-GUARANTOR
NMHG COMPANIES COMPANIES CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) (FOREIGN COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------------- ------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES... $ 2.2 $ 18.7 $ 48.8 $(38.7) $ 31.0
INVESTING ACTIVITIES
Expenditures for
property, plant and
equipment........... -- (31.6) (24.3) 2.4 (53.5)
Proceeds from the sale
of property, plant
and equipment....... -- 6.0 7.0 -- 13.0
Other -- net........... -- 2.8 (9.5) -- (6.7)
------ ------ ------ ------ ------
Net cash used for
investing
activities........ -- (22.8) (26.8) 2.4 (47.2)
FINANCING ACTIVITIES
Additions to long-term
debt and revolving
credit agreements... -- 68.9 -- -- 68.9
Reductions of long-term
debt and revolving
credit agreements... -- (3.9) (18.1) -- (22.0)
Notes
receivable/payable,
parent company...... 80.5 (37.4) (32.1) -- 11.0
Other -- net........... (82.7) (4.4) 45.2 36.3 (5.6)
------ ------ ------ ------ ------
Net cash provided by
(used for)
financing
activities........ (2.2) 23.2 (5.0) 36.3 52.3
Effect of exchange rate
changes on cash..... -- -- (0.9) -- (0.9)
------ ------ ------ ------ ------
CASH AND CASH EQUIVALENTS
Increase for the
year................ -- 19.1 16.1 -- 35.2
Balance at the
beginning of the
year................ -- 2.8 21.6 -- 24.4
------ ------ ------ ------ ------
Balance at the end of
the year............ $ -- $ 21.9 $ 37.7 $ -- $ 59.6
====== ====== ====== ====== ======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (FOREIGN CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES....... $0.2 $ 31.9 $ (26.2) $ 56.7 $ 62.6
INVESTING ACTIVITIES
Expenditures for property,
plant and equipment..... -- (31.0) (21.6) 0.8 (51.8)
Proceeds from the sale of
property, plant and
equipment............... -- 3.1 7.1 (0.1) 10.1
Other -- net............... -- -- (18.3) 0.3 (18.0)
---- ------- ------- ------ -------
Net cash used for
investing
activities............ -- (27.9) (32.8) 1.0 (59.7)
FINANCING ACTIVITIES
Additions to long-term debt
and revolving credit
agreements.............. -- 32.4 6.2 -- 38.6
Reductions of long-term
debt and revolving
credit agreements....... -- (43.2) (2.9) -- (46.1)
Notes receivable/payable,
parent company.......... (0.2) (5.8) 13.0 -- 7.0
Other -- net............... -- 12.9 35.2 (57.7) (9.6)
---- ------- ------- ------ -------
Net cash provided by
(used for) financing
activities............ (0.2) (3.7) 51.5 (57.7) (10.1)
Effect of exchange rate
changes on cash......... -- -- 0.5 -- 0.5
---- ------- ------- ------ -------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the
year.................... -- 0.3 (7.0) -- (6.7)
Balance at the beginning of
the year................ -- 2.5 28.6 -- 31.1
---- ------- ------- ------ -------
Balance at the end of
the year.............. $ -- $ 2.8 $ 21.6 $ -- $ 24.4
==== ======= ======= ====== =======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NMHG HOLDING CO.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (FOREIGN CONSOLIDATING NMHG
HOLDING CO. (US COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES....... $(16.1) $ 17.4 $ 80.3 $(2.2) $ 79.4
INVESTING ACTIVITIES
Expenditures for property,
plant and equipment..... -- (41.2) (5.7) 0.7 (46.2)
Other -- net............... -- (32.6) (37.3) -- (69.9)
------ ------- ------ ----- -------
Net cash used for
investing
activities............ -- (73.8) (43.0) 0.7 (116.1)
FINANCING ACTIVITIES.........
Additions to long-term debt
and revolving credit
agreements.............. -- 49.8 5.9 6.0 61.7
Reductions of long-term
debt and revolving
credit agreements....... -- -- (26.3) -- (26.3)
Notes receivable/payable,
parent company.......... 16.1 (17.2) 10.5 (1.4) 8.0
Other -- net............... -- 25.4 (18.3) (3.1) 4.0
------ ------- ------ ----- -------
Net cash provided by
(used for) financing
activities............ 16.1 58.0 (28.2) 1.5 47.4
Effect of exchange rate
changes on cash......... -- -- (1.8) -- (1.8)
------ ------- ------ ----- -------
CASH AND CASH EQUIVALENTS
Increase for the year...... -- 1.6 7.3 -- 8.9
Balance at the beginning of
the year................ -- 0.9 21.3 -- 22.2
------ ------- ------ ----- -------
Balance at the end of
the year.............. $ -- $ 2.5 $ 28.6 $ -- $ 31.1
====== ======= ====== ===== =======
|
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
NMHG HOLDING CO. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
COL A. COL B. COL C. COL D. COL E.
---------------------------------------- ------------ --------------------------- ----------- ----------
ADDITIONS
--------------------------- (C)
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES -- DESCRIBE -- DESCRIBE PERIOD
---------------------------------------- ------------ ---------- -------------- ----------- ----------
(DOLLARS IN MILLIONS)
2001
Reserves deducted from asset accounts:
Allowance for doubtful accounts....... $ 7.7 $(0.4) $ 0.1(B) $(0.6)(A) $ 8.0
Reserve for losses on inventory....... 17.3 9.4 -- 4.2(A) 22.5
Valuation allowance against deferred
tax assets.......................... 4.6 5.5 -- -- 10.1
2000
Reserves deducted from asset accounts:
Allowance for doubtful accounts....... $ 6.4 $ 1.6 $ 0.2(B) $ 0.5(A) $ 7.7
Reserve for losses on inventory....... 18.5 2.4 0.8(B) 4.4(A) 17.3
Valuation allowance against deferred
tax assets.......................... 7.9 (3.1) (0.2)(B) -- 4.6
1999
Reserves deducted from asset accounts:
Allowance for doubtful accounts....... $ 5.8 $ 1.8 $ 0.2(B) $ 1.4(A) $ 6.4
Reserve for losses on inventory....... 19.1 6.2 (0.4)(B) 6.4(A) 18.5
Valuation allowance against deferred
tax assets.......................... 6.7 1.2 -- -- 7.9
|
Note (A) -- Write-offs, net of recoveries.
Note (B) -- Subsidiary's foreign currency translation adjustments and other.
Note (C) -- Balances which are not required to be presented and those which are
immaterial have been omitted.
NMHG HOLDING CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
MARCH 31, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED) (AUDITED)
ASSETS
Current Assets
Cash and cash equivalents................................. $ 54.9 $ 59.6
Accounts receivable, net.................................. 194.2 165.6
Tax advances, NACCO Industries, Inc....................... 3.0 23.1
Inventories............................................... 220.2 234.5
Deferred income taxes..................................... 29.1 32.9
Prepaid expenses and other................................ 12.0 12.2
-------- --------
513.4 527.9
Property, Plant and Equipment, Net.......................... 274.3 280.5
Deferred Charges
Goodwill, net............................................. 342.8 344.2
Other intangibles, net.................................... 1.6 --
Deferred costs and other.................................. 1.7 1.9
Deferred income taxes..................................... 18.0 15.7
-------- --------
364.1 361.8
Other Assets................................................ 34.8 34.9
-------- --------
Total Assets........................................... $1,186.6 $1,205.1
======== ========
|
See Notes to Unaudited Condensed Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED) (AUDITED)
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable.......................................... $ 187.5 $ 176.7
Revolving credit agreements............................... 34.3 36.2
Revolving credit agreement refinanced on May 9, 2002...... 265.0 265.0
Current maturities of long-term debt...................... 23.7 25.5
Notes payable, NACCO Industries, Inc...................... -- 8.0
Accrued payroll........................................... 13.4 20.0
Accrued warranty obligations.............................. 33.8 34.3
Other current liabilities................................. 115.3 112.2
-------- --------
673.0 677.9
Long-term Debt.............................................. 26.0 27.7
Self-insurance Reserves..................................... 52.4 52.7
Other Long-term Liabilities................................. 61.0 62.5
Minority Interest........................................... 2.1 2.3
Stockholder's Equity
Common stock, par value $1 per share, 10,000 shares
authorized; 5,599 shares outstanding................... -- --
Capital in excess of par value............................ 198.2 198.2
Retained earnings......................................... 218.8 229.5
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment.............. (27.4) (26.9)
Reclassification of hedging activities into
earnings............................................ 1.2 --
Deferred loss on cash flow hedging................... (3.9) (3.3)
Minimum pension liability adjustment................. (14.8) (14.8)
Cumulative effect of change in accounting for
derivatives and hedging............................. -- (0.7)
-------- --------
372.1 382.0
-------- --------
Total Liabilities and Stockholder's Equity............. $1,186.6 $1,205.1
======== ========
|
See Notes to Unaudited Condensed Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
------------------
2002 2001
------- -------
Revenues.................................................... $371.8 $495.6
Cost of sales............................................... 310.1 406.8
------ ------
Gross Profit................................................ 61.7 88.8
Selling, general and administrative expenses................ 55.1 64.9
Amortization of goodwill.................................... -- 3.2
------ ------
Operating Profit............................................ 6.6 20.7
Other expenses
Interest expense.......................................... (5.5) (5.2)
Other -- net.............................................. 2.1 1.7
------ ------
(3.4) (3.5)
------ ------
Income Before Income Taxes, Minority Interest and Cumulative
Effect of Accounting Changes.............................. 3.2 17.2
Provision (benefit) for income taxes........................ (0.9) 7.8
------ ------
Income Before Minority Interest and Cumulative Effect of
Accounting Changes........................................ 4.1 9.4
Minority interest income.................................... 0.2 0.2
------ ------
Income Before Cumulative Effect of Accounting Changes....... 4.3 9.6
Cumulative effect of accounting changes (net of $0.8 tax
benefit).................................................. -- (1.3)
------ ------
Net Income.................................................. $ 4.3 $ 8.3
====== ======
Comprehensive Income (Loss)................................. $ 5.1 $ (6.9)
====== ======
|
See Notes to Unaudited Condensed Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
THREE MONTHS
ENDED MARCH 31,
---------------
2002 2001
------ ------
OPERATING ACTIVITIES
Net income................................................ $ 4.3 $ 8.3
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 10.6 14.7
Deferred income taxes................................ 3.2 (1.2)
Minority interest income............................. (0.2) (0.2)
Cumulative effect of accounting changes.............. -- 1.3
Other non-cash items................................. (0.8) (3.7)
Working capital changes
Affiliate receivables/payables....................... 20.4 10.2
Accounts receivable.................................. (28.3) 5.3
Inventories.......................................... 15.0 (9.6)
Other current assets................................. (4.0) (2.0)
Accounts payable and other liabilities............... 8.4 (10.4)
------ ------
Net cash provided by operating activities............ 28.6 12.7
INVESTING ACTIVITIES
Expenditures for property, plant and equipment............ (6.2) (9.7)
Proceeds from the sale of property, plant and equipment... 0.2 1.4
Investments in unconsolidated affiliates.................. -- (0.1)
Proceeds from unconsolidated affiliates................... 0.6 --
Other -- net.............................................. -- (2.3)
------ ------
Net cash used for investing activities............... (5.4) (10.7)
FINANCING ACTIVITIES
Additions to long-term debt and revolving credit
agreements............................................. 3.3 30.4
Reductions of long-term debt and revolving credit
agreements............................................. (8.2) (14.6)
Cash dividends paid....................................... (15.0) --
Notes receivable/payable, NACCO Industries, Inc........... (8.0) (7.2)
Deferred financing costs and other........................ -- (0.5)
------ ------
Net cash provided by (used for) financing
activities.......................................... (27.9) 8.1
Effect of exchange rate changes on cash................... -- (0.5)
------ ------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the period........................ (4.7) 9.6
Balance at the beginning of the period.................... 59.6 24.4
------ ------
Balance at the end of the period.......................... $ 54.9 $ 34.0
====== ======
|
See Notes to Unaudited Condensed Consolidated Financial Statements.
NMHG HOLDING CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
------------------
2002 2001
------- -------
Common Stock................................................ $ -- $ --
------ ------
Capital in Excess of Par Value.............................. 198.2 198.2
------ ------
Retained Earnings
Beginning balance......................................... 229.5 283.9
Net income................................................ 4.3 8.3
Cash dividends............................................ (15.0) --
------ ------
218.8 292.2
------ ------
Accumulated Other Comprehensive Income (Loss)
Beginning balance......................................... (45.7) (19.1)
Foreign currency translation adjustment................... (0.5) (12.3)
Cumulative effect of change in accounting for derivatives
and hedging............................................ 0.7 (0.7)
Reclassification from Cumulative effect of change in
accounting for derivatives and hedging to Deferred loss
on cash flow hedging................................... (0.7) --
Reclassification of hedging activity into earnings........ 1.2 --
Current period cash flow hedging activity................. 0.1 (2.2)
------ ------
(44.9) (34.3)
------ ------
Total Stockholder's Equity............................. $372.1 $456.1
====== ======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS IN MILLIONS)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include the accounts of NMHG Holding Co. ("NMHG Holding," the parent company), a Delaware corporation, and its wholly owned subsidiaries, NACCO Materials Handling Group, Inc. ("NMHG Wholesale") and NMHG Distribution Co. ("NMHG Retail") (collectively, "NMHG" or the "Company"). NMHG Holding is a wholly owned subsidiary of NACCO Industries, Inc. ("NACCO"). The Company's subsidiaries operate in the lift truck industry. NMHG segments its lift truck operations into two components: wholesale manufacturing and retail distribution. Intercompany accounts and transactions have been eliminated.
NMHG designs, engineers, manufactures, sells, services and leases a full line of lift trucks and service parts marketed worldwide under the Hyster(R) and Yale(R) brand names. NMHG Wholesale includes the manufacture and sale of lift trucks and related service parts, primarily to independent and wholly owned Hyster and Yale retail dealerships. NMHG Retail includes the sale, service and rental of Hyster and Yale lift trucks and related service parts by wholly owned retail dealerships and rental companies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus for segment disclosures.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company as of March 31, 2002 and the results of its operations, cash flows and changes in stockholder's equity for the three month periods ended March 31, 2002 and 2001 have been included.
Operating results for the three month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the remainder of the year ended December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto for the fiscal year ended December 31, 2001 on pages F-1 to F-37 of this prospectus.
NOTE 2 -- INVENTORIES
Inventories are summarized as follows:
MARCH 31, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED) (AUDITED)
Manufactured inventories:
Finished goods and service parts......................... $ 99.5 $ 99.6
Raw materials and work in process........................ 98.6 111.4
------ ------
Total manufactured inventories........................ 198.1 211.0
Retail inventories......................................... 33.0 35.8
------ ------
Total inventories at FIFO............................. 231.1 246.8
LIFO reserve............................................... (10.9) (12.3)
------ ------
$220.2 $234.5
====== ======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The cost of certain manufactured and retail inventories has been determined using the LIFO method. At March 31, 2002 and December 31, 2001, 67 and 68 percent of total inventories, respectively, were determined using the LIFO method.
NOTE 3 -- RESTRUCTURING CHARGES
The changes to the Company's restructuring accruals since December 31, 2001 are as follows:
LEASE CURTAILMENT
SEVERANCE IMPAIRMENT LOSS OTHER TOTAL
--------- ---------- ----------- ----- -----
NMHG WHOLESALE
Balance at December 31, 2001................ $ 5.3 $ -- $5.1 $2.4 $12.8
Provision................................ -- -- -- -- --
Payments................................. (2.4) -- -- -- (2.4)
----- ----- ---- ---- -----
BALANCE AT MARCH 31, 2002................... $ 2.9 $ -- $5.1 $2.4 $10.4
===== ===== ==== ==== =====
NMHG RETAIL
Balance at December 31, 2001................ $ 3.9 $ 0.4 $ -- $ -- $ 4.3
Provision................................ -- -- -- -- --
Payments................................. (0.7) (0.1) -- -- (0.8)
----- ----- ---- ---- -----
BALANCE AT MARCH 31, 2002................... $ 3.2 $ 0.3 $ -- $ -- $ 3.5
===== ===== ==== ==== =====
|
NMHG WHOLESALE: The reserve balance at NMHG Wholesale consists of two restructuring programs: the 2001 closure of the Danville, Illinois facility and the restructuring of European wholesale operations initiated in 2001. The Danville program, which was approved and accrued in December 2000, was essentially completed in 2001. In the first quarter of 2002, severance payments of $1.8 million were made to approximately 200 employees which reduced the ending severance reserve balance to $0.3 million. The curtailment loss and other reserve balances also relate to the closure of the Danville facility and were recognized primarily for pension and other post-employment benefits, which will not be paid until employees reach retirement age. In the first quarter of 2002, NMHG Wholesale recognized a charge of approximately $0.6 million, which had not previously been accrued and is not included in the table above, related to the costs of the idle Danville facility. Pre-tax benefits of approximately $3.2 million were recognized in the first quarter of 2002 related to this program. Pre-tax benefits, net of idle facility costs, are estimated to be $7.6 million for the remainder of 2002.
In 2001, NMHG Wholesale recognized a restructuring charge of approximately $4.5 million pre-tax for severance and other employee benefits to be paid to approximately 285 direct and indirect factory labor and administrative personnel in Europe. Of this amount, $3.2 million remained unpaid as of December 31, 2001. Payments of $0.6 million were made in the first quarter of 2002 to approximately 25 employees. Pre-tax benefits of approximately $1.2 million were recognized in the first quarter of 2002 related to this program. Pre-tax benefits for the remainder of 2002 are estimated to be $6.8 million.
NMHG RETAIL: NMHG Retail recognized a restructuring charge of approximately $4.7 million pre-tax, in 2001, of which $0.4 million relates to lease termination costs and $4.3 million relates to severance and other employee benefits to be paid to approximately 140 service technicians, salesmen and administrative personnel at wholly owned dealers in Europe. During 2001, severance payments of $0.4 million were made to approximately 40 employees. In the first quarter of 2002, severance payments of $0.7 million were made to approximately 10 employees. Pre-tax benefits of approximately $0.5 million were recognized in the first quarter of 2002 related to this program. Pre-tax benefits for the remainder of 2002 are estimated to be $2.3 million.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- ACCOUNTING CHANGES
ACCOUNTING FOR GOODWILL
On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." This Statement establishes accounting and reporting standards for goodwill and other intangible assets and supersedes APB Opinion No. 17, "Intangible Assets." Goodwill and other intangibles that have indefinite lives will no longer be amortized, but will be subject to annual impairment tests. All other intangible assets will continue to be amortized over their estimated useful lives, which are no longer limited to 40 years. Effective January 1, 2002, the Company discontinued amortization of its goodwill in accordance with this Statement. The amortization periods of the Company's other intangible assets were not revised as a result of the adoption of this Statement. Pro forma information, assuming the adoption of this Statement in the prior year, is as follows:
THREE MONTHS
ENDED MARCH 31
---------------
2002 2001
------ ------
Reported net income......................................... $ 4.3 $ 8.3
Add back: goodwill amortization............................. -- 3.2
----- -----
Adjusted net income......................................... $ 4.3 $11.5
===== =====
|
The balance of other intangible assets, which are subject to amortization, acquired in previous years is as follows at March 31, 2002:
OTHER INTANGIBLES
---------------------------------
GROSS
CARRYING ACCUMULATED NET
AMOUNT AMORTIZATION BALANCE
-------- ------------ -------
BALANCE AT DECEMBER 31, 2001.......................... $ -- $ -- $ --
Transfer from goodwill.............................. 1.6 -- 1.6
----- ----- -----
BALANCE AT MARCH 31, 2002............................. $ 1.6 $ -- $ 1.6
===== ===== =====
|
In the first quarter of 2002, $1.6 million that was previously preliminarily classified as goodwill relating to an acquisition in 2001 was reclassified to other intangibles.
Amortization expense in the first quarter of 2002 was less than $0.1 million. Expected amortization expense of other intangible assets for the next five years is $0.2 million annually.
Following is the a summary of the changes in goodwill during the first quarter of 2002:
WHOLESALE RETAIL CONSOLIDATED
--------- ------ ------------
Balance at December 31, 2001.......................... $304.6 $39.6 $344.2
Reclassification to other intangibles............... -- (1.6) (1.6)
Foreign currency translation........................ -- 0.2 0.2
------ ----- ------
BALANCE AT MARCH 31, 2002............................. $304.6 $38.2 $342.8
====== ===== ======
|
In addition, this Statement requires goodwill to be tested for impairment at least annually at a level of reporting defined in the Statement as a "reporting unit," using a two-step process. The first step requires comparison of the reporting unit's fair market value to its carrying value. If the fair market value of the reporting unit exceeds its carrying value, no further analysis is necessary and goodwill is not impaired. If the carrying value of the reporting unit exceeds its fair market value, then the second step, as defined in the Statement, must be completed. The second step requires the Company to determine the fair market value of
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
each existing asset and liability of the applicable reporting unit to enable the Company to derive the "implied" fair market value of goodwill. If the implied fair market value of goodwill is less than the carrying value of goodwill, then an impairment loss must be recognized.
This Statement provides that companies have until the second quarter of fiscal 2002 to complete the first step of the impairment testing and until the end of the fiscal year to complete the second step of the impairment testing during this initial adoption of SFAS No. 142. In accordance with this provision, the Company has begun the process of testing its goodwill for impairment, but has not yet completed the first step of the two-step testing process.
NOTE 5 -- SUBSEQUENT EVENTS
On May 9, 2002, NMHG refinanced its prior financing agreement, an unsecured floating-rate revolving line of credit with availability of $350.0 million, certain other lines of credit with availability of $4.6 million and a program to sell accounts receivable in Europe with the proceeds from the sale of $250.0 million of 10% Senior Notes due 2009 and borrowings under a secured, floating-rate revolving credit facility which expires in May 2005. Availability under the new revolving credit facility is up to $175.0 million, based on a formula using certain of NMHG's accounts receivable and inventory balances. At May 9, 2002, the borrowing capacity under this facility was $109.7 million and the domestic floating rate of interest applicable to this facility was 6.75% including the applicable floating rate margin. NMHG will also pay a 0.5% per annum fee on the unused commitment. Both the new revolving credit facility and terms of the Senior Notes include restrictive covenants which, among other things, limit dividends to NACCO. The new revolving credit facility also requires NMHG to maintain certain ratios of Debt to EBITDA and EBITDA to interest, as defined, and limits capital expenditures.
As a result of the refinancing of the prior financing arrangement, a significant portion of NMHG's interest rate swap agreements will no longer qualify for hedge accounting treatment in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." As such, the mark-to-market of these interest rate swap agreements will be recognized in the statement of operations. Prior to the refinancing, the mark-to-market of these interest rate swap agreements was recognized as a component of other comprehensive income (loss) in stockholder's equity. The balance in other comprehensive income (loss) for all of NMHG's interest rate swap agreements was a loss of $2.4 million at March 31, 2002.
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
The following tables set forth the condensed consolidating statements of operations and cash flows for each of the three months ended March 31, 2002 and 2001 and the condensed consolidating balance sheet as of March 31, 2002. The following information is included as a result of the guarantee of the new debt by each of NMHG's wholly owned U.S. subsidiaries ("Guarantor Companies"). None of the company's other subsidiaries will guarantee any of these notes. Each of the guarantees is joint and several and full and unconditional. "NMHG Holding" includes the consolidated financial results of the parent company only, with all of its wholly owned subsidiaries accounted for under the equity method.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Revenues...................... $ -- $239.1 $181.3 $(48.6) $371.8
Cost of sales................. -- 208.2 151.1 (49.2) 310.1
All other operating
expenses.................... -- 30.7 24.6 (0.2) 55.1
----- ------ ------ ------ ------
Operating profit.............. -- 0.2 5.6 0.8 6.6
Interest expenses............. (1.8) (2.5) (0.1) (1.1) (5.5)
Other income (expenses)....... -- 1.4 (0.3) -- 1.1
----- ------ ------ ------ ------
Income (loss) before income
taxes, minority interest and
equity in unconsolidated
affiliates.................. (1.8) (0.9) 5.2 (0.3) 2.2
Income tax (expense)
benefit..................... 0.6 0.1 -- 0.2 0.9
Minority interest income...... -- -- 0.2 -- 0.2
Equity in unconsolidated
affiliates.................. 5.5 1.0 -- (5.5) 1.0
----- ------ ------ ------ ------
Net income.................... $ 4.3 $ 0.2 $ 5.4 $ (5.6) $ 4.3
===== ====== ====== ====== ======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Revenues...................... $ -- $349.1 $226.0 $(79.5) $495.6
Cost of sales................. -- 294.4 192.6 (80.2) 406.8
All other operating
expenses.................... -- 36.2 32.2 (0.3) 68.1
----- ------ ------ ------ ------
Operating profit.............. -- 18.5 1.2 1.0 20.7
Interest expenses............. (0.3) (3.2) (0.6) (1.1) (5.2)
Other income.................. -- -- 0.3 -- 0.3
----- ------ ------ ------ ------
Income (loss) before income
taxes, minority interest,
equity in unconsolidated
affiliates and cumulative
effect of accounting
changes..................... (0.3) 15.3 0.9 (0.1) 15.8
Income tax (expense)
benefit..................... 0.6 (8.4) -- -- (7.8)
Minority interest income...... -- -- 0.2 -- 0.2
Equity in unconsolidated
affiliates.................. 8.0 1.4 -- (8.0) 1.4
----- ------ ------ ------ ------
Income before cumulative
effect of accounting
changes..................... 8.3 8.3 1.1 (8.1) 9.6
Cumulative effect of
accounting changes.......... -- (0.9) (0.4) -- (1.3)
----- ------ ------ ------ ------
Net income.................... $ 8.3 $ 7.4 $ 0.7 $ (8.1) $ 8.3
===== ====== ====== ====== ======
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2002
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Cash and cash equivalents.... $ -- $ 17.3 $ 37.6 $ -- $ 54.9
Accounts and notes
receivable, net............ 0.6 231.7 238.9 (274.0) 197.2
Inventories.................. -- 125.5 95.6 (0.9) 220.2
Other current assets......... 2.4 32.6 6.7 (0.6) 41.1
------ -------- ------ --------- --------
Total current assets.... 3.0 407.1 378.8 (275.5) 513.4
Property, plant and
equipment, net............. -- 157.9 116.9 (0.5) 274.3
Goodwill, net................ -- 307.3 35.5 -- 342.8
Other assets................. 467.9 834.3 28.9 (1,275.0) 56.1
------ -------- ------ --------- --------
Total assets............ $470.9 $1,706.6 $560.1 $(1,551.0) $1,186.6
====== ======== ====== ========= ========
Accounts and notes payable... $ 97.0 $ 150.6 $208.7 $ (268.8) $ 187.5
Other current liabilities.... 1.8 123.7 102.4 (7.4) 220.5
Revolving credit facility.... -- 265.0 -- -- 265.0
------ -------- ------ --------- --------
Total current
liabilities........... 98.8 539.3 311.1 (276.2) 673.0
Long-term debt............... -- 3.7 22.3 -- 26.0
Other long-term
liabilities................ -- 95.2 20.7 (0.4) 115.5
Stockholder's equity......... 372.1 1,068.4 206.0 (1,274.4) 372.1
------ -------- ------ --------- --------
Total liabilities and
stockholder's equity.... $470.9 $1,706.6 $560.1 $(1,551.0) $1,186.6
====== ======== ====== ========= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
Cash and cash equivalents.... $ -- $ 21.9 $ 37.7 $ -- $ 59.6
Accounts and notes
receivable, net............ -- 211.9 225.8 (272.1) 165.6
Inventories.................. -- 136.9 97.8 (0.2) 234.5
Other current assets......... 2.6 55.4 10.2 -- 68.2
------ -------- ------ --------- --------
Total current assets.... 2.6 426.1 371.5 (272.3) 527.9
Property, plant and
equipment, net............. -- 163.0 118.0 (0.5) 280.5
Goodwill, net................ -- 307.3 36.9 -- 344.2
Other assets................. 476.7 849.7 31.6 (1,305.5) 52.5
------ -------- ------ --------- --------
Total assets............ $479.3 $1,746.1 $558.0 $(1,578.3) $1,205.1
====== ======== ====== ========= ========
Accounts and notes payable... $ 96.3 $ 154.4 $200.7 $ (274.7) $ 176.7
Other current liabilities.... 0.9 126.8 73.3 (1.0) 200.0
Revolving credit
facilities................. -- 265.0 36.2 -- 301.2
------ -------- ------ --------- --------
Total current
liabilities........... 97.2 546.2 310.2 (275.7) 677.9
Long-term debt............... -- 3.2 24.5 -- 27.7
Other long-term
liabilities................ 0.1 95.0 28.1 (5.7) 117.5
Stockholder's equity......... 382.0 1,101.7 195.2 (1,296.9) 382.0
------ -------- ------ --------- --------
Total liabilities and
stockholder's equity.... $479.3 $1,746.1 $558.0 $(1,578.3) $1,205.1
====== ======== ====== ========= ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
(IN MILLIONS)
NET CASH PROVIDED BY (USED
FOR) OPERATING
ACTIVITIES................ $ (0.7) $ 17.8 $ 11.1 $ 0.4 $ 28.6
INVESTING ACTIVITIES
Expenditures for property,
plant and equipment.... -- (0.8) (5.4) -- (6.2)
Proceeds from the sale of
property, plant and
equipment.............. -- 0.3 (0.1) -- 0.2
Other -- net.............. 14.2 2.5 (2.2) (13.9) 0.6
-------- -------- -------- -------- --------
Net cash provided by
(used for) investing
activities........... 14.2 2.0 (7.7) (13.9) (5.4)
FINANCING ACTIVITIES
Additions to long-term
debt and revolving
credit agreements...... -- -- 3.3 -- 3.3
Reductions of long-term
debt and revolving
credit agreements...... -- (0.8) (7.4) -- (8.2)
Notes receivable/payable,
parent company......... 0.7 (3.6) (5.4) 0.3 (8.0)
Other -- net.............. (14.2) (20.0) 6.0 13.2 (15.0)
-------- -------- -------- -------- --------
Net cash used for
financing
activities........... (13.5) (24.4) (3.5) 13.5 (27.9)
Effect of exchange rate
changes on cash........ -- -- -- -- --
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS
Decrease for the year..... -- (4.6) (0.1) -- (4.7)
Balance at the beginning
of the year............ -- 21.9 37.7 -- 59.6
-------- -------- -------- -------- --------
Balance at the end of the
year................... $ -- $ 17.3 $ 37.6 $ -- $ 54.9
======== ======== ======== ======== ========
|
NMHG HOLDING CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(IN MILLIONS)
NON-GUARANTOR
GUARANTOR COMPANIES
NMHG COMPANIES (US (FOREIGN CONSOLIDATING NMHG
HOLDING CO. COMPANIES) COMPANIES) ELIMINATIONS CONSOLIDATED
----------- -------------- ------------- ------------- ------------
NET CASH PROVIDED BY (USED
FOR) OPERATING
ACTIVITIES................ $ 0.4 $ (13.0) $ 24.3 $ 1.0 $ 12.7
INVESTING ACTIVITIES
Expenditures for property,
plant and equipment.... -- (7.7) (2.0) -- (9.7)
Proceeds from the sale of
property, plant and
equipment.............. -- 0.1 1.3 -- 1.4
Other -- net.............. -- 38.7 (14.9) (26.2) (2.4)
-------- -------- -------- -------- --------
Net cash provided by
(used for) investing
activities........... -- 31.1 (15.6) (26.2) (10.7)
FINANCING ACTIVITIES
Additions to long-term
debt and revolving
credit agreements...... -- 12.1 18.3 -- 30.4
Reductions of long-term
debt and revolving
credit agreements...... -- (14.6) -- -- (14.6)
Notes receivable/payable,
parent company......... (0.4) (10.8) 4.0 -- (7.2)
Other -- net.............. -- (0.3) (25.4) 25.2 (0.5)
-------- -------- -------- -------- --------
Net cash used for
financing
activities........... (0.4) (13.6) (3.1) 25.2 8.1
Effect of exchange rate
changes on cash........ -- -- (0.5) -- (0.5)
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS
Increase for the year..... -- 4.5 5.1 -- 9.6
Balance at the beginning
of the year............ -- 2.8 21.6 -- 24.4
-------- -------- -------- -------- --------
Balance at the end of the
year................... $ -- $ 7.3 $ 26.7 $ -- $ 34.0
======== ======== ======== ======== ========
|
$250,000,000
NMHG HOLDING CO.
10% SENIOR NOTES DUE 2009
, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law provides that a director of a corporation will not be personally liable for monetary damages for breach of that individual's fiduciary duties as a director except for liability for (1) a breach of the director's duty of loyalty to the corporation or its stockholders, (2) any act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law, (3) unlawful payments of dividends or unlawful stock repurchases or redemptions, or (4) any transaction from which the director derived an improper personal benefit.
This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or recission.
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers, as well as other employees and individuals, against attorneys' fees and other expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person was or is a party or is threatened to be made a party by reason of such person being or having been a director, officer, employee or agent of the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits. The following is a list of all exhibits filed as a part of this registration statement on Form S-4, including those incorporated by reference.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
3.1(i) Certificate of Incorporation of NMHG Holding Co.
3.1(ii) By-laws of NMHG Holding Co.
4.1 Form of Common Stock Certificate of NMHG Holding Co.
4.2 Indenture, dated as of May 9, 2002, by and among NMHG
Holding Co., the Subsidiary Guarantors named therein and
U.S. Bank National Association, as Trustee (including the
form of 10% senior note due 2009)
4.3 Registration Rights Agreement, dated as of May 9, 2002, by
and among NMHG Holding Co., the Guarantors named therein and
Credit Suisse First Boston Corporation, Salomon Smith Barney
Inc., U.S. Bancorp Piper Jaffray Inc., McDonald Investments
Inc., NatCity Investments, Inc. and Wells Fargo Brokerage
Services, LLC
* 5.1 Opinion of Jones, Day, Reavis & Pogue
10.1 Credit Agreement, dated as of May 9, 2002, among NMHG
Holding Co., NACCO Materials Handling Group, Inc., NMHG
Distribution Co., NACCO Materials Handling Limited, NACCO
Materials Handling B.V., the financial institutions from
time to time a party thereto as Lenders, the financial
institutions from time to time a party thereto as Issuing
Bank, Citicorp North America, Inc., as administrative agent
for the Lenders and the Issuing Bank thereunder and Credit
Suisse First Boston as joint arrangers and joint bookrunners
and CSFB as syndication agent
10.2 Operating Agreement, dated July 31, 1979, among Eaton
Corporation and Sumitomo Heavy Industries, Ltd.
10.3 Equity joint venture contract, dated November 27, 1997,
between Shanghai Perfect Jinqiao United Development Company
Ltd., People's Republic of China, NACCO Materials Handling
Group, Inc., USA, and Sumitomo-Yale Company Ltd., Japan
10.4 Recourse and Indemnity Agreement, dated October 21, 1998,
between General Electric Capital Corp., NMHG Financial
Services, Inc. and NACCO Materials Handling Group, Inc.
|
II-1
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
10.5 Restated and Amended Joint Venture and Shareholders
Agreement, dated April 15, 1998, between General Electric
Capital Corp. and NACCO Materials Handling Group, Inc.
10.6 Amendment No. 1 to the Restated and Amended Joint Venture
and Shareholders Agreement between General Electric Capital
Corporation and NACCO Materials Handling Group, Inc., dated
as of October 21, 1998
10.7 International Operating Agreement, dated April 15, 1998,
between NACCO Materials Handling Group, Inc. and General
Electric Capital Corp. (the "International Operating
Agreement")
10.8 Amendment No. 1 to the International Operating Agreement,
dated as of October 21, 1998
10.9 Amendment No. 2 to the International Operating Agreement,
dated as of December 1, 1999
10.10 Amendment No. 3 to the International Operating Agreement,
dated as of May 1, 2000
10.11 Letter agreement, dated November 22, 2000, between General
Electric Capital Corporation and NACCO Materials Handling
Group, Inc. amending the International Operating Agreement
10.12 A$ Facility Agreement, dated November 22, 2000, between GE
Capital Australia and National Fleet Network PTY Limited
10.13 Loan Agreement, dated as of June 28, 1996, between NACCO
Materials Handling Group, Inc. and NACCO Industries, Inc.
10.14 Business sale agreement, dated November 10, 2000, between
Brambles Australia Limited, ACN 094 802 141 Pty Limited and
NACCO Materials Handling Group, Inc.
10.15 NACCO Materials Handling Group, Inc. Annual Incentive
Compensation Plan, effective as of January 1, 2002, is
incorporated herein by reference to Exhibit 10(lxiii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.16 NACCO Materials Handling Group, Inc. Senior Executive
Long-Term Incentive Compensation Plan, effective as of
January 1, 2000, is incorporated herein by reference to
Exhibit 10(lxiv) to NACCO Industries, Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 31, 2000,
Commission File Number 1-9172
10.17 NACCO Materials Handling Group, Inc. Long-Term Incentive
Compensation Plan, effective as of January 1, 2000, is
incorporated by reference to Exhibit 10(lxv) to NACCO
Industries, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, Commission File Number 1-9172
10.18 Amendment No. 1, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Senior Executive Long-Term
Incentive Compensation Plan (effective as of January 1,
2000) is incorporated herein by reference to Exhibit
10(lxvi) to NACCO Industries, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 2001, Commission
File Number 1-9172
10.19 Amendment No. 1, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Long-Term Incentive
Compensation Plan (effective as of January 1, 2000) is
incorporated herein by reference to Exhibit 10(lxvii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.20 Amendment No. 1, dated as of February 19, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxviii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.21 NACCO Materials Handling Group, Inc. Unfunded Benefit Plan
(as amended and restated effective as of September 1, 2000)
is incorporated herein by reference to Exhibit 10(lxxiii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, Commission File Number
1-9172
10.22 Amendment No. 2, dated as of August 6, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxix) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
|
II-2
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
10.23 Amendment No. 3, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxx) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.24 Amendment No. 4, dated as of November 1, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxxi) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.25 Amendment No. 5, dated as of December 21, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxxii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
12.1 Ratio of Earnings to Fixed Charges
16.1 Letter of Arthur Andersen LLP to the Securities and Exchange
Commission dated May 24, 2002
21.1 Subsidiaries of NMHG Holding Co.
23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1)
24.1 Powers of attorney
25.1 Statement of Eligibility under the Trust Indenture Act of
1939 on Form T-1
99.1 Letter of Transmittal
99.2 Notice of Guaranteed Delivery
99.3 Letter regarding exchange offer
99.4 Letter to participants
|
* To be filed by amendment.
(b) Financial Statement Schedules. Valuation and Qualifying Accounts for the Years Ended December 31, 2001, 2000 and 1999
(c) Reports. None
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that paragraphs
(1)(i) and (1)(ii) do not apply if
II-3
the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
NMHG Holding Co.
By: /s/ GEOFFREY D. LEWIS
--------------------------------------
Geoffrey D. Lewis
Vice President, General Counsel
and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President, Chief Executive Officer and May 28, 2002
------------------------------------------------ Director (Principal Executive Officer)
Reginald R. Eklund
* Treasurer (Principal Financial May 28, 2002
------------------------------------------------ Officer)
Jeffrey C. Mattern
* Controller (Principal Accounting May 28, 2002
------------------------------------------------ Officer)
Raymond C. Ulmer
* Director May 28, 2002
------------------------------------------------
Alfred M. Rankin, Jr.
* Director May 28, 2002
------------------------------------------------
Owsley Brown II
* Director May 28, 2002
------------------------------------------------
Eiichi Fujita
* Director May 28, 2002
------------------------------------------------
Robert M. Gates
* Director May 28, 2002
------------------------------------------------
Leon J. Hendrix, Jr.
* Director May 28, 2002
------------------------------------------------
David H. Hoag
* Director May 28, 2002
------------------------------------------------
Dennis W. LaBarre
* Director May 28, 2002
------------------------------------------------
Richard de J. Osborne
* Director May 28, 2002
------------------------------------------------
Claiborne R. Rankin
|
II-5
NAME TITLE DATE
---- ----- ----
* Director May 28, 2002
------------------------------------------------
Ian M. Ross
* Director May 28, 2002
------------------------------------------------
Britton T. Taplin
* Director May 28, 2002
------------------------------------------------
David F. Taplin
* Director May 28, 2002
------------------------------------------------
Frank F. Taplin
* Director May 28, 2002
------------------------------------------------
John F. Turben
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS ------------------------------------ Geoffrey D. Lewis, Attorney-in-Fact |
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
NMHG Distribution Co.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis
Vice President and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President and Director May 28, 2002
------------------------------------------------ (Principal Executive Officer)
Edward W. Ryan
* Treasurer (Principal Financial Officer May 28, 2002
------------------------------------------------ and Principal Accounting Officer)
Jeffrey C. Mattern
* Chairman and Director May 28, 2002
------------------------------------------------
Reginald R. Eklund
* Director May 28, 2002
------------------------------------------------
Geoffrey D. Lewis
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis,
Attorney-in-Fact
|
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
NMHG Oregon, Inc.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis
Vice President and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President and Director May 28, 2002
------------------------------------------------ (Principal Executive Officer)
Reginald R. Eklund
* Treasurer May 28, 2002
------------------------------------------------ (Principal Financial Officer)
Jeffrey C. Mattern
* Controller May 28, 2002
------------------------------------------------ (Principal Accounting Officer)
Raymond C. Ulmer
* Director May 28, 2002
------------------------------------------------
Geoffrey D. Lewis
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis,
Attorney-in-Fact
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
Hyster Overseas Capital Corporation,
LLC
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis
Vice President and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President and Manager May 28, 2002
------------------------------------------------ (Principal Executive Officer)
Reginald R. Eklund
* Treasurer and Manager May 28, 2002
------------------------------------------------ (Principal Financial Officer and
Jeffrey C. Mattern Principal Accounting Officer)
* Manager May 28, 2002
------------------------------------------------
Geoffrey D. Lewis
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis,
Attorney-in-Fact
|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
Hyster-Yale Materials Handling, Inc.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis
Vice President, General Counsel
and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President, Chief Executive Officer and May 28, 2002
------------------------------------------------ Director (Principal Executive Officer)
Reginald R. Eklund
* Treasurer May 28, 2002
------------------------------------------------ (Principal Financial Officer)
Jeffrey C. Mattern
* Controller May 28, 2002
------------------------------------------------ (Principal Accounting Officer)
Raymond C. Ulmer
* Director May 28, 2002
------------------------------------------------
Alfred M. Rankin, Jr.
* Director May 28, 2002
------------------------------------------------
Owsley Brown II
* Director May 28, 2002
------------------------------------------------
Eiichi Fujita
* Director May 28, 2002
------------------------------------------------
Robert M. Gates
* Director May 28, 2002
------------------------------------------------
Leon J. Hendrix, Jr.
* Director May 28, 2002
------------------------------------------------
David H. Hoag
* Director May 28, 2002
------------------------------------------------
Dennis W. LaBarre
* Director May 28, 2002
------------------------------------------------
Richard de J. Osborne
* Director May 28, 2002
------------------------------------------------
Claiborne R. Rankin
|
II-10
NAME TITLE DATE
---- ----- ----
* Director May 28, 2002
------------------------------------------------
Ian M. Ross
* Director May 28, 2002
------------------------------------------------
Britton T. Taplin
* Director May 28, 2002
------------------------------------------------
David F. Taplin
* Director May 28, 2002
------------------------------------------------
Frank F. Taplin
* Director May 28, 2002
------------------------------------------------
John F. Turben
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis,
Attorney-in-Fact
|
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Portland, in the State of Oregon, on May 28, 2002.
NACCO Materials Handling Group, Inc.
By: /s/ GEOFFREY D. LEWIS
------------------------------------
Geoffrey D. Lewis
Vice President, General Counsel
and Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
* President, Chief Executive Officer and May 28, 2002
------------------------------------------------ Director (Principal Executive Officer)
Reginald R. Eklund
* Treasurer May 28, 2002
------------------------------------------------ (Principal Financial Officer)
Jeffrey C. Mattern
* Controller May 28, 2002
------------------------------------------------ (Principal Accounting Officer)
Raymond C. Ulmer
* Director May 28, 2002
------------------------------------------------
Alfred M. Rankin, Jr.
* Director May 28, 2002
------------------------------------------------
Owsley Brown II
* Director May 28, 2002
------------------------------------------------
Eiichi Fujita
* Director May 28, 2002
------------------------------------------------
Robert M. Gates
* Director May 28, 2002
------------------------------------------------
Leon J. Hendrix, Jr.
* Director May 28, 2002
------------------------------------------------
David H. Hoag
* Director May 28, 2002
------------------------------------------------
Dennis W. LaBarre
* Director May 28, 2002
------------------------------------------------
Richard de J. Osborne
* Director May 28, 2002
------------------------------------------------
Claiborne R. Rankin
|
II-12
NAME TITLE DATE
---- ----- ----
* Director May 28, 2002
------------------------------------------------
Ian M. Ross
* Director May 28, 2002
------------------------------------------------
Britton T. Taplin
* Director May 28, 2002
------------------------------------------------
David F. Taplin
* Director May 28, 2002
------------------------------------------------
Frank F. Taplin
* Director May 28, 2002
------------------------------------------------
John F. Turben
|
* The undersigned, by signing his name hereto, does sign and execute this Registration Statement on Form S-4 pursuant to a Power of Attorney executed on behalf of the above-indicated officers and directors of the registrant and filed herewith as exhibit 24.1 on behalf of the registrant.
By: /s/ GEOFFREY D. LEWIS ------------------------------------ Geoffrey D. Lewis, Attorney-in-Fact |
II-13
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
3.1(i) Certificate of Incorporation of NMHG Holding Co.
3.1(ii) By-laws of NMHG Holding Co. of NMHG Holding Co.
4.1 Form of Common Stock Certificate
4.2 Indenture, dated as of May 9, 2002, by and among NMHG
Holding Co., the Subsidiary Guarantors named therein and
U.S. Bank National Association, as Trustee (including the
form of 10% senior note due 2009)
4.3 Registration Rights Agreement, dated as of May 9, 2002, by
and among NMHG Holding Co., the Guarantors named therein and
Credit Suisse First Boston Corporation, Salomon Smith Barney
Inc., U.S. Bancorp Piper Jaffray Inc., McDonald Investments
Inc., NatCity Investments, Inc. and Wells Fargo Brokerage
Services, LLC
* 5.1 Opinion of Jones, Day, Reavis & Pogue
10.1 Credit Agreement, dated as of May 9, 2002, among NMHG
Holding Co., NACCO Materials Handling Group, Inc., NMHG
Distribution Co., NACCO Materials Handling Limited, NACCO
Materials Handling B.V., the financial institutions from
time to time a party thereto as Lenders, the financial
institutions from time to time a party thereto as Issuing
Bank, Citicorp North America, Inc., as administrative agent
for the Lenders and the Issuing Bank thereunder and Credit
Suisse First Boston as joint arrangers and joint bookrunners
and CSFB as syndication agent
10.2 Operating Agreement, dated July 31, 1979, among Eaton
Corporation and Sumitomo Heavy Industries, Ltd.
10.3 Equity joint venture contract, dated November 27, 1997,
between Shanghai Perfect Jinqiao United Development Company
Ltd., People's Republic of China, NACCO Materials Handling
Group, Inc., USA, and Sumitomo-Yale Company Ltd., Japan
10.4 Recourse and Indemnity Agreement, dated October 21, 1998,
between General Electric Capital Corp., NMHG Financial
Services, Inc. and NACCO Materials Handling Group, Inc.
10.5 Restated and Amended Joint Venture and Shareholders
Agreement, dated April 15, 1998, between General Electric
Capital Corp. and NACCO Materials Handling Group, Inc.
10.6 Amendment No. 1 to the Restated and Amended Joint Venture
and Shareholders Agreement between General Electric Capital
Corporation and NACCO Materials Handling Group, Inc., dated
as of October 21, 1998
10.7 International Operating Agreement, dated April 15, 1998,
between NACCO Materials Handling Group, Inc. and General
Electric Capital Corp. (the "International Operating
Agreement")
10.8 Amendment No. 1 to the International Operating Agreement,
dated as of October 21, 1998
10.9 Amendment No. 2 to the International Operating Agreement,
dated as of December 1, 1999
10.10 Amendment No. 3 to the International Operating Agreement,
dated as of May 1, 2000
10.11 Letter agreement, dated November 22, 2000, between General
Electric Capital Corporation and NACCO Materials Handling
Group, Inc. amending the International Operating Agreement
10.12 A$ Facility Agreement, dated November 22, 2000, between GE
Capital Australia and National Fleet Network PTY Limited
10.13 Loan Agreement, dated as of June 28, 1996, between NACCO
Materials Handling Group, Inc. and NACCO Industries, Inc.
10.14 Business sale agreement, dated November 10, 2000, between
Brambles Australia Limited, ACN 094 802 141 Pty Limited and
NACCO Materials Handling Group, Inc.
10.15 NACCO Materials Handling Group, Inc. Annual Incentive
Compensation Plan, effective as of January 1, 2002, is
incorporated herein by reference to Exhibit 10(lxiii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.16 NACCO Materials Handling Group, Inc. Senior Executive
Long-Term Incentive Compensation Plan, effective as of
January 1, 2000, is incorporated herein by reference to
Exhibit 10(lxiv) to NACCO Industries, Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 31, 2000,
Commission File Number 1-9172
|
II-14
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
10.17 NACCO Materials Handling Group, Inc. Long-Term Incentive
Compensation Plan, effective as of January 1, 2000, is
incorporated by reference to Exhibit 10(lxv) to NACCO
Industries, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, Commission File Number 1-9172
10.18 Amendment No. 1, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Senior Executive Long-Term
Incentive Compensation Plan (effective as of January 1,
2000) is incorporated herein by reference to Exhibit
10(lxvi) to NACCO Industries, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 2001, Commission
File Number 1-9172
10.19 Amendment No. 1, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Long-Term Incentive
Compensation Plan (effective as of January 1, 2000) is
incorporated herein by reference to Exhibit 10(lxvii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.20 Amendment No. 1, dated as of February 19, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxviii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.21 NACCO Materials Handling Group, Inc. Unfunded Benefit Plan
(as amended and restated effective as of September 1, 2000)
is incorporated herein by reference to Exhibit 10(lxxiii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, Commission File Number
1-9172
10.22 Amendment No. 2, dated as of August 6, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxix) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.23 Amendment No. 3, dated as of June 8, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxx) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.24 Amendment No. 4, dated as of November 1, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxxi) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
10.25 Amendment No. 5, dated as of December 21, 2001, to the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as
amended and restated effective September 1, 2000) is
incorporated herein by reference to Exhibit 10(lxxxii) to
NACCO Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, Commission File Number
1-9172
12.1 Ratio of Earnings to Fixed Charges
16.1 Letter of Arthur Andersen LLP to the Securities and Exchange
Commission dated May 24, 2002
21.1 Subsidiaries of NMHG Holding Co.
23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1)
24.1 Powers of attorney
25.1 Statement of Eligibility under the Trust Indenture Act of
1939 on Form T-1.
99.1 Letter of Transmittal
99.2 Notice of Guaranteed Delivery
99.3 Letter regarding exchange offer
99.4 Letter to participants
|
* To be filed by amendment.
II-15
Exhibit 3.1(i)
CERTIFICATE OF INCORPORATION
OF
NMHH CO.
A STOCK CORPORATION
I, the undersigned, for the purpose of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware, do hereby certify as follows:
FIRST: The name of the corporation (the "Corporation") is NMHH Co.
SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of the Corporation's registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have authority to issue is one hundred (100) shares of Common Stock, par value of $.01 per share.
FIFTH: Elections of directors need not be by written ballot except and to the extent provided in the by-laws of the Corporation.
SIXTH: To the full extent permitted by the General Corporation Law of the State of Delaware or any other applicable laws presently or hereafter in effect, no director of the Corporation shall be personally liable to the Corporation or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a director of the Corporation.
Any repeal or modification of this Article Sixth shall not adversely affect any right or protection of a director of the Corporation existing immediately prior to such repeal or modification.
SEVENTH: Each person who is or was or had agreed to become a director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the full extent permitted by the General Corporation Law of the State of Delaware or any other applicable laws as presently or hereafter in effect. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article. Any repeal or modification of this Article Seventh shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification.
EIGHTH: In furtherance and not in limitation of the rights, powers, privileges, and discretionary authority granted or conferred by the General Corporation Law of the State of Delaware or other statutes or laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend or repeal the by-laws of the Corporation, without any action on the part of the stockholders, but the stockholders may make additional by-laws and may alter, amend or repeal any by-law whether adopted by them or otherwise. The Corporation may in its by-laws confer powers upon its Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law.
NINTH: The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to this reservation.
TENTH: The name and mailing address of the incorporator is:
Constantine E. Tsipis 5875 Landerbrook Drive #300 Mayfield Heights, OH 44124-4017
IN WITNESS WHEREOF, I the undersigned, being the incorporator hereinabove named, do hereby execute this Certificate of Incorporation this 26th day of February, 1999.
/s/ Constantine E. Tsipis --------------------------------- Constantine E. Tsipis |
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NMHH CO.
NMHH Co., a Delaware corporation (the "Corporation"), does hereby certify:
A. That the Board of Directors of the Corporation, by unanimous written action without a meeting pursuant to Section 141 of the General Corporation Law of the State of Delaware (the "DGCL") adopted a resolution proposing and declaring advisable the following amendment to Article FIRST of the Certificate of Incorporation of the Corporation:
"FIRST: The name of the corporation (hereinafter called the "Corporation") is NMHG Holding Co."
B. That in lieu of a meeting and vote of stockholders, the sole stockholder of the Corporation has given written consent to such amendment in accordance with Section 228 of the DGCL.
C. That the amendment has been duly approved and adopted in accordance with Section 242 of the DGCL.
IN WITNESS WHEREOF, the undersigned has caused this Certificate of Amendment of Certificate of Incorporation to be executed as of this 1st day of April, 1999.
NMHH CO.
/s/ Reginald R. Eklund
-------------------------------------------
By: Reginald R. Eklund
Name: President
ATTEST:
/s/ Geoffrey D. Lewis
----------------------------
By: Geoffrey D. Lewis
Name: Secretary
|
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
NMHG Holding Co.
2 The registered office of the corporation within the State of Delaware is hereby changed to 1013 Centre Road, City of Wilmington 19805, County of New Castle.
3. The registered agent of the corporation within the State of Delaware is hereby changed to Corporation Service Company, the business office of which is identical with the registered office of the corporation as hereby changed.
4. The corporation has authorized the changes hereinbefore set forth by resolution of its Board of Directors.
Signed on April 15, 1999.
/s/ Geoffrey D. Lewis
---------------------------------------------
Geoffrey D. Lewis
Vice President
|
Exhibit 3.1(ii)
NMHH CO.
BY-LAWS
NMHH CO.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. TIME AND PLACE OF MEETINGS. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, within or without the State of Delaware, as may be designated by the Board of Directors, or by the Chairman of the Board, the President or the Secretary in the absence of a designation by the Board of Directors, and stated in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders, commencing with the year 1999, shall be held on the first Tuesday in May if not a legal holiday, and if a legal holiday, then on the next business day following, at such time as shall be designated from time to time by the Board of Directors, at which meeting the stockholders shall elect by a plurality vote the directors to succeed those whose terms expire and shall transact such other business as may properly be brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by law or by the Certificate of Incorporation, may be called by the Board of Directors or the President, and shall be called by the President or the Secretary at the request in writing of stockholders owning a majority in interest of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall be sent to the President and the Secretary and shall state the purpose or purposes of the proposed meeting.
Section 4. NOTICE OF MEETINGS. Written notice of every meeting of the stockholders, stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided herein or by law. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may
be transacted which might have been transacted at the original meeting.
Section 5. QUORUM. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by law or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.
Section 6. VOTING. Except as otherwise provided by law or by the Certificate of Incorporation, each stockholder shall be entitled at every meeting of the stockholders to one vote for each share of stock having voting power standing in the name of such stockholder on the books of the Corporation on the record date for the meeting and such votes may be cast either in person or by written proxy. Every proxy must be duly executed and filed with the Secretary of the Corporation. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. The vote upon any
question brought before a meeting of the stockholders may be by voice vote, unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at such meeting shall so determine. Every vote taken by written ballot shall be counted by one or more inspectors of election appointed by the Board of Directors. When a quorum is present at any meeting, the vote of the holders of a majority of the stock which has voting power present in person or represented by proxy shall decide any question properly brought before such meeting, unless the question is one upon which by express provision of law, the Certificate of Incorporation or these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question.
ARTICLE II
DIRECTORS
Section 1. POWERS. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation directed or required to be exercised or done by the stockholders.
Section 2. NUMBER AND TERM OF OFFICE. The Board of Directors shall consist of one or more members. The Board of Directors shall initially consist of three members. Thereafter, the number of directors shall be fixed from time to time by resolution of the Board of Directors or by the stockholders at the annual meeting or a special meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified, except as required by law. Any decrease in the authorized number of directors shall not be effective until the expiration of the term of the directors then in office, unless, at the time of such decrease, there shall be vacancies on the Board which are being eliminated by such decrease.
Section 3. VACANCIES AND NEW DIRECTORSHIPS. Vacancies and newly created directorships resulting from any increase in the authorized number of directors which occur between annual meetings of the stockholders may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so elected shall hold office until the next annual meeting of the stockholders and until their successors are elected and qualified, except as required by law.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board of Directors.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the President on one day's written notice to each director by whom such notice is not waived, given either personally or by mail or telegram, and shall be called by the President or the Secretary in like manner and on like notice on the written request of any two directors.
Section 6. QUORUM. At all meetings of the Board of Directors, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time to another place, time or date, without notice other than announcement at the meeting, until a quorum shall be present.
Section 7. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes or proceedings of the Board or Committee.
Section 8. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any such committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Section 9. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation and each to have such lawfully delegable powers and duties as the Board may confer. Each such committee shall serve at the pleasure of the Board of Directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except as otherwise provided by law, any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Any committee or committees so designated by the Board shall have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. Unless otherwise prescribed by the Board of Directors, a majority of the members of the committee shall constitute a quorum for the transaction of business, and the act of a majority of the members present at a meeting at which there is a quorum shall be the act of such committee. Each committee shall prescribe its own rules for calling and holding meetings and its method of procedure, subject to any rules prescribed by the Board of Directors, and shall keep a written record of all actions taken by it.
Section 10. COMPENSATION. The Board of Directors may establish such compensation for, and reimbursement of the expenses of, directors for attendance at meetings of the Board of Directors or committees, or for other services by directors to the Corporation, as the Board of Directors may determine.
Section 11. RULES. The Board of Directors may adopt such special rules and regulations for the conduct of their meetings and the management of the affairs of the Corporation as they may deem proper, not inconsistent with law or these by-laws.
ARTICLE III
NOTICES
Section 1. GENERALLY. Whenever by law or under the provisions of the Certificate of Incorporation or these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice
may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram, telecopy or telephone.
Section 2. WAIVERS. Whenever any notice is required to be given by law or under the provisions of the Certificate of Incorporation or these by-laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
ARTICLE IV
OFFICERS
Section 1. GENERALLY. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a President, a Secretary and a Treasurer. The Board of Directors may also choose any or all of the following: a Chairman of the Board of Directors, one or more Vice Presidents, a Controller, a
General Counsel, and one or more Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person.
Section 2. COMPENSATION. The compensation of all officers and agents of the Corporation who are also directors of the Corporation shall be fixed by the Board of Directors. The Board of Directors may delegate the power to fix the compensation of other officers and agents of the Corporation to an officer of the Corporation.
Section 3. SUCCESSION. The officers of the Corporation shall hold office until their successors are elected and qualified. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors.
Section 4. AUTHORITY AND DUTIES. Each of the officers of the Corporation shall have such authority and shall perform such duties as are stated in these by-laws or customarily incident to their respective offices, or as may be specified from time to time by the Board of Directors in a resolution which is not inconsistent with these by-laws.
Section 5. PRESIDENT. The President shall be responsible for the active management and direction of the business and affairs of the Corporation. The President shall preside at all meetings of the stockholders and of the Board of Directors. The
President may delegate to any qualified person authority to chair any meeting, either on a permanent or temporary basis.
Section 6. EXECUTION OF DOCUMENTS AND ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. The President shall have and is hereby given, full power and authority, except as otherwise required by law or directed by the Board of Directors, (a) to execute, on behalf of the Corporation, all duly authorized contracts, agreements, deeds, conveyances or other obligations of the Corporation, applications, consents, proxies and other powers of attorney, and other documents and instruments, and (b) to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders (or with respect to any action of such stockholders) of any other corporation in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities of such other corporation. In addition, the President may delegate to other officers, employees and agents of the Corporation the power and authority to take any action which the President is authorized to take under this Section 6, with such limitations as the President may specify; such authority so delegated by the President shall not be re-delegated by the person to whom such execution authority has been delegated.
Section 7. VICE PRESIDENT. Each Vice President, however titled, if any, shall perform such duties and services and shall have such authority and responsibilities as shall be assigned to or required from time to time by the Board of Directors or the President.
Section 8. SECRETARY AND ASSISTANT SECRETARIES. (a) The Secretary shall attend all meetings of the stockholders and all meetings of the Board of Directors and record all proceedings of the meetings of the stockholders and of the Board of Directors and shall perform like duties for the standing committees when requested by the Board of Directors or the President. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and meetings of the Board of Directors. The Secretary shall perform such duties as may be prescribed by the Board of Directors or the President. The Secretary shall have charge of the seal of the Corporation and authority to affix the seal to any instrument. The Secretary or any Assistant Secretary may attest to the corporate seal by handwritten or facsimile signature. The Secretary shall keep and account for all books, documents, papers and records of the Corporation except those for which some other officer or agent has been designated or is otherwise properly accountable. The Secretary shall have authority to sign stock certificates.
(b) Assistant Secretaries, in the order of their seniority, shall assist the Secretary and, if the Secretary is unavailable or fails to act, perform the duties and exercise the authorities of the Secretary.
Section 9. TREASURER AND ASSISTANT TREASURERS. (a) The Treasurer shall have the custody of the funds and securities belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Treasurer with the prior approval of the Board of Directors or the President. The Treasurer shall disburse the funds and pledge the credit of the Corporation as may be directed by the Board of Directors and shall render to the Board of Directors and the President, as and when required by them, or any of them, an account of all transactions by the Treasurer.
(b) Assistant Treasurers, in the order of their seniority, shall assist the Treasurer and, if the Treasurer is unable or fails to act, perform the duties and exercise the powers of the Treasurer.
Section 10. CONTROLLER. The Controller, if one is appointed, shall be the chief accounting officer of the Corporation. The Controller shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation in accordance with accepted accounting methods and procedures. The Controller shall initiate periodic audits of the
accounting records, methods and systems of the Corporation. The Controller shall render to the Board of Directors and the President, as and when required by them, or any of them, a statement of the financial condition of the Corporation. If a Controller has not been appointed, the Treasurer shall perform the functions described in this Section 10.
Section 11. GENERAL COUNSEL. The General Counsel, if one is appointed, shall be the chief legal officer of the Corporation. The General Counsel shall provide legal counsel and advice to the Board of Directors and to the officers with respect to compliance with applicable laws and regulations. The General Counsel shall also provide or obtain legal representation of the Corporation in proceedings by or against the Corporation. The General Counsel shall render to the Board of Directors and the President, as and when required by them, or any of them, a report on the status of claims against, and pending litigation of, the Corporation.
ARTICLE V
STOCK
Section 1. CERTIFICATES. Certificates representing shares of stock of the Corporation shall be in such form as shall be determined by the Board of Directors, subject to applicable legal requirements. Such certificates shall be numbered and their issuance recorded in the books of the Corporation, and such
certificate shall exhibit the holder's name and the number of shares and shall be signed by, or in the name of the Corporation by the President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation. Any or all of the signatures and the seal of the Corporation, if any, upon such certificates may be facsimiles, engraved or printed.
Section 2. TRANSFER. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue, or to cause its transfer agent to issue, a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Secretary may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact, satisfactory to the Secretary, by the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates the Secretary may require the owner of such lost, stolen or destroyed certificate or certificates to give the Corporation a bond in such sum and with such surety or sureties as the Secretary may direct as indemnity against any claims that
may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of the new certificate.
Section 4. RECORD DATE. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
ARTICLE VI
GENERAL PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be fixed from time to time by the Board of Directors.
Section 2. CORPORATE SEAL. The Board of Directors may adopt a corporate seal and use the same by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director, each member of a committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees of the Board of Directors, or by any other person as
to matters the director, committee member or officer believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. TIME PERIODS. In applying any provision of these by-laws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.
Section 5. DIVIDENDS. The Board of Directors may from time to time declare and the Corporation may pay dividends upon its outstanding shares of capital stock, in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.
ARTICLE VII
AMENDMENTS
Section 1. AMENDMENTS. These by-laws may be altered, amended or repealed, or new by-laws may be adopted, by the stockholders or by the Board of Directors.
EXHIBIT 4.1
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NMHH CO.
Common Stock, par value $.01 per share
THIS CERTIFIES THAT -Specimen- is the owner of _______________________ fully
paid and non-assessable shares of common stock of the par value of $.01 each of
NMHH CO.
transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
WITNESS the seal of the Corporation and the signatures of its duly authorized officers.
Dated _______________________________
SEE REVERSE FOR CERTAIN DEFINITIONS
Exhibit 4.2
EXECUTION COPY
NMHG Holding Co.
Issuer
Certain Subsidiary Guarantors
As Guarantors
10% Senior Notes due 2009
INDENTURE
Dated as of May 9, 2002
U.S. Bank National Association Trustee
CROSS-REFERENCE TABLE
TIA Indenture Section Section ------- --------- 310(a)(1) ......................................... 7.10 (a)(2) ......................................... 7.10 (a)(3) ......................................... N.A. (a)(4) ......................................... N.A. (b) ......................................... 7.08; 7.10 (c) ......................................... N.A. 311(a) ......................................... 7.11 (b) ......................................... 7.11 (c) ......................................... N.A. 312(a) .. ...................................... 2.05 (b) ......................................... 11.03 (c) ......................................... 11.03 313(a) ......................................... 7.06 (b)(1) ......................................... N.A. (b)(2) ......................................... 7.06 (c) ......................................... 11.02 (d) ......................................... 7.06 314(a) ......................................... 4.02; 11.02 (b) ......................................... N.A. (c)(1) ......................................... 11.04 (c)(2) ......................................... 11.04 (c)(3) ......................................... N.A. (d) ......................................... N.A. (e) ......................................... 11.05 (f) ......................................... 4.13 315(a) ......................................... 7.01 (b) ......................................... 7.05; 11.02 (c) ......................................... 7.01 (d) ......................................... 7.01 (e) ......................................... 6.11 316(a)(last sentence) ......................................... 11.06 (a)(1)(A) ......................................... 6.05 (a)(1)(B) ......................................... 6.04 (a)(2) ......................................... N.A. (b) ......................................... 6.07 317(a)(1) ......................................... 6.08 (a)(2) ......................................... 6.09 (b) ......................................... 2.04 318(a) ......................................... 11.01 |
N.A. means Not Applicable.
TABLE OF CONTENTS
ARTICLE 1 Page
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Definitions and Incorporation by Reference
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SECTION 1.01. Definitions ................................................ 1
SECTION 1.02. Other Definitions .......................................... 34
SECTION 1.03. Incorporation by Reference of Trust Indenture Act .......... 34
SECTION 1.04. Rules of Construction ...................................... 35
ARTICLE 2
The Securities
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SECTION 2.01. Form and Dating ............................................ 36
SECTION 2.02. Execution and Authentication ............................... 36
SECTION 2.03. Registrar and Paying Agent ................................. 37
SECTION 2.04. Paying Agent To Hold Money in Trust......................... 38
SECTION 2.05. Securityholder Lists ....................................... 38
SECTION 2.06. Transfer and Exchange ...................................... 38
SECTION 2.07. Replacement Securities ..................................... 38
SECTION 2.08. Outstanding Securities ..................................... 39
SECTION 2.09. Temporary Securities ....................................... 39
SECTION 2.10. Cancellation ............................................... 40
SECTION 2.11. Defaulted Interest ......................................... 40
SECTION 2.12 CUSIP Numbers............................................... 40
SECTION 2.12. Issuance of Additional Securities .......................... 40
ARTICLE 3
Redemption
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SECTION 3.01. Notices to Trustee ......................................... 41
SECTION 3.02. Selection of Securities To Be Redeemed ..................... 42
SECTION 3.03. Notice of Redemption ....................................... 42
SECTION 3.04. Effect of Notice of Redemption ............................. 43
SECTION 3.05. Deposit of Redemption Price ................................ 43
SECTION 3.06. Securities Redeemed in Part ................................ 43
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ARTICLE 4
Covenants
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SECTION 4.01. Payment of Securities ...................................... 43
SECTION 4.02. SEC Reports ................................................ 44
SECTION 4.03. Limitation on Indebtedness ................................. 44
SECTION 4.04. Limitation on Restricted Payments .......................... 48
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries .................................. 53
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock ......... 55
SECTION 4.07. Limitation on Affiliate Transactions ....................... 59
SECTION 4.08. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries .................................. 60
SECTION 4.09. Change of Control .......................................... 61
SECTION 4.10. Limitation on Liens ........................................ 62
SECTION 4.11. Limitation on Sale/Leaseback Transactions .................. 62
SECTION 4.12. Future Guarantors .......................................... 63
SECTION 4.13. Compliance Certificate ..................................... 63
SECTION 4.14. Further Instruments and Acts ............................... 63
ARTICLE 5
Successor Company
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SECTION 5.01. When Company May Merge or Transfer Assets .................. 63
ARTICLE 6
Defaults and Remedies
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SECTION 6.01. Events of Default .......................................... 66
SECTION 6.02. Acceleration ............................................... 68
SECTION 6.03. Other Remedies ............................................. 69
SECTION 6.04. Waiver of Past Defaults .................................... 69
SECTION 6.05. Control by Majority ........................................ 69
SECTION 6.06. Limitation on Suits ........................................ 70
SECTION 6.07. Rights of Holders To Receive Payment ....................... 70
SECTION 6.08. Collection Suit by Trustee ................................. 70
SECTION 6.09. Trustee May File Proofs of Claim ........................... 71
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SECTION 6.10. Priorities ................................................. 71
SECTION 6.11. Undertaking for Costs ...................................... 71
SECTION 6.12. Waiver of Stay or Extension Laws ........................... 72
ARTICLE 7
Trustee
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SECTION 7.01. Duties of Trustee .......................................... 72
SECTION 7.02. Rights of Trustee .......................................... 73
SECTION 7.03. Individual Rights of Trustee ............................... 74
SECTION 7.04. Trustee's Disclaimer ....................................... 74
SECTION 7.05. Notice of Defaults ......................................... 74
SECTION 7.06. Reports by Trustee to Holders .............................. 75
SECTION 7.07. Compensation and Indemnity ................................. 75
SECTION 7.08. Replacement of Trustee ..................................... 76
SECTION 7.09. Successor Trustee by Merger ................................ 77
SECTION 7.10. Eligibility; Disqualification .............................. 77
SECTION 7.11. Preferential Collection of Claims Against Company .......... 77
ARTICLE 8
Discharge of Indenture; Defeasance
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SECTION 8.01. Discharge of Liability on Securities; Defeasance ........... 78
SECTION 8.02. Conditions to Defeasance ................................... 79
SECTION 8.03. Application of Trust Money ................................. 80
SECTION 8.04. Repayment to Company ....................................... 80
SECTION 8.05. Indemnity for Government Obligations ....................... 81
SECTION 8.06. Reinstatement .............................................. 81
ARTICLE 9
Amendments
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SECTION 9.01. Without Consent of Holders ................................. 81
SECTION 9.02. With Consent of Holders .................................... 82
SECTION 9.03. Compliance with Trust Indenture Act ........................ 83
SECTION 9.04. Revocation and Effect of Consents and Waivers .............. 83
SECTION 9.05. Notation on or Exchange of Securities ...................... 84
SECTION 9.06. Trustee To Sign Amendments ................................. 84
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SECTION 9.07. Payment for Consent ........................................ 84
ARTICLE 10
Subsidiary Guaranties
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SECTION 10.01. Guaranties ................................................ 85
SECTION 10.02. Limitation on Liability ................................... 87
SECTION 10.03. Successors and Assigns .................................... 87
SECTION 10.04. No Waiver ................................................. 87
SECTION 10.05. Modification .............................................. 88
SECTION 10.06. Release of Subsidiary Guarantor ........................... 88
ARTICLE 11
Miscellaneous
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SECTION 11.01. Trust Indenture Act Controls .............................. 88
SECTION 11.02. Notices ................................................... 89
SECTION 11.03. Communication by Holders with Other Holders ............... 89
SECTION 11.04. Certificate and Opinion as to Conditions Precedent ........ 90
SECTION 11.05. Statements Required in Certificate or Opinion ............. 91
SECTION 11.06. When Securities Disregarded ............................... 91
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar .............. 91
SECTION 11.08. Legal Holidays ............................................ 91
SECTION 11.09. Governing Law ............................................. 91
SECTION 11.10. No Recourse Against Others ................................ 91
SECTION 11.11. Successors ................................................ 91
SECTION 11.12. Multiple Originals ........................................ 91
SECTION 11.13. Table of Contents; Headings ............................... 92
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Rule 144A/Regulation S Appendix
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange Security
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Indenture dated as of May 9, 2002, among NMHG Holding Co., a Delaware corporation (the "Company"), the Subsidiary Guarantors and U.S. Bank National Association, a national banking association(the "Trustee").
Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's Initial Securities, Exchange Securities and Private Exchange Securities (collectively, the "Securities"):
ARTICLE 1
"Additional Assets" means (1) any property, plant or equipment or other tangible assets used in or useful in the operation of a Related Business; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; PROVIDED, HOWEVER, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.
"Additional Interest" has the meaning given in the Registration Rights Agreement.
"Additional Securities" means, subject to the Company's compliance with
Section 4.03, 10% Senior Notes due 2009 issued from time to time after the Issue
Date under the terms of this Indenture (other than pursuant to Section 2.06,
2.07, 2.09 or 3.06 of this Indenture and other than Exchange Securities or
Private Exchange Securities issued pursuant to an exchange offer for other
Securities outstanding under this Indenture).
"Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of
Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "disposition"), of
(1) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary),
(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or
(3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary
other than, in the case of (1), (2) and (3) above,
(A) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(B) for purposes of Section 4.06 only, (x) a disposition that constitutes a Restricted Payment permitted by Section 4.04 or a Permitted Investment and (y) a disposition of all or substantially all the assets of the Company in accordance with Section 5.01;
(C) a disposition of assets with a fair market value of less than $2.0 million;
(D) sales of accounts receivable and related assets of the type specified in the definition of Qualified Receivables
Transaction to a Receivables Subsidiary for the fair market value thereof;
(E) disposals of equipment in connection with reinvestment in or the replacement of its equipment and disposals of worn-out or obsolete equipment, in each case in the ordinary course of business of the Company or its Restricted Subsidiaries;
(F) the grant in the ordinary course of business of the Company or its Restricted Subsidiaries of any license of patents, trademarks, registrations therefor or similar intellectual property;
(G) any sale, transfer or other disposition of defaulted receivables for collection; and
(H) any sale, transfer or other disposition of lift trucks and related products in which the Company or its Restricted Subsidiaries holds a security interest in connection with its granting of a guarantee or recourse or repurchase obligation under any Lift Truck Financing Guarantee; PROVIDED that the net proceeds of any such sale, transfer or other disposition shall be applied to repay the outstanding Indebtedness, if any, associated with such guarantee or recourse or repurchase obligation.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as of the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); PROVIDED, HOWEVER, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capital Lease Obligation."
"Average Life" means, as of the date of determina tion, with respect to any Indebtedness, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of, or
redemption or similar payment with respect to, such Indebtedness multiplied by the amount of such payment by (2) the sum of all such payments.
"Board of Directors" means, with respect to a Person, the Board of Directors of such Person or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(1) any "person" (as such term is used in Sec tions 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of Parent or the Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of Parent or the Company, as the case may be, than such other person and do not have the
right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of Parent or the Company, as the case may be (such other person shall be deemed to beneficially own any Voting Stock of a specified Person (the "specified person") held by any other Person (the "parent entity"), if such other person is the beneficial owner (as defined in this clause (1)), directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent entity;
(2) individuals who on the Issue Date constituted the Board of Directors of the Company or Parent (together with any new directors whose election by such Board of Directors of the Company or Parent, as the case may be, or whose nomination for election by the stockholders of the Company or Parent, as the case may be, was approved by a vote of a majority of the directors of the Company or Parent, as the case may be, then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company or Parent then in office;
(3) the adoption of a plan relating to the liquidation or dissolution of the Company or Parent; or
(4) the merger or consolidation of Parent or the Company with or into another Person or the merger of another Person with or into Parent or the Company, or the sale of all or substantially all the assets of Parent or the Company (determined on a consolidated basis) to another Person, other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of Parent or the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and in substantially the same proportion as before the transaction, and (B) in the case of a sale of assets transaction, the transferee Person becomes the obligor in respect of the Securities and a Subsidiary of the transferor of such assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means the ratio of
(x) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for which such financial statements have been made publicly available prior to the date of such determination to
(y) Consolidated Interest Expense for such four fiscal quarters;
PROVIDED, HOWEVER, that:
(1) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period;
(2) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments
used to repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and
(5) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, without duplication:
(1) interest expense attributable to Capital Leases Obligations and the interest expense attributable to leases constituting part of a Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Interest Rate Agreements and, to the extent entered into in connection with financing transactions, currency hedging transactions;
(7) Preferred Stock dividends in respect of all Preferred Stock held by Persons other than the Company
or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the issuer of such Preferred Stock);
(8) interest incurred in connection with Investments in discontinued operations;
(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of the Company and its consolidated Subsidi aries; PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and
(B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income but only to the extent the Company or a Restricted Subsidiary funded such net loss with cash;
(2) any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:
(A) subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income but only to the extent the Company or a Restricted Subsidiary funded such net loss with cash;
(4) any gain or loss realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions,
proceeds or returns increase the amount of Restricted Payments permitted under such Section pursuant to Section 4.04(a)(3)(D).
"Credit Agreement" means the Credit Agreement to be entered into as of the Issue Date by and among the Company, certain of its Subsidiaries, the lenders referred to therein, Citicorp North America, Inc., as Administrative Agent, and Credit Suisse First Boston, as Syndication Agent, together with the related documents thereto (including the term loans and revolving loans thereunder, any guarantees and security documents), as such Credit Agreement and/or related documents may be replaced, amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions and whether or not with the same agent, trustee or lenders) from time to time, and any agreement (and related document) governing Indebtedness incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders.
"Credit Facility" means one or more debt facilities (including the Credit Agreement), with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing or letters of credit, in each case, as amended, extended, renewed, replaced, restated, supplemented or otherwise modified in whole or in part from time to time (including any increase in principal amount).
"Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement designed to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the Securities; PROVIDED, HOWEVER, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Securities shall not constitute Disqualified Stock if (1) the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the Securities described in Sections 4.06 and 4.09 of this Indenture and (2) any such requirement only becomes operative after compliance with such terms applicable to the Securities, including the purchase of any Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture; PROVIDED, HOWEVER, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.
"EBITDA" for any period means the sum of Consolidated Net Income, plus Consolidated Interest Expense, plus the following to the extent deducted in calculating such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated Restricted Subsidiaries;
(2) depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid operating activity item that was paid in cash in a prior period);
(3) all non-recurring gains and losses of the Company and its consolidated Restricted Subsidiaries; and
(4) all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period);
in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non- cash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended or distributed to the Company or another Restricted Subsidiary by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any Restricted Subsidiary that is not organized and existing under the laws of the United States of America, any State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards Board;
(3) such other statements by such other entity as approved by a significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
PROVIDED, HOWEVER, 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. The term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company's obligations with respect to the Securities on the terms provided for in this Indenture.
"Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 4.03, (1) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security and (2) the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms shall not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered
into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture (but excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase by the Company or any Restricted Subsidiary of any business or other assets, the term "Indebtedness" will exclude indemnification or post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; PROVIDED, HOWEVER, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter.
The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date;
PROVIDED, HOWEVER, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.
"Indenture" means this Indenture as amended or supplemented from time to time.
"Independent Qualified Party" means an investment banking firm, accounting firm or appraisal firm of national standing; PROVIDED, HOWEVER, that such firm is not an Affiliate of the Company.
"Interest Rate Agreement" means in respect of a Person any interest rate swap agreement, interest rate cap agreement or other similar financial agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable or deposits on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without giving effect to subsequent changes in value. For purposes of the definition of "Unrestricted Subsidiary", the definition of "Restricted Payment" and Section 4.04,
(1) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Company's senior management or, in the case of an Investment in excess of $5.0 million, by the Board of Directors of the Company.
"Issue Date" means May 9, 2002.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).
"Lift Truck Financing Guarantee" means guarantees or repurchase or
recourse obligations of the Company or a Restricted Subsidiary, Incurred in the
ordinary course of business consistent with past practice, of Indebtedness
Incurred by a dealer or customer of a dealer, for the purchase or lease of lift
trucks substantially all of which are manufactured or sold by the Company or a
Restricted Subsidiary, the proceeds of which Indebtedness is used by such dealer
or customer primarily to pay the purchase price of such lift trucks and any
related reasonable fees and expenses (including financing fees), PROVIDED,
HOWEVER, that (1)(A) with respect to lift trucks located in the United States,
the Indebtedness so guaranteed is secured by a perfected first priority Lien on
such lift trucks in favor of the holder of such Indebtedness, the Company or a
Restricted Subsidiary and (B) with respect to lift trucks located outside of the
United States, the Indebtedness so guaranteed is secured by a lien or other
similar security interest in favor of the holder of such Indebtedness, the
Company or a Restricted Subsidiary to the extent commercially practicable in the
jurisdiction in which such lift trucks are located and (2) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
guarantee, the Company or such Restricted Subsidiary will have the right to
either (a) the title to such lift trucks, (b) a valid assignment of a perfected
first priority Lien or other similar security interest in the lift trucks, or
(c) the net proceeds of any resale of such lift trucks.
"Net Available Cash" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any
securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form), in each case net of
(1) all legal, title and recording tax expenses, commissions and other fees and expenses (including fees and expenses of counsel, accountants and investment bankers) incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;
(4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition; and
(5) in the case of an Asset Disposition that involves the sale of an owned dealer or dealers, payments required to be made to third parties (other than as set forth in clause (3) above) in respect of terminations of lease obligations, dealer exclusivity arrangements or similar obligations necessary, in the good faith judgment of the Company, to complete such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"Offering Circular" means the Offering Circular, dated May 2, 2002 pursuant to which the Securities were offered.
"Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
"Parent" means NACCO Industries, Inc. and its successors.
"Permitted Holders" means, collectively, the parties to the Stockholders' Agreement, dated as of March 15, 1990, as amended from time to time, by and among National City Bank, (Cleveland, Ohio), as depository, the Participating Stockholders, as defined therein, and Parent; PROVIDED, HOWEVER, that for purposes of this definition only, the definition of Participating Stockholders contained in the Stockholders' Agreement shall be such definition in effect on the Issue Date.
"Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; PROVIDED, HOWEVER, that the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that such Person's primary business is a Related Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to Section 4.06;
(9) any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(10) a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person, in each case in connection with a Qualified Receivables Transaction, PROVIDED, HOWEVER, that any Investment in a Receivables Subsidiary is in the form of (a) a Purchase Money Note; (b) any equity interest; (c) obligations of the Receivables Subsidiary to pay the purchase price for assets transferred to it; or (d)
interests in accounts receivable generated by the Company or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable;
(11) Hedging Obligations;
(12) negotiable instruments held for deposit or collection in the ordinary course of business;
(13) any Investment in existence on the Issue Date;
(14) Investments in independently held lift truck dealers (consisting of not more than 50% of the total voting power of shares of Voting Stock of any such dealer) which do not exceed, at any one time, $5.0 million; and
(15) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value) which, when taken together with all other Investments made pursuant to this clause (15) that are at the time outstanding (measured on the date such Investment was made and without giving effect to subsequent changes in value), does not exceed $20.0 million.
"Permitted Liens" means, with respect to any Person,
(1) pledges or deposits by such Person under workers' compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review and Liens arising solely by virtue of any statutory or common law provision relating to banker's Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; PROVIDED, HOWEVER, that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;
(3) Liens for property taxes not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that such letters of credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person; PROVIDED, HOWEVER, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;
(7) Liens to secure Indebtedness permitted under Section 4.03(b)(1) and
Section 4.03(b)(16); PROVIDED, HOWEVER, that with respect to Liens securing
Indebtedness Incurred under Section 4.03(b)(16), such Liens exclude Liens
on real property, plant and equipment;
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Subsidiary of such Person; PROVIDED, HOWEVER, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(10) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; PROVIDED, HOWEVER, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(11) Liens securing Indebtedness or other obligations of a Subsidiary of such Person owing to such Person or a wholly owned Subsidiary of such Person;
(12) Liens securing Hedging Obligations so long as such Hedging Obligations relate to Indebtedness that is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligations;
(13) Liens arising from precautionary Uniform Commercial Code financing statement filings relating to operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;
(14) Liens on assets held by the Company-owned dealers in connection with Lift Truck Financing Guarantees and limited in each case to the property subject to such Lift Truck Financing Guarantee; and
(15) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clause (6),(8), (9) or (10); PROVIDED, HOWEVER, that (A) such
new Lien shall be limited to all or part of the same property and assets
that secured or, under the written agreements pursuant to which the
original Lien arose, could secure the original Lien (plus improvements and
accessions to such property or proceeds or distributions thereof) and (B)
the Indebtedness secured by such Lien at such time is not increased to any
amount greater than the sum of (x) the outstanding principal amount or, if
greater, committed amount of the Indebtedness described under clause (6),
(8), (9) or (10) at the time the original Lien became a Permitted Lien and
(y) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien described in clause (6), (9) or (10) above to the extent such Lien applies to any Additional Assets acquired directly or indirectly from Net Available Cash pursuant to Section 4.06. For purposes of this definition, the term "Indebtedness" shall be deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the premium, if any, payable on the Secu rity which is due or overdue or is to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering of common stock of Parent or the
Company pursuant to an effective registration statement under the Securities Act.
"Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Restricted Subsidiary in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Restricted Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any Restricted Subsidiary), and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Restricted Subsidiary of the Company, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets that are customarily transferred, or in respect of which security interests are customarily granted, in connection with asset securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company that engages in no activities other than in connection with the financing of accounts receivable and that is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and (1) has no Indebtedness or other obligations (contingent or otherwise) that (a) are guaranteed by the Company or any Restricted Subsidiary, other than contingent liabilities pursuant to Standard Securitization Undertakings, (b) are recourse to or obligate the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings; (2) has no contract, agreement, arrangement or undertaking (except in connection with a Purchase Money Note or Qualified Receivables Transaction) with the Company or its Restricted Subsidiaries other than on terms no less favorable to the Company or such Restricted Subsidiaries than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and (3) neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve the Receivables Subsidiary's financial condition or cause the Receivables Subsidiary to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officer's Certificate certifying, to the best of such officer's knowledge and belief after consulting with counsel, that such designation complied with the foregoing conditions.
"Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced;
PROVIDED FURTHER, HOWEVER, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights Agreement dated May 9, 2002, among the Company, the Subsidiary Guarantors, Credit Suisse First Boston Corporation and Salomon Smith Barney Inc.
"Related Business" means any business in which the Company or its Subsidiaries was engaged on the Issue Date and any business related, ancillary or complementary to any business of the Company or its Subsidiaries in which the Company or its Subsidiaries was engaged on the Issue Date or a reasonable extension, development or expansion of the business in which the Company or its Subsidiaries was engaged as of the Issue Date.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or distributions payable solely to the Company or a Restricted Subsidiary, and other than pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital
Stock (other than into Capital Stock of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other than the purchase, repurchase, or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition); or
(4) the making of any Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property owned the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person, other than Sale/Leaseback Transactions involving lift trucks placed into the owned operations of the Company or the Restricted Subsidiaries for use or lease.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means with respect to any Person,
(1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and
(2) accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is responsible or liable
unless, in the case of (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are subordinate in right of payment to the Securities or the Subsidiary Guaranty of such Person, as the case may be; PROVIDED, HOWEVER, that Senior Indebtedness shall not include:
(1) any obligation of such Person to any Subsidiary;
(2) any liability for Federal, State, local or other taxes owed or owing by such Person;
(3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities);
(4) any Indebtedness or Guarantee of such Person (and any accrued and unpaid interest in respect thereof) which is subordinate or junior in any respect to any other Indebtedness or Guarantee or other obligation of such Person; or
(5) that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary that are reasonably customary in securitization transactions involving accounts receivables in connection with any servicing obligations assumed by the Company or any Restricted Subsidiary in respect of such accounts receivable.
"Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a written agreement to that effect.
"Subsidiary" means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by (1) such Person; (2) such Person and one or more Subsidiaries of such Person; or (3) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means NMHG Distribution Co., Hyster-Yale Materials Handling, Inc., NACCO Materials Handling Group, Inc., NMHG Oregon, Inc. and Hyster Overseas Capital Corporation, LLC and each other Subsidiary of the Company that executes this Indenture as a Guarantor and each other Subsidiary of the Company that hereafter guarantees the Securities pursuant to the terms of this Indenture.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50 million (or the foreign currency equivalent thereof) and has
outstanding debt that is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money- market fund sponsored by a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group; and
(5) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.04. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a) and (B) no Default shall have occurred and be continuing. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"U.S. Dollar Equivalent" means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the "Exchange Rates" column under the heading "Currency Trading" on the date two Business Days prior to such determination.
Except as described in Section 4.03, whenever it is necessary to determine whether the Company has complied with any covenant in this Indenture or a Default has occurred and an amount is expressed in a currency other than U.S. dollars, such amount will be treated as the U.S. Dollar Equivalent determined as of the date such amount is initially determined in such currency.
"U.S. Government Obligations" means direct obliga tions (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issu er's option.
"Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
---- ---------
"Affiliate Transaction" ................................... 4.07
"Appendix" ................................................ 2.01
"Bankruptcy Law" .......................................... 6.01
"Change of Control Offer" ................................. 4.09(b)
"covenant defeasance option" .............................. 8.01(b)
"CUSIP" ................................................... 2.12
"Custodian" ............................................... 6.01
"Event of Default" ........................................ 6.01
"Guaranteed Obligations" .................................. 10.01
"ISIN" .................................................... 2.12
"legal defeasance option" ................................. 8.01(b)
"Legal Holiday" ........................................... 11.08
"Offer" ................................................... 4.06(b)
"Offer Amount" ............................................ 4.06(c)(2)
"Offer Period" ............................................ 4.06(c)(2)
"Paying Agent" ............................................ 2.03
"Purchase Date" ........................................... 4.06(c)(1)
"Registrar" ............................................... 2.03
"Successor Company" ....................................... 5.01
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SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in
and made a part of this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC;
"indenture security" means the Securities and each Subsidiary Guaranty;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture and each Guaranty Agreement;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company, the Subsidiary Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limita tion;
(5) words in the singular include the plural and words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a
balance sheet of the issuer dated such date prepared in accordance with
GAAP;
(8) interest payable on the Securities shall include any Additional Interest required to be paid on the Securities under the Registration Rights Agreement;
(9) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemp tion or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; and
(10) all references to the date the Securities were originally issued shall refer to the Issue Date.
ARTICLE 2
SECTION 2.01. FORM AND DATING. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix") which is hereby incorporated in and expressly made part of this Indenture. The Initial Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in the Appendix and Exhibit A are part of the terms of this Indenture.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenti-
cates the Security, the Security shall be valid neverthe less.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be con clusive evidence that the Security has been authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $250.0 million of 10% Senior Notes due 2009 and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount specified in such order, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 2.13 after the Issue Date, shall certify that such issuance is in compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appoint ment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authen tication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Secur ities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co- registrar and the term "Paying Agent" includes any addi tional paying agent.
The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary incorporated or organized within the United States of America may act as Paying Agent, Registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securi ties.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably prac ticable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the
requirements of this Indenture and Section 8-401(a) of the Uniform Commercial Code are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent and the Registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Secur ity.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Sec tion 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Secur ities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities.
SECTION 2.10. CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record reten tion requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or caused to be mailed to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Securities may use numbers assigned by the Committee on Uniform Securities Identification Procedures ("CUSIP") and corresponding International Securities Identification Numbers ("ISIN") (if then generally in use) and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP or ISIN numbers.
SECTION 2.13. ISSUANCE OF ADDITIONAL SECURITIES. The Company shall be entitled, subject to its compliance with Section 4.03, to issue Additional Securities under this Indenture which shall have identical terms as the Initial Securities issued on the Issue Date, other than with respect to the date of issuance and issue price. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor shall be treated as a single class for all purposes under this Indenture.
With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors and an Officers' Certificate, a copy of each which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number and corresponding ISIN of such Additional Securities; PROVIDED, HOWEVER, that no Additional Securities may be issued unless such Additional Securities are fungible in all respects for U.S. Federal income tax purposes with the Securities then outstanding; and
(3) whether such Additional Securities shall be Transfer Restricted Securities and issued in the form of Initial Securities as set forth in the Appendix to this Indenture or shall be issued in the form of Exchange Securities as set forth in Exhibit A.
ARTICLE 3
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be
redeemed and the paragraph of the Securities pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 45 days before the redemption date unless the Trustee consents
to a shorter period. Any such notice may be cancelled by the Company at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in principal amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly in writing of the Securities or portions of Securities to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a date for redemp tion of Securities, the Company shall mail or cause to be mailed a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption payment, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities.
At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surren der to the Paying Agent, such Securities called for redemption shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued inter est on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation. The Paying Agent shall promptly after the redemption date return to the Company any money so deposited which is not required for that purpose upon the request of the Company.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue princi pal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC REPORTS. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC and provide the Trustee and Securityholders with such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and other reports to be so filed and provided at the times specified for the filing of such information, documents and reports under such Sections.
In addition, the Company shall furnish to the Holders of the Securities and to prospective investors, upon the requests of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long the Securities are not freely transferable under the Securities Act. The Company also shall comply with the other provisions of TIA ss. 314(a).
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; PROVIDED, HOWEVER, that the Company and the Subsidiary Guarantors shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a PRO FORMA basis, no Default has occurred and is continuing and the Consolidated Coverage Ratio exceeds 2.00 to 1 if such Indebtedness is Incurred prior to May 15, 2003 or 2.25 to 1 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and the Restricted Subsidiaries shall be entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by the Company and any Subsidiary Guarantor pursuant to any Credit Facility; PROVIDED, HOWEVER, that, after giving effect to any such Incurrence, the aggregate principal amount of Indebtedness Incurred pursuant to this clause (1) and then outstanding does not exceed the greater of (i) $175.0 million less the sum of all principal payments with respect to such Indebtedness pursuant to Section 4.06(a)(3)(A) and (ii) the sum of (x) 60% of the book value of the inventory of the Company and its Restricted Subsidiaries and (y) 80% of the book value of the accounts receivable of the Company and its Restricted Subsidiaries, in each case at the end of the most recent fiscal quarter for which financial statement are publicly available;
(2) Indebtedness owed to and held by the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Securities;
(3) the Securities (other than any Additional Securities);
(4) Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this Section 4.03(b));
(5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company); PROVIDED, HOWEVER, that on the date of such
acquisition and after giving pro forma effect thereto, the Company would have been able to Incur at least $1.00 of Indebtedness pursuant to Section 4.03(a);
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (3), (4) or (5) of this
Section 4.03(b) or this clause (6); PROVIDED, HOWEVER, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Subsidiary Incurred pursuant to clause (5), such
Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(7) Hedging Obligations directly related to Indebtedness permitted to be Incurred by the Company or the Subsidiary Guarantors pursuant to this Indenture or directly related to the ordinary course of business of the Company and its Restricted Subsidiaries;
(8) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;
(9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within five Business Days of its Incurrence;
(10) Indebtedness consisting of (i) the Subsidiary Guaranty of a Subsidiary Guarantor, (ii) a Guarantee of a Restricted Subsidiary that is not a Subsidiary Guarantor to the extent it Guarantees Indebtedness permitted to be Incurred under the Indenture by any other Restricted Subsidiary that is also not a Subsidiary Guarantor and (iii) any Guarantee by a Subsidiary Guarantor of Indebtedness Incurred pursuant to Section 4.03(a) or pursuant to clause (1), (2), (3) or (4) of this Section 4.03(b) or pursuant to clause (6) of this Section 4.03(b) to the extent the Refinancing Indebtedness Incurred thereunder directly or indirectly Refinances Indebtedness Incurred pursuant to Section 4.03(a) or pursuant to clauses (3) or (4) of this Section 4.03(b);
(11) Indebtedness of the Company or the Subsidiary Guarantors represented by Capital Lease Obligations
Incurred for the purpose of financing all or any part of the purchase price
or cost of construction or improvement of property, plant or equipment used
in a Related Business in an aggregate principal amount which, when added
together with the amount of Indebtedness Incurred pursuant to this clause
(11) and then outstanding, does not exceed $5.0 million (including any
Refinancing Indebtedness with respect thereto);
(12) Lift Truck Financing Guarantees;
(13) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Transaction that is not recourse to the Company or any of its Subsidiaries (except for Standard Securitization Undertakings) in an amount which, when added together with the aggregate amount of all Indebtedness Incurred pursuant to this clause (13) and then outstanding, does not exceed the lesser of (i) $175.0 million and (ii) the maximum principal amount of Indebtedness that could be Incurred pursuant to clause (1) of this Section 4.03(b) at such time after taking into account all Indebtedness theretofore Incurred pursuant to clause (1) of this Section 4.03(b) and then outstanding;
(14) Indebtedness of the Company or any Restricted Subsidiary consisting of reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in response to worker's compensation claims or self- insurance or similar requirements;
(15) Indebtedness consisting of customary indemnification, adjustment of purchase price or similar obligations, including insurance, of the Company or any Restricted Subsidiary, in each case Incurred in connection with the acquisition or disposition of any assets by the Company or any Restricted Subsidiary;
(16) Indebtedness Incurred by any Foreign Subsidiary; PROVIDED, HOWEVER, that, after giving effect to any such Incurrence, the aggregate principal amount of such Indebtedness then outstanding does not exceed the sum of (x) 60% of the book value of the inventory of all Foreign Subsidiaries and their Restricted Subsidiaries and (y) 80% of the book value of the accounts receivables of all Foreign Subsidiaries and their Restricted Subsidiaries, in each case at the
end of the most recent fiscal quarter for which financial statements are publicly available; and
(17) Indebtedness of the Company or the Subsidiary Guarantors in an aggregate principal amount which, when taken together with all other Indebtedness of the Company or the Subsidiary Guarantors outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (1) through (16) of this Section 4.03(b) or Section 4.03(a)), does not exceed $40.0 million.
(c) Notwithstanding the foregoing, neither the Company nor any Subsidiary Guarantor shall Incur any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Company or a Subsidiary Guarantor unless such Indebtedness shall be subordinated to the Securities or to the Subsidiary Guaranty of such Subsidiary Guarantor to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (1) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described herein, the Company, in its sole discretion, shall classify such item of Indebtedness at the time of Incurrence and only be required to include the amount and type of such Indebtedness in one of the above clauses and (2) the Company shall be entitled at the time of such Incurrence to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described herein.
(e) For purposes of determining compliance with any U.S. dollar restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is denominated in a different currency, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of the Incurrence of such Indebtedness; PROVIDED, HOWEVER, that if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Agreement. The principal amount of any Refinancing Indebtedness Incurred in the same currency as the Indebtedness being Refinanced will be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that (1) such U.S. Dollar Equivalent was determined
based on a Currency Agreement, in which case the Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (2) the principal amount of the Refinancing Indebtedness exceeds the principal amount of the Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such excess, as appropriate, will be determined on the date such Refinancing Indebtedness is Incurred.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continu ing (or would result therefrom);
(2) the Company is not entitled to Incur an additional $1.00 of Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Pay ment and all other Restricted Payments since the Issue Date would exceed the sum of (without duplication):
(A) 50% of the Consolidated Net Income accrued during the period (treated as one account ing period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter prior to the date of such Restricted Payment for which financial statements have been made publicly available (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); PLUS
(B) 100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution received by the Company from its stockholders subsequent to the Issue Date; plus
(C) the amount by which Indebtedness of the Company is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); PLUS
(D) an amount equal to the sum of (x) the net reduction in the Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in each case received by the Company or any Restricted Subsidiary and (y) to the extent such Person is an Unrestricted Subsidiary, the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the foregoing sum shall not exceed, in the case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its stockholders; PROVIDED, HOWEVER, that (A) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness which is permitted to be Incurred pursuant to Section 4.03; PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;
(3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or any Subsidiary Guarantor using any Net Available Cash remaining after compliance with the requirements of Section 4.06;
(4) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied with this
Section 4.04; PROVIDED, HOWEVER, that at the time of payment of such
dividend, no other Default shall have occurred and be continuing (or result
therefrom); PROVIDED FURTHER, HOWEVER, that such dividend shall be included
in the calculation of the amount of Restricted Payments;
(5) so long as no Default has occurred and is continuing, the repurchase or other acquisition of shares of Capital Stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; PROVIDED, HOWEVER, that the aggregate amount of such repurchases and other acquisitions shall not exceed $2.0 million in any calendar year; PROVIDED FURTHER, HOWEVER, that such
repurchases and other acquisitions shall be excluded in the calculation of the amount of Restricted Payments;
(6) dividends or other distributions to Parent consistent with past practices (i) to pay franchise taxes and other amounts allocable to the Company required by Parent to maintain its corporate existence, (ii) to pay for all operating and overhead expenses of Parent allocable to the Company (including salaries and other compensation of employees, directors' fees and expenses, and travel and entertainment expenses) incurred by Parent in the ordinary course of its business, (iii) to pay Parent fees for services provided by Parent to the Company that would otherwise have been performed by third parties (including accounting, treasury, tax, legal, strategic consulting and corporate development services) and (iv) to reimburse Parent for the payment of amounts relating to services (including legal, consulting, software, insurance and accounting services) provided by third parties on the Company's or any Restricted Subsidiary's behalf; PROVIDED, HOWEVER, that such dividends or other distributions shall be excluded in the calculation of the amount of Restricted Payments, except for dividends and other distributions described in clause (ii) above which shall be included in the calculation of the amount of Restricted Payments;
(7) so long as no Default has occurred and is continuing, payments to Parent in an amount not in excess of $5.0 million per calendar year; PROVIDED, HOWEVER, that such payments shall be included in the calculation of the amount of Restricted Payments;
(8) so long as no Default has occurred and is continuing, any Investments in joint ventures or similar Persons, including NMHG Financial Services, Inc., Sumitomo-NACCO Materials Handling Co., Ltd., Shanghai Hyster Forklift Ltd., in Related Businesses; PROVIDED, HOWEVER, that the aggregate amount of all Investments made pursuant to this clause (8) to the extent they shall not have at the time been repaid, repurchased, redeemed, sold or returned, does not exceed $5.0 million; PROVIDED FURTHER, HOWEVER, that such payments shall be included in the calculation of the amount of Restricted Payments;
(9) payments or repayments of advances to Parent pursuant to the tax sharing agreement among the Company, Parent and Parent's domestic subsidiaries and
consistent with past practices; PROVIDED, HOWEVER, that such payments shall be excluded in the calculation of the amount of Restricted Payments; or
(10) so long as no Default has occurred and is continuing, Restricted Payments in an amount which, when added together with all Restricted Payments made pursuant to this clause (10) to the extent they shall not have at the time been repaid, repurchased, redeemed, sold or returned, does not exceed $10.0 million; PROVIDED, HOWEVER, that such payment shall be included in the calculation of the amount of Restricted Payments
SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c) of this Section 4.05,
(i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date or any encumbrance or restriction pursuant to any term sheets for financings attached to this Indenture;
(ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Company) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to
an agreement referred to in clause (i) or (ii) of clause 1
of this Section 4.05 or this clause (iii) or contained in
any amendment to an agreement referred to in clause (i) or
(ii) of this Section 4.05(1) or this clause (iii); PROVIDED,
HOWEVER, that the encumbrances and restrictions with respect
to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less favorable to
the Securityholders than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such
predecessor agreements;
(iv) applicable by reason of law, rule, regulation, order, grant or governmental permit;
(v) any encumbrance or restriction with respect to contractual requirements of a Receivables Subsidiary in connection with a Qualified Receivables Transaction; PROVIDED, HOWEVER, that such restrictions apply only to such Receivables Subsidiary; and
(vi) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition; and
(2) with respect to clause (c) of this Section 4.05 only,
(i) any such encumbrance or restriction consisting of customary nonassignment provisions of any contract, license or lease with any Restricted Subsidiary to
the extent such provisions restrict the transfer of the
property subject to such contract, license or lease; and
(ii) restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages.
SECTION 4.06. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless (1) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the senior management of the Company or, in the case of an Asset Disposition in excess of $5.0 million, by the Board of Directors of the Company, of the shares and assets subject to such Asset Disposition; (2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents; and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) pursuant to one or more of the following: (A) to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B) to the extent the Company or such Restricted Subsidiary elects, to acquire Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; and (C) to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B) of this Section 4.06(a)(3), to make an Offer to the holders of the Securities (and to holders of other Senior Indebtedness of the Company designated by the Company) to purchase Securities (and such other Senior Indebtedness of the Company) pursuant to and subject to the conditions of this Section 4.06; PROVIDED, HOWEVER, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (A) or (C) of this Section 4.06(a)(3), the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.06, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 4.06(a) except to the extent that the aggregate Net Available Cash from all Asset Dispositions which are not applied in accordance with this Section 4.06(a) exceeds $10.0 million. Pending application of Net Available Cash pursuant to this Section 4.06(a), such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness.
For the purposes of this Section 4.06(a), the following are deemed to be cash or cash equivalents: (1) the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition and (2) securities received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Indebtedness of the Company) pursuant to Sec tion
4.06(a)(3)(C), the Company shall purchase Securities tendered pursuant to an
offer by the Company for the Securities (and such other Senior Indebtedness of
the Company) (the "Offer") at a purchase price of 100% of their principal amount
(or, in the event such other Senior Indebtedness was issued with significant
original issue discount, 100% of the accreted value thereof) (the "Offer Price")
without premium, plus accrued but unpaid interest (or, in respect of such other
Senior Indebtedness of the Company, such lesser price, if any, as may be
provided for by the terms of such Senior Indebtedness) in accordance with the
procedures (including prorating in the event of over subscription) set forth in
Section 4.06(c). If the aggre gate purchase price of Securities (and any other
Senior Indebtedness) tendered pursuant to the Offer exceeds the Net Available
Cash allotted to their purchase, the Company shall select the Securities (and
other Senior Indebtedness) to be purchased on a pro rata basis but in round
denominations, which in the case of the Securities will be denominations of
$1,000 principal amount or multiples thereof. The Company shall not be required to make an Offer to purchase Securities (and other Senior Indebtedness of the Company) pursuant to this Section 4.06 if the Net Available Cash available therefor is less than $10.0 million (which lesser amount shall be carried forward for purposes of determining whether such an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall deliver to the Trustee and send or cause to be sent, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Securities purchased by the Company either in whole or in part (subject to prorating as described in Section 4.06(b) in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice, unless a longer period is required by applicable law (the "Purchase Date") and shall contain such information concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed decision and all instructions and materials necessary to tender Securities pursuant to the Offer, together with the information contained in clause (3).
(2) Not later than the Purchase Date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust) in Temporary Cash Investments, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the amount of the Offer (the "Offer Amount") to be held for payment in accordance with the provisions of this Section. If the Offer includes other Senior Indebtedness of the Company, the deposit described in the preceding sentence may be made with any other paying agent pursuant to arrangements satisfactory to the Trustee. Upon the expiration of the period for which the Offer remains open (the "Offer Period"), the Company shall deliver to the Trustee for cancellation the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offer Amount applicable to the
Securities, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in any manner not prohibited by this Indenture.
(3) Holders electing to have a Security purchased shall be required to surrender the Security, with an appro priate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased. Holders whose Securities are purchased only in part shall be issued new Securities equal in princi pal amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Securities are to be accepted by the Company pursuant to and in accordance with the terms of this Sec tion. A Security shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrender ing Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.06 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.07. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or of the benefit of, any Affiliate of the Company (an "Affiliate
Transaction") unless (1) the terms of the Affiliate Transaction are no less
favorable to the Company or such Restricted Subsidiary than those that could be
obtained at the time of such Affiliate Transaction in arm's-length dealings with
a Person who is not such an Affiliate; (2) if such Affiliate Transaction
involves an amount in excess of $10.0 million, the terms of the Affiliate
Transaction are set forth in writing and a majority of the members of the Board
of Directors of the Company disinterested with respect to such Affiliate
Transaction have determined in good faith that the criteria set forth in clause
(1) of this Section 4.07(a) are satisfied and have approved the relevant
Affiliate Transaction as evidenced by a resolution of the Board of Directors of
the Company; PROVIDED that, for purposes of this Section 4.07(a)(2) only, in the
event of any Affiliate Transaction involving Parent, those members of the Board
of Directors of the Company who are not Permitted Holders, whether or not they
are also members of the Board of Directors of Parent, shall be deemed
disinterested; and (3) if such Affiliate Transaction involves an amount in
excess of (i) $10.0 million in the case of any Affiliate Transaction between
Parent, on the one hand, and the Company or any Restricted Subsidiary, on the
other hand, or (ii) $20.0 million in the case of any other Affiliate
Transaction, the Board of Directors of the Company shall also have received a
written opinion from an Independent Qualified Party to the effect that such
Affiliate Transaction is fair, from a financial standpoint, to the Company and
its Restricted Subsidiaries or not less favorable to the Company and its
Restricted Subsidiaries than could reasonably be expected to be obtained at the
time in an arm's-length transaction with a Person who was not an Affiliate.
(b) The provisions of Section 4.07(a) shall not prohibit (1) any Investment (other than a Permitted Investment) or other Restricted Payment, in each case permitted to be made pursuant to Section 4.04; (2) any issuance of securities, or other payments, awards or grants in cash, securities (including securities of the Parent) or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors of the Company; (3) loans or advances to employees in the ordinary course of business in accordance with the past practices of the Company or its Restricted Subsidiaries, but in any event not to exceed $6.0 million in the aggregate outstanding at any one time; (4) reasonable fees and compensation paid to and indemnity provided on behalf of officers, directors and employees of the Company or any of its Restricted Subsidiaries in the
ordinary course of business or as required by law; (5) any transaction with a Restricted Subsidiary or joint venture or similar entity which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary, joint venture or similar entity; (6) the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company; (7) the purchase of or the payment of Indebtedness of or monies owed by the Company or any of its Restricted Subsidiaries for goods or materials purchased, or services received, in the ordinary course of business; (8) any Qualified Receivables Transaction, and the Incurrence of obligations and acquisitions of Permitted Investments and other rights, or assets in connection with a Qualified Receivables Transaction; and (9) any agreement as in effect or entered into on the Issue Date and described in the Offering Circular or any renewals or extensions of any such agreements (so long as such renewals or extensions are not less favorable to the Company or the Restricted Subsidiaries) and the transactions evidenced thereby.
SECTION 4.08. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. The Company (1) shall not, and shall not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of any Capital Stock of any Restricted Subsidiary to any Person (other than to the Company or a Wholly Owned Subsidiary), and (2) shall not permit any Restricted Subsidiary to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors' or other legally required qualifying shares) to any Person (other than to the Company or a Wholly Owned Subsidiary) unless (A) immediately after giving effect to such issuance, sale or other disposition, neither the Company nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary or (B) immediately after giving effect to such issuance, sale or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect thereto is treated as a new Investment by the Company and such Investment would not have been prohibited by Section 4.04 if made on the date of such issuance, sale or other disposition.
SECTION 4.09. CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the terms contemplated in Section 4.09(b).
(b) Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the "Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, or premium, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by the Company, consistent with this Section, that a Holder must follow in order to have its Securities purchased.
(c) Holders electing to have a Security purchased will be required to surrender the Security, with an appro priate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities pur chased by the Company under this Section shall be delivered by the Company to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in Section 4.09 applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue of its compliance with such securities laws or regulations.
SECTION 4.10. LIMITATION ON LIENS. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (the "Initial Lien") of any nature whatsoever on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Indebtedness, other than Permitted Liens, without effectively providing that the Securities shall be secured equally and ratably with (or prior to) the obligations so secured for so long as such obligations are so secured. Any Lien created for the benefit of the Holders of the Securities pursuant to the foregoing sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
SECTION 4.11. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless (1) the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 4.03 and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Securities pursuant to Section 4.10, (2) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair
value (as determined by the senior management of the Company or, in the case of a Sale/Leaseback Transaction in excess of $5.0 million, by the Board of Directors of the Company) of such property and (3) the Company applies the proceeds of such transaction in compliance with Section 4.06.
SECTION 4.12. FUTURE GUARANTORS. The Company shall cause each Restricted Subsidiary organized under the laws of the United States, any State thereof or the District of Columbia that Guarantees any Indebtedness of the Company or any Indebtedness of any other Restricted Subsidiary to, at the same time, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary will Guarantee payment of the Securities on the same terms and conditions as those set forth in this Indenture.
SECTION 4.13. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA Sec. 314(a)(4).
SECTION 4.14. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
ARTICLE 5
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obliga tions of the Company under the Securities and this Indenture;
(2) immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a);
(4) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and
(5) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such transaction and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred.;
PROVIDED, HOWEVER, that clause (3) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to the Company or (B) the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction.
The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or series of transactions, all or substantially all of its assets to any Person unless: (1) except in the case of a Subsidiary Guarantor that has been disposed of in its entirety to another Person (other than to the Company or an Affiliate of the Company), whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the Company provides an Officers' Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 4.06 in respect of such disposition, the resulting, surviving or transferee Person (if not such Subsidiary Guarantor) shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary Guarantor was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form reasonably satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor, if any, under its Subsidiary Guaranty; (2) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and (3) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement, if any, complies with this Indenture.
Notwithstanding this Section 5.01, a Restricted Subsidiary may consolidate with or merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Company or another Restricted Subsidiary.
ARTICLE 6
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security when the same becomes due and payable and such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 or 4.12 (other than a failure to purchase Securities when required under Section 4.06 or 4.09) and such failure continues for 30 days after the notice specified below;
(5) the Company or a Subsidiary Guarantor fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clause (1), (2), (3) or (4) above) and such failure continues for 60 days after the notice specified below;
(6) Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10 million;
(7) the Company, a Subsidiary Guarantor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary case;
(C) consents to the appointment of a Custo dian of it or for any substantial part of its property; or
(D) makes a general assignment for the bene fit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company, a Subsidiary Guarantor or any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, a Subsidiary Guarantor or any Significant Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company, a Subsidiary Guarantor or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money, the portion of which not covered by insurance exceeds $10 million, is entered against the Company, a Subsidiary Guarantor or any Significant Subsidiary, remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed (the "Judgment Default Provision"); or
(10) a Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty)
or a Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clauses (4) or (5) is not an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (6), (9) or (10) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (4) or (5), its status and what action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing, the Trustee by written notice specifying the Event of Default to the Company, or the Holders of at least 25% in principal amount of the outstanding Securities by written notice specifying the Event of Default to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(7) or (8) with respect to the Company occurs, the principal of and interest on all the Securities shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its conse quences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquies cence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security (ii) a Default arising from the failure to redeem or purchase any Security when required pursuant to this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceed ing for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemni fication satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Inden ture, the right of any Holder to receive payment of princi pal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Secu rities, or to bring suit for the enforcement of any payment with respect to the Securities, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together
with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disburse ments and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. PRIORITIES. If the Trustee col lects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Sec tion 7.07;
SECOND: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securi ties for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Inden ture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including rea sonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatso ever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the require ments of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabil ity for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genu ine and to have been signed or presented by the proper per son. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opin ion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it here under in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company, any Subsidiary Guarantor or their respective Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Secur ities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in the Inden ture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is not opposed to the interests of Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each May 1 beginning with the May 1 following the date of this Indenture, and in any
event prior to July 1 in each year, the Trustee shall mail to each
Securityholder a brief report dated as of May 1 that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company and the Subsidiary Guarantors shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company and the Subsidiary Guarantors shall jointly and severally indemnify the Trustee against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such one counsel; provided, that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and if the Trustee is advised by counsel that there is no conflict of interest between the Company and the Trustee in connection with such defense. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(7) or (8) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by so notifying the Company in writing. The Holders of a majority in principal amount then outstanding of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appoint ment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's and the Subsidiary Guarantor's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA ss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are out standing if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Sec. 311(a), excluding any creditor relationship listed in TIA Sec. 311(b). A Trustee who has resigned or been removed shall be subject to TIA Sec. 311(a) to the extent indicated.
ARTICLE 8
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURI TIES; DEFEASANCE. (a) When (1) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (2) all outstanding Securities have become due and payable, whether at maturity or on a redemption date as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (1) all its obligations under the Securities and this Indenture ("legal defeasance option") or (2) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.12 and the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in the case of Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) and the limitation contained in Section 5.01(a)(3) ("covenant defeasance option"). The Company may exercise its legal defeasance option notwith standing its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in the case of Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) or because of the failure of the Company to comply with Section 5.01(a)(3). If the Company exercises its legal defeasance option or its covenant defeasance
option, each Subsidiary Guarantor, if any, shall be released from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations or a combination thereof for the payment of principal of and interest on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a cer tificate from a nationally recognized firm of indepen dent accountants expressing their opinion that the pay ments of principal and interest when due and without reinvestment on the deposited U.S. Government Obliga tions plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day period no Default specified in Sections 6.01(7) or (8) with respect to the Company occurs which is continuing at the end of the 123-day period;
(4) the deposit does not constitute a default under any other agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Security holders will not recognize income, gain or loss for Federal income tax purposes as a result of such cove nant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Offi cers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money and/or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restrain ing or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities and at the Subsidiary Guarantor's obligations under their respective Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in place of certificated Securities; PROVIDED, HOWEVER, that the uncertificated Securities are issued in registered form for purposes of Sec tion 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Secur ities, including any Subsidiary Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company or any Subsidiary Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Subsidiary Guarantor;
(6) to comply with any requirement of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or
(7) to make any change that does not adversely affect the rights of any Securityholder.
After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Security;
(3) reduce the principal amount of or extend the Stated Maturity of any Security;
(4) reduce the amount payable upon the redemption of any Security or change the time at which any Secur ity may be redeemed in accordance with Article 3;
(5) make any Security payable in money other than that stated in the Security;
(6) impair the right of any holder of the Securities to receive payment of principal of and interest on such holder's Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder's Securities;
(7) make any change in Section 6.04 or 6.07 or the second sentence of this Section;
(8) make any changes in the ranking or priority of any Security that would adversely affect the Securityholders; or
(9) make any change in any Subsidiary Guaranty that would adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subse quent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subse quent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Security holder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURI TIES. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In sign ing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permit ted by this Indenture.
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid
to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.
ARTICLE 10
SECTION 10.01. GUARANTIES. Each Subsidiary Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment of principal of and interest on the Securities when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations").
Each Subsidiary Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives any notice not provided for in this Indenture of any default under the Securities or the Guaranteed Obligations. The obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any such obligation; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (f) except as set forth in Section 10.06, any change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guaranty herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Subsidiary Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Guaranteed Obligations herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at Stated Maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Subsidiary Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the unpaid amount of such Guaranteed Obligations.
Each Subsidiary Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Guaranteed Obligations hereby may be accelerated as provided in Article 6 for the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Subsidiary Guarantor for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.02. LIMITATION ON LIABILITY. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
SECTION 10.03. SUCCESSORS AND ASSIGNS. This Article 10 shall be binding upon each Subsidiary Guarantor (except as set forth in Section 10.06) and its successors and assigns and shall enure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise.
SECTION 10.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 10.06. RELEASE OF SUBSIDIARY GUARANTOR. Upon the sale or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of a Subsidiary Guarantor (in each case other than a sale or disposition to the Company or an Affiliate of the Company), or if the Company properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture, such Subsidiary Guarantor shall be deemed released from all obligations under this Article 10 without any further action required on the part of the Trustee or any Holder. At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release.
ARTICLE 11
SECTION 11.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or con flicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.
SECTION 11.02. NOTICES. Any notice or communica tion shall be in writing and delivered in person or mailed by first-class mail addressed as follows:
if to the Company or any Subsidiary Guarantor:
NMHG Holding Co.
650 N.E. Holladay Street
Suite 1600
Portland, Oregon 97232
Attention: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114-1190
Attention: Thomas C. Daniels, Esq.
if to the Trustee:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
The Company, any Subsidiary Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Security holder shall be mailed to the Securityholder at the Secu rityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to
their rights under this Indenture or the Securities. The Company, any Subsidiary Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion has read such covenant or condi tion;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opin ion of such individual, such covenant or condition has been complied with; PROVIDED that an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials with respect to matters of fact.
SECTION 11.06. WHEN SECURITIES DISREGARDED. In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the fore going, only Securities outstanding at the time shall be considered in any such determination.
SECTION 11.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institu tions are not required to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
SECTION 11.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company under the Securities or this Indenture or of such Subsidiary Guarantor under its Subsidiary Guaranty or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release shall be part of the consideration for the issue of the Securities.
SECTION 11.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.
SECTION 11.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
NMHG HOLDING CO.
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, General
Counsel and Secretary
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HYSTER OVERSEAS CAPITAL
CORPORATION, LLC
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President and Secretary
|
HYSTER-YALE MATERIALS
HANDLING, INC.
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, General
Counsel and Secretary
|
NACCO MATERIALS HANDLING
GROUP, INC.
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, Corporate Development,
General Counsel and Secretary
|
NMHG DISTRIBUTION CO.
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President and Secretary
|
NMHG OREGON, INC.
by /s/ Geoffrey D. Lewis
----------------------------------
Name: Geoffrey D. Lewis
Title: Vice President and Secretary
|
U.S. BANK NATIONAL ASSOCIATION
by /s/ Frank P. Leslie III
----------------------------------
Name: Frank P. Leslie III
Title: Vice President
|
RULE 144A/REGULATION S APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. DEFINITIONS
1.1 DEFINITIONS
For the purposes of this Appendix the following terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or transaction involving a Temporary Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depository, Euroclear and Clearstream for such a Temporary Regulation S Global Security, in each case to the extent applicable to such transaction and as in effect from time to time.
"Clearstream" means Clearstream Banking, societe anonyme, or any successor securities clearing agency.
"Definitive Security" means a certificated Initial Security or Exchange Security or Private Exchange Security bearing, if required, the restricted securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and their respective successors.
"Distribution Compliance Period", with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the date on which such Securities are initially issued.
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear System, or any successor securities clearing agency.
"Exchange Securities" means (1) the 10% Senior Notes due 2009 issued pursuant to the Indenture in connection with a Registered Exchange Offer pursuant to a Registration Rights Agreement and (2) Additional Securities, if any, issued pursuant to a registration statement filed with the SEC under the Securities Act.
"Initial Purchasers" means (1) with respect to the Initial Securities issued on the Issue Date, Credit Suisse First Boston Corporation, Salomon Smith Barney Inc., U.S. Bancorp Piper Jaffray Inc., McDonald Investments Inc., NatCity Investments, Inc. and Wells Fargo Brokerage Services, LLC and (2) with respect to each issuance of Additional Securities, the Persons purchasing such Additional Securities under the related Purchase Agreement.
"Initial Securities" means (1) $250 million aggregate principal amount of 10% Senior Notes due 2009 issued on the Issue Date and (2) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 10% Senior Notes due 2009 issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial Securities issued on the Issue Date, the Purchase Agreement dated May 2, 2002, among the Company, the Subsidiary Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities, the purchase agreement or underwriting agreement among the Company, the Subsidiary Guarantors and the Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act.
"Registration Rights Agreement" means (1) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement dated May 9, 2002, among the Company, the Subsidiary Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities issued in a transaction exempt from the registration requirements of the Securities Act, the
registration rights agreement, if any, among the Company, the Subsidiary Guarantors and the Persons purchasing such Additional Securities under the related Purchase Agreement.
"Securities" means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration statement issued by the Company in connection with the offer and sale of Initial Securities or Private Exchange Securities pursuant to a Registration Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 2.3(e)hereto.
1.2 OTHER DEFINITIONS
Defined in
Term Section:
---- -------
"Agent Members"................................................. 2.1(b)
"Global Security"............................................... 2.1(a)
"Permanent Regulation S Global 2.1(a)
"Security"......................................................
"Regulation S".................................................. 2.1(a)
"Rule 144A"..................................................... 2.1(a)
"Rule 144A Global Security"..................................... 2.1(a)
"Temporary Regulation S Global 2.1(a)
"Security"......................................................
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2. THE SECURITIES
2.1 (a) FORM AND DATING. The Initial Securities will be offered and sold by the Company pursuant to a Purchase Agreement. The Initial Securities will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act ("Rule 144A") and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act ("Regulation S"). Initial Securities may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, in each case, subject to the restrictions on transfer set forth herein. Initial Securities initially resold pursuant to
Rule 144A shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "Rule 144A Global Security") and Initial Securities initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary global securities in definitive, fully registered form (collectively, the "Temporary Regulation S Global Security"), in each case without interest coupons and with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Securities Custodian, and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. Except as set forth in this Section 2.1(a), beneficial ownership interests in the Temporary Regulation S Global Security will not be exchangeable for interests in the permanent global security (the "Permanent Regulation S Global Security"), or any other Security without a legend containing restrictions on transfer of such Security prior to the expiration of the Distribution Compliance Period and then beneficial interests in the Temporary Regulation S Global Security may be exchanged for interests in a Rule 144A Global Security or the Permanent Regulation S Global Security only upon certification in a form reasonably satisfactory to the Trustee that beneficial ownership interests in such Temporary Regulation S Global Security are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act.
Beneficial interests in Temporary Regulation S Global Securities may be
exchanged for interests in Rule 144A Global Securities or Permanent Regulation S
Global Securities only if (1) such exchange occurs in connection with a transfer
of Securities in compliance with Rule 144A, and (2) the transferor of the
Temporary Regulation S Global Security first delivers to the Trustee a written
certificate (in a form satisfactory to the Trustee) to the effect that the
Temporary Regulation S Global Security is being transferred to a Person
(a) who the transferor reasonably believes to be a QIB, (b) purchasing for its
own account or the account of a QIB in a transaction meeting the requirements of
Rule 144A, and (c) in accordance with all applicable securities laws of the
States of the United States and other jurisdictions.
The Rule 144A Global Security, the Temporary Regulation S Global Security and the Permanent Regulation S Global Security are collectively referred to herein as "Global
Securities." The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security.
(c) CERTIFICATED SECURITIES. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global
Securities shall not be entitled to receive physical delivery of certificated
Securities.
2.2 AUTHENTICATION. The Trustee shall authenticate and deliver:
(1) on the Issue Date, an aggregate principal amount of $250 million 10% Senior
Notes due 2009, (2) any Additional Securities for an original issue in an
aggregate principal amount specified in the written order of the Company
pursuant to Section 2.02 of the Indenture and (3) Exchange Securities or Private
Exchange Securities for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to a Registration Rights Agreement,
for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of any issuance of Additional Securities pursuant to Section 2.13 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the Indenture.
2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations,
the Registrar or shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and
(ii) if such Definitive Securities are required to bear a restricted securities legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being
transferred to the Company, a certification
to that effect; or
(C) if such Definitive Securities are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Security) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be exchanged for a beneficial interest in a Rule 144A Global Security or a Permanent Regulation S Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the Security, that such Definitive Security is either (A) being transferred to a QIB in accordance with Rule 144A or (B) is being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Security in reliance on Regulation S to a buyer who elects to hold its interest in such Security in the form of a beneficial interest in the Permanent Regulation S Global Security; and
(ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S Global Security (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of
the Securities represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, such instructions to contain information regarding the Depository account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of the Definitive Security so canceled. If no Rule 144A Global Securities or Permanent Regulation S Global Securities, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
(i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depository's procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the
beneficial interest in the Global Security being
transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this
Appendix (other than the provisions set forth in
Section 2.4), a Global Security may not be
transferred as a whole except by the Depository to
a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of
the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of
such successor Depository.
(iv) In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company.
(d) RESTRICTIONS ON TRANSFER OF TEMPORARY REGULATION S GLOBAL SECURITIES. During the Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global Securities may only be sold, pledged or transferred through Euroclear or Clearstream in
accordance with the Applicable Procedures and only (i) to the Company, (ii) so long as such Security is eligible for resale pursuant to Rule 144A, to a Person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (iii) in an offshore transaction in accordance with Regulation S, (iv) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act or (v) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.
(e) LEGEND.
(i) Except as permitted by the following paragraphs
(ii), (iii) and (iv), each Security certificate evidencing the
Transfer Restricted Securities (and all Securities issued in
exchange therefor or in substitution thereof) shall bear a legend
in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
FURTHER, NO SALE OR TRANSFER OF THIS NOTE (OR ANY
INTEREST HEREIN) MAY BE MADE UNLESS SUCH SALE OR
TRANSFER WILL NOT CONSTITUTE OR RESULT IN A NON-
EXEMPT PROHIBITED TRANSACTION UNDER THE U.S.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA")OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
(ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private Exchange Securities pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements requiring any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security or an Initial Security or Private Exchange Security in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such transferring Holder's certificated Initial Security or Private Exchange Security or directions to transfer such Holder's interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Private Exchange Securities in global form with the global securities legend and the Restricted Securities Legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange.
(f) CANCELLATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all beneficial interests in a Global Security have either been exchanged for certificated Securities, redeemed, purchased or canceled, such Global Security shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF SECURITIES.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate certificated Securities and Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.09 and 9.05 of the Indenture).
(iii) The Registrar shall not be required to register the transfer of or exchange (a) any Definitive Security selected for redemption in whole or in part pursuant to Article 3 of this Indenture, except the unredeemed portion of any Definitive Security being redeemed in part, or (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Securities or 15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
(h) NO OBLIGATION OF THE TRUSTEE.
(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
2.4 CERTIFICATED SECURITIES.
(a) A Global Security deposited with the Depository
or with the Trustee as Securities Custodian for the Depository pursuant to
Section 2.1 shall be transferred to the beneficial owners thereof in the form of
certificated Securities in an aggregate principal amount equal to the principal
amount of such Global Security, in exchange for such Global Security, only if
such transfer complies with Section 2.3 and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act, in either case, and a successor Depositary is
not appointed by the Company within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depository to the Trustee located at its principal corporate trust office in the Borough of Manhattan, The City of New York, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized
denominations. Any portion of a Global Security transferred pursuant to this
Section shall be executed, authenticated and delivered only in denominations of
$1,000 principal amount and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Definitive Security delivered in
exchange for an interest in the Transfer Restricted Security shall, except as
otherwise provided by Section 2.3(e) hereof, bear the restricted securities
legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of either of the events specified in Section 2.4(a), the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities in definitive, fully registered form without interest coupons.
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) TO THE COMPANY (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
FURTHER, NO SALE OR TRANSFER OF THIS NOTE (OR ANY INTEREST HEREIN) MAY BE MADE UNLESS SUCH SALE OR TRANSFER WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN
THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN
INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND
CONTAINING RESTRICTIONS ON TRANSFER PRIOR TO THE EXPIRATION OF THE "40-DAY
DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF
REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM
REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED
EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A
TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING
SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR
TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.A., AS OPERATOR OF THE EUROCLEAR
SYSTEM, OR CLEARSTREAM BANKING, SOCIETE ANONYME AND ONLY (I) TO THE COMPANY,
(II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, OR
(IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF THE
RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE TEMPORARY REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE TEMPORARY REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED TO A PERSON (A) WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTEREST IN A RULE 144A GLOBAL SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT IF SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE) AND THAT, IF SUCH TRANSFER OCCURS PRIOR TO THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, THE INTEREST TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH EUROCLEAR BANK S.A./N.A. OR CLEARSTREAM BANKING, SOCIETE ANONYME.
No. __________ CUSIP No. ___________
$ ____________
10% Senior Note due 2009
NHMG Holding Co., a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of _________ Dollars on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing November 15,
2002.
Record Dates: May 1 and November 1.
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Additional provisions of this Security are set forth on the other side of this Security.
Dated:
NMHG HOLDING CO.
Name:
Title:
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. BANK NATIONAL ASSOCIATION
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by ____________________________
Authorized Signatory
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10% Senior Note due 2009
1. INTEREST
NMHG Holding Co., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of 1.0% per annum) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on May 15 and November 15 of each year, commencing November 15, 2002. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 9, 2002. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at 1.0% per annum in excess of the above rate and will pay interest on overdue installments of interest at such higher rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, U.S. Bank National Association (the "Trustee") will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated or organized Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of May 9, 2002 ("Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its Subsidiaries to incur additional Indebtedness; pay dividends or distributions on,
or redeem or repurchase capital stock; make Investments; issue or sell capital stock of Subsidiaries; engage in transactions with Affiliates; create Liens on assets; transfer or sell assets; Guarantee Indebtedness; restrict dividends or other payments of Subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its Subsidiaries; and engage in Sale/Leaseback Transactions. These covenants are subject to important exceptions and qualifications.
5. OPTIONAL REDEMPTION
Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to May 15, 2006.
On and after May 15, 2006, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on May 15 of the years set forth below:
Redemption
Period Price
------ -----
2006 105.00%
2007 102.50%
2008 100.00%
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In addition, prior to May 15, 2005, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 110%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds, to the extent actually received by the Company, from one or more Public Equity Offerings; PROVIDED, HOWEVER, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Affiliates); and (2) each such redemption
occurs within 60 days after the date of the related Public Equity Offering.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
7. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have the right to require the Company to repurchase the Securities of such Holder at a repurchase price in cash equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.
Under certain circumstances as set forth in the Indenture, the Company will be required to offer to purchase Securities with the Net Available Cash from Asset Dispositions.
8. GUARANTY
The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior unsecured basis by each of the Subsidiary Guarantors.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of it for all purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations and those of the Subsidiary Guarantors under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Securities may be amended with the consent of the Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any past default or noncompliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the Securities then outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Subsidiary Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Subsidiary Guaranties, or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Subsidiary Guarantors, or to comply with any requirement of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder.
14. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities when due; (ii) default in payment of principal on the Securities at Stated Maturity, upon redemption pursuant to paragraph 5 of the Securities, upon acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure by the Company or any Subsidiary Guarantors to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company or any Significant Subsidiary if the amount accelerated (or so unpaid) exceeds $10 million; (v) certain events of bankruptcy or insolvency with respect to the Company, a Subsidiary Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees for the payment of money, the portion of which not covered by insurance exceed $10 million; and (vii) certain defaults with respect to Subsidiary Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is not opposed to the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee, incorporator or stockholder (including Parent), as such, of the Company or any Subsidiary Guarantor or the Trustee shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.
17. AUTHENTICATION
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
18. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN
(=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
19. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
20. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.
21. GOVERNING LAW
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security. Requests may be made to:
NMHG Holding Co.
650 N.E. Holladay Street
Suite 1600
Portland, Oregon 97232
Attention: Chief Financial Officer
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] in the United States to Person whom the seller
reasonably believes is a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in a transaction
meeting the requirements of Rule 144A; or
(3) [ ] outside the United States in an offshore
transaction in accordance with Rule 904 under
the Securities Act; or
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(4) [ ] pursuant to the exemption from registration
under the Securities Act provided by Rule 144
thereunder (if available); or
(5) [ ] pursuant to an effective registration statement
under the Securities Act of 1933.
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If such transfer is being made pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act, the undersigned further certifies that:
(i) the offer of the Securities was not made to a person in the United States;
(ii) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903 or Rule 904 of Regulation S, as applicable;
(iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions applicable to the Securities; and
(vi) if the circumstances set forth in Rule 904(b) under the Securities Act are applicable, we have complied with the additional conditions therein, including (if applicable) sending a confirmation or other notice stating that the Securities may be offered and sold during the distribution compliance period specified in Rule 903 of Regulation S; pursuant to registration of the Securities under the Securities Act; or pursuant to an available exemption from the registration requirements under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (3) or (4) is checked, the Trustee shall be
entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.
Signature Guarantee:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.
Dated:
--------------------- ---------------------------
NOTICE: To be executed by
an executive
officer
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[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
Date of Amount of Amount of Principal amount Signature of
Exchange decrease increase of this Global authorized officer
in Principal in Principal Security of Trustee or
amount of this amount of this following Securities
Global Global Security such decrease or Custodian
Security increase
------- -------------- ----------------- ----------------- ------------------
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in principal amount: $
Date: Your Signature:
--------------- ----------------------
(Sign exactly as your
name appears on the
other side of this
Security.)
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Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
Exhibit 4.3
EXECUTION COPY
$250, 000,000
NMHG HOLDING CO.
10% SENIOR NOTES DUE 2009
May 9, 2002
Credit Suisse First Boston Corporation
Salomon Smith Barney Inc.,
As Representatives of the Several Initial Purchasers
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
NMHG Holding Co., a Delaware corporation (the "ISSUER"), proposes to issue and sell to Credit Suisse First Boston Corporation, Salomon Smith Barney Inc., U.S. Bancorp Piper Jaffray Inc., McDonald Investments Inc., NatCity Investments, Inc. and Wells Fargo Brokerage Services, LLC (collectively, the "INITIAL PURCHASERS"), upon the terms set forth in a purchase agreement dated as of May 2, 2002 (the "PURCHASE AGREEMENT"), $250,000,000 aggregate principal amount of its 10% Senior Notes due 2009 (the "INITIAL SECURITIES") to be guaranteed (the "GUARANTIES") by the entities listed in Schedule B to the Purchase Agreement (the "GUARANTORS" and, collectively with the Issuer, the "COMPANY"). The Initial Securities will be issued pursuant to an Indenture, dated as of May 9, 2002 (the "INDENTURE"), among the Issuer, the Guarantors named therein and U.S. Bank National Association, as trustee (the "TRUSTEE"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company agrees with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively, the "HOLDERS"), as follows:
1. Registered Exchange Offer. Unless not permitted by applicable law (after the Company has complied with the ultimate paragraph of this Section 1), the Company shall prepare and, not later than 45 days (such 45th day being a "FILING DEADLINE") after the date on which the Initial Purchasers purchase the Initial Securities pursuant to the Purchase Agreement (the "CLOSING DATe"), file with the Securities and Exchange Commission (the "COMMISSION") a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to a proposed offer (the "REGISTERED EXCHANGE OFFER") to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities of the Company issued under the Indenture, identical in all material respects to the Initial Securities (other than with respect to transfer restrictions) and registered under the
Securities Act (the "EXCHANGE SECURITIES"); provided that if, due to events
arising out of the March 14, 2002 indictment of Arthur Andersen LLP ("ARTHUR
ANDERSEN"), the Company's independent public accountants, by the U.S government,
(a) Arthur Andersen becomes unable to issue consents in connection with the
inclusion in registration statements of financial statements audited by it or
(b) the Commission ceases to accept financial statements audited by Arthur
Andersen (any event set forth in either clause (a) or (b) of this proviso, an
"ACCOUNTING EVENT") on or prior to the expiration of such 45-day period, such
period shall be increased to 105 days (such 105th day being a Filing Deadline).
The Company shall use its best efforts to: (i) cause such Exchange Offer
Registration Statement to become effective under the Securities Act within 180
days after the Closing Date, provided, that upon the occurrence of an Accounting
Event on or prior to the expiration of such 180-day period, such period shall be
increased to 240 days (such 180th or 240th day, as the case may be, being an
"EFFECTIVENESS DEADLINE"); and (ii) keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Registered Exchange Offer is mailed
to the Holders (such period being called the "EXCHANGE OFFER REGISTRATION
PERIOD").
If the Company commences the Registered Exchange Offer, the Company (i) will be entitled to consummate the Registered Exchange Offer 30 days after such commencement (provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer) and (ii) will be required to consummate the Registered Exchange Offer no later than 40 days after the date on which the Exchange Offer Registration Statement is declared effective (such 40th day being the "CONSUMMATION DEADLINE").
Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.
The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment, is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.
The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 180-days after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects to the Initial Securities (including with respect to transfer restrictions) (the "PRIVATE EXCHANGE SECURITIES"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal (the "LETTER OF TRANSMITTAL") and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.
Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will use its reasonable best efforts to ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
If following the date hereof there has been announced a change in Commission policy with respect to exchange offers that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Registered Exchange Offer is permitted by applicable federal law, the Company will seek a no-action letter or other favorable decision from the Commission allowing the Company to consummate the Registered Exchange Offer. The Company will pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company will take all such other actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation (i) participating in telephonic conferences with the Commission, (ii) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that the Registered Exchange Offer should be permitted and (iii) diligently pursuing a resolution (which need not be favorable) by the Commission staff.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
220th day after the Closing Date, or, if an Accounting Event has occurred, no
later than the 280th day after the Closing Date, (iii) any Initial Purchaser so
requests with respect to the Initial Securities (or the Private Exchange
Securities) not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following consummation of the
Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer)
is not eligible to participate in the Registered Exchange Offer and such Holder
notifies the Company within 60 days following consummation of the Registered
Exchange Offer, or, in the case of any Holder (other than an Exchanging Dealer)
that participates in the Registered Exchange Offer, such Holder does not receive
freely tradeable Exchange Securities on the date of the exchange and any such
Holder so requests within 60 days following consummation of the Registered
Exchange Offer, the Company shall take the following actions (the date on which
any of the conditions described in the foregoing clauses (i) through (iv) occur,
including in the case of clauses (iii) or (iv) the receipt of the required
notice, being a "TRIGGER DATE"):
(a) The Company shall promptly (but in no event more than 45 days after the Trigger Date (such 45th day being a "FILING DEADLINE")) file with the Commission and thereafter use its reasonable best efforts to cause to be declared effective no later than 60 days after the Filing Deadline (or, upon the occurrence of an Accounting Event on or prior to such 60th day, 120 days after the Filing Deadline) (each of such days, as applicable, being an "EFFECTIVENESS DEADLINE") a registration statement (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer Registration Statement, a "REGISTRATION STATEMENT") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "SHELF REGISTRATION"); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, until the earlier of (i) two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or (ii) the date when all the Securities covered by the Shelf Registration Statement have been sold pursuant thereto or are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof) (the "SHELF REGISTRATION PERIOD"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes
any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.
Notwithstanding the foregoing, during any 365-day period, the Company
may suspend the effectiveness of the Shelf Registration Statement for
up to 2 periods (each a "Suspension Period") of up to 30 consecutive
days, but no more than an aggregate of 60 days during any 365-day
period, if the Company makes a good- faith determination (a "Suspension
Determination") that it is advisable to suspend use of the Shelf
Registration Statement or the prospectus for a period of time due to
pending material corporate developments or similar material events that
have not been publicly disclosed and as to which the Company reasonably
believes public disclosure prejudicial to the Company or to NACCO
Industries, Inc. Upon the abandonment, consummation or termination of
the corporate developments or material events, the suspension of the
use of the Shelf Registration Statement pursuant to this paragraph
shall cease and the Company shall promptly comply with the first
paragraph of Section 2(b) hereof and make the notifications required by
Section 3(b)(vi).
(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration, the Company shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may, on a timely basis, propose; (ii) include substantially the information set forth in Annex A hereto in the forepart thereof, in Annex B hereto in the "Exchange Offer Procedures" or similarly titled section and the "Purpose of the Exchange Offer"or similarly titled section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain
a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "PARTICIPATING BROKER-DEALER"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(vi) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading; and
(vi) of any Suspension Determination pursuant to
Section 2(b).
(c) The Company shall make every reasonable effort to obtain the withdrawal, at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of
the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those, if any, incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement to the extent such Securities are not represented entirely in global form held by The Depositary Trust Company.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (vi) of Section 3(b) above during the period
for which the Company is required to maintain an effective Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through
(vi) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker- Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving of such notice
to and including the date when the Initial Purchasers, the Holders of
the Securities and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant to this
Section 3(j).
(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.
(m) To the extent required by applicable law, the Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements (including, if requested in the case of a Shelf Registration, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the
Securities, any underwriter participating in any disposition pursuant
to the Shelf Registration Statement and any attorney, accountant or
other agent retained by the Holders of the Securities or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and (ii) cause the
Company's officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders of
the Securities or any such underwriter, attorney, accountant or agent
in connection with the Shelf Registration Statement, in each case, as
shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that (A) the foregoing inspection
and information gathering shall be coordinated on behalf of the Initial
Purchasers by Credit Suisse First Boston Corporation and Salomon Smith
Barney Inc. and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in
Section 4 hereof and (B) the Company may require each Holder,
underwriter, attorney, accountant or other agent to keep confidential
any material non-public information relating to the Company received by
such persons and to abstain from trading in violation of applicable
securities laws on the basis of such information.
(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall be those customary for underwritten offerings and include, without limitation, the matters set forth in Section 6(c) and Section 6(d) of the Purchase Agreement; (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker- Dealer a signed opinion in the form set forth in Section 6(c) and Section 6(d) of the Purchase Agreement with such changes as are customary in connection with
the preparation of a Registration Statement and (ii) its independent
public accountants and the independent public accountants with respect
to any other entity for which financial information is provided in the
Registration Statement to deliver to such Initial Purchaser or such
Participating Broker-Dealer a comfort letter, in customary form,
meeting the requirements as to the substance thereof as set forth in
Section 6(a) of the Purchase Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Company will use its reasonable best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the "Rules") of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker- dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.
(v) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of and compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement is ever filed or becomes effective, including without limitation;
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state "blue sky" or securities laws;
(iii) all expenses of printing (including printing certificates for the Securities to be issued in the Registered Exchange Offer and the Private Exchange and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company;
(v) all application and filing fees in connection with listing the Exchange Securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance).
The Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this Agreement, the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Securities in the Registered Exchange Offer and/or selling or reselling Securities pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements (which shall be not more that $5,000) of not more than one counsel, who shall be Cravath, Swaine & Moore unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker- Dealer and such controlling persons are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder or Participating Broker- Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company or any such controlling person for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section 5, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof the indemnifying party will
not be liable to such indemnified party under this Section 5 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the
defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement (i) includes an
unconditional release of such indemnified party from all liability on
any claims that are the subject matter of such action, and (ii) does
not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount
by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances.
(a) Additional interest (the "ADDITIONAL INTEREST") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below being herein called a "REGISTRATION DEFAULT"):
(i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline;
(ii) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline;
(iii) the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or
(iv) any Registration Statement required by this Agreement has been declared effective by the Commission but (A) such Registration Statement thereafter ceases to be effective or (B) such Registration Statement or the related prospectus ceases to be usable in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder or (3) the Company makes a Suspension Determination in accordance with Section 2(b) to suspend the use of the Shelf Registration Statement or prospectus.
Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the
Company or pursuant to operation of law or as a result of any action or inaction by the Commission .
Additional Interest shall accrue on the Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the "ADDITIONAL INTEREST RATE") for the first 90-day period immediately following the occurrence of such Registration Default. The Additional Interest Rate shall increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.0% per annum.
(b) A Registration Default referred to in Section 6(a)(iv) hereof shall
be deemed not to have occurred and be continuing in relation to a Registration
Statement or the related prospectus if (i) such Registration Default has
occurred solely as a result of (x) the filing of a post-effective amendment to
such Registration Statement to incorporate annual audited or quarterly financial
information with respect to the Company where such post- effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) other material events, with respect to the Company
that would need to be described in such Registration Statement or the related
prospectus and in the case of clause (y), the Company is proceeding promptly and
in good faith to amend or supplement such Registration Statement and related
prospectus to describe such events or to otherwise cause such Registration
Statement and related prospectus to again be usable; provided, however, that in
any case if such Registration Default occurs for a continuous period in excess
of 30 days, Additional Interest shall be payable in accordance with the above
paragraph from the day such Registration Default occurs until such Registration
Default is cured or (ii) such Registration Default has occurred solely as a
result of a Suspension Determination by the Company in accordance with Section
2(b); provided, however, that if any such Suspension Period exceeds 30 days
individually or 60 days in the aggregate during any 365-day period, Additional
Interest shall be paid in accordance with the above paragraph from the day such
Registration Default occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the principal amount of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("Managing Underwriters") will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering following consultation with the Company.
No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 1 and 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents. Without the consent of the
Holder of each Security, however, no modification may change the provisions relating to the payment of Additional Interest.
(d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax No.: (212) 474-3700
Attn: William J. Whelan III
(3) if to the Company, at its address as follows:
NMHG Holding Co.
650 N.E. Holladay Street
Suite 1600
Portland, OR 97232
Fax No.: (503) 721-6059
Attn: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114-1190
Fax No.: (216) 579-0212
Attn: Thomas C. Daniels
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.
(e) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial
Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.
(f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns.
(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
(l) Submission to Jurisdiction. By execution and delivery of this Agreement, the Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
NMHG HOLDING CO.
By /s/ Geoffrey D. Lewis
------------------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, General
Counsel and Secretary
|
HYSTER OVERSEAS CAPITAL
CORPORATION, LLC
By /s/ Geoffrey D. Lewis ------------------------------------------ Name: Geoffrey D. Lewis Title: Vice President and Secretary |
HYSTER-YALE MATERIALS
HANDLING, INC.
By /s/ Geoffrey D. Lewis
------------------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, General
Counsel and Secretary
|
NACCO MATERIALS HANDLING
GROUP, INC.
By /s/ Geoffrey D. Lewis
------------------------------------------
Name: Geoffrey D. Lewis
Title: Vice President, Corporate Development,
General Counsel and Secretary
|
NMHG DISTRIBUTION CO.
By /s/ Geoffrey D. Lewis ------------------------------------------ Name: Geoffrey D. Lewis Title: Vice President and Secretary |
NMHG OREGON, INC.
By /s/ Geoffrey D. Lewis ------------------------------------------ Name: Geoffrey D. Lewis Title: Vice President and Secretary |
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
SALOMON SMITH BARNEY INC.
Acting on behalf of themselves and
as the Representatives of the several
Initial Purchasers
By: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ James T. Glerum, Jr. ----------------------------------- Name: James T. Glerum, Jr. Title: Managing Director |
By: SALOMON SMITH BARNEY INC.
by /s/ Arnold Y. Wong ----------------------------------- Name: Arnold Y. Wong Title: Director |
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution."
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker- dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution."
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2002, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.1
The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
(1) In addition, the legend required by Item 502(b) of Regulation S-K will appear on the inside front cover page of the Exchange Offer prospectus below the Table of Contents.
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ___________________________________
Address: __________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of MAY 9, 2002
among
NMHG HOLDING CO.
NMHG DISTRIBUTION CO.
NACCO MATERIALS HANDLING GROUP, INC.
NACCO MATERIALS HANDLING LIMITED
and
NACCO MATERIALS HANDLING B.V.
as Borrowers
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE FINANCIAL INSTITUTION FROM TIME TO TIME
PARTY HERETO AS AN ISSUING BANK
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
SALOMON SMITH BARNEY INC.
and
CREDIT SUISSE FIRST BOSTON
as Joint Arrangers and as Joint Bookrunners
and
CREDIT SUISSE FIRST BOSTON
as Syndication Agent
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ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...............................................................................1
1.02. Computation of Time Periods........................................................................52
1.03. Accounting Terms...................................................................................53
1.04. Other Definitional Provisions......................................................................53
1.05. Other Terms........................................................................................53
1.06. Payments by the Borrowers..........................................................................53
ARTICLE II
AMOUNTS AND TERMS OF LOANS AND LETTERS OF CREDIT
2.01. The Revolving Credit Facility......................................................................53
2.02. Letters of Credit..................................................................................60
2.03. Participations in Credit Facilities................................................................67
2.04. Evidence of Indebtedness...........................................................................69
2.05. Authorized Officers and Administrative Agents......................................................69
2.06. Booking of Loans and Letters of Credit.............................................................70
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in and Reallocations of Commitments........................................70
3.02. Payments...........................................................................................74
3.03. Pro Rata Shares Adjustment.........................................................................79
3.04. Taxes..............................................................................................80
3.05. Increased Capital..................................................................................83
3.06. Cash Management and Concentration Accounts.........................................................84
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations........................................................88
4.02. Special Provisions Governing Fixed Rate Loans......................................................91
4.03. Fees...............................................................................................94
ARTICLE V
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. Conditions Precedent to Effectiveness..............................................................95
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Table of Contents
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(continued)
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5.02. Conditions Precedent to Revolving Loans, Swing Loans, Overdraft Loans and
Letters of Credit..................................................................................99
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrowers...................................................100
ARTICLE VII
REPORTING COVENANTS
7.01. Financial Statements..............................................................................111
7.02. Events of Default.................................................................................114
7.03. Lawsuits..........................................................................................115
7.04. Insurance.........................................................................................115
7.05. Borrowing Base Certificate........................................................................115
7.06. ERISA and Analogous Notices.......................................................................116
7.07. Environmental Notices.............................................................................117
7.08. Labor Matters.....................................................................................118
7.09. Public Filings and Reports........................................................................119
7.10. Bank Account Information..........................................................................119
7.11. Senior Notes; Debt................................................................................119
7.12. Other Reports.....................................................................................119
7.13. Other Information.................................................................................119
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.01. Corporate Existence, Etc..........................................................................120
8.02. Corporate Powers; Conduct of Business, Etc........................................................120
8.03. Compliance with Laws, Etc.........................................................................120
8.04. Payment of Taxes and Claims; Tax Consolidation....................................................120
8.05. Insurance.........................................................................................121
8.06. Inspection of Property; Books and Records; Discussions............................................121
8.07. ERISA Compliance..................................................................................122
8.08. Foreign Employee Benefit Plan Compliance..........................................................122
8.09. Maintenance of Property...........................................................................122
8.10. Further Assurances; Additional Collateral.........................................................123
8.11. Landlord and Bailee Waivers.......................................................................125
8.12. Environmental Compliance..........................................................................125
8.13. Insurance and Condemnation Proceeds...............................................................125
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Table of Contents
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(continued)
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ARTICLE IX
NEGATIVE COVENANTS
9.01. Indebtedness......................................................................................126
9.02. Sales of Assets...................................................................................129
9.03. Liens.............................................................................................130
9.04. Investments.......................................................................................131
9.05. Accommodation Obligations.........................................................................132
9.06. Restricted Payments...............................................................................133
9.07. Conduct of Business; Subsidiaries; Acquisitions...................................................134
9.08. Transactions with Shareholders and Affiliates.....................................................136
9.09. Restriction on Fundamental Changes................................................................137
9.10. Sale and Leaseback Transactions; Operating Leases.................................................137
9.11. Margin Regulations; Securities Laws...............................................................138
9.12. ERISA.............................................................................................138
9.13. Constituent Documents.............................................................................139
9.14. Fiscal Year.......................................................................................139
9.15. Cancellation of Debt; Prepayment of Indebtedness; Certain Amendments..............................139
9.16. Environmental Matters.............................................................................139
9.17. Cash Management...................................................................................139
9.18. No Restrictions on Subsidiary Dividends...........................................................140
ARTICLE X
FINANCIAL COVENANTS
10.01. Excess Availability...............................................................................140
10.02. Maximum Leverage Ratio............................................................................140
10.03. Minimum Fixed Charge Coverage Ratio...............................................................140
10.04. Maximum Capital Expenditures......................................................................141
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default.................................................................................142
11.02. Rights and Remedies...............................................................................145
11.03. Cash Collateral...................................................................................146
11.04. License for Use of Software and Other Intellectual Property.......................................147
ARTICLE XII
THE ADMINISTRATIVE AGENT
12.01. Appointment.......................................................................................147
12.02. Nature of Duties..................................................................................148
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12.03. Rights, Exculpation, Etc..........................................................................149
12.04. Reliance..........................................................................................149
12.05. Indemnification...................................................................................150
12.06. CNAI Individually.................................................................................150
12.07. Successor Administrative Agents; Resignation of Administrative Agents.............................150
12.08. Relations Among Lenders...........................................................................151
12.09. Concerning the Collateral and the Loan Documents..................................................151
ARTICLE XIII
CO-BORROWER PROVISIONS
13.01. Domestic Borrowers................................................................................154
13.02. Multicurrency Borrowers...........................................................................154
13.03. Separate Actions..................................................................................154
13.04. Obligations Absolute and Unconditional............................................................155
13.05. Waivers and Acknowledgements......................................................................156
13.06. Contribution Among Borrowers......................................................................156
13.07. Subrogation.......................................................................................157
13.08. Subordination.....................................................................................157
ARTICLE XIV
MISCELLANEOUS
14.01. Lender Assignments and Participations.............................................................159
14.02. Expenses..........................................................................................162
14.03. Indemnity.........................................................................................163
14.04. Change in Accounting Principles...................................................................164
14.05. Setoff............................................................................................164
14.06. Ratable Sharing...................................................................................164
14.07. Amendments and Waivers............................................................................165
14.08. Notices...........................................................................................167
14.09. Survival of Warranties and Agreements.............................................................168
14.10. Failure or Indulgence Not Waiver; Remedies Cumulative.............................................169
14.11. Marshaling; Payments Set Aside....................................................................169
14.12. Severability......................................................................................169
14.13. Headings..........................................................................................169
14.14. Governing Law.....................................................................................169
14.15. Limitation of Liability...........................................................................169
14.16. Successors and Assigns............................................................................170
14.17. Certain Consents and Waivers......................................................................170
14.18. Counterparts; Effectiveness; Inconsistencies......................................................172
14.19. Limitation on Agreements..........................................................................172
14.20. Confidentiality...................................................................................172
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14.21. Currency Conversions..............................................................................173
14.22. Entire Agreement..................................................................................173
14.23. Advice of Counsel.................................................................................174
14.24. Joint Arrangers, Joint Bookrunners and Syndication Agent..........................................174
14.25. Termination of the Multicurrency Facility.........................................................174
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EXHIBITS
Exhibit A -- Applicable Interest Rate Margins and Fee Rates
Exhibit B -- Form of Assignment and Acceptance
Exhibit C-1 -- Form of Borrowing Base Certificate (Domestic Facility)
Exhibit C-2 -- Form of Borrowing Base Certificate (Multicurrency Facility)
Exhibit D-1 -- Form of Collateral Access Agreement (Landlord)
Exhibit D-2 -- Form of Collateral Access Agreement (Bailee)
Exhibit E -- Form of Collection Account Agreement
Exhibit F -- Credit and Collection Policies
Exhibit G-1 -- Form of Domestic Borrower Guaranty
Exhibit G-2 -- Form of Multicurrency Borrower Guaranty
Exhibit G-3 -- Form of Foreign Guaranty (Multicurrency Obligations)
Exhibit H -- Form of Domestic Security Agreement
Exhibit I -- Form of Foreign Working Capital Guaranty
Exhibit J -- Initial Projections
Exhibit K-1 -- Form of Notice of Borrowing (Domestic Facility)
Exhibit K-2 -- Form of Notice of Borrowing (Multicurrency Facility)
Exhibit L -- Form of Notice of Continuation/Conversion
Exhibit M-1 -- Form of Notice of Letter of Credit Issuance (Domestic Facility)
Exhibit M-2 -- Form of Notice of Letter of Credit Issuance (Multicurrency
Facility)
Exhibit N -- Form of Officer's Certificate
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Exhibit O -- Form of Pledge Agreement (Domestic) Exhibit P -- Pro Forma Exhibit Q-1 -- Form of Domestic Loan Note Exhibit Q-2 -- Form of Multicurrency Loan Note Exhibit Q-3 -- Form of Swing Loan Note Exhibit R -- Form of Trademark Security Agreement Exhibit S -- List of Closing Documents Exhibit T -- Form of Compliance Certificate |
SCHEDULES
Schedule 1.01.1 -- Commitments Schedule 1.01.2 -- Guarantors Schedule 1.01.3 -- Intentionally Omitted Schedule 1.01.4 -- Permitted Existing Accommodation Obligations Schedule 1.01.5 -- Permitted Existing Indebtedness Schedule 1.01.6 -- Permitted Existing Investments Schedule 1.01.7 -- Permitted Existing Liens Schedule 1.01.8 -- Refinanced Indebtedness Schedule 6.01-A -- Constituent Documents Schedule 6.01-C -- Authorized, Issued and Outstanding Capital Stock; Subsidiaries Schedule 6.01-I -- Litigation; Adverse Effects Schedule 6.01-O -- Environmental Matters Schedule 6.01-P -- ERISA Matters Schedule 6.01-R -- Labor Matters Schedule 6.01-U -- Intellectual Property & Permits Schedule 6.01-V -- Assets and Properties Schedule 6.01-W -- Insurance Schedule 6.01-Y -- Transactions with Affiliates Schedule 6.01-Z -- Collection Account Banks; Bank Accounts Schedule 6.01-CC -- Compensation Increases Schedule 9.02-B -- Sale of Assets |
Schedule 9.04 -- Investments in Disbursement Accounts Schedule 9.10 -- Sale and Leaseback Transactions |
EXECUTION COPY
CREDIT AGREEMENT
This Credit Agreement dated as of May 9, 2002 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "AGREEMENT") is entered into among NMHG Holding Co., a Delaware corporation ("NMHG HOLDING"), NACCO Materials Handling Group, Inc., a Delaware corporation ("NMHG"), NMHG Distribution Co., a Delaware corporation and direct wholly-owned Subsidiary of NMHG Holding ("NMHG DISTRIBUTION"), NACCO Materials Handling Limited (company number 02636775), incorporated under the laws of England and Wales (the "UK BORROWER"), NACCO Materials Handling B.V., a private company with limited liability incorporated under the laws of the Netherlands having its corporate seat in Nijmegen (the "NETHERLANDS BORROWER"; and together with NMHG Holding, NMHG, NMHG Distribution, and the UK Borrower, the "BORROWERS"), the financial institutions from time to time a party hereto as Lenders, whether by execution of this Agreement or an Assignment and Acceptance, the financial institutions from time to time party hereto as Issuing Bank, whether by execution of this Agreement or an Assignment and Acceptance or otherwise, Citicorp North America, Inc., a Delaware corporation ("CNAI"), in its capacity as administrative agent for the Lenders and the Issuing Bank hereunder (with its successors and permitted assigns in such capacity, the "ADMINISTRATIVE AGENT"), Salomon Smith Barney Inc. ("SSB") and Credit Suisse First Boston ("CSFB") as joint arrangers ("JOINT ARRANGERS") and joint bookrunners ("JOINT BOOKRUNNERS"), and CSFB as syndication agent ("SYNDICATION AGENT").
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINED TERMS. In addition to the terms defined above, the following terms used in this Agreement shall have the following meanings, applicable both to the singular and the plural forms of the terms defined:
"ACCOMMODATION OBLIGATION" means any Contractual Obligation, contingent or otherwise, of one Person with respect to any Indebtedness, obligation or liability of another, if the primary purpose or intent thereof by the Person incurring the Accommodation Obligation is to provide assurance to the obligee of such Indebtedness, obligation or liability of another that such Indebtedness, obligation or liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders thereof will be protected (in whole or in part) against loss in respect thereof including, without limitation, direct and indirect guarantees, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, take-or-pay agreements, keep-well agreements, agreements to purchase or repurchase such Indebtedness, obligation or liability or any security therefor or to provide funds for the payment or discharge thereof, agreements to maintain solvency, assets, level of income, or other financial condition, and agreements to make payment other than for value received. The amount of any Accommodation Obligation shall be equal to the lesser of (a) the principal amount payable under such Accommodation Obligation (if quantifiable) and (b) the portion of the obligation so guaranteed or otherwise supported.
"ACCOUNT" is defined in SECTION 2.01(c)(i).
"ACCOUNTING CHANGES" means, with respect to any Person, changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or any agency with similar functions).
"ACCOUNTING FIRM" means Arthur Andersen or such other firm of independent certified public accountants of recognized national standing acceptable to the Administrative Agent.
"ACQUISITION" is defined in SECTION 9.04(f).
"ADDITIONAL ASSETS" means: (a) any property, plant or equipment or other tangible assets used in or useful in the operation of a Related Business, (b) the Capital Stock of a Person that becomes a Borrower Subsidiary as a result of the acquisition of such Capital Stock by a Borrower or a Borrower Subsidiary, or (c) Capital Stock constituting a minority interest in any Person that at such time is a Borrower Subsidiary; provided, however, that any such Subsidiary described in clause (b) or (c) above is primarily engaged in a Related Business.
"ADJUSTED EBITDA" means, for any period, the sum, without duplication, of (a) Consolidated EBITDA and (b) equity advances and capital contributions to NMHG Holding or any of the other Borrowers made during such period or within thirty days following the end of such period and specifically designated for allocation to such period and not in the period in which made, provided, that no greater than $10,000,000 of such equity advances and capital contributions may be included in the determination of Adjusted EBITDA during any four-quarter period.
"ADMINISTRATIVE AGENT" is defined in the preamble.
"ADMINISTRATIVE QUESTIONNAIRE" means an administrative questionnaire in a form supplied by the Administrative Agent.
"AFFILIATE" means, as applied to any specified Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person and includes each officer or director or general partner of such Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with") as applied to any specified Person means the possession, directly or indirectly, of the power to vote five percent (5.0%) or more of the Voting Stock or otherwise to direct or cause the direction of, the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "AFFILIATED" has a correlative meaning to Affiliate.
"AGREEMENT" is defined in the preamble.
"APPLICABLE FIXED RATE MARGIN", "APPLICABLE FLOATING RATE MARGIN", "APPLICABLE LETTER OF CREDIT FEE RATE", "APPLICABLE OVERDRAFT RATE MARGIN", and "APPLICABLE UNUSED COMMITMENT FEE RATE" mean a per annum rate equal to (a) for the period from the Closing Date until the Rate Change Date (as defined below) occurring after the timely delivery
of the Compliance Certificate for the period ending September 30, 2002, pursuant
to SECTION 7.01(c), the respective per annum rates in the row designated "Level
3" on the table set forth on EXHIBIT A attached hereto with respect to each of
the Applicable Fixed Rate Margin, the Applicable Floating Rate Margin, the
Applicable Overdraft Rate Margin, the Applicable Letter of Credit Fee Rate, and
the Applicable Unused Commitment Fee Rate and (b) from and after such Rate
Change Date, if the Leverage Ratio for the applicable period ending on the last
day of the then most recent fiscal quarter (as shown on the Compliance
Certificate delivered pursuant to SECTION 7.01(c)) is within the applicable
range set forth on EXHIBIT A attached hereto, the Applicable Fixed Rate Margin,
the Applicable Floating Rate Margin, the Applicable Letter of Credit Fee Rate,
the Applicable Overdraft Rate Margin and the Applicable Unused Commitment Fee
Rate shall be the respective per annum rates set forth opposite the applicable
range indicated on the table set forth on EXHIBIT A attached hereto. In the
event of the delivery of a Compliance Certificate after September 30, 2002,
showing an increase or decrease in the Leverage Ratio (for the twelve-month
period ending on the last day of a fiscal quarter) which requires a change in
the Applicable Fixed Rate Margin, the Applicable Floating Rate Margin, the
Applicable Letter of Credit Fee Rate, the Applicable Overdraft Rate Margin and
the Applicable Unused Commitment Fee Rate, such changes shall be effective from
the first day of the calendar month immediately following receipt of such
Compliance Certificate (provided that the Compliance Certificate is received by
the Administrative Agent no later than 12:00 p.m. (New York time) at least one
(1) Business Day prior to the first day of such calendar month) until the next
such date on which the Applicable Fixed Rate Margin, the Applicable Floating
Rate Margin, the Applicable Letter of Credit Fee Rate, the Applicable Overdraft
Rate Margin and the Applicable Unused Commitment Fee Rate are subject to change
following the delivery of (or failure to deliver) a Compliance Certificate
showing an increase or decrease in the Leverage Ratio which requires such
changes (any such date on which the Applicable Fixed Rate Margin, the Applicable
Floating Rate Margin, the Applicable Letter of Credit Fee Rate, the Applicable
Overdraft Rate Margin and the Applicable Unused Commitment Fee Rate are subject
to change being a "Rate Change Date"); provided, however, that failure to timely
deliver such Compliance Certificate following the end of any fiscal quarter
shall, in addition to any other remedy provided for in this Agreement, result in
an increase in the Applicable Fixed Rate Margin, the Applicable Floating Rate
Margin, the Applicable Letter of Credit Fee Rate, the Applicable Overdraft Rate
Margin and the Applicable Unused Commitment Fee Rate to the maximum per annum
rates for the applicable period set forth above until the first day of the first
calendar month following the delivery of such Compliance Certificate
demonstrating that such an increase is not required; provided further, however,
the occurrence and continuation of any Event of Default, in addition to any
other remedy provided for in this Agreement, shall result in an increase in the
Applicable Fixed Rate Margin, the Applicable Floating Rate Margin, the
Applicable Letter of Credit Fee Rate, the Applicable Overdraft Rate Margin and
the Applicable Unused Commitment Fee Rate to the maximum per annum rates for the
applicable period set forth above until the first day of the first calendar
month following the date on which such Event of Default is cured or waived in
accordance with SECTION 14.07.
"APPLICABLE LENDING OFFICE" means, with respect to a particular Lender, its Fixed Rate Lending Office in respect of provisions relating to Fixed Rate Loans, Overdraft Loans and Multicurrency Loans, and its Domestic Lending Office in respect of provisions relating to Floating Rate Loans.
"APPROVED FUND" means any Fund that (a) is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender, and, (b) together with all other Affiliated Approved Funds that are Lender assignees hereunder, have total assets in excess of $200,000,000.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in substantially the form of EXHIBIT B attached hereto delivered to the Administrative Agent in connection with an assignment of a Lender's interest under this Agreement in accordance with the provisions of SECTION 14.01.
"AUSTRALIAN CREDIT FACILITY" means that certain Guaranteed Multi Option Facility, dated August 15, 2000, among NACCO Materials Handling Group Pty Ltd., Citibank and Citibank Limited, as amended, restated, supplemented or otherwise modified from time to time or as the same may be refinanced or replaced; provided that such refinancing or replacement, taken as a whole, is on terms no less favorable to NACCO Materials Handling Group Pty Ltd. than the terms of the existing Australian Credit Facility prior to such replacement or refinancing; provided further that if such refinancing or replacement is in an aggregate principal amount greater than the commitments under the Australian Credit Facility on the Closing Date, any excess amounts shall only be permitted as allowed in accordance with SECTION 9.01(q).
"AUSTRALIAN CREDIT FACILITY SUBLIMIT" means, (a) from the Closing Date through May 31, 2002, the Dollar Equivalent (determined as of the Closing Date) of the aggregate commitment under the Australian Credit Facility and (b) after May 31, 2002, with respect to an Australian Credit Facility provided by a CNAI Affiliate and with respect to any calendar month, an amount equal to the lesser of (i) the Dollar Equivalent of the aggregate commitment under such Australian Credit Facility and (ii) that amount equal to (A) the Dollar Equivalent of the amount designated in writing by NACCO Materials Handling Group Pty Ltd. to such CNAI Affiliate and the Administrative Agent as the "Australian Credit Facility Sublimit" at least three (3) Business Days prior to the first Business Day of such calendar month (as such Dollar Equivalent is determined on the day of such notice) MULTIPLIED BY (B) one hundred five percent (105%); provided, that such designated amount may not be less than the outstanding obligations under such Australian Credit Facility; provided, further that to the extent a notice is not given as herein provided, the Australian Credit Facility Sublimit shall be the amount most recently designated in such a written notice prior to the first Business Day of such calendar month.
"AUSTRALIAN REORGANIZATION" means a transaction or series of transactions in which an Australian Subsidiary is consolidated or merged with, or whose Capital Stock is contributed to, another Australian Subsidiary or any other Subsidiary as agreed by the Administrative Agent and the Borrowers.
"AUSTRALIAN SUBSIDIARIES" means NACCO Materials Handling Group Pty. Ltd, NMHG Superannuation Programme Pty. Limited, NMHG Employees Super. Fund Pty Limited, National Fleet Network Pty Limited, NMHG Distribution Pty Limited, KS Coy & Sons Pty Limited, Yale-LTC Industrial Trucks Pty Limited, LTC Forklift Rentals Pty Limited., and any other Foreign Subsidiaries (a) organized under the laws of Australia from time to time in accordance with SECTION 9.07 of this Agreement or (b) agreed to by the Administrative Agent
and the Borrowers in connection with an Australian Reorganization and otherwise organized in accordance with SECTION 9.07 of this Agreement.
"AVAILABILITY" means, (a) with respect to any Credit Facility at any particular time, the amount by which the Maximum Credit Amount for such Credit Facility exceeds the Credit Facility Outstandings under such Credit Facility at such time; (b) with respect to any Subfacility at any particular time, the amount by which the Maximum Credit Amount for such Subfacility exceeds the Credit Facility Outstandings under such Subfacility at such time; or (c) with respect to both Credit Facilities at any particular time, the aggregate Availability under each Credit Facility.
"AVAILABILITY RESERVES" means (a) an amount equal to the
Australian Credit Facility Sublimit, (b) an amount equal to the aggregate
commitments of all CNAI Affiliates under any other foreign working capital
facility subject to the Foreign Working Capital Guaranty, (c) any other reserve
against the Availability under any Credit Facility established by the
Administrative Agent, (d) any reserve established pursuant to SECTION
9.02(b)(iv) and (e) such amounts as the Administrative Agent may from time to
time establish against Availability under any Credit Facility in order either
(i) to preserve the value of, or the Administrative Agent's Lien on, the
Collateral or (ii) to reflect future liabilities (including, without limitation,
liabilities in respect of cash management agreements and arrangements) of the
Borrowers to the Administrative Agent and its Affiliates.
"BAILEE" is defined in the Domestic Security Agreement.
"BANK ACCOUNTS" means the Cash Collateral Accounts, the Collection Accounts, the Disbursement Accounts, the Lockboxes, and the Concentration Accounts.
"BANK OF SCOTLAND OVERDRAFT LINE" means that certain working capital facility in a principal amount not to exceed (pound)16,000,000, provided by Bank of Scotland to the UK Borrower pursuant to that certain letter dated October 15, 2001 between, inter alios, Bank of Scotland and the UK Borrower.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.ss.ss.101 ET seq.), as amended from time to time, and any successor statute.
"BANKRUPTCY EVENT" means (a) any event that constitutes a Default or an Event of Default under SECTION 11.01(f) or 11.01(g), and (b) as used in SECTION 9.06(a)(ii)(E), any event of a type described under SECTION 11.01(f) or 11.01(g) with respect to the Parent (rather than a Borrower or Borrower Subsidiary as set forth therein).
"BENEFIT PLAN" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan or Foreign Employee
Benefit Plan) in respect of which any Borrower or any ERISA Affiliate is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"BOARD OF DIRECTORS" means, with respect to any Person, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such Board.
"BORROWER SUBSIDIARIES" means the Subsidiaries of each Borrower and "BORROWER SUBSIDIARY" means any Subsidiary of any Borrower.
"BORROWERS" is defined in the preamble.
"BORROWING" means a borrowing consisting of Loans under the same Credit Facility of the same type (i.e., Floating Rate Loans or Fixed Rate Loans) and of the same Optional Currency made on the same day by the same Borrower.
"BORROWING BASE" shall mean any of the Domestic Borrowing Base or the Multicurrency Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate, (a) with respect to the Domestic Facility, in substantially the form of EXHIBIT C-1 attached hereto (with such modifications thereto as shall be agreed to by the Administrative Agent in accordance with the terms of this Agreement), setting forth the Domestic Borrowers' calculation of the Domestic Borrowing Base and (b) with respect to the Multicurrency Facility, in substantially the form of EXHIBIT C-2 attached hereto (with such modifications thereto as shall be agreed to by the Administrative Agent in accordance with the terms of this Agreement), setting forth the Multicurrency Borrowers' calculation of the Multicurrency Borrowing Base.
"BORROWING BASE DELIVERY DATE" is defined in SECTION 7.05.
"BUSINESS ACTIVITY REPORT" means (a) a Notice of Business Activities Report from the State of New Jersey Division of Taxation or (b) a Minnesota Business Activity Report from the Minnesota Department of Revenue.
"BUSINESS DAY" means a day, in the applicable local time, (a) which is not a Saturday or Sunday or a legal holiday, (b) on which banks are not required or permitted by law or other governmental action to close (i) in New York, New York, (ii) in the case of Fixed Rate Loans or Multicurrency Loans, in London, England, or (iii) in the case of Letter of Credit transactions for a particular Issuing Bank, in the place where its office for issuance or administration of the pertinent Letter of Credit is located, and (c) in the case of Euro Loans, on which the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) system is operating.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all expenditures (whether payable in cash or other Property or accrued as a liability (but without duplication)) during such period that, in conformity with GAAP, are required to be classified as capital expenditures but excluding (a) interest capitalized relating to and during construction of Property, (b) expenditures made in connection with the replacement or restoration of Property to the extent reimbursed or financed from insurance or condemnation proceeds not constituting net cash proceeds of sale of such Property, and (c) expenditures made with the proceeds from the sales of similar Property to the extent such sales and reinvestments are otherwise permitted under this Agreement.
"CAPITAL LEASE" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person.
"CAPITAL STOCK" means, with respect to any Person, any shares of common or preferred stock, any other equity securities, any limited liability company interests, any general or limited partnership interests or other equivalents of such Person, regardless of class or designation, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character with respect thereto.
"CASH COLLATERAL" means immediately available cash or Cash Equivalents in any Concentration Account or Cash Collateral Account under the "control" (within the meaning of Section 9-104 of the Uniform Commercial Code or in the case of Cash Collateral of the Multicurrency Borrowers, within the meaning of applicable law) of the Administrative Agent, as security for any of the Obligations.
"CASH COLLATERAL ACCOUNTS" means, collectively, the Domestic Cash Collateral Account and the Multicurrency Cash Collateral Accounts.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government; (b) domestic and Eurodollar certificates of deposit and time deposits, bankers' acceptances and floating rate certificates of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations), which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor's Corporation (or its successors) or P-1 (or better) by Moody's Investors Service, Inc. (or its successors); (c) commercial paper of United States and foreign banks and bank holding companies and their subsidiaries and United States and foreign finance, commercial industrial or utility companies which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor's Corporation (or its successors) or P-1 (or better) by Moody's Investors Service, Inc. (or its successors); and (d) marketable direct obligations of any state of the United States of America or any political subdivision of any such state given on the date of such investment the highest credit rating by Moody's Investors Service, Inc. (or its successors) and Standard & Poor's Corporation (or its successors); provided, that the maturities of any such Cash Equivalents referred to in clauses (a) through (d) shall not exceed 270 days.
"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 ET SEQ., any amendments thereto, any successor statutes, and any regulations or legally enforceable guidance promulgated thereunder.
"CERCLIS" is defined in SECTION 6.01(o).
"CHANGE OF CONTROL" means any of the following shall occur:
(a) any Person or group of Persons (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act) other than one or more
Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 promulgated by the Commission under said Act) of twenty-five percent (25%) or more of the total voting power of the outstanding Voting Stock of the Parent; provided, however, that the Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of Parent than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of Parent;
(b) individuals who on the Closing Date constituted the Board of Directors of NMHG Holding or the Parent (together with any new directors whose election by such Board of Directors of NMHG Holding or the Parent, as the case may be, or whose nomination for election by the stockholders of NMHG Holding or the Parent, as the case may be, was approved by a vote of a majority of the directors of NMHG Holding or of the Parent, as the case may be, then still in office who were either directors on the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of NMHG Holding or the Parent, as the case may be, then in office;
(c) the adoption of a plan relating to the liquidation or dissolution of any Credit Party or the Parent other than to the extent permitted in SECTION 9.09;
(d) the merger or consolidation of Parent or any Credit Party with or into another Person or the merger of another Person with or into Parent or any Credit Party, or the sale of all or substantially all the assets of Parent (determined on a consolidated basis) or any Credit Party to another Person, other than a transaction permitted by SECTION 9.09;
(e) the occurrence of a "Change of Control" under (and as defined in) the Senior Note Indenture; or
(f) one hundred percent (100%) of the Capital Stock of any Borrower ceasing to be owned (directly or indirectly) and controlled by the Parent, other than to the extent permitted by SECTION 9.02(c).
"CITIBANK" means Citibank, NA, a national banking association.
"CLAIM" means any claim or demand, by any Person, of whatsoever kind or nature for any alleged Liabilities and Costs, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, Permit, ordinance or regulation, common law or otherwise.
"CLOSING DATE" means May 9, 2002.
"CLOSING LIST" is defined in SECTION 5.01(a)(i).
"CNAI" is defined in the preamble.
"CNAI AFFILIATES" means all Affiliates of CNAI.
"COLLATERAL" means all Property and interests in Property and proceeds thereof (including, but not limited to, all accounts, Receivables, deposit accounts, Bank Accounts, chattel paper, instruments, investment property, Inventory, General Intangibles, documents, commercial tort claims, and proceeds thereof) now owned or hereafter acquired by any Credit Party upon which a Lien is granted under any of the Loan Documents, provided, that the Collateral shall not include any Equipment, Real Property, fixtures or improvements thereon.
"COLLATERAL ACCESS AGREEMENT" means (a) a landlord waiver (with a copy of the relevant Lease attached) with respect to personal property located at real property leased by any Credit Party, substantially in the form of EXHIBIT D-1 attached hereto (with such modifications as the Administrative Agent may approve in its sole discretion), (b) a bailee waiver with respect to Property maintained by a Credit Party with a Bailee, substantially in the form of EXHIBIT D-2 attached hereto (with such modifications as the Administrative Agent may approve in its sole discretion), and (c) a waiver with respect to Collateral that is the subject of a bill of lading executed by the issuer of such bill of lading and the agent for the destination named in such bill of lading, in form and substance satisfactory to the Administrative Agent.
"COLLATERAL VALUE" means (a) with respect to any Eligible
Receivable, the Dollar Equivalent of the unpaid face amount of such Receivable;
(b) with respect to any item of Eligible Inventory, the Dollar Equivalent of the
value (determined at the lower of cost, on a first-in, first-out, basis and
market value) of such Inventory.
"COLLECTION ACCOUNT AGREEMENT" means (a) with respect to Collection Accounts located in the United States, a collection account agreement executed by a Collection Account Bank, the applicable Borrower or Borrowers, and the Administrative Agent substantially in the form of EXHIBIT E attached hereto (with such changes thereto requested by the Collection Account Bank as may be acceptable to the Administrative Agent and the applicable Borrower or Borrowers, as the case may be), and (b) with respect to Collection Accounts located outside of the United States, an agreement or security agreement between a Multicurrency Borrower, the Administrative Agent (in its capacity as security holder or otherwise), a Collection Account Bank and such other parties as may be necessary, which agreement gives the Administrative Agent the control rights specified therein and security with respect to the Collection Accounts designated therein, in form and substance satisfactory to the Administrative Agent, in each case, as the same may be amended, supplemented or otherwise modified from time to time.
"COLLECTION ACCOUNT BANK" means each bank which has entered into a Collection Account Agreement and which is identified as a Collection Account Bank on SCHEDULE 6.01-Z, as such schedule may be modified from time to time pursuant to SECTION 3.06.
"COLLECTION ACCOUNTS" means, collectively, the collection accounts in which proceeds of Collateral are deposited, established at the Collection Account Banks which are subject to a Collection Account Agreement.
"COLLECTIONS" is defined in SECTION 3.06(b).
"COMMERCIAL LETTER OF CREDIT" means any documentary letter of credit Issued by an Issuing Bank pursuant to SECTION 2.02 for the account of a Borrower, which is drawable upon
presentation of documents evidencing the sale or shipment of goods purchased by such Borrower in the ordinary course of its business.
"COMMITMENT LETTER" means the Commitment Letter dated April 3, 2002, from CNAI, CSFB and SSB and accepted by the Domestic Borrowers.
"COMMITMENT REALLOCATION REQUEST" is defined in SECTION
3.01(d).
"COMMITMENT REDUCTION AMOUNT" is defined in SECTION 3.01(d).
"COMMITMENTS" means, collectively, the Domestic Commitments and the Multicurrency Commitments (it being understood and agreed that the maximum aggregate principal amount of the Commitments shall not exceed $175,000,000, as reduced from time to time pursuant to the terms hereof).
"COMPLIANCE CERTIFICATE" is defined in SECTION 7.01(e).
"CONCENTRATION ACCOUNT" means any Domestic Concentration Account or Multicurrency Concentration Account, and "CONCENTRATION ACCOUNTS" means, collectively, the Domestic Concentration Account and the Multicurrency Concentration Accounts.
"CONSOLIDATED EBITDA" means, for any period, (a) Consolidated
Net Income for such period PLUS (b) to the extent deducted in determining
Consolidated Net Income for such period, but without duplication, the aggregate
amount of (i) depreciation and amortization expense, (ii) Consolidated Interest
Expense, (iii) foreign, federal, state and local income taxes, (iv)
extraordinary losses, (v) equity in losses of unconsolidated Subsidiaries and
Affiliates, (vi) accruals for long-term deferred compensation (net of cash
payments of deferred compensation accrued in prior periods), (vii) losses from
minority interests in affiliates, (viii) non-recurring non-cash charges and
expenses (including the cumulative effect of any Accounting Changes), (ix)
non-cash expenses relating to the mark to market provision for derivative
instruments, and (x) cash receipts related to the termination of any derivative
instrument that, as of the end of the prior period, had a net gain since the
inception of such derivative instrument, MINUS (c) to the extent included in
determining Consolidated Net Income for such period, but without duplication,
(i) extraordinary gains, (ii) equity in earnings of unconsolidated Subsidiaries
and Affiliates for such period, (iii) income from minority interests in
affiliates, (iv) non-recurring non-cash gains (including the cumulative effect
of any Accounting Changes), (v) non-cash income relating to the mark to market
provision for derivative instruments, and (vi) cash payments related to the
termination of any derivative instrument that, as of the end of the prior
period, had a net loss since the inception of such derivative instrument.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, all as determined in conformity with GAAP, (a) total interest expense, whether paid or accrued (without duplication) (including the interest component of Capital Lease obligations), of NMHG Holding and its Subsidiaries on a consolidated basis, including, without limitation, all recurring bank loan fees and commissions, discounts and other fees and charges owed with respect to letters of credit, but excluding, however, amortization of discount, interest paid in property other than cash or any other interest expense not payable in cash, PLUS (b) any net payments made during such period
under Interest Rate Contracts minus (c) any net payments received during such period under Interest Rate Contracts, PLUS (d) to the extent deducted in determining Consolidated Interest Expense, any interest income.
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or loss) after taxes of NMHG Holding and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP.
"CONSTITUENT DOCUMENT" means, (a) with respect to any corporation, (i) the articles/certificate of incorporation (or the equivalent organizational documents) of such entity, (ii) the bylaws (or the equivalent governing documents) of such entity and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any class or series of such entity's Capital Stock or any unanimous shareholder agreement pertaining to any Foreign Subsidiary; (b) with respect to any partnership (whether limited or general), (i) the certificate of partnership (or equivalent filings), (ii) the partnership agreement (or equivalent organizational documents) of such partnership and (iii) any document setting forth the designation, amount and/or rights, limitations and preferences of any of such partnership's partnership interests; and (c) with respect to any limited liability company, (i) the articles of organization (or the equivalent organizational documents) of such entity, (ii) the operating agreement (or the equivalent governing documents) of such entity and (iii) any document setting forth the designation, amount and/or rights, limitations and preferences of any of such limited liability company's membership interests.
"CONTAMINANT" means any man-made or naturally occurring waste, pollutant, hazardous substance, radioactive substance or material, toxic substance, hazardous waste, radioactive waste, special waste, petroleum or petroleum-derived substance or waste, mold, asbestos in any form or condition, polychlorinated biphenyls, or any hazardous or toxic constituent thereof and includes, but is not limited to, these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of any Securities issued by that Person or any indenture, mortgage, deed of trust, security agreement, pledge agreement, guaranty, contract, undertaking, agreement or instrument to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its properties is subject.
"CREDIT AND COLLECTION POLICIES" means the credit and collection policy of each Borrower and each originator of Receivables owned by a Borrower, each in the respective form and substance attached as EXHIBIT F attached hereto and satisfactory to the Administrative Agent.
"CREDIT FACILITY" means either of the Domestic Facility and the Multicurrency Facility. "CREDIT FACILITIES" means, collectively, the Domestic Facility and the Multicurrency Facility.
"CREDIT FACILITY OUTSTANDINGS" means, at any particular time
(a) with respect to the Domestic Facility, the sum of (i) the outstanding
principal amount of the Swing Loans at such time, PLUS (ii) the outstanding
principal amount of the Domestic Loans at such time, PLUS
(iii) the Letter of Credit Obligations outstanding at such time under the
Domestic Facility, PLUS (iv) the aggregate principal amount of Protective
Advances to the Domestic Lenders outstanding at such time; (b) with respect to
the Multicurrency Facility, the sum of (i) the Overdraft Line Commitment, PLUS
(ii) the outstanding principal amount of the Sterling Loans at such time, PLUS
(iii) the outstanding principal amount of the Euro Loans at such time, PLUS (iv)
the Letter of Credit Obligations outstanding at such time under the
Multicurrency Facility, PLUS (v) the aggregate principal amount of Protective
Advances to the Multicurrency Lenders; (c) with respect to the Euro Subfacility,
the outstanding principal amount of the Euro Loans under such Subfacility at
such time PLUS the Letter of Credit Obligations denominated in Euros and
outstanding at such time under the Multicurrency Facility PLUS the Euro
Overdraft Limit; and (d) with respect to the Sterling Subfacility, the
outstanding principal amount of the Sterling Loans under such Subfacility at
such time PLUS the Letter of Credit Obligations denominated in Sterling and
outstanding at such time under the Multicurrency Facility PLUS the Sterling
Overdraft Limit. For purposes of determining the amount of Credit Facility
Outstandings (or any component thereof) in respect of any Revolving Loan which
is denominated in Euros or Sterling, such amount shall equal the Dollar
Equivalent of the amount of such currency at the time of determination thereof.
"CREDIT PARTY" means any Domestic Credit Party or Foreign Credit Party, and "CREDIT PARTIES" means, collectively, the Domestic Credit Parties and the Foreign Credit Parties.
"CSFB" is defined in the preamble.
"CUMULATIVE AVAILABILITY" means the sum of (a) Availability under the Domestic Facility PLUS (b) the amount then available under the Permitted Multicurrency Refinancing as set forth in a notice from NMHG Holding (certified by a Financial Officer) to the Administrative Agent.
"CURE FUNDINGS" is defined in SECTION 3.02(b)(iv)(C).
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement.
"CURRENCY AGREEMENT EXPOSURE" means, with respect to any Borrower at any time and from time to time, an aggregate amount equal to the then pre-settlement risk of such Borrower (determined by the Administrative Agent in accordance with the Administrative Agent's (or its applicable Affiliate's) customary practices) of each Currency Agreement entered into by such Borrower and the Administrative Agent (or an Affiliate of the Administrative Agent) on or after the Closing Date for the remaining term and volume of such Currency Agreement, disregarding (subject to the immediately succeeding sentence) any Currency Agreement with respect to which the pre-settlement risk of such Borrower at such time is positive. If (a) such Borrower is a party to (i) such Currency Agreement providing for such Borrower's purchase of a particular currency and (ii) a similar Currency Agreement with the same counterparty providing for the sale of such currency and (b) such Borrower and such counterparty have entered into a netting agreement in form and substance satisfactory to the Administrative Agent with respect to such Currency Agreements, then the pre-settlement risk of such Borrower and such counterparties at such time (determined by the Administrative Agent in
accordance with the Administrative Agent's (or its applicable Affiliate's) customary practices) under such Currency Agreements shall be netted against one another in determining such Borrower's aggregate Currency Agreement Exposure (it being understood and agreed that if any such netting of Currency Agreements results in a positive net pre-settlement risk to such Borrower, such net pre-settlement risk shall be disregarded in the calculation of such Borrower's aggregate Currency Agreement Exposure).
"CUSA" means Citicorp USA, Inc., a Delaware corporation.
"CUSTOMARY PERMITTED LIENS" means
(a) Liens (other than Environmental Liens and Liens in favor of the PBGC) with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due or which are not required to be paid pursuant to SECTION 8.04;
(b) statutory Liens of landlords and Liens of mechanics, carriers, materialmen, consignors, warehousemen, or workmen and other Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP, provided that the foregoing shall not include statutory or contractual rights of title retention on Inventory;
(c) Liens (other than any Lien in favor of the PBGC) incurred or deposits made in the ordinary course of business in connection with worker's compensation, unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, surety, appeal and performance bonds, trade, contracts (not constituting Indebtedness), regulatory or statutory obligations, government contracts or other obligations of a like nature provided in the ordinary course of business; provided that all such Liens do not in the aggregate detract from the value of any Borrower's or any of its Subsidiaries' assets or Property or impair the use thereof in the operation of their respective businesses; and
(d) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar charges or encumbrances on the use of Real Property which do not interfere with the ordinary conduct of the business of any Borrower or its Subsidiaries.
"DB CONTRIBUTION AMOUNT" is defined in SECTION 13.06(a).
"DEFAULT" means an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" is defined in SECTION 3.02(b)(iv).
"DISBURSEMENT ACCOUNTS" means, collectively, the disbursement account of each Borrower as set forth on SCHEDULE 6.01-Z.
"DISTRIBUTION PROPERTY" is defined in SECTION 9.02(b).
"DOL" means the United States Department of Labor and any Person succeeding to the functions thereof.
"DOLLAR EQUIVALENT" means, with respect to any amount denominated in a Specified Foreign Currency on the date of determination thereof, the equivalent of such amount in Dollars determined at the rate of exchange equal to the Spot Rate on such date of determination.
"DOLLARS" and "$" mean the lawful money of the United States.
"DOMESTIC BORROWER GUARANTY" means (a) the Domestic Borrower Guaranty dated as of the Closing Date duly executed and delivered to the Administrative Agent by each of the Domestic Guarantors with respect to the Domestic Obligations, substantially in the form and substance of EXHIBIT G-1 attached hereto, and (b) each Domestic Borrower Guaranty, substantially in the form and substance of EXHIBIT G-1 attached hereto, required to be executed and delivered by a Domestic Subsidiary pursuant to SECTION 9.07, as each of the same may be further amended, supplemented or otherwise modified from time to time.
"DOMESTIC BORROWERS" means, collectively, NMHG Holding, NMHG, and NMHG Distribution.
"DOMESTIC BORROWING BASE" means, as of any date of determination, with respect to the Domestic Borrowers, an amount equal to the sum of:
(a) up to 85.0% (or such other higher percentage as agreed to by all Lenders in their sole discretion) of the Collateral Value of Eligible Domestic Receivables PLUS
(b) the least of:
(i) $90,000,000 LESS the Multicurrency Inventory Sublimit,
(ii) up to 65.0% of the Collateral Value of the aggregate Eligible Domestic Inventory, and
(iii) the sum of the products of the Inventory Advance Rate multiplied by the Collateral Value of each category of Eligible Domestic Inventory set forth on the Domestic Borrowers' Borrowing Base Certificate, PLUS
(c) the Dollar Equivalent of cash, overnight investments and marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government with a tenor of less than one year deposited by or on behalf of any Domestic Borrower and held from time to time in the Domestic Concentration Account or the Domestic Cash Collateral Account, in each case, subject to a first priority perfected Lien of the Administrative Agent.
For purposes of this definition, the Collateral Values of Inventory shall be determined after deduction of all Eligibility Reserves then effective with respect to such items.
"DOMESTIC CASH COLLATERAL ACCOUNT" means an account designated as such and established by the Administrative Agent in the name of the Administrative Agent maintained with Citibank in New York, New York.
"DOMESTIC COLLATERAL" means all Collateral of the Domestic Credit Parties.
"DOMESTIC COMMITMENT" means the commitment of each Domestic Lender to make Domestic Loans (including Domestic Loans required to be made pursuant to SECTION 2.01(g) and 2.02(e)(ii) to the Domestic Borrowers), to participate in Letters of Credit Issued for the account of the Domestic Borrowers, and to participate in Multicurrency Loans and fund such participations, in each case pursuant to SECTION 2.03, in an aggregate principal amount (after giving effect to all participations purchased by and from such Domestic Lender) outstanding not to exceed the amount on the Closing Date set forth opposite such Domestic Lender's name on SCHEDULE 1.01.1 under the caption "Domestic Commitment", as such amount may be reduced or modified pursuant to this Agreement; provided, however, at no time shall the aggregate Domestic Commitments of all Domestic Lenders exceed $130,000,000 less any permanent reduction made pursuant to SECTION 3.01; provided, further, at the Closing Date the aggregate Domestic Commitments of all Domestic Lenders shall equal $120,000,000; provided, further, at no time shall the aggregate Domestic Commitments and the aggregate Multicurrency Commitments exceed $175,000,000.
"DOMESTIC CONCENTRATION ACCOUNT" means account number 30508139, in the name of the Administrative Agent, maintained with Citibank in New York, New York.
"DOMESTIC CREDIT PARTY" means any Domestic Borrower or any Domestic Guarantor, and "DOMESTIC CREDIT PARTIES" means, collectively, the Domestic Borrowers and the Domestic Guarantors.
"DOMESTIC FACILITY" means the facility provided by the Domestic Lenders to make Domestic Loans to, and to Issue Letters of Credit for the account of, the Domestic Borrowers, and provided by the Swing Loan Bank to make Swing Loans to the Domestic Borrowers, in each case in accordance with the terms and conditions contained in this Agreement.
"DOMESTIC GUARANTOR" means each Domestic Subsidiary (other than a Domestic Borrower) which is (a) designated on SCHEDULE 1.01.2 or (b) required under SECTION 9.07 to be a party to a Domestic Borrower Guaranty and/or a Multicurrency Borrower Guaranty.
"DOMESTIC LENDERS" means the Lenders designated as such on SCHEDULE 1.01.1 under the caption "Domestic Commitment" and each other institution which is party hereto as a Domestic Lender pursuant to an Assignment and Acceptance.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, such Lender's office, located in the United States, specified as the "Domestic Lending Office" under its name on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such other United States office of such Lender as it may from time to time specify by written notice to the Borrowers and the Administrative Agent.
"DOMESTIC LIBO RATE" means, with respect to any Interest Period applicable to a Borrowing of Fixed Rate Loans under the Domestic Facility denominated in Dollars, the interest rate per annum obtained by DIVIDING:
(a) the interest rate per annum equal to (A) the offered
quotations for deposits in Dollars for a period comparable to the
relevant Interest Period which appears on Dow Jones Markets Service
(formerly known as Telerate) Page 3750 or Dow Jones Markets Service
Page 3740 (as appropriate) (or such other page as may replace Page 3750
or Page 3740, as applicable, or the service as may be nominated by the
British Bankers' Association as the information vendor for the purpose
of displaying British Bankers' Association Interest Settlement Rates
for deposits in Dollars) at or about 11:00 a.m. (London time) on the
applicable Fixed Rate Determination Date; or (B) if no such interest
rate determined under clause (A) is available, the arithmetic mean
(rounded upward to the nearest one-sixteenth of one percent (0.0625%))
of the interest rates, as supplied to Citibank at its request, quoted
by the "London Reference Banks" to leading banks in the London
interbank market at or about 11:00 a.m. (London time) on the applicable
Fixed Rate Determination Date for the offering of deposits in Dollars
for a period comparable to the relevant Interest Period, BY
(b) a percentage equal to (i) 100% MINUS (ii) the Domestic LIBOR Reserve Percentage in effect on the relevant Fixed Rate Determination Date. The Domestic LIBO Rate shall be adjusted automatically on and as of the effective date of any change in the Domestic LIBOR Reserve Percentage.
For purposes of this definition, "DOMESTIC LIBOR RESERVE PERCENTAGE" means, for any day, that percentage which is in effect on such day, as prescribed by the Federal Reserve Board for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York, New York with deposits exceeding five billion Dollars in respect of "Eurocurrency Liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Fixed Rate Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any bank to United States residents). The Administrative Agent shall provide to any Borrower, upon the reasonable request of any Borrower, a explanation of any Domestic LIBOR Reserve Percentage used in the determination of the Domestic LIBO Rate.
"DOMESTIC LOAN" is defined in SECTION 2.01(a).
"DOMESTIC LOAN NOTES" means one or more promissory notes payable to the Domestic Lenders evidencing the Domestic Borrowers' Obligations to repay the Domestic Loans made to such Borrowers, substantially in the form and substance of EXHIBIT Q-1 attached hereto.
"DOMESTIC OBLIGATIONS" means the Obligations of the Domestic Borrowers and the Domestic Guarantors under the Domestic Facility.
"DOMESTIC SECURITY AGREEMENT" means (a) the Security Agreement dated as of the Closing Date by and between the Domestic Credit Parties and the Administrative Agent,
substantially in the form and substance of EXHIBIT H attached hereto, and (b) each Security Agreement executed and delivered by a Domestic Subsidiary, substantially in the form and substance of EXHIBIT H attached hereto, pursuant to SECTION 9.07, as each of the same may be further amended, supplemented or otherwise modified from time to time.
"DOMESTIC SUBSIDIARY" means any Subsidiary of NMHG Holding organized in the United States or any state or territory thereof.
"DUTCH PLEDGES" means any and all Pledge Agreements, Foreign Security Agreements or other Security Documents creating a right of pledge (pandrechten) under the laws of the Netherlands.
"ELIGIBILITY RESERVES" means such amounts as the Administrative Agent, in the exercise of its sole discretion in accordance with the Administrative Agent's customary practices, may from time to time establish against the gross amounts of Eligible Foreign Receivables, Eligible Domestic Receivables, Eligible Foreign Inventory and Eligible Domestic Inventory to reflect risks or contingencies arising after the Closing Date or to reflect risks of statutory and contractual rights of retention on the Inventory of each Multicurrency Borrower or its Subsidiaries existing on or after the Closing Date which may affect such items and which have not already been taken into account in the determination of Eligible Foreign Receivables, Eligible Domestic Receivables, Eligible Foreign Inventory, and Eligible Domestic Inventory.
"ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a
Lender; (c) an Approved Fund; and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent, (ii) the Issuing Bank, and
(iii) unless an Event of Default has occurred and is continuing, any Borrower
(each such approval not to be unreasonably withheld or delayed); provided, that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any Affiliates of any Borrower or the Borrower Subsidiaries.
"ELIGIBLE DOMESTIC INVENTORY" means Inventory owned by a Domestic Borrower:
(a) with respect to which the Administrative Agent has a valid and perfected first priority Lien (subject only to Customary Permitted Liens),
(b) with respect to which no representation, warranty or covenant contained in any of the Loan Documents has been breached,
(c) which is not in the sole discretion of the Administrative Agent (exercised in accordance with the Administrative Agent's customary practices), obsolete, unmerchantable or subject to any statutory, contractual or other title retention or similar agreement or arrangement,
(d) (i) located in the United States or (ii) in transit to the United States from a Multicurrency Borrower and (A) with respect to Collateral in transit as of the Closing Date, as to which the issuer of the related bill of lading and the agent at the destination named in such bill of lading have executed a Collateral Access Agreement no later than the forty-fifth day after the Closing Date and (B) with respect to any other such Collateral, as to which the issuer of the
related bill of lading and the agent at the destination named in such bill of lading have executed a Collateral Access Agreement, and
(e) which the Administrative Agent deems to be Eligible Domestic Inventory, based on such credit and collateral considerations as the Administrative Agent deems appropriate.
Except as otherwise agreed to by the Administrative Agent, no Inventory of any Domestic Borrower shall be Eligible Domestic Inventory if such Inventory is located, stored, used or held at leased premises or the premises of a Bailee unless (i) the Administrative Agent shall have received a Collateral Access Agreement from such third party unless, solely with respect to Inventory located in the United States of America (including its territories and possessions), a Collateral Access Agreement is not required pursuant to SECTION 8.11 and (ii) appropriate UCC-1 financing statements shall have been executed or, in the case of Inventory which is located, stored, used or held outside the United States of America (including its territories and possessions), other appropriate action satisfactory to the Administrative Agent shall have been taken to make the rights of the Administrative Agent in such Inventory effective against third parties, with respect to such location. The Administrative Agent reserves the right to create, from time to time, additional categories of ineligible Inventory.
"ELIGIBLE DOMESTIC RECEIVABLE" means a Receivable owned by a Domestic Borrower:
(i) (A) The account debtor of which is located in the United States of America or Canada, is not an Affiliate of any Domestic Borrower (other than a Financing Affiliate or Hyster New England, Inc., a Delaware corporation), is not a foreign governmental authority, and is otherwise approved of by the Administrative Agent, (B) is an Eligible L/C Backed Domestic Receivable, (C) is an Eligible Supported Domestic Receivable, or (D) the account debtor of which is a Financing Affiliate and the Financing Agreement specified in CLAUSE (b) of the definition thereof is in full force and effect;
(ii) To the extent the aggregate amount of all Receivables owing by the account debtor thereof to the Domestic Borrowers do not exceed a credit limit determined by the Administrative Agent;
(iii) With respect to which less than 50% of all Receivables owing by the account debtor thereof to the Domestic Borrowers are ineligible for any reason other than a failure to satisfy CLAUSE (ii) above;
(iv) The account debtor of which has not suffered a bankruptcy, insolvency or similar event and the terms of which have not been re-written, extended or restructured due to such account debtor's inability to pay;
(v) The term of which is not longer than 90 days unless otherwise permitted by the Administrative Agent in its sole discretion;
(vi) Which does not remain unpaid for more than 60 days from the due date or 90 days from the invoice date thereof unless otherwise permitted by the Administrative Agent in its sole discretion, or which the Administrative Agent does not otherwise believe the payment thereunder is insecure or may not be paid due to the account debtor's financial condition;
(vii) Which, pursuant to the applicable Domestic Borrower's Credit and Collection Policy, has not been or should not have been written off as uncollectible;
(viii) Which arises out of (A) a sale of goods (or rendering of services) or (B) a rental by NMHG Distribution as the lessor of goods owned by NMHG Distribution for periods of time less than or equal to 90 days (but only to the extent of unpaid invoices for rent in arrears), and, in each case, is made in the ordinary course of business;
(ix) Which is in conformity with the representations, warranties and covenants in the Loan Documents;
(x) Which does not contravene any laws, rules or regulations applicable thereto and with respect to which no party to the contract related thereto is in violation of any such law, rule or regulation (including doing business and local licensing requirements);
(xi) (A) Which is not subject to any right of setoff, offset, rescission, recoupment, counterclaim or defense or any dispute by the account debtor thereof (provided that only 125.0% of the amount subject to setoff, offset, rescission, recoupment, counterclaim, defense or dispute shall be deemed ineligible) and (B) if the account debtor or any of its Affiliates is also such Borrower's supplier or creditor and such Receivable is or may become subject to any right of setoff by the account debtor, such account debtor has entered into an agreement with the Agent with respect to the waiver of rights of setoff;
(xii) Which was originated in accordance with all applicable requirements of the applicable Domestic Borrower's Credit and Collection Policies;
(xiii) That represents the genuine, legal, valid and binding obligation of the account debtor thereunder enforceable in accordance with its terms;
(xiv) The sale of which is not on a "shipped not billed", bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis;
(xv) The goods, the delivery of which has given rise to such Receivable, have been delivered to and not rejected by the account debtor thereunder, or the services, the performance of which has given rise to such Receivable, have been performed and have not been rejected by the account debtor thereunder;
(xvi) In which the Administrative Agent has a valid and perfected first priority security interest and which is free and clear of any other Liens (other than the Customary Permitted Liens specified in CLAUSES (a) AND (b) of the definition thereof), and, if such
Receivable constitutes "chattel paper" within the meaning of the Uniform Commercial Code, such Borrower has complied with SECTION 8.06(c);
(xvii) If the account debtor of which is located in the state of New Jersey or Minnesota, such Borrower has filed and maintained effective a current Business Activity Report with the appropriate Governmental Authority in such state (except in the case such Borrower is qualified to transact business in such state as a foreign corporation);
(xviii) Which does not arise out of or in connection with a retainage or similar arrangement;
(xix) Which does not arise out of or in connection with a transaction described in CLAUSE (c) of the defined term "Lease Finance Transaction";
(xx) Which is not evidenced by an instrument; and
(xxi) Which is not otherwise deemed ineligible by the Administrative Agent in accordance with its customary practices.
"ELIGIBLE FOREIGN INVENTORY" means Inventory owned by the Multicurrency Borrowers:
(a) with respect to which the Administrative Agent has a valid and perfected first priority Lien, first floating charge or similar non-possessory interest (subject, in each case, only to Customary Permitted Liens specified in CLAUSES (a) and (b) of the definition thereof),
(b) with respect to which no representation, warranty or covenant contained in any of the Loan Documents has been breached,
(c) which is not in the sole discretion of the Administrative Agent (exercised in accordance with the Administrative Agent's customary practices), obsolete, unmerchantable or subject to any statutory, contractual or other title retention or similar agreement or arrangement,
(d) (i) located on the premises of a Multicurrency Borrower in the United Kingdom or the Netherlands or (ii) in transit from the premises or warehouses of any Domestic Borrower to the premises of any Multicurrency Borrower or in transit from the premises of any Multicurrency Borrower to the premises of such or any other Multicurrency Borrower and (A) with respect to Collateral in transit as of the Closing Date, for so long as such Collateral is in transit, as to which the issuer of the related bill of lading (or other applicable document issued by a transporter under applicable law with respect to Inventory in transit) and the agent at the destination named in such bill of lading (or other applicable document issued by a transporter under applicable law with respect to Inventory in transit) have executed a Collateral Access Agreement no later than the forty-fifth day after the Closing Date, (B) with respect to any other such Collateral, as to which the issuer of the related bill of lading (or other applicable document issued by a transporter under applicable law with respect to Inventory in transit) and the agent at the destination named in such bill of lading (or other applicable document issued by a transporter under applicable law with respect to Inventory in transit) have executed a Collateral Access
Agreement, and (C) as to which the related bill of lading (or other applicable document issued by a transporter under applicable law with respect to Inventory in transit) is not a negotiable bill of lading (or negotiable document), and
(e) which the Administrative Agent deems to be Eligible Foreign Inventory, based on such credit and collateral considerations as the Administrative Agent deems appropriate.
Except as otherwise agreed to by the Administrative Agent, no Inventory of any Multicurrency Borrower shall be Eligible Foreign Inventory if such Inventory is located, stored, used or held at leased premises or the premises of a third party unless other appropriate action satisfactory to the Administrative Agent shall have been taken to make the rights of the Administrative Agent in such Inventory effective against third parties, with respect to such location. The Administrative Agent reserves the right to create, from time to time, additional categories of ineligible Inventory.
"ELIGIBLE FOREIGN RECEIVABLE" means any Receivable of the UK Borrower:
(i) The account debtor of which is not domiciled in a country (A) the national governmental authority of which is in default of its foreign debts or has prohibited the sale of foreign exchange or is in debt moratorium, or shall have ceased to be a member of the International Monetary Fund, or (B) with respect to which the United States shall have imposed economic sanctions under Title 31 Part 500 et. seq. of the U.S. Code of Federal Regulations;
(ii) (A) The account debtor of which is located in the United Kingdom, the Netherlands, the United States or any other country that is a member of the Organization for Economic Cooperation and Development approved from time to time (unless disapproved from time to time by the Administrative Agent), which shall initially include Australia, Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Luxembourg, New Zealand, Norway, Portugal, Spain, Sweden, and Switzerland, (B) which is an Eligible L/C Backed Foreign Receivable or (c) which is an Eligible Supported Foreign Receivable;
(iii) The account debtor of which is not an Affiliate of any Borrower or a governmental authority, and is otherwise approved of by the Administrative Agent;
(iv) With respect to Receivables purchased by the UK Borrower pursuant to the Receivables Sale Agreements or reconveyed to the UK Borrower by Bank of Scotland, all actions required by SECTION 5.01(m) have been taken, true sale opinions with respect to such transfers have been delivered to the satisfaction of the Administrative Agent and the representations and warranties set forth in SECTION 6.01(dd) are true and correct in all respects;
(v) To the extent all Receivables owing by the account debtor thereof to the UK Borrower do not exceed a credit limit determined by the Administrative Agent;
(vi) With respect to which less than 50% of all Receivables of the UK Borrower owing by the account debtor thereof are ineligible for any reason other than a failure to satisfy CLAUSE (v) above;
(vii) The account debtor of which has not suffered a bankruptcy, insolvency or similar event, or had an administrator or analogous officer appointed, and the terms of which have not been re-written, extended or restructured due to such account debtor's inability to pay;
(viii) The term of which is not longer than 90 days unless otherwise permitted by the Administrative Agent in its sole discretion;
(ix) Which does not remain unpaid for more than 60 days from the due date or 90 days from the invoice date thereof unless otherwise permitted by the Administrative Agent in its sole discretion, or which the Administrative Agent does not otherwise believe the payment thereunder is insecure or may not be paid due to the account debtor's financial condition;
(x) Which, pursuant to the UK Borrower's Credit and Collection Policy, has not been or should not have been written off as uncollectible;
(xi) Which arises out of a sale of goods (or rendering of services) by a Foreign Credit Party made in the ordinary course of business;
(xii) Which is in conformity with the representations, warranties and covenants in the Loan Documents;
(xiii) Which does not contravene any laws, rules or regulations applicable thereto and with respect to which no party to the contract related thereto is in violation of any such law, rule or regulation (including doing business and local licensing requirements);
(xiv) (A) Which is not subject to any right of setoff, offset, rescission, recoupment, counterclaim or defense or any dispute by the account debtor thereof (provided that only 125.0% of the amount subject to setoff, offset, rescission, recoupment, counterclaim, defense or dispute shall be deemed ineligible) and (B) if the account debtor or any of its Affiliates is also such Borrower's supplier or creditor and such Receivable is or may become subject to any right of setoff by the account debtor, such account debtor has entered into an agreement with the Agent with respect to the waiver of rights of setoff;
(xv) Which was originated (or, solely with respect to purchases by the UK Borrower in accordance with CLAUSE (iv) above, originated by the Netherlands Borrower or by NACCO Materials Handling S.R.L.) in accordance with all applicable requirements of the UK Borrower's Credit and Collection Policies;
(xvi) That represents the lawful, valid and binding obligation of the account debtor thereunder enforceable in accordance with its terms;
(xvii) The sale of which is not on a "shipped not billed", bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis;
(xviii) The goods, the delivery of which has given rise to such Receivable, have been delivered to and have not been rejected by the account debtor thereunder, or the services, the performance of which has given rise to such Receivable, have been performed and have not been rejected by the account debtor thereunder;
(xix) In which the Administrative Agent has a valid, legal or
equitable Lien in respect of which notice has been given to the
relevant account debtor and which is free and clear of any other Liens
(other than the Customary Permitted Liens specified in CLAUSES (a) AND
(b) of the definition thereof);
(xx) If the account debtor of which is located in the state of New Jersey or Minnesota, the UK Borrower (or if such Receivables are originated by the Netherlands Borrower or NACCO Materials Handling S.R.L., such originator) has filed and maintained effective a current Business Activity Report with the appropriate Governmental Authority in such state (except in the case such Borrower is qualified to transact business in such state as a foreign corporation);
(xxi) Which does not arise out of or in connection with a retainage or similar arrangement;
(xxii) Which does not arise out of or in connection with a transaction described in CLAUSE (c) of the defined term "Lease Finance Transaction";
(xxiii) Which is not evidenced by an instrument;
(xxiv) if the sale of Inventory giving rise to such Receivable is through an agent of the UK Borrower (including, without limitation, an Affiliate acting as agent for the UK Borrower), the agency agreement applicable thereto (A) shall be in form and substance reasonably satisfactory to the Administrative Agent, (B) shall be enforceable and in full force and effect under all applicable laws, and (C) shall have been collaterally assigned to the Administrative Agent pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent (and, as to the matters described in CLAUSES (B) and (C) above, the Administrative Agent has received such opinions of counsel as the Administrative Agent may reasonably request); and
(xxv) Which is not otherwise deemed ineligible by the Administrative Agent in accordance with its customary practices.
"ELIGIBLE INVENTORY" means Eligible Domestic Inventory and Eligible Foreign Inventory.
"ELIGIBLE L/C BACKED DOMESTIC RECEIVABLE" means Eligible Domestic Receivables of a Domestic Borrower the account debtor of which does not meet the criteria set forth in clause (i)(A) of the definition of "Eligible Domestic Receivable", is not an Affiliate of
the Domestic Borrower, and with respect to which the account debtor's obligations (or that portion of such obligations which is acceptable to the Administrative Agent) are secured by a letter of credit, guaranty or eligible bankers' acceptance having terms, and from such issuers and confirmation banks, as are reasonably acceptable to the Administrative Agent (which letter of credit, guaranty or acceptance is subject to the first priority Lien of the Administrative Agent (other than Customary Permitted Liens specified in CLAUSES (A) and (B) of the definition thereof) under the Domestic Security Agreement in a manner reasonably satisfactory to the Administrative Agent).
"ELIGIBLE L/C BACKED FOREIGN RECEIVABLES" means Eligible Foreign Receivables of the UK Borrower which arise with respect to a sale to an account debtor located in any country (other than an approved country specified or referred to in clause (ii)(A) of the defined term "Eligible Foreign Receivable") and with respect to which the account debtor's obligations (or that portion of such obligations which is acceptable to the Administrative Agent) are secured by a letter of credit, guaranty or eligible bankers' acceptance having terms, and from such issuers and confirmation banks, as are reasonably acceptable to the Administrative Agent (which letter of credit, guaranty or acceptance is subject to the valid legal or equitable Lien in respect of which notice has been given to the relevant obligor in favor of the Administrative Agent (other than Customary Permitted Liens specified in CLAUSES (a) and (b)) under the Foreign Security Agreements in a manner reasonably satisfactory to the Administrative Agent).
"ELIGIBLE RECEIVABLES" means the Eligible Domestic Receivables and the Eligible Foreign Receivables.
"ELIGIBLE SUPPORTED DOMESTIC RECEIVABLE" means Eligible Domestic Receivables of a Domestic Borrower the account debtor of which does not meet the criteria set forth in clause (i)(A) of the definition of "Eligible Domestic Receivable", and which are fully supported by credit insurance payable to such Domestic Borrower on terms and conditions and from a financial institution satisfactory to the Administrative Agent; provided that such credit insurance (x) shall be in full force and effect and not in dispute and (y) shall have been collaterally assigned to the Administrative Agent pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent.
"ELIGIBLE SUPPORTED FOREIGN RECEIVABLES" means Eligible Foreign Receivables of the UK Borrower which arise with respect to sales to account debtors in any country (other than an approved country specified or referred to in clause (ii)(A) of the defined term "Eligible Foreign Receivable"), and which are fully supported by credit insurance payable to such Borrower on terms and conditions and from a financial institution satisfactory to the Administrative Agent; provided that such credit insurance (x) shall be in full force and effect and not in dispute and (y) shall have been collaterally assigned to the Administrative Agent pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent.
"ENGLISH DEED OF CHARGE" means that certain Deed of Charge and Assignment dated the Closing Date by and between the UK Borrower and the Administrative Agent, as the same may be amended, supplemented or otherwise modified from time to time.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all Requirements of Law derived from or relating to federal, state, local and foreign laws, regulations, orders, ordinances, rules, permits, licenses or other binding determination of any Governmental Authority relating to or addressing the indoor or outdoor environment, public or worker health or safety, including but not limited to CERCLA, any other law, regulation, or order relating to the use, Release, handling, or disposal of any Contaminant, any law, regulation, or order relating to Remedial Action and any law, regulation, or order relating to workplace or worker safety and health, and such Requirements of Law as are promulgated by the specifically authorized agent or agents responsible for administering such Requirements of Law.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental Authority for any (a) liabilities under any Environmental, Health or Safety Requirements of Law, or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACTS" means any applicable Requirement of Law that conditions, restricts, prohibits or requires any notification or disclosure triggered by the closure of any Property or the transfer, sale or lease of any Property or deed or title for any Property for environmental reasons, including, but not limited to, any so-called "Environmental Cleanup Responsibility Act", "Responsible Transfer Act", or "Industrial Site Recovery Act".
"EQUIPMENT" means, with respect to any Person, all of such Person's present and future equipment (as defined in the Uniform Commercial Code).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.
"ERISA AFFILIATE" means (a) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as any Borrower; (b) a partnership or other trade or business (whether or not incorporated) which is under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with any Borrower; (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as any Borrower, any corporation described in CLAUSE (A) above or any partnership or trade or business described in CLAUSE (B above; and (d) any other Person which is required to be aggregated with any Borrower pursuant to regulations promulgated under Section 414(o) of the Internal Revenue Code.
"EURO" means the "euro", the official monetary unit of the member nations of the European Monetary Union.
"EURO CASH COLLATERAL ACCOUNT" means an account designated as such with respect to the Multicurrency Borrowers and established by the Administrative Agent maintained with Citibank in London, England, for account funds denominated in Euros.
"EURO LOANS" means Multicurrency Loans denominated in Euros and Protective Advances denominated in Euros, and, in each case, advanced to a Multicurrency Borrower.
"EURO OVERDRAFT ACCOUNTS" means account number 8753733 maintained with Citibank in London, England, in the name of the Netherlands Borrower and account number 8753725 maintained with Citibank in London, England, in the name of the UK Borrower.
"EURO OVERDRAFT LIMIT" means $2,500,000, as such amount may be adjusted pursuant to SECTION 2.01(c)(iii).
"EURO SUBFACILITY" means the subfacility of the Multicurrency Facility for which Borrowings are only available in Euros.
"EVENT OF DEFAULT" means any of the occurrences set forth in
SECTION 11.01 after the expiration of any applicable grace period and the giving
of any applicable notice, in each case as expressly provided in SECTION 11.01.
"FAIR MARKET VALUE" means, with respect to any asset, the value of the consideration obtainable in a sale of such asset in the open market, assuming a sale by a willing seller to a willing purchaser dealing at arm's length and arranged in an orderly manner over a reasonable period of time, each having reasonable knowledge of the nature and characteristics of such asset, neither being under any compulsion to act, and, if in excess of $10,000,000, as determined (a) in good faith by the Board of Directors of the applicable Borrower and (b) in an appraisal of such asset, provided that such appraisal was performed relatively contemporaneously with such sale by an independent third party appraiser and the basic assumptions underlying such appraisal have not materially changed since the date thereof.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day in New York, New York, for the next preceding Business Day) in New York, New York by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day in New York, New York, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve System or any Governmental Authority succeeding to its functions.
"FINANCIAL COVENANT DEBT" means, with respect to NMHG Holding and its Subsidiaries, at any time, without duplication, (a) all indebtedness, obligations or other liabilities of such Persons (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, (ii) in respect of obligations (A) to redeem, repurchase or exchange for cash any Securities of any such Person or (B) to pay cash dividends (or equivalent cash distributions) in respect of any Capital Stock (but only to the extent such dividends have been declared), (iii) to pay the deferred purchase price of property or services, except accounts payable and accrued expenses arising in the ordinary course of business, (iv) in respect of the principal component of Capital Lease Obligations, (v) which are Accommodation Obligations required by GAAP to be classified as debt, or (vi) under conditional sale or other title retention
agreements relating to property purchased by any such Person; (b) all
indebtedness, obligations or other liabilities of such Persons or others secured
by a Lien on any property of any such Person, whether or not such indebtedness,
obligations or liabilities are assumed by any such Person, all as of such time;
(c) all preferred stock subject (upon the occurrence of any contingency or
otherwise) to mandatory redemption; and (d) to the extent required by GAAP to be
classified as debt, all contingent Contractual Obligations.
"FINANCIAL INSTITUTION" means any (a) Financing Affiliate, (b) solely with respect to transactions in existence on the Closing Date, any financial institution party to such transaction, (c) solely with respect to Lease Finance Transactions to which the Australian Subsidiaries are a party, any financial institution, (d) solely with respect to Lease Finance Transactions to which the Foreign Subsidiaries are a party, General Electric Capital Corporation pursuant to the Financing Agreement specified in CLAUSE (A) of the definition thereof, and (e) in all other cases, any financial institution from time to time approved by the Administrative Agent.
"FINANCIAL OFFICER" means, with respect to (a) any Borrower, the chief executive officer, chief financial officer, the treasurer, the controller or principal accounting officer of such Borrower, or any other financial officer identified and reasonably acceptable to the Administrative Agent, or (b) any Foreign Credit Party, a director.
"FINANCIAL STATEMENTS" means (a) statements of income and retained earnings, statements of cash flow, and balance sheets, (b) such other financial statements as NMHG Holding and its Subsidiaries shall routinely and regularly prepare and (c) such other financial statements as the Administrative Agent or the Requisite Lenders may from time to time reasonably specify.
"FINANCING AFFILIATE" means NFS or any other Affiliate of the Borrowers party to a Financing Agreement pursuant to CLAUSE (b) of the definition thereof.
"FINANCING AGREEMENTS" means the (a) International Operating Agreement, dated April 15, 1998, between NMHG and General Electric Capital Corporation and (b) Restated and Amended Joint Venture and Shareholders Agreement, dated April 15, 1998, between NMHG and General Electric Capital Corporation, as each of the same may be (i) renewed, amended or restated from time to time on substantially the same terms or otherwise as consented to by the Administrative Agent, such consent not to be unreasonably withheld or (ii) replaced from time to time as consented to by the Administrative Agent, such consent not to be unreasonably withheld.
"FISCAL YEAR" means the fiscal year of NMHG Holding, which shall be the 12-month period ending on December 31 of each calendar year.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any period, the ratio of (a) Adjusted EBITDA for such period MINUS Capital Expenditures for such period to (b) Scheduled Principal Payments for such period PLUS Consolidated Interest Expense for such period.
"FIXED RATE" means, with respect to any Interest Period applicable to a Borrowing of Fixed Rate Loans under the applicable Credit Facility denominated in the applicable currency, an interest rate per annum equal to (a) the Domestic LIBO Rate with respect to Fixed Rate Loans denominated in Dollars under the Domestic Facility and (b) the Multicurrency LIBO Rate, with respect to Fixed Rate Loans
denominated in a Specified Foreign Currency under the Multicurrency Facility, in each case in effect on the relevant Fixed Rate Determination Date.
"FIXED RATE AFFILIATE" means, with respect to each Lender, the Affiliate of such Lender (if any) set forth below such Lender's name under the heading "Fixed Rate Affiliate" on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such Affiliate of a Lender as it may from time to time specify by written notice to the Borrowers and the Administrative Agent.
"FIXED RATE DETERMINATION DATE" means, with respect to a Borrowing of Fixed Rate Loans (a) that are Domestic Loans, the second Business Day prior to the first day of the Interest Period for any Borrowing and (b) that are Multicurrency Loans, the fourth Business Day prior to the first day of the Interest Period for any Borrowing.
"FIXED RATE INTEREST PAYMENT DATE" means (a) with respect to any Fixed Rate Loan, the last day of each Interest Period applicable to such Loan and (b) with respect to any Fixed Rate Loan having an Interest Period in excess of three (3) calendar months, the last day of each three (3) calendar month interval during such Interest Period.
"FIXED RATE LENDING OFFICE" means, with respect to any Lender, the office or offices of such Lender (if any) set forth below such Lender's name under the heading "Fixed Rate Lending Office" on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such office or offices of such Lender as it may from time to time specify by written notice to the Borrowers and the Administrative Agent.
"FIXED RATE LOANS" means all Loans under the Domestic Facility and the Multicurrency Facility denominated in Dollars or a Specified Foreign Currency, respectively, outstanding which bear interest at a rate determined by reference to the Fixed Rate applicable to such currency as provided in SECTION 4.01(a).
"FLOATING RATE" means, for any period applicable to any Floating Rate Loan, a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York, New York from time to time, as Citibank's base rate; and
(b) the sum (adjusted to the nearest one quarter of one percent (0.25%) or, if there is no nearest one quarter of one percent (0.25%), to the next higher one quarter of one percent (0.25%)) of (i) one half of one percent (0.50%) per annum PLUS (ii) the rate per annum obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday (or, if such day is not a Business Day, on the next preceding Business Day) by Citibank on the
basis of such rates reported by certificate of deposit dealers to, and published by, the Federal Reserve Bank of New York, or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three (3) New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Federal Reserve Board for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month Dollar nonpersonal time deposits in the United States, PLUS (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring Dollar deposits of Citibank in the United States.
"FLOATING RATE LOANS" means all Loans denominated in Dollars which bear interest at a rate determined by reference to the Floating Rate as provided in SECTION 4.01(a).
"FOREIGN ACCOUNT DEBTOR" is defined in SECTION 8.10(b).
"FOREIGN COLLATERAL" means all Collateral of the Foreign Credit Parties.
"FOREIGN CREDIT PARTY" means any Multicurrency Borrower or any Foreign Guarantor, and "FOREIGN CREDIT PARTIES" means, collectively, the Multicurrency Borrowers and the Foreign Guarantors.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as defined in Section 3(3) of ERISA which is maintained or contributed to for the benefit of the employees or former employees of the Borrowers or any of their Subsidiaries or any employee benefit plan in relation to which the Borrowers or any of their Subsidiaries has a liability or potential liability, but which is not covered by ERISA pursuant to Section 4(b)(4) of ERISA.
"FOREIGN GUARANTIES" means collectively, and "FOREIGN GUARANTY" means individually, (a) each Foreign Guaranty dated as of the Closing Date duly executed and delivered to the Administrative Agent by a Foreign Guarantor substantially in the form and substance of EXHIBIT G-3 attached hereto, and (b) each Foreign Guaranty executed and delivered by a Foreign Subsidiary to the Administrative Agent pursuant to SECTION 9.07, as each of the same may be further amended, supplemented or otherwise modified from time to time.
"FOREIGN GUARANTOR" means each Foreign Subsidiary (other than a Multicurrency Borrower) (a) which is the direct parent of a Multicurrency Borrower or a Subsidiary of any Multicurrency Borrower, as designated on SCHEDULE 1.01.2, and (b) required under SECTION 9.07 to be a party to a Foreign Guaranty.
"FOREIGN PENSION PLAN" means any Foreign Employee Benefit Plan which is a pension plan as defined in Section 3(2) of ERISA but which is not covered by ERISA pursuant to Section 4(b)(4) of ERISA and which under applicable local law is required to be funded
through a trust or other funding vehicle other than a trust or funding vehicle maintained by a foreign Governmental Authority.
"FOREIGN SECURITY AGREEMENTS" means, inter alias, (a) the English Deed of Charge, (b) the Deed of Pledge of Assets by and between the Netherlands Borrower and the Administrative Agent, (c) the Deed of Pledge of Receivables by and between the Netherlands Borrower and the Administrative Agent, (d) each other security agreement dated as of, or the Closing Date duly executed and delivered to the Administrative Agent by a Foreign Credit Party, and (e) each other security agreement executed and delivered by a Foreign Subsidiary pursuant to SECTION 9.07, as each of the same may be amended, supplemented or otherwise modified from time to time.
"FOREIGN SUBSIDIARY" means any Subsidiary of NMHG Holding that is not a Domestic Subsidiary.
"FOREIGN WORKING CAPITAL GUARANTY" means the Guaranty dated as of the Closing Date duly executed and delivered to Citibank by the Borrowers substantially in the form of EXHIBIT I attached hereto, as the same may be amended, supplemented or otherwise modified from time to time.
"FUND" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans of the type contemplated by this Agreement and similar extensions of credit in the ordinary course of its business.
"FUNDING ACCOUNT" means each account of the Administrative Agent into which fundings of Loans shall be made, as notified to the Lenders from time to time.
"FUNDING DATE" means, with respect to any Loan, the date of the funding of such Loan.
"GAAP" means generally accepted accounting principles (in the United States except as otherwise specified in this Agreement) set forth in the opinions and pronouncements of the Accounting Principles Board, the American Institute of Certified Public Accountants and the Financial Accounting Standards Board or in such other statements by such other entity as may be in general use by significant segments of the accounting profession as in effect on the Closing Date (unless otherwise specified herein as in effect on another date or dates).
"GENERAL INTANGIBLES" means, with respect to any Person, all of such Person's present and future general intangibles (as defined in the Uniform Commercial Code or in any similar statute of England and Wales, Scotland, Northern Ireland, any other relevant jurisdiction, or any political subdivision thereof).
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, province, territory, regional, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTOR" means any Domestic Guarantor or Foreign Guarantor, and "GUARANTORS" means the Domestic Guarantors and Foreign Guarantors collectively.
"HITFL" is defined in SECTION 5.01(n).
"HITFL CONTRACT" means that certain letter agreement dated July 6, 1998, between HITFL and NMHG, as supplemented by that certain Schedule dated December 4, 2000.
"HOLDER" means any Person entitled to enforce any of the Obligations, whether or not such Person holds any evidence of Indebtedness, including, without limitation, the Administrative Agent, each Lender and each Issuing Bank.
"IMPAIRMENT ADJUSTMENT" means, for any period, impairment loss as determined in accordance with the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 144.
"INCLUDED UK WITHHOLDING TAXES" is defined in SECTION 3.04(a).
"INDEBTEDNESS" means, as applied to any Person, at any time, without duplication, (a) all indebtedness, obligations or other liabilities of such Person (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, and any past due accrued interest, fees and charges relating thereto, (ii) in respect of obligations (A) to redeem, repurchase or exchange for cash any Securities of such Person or (B) to pay cash dividends (or equivalent cash distributions) in respect of any Capital Stock (but only to the extent such dividends have been declared), (iii) with respect to letters of credit issued for such Person's account, (iv) to pay the deferred purchase price of property or services, except accounts payable and accrued expenses arising in the ordinary course of business, (v) in respect of Capital Leases, (vi) which are Accommodation Obligations, (vii) under warranties and indemnities; or (viii) under conditional sale or other title retention agreements relating to property purchased by such Person; (b) all indebtedness, obligations or other liabilities of such Person or others secured by a Lien on any property of such Person, whether or not such indebtedness, obligations or liabilities are assumed by such Person, all as of such time; (c) the fair market value, as determined in accordance with GAAP, of all indebtedness, obligations or other liabilities of such Person in respect of Interest Rate Contracts and Currency Agreements, net of liabilities owed to such Person by the counterparties thereon; (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption; and (e) all contingent Contractual Obligations with respect to any of the foregoing.
"INDEMNIFIED MATTER" is defined in SECTION 14.03.
"INDEMNITEE" is defined in SECTION 14.03.
"INDEPENDENT QUALIFIED PARTY" means an investment banking firm, accounting firm or appraisal firm of national standing; provided, however, that such firm is not an Affiliate of any Borrower.
"ING WORKING CAPITAL LINE" means that certain unsecured working capital facility in a principal amount not to exceed 7,000,000 Euros provided by ING Bank N.V. to the
Netherlands Borrower pursuant to that certain letter dated January 14, 2000, between ING Bank N.V. and the Netherlands Borrower, as amended by that certain letter dated November 6, 2000, as amended by that certain release dated on or before the Closing Date, in form and substance satisfactory to the Administrative Agent, as the same may be refinanced or replaced, provided that such refinancing or replacement is, taken as a whole, on terms no less favorable to the Netherlands Borrower than the terms of, the ING Working Capital Line prior to such replacement or refinancing; provided, further that if such refinancing or replacement is in an aggregate principal amount greater than 7,000,000 Euros, any excess amounts shall only be permitted as allowed in accordance with SECTION 9.01(q).
"INITIAL PROJECTIONS" means the financial projections presented to the Administrative Agent and the Lenders on April 5, 2002, with respect to NMHG Holding and its Subsidiaries delivered by NMHG Holding to the Administrative Agent on or prior to the Closing Date, attached as EXHIBIT J hereto.
"INTER-BORROWER INDEBTEDNESS" is defined in SECTION 13.08.
"INTERBANK RATE" means, for any period, (a) in respect of Loans denominated in Dollars, the Federal Funds Rate, and (b) in respect of Loans denominated in a Specified Foreign Currency, the Overdraft Rate.
"INTEREST PERIOD" is defined in SECTION 4.02(a).
"INTEREST RATE CONTRACT" means any interest rate exchange, swap, collar, future, protection, cap, floor or similar agreements providing interest rate protection.
"INTEREST RATE CONTRACT EXPOSURE" means, with respect to any Borrower at any time and from time to time, an aggregate amount equal to the then pre-settlement risk of such Borrower (determined by the Administrative Agent in accordance with the Administrative Agent's (or its applicable Affiliate's) customary practices) of each Interest Rate Contract entered into by such Borrower and the Administrative Agent (or an Affiliate of the Administrative Agent) on or after the Closing Date for the remaining term and volume of such Interest Rate Contract, disregarding (subject to the immediately succeeding sentence) any such Interest Rate Contract with respect to which the pre-settlement risk of such Borrower at such time is positive. If (a) such Borrower is a party to more than one Interest Rate Contract with the same counterparty and (b) such Borrower and such counterparty have entered into a netting agreement in form and substance satisfactory to the Administrative Agent with respect to such Interest Rate Contracts, then the pre-settlement risk of such Borrower and such counterparties at such time (determined by the Administrative Agent in accordance with the Administrative Agent's (or its applicable Affiliate's) customary practices) under such Interest Rate Contracts shall be netted against one another in determining such Borrower's aggregate Interest Rate Contract Exposure (it being understood and agreed that if any such netting of Interest Rate Contracts results in a positive net pre-settlement risk to such Borrower, such net pre-settlement risk shall be disregarded in the calculation of such Borrower's aggregate Interest Rate Contract Exposure).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, any successor statute and any regulations or guidance promulgated thereunder.
"INVENTORY" means, with respect to any Person, all of such Person's present and future (a) inventory (as defined in the Uniform Commercial Code or in any similar statute of England and Wales, Scotland, Northern Ireland or any other relevant jurisdiction, or any political subdivision thereof) (including unbilled accounts receivable), (b) goods, merchandise and other personal Property furnished or to be furnished under any contract of service or intended for sale or lease, and all goods consigned by such Person and all other items which have previously constituted Equipment but are then currently being held for sale or lease in the ordinary course of such Person's business, (c) raw materials, work-in-process and finished goods, (d) materials and supplies of any kind, nature or description used or consumed in such Person's business or in connection with the manufacture, production, packing, shipping, advertising, finishing or sale of any of the Property described in CLAUSES (A) through (D) above, (e) goods in which such Person has a joint or other interest to the extent of such Person's interest therein or right of any kind (including, without limitation, goods in which such Person has an interest or right as consignee), and (f) goods which are returned to or repossessed by such Person; in each case whether in the possession of such Person, a bailee, a consignee, or any other Person for sale, storage, transit, processing, repair, use or otherwise, and any and all documents for or relating to any of the foregoing.
"INVENTORY ADVANCE RATE" means:
(a) with respect to the Eligible Domestic Inventory, at no time greater than 80.0%, as each such rate may be increased or decreased from time to time by the Administrative Agent in its sole discretion, exercised in accordance with the Administrative Agent's customary practices, with respect to all or any portion of any category of Eligible Domestic Inventory (as set forth on the Domestic Borrowing Base Certificate), with any change in such rates to be effective five (5) Business Days after written notice thereof from the Administrative Agent to any Borrower; provided, however, that the Administrative Agent may increase such rates above the Original Inventory Advance Rates based on an independent third party appraisal of the Inventory at the time of such increase but in no event in excess of 85.0% of the net orderly liquidation value for such Inventory as set forth in the most recent independent third party appraisal obtained by the Administrative Agent;
(b) with respect to the Eligible Foreign Inventory, at no time greater than 75.0%, as each such rate may be increased or decreased from time to time by the Administrative Agent in its sole discretion, exercised in accordance with the Administrative Agent's customary practices, with respect to all or any portion of any category of Eligible Foreign Inventory (as set forth on the Multicurrency Borrowing Base Certificate), with any change in such rates to be effective five (5) Business Days after written notice thereof from the Administrative Agent to any Borrower; provided, however, that the Administrative Agent may increase such rates above the Original Inventory Advance Rates based on an independent third party appraisal of the Inventory at the time of such increase but in no event in excess of 80.0% of the net orderly liquidation value for such Inventory as set forth in the most recent independent third party appraisal obtained by the Administrative Agent;
and, provided, further, that the Administrative Agent shall not increase any such rates more than five percentage points above the Original Inventory Advance Rates without the consent of all of the Lenders.
"INVESTMENT" means, with respect to any Person, (a) any
purchase or other acquisition by that Person of Securities, or of a beneficial
interest in Securities, issued by, any other Person, (b) any purchase by that
Person of all or a significant part of the assets of a business conducted by
another Person, (c) any loan, advance (other than prepaid expenses, accounts
receivable, advances to employees and similar items made or incurred in the
ordinary course of business), or capital contribution by that Person to any
other Person, including all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business and
(d) any accounts (including, without limitation, any such deposit, cash
collateral and investment accounts) with banks or other financial institutions.
The amount of any Investment shall be the original cost of such Investment, plus
the cost of all additions thereto less the amount of any return of capital or
principal to the extent such return is in cash with respect to such Investment
without any adjustments for increases or decreases in value or write-ups,
write-downs or write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to the functions thereof.
"ISSUE" means, with respect to any Letter of Credit, either to issue, or extend the expiry of, or renew, or increase the amount of, such Letter of Credit, and the terms "ISSUED" or "ISSUANCE" shall have corresponding meanings.
"ISSUING BANK" means Citibank or an Affiliate of Citibank who has agreed to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to SECTION 2.02.
"JOINT ARRANGER" is defined in the preamble.
"JOINT BOOKRUNNER" is defined in the preamble.
"KNOWLEDGE" (and the related term "KNOW") means, with respect to any Borrower's knowledge, the knowledge of a Financial Officer of such Borrower.
"LEASE FINANCE TRANSACTION" means a transaction under which:
(a) a Borrower or Borrower Subsidiary sells a lift truck to a Financial
Institution, (b) such Financial Institution, as lessor, enters into an Operating
Lease with respect to such lift truck with a Borrower or Borrower Subsidiary, as
lessee, and (c) such Borrower or Borrower Subsidiary, as the case may be, as
lessor, enters into an Operating Lease with respect to such lift truck with a
customer, as lessee.
"LEASES" means those leases, tenancies or occupancies entered into by any Borrower or any of the Borrowers' respective Subsidiaries, as tenant, sublessor or sublessee either directly or as the successor in interest to any Borrower or any Affiliates of Borrower.
"LENDER" means, (a) as of the Closing Date, CUSA, Citibank, CSFB and each other institution which is a signatory hereto, and (b) at any other given time each other institution
which is a party hereto as a Lender, whether as a signatory hereto or pursuant to an Assignment and Acceptance.
"LETTER AGREEMENT" means the fee letter dated as of April 3, 2002, from CNAI, SSB and CSFB and accepted by the Domestic Borrowers.
"LETTER OF CREDIT" means any Commercial Letter of Credit or
Standby Letter of Credit Issued for the account of any Borrower pursuant to
SECTION 2.02.
"LETTER OF CREDIT FEE" is defined in SECTION 4.03(a).
"LETTER OF CREDIT OBLIGATIONS" means, at any particular time with respect to any Borrower, the sum of (a) all outstanding Reimbursement Obligations of such Borrower, PLUS (b) the aggregate undrawn face amount of all outstanding Letters of Credit issued for the account of such Borrower (including, without limitation, any Letter of Credit with respect to which, notwithstanding the termination thereof pursuant to its terms, the beneficiary thereunder has a right to make drawings thereunder in accordance with applicable law), PLUS (c) the aggregate face amount of all Letters of Credit requested by such Borrower but not yet issued (unless the request for an unissued Letter of Credit has been denied pursuant to SECTION 2.02). For purposes of determining the amount of Letter of Credit Obligations (or any component thereof) in respect of any Letter of Credit which is denominated in a Specified Foreign Currency, such amount shall equal the Dollar Equivalent of the amount of such currency at the time of determination thereof.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" means, with respect to a Letter of Credit, such form of application therefor and form of reimbursement agreement therefor (whether in a single or several documents, taken together) as the Issuing Bank from which the Letter of Credit is requested may employ in the ordinary course of business for its own account, with such modifications thereto as may be agreed upon by the Issuing Bank and the relevant Borrower and as are not materially adverse (in the reasonable judgment of the Issuing Bank) to the interests of the Lenders; provided, however, in the event of any conflict between the terms hereof and of any Letter of Credit Reimbursement Agreement, the terms hereof shall control.
"LETTER OF CREDIT SUBLIMIT" means, at any particular time (a) with respect to the Domestic Facility, $35,000,000, and (b) with respect to the Multicurrency Facility, $10,000,000.
"LEVERAGE RATIO" means, (a) as of June 30, 2002, the ratio of
(i) Financial Covenant Debt at such date to (ii) two (2) times Adjusted EBITDA
for the two-fiscal-quarter period then ending, (b) as of September 30, 2002, the
ratio of (i) Financial Covenant Debt at such date to (ii) four-thirds (4/3) of
Adjusted EBITDA for the three-fiscal-quarter period then ending and (c) as of
the last day of each fiscal quarter thereafter, the ratio of (i) Financial
Covenant Debt at such date to (ii) Adjusted EBITDA for the four-fiscal-quarter
period then ending.
"LIABILITIES AND COSTS" means all liabilities, obligations, responsibilities, losses, damages, punitive damages, economic damages, consequential damages, treble damages, costs and expenses (including, without limitation, attorney, expert and consulting fees and costs and fees associated with any investigation, feasibility or Remedial Action studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent,
past, present or future, including interest, if any, thereon, including, without limitation, those arising from personal injury, death, intentional, willful or wanton injury, damage or threat to the environment, natural resources or public health or welfare.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale agreement, deposit arrangement, security interest, encumbrance, lien (statutory or other, and including, without limitation, any Environmental Lien), preference, priority, title retention or other security agreement or preferential arrangement (including, without limitation, any negative pledge arrangement and any agreement to provide equal and ratable security) of any kind or nature whatsoever in respect of any property of a Person intended to assure payment of any Indebtedness, obligation or other liability, whether granted voluntarily or imposed by law, and includes the interest of a lessor under a Capital Lease or under any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement or similar notice (other than a financing statement filed by a "true" lessor pursuant to the Uniform Commercial Code or any similar statute of England and Wales, Scotland, Northern Ireland, the Netherlands or any other relevant jurisdiction, or any political subdivision thereof), naming the owner of such property as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction, but does not include the interest of a lessor under an Operating Lease.
"LIFT TRUCK FINANCING GUARANTEE" means guarantees or
repurchase or recourse obligations of a Credit Party, incurred in the ordinary
course of business consistent with past practice, of Indebtedness incurred by a
dealer or customer of a dealer, for the purchase or lease of lift trucks
substantially all of which are manufactured or sold by a Credit Party, the
proceeds of which Indebtedness is used by such dealer or customer primarily to
pay the purchase price of such lift trucks and any related reasonable fees and
expenses (including financing fees); provided, however, that (a)(i) with respect
to lift trucks located in the United States, the Indebtedness so guaranteed is
secured by a perfected first priority Lien on such lift trucks in favor of the
holder of Indebtedness or a Credit Party and (ii) with respect to lift trucks
located outside of the United States, the Indebtedness so guaranteed is secured
by a Lien or other similar security interest to the extent commercially
practicable in the jurisdiction in which such lift trucks are located and (b) if
any Credit Party is required to make payment with respect to such guaranty, such
Credit Party will have the right to either (i) the title to such lift trucks,
(ii) a valid assignment of a perfected first priority Lien or other similar
security interest in the lift trucks or (iii) the net proceeds of any resale of
such lift trucks.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Domestic
Borrower Guaranty, the Multicurrency Borrower Guaranty, each Foreign Guaranty,
the Security Documents, the Letter Agreement, the Letter of Credit Reimbursement
Agreements, the Foreign Working Capital Guaranty, the Collection Account
Agreements, the Multicurrency Concentration Accounts Agreements, the collateral
assignments of the Receivables Sale Agreements, the collateral assignments of
the agreements described in SECTION 9.02(e)(i), and the other instruments,
agreements and written Contractual Obligations executed or delivered pursuant to
SECTION 5.01(a) of this Agreement by any Credit Party or Pledged Entity, any
Currency Agreements to which the Administrative Agent or any Affiliate of the
Administrative Agent is a party, any Interest Rate Contracts to which the
Administrative Agent or any Affiliate of the Administrative Agent is a party,
all other instruments, agreements and written Contractual
Obligations between any Credit Party or Pledged Entity, on the one hand, and any of the Administrative Agent, the Lenders or the Issuing Bank, on the other hand, in each case delivered to either the Administrative Agent, such Lender or such Issuing Bank before, on or after the Closing Date pursuant to or in connection with the transactions (including, without limitation, the cash management arrangements) contemplated by this Agreement, and all other agreements or instruments executed and delivered or to be executed and delivered pursuant hereto or thereto or in connection herewith or therewith or any of the transactions contemplated hereby or thereby, as any of the same may be amended, supplemented or otherwise modified from time to time.
"LOANS" means the Revolving Loans, the Swing Loans and the Overdraft Loans.
"LOCKBOXES" means, collectively, the lockboxes established at the Collection Account Banks for collection of payments in respect of Receivables or other Collateral.
"MARGIN STOCK" means "margin stock" as such term is defined in Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon
(a) the condition (financial or otherwise), performance, properties or prospects
of any Borrower, or the Borrowers and their Subsidiaries taken as a whole, (b)
the ability of any of the Credit Parties to perform their respective obligations
under the Loan Documents or (c) the ability of the Lenders, the Issuing Bank or
the Administrative Agent to enforce any of the Loan Documents.
"MATERIAL FOREIGN ACCOUNT DEBTOR JURISDICTION" is defined in
SECTION 8.10(b).
"MAXIMUM CREDIT AMOUNT" means, at any particular time, an amount equal to:
(i) with respect to the Domestic Facility, (A) the lesser of
(1) the Domestic Commitment in effect at such time and (2) the Domestic
Borrowing Base, MINUS (B) the amount of any Availability Reserves
applicable to the Domestic Facility in effect at such time, MINUS (C)
the aggregate amount of the Currency Agreement Exposure of the Domestic
Borrowers at such time, MINUS (D) the aggregate amount of the Interest
Rate Contract Exposure of the Domestic Borrowers at such time;
(ii) with respect to the Multicurrency Facility, (A) the
lesser of (1) the Multicurrency Commitment in effect at such time and
(2) the Multicurrency Borrowing Base at such time, minus (B) the amount
of any Availability Reserves applicable to the Multicurrency Facility
in effect at such time, MINUS (C) the amount of the Currency Agreement
Exposure of the Multicurrency Borrowers at such time, MINUS (D) the
amount of the Interest Rate Contract Exposure of the Multicurrency
Borrowers at such time; and
(iii) with respect to each Subfacility, the applicable Subfacility Commitment in effect at such time.
"MAXIMUM SWING LOAN AMOUNT" is defined in SECTION 2.01(b).
"MB CONTRIBUTION AMOUNT" is defined in SECTION 13.06(b).
"MIS" means computerized management information system for recording and maintenance of information regarding purchases, sales, aging, categorization, and locations of Inventory, creation and aging of Receivables, and accounts payable (including agings thereof).
"MULTICURRENCY BORROWER GUARANTY" means (a) the Multicurrency
Borrower Guaranty dated as of the Closing Date duly executed and delivered to
the Administrative Agent by each of the Domestic Credit Parties with respect to
the Multicurrency Obligations, substantially in the form and substance of
EXHIBIT G-2 attached hereto, and (b) each Multicurrency Borrower Guaranty,
substantially in the form and substance of EXHIBIT G-2 attached hereto, executed
and delivered by a Domestic Subsidiary to the Administrative Agent pursuant to
SECTION 9.07, as each of the same may be further amended, supplemented or
otherwise modified from time to time.
"MULTICURRENCY BORROWERS" means the UK Borrower and the Netherlands Borrower.
"MULTICURRENCY BORROWING BASE" means, as of any date of determination, with respect to the Multicurrency Borrowers, an amount equal to the sum of:
(a) up to 80.0% (or such other higher percentage as agreed to by all Lenders in their sole discretion) of the Collateral Value of Eligible Foreign Receivables PLUS
(b) the least of:
(i) the Multicurrency Inventory Sublimit,
(ii) up to 60.0% of the Collateral Value of the aggregate Eligible Foreign Inventory, and
(iii) the sum of the products of the Inventory Advance Rate multiplied by the Collateral Value of each category of Eligible Foreign Inventory set forth on the Multicurrency Borrowers' Borrowing Base Certificate, PLUS
(c) the Dollar Equivalent of cash, overnight investments and marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government with a tenor of less than one year deposited by or on behalf of any Multicurrency Borrower and held from time to time in the Multicurrency Concentration Accounts or Multicurrency Cash Collateral Accounts, in each case subject to the legal or equitable Lien of the Administrative Agent.
For purposes of this definition, the Collateral Values of Inventory shall be determined after deduction of all Eligibility Reserves then effective with respect to such items.
"MULTICURRENCY CASH COLLATERAL ACCOUNTS" means the Euro Cash
Collateral Account and the Sterling Cash Collateral Account.
"MULTICURRENCY COMMITMENT" means, as to each Multicurrency Lender, the commitment to make Multicurrency Loans (including Multicurrency Loans required to be made pursuant to SECTION 2.01(h) and 2.02(e)(ii) to the Multicurrency Borrowers), to participate in Letters of Credit Issued for the account of the Multicurrency Borrowers, and to participate in Domestic Loans and fund such participations, in each case pursuant to SECTION 2.03, in an aggregate principal amount (after giving effect to all participations purchased by and from such Multicurrency Lender) outstanding not to exceed the amount on the Closing Date set forth opposite such Multicurrency Lender's name on SCHEDULE 1.01.1 under the caption "Multicurrency Commitment," as such amount may be reduced or modified pursuant to this Agreement; provided, however, at no time shall the aggregate Multicurrency Commitments of all Multicurrency Lenders exceed the Dollar Equivalent of $70,000,000 less any permanent reduction made pursuant to SECTION 3.01; provided, further, at the Closing Date the aggregate Multicurrency Commitments shall equal $55,000,000; provided, further, at no time shall the aggregate Multicurrency Commitments and the aggregate Domestic Commitments exceed $175,000,000.
"MULTICURRENCY CONCENTRATION ACCOUNTS" means (a) with respect to deposits denominated in Dollars, that certain account of the UK Borrower, number 10124648 maintained with Citibank in London, England, (b) with respect to deposits denominated in Euros, that certain account of the UK Borrower, number 10124664 maintained with Citibank in London, England, and (c) with respect to deposits in Sterling, that certain account of the UK Borrower, number 102456 maintained with Citibank in London, England, in each case, operated in accordance with the Multicurrency Concentration Accounts Agreements.
"MULTICURRENCY CONCENTRATION ACCOUNTS AGREEMENTS" means (a) that certain Multicurrency Concentration Accounts Agreement dated as of the Closing Date among Citibank in London, England and the UK Borrower, as amended, restated, supplemented or otherwise modified from time to time, (b) that certain Multicurrency Concentration Accounts Acknowledgment of Charge and Agreement dated as of the Closing Date among Citibank in London, England and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time, (c) that certain Multicurrency Concentration Accounts Charge dated as of the Closing Date among the UK Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.
"MULTICURRENCY FACILITY" means the facility provided by (a) the Multicurrency Lenders to make Multicurrency Loans to the Multicurrency Borrowers, (b) the Overdraft Line Bank to make Overdraft Loans to the Multicurrency Borrowers and (c) the Issuing Bank to Issue Letters of Credit for the account of the Multicurrency Borrowers, in each case on and after the Closing Date in accordance with the terms and conditions contained in this Agreement and includes the Euro Subfacility and the Sterling Subfacility.
"MULTICURRENCY INVENTORY SUBLIMIT" means $17,500,000.
"MULTICURRENCY LENDER" means each Lender designated as such on SCHEDULE 1.01.1 under the caption "Multicurrency Commitment" and each other institution which is party hereto as a Multicurrency Lender pursuant to an Assignment and Acceptance.
"MULTICURRENCY LIBO RATE" means, with respect to any Interest Period applicable to a Borrowing of Fixed Rate Loans under the Multicurrency Facility denominated in a Specified Foreign Currency:
(i) the interest rate per annum equal to (A) the offered
quotations for deposits in the Specified Foreign Currency of the
relevant Borrowing for a period comparable to the relevant Interest
Period which appears on Dow Jones Markets Service (formerly known as
Telerate) Page 3750 or Dow Jones Markets Service Page 3740 (as
appropriate) (or such other page as may replace Page 3750 or Page 3740,
as applicable, or the service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for
deposits in the Specified Foreign Currency concerned) at or about 11:00
a.m. (London time) on the applicable Fixed Rate Determination Date; or
(B) if no such interest rate determined under clause (A) is available,
the arithmetic mean (rounded upward to the nearest one-sixteenth of one
percent (0.0625%)) of the interest rates, as supplied to Citibank at
its request, quoted by the "London Reference Banks" to leading banks in
the London interbank market at or about 11:00 a.m. (London time) on the
applicable Fixed Rate Determination Date for the offering of deposits
in the Specified Foreign Currency of the relevant Borrowing for a
period comparable to the relevant Interest Period; PLUS ----
(ii) in the case of Fixed Rate Loans denominated in Sterling, the amount (expressed as a percentage) of "associated reserve costs" being imposed by the Bank of England on the relevant Fixed Rate Determination Date. The Multicurrency LIBO Rate shall be adjusted automatically on and as of the effective date of any change in the amount of associated reserve costs so imposed.
"MULTICURRENCY LOAN" is defined in SECTION 2.01(a).
"MULTICURRENCY LOAN NOTES" means one or more promissory notes payable to the Multicurrency Lenders evidencing the Multicurrency Borrowers' Obligations to repay the Multicurrency Loans, substantially in the form and substance of EXHIBIT Q-2 attached hereto.
"MULTICURRENCY OBLIGATIONS" means the Obligations of the Foreign Credit Parties under the Multicurrency Facility.
"MULTICURRENCY PAYMENT ACCOUNT" means that account maintained at Citibank in London, England, in the name of the Administrative Agent, into which payments in respect of Obligations shall be made, as set forth in the Multicurrency Concentration Accounts Agreements.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by any Borrower or any ERISA Affiliate.
"NET CASH PROCEEDS OF ISSUANCE OF EQUITY SECURITIES OR INDEBTEDNESS" means (a) net cash proceeds (including cash, equivalents readily convertible into cash, and such proceeds of any notes received as consideration or any other non-cash consideration) received by any
Credit Party or any direct Subsidiary of any Borrower at any time after the
Closing Date on account of the issuance of (i) equity Securities of any Borrower
or any of its Subsidiaries (other than Capital Stock of a Subsidiary issued to
any Credit Party) or (ii) Indebtedness (other than Indebtedness permitted under
SECTION 9.01 (other than SECTION 9.01(m)) of any Credit Party, or any direct
Subsidiary of any Borrower, in each case net of all transaction costs and
underwriters' discounts with respect thereto; and (b) proceeds received by any
Borrower at any time after the Closing Date as a contribution to its capital on
account of the issuance of equity Securities of such Borrower.
"NET CASH PROCEEDS OF SALE" means, (a) proceeds received by
any Credit Party, or any direct Subsidiary of any Borrower in cash (including
cash, equivalents readily convertible into cash, and such proceeds of any notes
received as consideration of any other non-cash consideration) from the sale,
assignment or other disposition of any Property (including any Sale and
Leaseback Transaction but not the lease or license of any Property), other than
sales permitted under CLAUSES (a), (c), (d), (e) and (f) of SECTION 9.02, net of
(i) the costs of sale, assignment or other disposition, (ii) any income,
franchise, transfer or other tax liability arising from such transaction and
(iii) amounts applied to the repayment of Indebtedness (other than the
Obligations) secured by a Lien permitted by SECTION 9.03 on the asset disposed
of, if such net proceeds arise from any individual sale, assignment or other
disposition or from any group of related sales, assignments or other
dispositions; (b) proceeds which constitute or are deemed "Net Available Cash"
from an "asset Disposition" (in each case as defined by the Senior Note
Indenture); and (c) to the extent provided in SECTION 8.13), proceeds of
insurance on account of the loss of or damage to any such Property or
Properties, and payments of compensation for any such Property or Properties
taken by condemnation or eminent domain.
"NETHERLANDS BORROWER" is defined in the preamble.
"NFS" means NMHG Financial Services, Inc., a Delaware corporation in which NMHG holds a minority interest.
"NMHG" is defined in the preamble.
"NMHG HOLDING" is defined in the preamble.
"NMHG MAURITIUS ENTITIES" means NMHG Mauritius, Shanghai Hyster Forklift Ltd., Shanghai Hyster International Trading Co., Ltd. and Hyster (H.K.) Limited.
"NON-COLLATERAL OPERATING LEASE" is defined in SECTION
9.10(b).
"NON PRO RATA FUNDING" is defined in SECTION 3.02(b)(iv).
"NON-USD CURRENCY" is defined in SECTION 14.21(a).
"NOTES" means, collectively, the Domestic Loan Notes, the Multicurrency Loan Notes, the Swing Loan Note, and all amendments thereto, replacements thereof and substitutions therefor.
"NOTICE OF BORROWING" means a notice substantially in the form of (a) EXHIBIT K-1 attached hereto for Borrowings under the Domestic Facility and (b) EXHIBIT K-2 attached hereto for Borrowings under the Multicurrency Facility.
"NOTICE OF CONTINUATION/CONVERSION" means a notice
substantially in the form of EXHIBIT L attached hereto.
"NOTICE OF LETTER OF CREDIT ISSUANCE" means a notice substantially in the form of (a) EXHIBIT M-1 attached hereto for Letters of Credit Issued under the Domestic Facility and (b) EXHIBIT M-2 attached hereto for Letters of Credit Issued under the Multicurrency Facility.
"NPL" is defined in SECTION 6.01(o).
"OBLIGATIONS" means, to the extent arising hereunder, under
the Notes or under any other Loan Document, all Loans, all Overdraft Loans,
Protective Advances, advances, debts, liabilities, obligations, covenants and
duties owing by any Credit Party to the Administrative Agent, any Lender, the
Issuing Bank, any Affiliate of the Administrative Agent, any Lender or the
Issuing Bank, or any Person entitled to indemnification pursuant to SECTION
14.03, of any kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether or not for the payment of money,
whether arising (a) under or in connection with (i) a Currency Agreement with
the Administrative Agent, any Lender or any Affiliate of the Administrative
Agent or any Lender, (ii) an Interest Rate Contract with the Administrative
Agent, any Lender or any Affiliate of the Administrative Agent or any Lender, or
(iii) the Concentration Accounts, the Cash Collateral Accounts or any cash
management services provided by the Administrative Agent or any Affiliate of the
Administrative Agent, including, without limitation, those described in SECTION
3.06(d), or (b) by reason of (i) an extension of credit, (ii) opening or
amendment of a Letter of Credit or payment of any draft drawn thereunder, (iii)
loan, (iv) guaranty or (v) indemnification or (c) in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges, foreign
exchange costs, expenses, fees, attorneys' fees and disbursements and any other
sum chargeable to any Credit Party hereunder or under any other Loan Document
and the obligations of the Borrowers to cash collateralize the Letter of Credit
Obligations.
"OBLIGEE" and "OBLIGEES" are defined in SECTION 12.09(e).
"OFFICER'S CERTIFICATE" means, as to a corporation, a certificate executed on behalf of such corporation by an officer or director of such corporation and, with respect to any Credit Party, substantially in the form of EXHIBIT N attached hereto.
"OPERATING LEASE" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which is not a Capital Lease.
"OPTIONAL CURRENCY" means (a) with respect to the Domestic Borrowers or Domestic Lenders, Dollars, and (b) with respect to the Multicurrency Borrowers or Multicurrency Lenders, the Specified Foreign Currency.
"ORIGINAL CURRENCY" is defined in SECTION 14.21(b).
"ORIGINAL INVENTORY ADVANCE RATES" means the Inventory Advance Rates in effect on the Closing Date.
"OTHER CURRENCY" is defined in SECTION 14.21(b).
"OVERDRAFT LINE BANK" means Citibank, in its individual capacity or, in the event CNAI is not the Administrative Agent, the Administrative Agent (or any Affiliate of the Administrative Agent designated by the Administrative Agent and approved by the Multicurrency Borrowers), in its individual capacity.
"OVERDRAFT LINE COMMITMENT" means $15,000,000.
"OVERDRAFT LOANS" is defined in SECTION 2.01(c)(i).
"OVERDRAFT RATE" means, for any period, a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the rate of interest designated and published in London by (a) with respect to Overdraft Loans provided to the Sterling Overdraft Accounts, the principal office of Bank of England in London, England as the "base rate" applicable to Sterling, and (b) with respect to Overdraft Loans provided to the Euro Overdraft Accounts, the principal office of the European Central Bank in London, England, as the "base rate" applicable to Euros.
"OVERDRAFT REDUCTION AMOUNT" is defined in SECTION
2.01(c)(iii).
"OVERDRAFT SETTLEMENT DATE" is defined in SECTION 2.01(h).
"PAID IN FULL", "PAY IN FULL" and "PAYMENT IN FULL" means, with respect to the Obligations of any Credit Party, (a) with respect to each Letter of Credit issued for the account of such Borrower, the termination and surrender for cancellation of such Letter of Credit, (b) with respect to (i) each Currency Agreement with the Administrative Agent or any Affiliate of the Administrative Agent to which such Credit Party is a counterparty, and (ii) each Interest Rate Contract with the Administrative Agent or any Affiliate of the Administrative Agent to which such Credit Party is a counterparty, the delivery of Cash Collateral in such form as requested by the Administrative Agent (and, in the case of Letters of Credit, the applicable Issuing Bank) for deposit in the appropriate Cash Collateral Account, together with such endorsements, and execution and delivery of such documents and instruments as the Administrative Agent may request in order to perfect or protect the Administrative Agent's Lien with respect thereto, in an aggregate principal amount equal to the then outstanding Currency Agreement Exposure and Interest Rate Contract Exposure, respectively, with respect thereto and (c) with respect to all other Obligations (other than, as of any date of payment, Obligations which are contingent and unliquidated and not then due and owing and which pursuant to SECTION 14.09, survive the making and repayment of the Loans, the issuance and discharge of Letters of Credit hereunder and the termination of the Commitments hereunder), the indefeasible payment in full in cash of such Obligations.
"PARENT" means NACCO Industries, Inc., a Delaware corporation.
"PARTICIPANT" is defined in SECTION 14.01(h).
"PARTICIPATION AMOUNT" is defined in SECTION 2.03(b).
"PARTICIPATION SETTLEMENT DATE" is defined in SECTION 2.03(b).
"PAYING DOMESTIC BORROWER" is defined in SECTION 13.06(a).
"PAYING MULTICURRENCY BORROWER" is defined in SECTION
13.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation and any Person succeeding to the functions thereof.
"PERMITS" means any permit, approval, authorization, license, variance, exemption, no-action letter or permission required from a Governmental Authority under an applicable Requirement of Law.
"PERMITTED EXISTING ACCOMMODATION OBLIGATIONS" means those Accommodation Obligations of the Borrowers and their Subsidiaries identified as such on SCHEDULE 1.01.4.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrowers and their Subsidiaries identified as such on SCHEDULE 1.01.5.
"PERMITTED EXISTING INVESTMENTS" means those Investments identified as such on SCHEDULE 1.01.6.
"PERMITTED EXISTING LIENS" means the Liens on assets of each Borrower and Borrower Subsidiary identified as such on SCHEDULE 1.01.7.
"PERMITTED HOLDERS" means, collectively, the parties to the Stockholders' Agreement, dated as of March 15, 1990, as amended from time to time, by and among National City Bank, (Cleveland, Ohio), as depository, the Participating Stockholders (as defined therein) and the Parent; provided, however, that for purposes of this definition only, the definition of Participating Stockholders contained in the Stockholder's Agreement shall be such definition in effect on the Closing Date.
"PERMITTED MULTICURRENCY REFINANCING" is defined in SECTION
9.01(m).
"PERSON" means any natural person, corporation, limited partnership, limited liability company, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or any Governmental Authority.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA in respect of which any Borrower or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means (a) the Pledge Agreement dated as of the Closing Date by and between each Domestic Credit Party and the Administrative Agent, substantially in the form and substance of EXHIBIT O attached hereto, (b) the Pledge Agreements dated as of the Closing Date by the Foreign Credit Parties specified on the Closing List in favor of the Administrative Agent, and (c) all other pledge agreements executed by any Borrower or Borrower Subsidiary in accordance with SECTION 9.07, as each of the same may be further amended, supplemented or otherwise modified from time to time.
"PLEDGED ENTITY" means any Borrower or Borrower Subsidiary all or a portion of the Capital Stock of which has been or is required to be pledged pursuant to a Pledge Agreement in accordance with the terms of this Agreement.
"PRO FORMA" means the unaudited pro forma opening balance sheet of NMHG Holding and its Subsidiaries attached hereto as EXHIBIT P, prepared in accordance with GAAP, dated as of March 31, 2002, and giving effect to the extensions of credit contemplated hereby and by the Senior Notes.
"PRO RATA SHARE" means (a) with respect to any Lender and any
Credit Facility, the percentage obtained by dividing (i) such Lender's
Commitment in respect of such Credit Facility at such time by (ii) the aggregate
amount of all Commitments in respect of such Credit Facility at such time and
(b) with respect to any Lender and the Credit Facilities taken as a whole, the
percentage obtained by dividing (i) such Lender's Commitment in respect of all
Credit Facilities at such time by (ii) the aggregate amount of all Commitments
at such time; provided, however, if all of the Commitments are terminated
pursuant to the terms hereof, then "PRO RATA SHARE" means the percentage
obtained by dividing (x) the aggregate amount of such Lender's Credit Facility
Outstandings under all Credit Facilities by (y) the aggregate amount of all
Credit Facility Outstandings.
"PROCESS AGENT" is defined in SECTION 14.17.
"PROPERTY" means any Real Property or personal property, plant, building, facility, structure, underground storage tank or unit, Equipment, Inventory, General Intangible, Receivable, or other asset owned, leased or operated by any Borrower or any of its Subsidiaries, as applicable (including any surface water thereon or adjacent thereto, and soil and groundwater thereunder).
"PROTECTIVE ADVANCE" is defined in SECTION 12.09.
"PURCHASE MONEY LIENS" is defined in SECTION 9.01(d).
"REAL PROPERTY" means, with respect to any Person, all of such Person's present and future right, title and interest (including, without limitation, any leasehold estate) in real property.
"RECEIVABLES" means, with respect to any Person, all of such Person's present and future (a) accounts (as defined in the Uniform Commercial Code or in any similar statute of England and Wales, Scotland, Northern Ireland, the Netherlands or any other relevant
jurisdiction, or any political subdivision thereof), (b) accounts receivable,
(c) rights to payment for goods sold or leased or for services rendered, whether
or not earned by performance (with respect to any Foreign Credit Party,
irrespective of whether such goods were sold by the UK Borrower or by any other
Foreign Credit Party), (d) all chattel paper, (e) all rights in any merchandise
or goods which any of the same may represent, and (f) all rights, title,
security, insurance, letters of credit, guaranties and other supporting
obligations with respect to each of the foregoing, including, without
limitation, any right of stoppage in transit.
"RECEIVABLES SALE AGREEMENTS" shall mean (a) the agreements between the Netherlands Borrower and the UK Borrower providing for the daily sale and assignment of all Receivables originated by the Netherlands Borrower to the UK Borrower and (b) the agreements, if any, between NACCO Materials Handling S.R.L. (or a successor thereto) and the UK Borrower providing for the daily sale and assignment of all Receivables originated by NACCO Materials Handling S.R.L. (or such successor) to the UK Borrower, in each case, in form and substance satisfactory to the Administrative Agent.
"RECEIVABLES SUBSIDIARY" means a wholly-owned Subsidiary of the UK Borrower that is structured to be "bankruptcy remote" and that engages in no activities other than in connection with the purchase and financing of Receivables from one or more of the Foreign Credit Parties and execution, delivery and performance of the Loan Documents and transactions contemplated thereby.
"REFINANCED INDEBTEDNESS" means the Indebtedness of any Borrower (including obligations under any receivables factoring or discounting facility) which is to be refinanced, repaid, retired or defeased out of the proceeds of the Loans made on the Closing Date and identified as such on SCHEDULE 1.01.8.
"REGISTER" is defined in SECTION 14.01(c).
"REGULATION A" means Regulation A of the Federal Reserve Board as in effect from time to time.
"REGULATION D" means Regulation D of the Federal Reserve Board as in effect from time to time.
"REGULATION U" means Regulation U of the Federal Reserve Board as in effect from time to time.
"REGULATION X" means Regulation X of the Federal Reserve Board as in effect from time to time.
"REIMBURSEMENT DATE" is defined in SECTION 2.02(d)(i)(A).
"REIMBURSEMENT OBLIGATIONS" means, as to any Borrower, the aggregate non-contingent reimbursement or repayment obligations of such Borrower with respect to amounts drawn under Letters of Credit Issued for the account of such Borrower.
"RELATED BUSINESS" means any business in which any Borrower or any Borrower Subsidiary was engaged on the Closing Date and any business related, ancillary or complementary to any business of any Borrower or any Borrower Subsidiary in which any Borrower or any Borrower Subsidiary was engaged on the Closing Date or a reasonable extension, development or expansion of the business in which any Borrower or any Borrower Subsidiary was engaged as of the Closing Date.
"RELATED PARTIES" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.
"RELEASE" means any active or passive release, spill, emission, leaking, pumping, injection, deposit, disposal, pouring, dumping, abandonment, discards of barrels, containers or other receptacles, including the active or passive discharge, dispersal, leaching or migration of Contaminants into the indoor or outdoor environment or into or out of any Property.
"REMEDIAL ACTION" means actions required to (a) clean up, remove, treat or in any other way address Contaminants in the indoor or outdoor environment; (b) prevent the Release or threat of Release or minimize the further Release of Contaminants; or (c) investigate and determine if a remedial or other response is needed and to design such a response and post-remedial investigation, monitoring, operation and maintenance and care.
"RENTAL EQUIPMENT OPERATING LEASE" is defined in SECTION
9.10(b).
"REPLACEMENT PROCEEDS" means the amount of (a) proceeds of insurance paid on account of the loss of or damage to any Property and awards of compensation for Property taken by condemnation or eminent domain to the extent actually used to replace, rebuild or restore the Property so lost, damaged or taken, provided that (i) a Borrower shall have delivered written notice to the Administrative Agent that it or its applicable Subsidiary intends to so replace, rebuild or restore such Property and (ii) such Borrower or such applicable Subsidiary of the Borrower replaces or commences the restoration or rebuilding of such Property within 365 days after the Administrative Agent's receipt of the proceeds of such insurance payment or condemnation award and (b) insurance paid on account of a business interruption occurrence to the extent actually used in the restoration or conduct of the business interrupted.
"REPORTABLE EVENT" means any of the events described in
Section 4043 of ERISA excluding those events for which the requirement of notice
has been waived by the PBGC.
"REQUIRED CROSS-BORDER OPINIONS" is defined in SECTION
8.10(b).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and bylaws or other organizational or governing documents of such Person, and any law, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject including, without limitation, the Internal Revenue Code, the Securities Act, the Securities Exchange Act, Regulations U and X, ERISA, the Fair Labor Standards Act and any similar statute of any foreign government or any political subdivision thereof and any
certificate of occupancy, zoning ordinance, building, or land use requirement or Permit or labor or employment rule or regulation, including Environmental, Health or Safety Requirements of Law.
"REQUISITE LENDERS" means, at any time, Lenders holding, in the aggregate, at least fifty-one percent (51%) of the then aggregate amount of the Commitments in effect at such time; provided, however, that, in the event any of the Lenders is then a Defaulting Lender, "REQUISITE LENDERS" means the Lenders (excluding Defaulting Lenders (and their Affiliates who are Lenders)) whose Pro Rata Shares of the Credit Facilities represent at least fifty-one percent (51%) of the aggregate Pro Rata Shares of such Lenders; provided, however, that, in the event that the Commitments have been terminated pursuant to the terms hereof, "REQUISITE LENDERS" means the Lenders (without regard to whether any Lenders are Defaulting Lenders) whose aggregate ratable shares (stated as a percentage) of the aggregate outstanding principal balance of all Credit Facility Outstandings are at least fifty-one percent (51%).
"RESTRICTED PAYMENT" means (a) any dividend or other distribution, direct or indirect, on account of any shares of, or interests in, any class of Capital Stock of any Borrower or any of their Subsidiaries now or hereafter outstanding, except a dividend (or equivalent distribution) payable solely in (i) shares of, or options or warrants (which do not contain put or call rights) with respect to, that class of stock and/or (ii) shares of any class of stock which is junior to that class of stock, provided that such shares do not constitute Indebtedness, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of, or interests in, any class of Capital Stock of any Borrower or any of their Subsidiaries now or hereafter outstanding, (c) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of, or interests in, any class of Capital Stock of any Borrower or any of their Subsidiaries now or hereafter outstanding, (d) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to any Indebtedness which by its terms is subordinated to the Obligations, and (e) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to (i) the Senior Notes, (ii) the ING Working Capital Line or (iii) Indebtedness arising from intercompany loans between any Borrower or Borrower Subsidiary and any other Borrower or Borrower Subsidiary.
"REVOLVING LOAN" is defined in SECTION 2.01(a).
"SALE AND LEASEBACK TRANSACTION" means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold or transferred by such Person and is thereafter leased back from the purchaser thereof by such Person.
"SCHEDULED PRINCIPAL PAYMENTS" means, for any period, the sum of the amounts for such period of scheduled payments of principal on the Indebtedness of NMHG Holding and its Subsidiaries (including the principal component of Capital Lease obligations).
"SECURITIES" means any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or any certificates of interest, shares, or participation in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing, but shall not include any evidence of the Obligations.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, and any successor statute.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
"SECURITY DOCUMENTS" means the Pledge Agreements, the Domestic Security Agreement, the Trademark Security Agreements, the Collection Account Agreements, the Foreign Security Agreements, and any other agreement, document or instrument that creates a Lien on Property of a Credit Party in favor of any Holder, in each case, together with all amendments, restatements, supplements or modifications thereto.
"SELLING DOMESTIC LENDERS" is defined in SECTION 2.03(a).
"SELLING MULTICURRENCY LENDERS" is defined in SECTION 2.03(a).
"SENIOR NOTE INDENTURE" means that certain Indenture between NMHG Holding, each of the Guarantors and U.S. Bank National Association as trustee, dated as of the Closing Date.
"SENIOR NOTES" means the "Notes" and "Exchange Notes" under and as defined in the Senior Note Indenture.
"SOLVENT" means, when used with respect to any Person, that at the time of determination:
(i) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including, without limitation, contingent liabilities); and
(ii) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has capital sufficient to carry on its business as conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
"SPECIFIED FOREIGN CURRENCY" means Euros or Sterling.
"SPOT RATE" means, as of any date of determination with respect to the conversion of an amount in the Original Currency to an Other Currency, the rate of exchange quoted by the Administrative Agent (or its Affiliate) in New York, New York (if the Original Currency is Dollars), or London, England (if the Original Currency is a Specified Foreign Currency), at 11:00 a.m. (New York time or London time, as applicable) on such date of determination to prime banks in New York, New York, or London, England, as appropriate, for the spot purchase in the foreign exchange market of such city of such amount of the Original Currency with such Other Currency.
"SSB" is defined in the preamble.
"STANDBY LETTER OF CREDIT" means any Letter of Credit Issued by an Issuing Bank pursuant to SECTION 2.02 for the account of a Domestic Borrower which is not a Commercial Letter of Credit.
"STERLING" means the lawful currency of the United Kingdom.
"STERLING CASH COLLATERAL ACCOUNT" means an account designated as such with respect to the Multicurrency Borrowers and established by the Administrative Agent maintained with Citibank in London, England, for account funds denominated in Sterling.
"STERLING LOANS" means Multicurrency Loans denominated in Sterling and Protective Advances denominated in Sterling, and, in each case, advanced to a Multicurrency Borrower.
"STERLING OVERDRAFT ACCOUNTS" means account number 48526 maintained with Citibank in London, England, in the name of the Netherlands Borrower and account number 8022232 maintained with Citibank in London, England, in the name of the UK Borrower.
"STERLING OVERDRAFT LIMIT" means $12,500,000, as may be adjusted pursuant to SECTION 2.01(c)(iii).
"STERLING SUBFACILITY" means the subfacility of the Multicurrency Facility for which Borrowings are only available in Sterling.
"SUBFACILITIES" means the Euro Subfacility and the Sterling Subfacility.
"SUBFACILITY COMMITMENT" means (i) with respect to the Euro Subfacility, $17,500,000 and (ii) with respect to the Sterling Subfacility, $37,500,000, as each may be adjusted in relative amounts pursuant to SECTION 3.01(c).
"SUBFACILITY REALLOCATION REQUEST" is defined in SECTION
3.01(c).
"SUBFACILITY REDUCTION AMOUNT" is defined in SECTION 3.01(c).
"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 or controlled by such Person, one or more of the other subsidiaries of such Person or any combination thereof.
"SWING LOAN" is defined in SECTION 2.01(b).
"SWING LOAN BANK" means CUSA, in its individual capacity or, in the event CNAI is not the Administrative Agent, the Administrative Agent (or any Affiliate of the Administrative Agent designated by the Administrative Agent), in its individual capacity.
"SWING LOAN NOTE" means the promissory note payable to the Swing Loan Bank evidencing the Domestic Borrowers' Obligations to repay the Swing Loans made to the Domestic Borrowers, substantially in the form and substance of EXHIBIT Q-3 attached hereto.
"SWING LOAN SETTLEMENT DATE" is defined in SECTION 2.01(g).
"SYNDICATION AGENT" is defined in the preamble.
"TAX SHARING AGREEMENT" means that certain Amended Tax Sharing Agreement, dated as of May 14, 1997, among the affiliated group of corporations, within the meaning of Section 1504(a) of the Internal Revenue Code of which the Parent is the common parent.
"TAXES" is defined in SECTION 3.04(a).
"TERMINATION DATE" means the earlier to occur of (a) the date of termination of the Commitments pursuant to the terms hereof and (b) the third anniversary of the Closing Date.
"TERMINATION EVENT" means (a) a Reportable Event with respect
to any Benefit Plan; (b) the withdrawal of any Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which such Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (c) the imposition of an obligation on any Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA or, with respect to a Foreign Pension Plan, written
notice to the trustees or fiduciaries of, or members in, such plan, or to a
foreign Governmental Authority of an intent to terminate such Foreign Pension
Plan; (d) the institution by the PBGC or any similar foreign Governmental
Authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan;
(e) any event or condition which would reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (f) a foreign Governmental Authority shall appoint
or institute proceedings to appoint a trustee to administer any Foreign Pension
Plan; or (g) the partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"TOTAL BORROWING BASE" means, collectively, the Domestic Borrowing Base and the Multicurrency Borrowing Base.
"TRADEMARK SECURITY AGREEMENTS" means (a) the Trademark Security Agreement dated as of the Closing Date by and between the Domestic Credit Parties and the Administrative Agent substantially in the form of EXHIBIT R attached hereto, (b) each Trademark Security Agreement, if any, dated as of the Closing Date by and between a Foreign Credit Party and the Administrative Agent, and (c) each Trademark Security Agreement required to be delivered by a Borrower Subsidiary pursuant to SECTION 9.07, as each of the same may be further amended, supplemented or otherwise modified from time to time.
"UK BORROWER" is defined in the preamble.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as enacted in the State of New York, as it may be amended from time to time; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the creation, attachment, perfection, priority or enforcement of the Administrative Agents' or Holder's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UNIFORM COMMERCIAL CODE" shall include the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such creation, attachment, perfection, priority or enforcement and for purposes of definitions related to such provisions.
"UNUSED COMMITMENT FEE" is defined in SECTION 4.03(b).
"VOTING STOCK" means, with respect to any Person, shares, securities, limited liability company interests, general or limited partnership interests or other equivalents with respect to any class or classes of Capital Stock of such Person entitling any holder thereof (whether at all times or only so long as no senior class of Capital Stock has voting power by reason of any contingency) (a) in the case of a corporation (or equivalent organization), to vote in the election of members of the board of directors (or the equivalent thereof) of such Person, (b) in the case of a limited liability company, to vote in the election of managers of such Person or to bind or otherwise act as agent for such Person, (c) in the case of a limited partnership, to vote on the admission of the general partner of such Person or to bind or otherwise act as agent for such Person or (iv) in the case of a general partnership, to bind or otherwise act as agent for such Person.
1.02. COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. Any period determined hereunder by reference to a month or months or year or years shall end on the day in the relevant calendar month in the relevant year, if applicable, immediately preceding the date numerically corresponding to the first day of such period, provided that if such period commences on the last day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month during which such period is to end), such period shall, unless otherwise expressly required by the other provisions of this Agreement, end on the last day of the calendar month.
1.03. ACCOUNTING TERMS. Subject to SECTION 14.04, for purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP.
1.04. OTHER DEFINITIONAL PROVISIONS. References to the "preamble", "Articles", "Sections", "subsections", "Schedules" and "Exhibits" shall be to the preamble, Articles, Sections, subsections, Schedules and Exhibits, respectively, of and to this Agreement unless otherwise specifically provided. The words "hereof", "herein", and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
1.05. OTHER TERMS. All other terms contained herein shall, unless the context indicates otherwise, have the meanings assigned to such terms by the Uniform Commercial Code to the extent the same are defined therein.
1.06. PAYMENTS BY THE BORROWERS. Except as expressly set forth
herein to the contrary, (a) all payments made by the Borrowers in respect of
principal and interest on the Loans made under any Credit Facility shall be made
(i) with respect to the Domestic Facility, in Dollars and (ii) with respect to
the Multicurrency Facility, in the Specified Foreign Currency in which such Loan
was made, (b) all payments of Reimbursement Obligations shall be made in Dollars
or the Specified Foreign Currency in which the Letter of Credit under which such
Reimbursement Obligations arise is denominated, and (c) all payments made by
Borrowers in respect of Participation Amounts funded under SECTION 2.03 shall be
made in the Optional Currency in which such Participation Amount was funded.
ARTICLE II
AMOUNTS AND TERMS OF LOANS AND LETTERS OF CREDIT
2.01. THE REVOLVING CREDIT FACILITY.
(a) REVOLVING LOANS. Subject to the terms and conditions set forth herein, (i) pursuant to the Domestic Commitments, each Domestic Lender hereby severally and not jointly agrees to make revolving loans (each a "DOMESTIC LOAN") to the Domestic Borrowers from time to time on any Business Day during the period from the Closing Date to the Termination Date, in an amount not to exceed such Domestic Lender's Pro Rata Share of the Availability under the Domestic Facility at such time, provided, however, no such Loan shall be required to be made if, after giving effect thereto, (A) the aggregate Credit Facility Outstandings owed by the Domestic Borrowers under the Domestic Facility exceed the Maximum Credit Amount for the Domestic Facility at such time, or (B) the aggregate Credit Facility Outstandings owing to such Domestic Lender and its Affiliates (after giving effect to any participations purchased by and from such Persons under SECTION 2.02(e)(ii) and funded by such Persons under SECTION 2.03) under all Credit Facilities would exceed the aggregate Commitment of such Persons with respect to all Credit Facilities, and (ii) pursuant to the Multicurrency Commitments, each Multicurrency Lender hereby agrees to make revolving loans (each a "MULTICURRENCY LOAN" and, together with the Domestic Loans, the "REVOLVING LOANS") to the Multicurrency Borrowers from time to time on any Business Day during the period from the Closing Date to the Termination Date, in an amount (converted to the Dollar Equivalent thereof) not to exceed such Multicurrency Lender's
Pro Rata Share of the Availability under the Multicurrency Facility at such
time, provided, however, no such Loan shall be required to be made if, after
giving effect thereto, (A) the aggregate Credit Facility Outstandings owed by
the Multicurrency Borrowers under the Multicurrency Facility exceed the Maximum
Credit Amount for the Multicurrency Facility at such time, (B) the aggregate
Credit Facility Outstandings owing to such Multicurrency Lender and its
Affiliates (after giving effect to any participation purchased by and from such
Persons under SECTION 2.02(e)(ii) and 2.03) under all Credit Facilities would
exceed the aggregate Commitment of such Persons with respect to all Credit
Facilities, (C) the aggregate Credit Facility Outstandings owed by the
Multicurrency Borrowers under the Multicurrency Facility which are denominated
in Euros would exceed the Maximum Credit Amount for the Euro Subfacility, and
(D) the aggregate Credit Facility Outstandings owed by the Multicurrency
Borrowers under the Multicurrency Facility which are denominated in Sterling
would exceed the Maximum Credit Amount for the Sterling Subfacility. All
Revolving Loans comprising the same Borrowing hereunder shall be made by the
Domestic Lenders or the Multicurrency Lenders, as the case may be,
simultaneously and proportionately to their then respective Pro Rata Shares of
the applicable Credit Facility. Subject to the provisions hereof, any Borrower
may repay any outstanding Revolving Loan on any day which is a Business Day and
any amounts so repaid may be reborrowed, up to the amount available under this
SECTION 2.01(a) at the time of such Borrowing, until the Termination Date. Each
Borrowing of Domestic Loans shall be in Dollars, and each Borrowing of
Multicurrency Loans shall be denominated in a single Specified Foreign Currency.
Each Borrowing of Revolving Loans shall be in an aggregate minimum amount of
$1,000,000 for Floating Rate Loans (and in intervals of $1,000,000 in excess
thereof), $7,500,000 for Fixed Rate Loans under the Domestic Credit Facility
(and in intervals of $1,000,000 in excess thereof), and $5,000,000 for Fixed
Rate Loans under the Multicurrency Credit Facility (and in intervals of the
Dollar Equivalent of $1,000,000 in excess thereof).
(b) SWING LOANS. The Swing Loan Bank may, in its sole discretion, make to the Domestic Borrowers to whom the Domestic Loans are available loans (each a "SWING LOAN") from time to time on any Business Day during the period from the Closing Date to the Termination Date, in an aggregate amount not to exceed at any time the lesser of (i) $25,000,000 (the "MAXIMUM SWING LOAN AMOUNT") and (ii) the Availability for the Domestic Credit Facility at such time. All Swing Loans made under the Domestic Credit Facility shall be made as Floating Rate Loans and shall be available in Dollars. Except as otherwise provided herein, all Swing Loans shall be subject to all the terms and conditions applicable to Revolving Loans. Swing Loans shall be repaid pursuant to the terms of SECTION 2.01(g) or as otherwise provided in this Agreement.
(c) OVERDRAFT LOANS.
(i) From time to time on any Business Day during the period
from the Closing Date to the Termination Date, upon presentment to the
Overdraft Line Bank for payment of an item drawn by a Multicurrency
Borrower on a Euro Overdraft Account or Sterling Overdraft Account
(each an "ACCOUNT" and collectively the "ACCOUNTS") with the Overdraft
Line Bank in an amount that, when charged against the Account, creates
an overdraft in the Account, the Overdraft Line Bank shall pay such
item to the extent not subject to the limitations set forth in this
SECTION 2.01(c)(i), and such payment shall be deemed an "OVERDRAFT
LOAN". Each Overdraft Loan provided hereunder shall bear
interest at the interest rate set forth in SECTION 4.01(a)(ii). At no time shall the aggregate amount of Overdraft Loans exceed the lesser of (A) the Overdraft Line Commitment and (B) the Availability for the Multicurrency Credit Facility at such time; provided, further, that the Overdraft Loans provided to the relevant Multicurrency Borrower with respect to the Euro Overdraft Accounts shall not exceed the Euro Overdraft Limit, and the Overdraft Loans provided to the relevant Multicurrency Borrower with respect to the Sterling Overdraft Accounts shall not exceed the Sterling Overdraft Limit. Overdraft Loans shall be repaid pursuant to the terms of SECTION 2.01(h) or as otherwise provided in this Agreement.
(ii) Notwithstanding the foregoing CLAUSE (I), the Overdraft Line Bank shall not make any Overdraft Loan in the period commencing on the second Business Day after it receives written notice from any Multicurrency Lender that one or more of the conditions precedent contained in SECTION 5.02 shall not on such date be satisfied, and ending when such conditions are satisfied, and the Overdraft Line Bank shall not otherwise be required to determine that, or take notice whether, the conditions precedent set forth in SECTION 5.02 hereof have been satisfied in connection with the making of any Overdraft Loan.
(iii) The Multicurrency Borrowers, upon three (3) Business Days' written notice to the Administrative Agent may request, no more than twelve (12) times in any Fiscal Year, that the Euro Overdraft Limit or the Sterling Overdraft Limit be reduced by an amount equal to not less than $500,000 (such amount, the "OVERDRAFT REDUCTION AMOUNT"), and that the Euro Overdraft Limit or the Sterling Overdraft Limit not so reduced be correspondingly increased by the Overdraft Reduction Amount.
(d) NOTICE OF BORROWING IN RESPECT OF REVOLVING LOANS AND
SWING LOANS. When a Borrower desires to make a Borrowing under CLAUSES (a) and
(b) of this SECTION 2.01, it shall deliver to the Administrative Agent in a
manner specified in SECTION 14.08 a signed Notice of Borrowing no later than (i)
(A) 3:00 p.m. (New York time) on the proposed Funding Date for such Borrowing,
in the case of a proposed Borrowing of Swing Loans, (B) 3:00 p.m. (New York
time) at least one (1) Business Day in advance of the proposed Funding Date for
such Borrowing, in the case of a proposed Borrowing of Floating Rate Loans that
cannot be provided as Swing Loans and (C) 12:00 p.m. (New York time) at least
three (3) Business Days in advance of the proposed Funding Date for such
Borrowing, in the case of a proposed Borrowing of Domestic Loans consisting of
Fixed Rate Loans or (ii) 3:00 p.m. (London time) at least four (4) Business Days
in advance of the proposed Funding Date for such Borrowing, in the case of a
proposed Borrowing of Multicurrency Loans. Any such Notice of Borrowing shall be
irrevocable and, with respect to any Notice of Borrowing under CLAUSE (i)(B)
above made by any Domestic Borrower, shall first constitute a request to borrow
Swing Loans (other than a request for a Fixed Rate Loan); provided, however, in
the event the Administrative Agent after consultation with the Swing Loan Bank
determines that a Borrowing of Swing Loans is not possible or feasible, such
Notice of Borrowing shall constitute a request, as of the time such Notice of
Borrowing was originally submitted, by such Borrower to borrow Revolving Loans
under the applicable Credit Facility; provided, further, however, all Notices of
Borrowing with respect to Fixed Rate Loans shall constitute a request by such
Borrower to borrow Revolving Loans under the Domestic Facility or the
Multicurrency Facility, as the case may be. All Domestic Loans made under this
SECTION 2.01 on the Closing Date shall be made initially as
Floating Rate Loans and may thereafter be continued as Floating Rate Loans or converted into Fixed Rate Loans in the manner provided in SECTION 4.01(c); and all Multicurrency Loans made under this SECTION 2.01 on the Closing Date shall be made initially, at the discretion of the Administrative Agent, as Overdraft Loans or as Fixed Rate Loans with an Interest Period of five days. In the case of a Notice of Borrowing delivered in connection with a proposed Borrowing of Multicurrency Loans, the applicable Multicurrency Borrower shall request, within one-half hour prior to the issuance of such Notice of Borrowing, the advice of the Administrative Agent as to the Dollar Equivalent of the amount of such Borrowing, and such Multicurrency Borrower shall specify such amount in such Notice of Borrowing; provided that such advice shall not be deemed to be a prediction or guaranty of the Dollar Equivalent of such amount after the Notice of Borrowing is submitted and shall in no way limit the Borrowers' Obligations under this Agreement due to fluctuations in the applicable Specified Foreign Currency; provided, further, that if any Multicurrency Borrower requests such advice from the Administrative Agent within one-half hour prior to the time that a Notice of Borrowing for Multicurrency Loans is required to be delivered hereunder and the Administrative Agent does not provide such advice prior to such time, such required delivery time shall be extended until the Administrative Agent provides such advice.
(e) MAKING OF SWING LOANS. Promptly after receipt of a Notice
of Borrowing pursuant to Section 2.01(d) with respect to the Borrowing of
Floating Rate Loans under the Domestic Credit Facility, the Swing Loan Bank
shall deposit in immediately available funds the amount it intends to fund, if
any, in respect of the Domestic Loans requested in such Notice of Borrowing with
the Administrative Agent at its office in New York, New York not later than 4:00
p.m. (New York time) on the Funding Date. The Swing Loan Bank shall not make any
Swing Loan in the period commencing on the first Business Day after it receives
written notice from any Domestic Lender that one or more of the conditions
precedent contained in SECTION 5.02 shall not on such date be satisfied, and
ending when such conditions are satisfied, and the Swing Loan Bank shall not
otherwise be required to determine that, or take notice whether, the conditions
precedent set forth in SECTION 5.02 hereof have been satisfied in connection
with the making of any Swing Loan. Subject to the preceding sentence, the
Administrative Agent shall make such proceeds of each funding of a Swing Loan
available to the relevant Domestic Borrower at the Administrative Agent's office
in New York, New York on the Funding Date of the proposed Borrowing and shall
disburse such proceeds to the Disbursement Account referred to in the applicable
Notice of Borrowing. If the Swing Loan Bank receives a Notice of Borrowing
within the applicable time limits set forth in SECTION 2.01(d) and does not
intend to fund such requested Borrowing as a Swing Loan, the Swing Loan Bank
will promptly notify the Administrative Agent (to the extent the Swing Loan Bank
and the Administrative Agent are not the same Person) of such intention, and no
delay by the Swing Loan Bank shall impair the applicable Domestic Borrower's
right to borrow Revolving Loans under this SECTION 2.01.
(f) MAKING OF REVOLVING LOANS.
(i) In the event any portion of the Loans requested in any
Notice of Borrowing delivered to the Administrative Agent pursuant
SECTION 2.01(d) will be made as Revolving Loans, the Administrative
Agent shall promptly notify each Lender under the applicable Credit
Facility of the amount of such Borrowing of Revolving Loans. Each such
Lender shall deposit an amount equal to its Pro Rata Share under such
Credit
Facility of the amount of such Borrowing with the Administrative Agent in the applicable Funding Account in immediately available funds and in the appropriate currency, not later than 3:00 p.m. (New York time) with respect to Domestic Loans or 4:00 p.m. (London time) with respect to Multicurrency Loans on any Funding Date applicable thereto (or, if the Funding Date is the Closing Date, such earlier time as the Administrative Agent shall determine). Subject to the fulfillment of the conditions precedent set forth in SECTION 5.01 (solely with respect to the making of Revolving Loans on the Closing Date) and SECTION 5.02, the Administrative Agent shall make the proceeds of such amounts received by it available to the applicable Borrower at the Administrative Agent's office in New York, New York, with respect to Domestic Loans, or London, England, with respect to Multicurrency Loans, on such Funding Date and shall disburse such proceeds to the Disbursement Account referred to in the applicable Notice of Borrowing on such Funding Date.
(ii) The failure of any Lender to deposit the amount described in CLAUSE (i) above (or required to be paid pursuant to SECTION 2.01(g)) with the Administrative Agent on the applicable Funding Date shall not relieve any other Lender of its obligations hereunder to make its Revolving Loan on such Funding Date. No Lender shall be responsible for any failure by any other Lender to perform its obligation to make a Revolving Loan hereunder nor shall the Domestic Commitment or Multicurrency Commitment of any Lender be increased or decreased as a result of any such failure.
(iii) Unless the Administrative Agent shall have been notified by any Lender prior to 2:00 p.m. (New York time) with respect to Domestic Loans or 2:00 p.m. (London time) with respect to Multicurrency Loans, on any applicable Funding Date in respect of any Borrowing of Revolving Loans that such Lender does not intend to fund its Loan requested to be made on such Funding Date, the Administrative Agent may assume that such Lender has funded its Revolving Loan and is depositing the proceeds thereof in the applicable Funding Account on the Funding Date, and the Administrative Agent in its sole discretion may, but shall not be obligated to, disburse a corresponding amount to the applicable Borrower on the Funding Date. If the Revolving Loan proceeds corresponding to that amount are advanced to such Borrower by the Administrative Agent but are not in fact deposited with the Administrative Agent by such Lender on or prior to the applicable Funding Date, such Lender agrees to pay, and in addition such Borrower agrees to repay, to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is disbursed to or for the benefit of such Borrower until the date such amount is paid or repaid to the Administrative Agent at the interest rate applicable to such Borrowing. If such Lender shall pay to the Administrative Agent the corresponding amount, the amount so paid shall constitute such Lender's Revolving Loan, and if both such Lender and such Borrower shall pay and repay such corresponding amount, the Administrative Agent shall promptly pay to such Borrower such corresponding amount (together with any interest included in such payment). This SECTION 2.01(f)(iii) does not relieve any Lender of its obligation to make its Revolving Loan on any Funding Date.
(iv) Anything hereinabove to the contrary notwithstanding, if any Multicurrency Lender shall, not later than 2:00 p.m. (London time) one Business Day before the date of
any requested Borrowing of Multicurrency Loans, notify the Administrative Agent that such Lender is not satisfied that deposits in the relevant Specified Foreign Currency will be freely available to it in the relevant amount and, if applicable, for the relevant Interest Period, the right of the Multicurrency Borrowers to request Multicurrency Loans in such Specified Foreign Currency from such Lender as part of such Borrowing or any subsequent Borrowing of Multicurrency Loans shall be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and, at the option of any Multicurrency Borrower, the Multicurrency Loan to be made by such Lender as part of such Borrowing (and the Multicurrency Loan to be made by such Lender as part of any subsequent Borrowing of Multicurrency Loans in respect of which such Specified Foreign Currency shall have been requested during such period of suspension) shall be denominated in any other Specified Foreign Currency requested on the same Business Day which is available, and having an Interest Period coextensive with the Interest Period in effect in respect of all other Multicurrency Loans comprising a part of such Borrowing. The Administrative Agent shall, upon becoming aware that the circumstances causing any such suspension no longer apply, promptly so notify the Multicurrency Borrowers, provided that the failure of the Administrative Agent to so notify the Multicurrency Borrowers shall not impair the rights of the Lenders under this SECTION 2.01(f)(iv) or expose the Administrative Agent to any liability.
(g) SETTLEMENT OF SWING LOANS.
(i) The Administrative Agent shall from time to time, in its sole discretion, notify each Domestic Lender by 12:00 p.m. (New York time), of the aggregate principal amount of Swing Loans outstanding as of the close of business on the Business Day immediately preceding the date of such notice (each such Business Day being a "SWING LOAN SETTLEMENT DATE"). Upon such notice, each Domestic Lender shall deposit in the applicable Funding Account in Dollars an amount equal to its Pro Rata Share under the Domestic Credit Facility of the amount of such principal amount of Swing Loans outstanding in immediately available funds, not later than 3:00 p.m. (New York time) on the date of such notice. Upon such payment, each Domestic Lender shall be deemed to have made a Revolving Loan denominated in Dollars to the applicable Borrower or Borrowers in such amount (irrespective of the satisfaction of the conditions in SECTION 5.02). Each Domestic Lender hereby agrees that its obligations under this SECTION 2.01(g) are irrevocable and unconditional (except with respect to Swing Loans made in contravention of the second sentence of SECTION 2.01(e)) notwithstanding (A) the nonconformity of the amount of the Loan with the minimum amounts (and increments thereof) otherwise required hereunder, (B) whether any conditions specified in SECTION 5.02 are then satisfied, (C) whether a Default or Event of Default has occurred and is continuing, (D) the date of such Borrowing, (E) the amount of the Domestic Borrowing Base, Multicurrency Borrowing Base, Total Borrowing Base and Commitment at such time. In the event that any such Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code in respect of any Borrower), each Domestic Lender (other than the Swing Loan Bank) hereby agrees that it shall forthwith purchase from the Swing Loan Bank (without recourse or warranty) such assignment of the
outstanding Swing Loans as shall be necessary to cause the Domestic Lenders to share in such Swing Loans ratably based upon their respective Pro Rata Shares; provided, that all interest payable on the Swing Loans shall be for the account of the Swing Loan Bank until the date the respective assignment is purchased and, to the extent attributable to the purchased assignment, shall be payable to the Domestic Lender purchasing the same from and after such date of purchase.
(ii) If and to the extent any Domestic Lender shall not have made available to the Administrative Agent on any Swing Loan Settlement Date with respect to the Domestic Credit Facility any amount payable by such Domestic Lender on such Swing Loan Settlement Date pursuant to this SECTION 2.01(g) or SECTION 2.01(h), such Domestic Lender agrees to pay to the Administrative Agent forthwith on demand such amount in Dollars together with interest thereon, for each day from such Swing Loan Settlement Date until the date such amount is paid to the Administrative Agent, at the interest rate applicable to the Loans denominated in such currency hereunder.
(h) SETTLEMENT OF OVERDRAFT LOANS.
(i) The Administrative Agent shall from time to time, in its sole discretion (but in no event less frequently than every five (5) Business Days), notify each Multicurrency Lender by 3:00 p.m. (London time), of the aggregate principal amount of Overdraft Loans outstanding as of the close of business on the Business Day immediately preceding the date of such notice. Upon such notice, each Multicurrency Lender shall deposit in the applicable Funding Account in the appropriate Specified Foreign Currency an amount equal to its Pro Rata Share under the Multicurrency Credit Facility of the amount of such principal amount of Overdraft Loans outstanding in immediately available funds, not later than 4:00 p.m. (London time) on the Business Day following such notice (such Business Day being an "OVERDRAFT SETTLEMENT Date"). Upon such payment, each Multicurrency Lender shall be deemed to have made a Revolving Loan denominated in the applicable Specified Foreign Currency to the Multicurrency Borrowers in such amount (irrespective of the satisfaction of the conditions in SECTION 5.02). Each Multicurrency Lender hereby agrees that its obligations under this SECTION 2.01(h) are irrevocable and unconditional (except with respect to Overdraft Loans made in contravention of the second sentence of SECTION 2.01(c)(ii)) notwithstanding (A) the nonconformity of the amount of the Loan with the minimum amounts (and increments thereof) otherwise required hereunder, (B) whether any conditions specified in SECTION 5.02 are then satisfied, (C) whether a Default or Event of Default has occurred and is continuing, (D) the date of such Borrowing, (E) the amount of the Domestic Borrowing Base, Multicurrency Borrowing Base, and Total Borrowing Base or Commitment at such time. In the event that any such Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code in respect of any Borrower), each Multicurrency Lender (other than the Overdraft Line Bank) hereby agrees that upon the request of the Overdraft Line Bank it shall forthwith purchase from the Overdraft Line Bank (without recourse or warranty) such assignment of the outstanding Overdraft Loans as shall be necessary to cause the Multicurrency Lenders to share in such Overdraft Loans ratably based upon their respective Pro Rata Shares; provided, that all interest
payable on the Overdraft Loans shall be for the account of the Overdraft Line Bank until the date the respective assignment is purchased and, to the extent attributable to the purchased assignment, shall be payable to the Multicurrency Lenders purchasing the same from and after such date of purchase.
(ii) If and to the extent any Multicurrency Lender shall not have made available to the Administrative Agent on any Overdraft Settlement Date with respect to the Multicurrency Credit Facility any amount payable by such Multicurrency Lender on such Overdraft Settlement Date pursuant to this SECTION 2.01(h), such Multicurrency Lender agrees to pay to the Administrative Agent forthwith on demand such amount in the applicable currency together with interest thereon, for each day from such Overdraft Settlement Date until the date such amount is paid to the Administrative Agent, at the interest rate applicable to the Loans denominated in such currency hereunder.
(i) USE OF PROCEEDS. Proceeds of Domestic Loans and of Swing
Loans under the Domestic Facility shall be used to (i) retire the Domestic
Borrowers' Refinanced Indebtedness; (ii) provide for ongoing working capital
needs in the ordinary course of the business of Domestic Borrowers and their
Subsidiaries; and (iii) for other lawful general corporate purposes not
prohibited hereunder (including Capital Expenditures permitted hereunder).
Proceeds of Multicurrency Loans and of Overdraft Loans under the Multicurrency
Facility shall be used to (x) retire the Multicurrency Borrowers' Refinanced
Indebtedness; (y) provide for ongoing working capital needs in the ordinary
course of the business of each Multicurrency Borrower and its Subsidiaries; and
(z) for other lawful general corporate purposes not prohibited hereunder
(including Capital Expenditures permitted hereunder). Proceeds of Revolving
Loans, Swing Loans and Overdraft Loans may also be used to pay for transaction
expenses incurred in connection herewith.
(j) TERMINATION DATE. The Commitments shall terminate, and all outstanding Obligations shall be Paid In Full, on the Termination Date.
2.02. LETTERS OF CREDIT. Subject to the terms and conditions set forth herein, (x) each Issuing Bank hereby severally agrees to Issue for the account of any Domestic Borrower one or more Letters of Credit denominated in Dollars, up to an aggregate face amount at any one time outstanding for all Domestic Borrowers equal to the Letter of Credit Sublimit of the Domestic Facility and (y) each Issuing Bank hereby severally agrees to Issue for the account of the Multicurrency Borrowers one or more Letters of Credit denominated in a Specified Foreign Currency, up to an aggregate face amount at any one time outstanding for the Multicurrency Borrowers equal to the Letter of Credit Sublimit of the Multicurrency Facility, subject, in each case, to the following provisions:
(a) TYPES AND AMOUNTS. An Issuing Bank shall not have any obligation to Issue, and shall not, except as otherwise agreed by the Requisite Lenders and Issuing Bank (except with respect to any notification received by an Issuing Bank pursuant to SECTION 2.02(a)(ii)(A), which shall require the agreement of all of the Lenders and the Issuing Bank), Issue any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to such Issuing Bank, after giving effect to the Issuance of the Letter of Credit requested hereunder, shall exceed any limit imposed by law or regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives notice (A) from the
Administrative Agent at or before 11:00 a.m. (New York or London time,
as applicable, with respect to a Letter of Credit Issued under the
Domestic Facility or the Multicurrency Facility, respectively) on the
date of the proposed Issuance of such Letter of Credit that,
immediately after giving effect to the Issuance of such Letter of
Credit, the Credit Facility Outstandings in respect of the Domestic
Facility or the Multicurrency Facility, as applicable, at such time
would exceed the Maximum Credit Amount for such Credit Facility or (B)
from any of the Lenders at or before 11:00 a.m. (New York or London
time, as applicable, with respect to a Letter of Credit Issued under
the Domestic Facility or the Multicurrency Facility, respectively) on
the date of the proposed Issuance of such Letter of Credit that one or
more of the conditions precedent contained in SECTIONS 5.01 (solely
with respect to an Issuance of a Letter of Credit on the Closing Date)
and 5.02 would not on such date be satisfied (or waived pursuant to
SECTION 14.07), unless such conditions are thereafter satisfied or
waived and notice of such satisfaction or waiver is given to the
Issuing Bank by the Administrative Agent (and an Issuing Bank shall not
otherwise be required to determine that, or take notice whether, the
conditions precedent set forth in SECTIONS 5.01 or 5.02, as applicable,
have been satisfied or waived);
(iii) which has an expiration date later than the earlier of (A) the date one (1) year after the date of Issuance or (B) the Business Day next preceding the Termination Date; or
(iv) which is in a currency other than (A) a Dollars with respect to Letters of Credit requested by the Domestic Borrowers and (B) a Specified Foreign Currency with respect to Letters of Credit requested by the Multicurrency Borrowers;
(v) the Issuance and terms of which is governed by the laws of any jurisdiction other than the United States, England or any other jurisdiction which is approved by the Administrative Agent and the applicable Issuing Bank; or
(vi) of which the date of Issuance is less than eleven (11) Business Days before the Termination Date.
(b) CONDITIONS. In addition to being subject to the satisfaction of the conditions precedent contained in SECTIONS 5.01 (solely with respect to an Issuance of a Letter of Credit on the Closing Date) and 5.02, the obligation of an Issuing Bank to Issue any Letter of Credit is subject to the satisfaction in full of the following conditions:
(i) if the Issuing Bank so requests, the applicable Borrower shall have executed and delivered to such Issuing Bank and the Administrative Agent a Letter of Credit Reimbursement Agreement and such other documents and materials as may be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall conform to the customary terms of letters of credit issued by the Issuing Bank.
(c) ISSUANCE OF LETTERS OF CREDIT.
(i) A Borrower shall deliver to the applicable Issuing Bank and the Administrative Agent in a manner specified in SECTION 14.08 a signed Notice of Letter of Credit Issuance not later than 11:00 a.m. (New York or London time, as applicable with respect to a Letter of Credit issued under the Domestic Facility or the Multicurrency Facility, respectively) on the third Business Day preceding the requested date for Issuance of a Letter of Credit hereunder, or such shorter notice as may be acceptable to such Issuing Bank and the Administrative Agent. Such notice shall be irrevocable. In the case of a Notice of Letter of Credit Issuance requesting the Issuance of a Letter of Credit denominated in any Specified Foreign Currency, the relevant Multicurrency Borrower shall request, within one-half hour prior to the issuance of such Notice of Letter of Credit Issuance, the advice of the Administrative Agent as to the Dollar Equivalent of the face amount of the requested Letter of Credit, and such Multicurrency Borrower shall specify such amount in such Notice of Letter of Credit Issuance; provided that such advice shall not be deemed to be a prediction or guaranty of the Dollar Equivalent of such amount after the Notice of Letter of Credit Issuance is submitted and shall in no way limit the Borrowers' Obligations under this Agreement or, if applicable, any Letter of Credit Reimbursement Agreement due to fluctuations in the applicable Specified Foreign Currency; provided, further, that if the relevant Multicurrency Borrower requests such advice from the Administrative Agent within one-half hour prior to the time that a Notice of Letter of Credit Issuance is required to be delivered hereunder and the Administrative Agent does not provide such advice prior to such time, such required delivery time shall be extended until the Administrative Agent provides such advice.
(ii) The Issuing Bank shall give the Administrative Agent written notice, or telephonic notice confirmed promptly thereafter in writing, of the Issuance of a Letter of Credit.
(d) REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUING BANK.
(i) Notwithstanding any provision to the contrary in any Letter of Credit Reimbursement Agreement:
(A) each Borrower for whose account a Letter of Credit has been Issued agrees to reimburse the applicable Issuing Bank in the applicable currency for amounts drawn under such Letter of Credit pursuant to SUBSECTION (e)(ii) below, no later than the date (the "REIMBURSEMENT DATE") which is one (1) Business Day after such Borrower receives written notice from the Issuing Bank that payment has been made under such Letter of Credit by the Issuing Bank;
(B) all Reimbursement Obligations with respect to any Letter of Credit Issued under the Domestic Credit Facility shall bear interest at the Floating Rate PLUS the Applicable Floating Rate Margin, from the date of the relevant drawing under
such Letter of Credit until the Reimbursement Date and thereafter at the rate applicable in accordance with SECTION 4.01(d); and
(C) all Reimbursement Obligations with respect to any Letter of Credit Issued under the Multicurrency Credit Facility shall bear interest at the Overdraft Rate PLUS the Overdraft Rate Margin, from the date of the relevant drawing under such Letter of Credit until the Reimbursement Date and thereafter at the rate applicable in accordance with SECTION 4.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written notice, or telephonic notice confirmed promptly thereafter in writing, of all drawings under a Letter of Credit and the payment (or the failure to pay when due) by the Borrowers on account of a Reimbursement Obligation.
(iii) No action taken or omitted in good faith by an Issuing Bank under or in connection with any Letter of Credit (except for any such action resulting from the gross negligence or willful misconduct of such Issuing Bank) shall put such Issuing Bank under any resulting liability to any Lender, any Borrower or, so long as such Letter of Credit is not Issued in violation of SECTION 2.02(a), relieve any Lender of its obligations hereunder to such Issuing Bank. In determining whether to pay under any Letter of Credit, the respective Issuing Bank shall have no obligation to the Lenders or any Borrower other than to confirm that any documents required to be delivered under a respective Letter of Credit appear to have been delivered by the appropriate Person and that they appear on their face to comply with the requirements of such Letter of Credit.
(e) PARTICIPATIONS.
(i) Immediately upon Issuance by an Issuing Bank of any Letter
of Credit under the Domestic Facility or the Multicurrency Facility, as
applicable, for the account of any Borrower under such Credit Facility
in accordance with the procedures set forth in this SECTION 2.02, each
Lender holding a Commitment in such Credit Facility shall be deemed to
have irrevocably and unconditionally purchased and received from that
Issuing Bank, without recourse or warranty, an undivided interest and
participation in such Letter of Credit to the extent of such Lender's
Pro Rata Share under the Credit Facility, including, without
limitation, all obligations of such Borrower with respect thereto
(other than amounts owing to the Issuing Bank under SECTION 2.02(g))
and any security therefor and guaranty pertaining thereto.
(ii) If the Issuing Bank makes any payment under any Letter of Credit for the account of any Borrower and such Borrower does not repay such amount to the Issuing Bank on the Reimbursement Date, the Issuing Bank shall promptly notify the Administrative Agent, which shall (unless the notice described in SECTION 2.03(b) has been given) notify the Swing Loan Bank (with respect to any Domestic Borrower) or the Overdraft Line Bank (with respect to the Multicurrency Borrowers), and if the Swing Loan Bank or Overdraft Line Bank, as applicable, so elects, a Swing Loan under the Domestic Credit Facility or an Overdraft Loan under the Multicurrency Facility, as applicable, can be made in such amount, the proceeds of which shall be paid to the
Administrative Agent for the account of such Issuing Bank, in immediately available funds, and the Administrative Agent shall promptly pay such proceeds to the Issuing Bank. In the event such Issuing Bank cannot be so paid from proceeds of a Swing Loan or an Overdraft Loan, as applicable, the Administrative Agent shall promptly notify each Lender under such Credit Facility, and each such Lender shall, unless the notice described in SECTION 2.03(b) has been given, promptly and unconditionally pay to the Administrative Agent for the account of such Issuing Bank, in immediately available funds, the amount in the relevant Optional Currency of such Lender's Pro Rata Share under the applicable Credit Facility of the payment made by such Issuing Bank, and the Administrative Agent shall promptly pay to the Issuing Bank such amounts received by it. In the event such payments are made by such Lenders, such payments shall constitute Revolving Loans made to the applicable Borrower under the applicable Credit Facility pursuant to SECTION 2.01 (irrespective of the satisfaction of the conditions in SECTION 5.02). If a Lender does not make its Pro Rata Share under the applicable Credit Facility of the amount of any such payment available to the Administrative Agent, such Lender agrees to pay to the Administrative Agent for the account of the Issuing Bank, forthwith on demand, such amount together with interest thereon, at the interest rate then applicable in accordance with SECTION 4.01. The failure of any such Lender to make available to the Administrative Agent for the account of an Issuing Bank its Pro Rata Share under the applicable Credit Facility of any such payment shall neither relieve any other Lender of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Bank such other Lender's Pro Rata Share under the applicable Credit Facility of any payment on the date such payment is to be made nor increase the obligation of any other Lender to make such payment to the Administrative Agent. This Section does not relieve any Borrower of its obligation to pay or repay any Lender funding its Pro Rata Share of such payment pursuant to this Section interest on the amount of such payment from such date such payment is to be made until the date on which payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account of a Reimbursement Obligation, including any interest thereon, as to which the Swing Loan Bank has made a Swing Loan, the Overdraft Line Bank has made an Overdraft Loan or any Lender has made a Revolving Loan pursuant to SECTION 2.02(e)(ii), such Issuing Bank shall promptly pay to the Administrative Agent such payment in accordance with SECTION 3.02.
(iv) Upon the request of any Lender under the applicable Credit Facility, an Issuing Bank shall furnish such Lender copies of any Letter of Credit or Letter of Credit Reimbursement Agreement to which such Issuing Bank is party and such other documentation as reasonably may be requested by such Lender.
(v) The obligations of any Lender to make payments to the Administrative Agent for the account of the Issuing Bank with respect to a Letter of Credit shall be irrevocable, shall not be subject to any qualification or exception whatsoever (except the Issuance of the Letter of Credit in contravention of this SECTION 2.02) and shall be made in accordance with this Agreement (irrespective of the satisfaction of the conditions
described in SECTIONS 5.01 and 5.02) under all circumstances, including, without limitation, any of the following circumstances:
(A) any lack of validity or enforceability hereof or of any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right which any Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of a beneficiary named in a Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Issuing Bank, any Lender, or any other Person, whether in connection herewith, with any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between the account party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented under the Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;
(E) any failure by such Issuing Bank to make any reports required pursuant to SECTION 2.02(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Default.
(f) PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(i) Each Borrower for whose account a Letter of Credit has been Issued unconditionally agrees to pay to each Issuing Bank the amount of all Reimbursement Obligations, interest and other amounts payable to such Issuing Bank under or in connection with such Letter of Credit when such amounts are due and payable, irrespective of any claim, setoff, defense or other right which such Borrower may have at any time against such Issuing Bank or any other Person.
(ii) In the event any payment by a Borrower received by an Issuing Bank with respect to a Letter of Credit Issued for the account of such Borrower and distributed by the Administrative Agent to the Lenders under the applicable Credit Facility on account of their participation is thereafter set aside, avoided or recovered from such Issuing Bank in connection with any receivership, liquidation or bankruptcy proceeding, each such Lender which received such distribution shall, upon demand by such Issuing Bank, contribute such Lender's Pro Rata Share under such Credit Facility of the amount set aside, avoided or recovered together with interest at the rate required to be paid by such Issuing Bank upon the amount required to be repaid by it.
(g) ISSUING BANK FEES AND CHARGES. Each Borrower for whose account a Letter of Credit has been Issued agrees to pay to each Issuing Bank, solely for its own account,
(i) a fronting fee in an amount equal to one-quarter of one percent (0.25%) on the face amount of such Letter of Credit, and (ii) the standard charges assessed by such Issuing Bank in connection with the issuance, administration, amendment and payment or cancellation of such Letter of Credit.
(h) ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank shall, on the day it Issues such a Letter of Credit, provide to the Administrative Agent separate schedules for Commercial Letters of Credit and Standby Letters of Credit Issued by it, in form and substance reasonably satisfactory to the Administrative Agent, setting forth the aggregate Letter of Credit Obligations of each Borrower under the applicable Credit Facility outstanding to it as of such date and any information requested by the Administrative Agent relating to the date of issue, account party, amount, expiration date and reference number of each Letter of Credit Issued by it. On each Overdraft Settlement Date (with respect to the Multicurrency Facility) and on each Swing Loan Settlement Date (with respect to the Domestic Facility), the Administrative Agent shall provide to each Lender under the applicable Credit Facility copies of the most recent schedules provided to it by each Issuing Bank under such Credit Facility.
(i) INDEMNIFICATION; EXONERATION.
(i) In addition to all other amounts payable to an Issuing Bank, each Borrower for whose account such Issuing Bank has Issued a Letter of Credit agrees to defend, indemnify, and save the Administrative Agent, such Issuing Bank and each Lender under the applicable Credit Facility harmless from and against any and all claims, demands, liabilities, penalties, damages, losses (other than loss of profits), costs, charges and expenses (including reasonable attorneys' fees but excluding taxes) which the Administrative Agent, such Issuing Bank or such Lender may incur or be subject to as a consequence, direct or indirect, of (A) the Issuance of such Letter of Credit other than as a result of the gross negligence or willful misconduct of such Issuing Bank, as determined by a court of competent jurisdiction, or (B) the failure of such Issuing Bank Issuing a Letter of Credit to honor a drawing under such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future DE JURE or DE FACTO government or Governmental Authority.
(ii) As between the Domestic Borrowers on the one hand and the
Administrative Agent, the Domestic Lenders and the Issuing Bank under
the Domestic Facility on the other hand, such Borrowers assume all
risks of the acts and omissions of, or misuse of Letters of Credit by,
the respective beneficiaries of the Letters of Credit Issued pursuant
to the Domestic Facility. As between the Multicurrency Borrowers on the
one hand and the Administrative Agent, Multicurrency Lenders and the
Issuing Bank under the Multicurrency Facility on the other hand, such
Borrowers assume all risks of the acts and omissions of, or misuse of
Letters of Credit by, the respective beneficiaries of the Letters of
Credit issued pursuant to the Multicurrency Facility. In furtherance
and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit Reimbursement Agreements, the Administrative
Agent, the Issuing Bank and the Lenders shall not be responsible for:
(A) the form, validity, legality, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with
the application for and Issuance of the Letters of Credit, even if it
should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity, legality or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any litigation, proceeding or charges with respect to such Letter of Credit; and (I) any consequences arising from causes beyond the control of the Administrative Agent, the Issuing Bank or the Lenders; except in the cases of CLAUSES (A) (with respect to form only), (B), (C), (D), (E), (F), (H) AND (I) Bank, as determined in a judgment by a court of competent jurisdiction.
(j) OBLIGATIONS SEVERAL. The obligations of each Issuing Bank and each Domestic Lender under this SECTION 2.02 are several and not joint, and no Issuing Bank or Domestic Lender shall be responsible for the obligation to Issue Letters of Credit or participation obligation hereunder, respectively, of any other Issuing Bank or Domestic Lender.
2.03. PARTICIPATIONS IN CREDIT FACILITIES.
(a) (i) Each Domestic Lender shall be deemed to, and hereby
agrees to, have irrevocably purchased from the Multicurrency Lenders (excluding,
if applicable, such Domestic Lender and any Affiliate of such Domestic Lender in
their capacity as Multicurrency Lenders; all such non-excluded Multicurrency
Lenders, the "SELLING MULTICURRENCY LENDERS") an unfunded participation in the
Credit Facility Outstandings of such Selling Multicurrency Lenders under the
Multicurrency Facility, including without limitation (A) the Multicurrency
Loans, (B) the participations purchased by such Multicurrency Lenders in the
Letters of Credit issued by the Issuing Bank pursuant to SECTION 2.02(e), (C)
the Loans made or required to be made pursuant to SECTION 2.01(h), and (D)
amounts in respect of Protective Advances under the Multicurrency Facility
required to be paid under SECTION 12.09(a), and (ii) each Multicurrency Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Domestic Lenders (excluding, if applicable, such Multicurrency Lender and any
Affiliate of such Multicurrency Lender in their capacity as Domestic Lenders;
all such non-excluded Domestic Lenders, the "SELLING DOMESTIC LENDERS") an
unfunded participation in the Credit Facility Outstandings of such Selling
Domestic Lenders under the Domestic Facility, including without limitation (A)
the Domestic Loans, (B) the participations purchased by such Domestic Lenders in
the Letters of Credit issued by the Issuing Bank pursuant to SECTION 2.02(e),
(c) the Loans made or required to be made pursuant to SECTION 2.01(g), and (D)
amounts in respect of Protective Advances under the Domestic Facility required
to be paid under SECTION 12.09(a); in each case, each Lender's participation
shall be equal to such Lender's Pro Rata Share in respect of all of the Credit
Facilities.
(b) By 12:00 p.m. (New York time with respect to the Domestic Lenders and London time with respect to the Multicurrency Lenders) on the Business Day immediately following the Business Day on which the Obligations have been accelerated pursuant to SECTION 11.02(a), the Administrative Agent shall notify each Lender of the aggregate principal amount of all outstanding Loans, Reimbursement Obligations and Protective Advances of the Selling Multicurrency Lenders (with respect to the Domestic Lenders) and of the Selling Domestic Lenders (with respect to the Multicurrency Lenders) (together with any accrued and unpaid interest thereon) to be purchased by each applicable Lender pursuant to SECTION 2.03(a) as of the close of business on the Business Day immediately preceding the date of such notice (each such Business Day being the "PARTICIPATION SETTLEMENT DATE"), such amount being stated in the Optional Currency in which the Credit Facility Outstandings being purchased are denominated (or the Dollar Equivalent of such amount (plus reasonable foreign exchange costs) in the case of purchases by a Domestic Lender which is not a Multicurrency Lender and which does not have an Affiliate which is a Multicurrency Lender) (the "PARTICIPATION AMOUNT"). Each Lender shall, not later than 3:00 p.m. (New York or London time, as applicable with respect to the Domestic Lenders and the Multicurrency Lenders, respectively) on the fifth Business Day following the date of such notice, pay to the Administrative Agent for the account of the Applicable Lender (in the case of Loans), the Issuing Bank (in the case of Reimbursement Obligations) and/or the Administrative Agent (in the case of Protective Advances), in immediately available funds, the applicable Participation Amount, and the Administrative Agent shall promptly pay to the applicable Holder, that portion of the Participation Amount owing to such Holder (less such foreign exchange costs) received by the Administrative Agent.
(c) Each Lender hereby agrees that its obligations under this
SECTION 2.03 are irrevocable and shall not be subject to any qualification or
exception whatsoever and shall be made in accordance with this Agreement
(irrespective of the satisfaction of the conditions described in SECTIONS 5.01
and 5.02) under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability hereof or of any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right which any Borrower may have at any time against the Administrative Agent, the Issuing Bank, any Lender, or any other Person, whether in connection herewith, the transactions contemplated herein or any unrelated transactions;
(iii) any adverse change in the condition (financial or otherwise) of any Credit Party;
(iv) any breach of this Agreement by any Borrower, Borrower Subsidiary, Administrative Agent, Issuing Bank or Lender;
(v) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;
(vi) the occurrence of any Event of Default or Default; or
(vii) any other circumstance, happening, or event whatsoever, whether or not similar to any of the foregoing.
(d) If and to the extent any Lender shall not have made available to the Administrative Agent on the Participation Settlement Date any amount payable by such Lender on the Participation Settlement Date pursuant to this SECTION 2.03, such Lender agrees to pay to the Administrative Agent forthwith on demand such amount in the applicable currency together with interest thereon, for each day from the Participation Settlement Date until the date such amount is paid to the Administrative Agent, for three (3) Business Days at the Interbank Rate and thereafter at the interest rate applicable to the Loans denominated in such currency hereunder. The failure of any such Lender to make available to the Administrative Agent for the account of the applicable Holder its Participation Amount shall neither relieve any other Lender of its obligation hereunder to make available to the Administrative Agent for the account of the applicable Holder such other Lender's Participation Amount on the date such payment is to be made nor increase the obligation of any other Lender to pay its Participation Amount to the Administrative Agent. This Section does not relieve any Borrower of its obligation to pay or repay any Lender funding pursuant to this Section interest on the amount of such payment from such date such payment is to be made until the date on which payment is repaid in full.
2.04. EVIDENCE OF INDEBTEDNESS. Each Borrower hereby agrees to pay when due the principal amount of each Loan which is made to it and other Obligations owing by it (whether or not evidenced by a Note), and further agrees to pay all unpaid interest accrued thereon, in accordance with the terms hereof and, to the extent evidenced thereby, of the Notes. On the Closing Date, (a) the Domestic Borrowers shall execute and deliver to each Domestic Lender Domestic Loan Notes in a principal amount equal to the maximum amount of such Lender's Domestic Commitment evidencing the Loans to such Borrowers made under the Domestic Facility, (b) the Multicurrency Borrowers shall execute and deliver to the Multicurrency Lenders Multicurrency Loan Notes in a principal amount equal to the maximum amount of such Lender's Multicurrency Commitment evidencing the Loans to such Borrowers made under the Multicurrency Facility, and (c) the Domestic Borrowers shall execute and deliver to the Swing Loan Bank a Swing Loan Note in a principal amount equal to the Maximum Swing Loan Amount. Thereafter each Borrower, as applicable, shall execute and deliver such other promissory notes substantially in the form of the Notes issued on the Closing Date as are necessary to evidence the Loans owing to the applicable Lenders after giving effect to any assignment thereof pursuant to SECTION 14.01, all in form and substance acceptable to the Administrative Agent and the parties to such assignment, provided that the promissory notes being replaced are returned to such Borrower or other arrangements satisfactory to such Borrower and the Administrative Agent are made. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrowers to such Lender under each Credit Facility in which it is a Lender resulting from each Loan made under such Credit Facility owing to such Lender from time to time, including the amount of principal and interest payable and paid to such Lender from time to time hereunder and under each of the Notes.
2.05. AUTHORIZED OFFICERS AND ADMINISTRATIVE AGENTS. On the Closing Date and from time to time thereafter, the Borrowers shall deliver to the Administrative Agent an Officers' Certificate setting forth the names of the officers, employees and agents authorized to request
Revolving Loans, Swing Loans, Overdraft Loans and Letters of Credit and containing a specimen signature of each such officer, employee or agent. The officers, employees and agents so authorized shall also be authorized to act for the Borrowers in respect of all other matters relating to the Loan Documents. The Administrative Agent shall be entitled to rely conclusively on such officer's or employee's authority to request such Loan or Letter of Credit until the Administrative Agent receives written notice to the contrary. In addition, the Administrative Agent shall be entitled to rely conclusively on any written notice sent to it by telecopy. The Administrative Agent shall have no duty to verify the authenticity of the signature appearing on, or any telecopy or facsimile of, any written Notice of Borrowing or any other document, and, with respect to an oral request for such a Loan or Letter of Credit, the Administrative Agent shall have no duty to verify the identity of any person representing himself or herself as one of the officers, employees or agents authorized to make such request or otherwise to act on behalf of the Borrowers. None of the Administrative Agent, any Lender or the Issuing Bank shall incur any liability to the Borrowers or any other Person in acting upon any telecopy or facsimile or telephonic notice referred to above which the Administrative Agent reasonably believes to have been given by a duly authorized officer or other person authorized to act on behalf of the Borrowers.
2.06. BOOKING OF LOANS AND LETTERS OF CREDIT. Any Lender and any Issuing Bank may make, carry or transfer Loans or Issue Letters of Credit at, to or for the account of its Fixed Rate Lending Office or Fixed Rate Affiliate or its other offices or Affiliates (without complying with the requirements of SECTION 13.01). No Lender shall be entitled, however, to receive any greater amount under SECTIONS 3.04, 3.05, 4.01(f) or 4.02(e) as a result of the transfer of any such Loan or Letter of Credit to any office (other than such Fixed Rate Lending Office) or any Affiliate (other than such Fixed Rate Affiliate) than such Lender or Issuing Bank would have been entitled to receive immediately prior thereto, unless, such Lender or Issuing Bank, as the case may be, provides reasonably satisfactory evidence to the Company that (i) the transfer occurred at a time when circumstances giving rise to the claim for such greater amount did not exist and (ii) such claim in the relevant amount would have arisen even if such transfer had not occurred. No Fixed Rate Affiliate or such other Affiliate of any Lender or Issuing Bank shall, in its capacity as such, be deemed a party hereto or have any liability or obligation hereunder.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. PREPAYMENTS; REDUCTIONS IN AND REALLOCATIONS OF COMMITMENTS. Subject to SECTION 3.06, all payments in respect of the Domestic Borrowers' Obligations shall be made to the Domestic Concentration Account and all payments in respect of the Multicurrency Borrowers' Obligations shall be made to the Multicurrency Payment Account.
(a) VOLUNTARY REDUCTIONS OF COMMITMENTS.
(i) Subject to SECTION 3.01(e), the Domestic Borrowers, upon at least three (3) Business Days' prior written notice to the Administrative Agent, shall have the right, from time to time, to terminate in whole the Domestic Commitments or permanently reduce in part the Domestic Commitments, provided that the Domestic Borrowers shall have made or caused to be made any payment required to be made pursuant to SECTION
3.01(b)(i) after giving effect to such reduction, and, provided, further, that after giving effect to such reduction, the aggregate Domestic Commitments are greater than or equal to sixty percent (60%) of the aggregate Commitments. Subject to SECTION 3.01(e), the Multicurrency Borrowers, upon at least five (5) Business Days' prior written notice to the Administrative Agent, shall have the right, from time to time, to terminate in whole the Multicurrency Commitments or permanently reduce in part the Multicurrency Commitments, provided that the Multicurrency Borrowers shall have made or caused to be made any payment required to be made pursuant to SECTION 3.01(b)(i) after giving effect to such reduction.
(ii) Any partial reduction of a Lender's Commitment (A) shall be applied to such Lender's applicable Commitment, (B) shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount, and (iii) shall reduce the aggregate applicable Commitment of such Lender (or, where applicable, its Affiliate) proportionately in accordance (x) with respect to a reduction of the Multicurrency Commitments, its Pro Rata Share of the applicable Credit Facility and (y) with respect to a reduction of the Domestic Commitments, their aggregate Pro Rata Share of all Credit Facilities. Any notice of termination or reduction given to the Administrative Agent under this SECTION 3.01(a) shall specify the date (which shall be a Business Day) of such termination or reduction and, with respect to a partial reduction, the aggregate principal amount thereof. When notice of termination or reduction of any Commitment is delivered as provided herein, the principal amount of the Revolving Loans under the Credit Facility so reduced shall become due and payable on the date specified in such notice to the extent the Credit Facility Outstandings under such Credit Facility would exceed the Maximum Credit Amount for such Credit Facility after giving effect to such reduction. The payments in respect of reductions and terminations described in this SECTION 3.01(a) may be made without premium or penalty (except as provided in SECTION 4.02(e)).
(b) MANDATORY PREPAYMENTS OF REVOLVING LOANS.
(i) Immediately, if at any time the Credit Facility Outstandings under any Credit Facility, the Euro Subfacility or the Sterling Subfacility are greater than the Maximum Credit Amount for such Credit Facility, the Euro Subfacility or the Sterling Subfacility, as applicable, the applicable Borrower or Borrowers shall make a mandatory repayment of such Credit Facility Outstandings in an aggregate amount sufficient to reduce any such excess to zero, such amounts to be applied to the Obligations of the Borrower or Borrowers making such payments in accordance with SECTION 3.02. In addition, if at any time the Maximum Credit Amount for any Credit Facility is less than the amount of contingent Letter of Credit Obligations outstanding under such Credit Facility at such time, the applicable Borrower or Borrowers agree to deposit and maintain Cash Collateral in the applicable Cash Collateral Account in a Dollar Equivalent amount equal to the amount by which such Letter of Credit Obligations exceed such Maximum Credit Amount.
(ii) Subject to SECTION 3.06, prior to 1:00 p.m. (New York
time), with respect to payments under the Domestic Facility, and 4:00
p.m. (London time), with respect to
payments under the Multicurrency Facility, on each Business Day, from
funds on deposit in (A) (x) the Domestic Concentration Account and (y)
if necessary to repay in full all Credit Facility Outstandings under
the Domestic Facility, the Domestic Cash Collateral Account, and (B)
(x) the Multicurrency Concentration Accounts and (y) if necessary to
repay in full all Credit Facility Outstandings under the Multicurrency
Facility, the Multicurrency Cash Collateral Accounts, the
Administrative Agent shall transfer funds in accordance with SECTION
3.06 and thereby cause (1) the Domestic Borrowers (in the case of
CLAUSE (A) above) to make a mandatory repayment of the Credit Facility
Outstandings owing by such Domestic Borrowers on such Business Day in
an amount equal to: FIRST, any and all Non Pro Rata Fundings made to
such Borrowers on a pro rata basis, SECOND, any and all outstanding
Protective Advances made on behalf of such Borrowers, THIRD, any and
all outstanding Swing Loans made to such Borrowers, FOURTH, any and all
outstanding Revolving Loans made to such Borrowers, and FIFTH, the
repayment of the Credit Facility Outstandings and other Obligations
owing by such Borrowers then outstanding, in each case in accordance
with the applicable provisions of SECTION 3.02, and (2) the
Multicurrency Borrowers (in the case of CLAUSE (B) above) to make a
mandatory repayment of the Credit Facility Outstandings owing by such
Multicurrency Borrowers on such Business Day in an amount equal to:
FIRST, any and all Non Pro Rata Fundings made to such Borrowers on a
pro rata basis, SECOND, any and all outstanding Protective Advances
made on behalf of such Borrowers, THIRD, any outstanding Multicurrency
Revolving Loans then due and payable, FOURTH, any and all outstanding
Overdraft Loans made to such Multicurrency Borrowers, FIFTH, any and
all outstanding Revolving Loans made to such Multicurrency Borrowers,
and SIXTH, the repayment of the Credit Facility Outstandings and other
Obligations owing by such Multicurrency Borrowers then outstanding, in
each case in accordance with the applicable provisions of SECTION 3.02.
(iii) Immediately (or, in the case of Net Cash Proceeds of
Sale under SECTION 8.13(b), five (5) Business Days) after any
Borrower's or any Borrower Subsidiary's receipt of any Net Cash
Proceeds of Sale, each Borrower receiving, or the Subsidiary of which
has received, such Net Cash Proceeds of Sale agrees to make or cause to
be made a mandatory prepayment of its Loans in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds of Sale, such amounts
to be applied to the Obligations of the (A) if such Borrower is a
Domestic Borrower, the Domestic Borrowers and the Multicurrency
Borrowers, and (B) if such Borrower is a Multicurrency Borrower, the
Multicurrency Borrowers, in each case, in accordance with SECTION 3.02.
Each mandatory prepayment required to be paid by any Borrower by this
SECTION 3.01(b)(iii) shall be allocated and applied FIRST, to the
repayment of the Revolving Loans owed by the applicable Borrowers;
SECOND, to any remaining non-contingent Obligations of the applicable
Borrowers; and THEN, to the extent any such Obligations are contingent,
deposited in the applicable Cash Collateral Account as Cash Collateral
in respect of such contingent Obligations. Each mandatory prepayment
required to be paid by any Borrower by this SECTION 3.01(b)(iii) shall
be followed by a corresponding permanent reduction of the Commitments
under the Credit Facility applicable to such Borrower in an amount
equal to the related Net Cash Proceeds of Sale which have not been
reinvested in Additional Assets on or before the one-year anniversary
of the receipt of such Net Cash Proceeds of Sale, with such
reduction taking effect on the one year anniversary after such receipt; provided, however, that such reduction shall take effect prior to such date if the applicable Borrower notifies the Administrative Agent that it does not intend to reinvest such Net Cash Proceeds of Sale in Additional Assets (all such reductions shall reduce the aggregate Commitments of each Lender (and where applicable, its Affiliate) proportionately in accordance with its (or their, where applicable) aggregate Pro Rata Share of all Credit Facilities.
(iv) Immediately after any Borrower's or any of the Borrower Subsidiaries receipt of any Net Cash Proceeds of Issuance of Equity Securities or Indebtedness, each Borrower receiving, or the Subsidiary of which has received, such Net Cash Proceeds of Issuance of Equity Securities or Indebtedness agrees to make or cause to be made a mandatory prepayment of its Loans in an amount equal to one hundred percent (100%) of such Net Cash Proceeds of Issuance of Equity Securities or Indebtedness. Each mandatory prepayment required to be paid by any Borrower by this SECTION 3.01(b)(iv) shall be allocated and applied FIRST, to the repayment of the Revolving Loans owed by such Borrower; SECOND, to any remaining non-contingent Obligations of such Borrower; and THEN, to the extent any such Obligations are contingent, deposited in the applicable Cash Collateral Account as Cash Collateral in respect of such contingent Obligations, in each case in accordance with the applicable provisions of SECTION 3.02. Each mandatory prepayment required to be paid by any Borrower by this SECTION 3.01(b)(iv) shall be accompanied by a corresponding permanent reduction of the Commitments under the Credit Facility applicable to such Borrower in an amount equal to fifty percent (50.0%) of such Net Cash Proceeds of Issuance of Equity Securities or Indebtedness (all such reductions shall reduce the aggregate Commitments of each Lender (and where applicable, its Affiliate) proportionately in accordance with its (or where applicable, their) aggregate Pro Rata Share of all Credit Facilities.
(v) Nothing in this SECTION 3.01(b) shall be construed to constitute the Lenders' consent to any transaction which is not expressly permitted by ARTICLE IX.
(c) REALLOCATIONS OF SUBFACILITY COMMITMENTS. The Multicurrency Borrowers, upon three (3) Business Days' written notice to the Administrative Agent and with the consent of the Administrative Agent (to be exercised in its sole discretion), may request (a "SUBFACILITY REALLOCATION REQUEST"), no more than twelve (12) times in any Fiscal Year, that the Subfacility Commitment of either Subfacility be reduced by an amount equal to not less than $1,000,000 (such amount, the "SUBFACILITY REDUCTION AMOUNT"), and that the Subfacility Commitment for the other Subfacility be correspondingly increased by the Subfacility Reduction Amount; provided that a Subfacility Reallocation Request may not be made if, after giving effect to the proposed reallocation, the aggregate amount of the Multicurrency Commitments would exceed the maximum permitted amount of the Multicurrency Facility in effect at such time. It is agreed and understood that, in connection with any such reallocation, (i) the Pro Rata Shares of the Multicurrency Lenders under the Multicurrency Facility shall not change and (ii) the amount of the aggregate Commitments of all Multicurrency Lenders before and after such reallocation shall not change. After receiving a Subfacility Reallocation Request, the Administrative Agent shall notify the Multicurrency Lenders of such Subfacility Reallocation Request.
(d) REALLOCATIONS OF COMMITMENTS. The Domestic Borrowers or the Multicurrency Borrowers, upon five (5) Business Days' written notice to the Administrative Agent, may request (a "COMMITMENT REALLOCATION REQUEST"), no more than four (4) times in any Fiscal Year, that a Lender under a Credit Facility reduce its Commitment under such Credit Facility by an amount equal to not less than $1,000,000 (such amount, the "COMMITMENT REDUCTION AMOUNT"), and that the Commitment of such Lender under the other Credit Facility (or its Affiliate which is a Lender under such Credit Facility), as selected by such Borrowers in the Commitment Reallocation Request, be correspondingly increased by the Commitment Reduction Amount; provided that a Commitment Reallocation Request may not be made if, after giving effect to the proposed reallocation, (i) the aggregate amount of the Multicurrency Commitments would exceed the maximum amount of the aggregate Multicurrency Commitments in effect at such time (determined in accordance with the definitions of "Commitments" and "Multicurrency Commitment"), (ii) the aggregate amount of the Domestic Commitments would exceed the maximum amount of the aggregate Domestic Commitments in effect at such time (determined in accordance with the definitions of "Commitments" and "Domestic Commitments", or (iii) the aggregate Domestic Commitments would be less than sixty percent (60%) of the aggregate Commitments. After receiving a Commitment Reallocation Request, the Administrative Agent shall notify each affected Lender of such Commitment Reallocation Request, and such Commitments shall be adjusted as contemplated thereby on the date set forth in such Commitment Reallocation Request. Notwithstanding anything to the contrary in the foregoing, a Commitment Reallocation Request may not be made with respect to any Lender under any Credit Facility that is not a Lender under both Credit Facilities or does not have an Affiliate that is a Lender under the other Credit Facility.
(e) ADDITIONAL CONDITIONS TO COMMITMENT REALLOCATIONS AND REDUCTIONS. In connection with any reallocation of Commitments under SECTION 3.01(d) or reduction of Commitments under SECTION 3.01(a) or SECTION 3.01(b), neither the Pro Rata Shares of the Multicurrency Lenders under the Multicurrency Facility, nor the aggregate Pro Rata Share under all Credit Facilities of a Lender and its Affiliated Lenders shall change unless the Multicurrency Commitment is permanently reduced to zero. In the case of a reallocation of Commitments under SECTION 3.01(d), neither the aggregate Commitment of a Lender and its Affiliated Lenders nor the amount of the aggregate Commitments of all Lenders, in each case, before and after such reallocation shall change.
3.02. PAYMENTS.
(a) MANNER AND TIME OF PAYMENT. All payments of principal of and interest on the Loans and Reimbursement Obligations and other Obligations (including, without limitation, fees and expenses) which are payable to the Administrative Agent, the Lenders or the Issuing Bank shall be made without condition or reservation of right, in immediately available funds, delivered to the Administrative Agent (or, in the case of Reimbursement Obligations, to the pertinent Issuing Bank) not later than 1:00 p.m. (New York time) to the Domestic Concentration Account (or, in the case of Reimbursement Obligations, such account of the Issuing Bank as it may designate), with respect to payments under the Domestic Facility, and 4:00 p.m. (London time) to the Multicurrency Concentration Account for the relevant Specified Foreign Currency (or, in the case of Reimbursement Obligations, such account of the Issuing Bank as it may designate), with respect to payments under the Multicurrency Facility, on the date
due. Thereafter, payments in respect of any Swing Loans received by the Administrative Agent shall be distributed to the Swing Loan Bank, payments in respect of any Overdraft Loans received by the Administrative Agent shall be distributed to the Overdraft Line Bank, and payments in respect of any Revolving Loan received by the Administrative Agent shall be distributed to each Lender under the applicable Credit Facility in accordance with its Pro Rata Share of such Credit Facility (without giving effect to any adjustment of such Pro Rata Share in connection with a substantially simultaneous reallocation or reduction of the Commitment under the Domestic Credit Facility, in the case of payments to the Domestic Lenders) in accordance with the provisions of SECTION 3.02(b) on the date received, if received prior to 1:00 p.m. (New York time) with respect to Domestic Obligations and prior to 4:00 p.m. (London time) with respect to Multicurrency Obligations, and (except in the case of repayment of Swing Loans and Overdraft Loans) on the next succeeding Business Day if received thereafter, by the Administrative Agent.
(b) APPORTIONMENT OF PAYMENTS.
(i) Subject to the provisions of SECTION 3.02(b)(ii) and (iv),
except as otherwise provided herein (A) all payments of principal and
interest in respect of outstanding Revolving Loans under any Credit
Facility, and all payments in respect of Reimbursement Obligations
under any Credit Facility, shall be allocated among such of the Lenders
and Issuing Bank as are entitled thereto, in proportion to their
respective Pro Rata Shares of such Credit Facility and (B) all payments
of fees and all other payments in respect of any other Obligation shall
be allocated among such of the Lenders and Issuing Bank as are entitled
thereto, in proportion to their respective Pro Rata Shares of the
applicable Credit Facility (if such Obligation relates to such Credit
Facility) or otherwise in proportion to their respective Pro Rata
Shares of all the Credit Facilities. All such payments and any other
proceeds of Collateral or other amounts received by the Administrative
Agent from or for the benefit of a Borrower shall be applied FIRST, to
pay principal of and interest on any portion of the Loans made to such
Borrower which the Administrative Agent may have advanced pursuant to
the express provisions of this Agreement on behalf of any Lender other
than the Lender then acting as Administrative Agent, for which the
Administrative Agent has not then been reimbursed by such Lender or
such Borrower, SECOND, to pay principal of and interest on any
Protective Advance made to such Borrower for which the Administrative
Agent has not then been paid by such Borrower or reimbursed by the
Lenders, THIRD, to pay Loans of such Borrower as set forth below and to
pay all other Obligations of such Borrower then due and payable and
FOURTH, to such Borrower's Concentration Account, or if demand under
SECTION 11.02(b) has been made, such Borrower's Cash Collateral
Account, in each case, for the currency in which such payment is
denominated, to be held as Cash Collateral in accordance with this
Agreement, or if the Administrative Agent consents in its sole
discretion, to a Disbursement Account designated by the applicable
Borrower. Except as set forth in SECTIONS 3.01(a) and (b) and unless
otherwise designated by the Domestic Borrowers, all principal payments
made by any Domestic Borrower in respect of outstanding Swing Loans or
Revolving Loans of such Domestic Borrower, as the case may be, shall be
applied FIRST, to the outstanding Swing Loans and SECOND, to the
outstanding Revolving Loans of such Domestic Borrower, in each case,
FIRST, to repay outstanding Floating Rate
Loans, and THEN to repay outstanding Fixed Rate Loans with Interest Periods then expiring. Except as set forth in SECTIONS 3.01(a) and (b) and unless otherwise designated by the Multicurrency Borrowers, all principal payments made by any Multicurrency Borrower in respect of outstanding Overdraft Loans or Revolving Loans of such Multicurrency Borrower, as the case may be, shall be applied FIRST, to the Revolving Loans with Interest Periods then expiring and SECOND to the outstanding Overdraft Loans, in each case, denominated in the Specified Foreign Currency of such payment.
(ii) After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and shall upon the acceleration of the Obligations pursuant to SECTION 11.02(a), apply all payments in respect of any Domestic Obligations to the payment of the Domestic Facility, all payments in respect of any Multicurrency Obligations to the payment of the Multicurrency Facility, all proceeds of Foreign Collateral to the payment of Multicurrency Obligations, and all proceeds of Domestic Collateral to the payment of Domestic Obligations, in the following order (it being understood that the Administrative Agent shall have the right to convert, at a rate of exchange equal to the Spot Rate as of such conversion date and at the Borrowers' expense, any of such payments or proceeds of Collateral into the currency in which such Obligations are denominated):
(A) FIRST, to pay interest on, and the principal of, any portion of the Revolving Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed by such Lender or a Borrower;
(B) SECOND, to pay interest on, and then principal of, first any outstanding Protective Advance;
(C) THIRD, to pay interest on, and the principal of, any Swing Loan or Overdraft Loan;
(D) FOURTH, to pay Obligations in respect of (1) any expense
reimbursements or indemnities then due to the Administrative
Agent and (2) fees and expenses in respect of cash management
services provided to Borrowers and their Subsidiaries by the
Administrative Agent or any Affiliates of the Administrative
Agent, including, without limitation, those described in
SECTION 3.06(d);
(E) FIFTH, to pay Obligations in respect of any fees then due to the Administrative Agent, the Lenders or the Issuing Bank;
(F) SIXTH, to pay interest due in respect of the Revolving Loans, Reimbursement Obligations and in respect of the Obligations arising under the Foreign Working Capital Guaranty;
(G) SEVENTH, to pay or prepay (or, to the extent such obligations are contingent, provide Cash Collateral (pursuant to SECTION 11.02(b), if applicable) in respect of) all outstanding Letter of Credit Obligations;
(H) EIGHTH, to pay Obligations in respect of any expense reimbursements or indemnities then due to the Lenders and the Issuing Bank;
(I) NINTH, to pay or prepay principal outstanding on Revolving Loans and all outstanding Obligations (other than in respect of interest) arising under the Foreign Working Capital Guaranty;
(J) TENTH, to the ratable payment of (or, to the extent such
obligations are contingent, provide Cash Collateral (pursuant
to SECTION 11.02(b), if applicable) Obligations in respect of
(1) Interest Rate Contracts to which the Administrative Agent
or any Affiliate of the Administrative Agent is a party and
(2) foreign exchange services (including Currency Agreements)
provided to any Borrower or Borrower Subsidiary by the
Administrative Agent or any Affiliate of the Administrative
Agent;
(K) ELEVENTH, to the ratable payment of all other Obligations; and
(L) TWELFTH, as the applicable Borrower so designates;
provided, however, if sufficient funds are not available to fund all payments to be made in respect of any of the Obligations described in any of the foregoing CLAUSES (A) through (K), the available funds being applied with respect to any such Obligations referred to in any one of such clauses (unless otherwise specified in such clause) shall be allocated to the payment of such Obligations ratably, based on the proportion of the Administrative Agent's and each Lender's interest in the aggregate outstanding Obligations described in such clauses. Notwithstanding the foregoing, the Administrative Agent, the Lenders and the Issuing Bank further agree and acknowledge that (x) in no event shall proceeds of any Foreign Collateral, more than sixty-five percent (65.0%) of the Capital Stock of any Foreign Subsidiary or amounts received from any Foreign Credit Party as described herein be applied on any of the Domestic Obligations, and (y) no application of Domestic Collateral or payments with respect to the Multicurrency Borrower Guaranty may be made to the Multicurrency Obligations until such time as the aggregate outstanding Obligations owing to each Lender (and its Affiliates) are in proportion to (or as near thereto as is reasonably practicable) the outstanding Obligations owing to each other Lender (and its Affiliates), in accordance with their respective Pro Rata Shares of all Credit Facilities. The order of priority set forth in this SECTION 3.02(b)(ii) and the related provisions hereof are set forth solely to determine the rights and priorities of the Administrative Agent, the Lenders, the Issuing Bank and other Holders as among themselves. The order of priority set forth in CLAUSES (A) through (K) of this SECTION 3.02(B)(II) may at any time and from time to time be changed by the agreement of all Lenders without necessity of notice to or consent of or approval by any Borrower, any Holder which is not a Lender or Issuing Bank, or any other Person; provided, however, the order of priority set forth in CLAUSES (A) through (D) of this SECTION 3.02(b)(ii) may not be changed without the prior written consent of the Administrative Agent.
(iii) The Administrative Agent, in its sole discretion subject only to the terms of this SECTION 3.02(b)(iii), may pay from the proceeds of Revolving Loans made under the
applicable Credit Facility (which Loans may not have been requested by
a Borrower pursuant to a Notice of Borrowing) made to a Borrower
hereunder, whether made following a request by such Borrower pursuant
to SECTION 2.01 or 2.02 or a deemed request as provided in this SECTION
3.02(b)(iii), all amounts then due and payable by any Borrower
hereunder, including, without limitation, amounts payable with respect
to payments of principal, interest, Reimbursement Obligations and fees
and all reimbursements for expenses pursuant to SECTION 14.02. Each
Borrower hereby irrevocably authorizes the Swing Loan Bank (with
respect to the Domestic Borrowers only), the Overdraft Line Bank (with
respect to the Multicurrency Borrowers only) and the Lenders to make
Swing Loans, Overdraft Loans or Revolving Loans in the appropriate
Optional Currency, which Loans other than the Overdraft Loans shall be
Floating Rate Loans upon notice from the Administrative Agent as
described in the following sentence for the purpose of paying
principal, interest, Reimbursement Obligations and fees due from any
Borrower, reimbursing expenses pursuant to SECTION 14.02 or any other
Loan Document and paying any and all other amounts due and payable by
any Borrower hereunder or under the Notes, and agrees that all such
Loans so made shall be deemed to have been requested by it pursuant to
SECTION 2.01 and 2.02 as of the date of the aforementioned notice. The
Administrative Agent shall request Swing Loans, Overdraft Loans or
Revolving Loans on behalf of a Borrower as described in the preceding
sentence by notifying the Lenders under the applicable Credit Facility
by telex, telecopy, telegram or other similar form of transmission
(which notice the Administrative Agent shall thereafter promptly
transmit to such Borrower), of the amount and Funding Date of the
proposed Borrowing and that such Borrowing is being requested on such
Borrower's behalf pursuant to this SECTION 3.02(b)(iii). On the
proposed Funding Date, the Swing Loan Bank, Overdraft Line Bank or
Lenders under the relevant Credit Facility, as the case may be, shall
make the requested Loans in accordance with the procedures and subject
to the conditions specified in SECTION 2.01 or 2.02 (irrespective of
the satisfaction of the conditions described in SECTION 5.02 or the
requirement to deliver a Notice of Borrowing in SECTION 2.01(d), which
conditions and requirements, for the purposes of the payment of Swing
Loans, Overdraft Loans and Revolving Loans at the request of the
Administrative Agent as described in the preceding sentence, the
Lenders irrevocably waive). Notwithstanding the foregoing, Overdraft
Loans shall also be made at the direct request of the Multicurrency
Borrowers by notice to the Overdraft Line Bank in accordance with
SECTION 2.01(c)(i).
(iv) If any Lender fails to fund its Pro Rata Share of any Revolving Loan Borrowing requested by a Borrower under any Credit Facility, which such Lender is obligated to fund under the terms hereof or any Revolving Loan or other amount required to be made under SECTION 2.01(g), 2.01(h), 2.02(e)(ii), 2.03, 3.02(b)(iii), 12.05 or 12.09(a) (the funded portion of such Revolving Loan or other amount being hereinafter referred to as a "NON PRO RATA FUNDING"; any such Lender being hereinafter referred to as a "DEFAULTING LENDER"), excluding, solely in the case of Revolving Loan Borrowings requested by a Borrower, any such Lender who has delivered to the Administrative Agent written notice that one or more of the conditions precedent contained in SECTION 5.02 shall not on the date of such request be satisfied and until such conditions are satisfied, THEN until the earlier of such Lender's cure of such failure and the termination of the
Commitments, the proceeds of all amounts thereafter received by the Administrative Agent and required to be applied to such Lender's share of all other Obligations pursuant to the terms hereof shall be advanced to the Borrower requesting such Revolving Loan Borrowing or to the applicable Holder to which such payment is owing by the Administrative Agent on behalf of such Lender to cure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender in satisfaction of such other Obligations. Notwithstanding anything contained herein to the contrary:
(A) the foregoing provisions of this SECTION 3.02(b)(iv) shall apply only with respect to the proceeds of payments of Obligations;
(B) a Lender shall cease to be a Defaulting Lender at such time as an amount equal to such Lender's original Pro Rata Share of the requested principal portion of such Revolving Loan or such other amount is fully funded to the applicable Borrower, whether made by such Lender itself or by operation of the terms of this SECTION 3.02(b)(iv), and whether or not the Non Pro Rata Funding with respect thereto has been repaid;
(C) amounts advanced to a Borrower to cure, in full or in part, any such Defaulting Lender's failure to fund its Pro Rata Share of any Revolving Loan Borrowing ("CURE FUNDINGS") shall bear interest from and after the date made available to the applicable Borrower at the rate applicable to the other Revolving Loans comprising such Borrowing and shall be treated as Revolving Loans comprising such Borrowing for all purposes herein;
(D) regardless of whether or not an Event of Default has occurred or is continuing, and notwithstanding the instructions of the Borrower as to its desired application, all repayments of principal which, in accordance with the other terms of this SECTION 3.02, would be applied to the outstanding Revolving Loans shall be applied FIRST, ratably to all Non Pro Rata Fundings, SECOND, ratably to Revolving Loans or other amounts payable other than those constituting Non Pro Rata Fundings or Cure Fundings and, THIRD, ratably to Cure Fundings; and
(E) no Lender shall be relieved of any obligation such Lender may have to the Borrower under the terms of this Agreement as a result of the provisions of this SECTION 3.02(b)(iv).
(c) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made by a Borrower hereunder or under the Notes is stated to be due on a day which is not a Business Day, the payment shall instead be due on the next succeeding Business Day (or, as set forth in SECTION 4.02(a)(iv), the next preceding Business Day), and any such extension of time shall be included in the computation of the payment of interest and fees hereunder.
3.03. PRO RATA SHARES ADJUSTMENT. In the event the Pro Rata Shares of the Lenders under a Credit Facility are altered after giving effect to any Commitment Reallocation Request, after giving effect to any partial reduction of the Commitments made pursuant to SECTION 3.01(a), after giving effect to any mandatory reduction of the Commitments made pursuant to
SECTION 3.02(b) or after giving effect to any participation under SECTION 2.03, the Lenders whose Pro Rata Shares have increased as a result shall effect such purchases of Loans from the other Domestic Lenders or Multicurrency Lenders, as applicable, on the next Swing Loan Settlement Date (with respect to the Domestic Lenders) and on the next Overdraft Loan Settlement Date (with respect to the Multicurrency Lenders) such that after giving effect to such purchases each Lender is owed Loans in an amount equal to its adjusted Pro Rata Share of the Credit Facility Outstandings outstanding in respect of the applicable Credit Facility.
3.04. TAXES.
(a) PAYMENT OF TAXES. Any and all payments by the Borrowers hereunder or under any Note or other document evidencing any Obligations shall be made free and clear of and without reduction for any and all taxes, levies, imposts, deductions, charges, withholdings, and all stamp or documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on the value of the Property, charges or levies which arise from the execution, delivery or registration, or from payment or performance under, or otherwise with respect to, any of the Loan Documents or the Commitments and all other liabilities with respect thereto excluding, in the case of each Lender, each Issuing Bank and the Administrative Agent, taxes imposed on its income, capital, receipts, property, profits or gains and franchise taxes imposed on it by (i) the United States, except certain withholding taxes contemplated pursuant to SECTION 3.04(d)(ii)(c), (ii) the Governmental Authority of any jurisdiction (or any political subdivision thereof) in which any Applicable Lending Office of such Lender is located, (iii) the Governmental Authority of the jurisdiction in which such Lender is organized, managed and controlled or any political subdivision thereof, (iv) any political subdivision of the United States, unless such taxes are imposed solely as a result of such Lender's performance of any of the Loan Documents in such political subdivision and such Lender would not otherwise be subject to tax by such political subdivision, or (v) the United Kingdom, except any deduction or withholding from any payment by a Borrower for or on account of any tax in respect of any payments made hereunder or under any Note or other document evidencing any Obligations to the Administrative Agent or otherwise on behalf of any Lender or Issuing Bank arising (A) in respect of any Participation Amount (provided that each Lender shall, where possible, make all reasonable efforts to enable the relevant Borrower to make any such payment free of United Kingdom withholding tax) or (B) by reason of a change in (or in the interpretation, administration, or application of) any law of the United Kingdom or any applicable tax treaty or any published practice or concession of any relevant taxing authority after the later of the Closing Date or the date on which such Lender became a Lender or such Issuing Bank became an Issuing Bank (such non-excluded United Kingdom taxes being hereinafter referred to as "INCLUDED UK WITHHOLDING TAXES") (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "TAXES"); provided, however, that neither withholding taxes contemplated pursuant to SECTION 3.04(d)(ii)(C) nor Included UK Withholding Taxes shall be excluded from Taxes by reason of the application of CLAUSE (ii) or CLAUSE (iii) of this sentence to any Applicable Lending Office of a Lender or to any Lender, respectively. If a Borrower shall be required by law to withhold or deduct any Taxes from or in respect of any sum payable hereunder or under any Note or other document evidencing any Obligations to any Lender, the Issuing Bank or the Administrative Agent, (x) the sum payable to such Lender, such Issuing
Bank or the Administrative Agent shall be increased as may be necessary so that after making all required withholding or deductions (including withholding or deductions applicable to additional sums payable under this SECTION 3.04) such Lender, such Issuing Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such withholding or deductions been made, (y) such Borrower shall make such withholding or deductions, and (z) such Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law.
(b) INDEMNIFICATION. (i) The Domestic Borrowers jointly and severally agree to indemnify each Domestic Lender, the Issuing Bank and the Administrative Agent, and (ii) the Multicurrency Borrowers jointly and severally agree to indemnify the Multicurrency Lenders, the Issuing Bank and the Administrative Agent, against, and reimburse each on demand for, the full amount of all Taxes (including, without limitation, any Taxes imposed by any Governmental Authority on amounts payable under this SECTION 3.04 and any additional income or franchise taxes resulting therefrom) incurred or paid by such Lender, the Issuing Bank or the Administrative Agent (as the case may be but only to the extent relating to the applicable Credit Facility) or any of their respective Affiliates and any liability (including penalties, interest, and out-of-pocket expenses paid to third parties) arising therefrom or with respect thereto, whether or not such Taxes were lawfully payable (other than any liability that results from the gross negligence or willful misconduct of the Lenders and the Administrative Agent), and whether or not such Taxes were correctly or legally asserted by the relevant taxing authority or other Governmental Authority. A certificate as to any additional amount payable to any Person under this SECTION 3.04 submitted by it to any Borrower shall, absent manifest error, be final, conclusive and binding upon all parties hereto. Each Lender, the Administrative Agent and each Issuing Bank agrees (i) within a reasonable time after receiving a written request from any Borrower, to provide such Borrower and the Administrative Agent with such certificates as are reasonably required, and (ii) take such other actions as are reasonably necessary to claim such exemptions as such Lender, the Administrative Agent or such Issuing Bank or Affiliate may be entitled to claim in respect of all or a portion of any Taxes which are otherwise required to be paid or deducted or withheld pursuant to this SECTION 3.04 in respect of any payments under this Agreement or under the Notes. If any Lender or the Administrative Agent receives a refund in respect of any Taxes for which such Lender or the Administrative Agent has received payment from a Borrower hereunder, it shall promptly apply such refund (including any interest received by such Lender or the Administrative Agent from the taxing authority with respect to the refund with respect to such Taxes) to the Obligations of such Borrower, net of all out-of-pocket expenses of such Lender or the Administrative Agent; provided that such Borrower, upon the request of such Lender or the Administrative Agent, agrees to reimburse such refund (plus penalties, interest or other charges) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such refund. Each Multicurrency Borrower jointly and severally agrees to pay and indemnify each Multicurrency Lender, Issuing Bank and the Administrative Agent against any cost, loss or liability that such Person incurs in relation to all stamp duty, registration and other similar taxes payable in respect of any Loan Document. Each Domestic Borrower jointly and severally agrees to pay and indemnify each Domestic Lender, Issuing Bank and the Administrative Agent against any cost, loss or liability that such Person incurs in relation to all stamp duty, registration and other similar taxes payable in respect of any Loan Document. Each Domestic Borrower jointly and severally agrees, and
each Multicurrency Borrower jointly and severally agrees, to pay promptly any stamp duty (and any interest or penalty in connection therewith) which is payable on any Receivables Sale Agreement (or any document executed in connection therewith) if it becomes reasonably necessary that the UK Borrower prove its entitlement to Receivables which are the subject of the relevant Receivables Sale Agreement and the payment of such stamp duty is reasonably necessary in order to do so.
(c) RECEIPTS. Within sixty (60) days after the date of any payment of Taxes pursuant to this SECTION 3.04 by any Borrower or any of the Borrowers' Subsidiaries, the Borrowers will furnish to the Administrative Agent at its request, at its notice address in effect under SECTION 14.08, a copy of a receipt, if any, or other documentation reasonably satisfactory to the Administrative Agent, evidencing payment thereof. The Borrowers shall furnish to the Administrative Agent, within sixty (60) days after the request of the Administrative Agent from time to time, a certificate of a Financial Officer stating that all Taxes of which they have Knowledge are due have been paid.
(d) NON-DOMESTIC BANK CERTIFICATIONS.
(i) Each Lender or Issuing Bank that is not created or organized under the laws of the United States or a political subdivision thereof shall deliver to the Borrowers and the Administrative Agent on the date such Lender becomes a Lender or such Issuing Bank becomes an Issuing Bank, (i) a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender or Issuing Bank to the effect that such Lender or Issuing Bank is eligible to receive all payments hereunder and under the Notes without deduction or withholding of United States federal income tax and (ii) a properly completed and executed IRS Form W-8 (or any successor forms, including IRS Form W-8 BEN, W-8IMY or W-8ECI). If a Lender or an Issuing Bank is unable to deliver the certificate and forms described in, and on the dates required by, the preceding sentence, then the applicable Borrower shall withhold the applicable tax and shall have no indemnification obligation with respect to such withholding tax.
(ii) Each Lender and each Issuing Bank further agrees to promptly deliver to the Borrowers and the Administrative Agent from time to time, subsequent to delivery of the certification referred to in SECTION 3.04(d)(i), a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender or such Issuing Bank before or promptly upon the occurrence of any event requiring a change in the most recent certificate previously delivered by it to the Borrowers and the Administrative Agent pursuant to this SECTION 3.04(d) (including, but not limited to, a change in such Lender's or such Issuing Bank's Applicable Lending Office). Each certificate required to be delivered pursuant to this SECTION 3.04(d)(ii) shall certify as to one of the following:
(A) that such Lender or such Issuing Bank can continue to receive payments hereunder and under the Notes without deduction or withholding of United States federal income tax;
(B) that such Lender or such Issuing Bank cannot continue to receive payments hereunder and under the Notes without deduction or withholding of United States
federal income tax as specified therein but does not require additional payments pursuant to SECTION 3.04(a) because it is entitled to recover the full amount of any such deduction or withholding from a source other than the Borrowers;
(C) that such Lender or Issuing Bank is no longer capable of
receiving payments hereunder and under the Notes without
deduction or withholding of United States federal income tax
as specified therein solely by reason of a change in law
(including the Internal Revenue Code or applicable tax treaty)
after the later of the Closing Date or the date on which such
Lender became a Lender or such Issuing Bank became an Issuing
Bank and that it is not capable of recovering the full amount
of the same from a source other than the Borrowers; or
(D) that such Lender or such Issuing Bank is no longer capable of receiving payments hereunder without deduction or withholding of United States federal income tax as specified therein other than by reason of a change in law (including the Internal Revenue Code or applicable tax treaty) after the later of the Closing Date or the date on which such Lender became a Lender or such Issuing Bank became an Issuing Bank.
Each Lender and each Issuing Bank agrees to deliver to the Borrowers under the applicable Credit Facility and the Administrative Agent further duly completed copies of the above-mentioned IRS forms on or before the earlier of (x) the date that any such form expires or becomes obsolete or otherwise is required to be resubmitted as a condition to obtaining an exemption from withholding from United States federal income tax and (y) fifteen (15) days after the occurrence of any event requiring a change in the most recent form previously delivered by such Lender or such Issuing Bank to the Borrowers and the Administrative Agent, unless any change in treaty, law, regulation or official interpretation thereof which would render such form inapplicable or which would prevent the Lender from duly completing and delivering such form has occurred prior to the date on which any such delivery would otherwise be required and the Lender or the Issuing Bank promptly advises the Borrowers that it is not capable of receiving payments hereunder or under the Notes without any deduction or withholding of United States federal income tax.
(e) The UK Borrower shall take all steps as may be reasonably requested by the Administrative Agent on behalf of any Lender or Issuing Bank to enable the relevant Lender or Issuing Bank to comply with certification or other procedures requisite to obtaining any available benefits under the tax treaty then in effect between the United Kingdom and the United States (or other applicable jurisdiction) with respect to any payment hereunder or under any Note or other document evidencing any Obligations, including (without limitation) providing information to the UK Borrower's local tax office, and shall take such steps as soon as reasonably possible (having regard to the consequences of any delay).
3.05. INCREASED CAPITAL. If after the date hereof any Lender or Issuing Bank determines that (i) the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or
control over any Lender, Issuing Bank or banks or financial institutions
generally (whether or not having the force of law), compliance with which
affects or would affect the amount of capital required or expected to be
maintained by such Lender or Issuing Bank or any corporation controlling such
Lender or Issuing Bank and (ii) the amount of such capital is increased by or
based upon (A) the making or maintenance by any Lender of its Loans, any
Lender's participation in or obligation to participate in the Loans, Letters of
Credit or other advances made hereunder or the existence of any Lender's
obligation to make Loans or (B) the issuance or maintenance by the Issuing Bank
of, or the existence of the Issuing Bank's obligation to Issue, Letters of
Credit, then, in any such case, upon written demand by (x) such Domestic Lender
or Issuing Bank (with a copy of such demand to the Administrative Agent), the
Domestic Borrowers, or (y) such Multicurrency Lender or Issuing Bank (with a
copy of such demand to the Administrative Agent), the Multicurrency Borrowers
jointly and severally agree immediately to pay to the Administrative Agent for
the account of such Lender or Issuing Bank, from time to time as specified by
such Lender or Issuing Bank, additional amounts sufficient to compensate such
Lender or Issuing Bank or such corporation therefor; provided that the Borrowers
shall not be required to compensate any Lender or Issuing Bank pursuant to this
SECTION 3.05 for any increased capital costs incurred more than 180 days prior
to the date such Issuing Bank or Lender notifies the applicable Borrower of the
event giving rise to such increased capital cost and of such Lender's or Issuing
Bank's intention to claim compensation therefor; provided further, however, that
such 180-day limitation shall not apply to any cost that is applicable
retroactively so long as the applicable Lender notifies the Borrowers of such
cost within 180 days of a responsible officer of such Lender receiving actual
knowledge thereof. Such demand shall be accompanied by a statement as to the
amount of such compensation and include a summary of the basis for such demand
with detailed calculations. Such statement shall be conclusive and binding for
all purposes, in the absence of manifest error.
3.06. CASH MANAGEMENT AND CONCENTRATION ACCOUNTS.
(a) ESTABLISHMENT OF ACCOUNTS. On the Closing Date, the Credit Parties shall have established the Bank Accounts identified on SCHEDULE 6.01-Z. After the Closing Date, the Borrowers agree to establish, and cause the Credit Parties or such other Subsidiaries who are agreed to by the Administrative Agent and the Borrowers, to establish, such other Bank Accounts as the Administrative Agent may reasonably request, and SCHEDULE 6.01-Z shall be updated accordingly. After any such Bank Account is established, the Borrowers or such Subsidiaries may change the Bank Accounts or add to the Bank Accounts listed on SCHEDULE 6.01-Z as their needs may require and agree to notify the Administrative Agent in writing of any such changes (such schedule being deemed to be amended by any such notice); PROVIDED, HOWEVER, no Credit Party shall:
(i) change any Bank Account other than a Disbursement Account (except as contemplated above) or establish any new Bank Account other than a Disbursement Account with any bank which is not acceptable to the Administrative Agent and which, in the case of a Collection Account to be maintained at such bank, has not executed a Collection Account Agreement with respect to such Collection Account, or
(ii) establish any other Bank Account other than a Disbursement Account, or modify any arrangement with respect to any other existing Bank Account other than a
Disbursement Account, without the prior consent of the Administrative Agent, which consent may be granted or withheld in the reasonable discretion of the Administrative Agent.
(b) COLLECTIONS. Each Credit Party, (i) has directed, and in the future will direct, all of its account debtors to remit all monies, checks, notes, drafts or funds received by it, including, without limitation, all payments in respect of Receivables, all other proceeds of Collateral, and all Net Cash Proceeds (the "COLLECTIONS") directly to a Lockbox or Collection Account (or in accordance with other arrangements approved by the Administrative Agent), or (ii) to the extent that the account debtors of such Credit Party, notwithstanding the instructions described in CLAUSE (I) above, remit such Collections directly to such Credit Party, each Borrower agrees, and agrees to cause each Credit Party to, deposit all such Collections into a Collection Account promptly upon such Person's receipt thereof. The Borrowers agree to cause all Collections now or hereafter received directly or indirectly by any Borrower or any such Credit Party or any agent thereof or in the possession of any Borrower or any Credit Party or any agent thereof to be held in trust for, or, in the case of Collections received by any Foreign Credit Party, on trust for (or as otherwise provided in the relevant Foreign Security Agreements relating thereto) the Administrative Agent and, promptly upon receipt thereof, to be deposited into a Collection Account. The contents of each Lockbox shall automatically be deposited into a Collection Account or be emptied and deposited into a Collection Account by a representative of the Collection Account Bank at which the applicable Collection Account has been established. Only the Administrative Agent and the applicable Collection Account Bank, if any, shall have power of withdrawal from each Lockbox and the related Collection Account. NMHG Distribution shall not remit, nor shall permit the deposit of, any Collections to account number 757123 held at City National Bank and account numbers 39079128, 394-189-765, and 754116069 held at National City Bank, and, to the extent any Collections are so deposited, shall promptly wire such funds to a Collection Account.
(c) CONCENTRATION ACCOUNTS; CASH COLLATERAL ACCOUNTS. All
immediately available funds, or as otherwise provided in any Collection Account
Agreement with respect to low volume Collection Accounts, in any Collection
Account (w) of any Domestic Borrower shall be automatically transferred (either
directly or indirectly) into the Domestic Concentration Account, (x) of the
Multicurrency Borrowers shall be transferred (either directly or indirectly)
automatically or as otherwise provided pursuant to the applicable Collection
Account Agreement and/or Multicurrency Concentration Accounts Agreements into
(A) with respect to funds denominated in Sterling, the applicable Sterling
Concentration Account, (B) with respect to funds denominated in Euros, the
applicable Euro Concentration Account, and (C) with respect to funds denominated
in Dollars, the applicable Dollars Concentration Account. Funds shall be
directed in accordance with the instructions of the Administrative Agent to the
applicable Cash Collateral Account upon a demand made pursuant to SECTION
11.02(b). The Domestic Concentration Account and each Domestic Cash Collateral
Account shall be in the name of and owned by the Administrative Agent. The
Multicurrency Concentration Account and each Multicurrency Cash Collateral
Account shall be under the sole dominion and control and subject to the first
priority security interest of the Administrative Agent. The following procedures
shall apply to the Domestic Concentration Account, the Multicurrency
Concentration Accounts and the Cash Collateral Accounts:
(i) GENERALLY. Each Bank Account shall be denominated in a single currency. The Administrative Agent alone shall have power of withdrawal from the Concentration Accounts and the Cash Collateral Accounts. Subject to SECTIONS 3.01(b)(ii), 3.01(b)(iii), 3.02(b)(ii), 3.02(b)(iii) and 11.03, (A) the Domestic Borrowers hereby authorize the Administrative Agent to apply all immediately available funds on deposit in the Domestic Concentration Account and, if necessary, Domestic Cash Collateral Account to the Domestic Obligations, and (B) the Multicurrency Borrowers hereby authorize the Administrative Agent to apply all immediately available funds on deposit in each Multicurrency Concentration Account and, if necessary, each Multicurrency Cash Collateral Account, to the Multicurrency Obligations denominated in the Specified Foreign Currency maintained in such Multicurrency Concentration Account and Multicurrency Cash Collateral Account. Solely with respect to the Domestic Concentration Account, to the extent any such funds remain after such application or disbursement to a Domestic Borrower pursuant to SECTION 3.02(b) and no Default or Event of Default has occurred and is continuing, each Domestic Borrower hereby authorizes the Administrative Agent to invest such funds in accordance with SECTION 3.06(c)(ii). Solely with respect to the Multicurrency Concentration Accounts, to the extent any such funds remain after such application or disbursement to a Multicurrency Borrower pursuant to SECTION 3.02(b) and no Default or Event of Default has occurred and is continuing, any Multicurrency Borrower may, upon notice to the Administrative Agent not later than 10:30 a.m. (London time), convert any funds on deposit in a Multicurrency Concentration Account into another Optional Currency and transfer such funds (less any reasonable foreign exchange costs) to another Multicurrency Concentration Account in which such other Optional Currency is maintained.
(ii) INVESTMENTS. Subject to the right of the Administrative Agent to apply and/or withdraw funds from the Domestic Concentration Account and the Domestic Cash Collateral Account as provided in this Agreement, the Administrative Agent shall, so long as no Default or Event of Default shall have occurred and be continuing, from time to time invest funds (or procure the investment of such funds) on deposit in such accounts and accrued interest thereon, procure the reinvestment of proceeds of any such investments which may mature or be sold, and invest interest or other income received from any such investments, in each case in an overnight investment selected by the Administrative Agent. None of the Administrative Agent, any Lender or the Issuing Bank shall be liable to any Borrower for, or with respect to, any decline in value of amounts on deposit in the Domestic Concentration Account or Domestic Cash Collateral Account which shall have been invested pursuant to this SECTION 3.06(c)(ii) pursuant to such overnight investments selected by the Administrative Agent. All funds on deposit in the Multicurrency Concentration Accounts and Multicurrency Cash Collateral Accounts shall bear interest in accordance with the applicable account agreement.
(iii) ADDITIONAL PAYMENTS. If at any time the Administrative Agent determines that any funds held in any Concentration Account or Cash Collateral Account are subject to any interest, right, claim or Lien (other than Liens arising in the ordinary course of business for amounts which are not yet due and payable) of any Person other than the Administrative Agent or the applicable Borrower, the Domestic Borrowers jointly and
severally (with respect to funds deposited by the Domestic Borrowers) and the Multicurrency Borrowers jointly and severally (with respect to funds deposited by the Multicurrency Borrowers) agree that (i) forthwith upon demand by the Administrative Agent, to pay to the Administrative Agent, as additional funds to be deposited and held in the applicable Concentration Account or Cash Collateral Account, as the case may be, an amount equal to the amount of funds subject to such interest, right, claim or Lien or (ii) if no such payment is made, the Administrative Agent shall immediately and without requirement of notice as set forth in the definitions of Multicurrency Borrowing Base and Domestic Borrowing Base, as applicable, impose an Eligibility Reserve in the amount of such funds (unless such interest, right, claim or Lien has then been included in any Eligibility Reserve with respect to such funds or has been factored into a decreased advance rate with respect to Cash Collateral).
(iv) CUSTODY OF CASH COLLATERAL. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Concentration Accounts and the Cash Collateral Accounts and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own like property, it being understood that the Administrative Agent shall not be required to preserve rights of the Borrowers in such accounts or any amounts on deposit therein or any Investments subject thereto against third parties but may do so at its option. All expenses incurred in connection therewith shall be for the joint and several account of the Multicurrency Borrowers with respect to any funds deposited by the Multicurrency Borrowers or the joint and several account of the Domestic Borrowers with respect to any funds deposited by the Domestic Borrowers, and, in each case, shall constitute Obligations hereunder.
Notwithstanding anything to the contrary contained in this Agreement, except as set forth in this CLAUSE (c), none of the Borrowers or any Person or entity claiming on behalf of or through a Borrower shall have any right to withdraw any of the funds held in the Domestic Concentration Account or any Cash Collateral Account. Upon the Payment In Full of the Obligations and termination of the Commitments, any funds remaining in the Domestic Concentration Account or the Domestic Cash Collateral Account shall be returned by the Administrative Agent to the relevant Borrower or paid by the Administrative Agent to whomever may be legally entitled thereto, and in relation to funds in the Multicurrency Concentration Accounts and the Multicurrency Cash Collateral Accounts, the Administrative Agent shall release the security over such accounts and terminate any associated control rights it may have.
(d) FEES AND EXPENSES. With respect to fees, costs and expenses incurred (i) in respect of the Domestic Facility, the Domestic Borrowers jointly and severally agree, and (ii) in respect of the Multicurrency Facility, the Multicurrency Borrowers jointly and severally agree, in each case, to pay to the Administrative Agent any and all reasonable fees, costs and expenses which the Administrative Agent incurs in connection with opening and maintaining the Collection Accounts, Concentration Accounts and Cash Collateral Accounts, lockbox or other similar payment collection mechanisms for such Borrowers and depositing for collection any check or item of payment received by and/or delivered to the Collection Account Banks or the Administrative Agent on account of the Obligations. With respect to the Collection Account Banks (x) for the Domestic Borrowers, the Domestic Borrowers jointly and severally agree, (y)
for the Multicurrency Borrowers, the Multicurrency Borrowers jointly and severally agree, in each case, to reimburse the Administrative Agent for any amounts paid to any Collection Account Bank arising out of any required indemnification by the Administrative Agent of such Collection Account Bank against damages incurred by the Collection Account Bank in the operation of a Collection Account.
ARTICLE IV
INTEREST AND FEES
4.01. INTEREST ON THE LOANS AND OTHER OBLIGATIONS.
(a) RATE OF INTEREST. All Loans and the outstanding principal balance of all other Obligations shall bear interest on the unpaid principal amount thereof from the date such Loans are made and such other Obligations are due and payable until paid in full, except as otherwise provided in SECTION 4.01(d), as follows:
(i) If a Floating Rate Loan or such other Obligation, at a rate per annum equal to the sum of the Floating Rate in effect from time to time as interest accrues, PLUS the Applicable Floating Rate Margin in effect from time to time;
(ii) If an Overdraft Loan, at a rate per annum equal to the sum of the Overdraft Rate in effect from time to time as interest accrues, PLUS the Applicable Overdraft Rate Margin in effect from time to time; and
(iii) If a Fixed Rate Loan, at a rate per annum equal to the sum of the Fixed Rate determined for the applicable Interest Period and the applicable currency, PLUS the Applicable Fixed Rate Margin in effect from time to time during such Interest Period.
The applicable basis for determining the rate of interest on any Loan shall be initially determined in accordance with SECTION 2.01(d). The applicable basis for determining the rate of interest on such Loan shall be selected thereafter by the relevant Borrower at the time a Notice of Conversion/Continuation is delivered by such Borrower to the Administrative Agent. Notwithstanding the foregoing, such Borrower may not select the Fixed Rate as the applicable basis for determining the rate of interest on such a Loan if (x) such Loan is to be made on the Closing Date or (y) at the time of such selection an Event of Default or Default would occur or has occurred and is continuing. If on any day any Loan is outstanding with respect to which notice has not been timely delivered to the Administrative Agent in accordance with the terms hereof specifying the basis for determining the rate of interest on that day, then for that day interest on that Loan shall be determined by reference to the applicable Floating Rate.
(b) INTEREST PAYMENTS.
(i) Interest accrued on each Floating Rate Loan shall be payable in arrears in the currency in which such Loan is denominated (A) on the first Business Day of each calendar month for the preceding calendar month, commencing on the first such day following the making of such Floating Rate Loan and (B) if not theretofore paid in full, at maturity (whether by acceleration or otherwise) of such Floating Rate Loan.
(ii) Interest accrued on each Fixed Rate Loan shall be payable in arrears in the currency in which such Loan is denominated on the last day of each Fixed Rate Interest Payment Date with respect to such Loan and (B) if not theretofore paid in full, at maturity (whether by acceleration or otherwise) of such Fixed Rate Loan.
(iii) Interest accrued on the principal balance of all other Obligations shall be payable in arrears in the currency in which such Obligation is denominated (A) on the first Business Day of each month, commencing on the first such day following the incurrence of such Obligation and (B) if not theretofore paid in full, at the time such other Obligation becomes due and payable (whether by acceleration or otherwise).
(c) CONVERSION OR CONTINUATION.
(i) Each Domestic Borrower shall have the option (A) to convert at any time all or any part of its outstanding Floating Rate Loans (other than Swing Loans) to Fixed Rate Loans or (B) to convert all or any part of its outstanding Fixed Rate Loans having Interest Periods which expire on the same date to Floating Rate Loans on such expiration date; and each Borrower shall have the option to continue all or any part of its outstanding Fixed Rate Loans having Interest Periods which expire on the same date as Fixed Rate Loans denominated in the same currency, and the succeeding Interest Period of such continued Loans shall commence on such expiration date; provided, however, in each case, no such outstanding Loan may be continued as, or be converted into, a Fixed Rate Loan (i) if the continuation of, or the conversion into, such Fixed Rate Loan would violate any of the provisions of SECTION 4.02 or (ii) if an Event of Default or Default would occur or has occurred and is continuing. Any conversion into or continuation of Fixed Rate Loans under this SECTION 4.01(c) shall be in a minimum amount of the Dollar Equivalent of $7,500,000 for Domestic Loans and $5,000,000 for Multicurrency Loans and in integral Dollar Equivalent multiples of $1,000,000 in excess of that amount. Such minimum levels may be achieved under the Domestic Facility by combining the Loans of more than one Borrower being continued as or converted into Fixed Rate Loans with the same Interest Period so long as the minimum amount of any single Borrowing is the Dollar Equivalent of $1,000,000; and such minimum levels may be achieved under the Multicurrency Facility by combining the Loans of the same currency of more than one Borrower being continued as or converted into Fixed Rate Loans with the same Interest Period so long as the minimum amount of any single Borrowing is the Dollar Equivalent of $1,000,000.
(ii) To convert or continue a Loan under SECTION 4.01(c)(i),
the applicable Borrower shall deliver a Notice of
Conversion/Continuation to the Administrative Agent no later than 12:00
p.m. (New York time) at least three Business Days in advance of the
proposed conversion/continuation date with respect to Domestic Loans
and 3:00 p.m. (London time) at least four Business Days in advance of
the proposed conversion/continuation date with respect to Multicurrency
Loans. Promptly after receipt of a Notice of Conversion/Continuation
under this SECTION 4.01(c)(ii), the Administrative Agent shall notify
each Lender under the applicable Credit Facility by telex or telecopy,
or other similar form of transmission, of the proposed
conversion/continuation. Any Notice of Conversion/Continuation for
conversion to, or continuation of, a Loan shall be
irrevocable, and the applicable Borrower shall be bound to convert or continue in accordance therewith.
(d) DEFAULT INTEREST. Notwithstanding the rates of interest specified in SECTION 4.01(a) or elsewhere herein, and to the extent permitted by applicable law, effective immediately upon the occurrence of any Event of Default and for as long thereafter as such Event of Default shall be continuing, the principal balance of all Loans and of all other Obligations shall bear interest at a rate which is two percent (2.0%) per annum in excess of the rate of interest applicable to such Loans and Obligations from time to time.
(e) COMPUTATION OF INTEREST. Interest on all Obligations shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and (i) with respect to Obligations for Sterling Loans and Overdraft Loans denominated in Sterling, a year of 365 days, and (ii) with respect to all other Obligations, a year of 360 days. In computing interest on any Loan, the date of the making of the Loan shall be included and the date of payment shall be excluded.
(f) CHANGES; LEGAL RESTRICTIONS. If after the date hereof any Lender or the Issuing Bank determines that the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over any Lender, the Issuing Bank or over banks or financial institutions generally (whether or not having the force of law), compliance with which, in each case after the date hereof:
(i) subject to the provisions of SECTION 3.04 (which will be conclusive as to matters covered thereby), does or will subject a Lender or an Issuing Bank (or its Applicable Lending Office or Fixed Rate Affiliate) to charges (other than Taxes) of any kind which such Lender or Issuing Bank reasonably determines to be applicable to the Commitments of the Lenders and/or the Issuing Bank to make Fixed Rate Loans or Issue and/or participate in Letters of Credit or change the basis of taxation of payments to that Lender or Issuing Bank of principal, fees, interest, or any other amount payable hereunder with respect to Fixed Rate Loans or Letters of Credit; or
(ii) does or will impose, modify, or hold applicable, in the determination of a Lender or an Issuing Bank, any reserve (other than reserves taken into account in calculating the Fixed Rate), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities (including those pertaining to Letters of Credit) in or for the account of, advances or loans by, commitments made, or other credit extended by, or any other acquisition of funds by, a Lender or an Issuing Bank or any Applicable Lending Office or Fixed Rate Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or Issuing Bank of making, renewing or maintaining any Loans or its Commitments or issuing or participating in the Letters of Credit or to reduce any amount receivable thereunder; then, in any such case, upon written demand by such Lender or Issuing Bank (with a copy of such demand to the
Administrative Agent), (x) the Domestic Borrowers jointly and severally agree
promptly to pay to the Administrative Agent for the account of such Domestic
Lender or Issuing Bank, from time to time as specified by such Domestic Lender
or Issuing Bank, such amount or amounts as may be necessary to compensate such
Domestic Lender or Issuing Bank or its Fixed Rate Affiliate for any such
additional cost incurred or reduced amount received in connection with the
Domestic Facility and (y) the Multicurrency Borrowers jointly and severally
agree promptly to pay to the Administrative Agent for the account of such
Multicurrency Lender or Issuing Bank, from time to time as specified by such
Multicurrency Lender or Issuing Bank, such amount or amounts as may be necessary
to compensate such Multicurrency Lender or Issuing Bank or its Fixed Rate
Affiliate for any such additional cost incurred or reduced amount received in
connection with the Multicurrency Facility; provided that the Borrowers shall
not be required to compensate any Lender or Issuing Bank pursuant to this
SECTION 4.01(f) for any increased costs or reductions incurred more than 180
days prior to the date such Issuing Bank or Lender notifies the applicable
Borrower of the event giving rise to such increased cost or reduction and of
such Lender's or Issuing Bank's intention to claim compensation therefor;
provided further, however, that such 180-day limitation shall not apply to any
cost or reduction that is applicable retroactively to periods prior to the
effective date of the applicable event so long as the applicable Lender notifies
the Borrowers of such event within 180 days of a responsible officer of the
Administrative Agent receiving actual knowledge thereof. Such demand shall be
accompanied by a statement as to the amount of such compensation. Such statement
shall be conclusive and binding for all purposes, absent manifest error.
(g) CONFIRMATION OF FIXED RATE. Upon the reasonable request of any Borrower from time to time, the Administrative Agent shall promptly provide to such Borrower such information with respect to the applicable Fixed Rate as may be so requested.
4.02. SPECIAL PROVISIONS GOVERNING FIXED RATE LOANS. With respect to Fixed Rate Loans:
(a) DETERMINATION OF INTEREST PERIOD. By giving notice as set forth in SECTION 2.01(d) (with respect to a new Borrowing of Domestic Loans or Multicurrency Loans) or SECTION 4.01(c) (with respect to a conversion into or continuation of a Fixed Rate Loan), the applicable Borrower shall have the option, subject to the other provisions of this SECTION 4.02, to select an interest period (each, an "INTEREST PERIOD") to apply to the Loans described in such notice, subject to the following provisions:
(i) (A) Such Domestic Borrower may only select, as to a
particular Borrowing of Fixed Rate Loans, an Interest Period of either
one (1), two (2), three (3) or six (6) months in duration and (B) such
Multicurrency Borrower may only select, as to a particular Borrowing of
Fixed Rate Loans, an Interest Period of either seven (7) days, fourteen
(14) days, one (1) month, two (2) months, three (3) months or six (6)
months in duration;
(ii) In the case of immediately successive Interest Periods applicable to a Borrowing of Fixed Rate Loans, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires;
(iii) If any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall be extended to expire on the next succeeding Business Day if the next succeeding Business Day occurs in the same calendar month, and if there shall be no succeeding Business Day in such calendar month, such Interest Period shall expire on the immediately preceding Business Day;
(iv) Such Borrower may not select an Interest Period as to any Loan if such Interest Period terminates later than the Termination Date;
(v) There shall be no more than ten (10) Interest Periods in effect at any one time; and
(vi) No Fixed Rate Loan may be borrowed on the Closing Date, and no Notice of Conversion/Continuation may be delivered prior to the Closing Date.
(b) DETERMINATION OF INTEREST RATE. As soon as practicable on the applicable Fixed Rate Determination Date, the Administrative Agent shall determine (pursuant to the procedures set forth in the definition of "FIXED RATE") the interest rate which shall apply to Fixed Rate Loans for which an interest rate is then being determined for the applicable Interest Period and currency and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the applicable Borrowers and to each Lender. The Administrative Agent's determination shall be presumed to be correct, absent manifest error, and shall be binding upon such Borrowers.
(c) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. In the event that (x) in the case of Domestic Loans, at least one (1) Business Day before and (y) in the case of Multicurrency Loans, on the Fixed Rate Determination Date with respect to any Fixed Rate Loan in the relevant currency:
(i) the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the applicable Fixed Rate for the applicable Optional Currency then being determined is to be fixed;
(ii) the Administrative Agent determines that deposits in such currency and in the principal amounts of the Fixed Rate Loans comprising such Borrowing are not generally available in the London interbank market for a period equal to such Interest Period; or
(iii) the Requisite Lenders in the applicable Credit Facility advise the Administrative Agent that the applicable Fixed Rate for the applicable Optional Currency, as determined by the Administrative Agent, after taking into account the adjustments for reserves and increased costs provided for in SECTION 4.01(f), will not adequately and fairly reflect the cost to such Lenders of funding the relevant Fixed Rate Loans in the currency in which such Loans are denominated;
then the Administrative Agent shall forthwith give notice thereof to the Borrowers under the applicable Credit Facility, whereupon (until the Administrative Agent notifies such Borrowers that the circumstances giving rise to such suspension no longer exist) the right of such Borrowers
to elect to have Loans bear interest based upon the Fixed Rate in such currency shall be suspended and each outstanding Fixed Rate Loan which is denominated in the affected currency shall be converted into a Floating Rate Loan denominated in such currency on the last day of the then current Interest Period therefor, and any Notice of Borrowing with respect to Loans denominated in such currency for which Revolving Loans have not then been made shall be deemed to be a request for Floating Rate Loans in such currency, notwithstanding any prior election by any such Borrower to the contrary.
(d) ILLEGALITY.
(i) If at any time any Lender determines (which determination shall, absent manifest error, be final and conclusive and binding upon all parties) that the making or continuation of any Fixed Rate Loan in any currency has become unlawful or impermissible by compliance by that Lender with any law, governmental rule, regulation or order of any Governmental Authority (whether or not having the force of law and whether or not failure to comply therewith would be unlawful or would result in costs or penalties), then, and in any such event, such Lender may give notice of that determination, in writing, to the Borrowers under the applicable Credit Facility and the Administrative Agent, and the Administrative Agent shall promptly transmit the notice to each other Lender.
(ii) When notice is given by a Lender under SECTION
4.02(d)(i), (a) such Borrowers' right to request from such Lender and
such Lender's obligation, if any, to make Fixed Rate Loans in such
currency shall be immediately suspended, and such Lender shall make a
Floating Rate Loan as part of any requested Borrowing of Fixed Rate
Loans in such currency and (B) if the affected Fixed Rate Loan or Loans
are then outstanding, the applicable Borrower shall, on the last day of
the applicable Interests Period(s), or if such postponement is not
permitted by applicable law, then by no later than the date it is
required to do so in accordance with applicable law, upon at least one
(1) Business Day's prior written notice to the Administrative Agent and
the affected Lender, convert each such Loan into a Floating Rate Loan.
(iii) If at any time after a Lender gives notice under SECTION 4.02(d)(i) in respect of a Fixed Rate Loan in any currency such Lender determines that it may lawfully make Fixed Rate Loans in such currency, such Lender shall promptly give notice of that determination, in writing, to the Borrowers under the applicable Credit Facility and the Administrative Agent, and the Administrative Agent shall promptly transmit the notice to each other Lender. Such Borrowers' right to request, and such Lender's obligation, if any, to make Fixed Rate Loans shall thereupon be restored.
(e) COMPENSATION. In addition to all amounts required to be paid by the Borrower pursuant to SECTION 4.01, each Domestic Borrower agrees to compensate each Domestic Lender and each Multicurrency Borrower agrees to compensate each Multicurrency Lender, upon demand, for all losses, expenses and similar liabilities (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Lender's Fixed Rate Loans made to such Borrower but excluding any loss of the Applicable Fixed Rate Margin on the
relevant Loans) which that Lender may sustain (i) if for any reason a Borrowing
of, conversion into or continuation of such Fixed Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation given by such Borrower or a successive Interest Period
does not commence after notice therefor is given pursuant to SECTION 4.01(c),
including, without limitation, pursuant to SECTION 4.02(c), (ii) if for any
reason any Fixed Rate Loan made to such Borrower is prepaid (including, without
limitation, mandatorily pursuant to SECTION 3.01) on a date which is not the
last day of the applicable Interest Period (it being understood and agreed that,
notwithstanding anything contained in this Agreement to the contrary, so long as
no Default or Event of Default shall have occurred and be continuing, such
Borrower may, in lieu of making a mandatory prepayment of a Fixed Rate Loan
which would otherwise be required to be made under this Agreement on a date
which is not the last day of the applicable Interest Period, deposit an amount
equal to the amount which would otherwise be required to be so prepaid (plus
interest accrued thereon for the appropriate number of days at the rate
applicable to such Loan) into the Domestic Cash Collateral Account (or, in the
case of Fixed Rate Loans denominated in an Optional Currency, an appropriate
Cash Collateral Account) as Cash Collateral for application by the
Administrative Agent to such Loan on the last day of such Interest Period),
(iii) as a consequence of a required conversion of such Fixed Rate Loan to a
Floating Rate Loan as a result of any of the events indicated in SECTION 4.02(c)
or (d) or (iv) as a consequence of any failure by such Borrower to repay Fixed
Rate Loans when required by the terms hereof. The Lender making demand for such
compensation shall deliver to the applicable Borrower concurrently with such
demand a written statement as to such losses, expenses and similar liabilities,
and such statement shall be conclusive as to the amount of compensation due to
that Lender, absent manifest error.
4.03. FEES.
(a) LETTER OF CREDIT FEE. In addition to any charges paid pursuant to SECTION 2.02(g), each Borrower agrees to pay to the Administrative Agent for the account of the Lenders under the applicable Credit Facility as provided in the following sentence with respect to any Letter of Credit Issued by the Issuing Bank for the account of such Borrower, a fee per annum (the "LETTER OF CREDIT FEE") equal to the Applicable Letter of Credit Fee Rate in effect as of the date of each such payment on the undrawn face amount of such Letter of Credit, payable in arrears on the first Business Day of each calendar month for the preceding calendar month and on the date on which such Letter of Credit expires in accordance with its terms; provided, however, effective immediately upon the occurrence of any Event of Default and for so long thereafter as such Event of Default shall be continuing, the rate at which the Letter of Credit Fees shall accrue and be payable shall be equal to two percent (2.0%) per annum in excess of the Applicable Letter of Credit Fee Rate in effect from time to time. The Administrative Agent shall pay each Letter of Credit Fee to the Lenders in accordance with their respective Pro Rata Shares of the Credit Facility under which such Letter of Credit has been issued.
(b) UNUSED COMMITMENT FEE. The Domestic Borrowers jointly and severally agree to pay to the Administrative Agent, for the account of the Domestic Lenders, and the Multicurrency Borrowers jointly and severally agree to pay to the Administrative Agent, for the account of the Multicurrency Lenders, in accordance with each Lender's respective Pro Rata Shares of the applicable Credit Facility, a fee (the "UNUSED COMMITMENT FEE"), in each case accruing from the Closing Date at a per annum rate equal to the Applicable Unused Commitment
Fee Rate in effect as of the payment date set forth below, on the average amount by which (i) the Commitment under the applicable Credit Facility exceeds (ii) an amount equal to the Credit Facility Outstandings under such Credit Facility less the Letter of Credit Obligations set forth in CLAUSE (c) of the definition thereof to the extent included in the determination of Credit Facility Outstandings, for the period commencing on the Closing Date and ending on the Termination Date, the accrued portion of such fee being payable (A) monthly, in arrears, on the first Business Day of the immediately succeeding calendar month, commencing on the first such day after the Closing Date and (B) on the Termination Date. Notwithstanding the foregoing, no Defaulting Lender shall be entitled to any Unused Commitment Fees with respect to its Commitment under the applicable Credit Facility until such Lender ceases to be a Defaulting Lender in accordance with SECTION 3.02(b)(iv)(B), and no Borrower shall be required to pay any Unused Commitment Fees with respect to such Credit Facility to such Lender for such period.
(c) OTHER FEES. The Borrowers agree to pay to the Administrative Agent solely for its own account such other fees as are set forth in the Letter Agreement.
(d) CALCULATION AND PAYMENT OF FEES. All of the above fees that are based on a per annum rate shall be calculated on the basis of the actual number of days elapsed in a 360-day year. All such fees shall be payable in addition to, and not in lieu of, interest, expense reimbursements, indemnification and other Obligations. Fees shall be payable by the Domestic Borrowers to the Domestic Concentration Account and by the Multicurrency Borrowers to the Multicurrency Payment Account in accordance with SECTION 3.02. All fees payable hereunder shall be fully earned and, subject only to SECTION 14.01(c), nonrefundable when paid. All fees specified or referred to herein due to the Administrative Agent, the Issuing Bank or any Lender, including, without limitation, those referred to in this SECTION 4.03, shall bear interest, if not paid when due, at the interest rate for Loans in accordance with SECTION 4.01(d), shall constitute Obligations and shall be secured by the Collateral.
ARTICLE V
CONDITIONS TO EFFECTIVENESS;
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Agreement shall become effective on the date (the "CLOSING DATE") when all of the following conditions precedent shall have been satisfied or waived in writing by the Administrative Agent:
(a) DOCUMENTS. The Administrative Agent (on behalf of itself and the Lenders) shall have received on or before the Closing Date all of the following:
(i) this Agreement, the Notes and all other agreements, documents and instruments (other than items designated as "post-closing" items) relating to the loan and other credit transactions contemplated by this Agreement and described in the List of Closing Documents attached hereto and made a part hereof as EXHIBIT S (the "CLOSING LIST"), each duly executed where appropriate and in form and substance satisfactory to the Administrative Agent and in sufficient copies for each of the Lenders; without limiting the foregoing, the Borrowers hereby direct their counsel, (A) Jones, Day, Reavis & Pogue and (B) each of its other counsel listed in the Closing List to prepare and deliver
to the Administrative Agent, the Lenders, the Issuing Bank and Sidley Austin Brown & Wood LLP, the opinions referred to in the Closing List with respect to such counsel;
(ii) the Pro Forma accompanied by the Initial Projections;
(iii) a solvency certificate for each Borrower, Foreign Credit Party and for the Borrowers and their Subsidiaries on a combined basis, duly executed by a Financial Officer of each Borrower, dated the Closing Date and giving effect to the financing transactions contemplated under this Agreement and the Senior Notes;
(iv) a Notice of Borrowing executed by each Borrower which desires to borrow Loans on the Closing Date, dated the Closing Date, with respect to such Loans;
(v) a certificate of a Financial Officer of each Borrower executed and delivered on behalf of such Borrower certifying that (A) no Material Adverse Effect has occurred since December 31, 2001, (B) all conditions precedent set forth in this SECTION 5.01 and SECTION 5.02 have been satisfied and (C) after giving effect to the financing transactions contemplated under this Agreement and the Senior Notes, all representations and warranties in this Agreement and the other Loan Documents are true and correct in all respects, no Default or Event of Default has occurred and is continuing and no event that is reasonably likely to have a Material Adverse Effect has occurred and is continuing;
(vi) a Borrowing Base Certificate for the Domestic Borrowers and a Borrowing Base Certificate for the Multicurrency Borrowers, dated as of the Closing Date and giving effect to the financing transactions contemplated under this Agreement and the Senior Notes, adequately supporting the Loans requested to be made and the Letters of Credit requested to be Issued and showing aggregate Availability under the Credit Facilities in excess of $50,000,000 after giving effect to such Loans or Letters of Credit;
(vii) a fully executed copy of the most recent management letter, if any, issued by the Auditor; and
(viii) such additional documentation as the Administrative Agent and the Lenders may reasonably request.
(b) COLLATERAL INFORMATION; PERFECTION OF LIENS. The Administrative Agent shall have received complete and accurate information from each Borrower with respect to the name and the location of the principal place of business and chief executive office for each Borrower and each Borrower Subsidiary; all Uniform Commercial Code and other filing and recording fees and taxes shall have been paid or duly provided for; and the Administrative Agent shall have received evidence to its satisfaction that all Liens granted to the Administrative Agent with respect to all Collateral are valid, effective, perfected and of first priority, except as otherwise permitted under this Agreement. All certificates representing Capital Stock included in the Collateral shall have been delivered to the Administrative Agent (with duly executed stock powers, as appropriate) and all instruments included in the Collateral shall have been delivered to the Administrative Agent (duly endorsed to the Administrative Agent).
(c) ISSUANCE OF SENIOR NOTES. The Lenders shall be satisfied in all material respects (i) with terms of, and underlying documentation relating to, the Senior Notes, (ii) that all conditions precedent to the issuance and effectiveness of the Senior Notes have been satisfied (or waived with the prior written consent of the Administrative Agent), and (iii) that net cash proceeds from the issuance of Senior Notes in excess of $225,000,000 shall have been received by NMHG Holding.
(d) CORPORATE AND CAPITAL STRUCTURE: DUE DILIGENCE; AMOUNT OF INDEBTEDNESS. The corporate, capital and legal structure of NMHG Holding and its Subsidiaries and all legal due diligence with respect thereto, shall be acceptable to the Administrative Agent. The Indebtedness of the Borrowers and their Subsidiaries shall be in form and substance satisfactory to the Administrative Agent. The Administrative Agent shall have determined, in it sole discretion, (a) that aggregate Availability under the Credit Facilities will be greater than $50,000,000 after giving effect to the initial Loans and Letters of Credit hereunder, and (b) that the Financial Covenant Debt of NMHG Holding and its Subsidiaries as of the Closing Date does not exceed $380,000,000.
(e) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment or decree of any Governmental Authority shall exist, which, in the sole discretion of the Administrative Agent, imposes adverse conditions on the Borrowers, the Borrower Subsidiaries or the consummation of the transactions contemplated hereunder; and the Administrative Agent shall not have received any notice that any action, suit, investigation, litigation or proceeding is pending or threatened in any court or before any arbitrator or Governmental Authority which is likely to (i) enjoin, prohibit or restrain the making of Loans and/or the Issuance of Letters of Credit on the Closing Date, or (ii) have a Material Adverse Effect.
(f) NO CHANGE IN CONDITION. Nothing contained in any disclosure made by NMHG Holding or any of its Subsidiaries after the date of the Commitment Letter or in any information disclosed to any Lender by NMHG Holding or any of its Subsidiaries after such date shall constitute, and the Administrative Agent shall not become aware of any fact or condition not disclosed to it prior to the date of the Commitment Letter which constitutes, in each case in the Administrative Agent's reasonable opinion, a material adverse change in the condition (financial or otherwise), business, performance, operations, prospects or properties of any Borrower or the Borrowers and the Borrower Subsidiaries taken as a whole from that disclosed in the information provided to the Administrative Agent on or before the date of the Commitment Letter.
(g) NO DEFAULT. No Event of Default or Default shall have occurred and be continuing or would result from the making of the Loans requested to be made or the Issuance of the Letters of Credit requested to be Issued on the Closing Date.
(h) REPRESENTATIONS AND WARRANTIES. All of the representations and warranties contained in this Agreement and in any of the other Loan Documents shall be true and correct on and as of the Closing Date, both before and immediately after giving effect to the making of the Loans and the Issuance of any Letters of Credit, if any, on such date.
(i) FEES AND EXPENSES PAID. There shall have been paid to the Administrative Agent, for the account of the Lenders and the Administrative Agent or other Persons entitled thereto, for their respective individual accounts, all fees (including, without limitation, the reasonable legal fees of counsel to the Administrative Agent and local counsel to the Administrative Agent) due and payable on or before the Closing Date (including, without limitation, all such fees described in the Letter Agreement), and all expenses (including, without limitation, legal expenses) due and payable on or before the Closing Date.
(j) CONSENTS, ETC. Each Borrower and each Borrower Subsidiary shall have received all consents and authorizations required pursuant to any Contractual Obligation with any other Person and shall have obtained all Permits of, and effected all notices to and filings with, any Governmental Authority as may be necessary to allow each Borrower and each Borrower Subsidiary lawfully (A) to execute, deliver and perform, in all respects, their respective obligations hereunder, under the other Loan Documents to which each of them is, or shall be, a party and each other agreement or instrument to be executed and delivered by each of them pursuant thereto or in connection therewith and (B) to create and perfect the Liens on the Collateral to be owned by each of them in the manner and for the purpose contemplated by the Loan Documents. No such consent or authorization shall impose any conditions upon any Borrower or any Borrower Subsidiary that are not acceptable to the Administrative Agent.
(k) CASH MANAGEMENT SYSTEMS. The Administrative Agent shall have received satisfactory evidence that on and after the Closing Date it will have control of the Bank Accounts and deposit accounts (other than any Disbursement Accounts), and securities accounts of the Credit Parties.
(l) DISSOLUTION OF CERTAIN SUBSIDIARIES. The Administrative Agent shall have received satisfactory evidence that on or prior to the Closing Date Hyster International Sales Corporation, a Delaware corporation, and Lift Truck Funding Company, LLC, an Oregon limited liability company, have been dissolved. The Administrative Agent shall have received satisfactory evidence that on or prior to the Closing Date the documents required to dissolve Hyster Canada Limited, a Canadian entity, have been sent by Federal Express for delivery to the appropriate Governmental Authorities.
(m) RECEIVABLES SALES. The Administrative Agent shall have received satisfactory documentation:
(i) demonstrating to its satisfaction that the Netherlands Borrower has transferred (by way of sale and assignment) all of its rights, title and interest in, under and to each Receivable originated by it (and which is still outstanding at the Closing Date) to the UK Borrower and that, subject to SECTION 8.10(b), all steps required to be taken (in any jurisdiction) to ensure that the UK Borrower can exercise all of its rights under the Receivables (including the right to require payment) directly against the relevant account debtors have been taken;
(ii) pursuant to which all of the rights, title and interest of the Netherlands Borrower to each Receivable originated by it after the Closing Date will be transferred, by way of sale, to the UK Borrower on a daily basis and which require the parties thereto
to take all steps necessary to ensure that the UK Borrower can exercise all of its rights under the Receivables so transferred directly against the relevant account debtors;
(iii) to the extent required, enabling the UK Borrower and the Administrative Agent to effect transfers of the bare legal title of any Receivables to the UK Borrower at agreed times in the future; and
(iv) demonstrating to its satisfaction that all rights, title and interest of Bank of Scotland in any Receivable originated by the UK Borrower, the Netherlands Borrower or NACCO Materials Handling S.R.L. (and, in the case of those originated other than by the UK Borrower, subsequently sold to the UK Borrower and then by the UK Borrower to Bank of Scotland) shall have been transferred to the UK Borrower by Bank of Scotland, free and clear of all security interests created by it, that Bank of Scotland shall have released any Liens which it holds with respect to the UK Borrower, other than any Liens it has over accounts of the UK Borrower maintained with it, and any other Foreign Subsidiary, that all relevant notices of such re-transfers and releases shall have been given to all relevant persons including account debtors and that all arrangements giving Bank of Scotland any trust over or interest in or control over any Collection Accounts and other bank accounts (other than Disbursement Accounts) of the UK Borrower or any Foreign Subsidiary shall have been unconditionally and absolutely terminated.
(n) HITFL CONTRACT. One of the following shall have occurred:
(i) the Administrative Agent shall have received a fully executed and effective
amendment or waiver to the HITFL Contract in form and substance satisfactory to
the Administrative Agent; (ii) a Notice of Letter of Credit Issuance shall have
been delivered to the Administrative Agent, the beneficiary of the Letter of
Credit to be issued thereunder shall be HSBC International Trade Finance Limited
("HITFL"), the terms of the Letter of Credit to be Issued thereunder shall be in
form and substance satisfactory to the Administrative Agent, and the
Administrative Agent shall have received a fully executed amendment or waiver to
the HITFL Contract in form and substance satisfactory to the Administrative
Agent which shall become effective upon the Issuance of such Letter of Credit;
or (iii) a Notice of Borrowing has been delivered with wire transfer
instructions to HITFL in an amount sufficient to pay in full all obligations
under the HITFL Contract.
5.02. CONDITIONS PRECEDENT TO REVOLVING LOANS, SWING LOANS, OVERDRAFT LOANS AND LETTERS OF CREDIT. The obligation of each Lender to make any Revolving Loan, of the Overdraft Line Bank to make any Overdraft Loan and of the Swing Loan Bank to make any Swing Loan, requested to be made by it on any date, and the agreement of each Issuing Bank to Issue any Letter of Credit on any date is subject to the following conditions precedent as of each such date:
(a) REPRESENTATIONS AND WARRANTIES. As of such date, both before and after giving effect to the Loans to be made or the Letter of Credit to be Issued on such date, all of the representations and warranties of the Borrowers and the Borrower Subsidiaries in this Agreement and in any other Loan Document (other than representations and warranties which expressly speak as of a different date, which representations shall be only made on such date) shall be true and correct in all material respects.
(b) NO DEFAULT. No Event of Default or Default shall have occurred and be continuing or would result from the making of the requested Loan or the Issuance of the requested Letter of Credit.
(c) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Administrative Agent
shall not have received from the Requisite Lenders, the Swing Loan Bank, the
Overdraft Line Bank or Issuing Bank, as the case may be, notice that, in the
judgment of such Person, any action, suit, investigation, litigation or
proceeding is pending or threatened in any court or before any arbitrator or
Governmental Authority which is likely to enjoin, prohibit or restrain, or
impose or result in the imposition of any material adverse condition upon, (i)
such Lender's making of the requested Loan or participation in the requested
Letter of Credit, (ii) the Swing Loan Bank's making of the requested Swing Loan,
(iii) the Overdraft Line Bank's making of the requested Overdraft Loan or (iv)
such Issuing Bank's issuance of the requested Letter of Credit.
Each submission by a Borrower to the Administrative Agent of a Notice of Borrowing with respect to a Revolving Loan or Swing Loan, each acceptance by a Borrower of the proceeds of each such Revolving Loan and Swing Loan and any Overdraft Loan, each submission by a Borrower to an Issuing Bank of a Notice of a Letter of Credit Issuance and the Issuance of such Letter of Credit, shall constitute a representation and warranty by such Borrower as of the Funding Date in respect of such Revolving Loan, as of the Swing Loan Funding Date in respect of such Swing Loan, as of the funding date in respect of any Overdraft Loan and as of the date of issuance of such Letter of Credit, that all the conditions contained in subsections (a), (b) and (c) of this SECTION 5.02 have been satisfied or waived in accordance with SECTION 14.07.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWERs. In order to induce the Lenders and the Issuing Bank to enter into this Agreement and to make the Loans and the other financial accommodations to the Borrowers and to Issue the Letters of Credit described herein, each of the Borrowers (other than the Multicurrency Borrowers, which so represent and warrant in favor of the Multicurrency Lenders, only with respect to themselves and their unconsolidated liabilities, assets, business and operations) hereby represents and warrants to each Lender, each Issuing Bank and the Administrative Agent as of the Closing Date and thereafter on each date as required by SECTION 5.02(a) that the following statements are true, correct and complete:
(a) ORGANIZATION; CORPORATE POWERS.
(i) Each of the Borrowers and Borrower Subsidiaries (A) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (B) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which failure to be so qualified and in good standing is reasonably likely to have a Material Adverse Effect, and (C) has all requisite corporate power and authority to own, operate and encumber its Property and to conduct its business as presently conducted and as proposed to be conducted in connection with and following the consummation of the transactions contemplated by
this Agreement. NMHG has filed and maintained effective (unless exempt from the requirements for filing) a current Business Activity Report with the appropriate Governmental Authority in the states of New Jersey and Minnesota and NMHG Distribution has no account debtors located in the states of New Jersey or Minnesota.
(ii) True, correct and complete copies of the Constituent Documents identified on SCHEDULE 6.01-a attached hereto have been delivered to the Administrative Agent, each of which is in full force and effect, has not been modified or amended except to the extent indicated therein and, to the best of each Borrower's knowledge, there are no defaults under such Constituent Documents and no events which, with the passage of time or giving of notice or both, would constitute a default under such Constituent Documents.
(b) AUTHORITY; ENFORCEABILITY.
(i) Each Borrower and Borrower Subsidiary has the requisite corporate power and authority to execute, deliver and perform each of the Loan Documents to which it is a party.
(ii) The execution, delivery and performance of each of the Loan Documents which have been executed and to which any Borrower or Borrower Subsidiary is a party and the consummation of the transactions contemplated thereby, have been duly approved by the boards of directors and (to the extent required by law) the shareholders of such Borrower or Borrower Subsidiary, respectively, and such approvals have not been rescinded, revoked or modified in any respect. No other corporate action or proceedings on the part of any Borrower or any Borrower Subsidiary are necessary to consummate such transactions.
(iii) Each of the Loan Documents to which any Borrower or any Borrower Subsidiary is a party has been duly executed and delivered on behalf of such Person and constitutes its legal, valid and binding obligation, enforceable against such Person in accordance with its terms and is in full force and effect and no material term or condition thereof has been amended, modified or waived from the terms and conditions contained therein as delivered to the Administrative Agent pursuant to SECTION 5.01(a) without the prior written consent of the Requisite Lenders.
(iv) Each of the Loan Documents to which any Borrower or any Borrower Subsidiary is a party, where applicable, creates valid and perfected first priority Liens (subject only to Customary Permitted Liens specified in CLAUSES (a) AND (b) of the definition thereof) in the Collateral covered thereby securing the payment of all of the Obligations purported to be secured thereby.
(v) Each Borrower and Borrower Subsidiary has performed and complied with all the terms, provisions, agreements and conditions set forth in each Loan Document to which it is a party and required to be performed or complied with by such parties on or before the Closing Date, all filings and recordings and other actions which are necessary or desirable to perfect and protect the Liens granted pursuant to the Loan Documents and
preserve their required priority have been duly taken, and no Default, Event of Default or breach of any covenant by any such party exists thereunder.
(c) SUBSIDIARIES; OWNERSHIP OF CAPITAL STOCK. SCHEDULE 6.01-C
(i) contains a diagram indicating the corporate structure of each Borrower,
Borrower Subsidiary and any other Affiliate thereof in which such Person holds a
direct or indirect partnership, joint venture or other equity interest as of the
Closing Date; and (ii) accurately sets forth as of the Closing Date (A) the
correct legal name, the jurisdiction of incorporation, the organizational
identification number issued by the state of organization of and the federal
employer identification number of (in each case, if applicable) each Borrower
and Borrower Subsidiary, and the jurisdictions in which each Borrower and
Borrower Subsidiary is qualified to transact business as a foreign corporation,
(B) the authorized, issued and outstanding shares of each class of Capital Stock
of such Person and the owners of such shares, and (C) a summary of the direct
and indirect partnership, joint venture, or other equity interests, if any, of
each such Person in any Person that is not a corporation. None of the issued and
outstanding Capital Stock of any Borrower and Borrower Subsidiary is subject to
any vesting, redemption, or repurchase agreement, and there are no warrants or
options outstanding with respect to such Capital Stock. The outstanding Capital
Stock of each Borrower and Borrower Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and is not Margin Stock.
(d) NO CONFLICT. The execution, delivery and performance of each of the Loan Documents to which any Borrower or Borrower Subsidiary is a party do not and will not (i) conflict with the Constituent Documents of any Borrower or Borrower Subsidiary, (ii) constitute a tortious interference with any Contractual Obligation of any Person, (iii) conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or other Contractual Obligation of any Borrower or Borrower Subsidiary, or require the termination of any other Contractual Obligation, (iv) result in or require the creation or imposition of any Lien whatsoever upon any of the Property or assets of any Borrower or Borrower Subsidiary, other than Liens contemplated by the Loan Documents, or (v) require any approval of any Borrower or Borrower Subsidiary shareholders that has not been obtained.
(e) GOVERNMENTAL CONSENTS, ETC. The execution, delivery and
performance of each of the Loan Documents to which each Borrower and Borrower
Subsidiary is a party do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by any Governmental
Authority, except (i) filings, consents or notices which have been made,
obtained or given, or, in a timely manner, will be made, obtained, or given; and
(ii) filings necessary to create or perfect security interests in the
Collateral. None of the Borrowers and Borrower Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940,
or any other federal or state statute or regulation which limits its ability to
incur indebtedness or its ability to consummate the transactions contemplated in
the Loan Documents.
(f) ACCOMMODATION OBLIGATIONS; CONTINGENCIES. Except as set
forth on SCHEDULE 1.01.4 as of the Closing Date, no Borrower or any Borrower
Subsidiary has any Accommodation Obligation, contingent liability or liability
for any Taxes, long-term lease or commitment, not reflected in its Financial
Statements delivered to the Administrative Agent on
or prior to the Closing Date or otherwise disclosed to the Administrative Agent and the Lenders in the other Schedules hereto.
(g) RESTRICTED PAYMENTS. Since the date of the Commitment Letter, no Borrower or any Borrower Subsidiary has directly or indirectly declared, ordered, paid or made or set apart any sum or Property for any Restricted Payment or agreed to do so, except as permitted pursuant to SECTION 9.06 hereof.
(h) FINANCIAL POSITION. The Initial Projections and each of the business plans and all other financial projections and related materials and documents delivered to the Lenders pursuant hereto (including, but not limited to, each Borrowing Base Certificate delivered hereunder) were prepared in good faith and are based upon facts and assumptions that management of the Borrowers believe to be reasonable in light of the then current and foreseeable business conditions and prospects of NMHG Holding and its Subsidiaries and represent management's opinion of the projected financial performance based on the information available at the time so furnished. All Financial Statements included in such materials were prepared in all material respects in conformity with GAAP, except as otherwise noted therein, and fairly present in all material respects the respective consolidated financial positions, and the consolidated results of operations and cash flows for each of the periods covered thereby of NMHG Holding and its Subsidiaries as at the respective dates thereof. The Pro Forma, copies of which have been furnished to the Lenders, fairly presents on a PRO FORMA basis the financial condition of NMHG Holding and its Subsidiaries as of the Closing Date, and reflects on a PRO FORMA basis those liabilities reflected in the notes thereto and resulting from consummation of the transactions contemplated by the Loan Documents, and the payment or accrual of all transaction costs payable with respect to any of the foregoing. The Borrowers believe that the Initial Projections and the assumptions expressed in the Pro Forma are reasonable based on the information available to the Borrowers at the time so furnished.
(i) LITIGATION; ADVERSE EFFECTS. Except as set forth in
SCHEDULE 6.01-I, there is no action, suit, audit, proceeding, claim, allegation
of defective pricing, investigation or arbitration (or series of related
actions, suits, proceedings, allegations, investigations or arbitrations) before
or by any Governmental Authority or private arbitrator pending or, to the
Knowledge of any Borrower or any Borrower Subsidiary, threatened against any
Borrower or any Borrower Subsidiary or any Property of any of them (i)
challenging the validity or the enforceability of any of the Loan Documents,
(ii) which has or is reasonably likely to have a Material Adverse Effect, or
(iii) under the Racketeering Influenced and Corrupt Organizations Act or any
similar federal or state statue where such Person is a defendant in a criminal
indictment that provides for the forfeiture of assets to any Governmental
Authority as a criminal penalty. There is no material loss contingency within
the meaning of GAAP which has not been reflected in the consolidated Financial
Statements of NMHG Holding and its Subsidiaries. No Borrower nor any Borrower
Subsidiary is (A) in violation of any applicable Requirements of Law which
violation has had or is reasonably likely to have a Material Adverse Effect, or
(B) subject to or in default with respect to any final judgment, writ,
injunction, restraining order or order of any nature, decree, rule or regulation
of any court or Governmental Authority which has had or is reasonably likely to
have a Material Adverse Effect.
(j) NO MATERIAL ADVERSE CHANGE. Since December 31, 2001, there has occurred no event which has resulted or is reasonably likely to have a Material Adverse Effect.
(k) PAYMENT OF TAXES. All tax returns and reports of each Borrower and Borrower Subsidiary required to be filed have been timely filed, and all taxes, assessments, fees and other governmental charges thereupon and upon their respective Property, assets, income and franchises which are shown in such returns or reports to be due and payable have been paid other than such taxes, assessments, fees and other governmental charges (i) which are being contested in good faith by a Borrower or Borrower Subsidiary, as the case may be, by appropriate proceedings diligently instituted and conducted as permitted by the terms of SECTION 8.04 and (ii) non-payment of the amounts thereof would not, individually or in the aggregate, result in a Material Adverse Effect. No Borrower or Borrower Subsidiary has any knowledge of any proposed tax assessment against any Borrower or Borrower Subsidiary that shall have or is reasonably likely to have a Material Adverse Effect.
(l) PERFORMANCE. None of the Borrowers or Borrower Subsidiaries has received notice or has actual Knowledge that (i) it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it; (ii) any condition exists which, with the giving of notice or the lapse of time or both, would constitute a default with respect to any such Contractual Obligation; or (iii) any of its Property is in violation of any Requirement of Law and which in the case of any of the foregoing has had or is reasonably likely to have a Material Adverse Effect.
(m) DISCLOSURE. The representations and warranties of each Borrower and Borrower Subsidiary contained in the Loan Documents and all certificates and documents delivered to the Administrative Agent and the Lenders pursuant to the terms hereof and the other Loan Documents, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which and the time at which they were made, not misleading. No Borrower nor Borrower Subsidiary has intentionally withheld any fact from the Administrative Agent, the Issuing Bank or any Lender in regard to any matter which has had or is reasonably likely to have a Material Adverse Effect.
(n) REQUIREMENTS OF LAW. Each of the Borrowers and Borrower Subsidiaries is in compliance with all Requirements of Law applicable to it and its business, in each case where the failure to so comply individually or in the aggregate shall have or is reasonably likely to have a Material Adverse Effect.
(o) ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 6.01-O and except as is not reasonably likely to have a Material Adverse Effect:
(i) the operations of the Borrowers and Borrower Subsidiaries comply in all respects with all applicable Environmental, Health or Safety Requirements of Law;
(ii) each Borrower and Borrower Subsidiary has obtained all environmental, health and safety Permits necessary for its respective operations as currently conducted and Properties as currently used, and all such Permits are in good standing, and each
Borrower and each Borrower Subsidiary is currently in compliance with all terms and conditions of such Permits;
(iii) none of the Borrowers and Borrower Subsidiaries nor any of their respective present or past Property or operations, are subject to or the subject of any currently effective or ongoing judicial or administrative proceeding, order, judgment, decree, dispute, negotiations, agreement, or settlement respecting (I) any violation of or liability under any Environmental, Health or Safety Requirements of Law, (II) any Remedial Action, or (III) any Claims or Liabilities and Costs arising from the Release or threatened Release of a Contaminant into the environment;
(iv) no Borrower nor any Borrower Subsidiary has filed any notice under any applicable Requirement of Law: (A) reporting to any Person or Governmental Authority a Release of a Contaminant within the past three years; (B) reporting under Section 103(c) of CERCLA, indicating past or present treatment, storage or disposal of a hazardous waste, as that term is defined under 40 C.F.R. Part 261 or any state equivalent; or (C) reporting a violation of any applicable Environmental, Health or Safety Requirement of Law or condition in any Permit under an Environmental, Health or Safety Requirement of Law within the past three years;
(v) none of the present or, to any Borrower's Knowledge, past Property of any Borrower or Borrower Subsidiary is listed or proposed for listing on the National Priorities List ("NPL") pursuant to CERCLA or on the Comprehensive Environmental Response Compensation Liability Information System List ("CERCLIS") or any similar state list of sites requiring Remedial Action;
(vi) no Borrower nor any Borrower Subsidiary has, to its Knowledge, sent or directly arranged for the transport of any product, material or waste, to any current or proposed NPL site, or any site on any similar state list of sites requiring Remedial Action;
(vii) there is not now in connection with or resulting from any Borrower's or any of Borrower Subsidiary's operations, nor, to any Borrower's knowledge, has there ever been on or in any of the current or former Property (A) any treatment, recycling, storage or disposal of any hazardous waste requiring a permit under 40 C.F.R. Parts 264 and 265 or any state equivalent, (B) any solid waste landfill, waste pile, petroleum or hazardous waste, swamp, pit, pond, underground storage tank or surface impoundment, or (C) a reportable or non-permitted Release to the environment of any Contaminant involving any polychlorinated biphenyls used in hydraulic oils, electrical transformers or other Equipment;
(viii) to each Borrower's and Borrower Subsidiary's Knowledge, there have been no Releases of any Contaminants to the environment from any Property except (A) in compliance with Environmental, Health or Safety Requirements of Law, or (B) which have been addressed to the satisfaction of the appropriate Governmental Authorities;
(ix) no Environmental Lien has attached to any Property;
(x) within the last year each Borrower and Borrower Subsidiary has inspected its respective Property and such Property does not contain any asbestos-containing material or visible evidence of mold growth;
(xi) none of the Property presently is subject to any Environmental Property Transfer Act, or the extent such acts are presently applicable to any such Property, the Borrowers and the Borrower Subsidiaries have fully complied with the requirements of such acts; and
(xii) the Borrowers and their Subsidiaries, taken as a whole, are not, and to their Knowledge will not be, subject to Liabilities and Costs arising out of or relating to environmental, health or safety matters that have resulted or are reasonably likely to result in cash expenditures by the Borrowers and their Subsidiaries in excess of $2,500,000 in the aggregate for any calendar year ending after the Closing Date.
(p) ERISA MATTERS. No Borrower nor any ERISA Affiliate
maintains or contributes to any Benefit Plan, Multiemployer Plan or Foreign
Pension Plan other than those listed on SCHEDULE 6.01-P attached hereto. Each
Plan which is intended to be qualified under Section 401(a) of the Internal
Revenue Code as currently in effect either (i) has received a favorable
determination letter from the IRS that the Plan is so qualified or (ii) an
application for determination of such tax-qualified status will be made to the
IRS prior to the end of the applicable remedial amendment period under Section
401(a) of the Internal Revenue Code as currently in effect, and a Borrower or an
ERISA Affiliate shall diligently seek to obtain a determination letter with
respect to such application. Except as identified on SCHEDULE 6.01-P, no
Borrower nor any Borrower Subsidiary maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA which provides
benefits to employees after termination of employment other than as required by
Section 601 of ERISA. Each Borrower and each Borrower Subsidiary is in
compliance in all material respects with the responsibilities, obligations and
duties imposed on it by ERISA and the Internal Revenue Code with respect to all
Plans. No Benefit Plan has incurred any accumulated funding deficiency (as
defined in Sections 302(a)(2) of ERISA and 412(a) of the Internal Revenue Code)
whether or not waived. No Borrower nor any ERISA Affiliate nor any fiduciary of
any Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code or (ii) has taken or failed to take any action which would
constitute or result in a Termination Event. No Borrower nor any ERISA Affiliate
has any potential liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA. No Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC which remains outstanding other than the payment of premiums, and there are
no premium payments which have become due which are unpaid. Schedule B to the
most recent annual report filed with the IRS with respect to each Benefit Plan
and furnished to the Administrative Agent is complete and accurate. Except as
identified on SCHEDULE 6.01-P, since the date of each such Schedule B, there has
been no material adverse change in the funding status or financial condition of
the Benefit Plan relating to such Schedule B. No Borrower nor any ERISA
Affiliate has (i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial withdrawal under Sections
4203 or 4205 of ERISA from a Multiemployer Plan. No Borrower nor any ERISA
Affiliate has failed to make a required installment or any other required
payment under Section 412 of the Internal Revenue Code on or before the due date
for such installment or
other payment. No Borrower nor any ERISA Affiliate is required to provide security to a Benefit Plan under Section 401(a)(29) of the Internal Revenue Code due to a Benefit Plan amendment that results in an increase in current liability for the plan year. Except as disclosed on SCHEDULE 6.01-P, no Borrower nor any Borrower Subsidiary has, by reason of the transactions contemplated hereby, any obligation to make any payment to any employee pursuant to any Plan or existing contract or arrangement. Each Borrower has given to the Administrative Agent copies of all of the following: each Benefit Plan and related trust agreement (including all amendments to such Plan and trust) in existence or committed to as of the Closing Date and in respect of which any Borrower or any ERISA Affiliate is currently an "employer" as defined in section 3(5) of ERISA, and the most recent actuarial report, determination letter issued by the IRS and Form 5500 filed in respect of each such Benefit Plan in existence; a listing of all of the Multiemployer Plans currently contributed to by any Borrower or any ERISA Affiliate with the aggregate amount of the most recent annual contributions required to be made by the Borrowers and all ERISA Affiliates to each such Multiemployer Plan, any information which has been provided to any Borrower or an ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan and the collective bargaining agreement pursuant to which such contribution is required to be made; and as to each employee welfare benefit plan within the meaning of Section 3(1) of ERISA which provides benefits to employees of any Borrower or any Borrower Subsidiary after termination of employment other than as required by Section 601 of ERISA, the plan document (or, if no plan document is available, a written description of the benefits provided under such plan), the actuarial report for such plan (if any), the aggregate amount of the most recent annual payments made to, or on behalf of, terminated employees under each such plan, and any information about funding to provide for such welfare benefits.
(q) FOREIGN EMPLOYEE BENEFIT MATTERS. Each Foreign Employee Benefit Plan is in compliance in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plan. Each Foreign Employee Benefit Plan intended to qualify for the most favorable tax and accounting treatment available in respect of it is so qualified. With respect to any Foreign Pension Plan with a defined benefit element not wholly covered by insurance maintained or contributed to by any Borrower or Borrower Subsidiary, the most recent valuation for such plan has been disclosed. Contributions to such Foreign Pension Plan are being made at the rate recommended by actuarial advice to eliminate any projected benefit obligation (PBO) deficits disclosed in such valuations in the period prior to the next valuation, and no Borrower or Borrower Subsidiary, or trustee has taken nor will take, any action which would materially increase any such deficit. With respect to any Foreign Employee Benefit Plan maintained or contributed to by any Borrower or any Borrower Subsidiary (other than a Foreign Pension Plan), reasonable reserves have been established in accordance with prudent business practice or where required by best accounting practices in the jurisdiction in which such Plan is maintained having regard to tax legislation. The aggregate unfunded liabilities, after giving effect to any reserves for such liabilities, with respect to such Plans will not result in a material liability. There are no actions, suits or claims (other than routine claims for benefits) pending or, to the best knowledge of the Borrowers, threatened against any Borrower, any Borrower Subsidiary or any ERISA Affiliate with respect to any Foreign Employee Benefit Plan.
(r) LABOR MATTERS.
(i) Except as set forth in SCHEDULE 6.01-R, as of the Closing Date there is no collective bargaining agreement covering any of the employees of any Borrower or Borrower Subsidiary. To each Borrower's Knowledge, except as set forth on SCHEDULE 6.01-R, as of the Closing Date no attempt to organize the employees of any Borrower or Borrower Subsidiary is pending, threatened or planned.
(ii) Set forth in SCHEDULE 6.01-R or SCHEDULE 6.01-P, as the case may be, is a list, as of the Closing Date, of all material consulting agreements, material executive employment agreements, executive compensation plans, deferred compensation agreements, employee pension plans or retirement plans, employee profit sharing plans, employee stock purchase and stock option plans, and severance plans of NMHG Holding and its Subsidiaries providing for benefits for employees of NMHG Holding and its Subsidiaries.
(s) SECURITIES ACTIVITIES. None of the Borrowers or Borrower Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock.
(t) SOLVENCY. After giving effect to (i) the issuance of any Indebtedness on any date, (ii) the making of any Restricted Payment or payment on any Senior Note on any date, (iii) the sale of assets on any date and (iv) the transactions contemplated by the Loan Documents and the Loans to be made on any date that Loans are requested hereunder and the disbursement of the proceeds of such Loans pursuant to the applicable Borrower's instructions, each Borrower and NMHG Holding together with its Subsidiaries is Solvent.
(u) PATENTS, TRADEMARKS, PERMITS, ETC.; GOVERNMENT APPROVALS.
(i) Each Borrower and Borrower Subsidiary owns, is licensed or otherwise has the lawful right to use, or have all permits and other governmental approvals, patents, trademarks, trade names, industrial designs, copyrights, technology, know-how and processes used in or necessary for the conduct of its respective business as currently conducted except where the failure to do so would not have or be reasonably likely to have a Material Adverse Effect. Except as set forth on SCHEDULE 6.01-U, as of the Closing Date no claims are pending or, to the best of each Borrower's Knowledge following inquiry, threatened that any Borrower or any Borrower Subsidiary is infringing upon the rights of any Person with respect to such permits and other governmental approvals, patents, trademarks, trade names, industrial designs, copyrights, technology, know-how and processes, except for such claims and infringements that do not, in the aggregate, give rise to any liability on the part of any Borrower or any Borrower Subsidiary which has, or is reasonably likely to, have a Material Adverse Effect.
(ii) Except for Liens granted to the Administrative Agent for the benefit of the Administrative Agent, the Issuing Bank and the Lenders, the transactions contemplated by the Loan Documents will not impair the ownership of or rights under (or the license or other right to use, as the case may be) any permits and governmental approvals, patents, trademarks, trade names, industrial designs, copyrights, technology, know-how or
processes by any Borrower or Borrower Subsidiary in any manner which shall have or is reasonably likely to have a Material Adverse Effect.
(v) ASSETS AND PROPERTIES. Each Borrower and each Borrower Subsidiary has good and marketable title to all of the Collateral and all other material assets and Property (tangible and intangible) owned by it (except insofar as marketability may be limited by any laws or regulations of any Governmental Authority affecting such assets or by the existence of any Liens permitted under SECTION 9.03), and all such assets and Property are free and clear of all Liens except Liens securing the Obligations and Liens permitted under SECTION 9.03. Substantially all of the material assets and Property owned by, leased to, or used by each Borrower and/or each Borrower Subsidiary is in adequate operating condition and repair, ordinary wear and tear excepted, is free and clear of any known defects except such defects as do not substantially interfere with the continued use thereof in the conduct of normal operations, and is able to serve the function for which they are currently being used, except in each case where the failure of such asset to meet such requirements has not, or is not reasonably likely to have a Material Adverse Effect. Neither this Agreement nor any other Loan Document, nor any transaction contemplated under any such agreement, will affect any right, title or interest of any Borrower or any Borrower Subsidiary in and to any of such assets in a manner that has, or is reasonably likely to have, a Material Adverse Effect. SCHEDULE 6.01-V contains a true and complete list of (i) all of the Real Property owned in fee simple by each Credit Party, (ii) a true and complete list of all Leases in effect on the Closing Date with annual rental payments which exceed $100,000 or with Inventory at any time with a Fair Market Value of $1,000,000 or more, and (iii) a true and complete list of all Bailees at which there is, or is reasonably expected to be, (A) for a period of 30 days or more during any twelve-month period, Inventory with a Fair Market Value of $250,000 or more or (B) at any time, Inventory with a Fair Market Value of $1,000,000 or more.
(w) INSURANCE. SCHEDULE 6.01-W attached hereto accurately sets forth as of the Closing Date all insurance policies and programs currently in effect with respect to the respective Property and assets and business of the Borrowers and the Borrower Subsidiaries, specifying for each such policy and program, (i) the amount thereof, (ii) the risks insured against thereby, (iii) the name of the insurer and each insured party thereunder, (iv) the policy or other identification number thereof, (v) the expiration date thereof, (vi) the annual premium with respect thereto, and (vii) a list of claims in excess of $500,000 made thereunder during the immediately preceding three (3) calendar years. Each Borrower has delivered to the Administrative Agent copies of all such insurance policies. Such insurance policies and programs are currently in full force and effect, in compliance with the requirements of SECTION 8.05 and are in amounts sufficient to cover the replacement value of the respective Property and assets of the Borrowers and the Borrower Subsidiaries.
(x) PLEDGE OF COLLATERAL. The grant and perfection of the security interests in the Capital Stock pledged pursuant to any Pledge Agreement, is not made in violation of the registration provisions of the Securities Act, any applicable provisions of other federal securities laws, state securities or "Blue Sky" law, foreign securities law, or applicable general corporation law or in violation of any other Requirement of Law.
(y) TRANSACTIONS WITH AFFILIATES. SCHEDULE 6.01-Y lists as of the Closing Date each and every existing material agreement (other than the Loan Documents) as of the Closing Date and arrangement that any Credit Party has entered into with any of their respective Affiliates which are not Credit Parties.
(z) BANK ACCOUNTS. SCHEDULE 6.01-Z sets forth as of the
Closing Date all of (i) the Collection Account Banks and other bank accounts of
the Credit Parties where proceeds of Collateral are from time to time deposited
by the Credit Parties, including the Lockboxes, the Collection Accounts and the
Disbursement Accounts, their addresses and the relevant account numbers, and
(ii) the Cash Collateral Accounts, and each Borrower has disclosed all
additions, subtractions and modifications to such Schedule to the Administrative
Agent and the Lenders as required by SECTION 3.06.
(aa) INDEBTEDNESS; REFINANCED INDEBTEDNESS. SCHEDULE 1.01.5 sets forth as of the Closing Date all Indebtedness for borrowed money of each Borrower and Borrower Subsidiary, and there are no defaults in the payment of principal or interest on any such Indebtedness and no payments thereunder have been deferred or extended beyond their stated maturity (except as disclosed on such Schedule). The Refinanced Indebtedness and all accrued and unpaid interest thereon has been paid in full or provision for payment has been made such that, in accordance with the express provisions of the instruments governing such Indebtedness, the Borrowers and all Borrower Subsidiaries have been or will be upon payment in full of the Refinanced Indebtedness irrevocably released from all liability and Contractual Obligations with respect thereto. All Liens, if any, securing the Refinanced Indebtedness have been released.
(bb) TAX EXAMINATIONS. The IRS has examined (or is foreclosed from examining by applicable statutes) the Parent's consolidated federal income tax returns for all tax periods prior to and including the taxable year ending December 31, 1997. All deficiencies which have been asserted against or with respect to any Borrower or any Borrower Subsidiary as a result of any federal, state, local or foreign tax examination for each taxable year in respect of which an examination has been conducted have been fully paid or finally settled or are being contested in good faith, and no issue has been raised in any such examination which, by application of similar principles, reasonably can be expected to result in assertion of a material deficiency for any other year not so examined which has not been reserved for in NMHG Holding's consolidated Financial Statements to the extent, if any, required by GAAP. No Borrower nor any Borrower Subsidiary has taken any reporting positions for which it does not have a reasonable basis and does not anticipate any further material tax liability with respect to the years which have not been closed pursuant to applicable law.
(cc) COMPENSATION. Except (i) as disclosed in documents filed with the Securities and Exchange Commission, (ii) as set forth on SCHEDULE 6.01-CC attached hereto, and (iii) for increases in the ordinary course of business and in accordance with past practices, during the period commencing on January 1, 2002, and ending on the Closing Date, no Borrower nor any Borrower Subsidiary has increased or agreed to increase the aggregate compensation or benefits (including severance benefits) payable or accruing to any past or present officer of any of such Persons or Person having management responsibilities.
(dd) RECEIVABLES SALE AGREEMENTS. Each of the Receivables Sale Agreements constitutes a legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms and is in full force and effect. All Receivables originated by the Netherlands Borrower have been sold and assigned to the UK Borrower and will be sold and assigned to the UK Borrower on a daily basis. After the effective date, if any, of the Receivables Sale Agreement between the UK Borrower and NACCO Materials Handling S.R.L., all Receivables originated by NACCO Materials Handling S.R.L. have been sold and assigned to the UK Borrower and will be sold and assigned to the UK Borrower on a daily basis. All steps necessary to ensure that the UK Borrower can exercise all of its rights under the Receivables so transferred under the Receivables Sale Agreements directly against the relevant account debtors have been taken. To the extent required, the Receivables Sale Agreements enable the UK Borrower and the Administrative Agent to effect transfers of the bare legal title of any Receivables to the UK Borrower at agreed times in the future.
(ee) CERTAIN BORROWER SUBSIDIARIES. None of the following
Persons have, as of any date of determination, total assets in excess of
$5,000,000: Hyster Canada Limited, Hyster France S.A.R.L., Hyster Germany GmbH,
Hyster Italia S.R.L., Hyster Singapore Pte Ltd., Yale Fordertechnik
Handelgesellschaft mbH, and Yale France Manutention S.A.R.L. except to the
extent the Capital Stock of such Borrower Subsidiary has been pledged for the
benefit of the Administrative Agent in accordance with SECTION 9.07(c) and such
Borrower Subsidiary has provided the guarantees and security required under
SECTION 9.07(c).
ARTICLE VII
REPORTING COVENANTS
Each Borrower (other than the Multicurrency Borrowers which so covenant in favor of the Multicurrency Lenders only with respect to themselves and their consolidated liabilities, assets, business and operations) covenants and agrees that so long as any Commitment is outstanding and thereafter until Payment In Full of all of the Obligations, unless the Requisite Lenders shall otherwise give prior written consent thereto:
7.01. FINANCIAL STATEMENTS. Each Borrower shall maintain, and shall cause each Borrower Subsidiary to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of consolidated and consolidating Financial Statements in conformity with GAAP, and each of the Financial Statements described below shall be prepared from such system and records. The Borrowers shall deliver or cause to be delivered to the Administrative Agent and the Lenders:
(a) MONTHLY REPORTS. Within thirty (30) days after the end of each fiscal month in each Fiscal Year (other than each fiscal month which is the last month of any fiscal quarter or of the Fiscal Year), the consolidated balance sheets of NMHG Holding and its Subsidiaries as at the end of such period and the related consolidated statements of income and cash flow of NMHG Holding and its Subsidiaries for such fiscal month and for the period from the beginning of the then current Fiscal Year to the end of such fiscal month, and for the corresponding period during the previous Fiscal Year, and a comparison of the statement of the year to date earnings and cash flow to the corresponding statement for the corresponding period from the previous Fiscal Year, and the forecasted consolidated balance sheet and consolidated
statement of earnings and cash flow most recently provided pursuant to SECTION 7.01(f), and a comparison of the statement of year to date earnings and cash flow to the annual operating plan, certified by a Financial Officer of NMHG Holding as fairly presenting in all material respects the consolidated financial position of NMHG Holding and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in accordance with GAAP, subject to normal year end adjustments.
(b) QUARTERLY REPORTS. As soon as practicable, and in any event within forty-five (45) days after the end of the first three fiscal quarters in each Fiscal Year:
(i) the consolidated balance sheets of NMHG Holding and its Subsidiaries as at the end of such period and the related consolidated statements of income, and cash flow of NMHG Holding and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current Fiscal Year to the end of such fiscal quarter, setting forth in each case in comparative form, on a consolidated basis only, the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the consolidated financial forecast for the current Fiscal Year delivered on the Closing Date or pursuant to SECTION 7.01(f), as applicable,
(ii) the consolidating balance sheets of NMHG Holding, which includes the wholesale and retail divisions of NMHG Holding and eliminations as at the end of such period and the related consolidating statements of income and cash flow of NMHG Holding, which includes the wholesale and retail divisions of NMHG Holding and eliminations for such fiscal quarter and for the period from the beginning of the then current Fiscal Year to the end of such fiscal quarter;
(iii) the consolidated balance sheets of the UK Borrower as at the end of such period and the related consolidated statements of income and cash flow of the UK Borrower for such fiscal quarter and for the period from the beginning of the then current Fiscal Year to the end of such fiscal quarter; and
(iv) the consolidated balance sheets of the Netherlands Borrower and its Subsidiaries as at the end of such period and the related consolidated statements of income and cash flow of the Netherlands Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current Fiscal Year to the end of such fiscal quarter;
in each case, certified by a Financial Officer of (x) with respect to CLAUSE (i)
or (ii) above, NMHG Holding, (y) with respect to CLAUSE (iii) above, NMHG
Holding or the UK Borrower, and (z) with respect to CLAUSE (iv) above, NMHG
Holding or the Netherlands Borrower, as fairly presenting the consolidated and
consolidating (where applicable) financial position of the reporting Persons as
at the dates indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP (with respect to the UK Borrower, the
Netherlands Borrower and/or their Subsidiaries, GAAP in the United Kingdom and
the Netherlands, respectively), subject to normal year end adjustments.
Notwithstanding the foregoing, the reports described in CLAUSES (b)(iii),
(b)(iv), (c)(iii) AND (c)(ii)(A) AND (c)(ii)(B)
shall not be required following the refinancing of the Multicurrency Facility in accordance with SECTION 9.01(m).
(c) ANNUAL REPORTS.
(i) Within ninety (90) days after the end of each Fiscal Year:
(A) audited consolidated Financial Statements of NMHG Holding and its Subsidiaries reported on by the Accounting Firm, which report shall be unqualified (or, if qualified, only as to non-material matters) and shall state that such Financial Statements fairly present the consolidated financial position of NMHG Holding and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except for changes with which such Accounting Firm shall concur and which shall have been disclosed in the notes to the Financial Statements) and that the examination by such Accounting Firm in connection with such consolidated Financial Statements has been made in accordance with generally accepted auditing standards, and
(B) the consolidating balance sheets of NMHG Holding, which includes the wholesale and retail divisions of NMHG Holding and eliminations as at the end of such period and the related consolidating statements of income and cash flow of NMHG Holding, which includes the wholesale and retail divisions of NMHG Holding and eliminations of NMHG Holding for such Fiscal Year;
(ii) Within one hundred thirty-five (135) days after the end of each Fiscal Year:
(A) the consolidated audited (by an Accounting Firm) balance sheets of the UK Borrower as at the end of such period and the related audited (by an Accounting Firm) consolidated statements of income and cash flow of the UK Borrower for such Fiscal Year, which balance sheets and statements of income constitute the local statutory reports; and
(B) the consolidated audited balance sheets of the Netherlands Borrower and its Subsidiaries as at the end of such period and the related audited (by an Accounting Firm) consolidated statements of income and cash flow of the Netherlands Borrower and its Subsidiaries for such Fiscal Year, which balance sheets and statements of income constitute the local statutory reports;
in each case, certified by a Financial Officer of NMHG Holding as fairly presenting the consolidated and consolidating (where applicable) financial position of the reporting Persons as at the dates indicated and the results of their operations and cash flow for the periods indicated in accordance with GAAP (with respect to the UK Borrower, the Netherlands Borrower and/or their Subsidiaries, GAAP in the United Kingdom and the Netherlands, respectively).
(d) PARENT REPORTS. The Parent's annual report on Form 10-K and annual report to shareholders (including audited financial statements).
(e) OFFICER'S CERTIFICATE. Together with each delivery of any Financial Statement pursuant to (i) PARAGRAPHS (A), (B) and (C) of this SECTION 7.01, an Officer's Certificate of NMHG Holding, stating that the Financial Officer signatory thereto has reviewed the terms of the Loan Documents, and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and consolidated and consolidating financial condition of NMHG Holding and its Subsidiaries during the accounting period covered by such Financial Statements, that such review has not disclosed the existence during or at the end of such accounting period, and that such Person does not have knowledge of the existence as at the date of such Officer's Certificate, of any condition or event which constitutes an Event of Default or Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action any Borrower or any Borrower Subsidiary has taken, is taking and proposes to take with respect thereto; and (ii) PARAGRAPHS (b) and (c) of this SECTION 7.01, a certificate (the "COMPLIANCE CERTIFICATE"), which shall be substantially in the form of EXHIBIT T attached hereto, signed by a Financial Officer of NMHG Holding, setting forth calculations (with such specificity as the Administrative Agent may reasonably request) for the period then ended which demonstrate compliance, when applicable, with the provisions of ARTICLE X and, when applicable, demonstrate whether the Applicable Fixed Rate Margin, the Applicable Floating Rate Margin, the Applicable Letter of Credit Fee Rate, the Applicable Overdraft Rate Margin, and the Applicable Unused Commitment Fee Rate are to be adjusted due to a change in the Leverage Ratio.
(f) BUSINESS PLANS; FINANCIAL PROJECTIONS. Within one calendar week of each February meeting of the board of directors of NMHG Holding and not later than March 1st of each Fiscal Year, and containing substantially the same types of financial information contained in the Initial Projections, the annual business plan for NMHG Holding and its Subsidiaries for such Fiscal Year and for each month in such Fiscal Year, the annual long-range business forecast of NMHG Holding and its Subsidiaries for each succeeding Fiscal Year, up to and including the Fiscal Year during which it is anticipated that the Obligations shall be Paid In Full, containing a consolidated balance sheet, income statement and statement of cash flow.
(g) MANAGEMENT LETTER. Together with each delivery of the Financial Statements referred to in SECTION 7.01(c), a copy of any management letter or any similar report delivered to any Borrower by the Accountant in connection with such Financial Statements. The Administrative Agent and each Lender may, with the written consent of any Borrower (which consent shall not be unreasonably withheld or delayed), communicate directly with such accountants in the presence of, or with the consent of, a Financial Officer of such Borrower or of NMHG Holding.
7.02. EVENTS OF DEFAULT. Promptly upon any Borrower obtaining Knowledge (a) of any condition or event which constitutes an Event of Default or Default, or becoming aware that any Lender, the Issuing Bank or the Administrative Agent has given any written notice with respect to a claimed Event of Default or Default, (b) that any Person has given any notice to any Borrower or any Borrower Subsidiary or taken any other action with respect to a claimed default or event or condition of the type referred to in SECTION 11.01(e), or (c) of any condition or event which has or is reasonably likely to result in a Material Adverse Effect or affect the value of, or the Administrative Agent's interest in, the Collateral in any material respect, such Borrower shall deliver to the Administrative Agent and the Lenders an Officer's Certificate specifying (A) the
nature and period of existence of any such claimed default, Event of Default, Default, condition or event, (B) the notice given or action taken by such Person in connection therewith, and (C) the remedial action any Borrower or Borrower Subsidiary, as the case may be, has taken, is taking and proposes to take with respect thereto.
7.03. LAWSUITS. Promptly upon (and, in any event, within ten
(10) Business Days of) any Borrower obtaining Knowledge of the institution of,
or written threat of, any Claim, action, suit, proceeding, governmental
investigation, any allegation of defective pricing, or any arbitration against
or affecting any Borrower or any Borrower Subsidiary or any Property of any
Borrower or Borrower Subsidiary not previously disclosed pursuant to SECTION
6.01(i), which action, suit, proceeding, governmental investigation or
arbitration exposes, or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same general
allegations or circumstances which expose, in such Borrower's reasonable
judgment, any Borrower or Borrower Subsidiary (or the Borrowers and the Borrower
Subsidiaries as a whole) to liability which has or is reasonably likely to have
a Material Adverse Effect, such Borrower shall give written notice thereof to
the Administrative Agent and the Lenders and provide such other information as
may be reasonably available to enable each Lender and the Administrative Agent
and its counsel to evaluate such matters. On the first Business Day of each
fiscal quarter, the Borrowers shall provide the Administrative Agent with a
schedule identifying (a) any written threat of, any Claim, action, suit,
proceeding, governmental investigation, any allegation of defective pricing, or
any arbitration against or affecting any Borrower or any Borrower Subsidiary or
any Property of any Borrower or Borrower Subsidiary not previously disclosed
pursuant to SECTION 6.01(i) or notified to the Administrative Agent in
accordance with this SECTION 7.03, which action, suit, proceeding, governmental
investigation or arbitration exposes, or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising out of the same
general allegations or circumstances which expose any Borrower or Borrower
Subsidiary (or the Borrowers and the Borrower Subsidiaries as a whole) to a
liability in an amount aggregating $3,000,000 or more (exclusive of claims
covered by insurance policies of any Borrower or Borrower Subsidiary unless the
insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims) and (b) any commercial tort claim filed by any
Domestic Credit Party stating a claim of $1,000,000 or more, together with an
addendum granting a security interest in such claim as required by the Domestic
Security Agreement.
7.04. INSURANCE. As soon as practicable and in any event by the last day in each calendar year, each Borrower shall deliver to the Administrative Agent (i) a report in form and substance reasonably satisfactory to the Administrative Agent outlining all material insurance coverage (including any self-insurance provided by any Borrower, Parent or any Borrower Subsidiary but excluding health, medical, dental and life insurance (other than key man life insurance)) maintained as of the date of such report by any Borrower, Borrower Subsidiary or the Parent on their behalf and the duration of such coverage and (ii) evidence that all premiums then due and payable with respect to such coverage have been paid (except as otherwise agreed to by the Administrative Agent).
7.05. BORROWING BASE CERTIFICATE. On each Wednesday (or if such day is not a Business Day, on the next succeeding Business Day) or more frequently if requested by the Administrative Agent in its sole discretion (each, a "BORROWING BASE DELIVERY DATE"), the
Domestic Borrowers and the Multicurrency Borrowers shall each provide the Administrative Agent (which the Administrative Agent will promptly deliver to each Domestic Lender and each Multicurrency Lender, respectively) with a Borrowing Base Certificate (a) with respect to Eligible Receivables, reporting as of the last day of the immediately preceding week and (b) with respect to Eligible Inventory, reporting as of (i) the last Business Day of the second preceding calendar month on any Borrowing Base Delivery Date on or prior to the fifteenth day of the calendar month and (ii) as of the last Day of the immediately preceding calendar month on any Borrowing Base Delivery Date after the fifteenth day of the calendar month, or, in any case of clauses (a) or (b) above, as of any other date requested by the Administrative Agent in its sole discretion, together with such supporting documents as the Administrative Agent requests, all with respect to the Domestic Facility certified as being true, accurate and complete by a Financial Officer of the Domestic Borrowers, and all with respect to the Multicurrency Facility certified as being true, accurate and complete by a Financial Officer of the Multicurrency Borrowers.
7.06. ERISA AND ANALOGOUS NOTICES. Each Borrower shall deliver or cause to be delivered to the Administrative Agent and the Lenders, at such Borrower's expense, the following information and notices as soon as reasonably possible, and in any event:
(a) within ten (10) Business Days after any Borrower or any ERISA Affiliate knows or has reason to know that a Termination Event has occurred, a written statement of a Financial Officer of such Borrower describing such Termination Event and the action, if any, which such Borrower or any ERISA Affiliate has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL, PBGC or any analogous foreign Governmental Authority in relation to Foreign Pension Benefit Plans with respect thereto;
(b) within ten (10) Business Days after any Borrower or any Borrower Subsidiary knows or has reason to know that a prohibited transaction defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code has occurred, a statement of a Financial Officer of such Borrower describing such transaction and the action which such Borrower or any ERISA Affiliate has taken, is taking or proposes to take with respect thereto;
(c) within three (3) Business Days after the filing of the same with the DOL, IRS or PBGC, copies of each annual report (form 5500 series), including Schedule B thereto, filed with respect to each Benefit Plan;
(d) within three (3) Business Days after receipt by any Borrower or any ERISA Affiliate of each actuarial report for any Benefit Plan or Multiemployer Plan and each annual report for any Multiemployer Plan, copies of each such report;
(e) within three (3) Business Days after the filing of the same with the IRS, a copy of each funding waiver request filed with respect to any Benefit Plan and all communications received by any Borrower or any ERISA Affiliate with respect to such request;
(f) within three (3) Business Days after the occurrence any material increase in the benefits of any existing Benefit Plan or the establishment of any new Benefit Plan or the
commencement of contributions to any Benefit Plan to which any Borrower or any ERISA Affiliate was not previously contributing, notification of such increase, establishment or commencement;
(g) within three (3) Business Days after any Borrower or any ERISA Affiliate receives notice of the PBGC's intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice;
(h) within three (3) Business Days after any Borrower or any Borrower Subsidiary receives notice of any unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Internal Revenue Code, copies of each such notice and letter;
(i) within three (3) Business Days after any Borrower or any ERISA Affiliate receives notice from a Multiemployer Plan regarding the imposition of withdrawal liability, copies of each such notice;
(j) within three (3) Business Days after any Borrower or any ERISA Affiliate fails to make a required installment or any other required payment under Section 412 of the Internal Revenue Code on or before the due date for such installment or payment, a notification of such failure or with respect to a Foreign Pension Plan, within three (3) Business Days after any Borrower or Borrower Subsidiary fails to make a required installment or other payment in accordance with a schedule of contributions, the terms of such Foreign Pension Plan or as otherwise required by a foreign Governmental Authority;
(k) within three (3) Business Days after any Borrower or any ERISA Affiliate knows (A) a Multiemployer Plan has been terminated, (B) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan; and
(l) within ten (10) Business Days after any Borrower receives written notice from the Administrative Agent requesting the same, copies of any Foreign Employee Benefit Plan and related documents, reports and correspondence specified in such notice.
For purposes of this SECTION 7.06, each Borrower and any ERISA Affiliate shall be deemed to know all facts known by the Administrator of any Plan of which any Borrower or any ERISA Affiliate is the plan sponsor.
7.07. ENVIRONMENTAL NOTICES.
(a) Each Borrower shall notify the Administrative Agent and the Lenders in writing, promptly upon such Borrower's learning thereof, of any:
(i) notice or Claim to the effect that any Borrower or any Borrower Subsidiary is or may be liable to any Person as a result of exposure to or the Release or threatened Release of any Contaminant, which liability is reasonably likely to result in an
expenditure by any Borrower or Borrower Subsidiary of over $1,000,000 in any Fiscal Year;
(ii) notice that any Borrower or any Borrower Subsidiary is subject to investigation by any Governmental Authority evaluating whether any Remedial Action is needed to respond to the Release or threatened Release of any Contaminant into the environment which investigation is reasonably likely to result in an expenditure by any Borrower or Borrower Subsidiary of over $1,000,000 in any Fiscal Year;
(iii) notice that any Property is subject to an Environmental Lien;
(iv) notice to any Borrower or any Borrower Subsidiary of any violation of any Environmental, Health or Safety Requirement of Law, except for such violations or Claims as are not reasonably likely to result in a Material Adverse Effect;
(v) condition, practice or circumstance reasonably likely to result in a violation of any Environmental, Health or Safety Requirement of Law or a Claim by any Person under any Environmental, Health or Safety Requirement of Law, except for such violations as are not reasonably likely to result in a Material Adverse Effect;
(vi) commencement or threat of any judicial or administrative proceeding alleging a violation by any Borrower or any Borrower Subsidiary of any Environmental, Health or Safety Requirement of Law, except for such violations as are not reasonably likely to result in a Material Adverse Effect;
(vii) new or proposed changes to any existing Environmental, Health or Safety Requirement of Law that are reasonably likely to result in a Material Adverse Effect;
(viii) any proposed acquisition of stock, assets, real estate, or leasing of property, or any other similar action by any Borrower or any Borrower Subsidiary that is reasonably likely to subject any Borrower or any Borrower Subsidiary to additional environmental, health or safety Liabilities and Costs of over $1,000,000 in any Fiscal Year; or
(ix) any filing or report made by any Borrower or any Borrower Subsidiary with any Person or Governmental Authority with respect to any unpermitted Release or threatened Release of a Contaminant, which Release or threatened Release is reasonably likely to result in an expenditure of over $1,000,000 in any Fiscal Year.
(b) Within forty-five (45) days after the end of each Fiscal Year, each Borrower shall submit to the Administrative Agent and the Lenders a report summarizing the status of environmental, health or safety compliance, hazard or liability issues identified in notices required pursuant to SECTION 7.07(a), disclosed on SCHEDULE 6.01-O or identified in any notice or report required herein.
7.08. LABOR MATTERS. A Borrower shall notify the Administrative Agent and the Lenders in writing, promptly after any Borrower has Knowledge thereof, of (i) any material labor dispute to which any Borrower or Borrower Subsidiary is or may become a party, including,
without limitation, any strikes, lockouts or other disputes relating to such Persons' plants and other facilities and (ii) any liability in excess of $3,000,000 (arising pursuant to the Worker Adjustment and Retraining Notification Act or otherwise) incurred with respect to the closing of any plant or other facility of such Persons.
7.09. PUBLIC FILINGS AND REPORTS. Promptly upon the filing thereof with the Securities and Exchange Commission, NMHG shall deliver to the Administrative Agent and the Lenders copies of all filings or reports made in connection with outstanding Indebtedness and Capital Stock of any Borrower or of the Parent.
7.10. BANK ACCOUNT INFORMATION. Promptly upon receipt of a request therefor from the Administrative Agent, the Credit Parties shall provide to the Administrative Agent and the Lenders copies of bank statements (covering the period of time requested by the Administrative Agent) with respect to any bank accounts then maintained by any Borrower or any Borrower Subsidiary.
7.11. SENIOR NOTES; DEBT. NMHG Holding shall deliver a copy to the Administrative Agent and the Lenders of (a) any material notice or other material communication delivered by or on behalf of any Borrower to any Person in connection with any material agreement or other document relating to the Senior Notes or Senior Note Indenture at the same time and by the same means as such notice or other communication is delivered to such Person and (b) any notice or other material communication received by any Borrower from any Person alleging the occurrence in connection with any Indebtedness described in SECTION 11.01(e) of an event described in such Section, promptly after such notice or other communication is received by the Borrower.
7.12. OTHER REPORTS. The Borrowers shall deliver or cause to be delivered to the Administrative Agent and the Lenders copies of all Financial Statements, material reports and material notices (such as Form 10-Q's, Form 10-K's and other material filings), if any, sent or made available generally by any Borrower or the Parent to its Securities holders or filed with the Securities and Exchange Commission and all press releases made available generally by any Borrower, the Parent or any Borrower Subsidiary to the public concerning material developments in the business of any Borrower, the Parent or any Borrower Subsidiary, and all notifications received by any Borrower, the Parent or any Borrower Subsidiary pursuant to the Securities Exchange Act and the rules promulgated thereunder.
7.13. OTHER INFORMATION. Promptly upon receipt of a request therefor from the Administrative Agent, the Borrowers shall prepare and deliver to the Administrative Agent and the Lenders such other information with respect to any Borrower, the Parent or any Borrower Subsidiary or the Collateral including, without limitation, schedules identifying and describing the Collateral and any dispositions thereof and copies of each existing written agreement or arrangement set forth on SCHEDULE 6.01-y, as from time to time may be reasonably requested by the Administrative Agent.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Each of the Borrowers (other than the Multicurrency Borrowers which so covenant in favor of the Multicurrency Lenders only with respect to themselves and their consolidated liabilities, assets, business and operations) covenants and agrees that so long as any Commitment is outstanding and thereafter until Payment In Full of all of the Obligations, unless the Requisite Lenders shall otherwise give prior written consent:
8.01. CORPORATE EXISTENCE, ETC. Each Borrower shall, and shall cause each Borrower Subsidiary to, at all times maintain its respective corporate existence and preserve and keep, or cause to be preserved and kept, in full force and effect its rights and franchises material to its business except where the failure to so maintain or preserve would not have or be reasonably be likely to have a Material Adverse Effect.
8.02. CORPORATE POWERS; CONDUCT OF BUSINESS, ETC. Each Borrower shall, and shall cause each Borrower Subsidiary to, qualify and remain qualified to do business and maintain its good standing in each jurisdiction in which the nature of its business and the ownership of its Property requires it to be so qualified and in good standing except where the failure to qualify or remain qualified would not have or be reasonably be likely to have a Material Adverse Effect.
8.03. COMPLIANCE WITH LAWS, ETC. Each Borrower shall and shall cause each Borrower Subsidiary to, (a) comply with all Requirements of Law and all restrictive covenants affecting such Person or the business, Property, assets or operations of such Person, and (b) obtain as needed all Permits necessary for such Person's operations and maintain such Permits in good standing, except, in each case, where the failure to do is not reasonably likely to result in a Material Adverse Effect.
8.04. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. Each Borrower shall, and shall cause each Borrower Subsidiary to, pay (a) all taxes, assessments and other governmental charges less than or equal to $2,000,000 imposed upon it or on any of its Property or assets or in respect of any of its franchises, business, income or Property within five days upon Knowledge that a penalty or interest has accrued thereon, and (b) all Claims (including, without limitation, claims for labor, services, materials and supplies) for sums less than or equal to $2,000,000 which have become due and payable and which by law have or may become a Lien (other than a Lien permitted by SECTION 9.03) upon any of any Borrower's or Borrower Subsidiary's Property or assets, within five days upon Knowledge that any penalty or fine has accrued with respect thereto. Each Borrower shall, and shall cause each Borrower Subsidiary to, pay (a) on the day when due, all taxes, assessments and other governmental charges greater than $2,000,000 imposed upon it or on any of its Property or assets or in respect of any of its franchises, business, income or Property, and (b) all Claims (including, without limitation, claims for labor, services, materials and supplies) for sums greater than $2,000,000 which have become due and payable and which by law have or may become a Lien (other than a Lien permitted by SECTION 9.03) upon any of any Borrower's or Borrower Subsidiary's Property or assets. Notwithstanding the preceding sentences, any Borrower or Borrower Subsidiary shall have the right to contest in good faith the validity or amount of any such taxes or claims by
proper proceedings timely instituted, and may permit the taxes or claims to be contested to remain unpaid during the period of such contest if (i) it diligently prosecutes such contest, (ii) it makes adequate provision in conformity with GAAP with respect to the contested items, and (iii) during the period of such contest, the enforcement and ability of any taxing authority to force payment of any contested item or to impose a Lien with respect thereto is effectively stayed. Each Borrower shall promptly pay or cause to be paid any valid judgment enforcing any such taxes and cause the same to be satisfied of record. No Borrower will, or will permit any Borrower Subsidiary to, file or consent to the filing of any consolidated income tax return with any Person other than its parent and its Subsidiaries pursuant to the Tax Sharing Agreement or otherwise.
8.05. INSURANCE. Each Borrower shall maintain for itself and its Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force and effect the insurance policies and programs listed on SCHEDULE 6.01-W or substantially similar policies and programs or other policies and programs as are acceptable to the Administrative Agent. All such policies and programs shall be maintained with responsible and reputable insurance companies, other than with respect to self insurance programs described in SCHEDULE 6.01-W. Each certificate and policy relating to the Collateral and/or business interruption coverage (other than self insurance programs) shall contain an endorsement, in form and substance acceptable to the Administrative Agent, showing loss payable to the Administrative Agent, for the benefit of the Holders, and, if required by the Administrative Agent, naming the Administrative Agent as an additional insured under such policy. Each certificate and policy relating to coverage other than the foregoing (other than self insurance programs) shall, if required by the Administrative Agent, contain an endorsement naming the Administrative Agent as an additional insured under such policy. Such endorsement or an independent instrument furnished to the Administrative Agent shall provide that the insurance companies will give the Administrative Agent at least thirty (30) days' written notice before any such policy or policies of insurance shall be altered adversely to the interests of the Holders or cancelled and that no act, whether willful or negligent, or default of any Borrower, any of its Subsidiaries or any other Person shall affect the right of the Administrative Agent to recover under such policy or policies of insurance in case of loss or damage. In the event any Borrower or any Borrower Subsidiary, at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto, then the Administrative Agent, without waiving or releasing any obligations or resulting Event of Default hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which the Administrative Agent deems advisable. All sums so disbursed by the Administrative Agent shall constitute Protective Advances hereunder and be part of the Obligations, payable as provided in this Agreement.
8.06. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Each Borrower shall, and shall cause each of its Subsidiaries to, permit any authorized representative(s) designated by the Administrative Agent to visit and inspect, whether by access to such Borrower's and its Subsidiaries' MIS or otherwise, any of the Property, to examine, audit, check and make copies of its respective financial and accounting records, books, journals, orders, receipts and any correspondence (other than privileged correspondence with legal counsel) and other data relating to their respective businesses or the
transactions contemplated hereby or referenced herein (including, without limitation, in connection with environmental compliance, hazard or liability), and to discuss their affairs, finances and accounts with their officers, management personnel, and independent certified public accountants (in the presence, or with the consent of, a Financial Officer of such Borrower or NMHG), all upon reasonable written notice and at such reasonable times during normal business hours, as often as may be reasonably requested. Each such visitation and inspection shall be at such Borrower's expense.
(b) Each Borrower shall keep and maintain, and cause each of its Subsidiaries to keep and maintain, in all material respects on its MIS and otherwise proper books of record and account in which entries in conformity with GAAP shall be made of all dealings and transactions in relation to its respective businesses and activities, including, without limitation, transactions and other dealings with respect to the Collateral. If an Event of Default has occurred and is continuing, each Borrower, upon the Administrative Agent's request, shall, and shall cause each of its Subsidiaries to, turn over any such records to the Administrative Agent or its representatives; provided, however, that the Borrower may, in its discretion, retain copies of such records.
(c) Each Borrower will, at all times from and after the date hereof, mark the original copy of all chattel paper with a legend describing the Administrative Agent's security interest therein and shall take all other actions required by the applicable Security Agreements with respect to chattel paper, and each Borrower will hold in trust and safely keep such chattel paper so legended at locations which are either (i) owned by a Borrower or (ii) leased by a Borrower and with respect to which a Collateral Access Agreement has been executed.
8.07. ERISA COMPLIANCE. Each Borrower shall, and shall cause each of its Subsidiaries to, and shall use its best efforts to cause its ERISA Affiliates who are not Borrower Subsidiaries to, establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA, the Internal Revenue Code, all other applicable laws, and the regulations and interpretations thereunder and the respective requirements of the governing documents for such Plans.
8.08. FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE. Each Borrower shall, and shall cause each of its Subsidiaries to, establish, maintain and operate all Foreign Employee Benefit Plans to comply in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plans.
8.09. MAINTENANCE OF PROPERTY. Each Borrower shall, and shall cause each of its Subsidiaries to, maintain in all material respects all of its respective owned and leased Property in good, safe and insurable condition and repair, ordinary wear and tear excepted, and not permit, commit or suffer any waste or abandonment of any such Property and from time to time shall make or cause to be made all material repairs, renewal and replacements thereof, including, without limitation, any capital improvements which may be required; provided, however, that such Property may be altered or renovated in the ordinary course of such Borrower's or its Subsidiaries' business.
8.10. FURTHER ASSURANCES; ADDITIONAL COLLATERAL.
(a) Each Borrower shall execute and deliver, and cause the Borrower Subsidiaries to execute and deliver, within the time periods set forth with respect to such items on the Closing List, all agreements, documents and instruments designated as "post-closing items" on the Closing List. In the event that any such agreement, document or instrument is not delivered within such time periods, in addition to any other remedies provided hereunder or under the Loan Documents, the Collateral Value of Collateral subject to such agreement, document or instrument, if any, shall be deemed to be zero or, if such Collateral does not otherwise have Collateral Value, the Administrative Agent shall have the right to establish appropriate Availability Reserves based on the value of such Collateral, until such agreements, documents and instruments with respect thereto are executed and delivered.
(b) In addition to and not in lieu of the rights and obligations of the parties under CLAUSE (a) above, with respect to each jurisdiction where the aggregate amount of Receivables owing by account debtors (each, a "FOREIGN ACCOUNT DEBTOR") located in such jurisdiction to the UK Borrower is in excess of $1,000,000 and such jurisdiction is a jurisdiction with respect to which Receivables would be given eligibility pursuant to CLAUSES (i) and (ii) of the defined term "Eligible Foreign Receivable" (each, a "MATERIAL FOREIGN ACCOUNT DEBTOR JURISDICTION"), the UK Borrower shall, on or before June 29, 2002, with respect to jurisdictions constituting Material Foreign Account Debtor Jurisdictions as of the Closing Date, cause to be delivered to the Administrative Agent an opinion of counsel, addressed to the Administrative Agent, the Lenders and the Issuing Bank, in form and substance reasonably satisfactory to the Administrative Agent and, without limiting the generality of the foregoing, concluding that, under the laws of the Material Foreign Account Debtor Jurisdiction, (i) the courts of the Material Foreign Account Debtor Jurisdiction would recognize the stated choice of law governing the Receivables (being Netherlands law, English law, and, if Receivables governed by Italian law are then included, Italian law) owing from the Foreign Account Debtors in such Material Foreign Account Debtor Jurisdiction; (ii) a judgment under or in respect of such Receivables obtained in the courts of the jurisdiction whose law governs the Receivables would be enforced in the Material Foreign Account Debtor Jurisdiction; (iii) if such Receivables have been sold to the UK Borrower by the Netherlands Borrower, and, if applicable, by NACCO Materials Handling S.R.L. pursuant to a Receivables Sale Agreement, such sale, and the stated choice of Dutch law under a Receivables Sale Agreement, or, in the case of sales by NACCO Materials Handling S.R.L., Italian law, would be recognized under the laws of the Material Foreign Account Debtor Jurisdiction (assuming that the same constituted a valid sale under Dutch, or, as the case may be, Italian, law and assuming that the notice of the sale required by the Receivables Sale Agreement had been given to the Foreign Account Debtor); and (iv) if the Administrative Agent so requires legal opinions of counsel in the relevant Material Foreign Account Debtor Jurisdiction as enables the Administrative Agent to assess the level of risk of the Liens granted over the Receivables (under English, Dutch, or as applicable, Italian law under the English Deed of Charge, the Dutch law governed Foreign Security Agreement granted by the UK Borrower or, if applicable, any Italian law governed Foreign Security Agreement granted by the UK Borrower): (A) not being recognized or upheld under the laws of the relevant Material Foreign Account Debtor Jurisdiction; and (B) in consequence thereof being successfully challenged by a trustee in bankruptcy, liquidator or similar officer of the UK Borrower under the laws of the relevant
Foreign Debtor Jurisdiction, the Administrative Agent has concluded that the level or risk is acceptable to it (collectively, the "REQUIRED CROSS-BORDER OPINIONS"); provided, however, that, in the event that the Required Cross-Border Opinions have not been delivered on or before June 30, 2002, with respect to any Material Foreign Account Debtor Jurisdiction, on or before August 31, 2002, (x) the UK Borrower shall form a Receivables Subsidiary, and the Multicurrency Borrowers (and any other Borrower Subsidiary party to a Receivables Sale Agreement) shall thereafter transfer all Receivables owing from account debtors located in such Material Foreign Account Debtor Jurisdiction to the Receivables Subsidiary and (y) the Receivables Subsidiary shall become a Multicurrency Borrower, and the Receivables Subsidiary, the UK Borrower, the Netherlands Borrower, the other Credit Parties and such other Borrower Subsidiary shall enter into amendments to this Agreement and the other Loan Documents, or other agreements, documents and instruments, in each case as the Administrative Agent may reasonably request, to permit the transactions among the Receivables Subsidiary, the UK Borrower the Netherlands Borrower and such other Borrower Subsidiary, to reflect the Receivables Subsidiary as a Multicurrency Borrower hereunder and to grant to the Administrative Agent a Lien on all Property (other than Equipment, fixtures and Real Property) of the Receivables Subsidiary. In the event that any jurisdiction where account debtors of the UK Borrower are located becomes a Material Foreign Account Debtor Jurisdiction after the Closing Date, the UK Borrower shall (1) cause to be delivered the Required Cross-Border Opinions for such jurisdiction within 45 days after the date such jurisdiction becomes a Material Foreign Account Debtor Jurisdiction or (2) to the extent not already completed, take all actions required under CLAUSES (X) and (Y) of the proviso to the preceding sentence within 90 days after the date such jurisdiction becomes a Material Foreign Account Debtor Jurisdiction.
(c) In addition to and not in lieu of the rights and obligations of the parties under CLAUSES (a) and (b) above, at any time and from time to time, (i) promptly following the Administrative Agent's written request and at the expense of the applicable Person, each Borrower agrees to duly execute and deliver, and to cause its Subsidiaries to duly execute and deliver, any and all such further instruments and documents and take such further action as the Administrative Agent may reasonably deem desirable in order to perfect and protect any Lien granted or purported to be granted pursuant to the Loan Documents or to enable the Administrative Agent, in accordance with the terms of the applicable Loan Documents, to exercise and enforce its rights and remedies under the Loan Documents with respect to such Collateral and (ii) promptly upon the request of the Administrative Agent, assign to the Administrative Agent, pursuant to an assignment in form and substance satisfactory to the Administrative Agent, the right to receive proceeds (for application to the Obligations in accordance with this Agreement) of any Interest Rate Contracts or Currency Agreement to which any Credit Party is a party. Notwithstanding the foregoing, the granting of such further assurances or security interest under this SECTION 8.10 shall not be required if it would (A) be prohibited by other Contractual Obligations to which such Borrower or such Subsidiary is a party, (B) be prohibited by applicable law, or (C) result in material adverse tax consequences to any Borrower. If the Australian Reorganization is not complete prior to July 31, 2002, or with the consent of the Administrative Agent, September 30, 2002, the Borrowers shall pledge for the benefit of the Administrative Agent pursuant to a Pledge Agreement, 65.0% of the Capital Stock of each first tier Subsidiary of any Domestic Borrower organized under the laws of Australia.
8.11. LANDLORD AND BAILEE WAIVERS.
(a) On or prior to the Closing Date, the Borrowers shall obtain and deliver, and cause the Credit Parties to obtain and deliver, to the Administrative Agent Collateral Access Agreements relating to each Bailee location listed on SCHEDULE 6.01-V as of the Closing Date. The Borrowers shall provide the Administrative Agent with written supplements to SCHEDULE 6.01-V as necessary to give a true representation and warranty in SECTION 6.01(v), and the Borrowers shall obtain and deliver, and cause the Credit Parties to obtain and deliver, to the Administrative Agent Collateral Access Agreements relating to each location so listed from time to time on SCHEDULE 6.01-V. With respect to any location not listed on SCHEDULE 6.01-V in which there is, or is reasonably expected to be, during any period of thirty days or more, Inventory with a Fair Market Value of $250,000 or more, each Borrower shall use, and shall cause the Credit Parties to use, its best efforts to obtain and deliver to the Administrative Agent Collateral Access Agreements.
(b) Each Borrower shall use, and shall cause the Credit Parties to use, its best efforts to obtain and deliver to the Administrative Agent Collateral Access Agreements with respect to all leased Properties in which there is, or is reasonably expect to be, Inventory with a Fair Market Value of $1,000,000 or more.
8.12. ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower and each Borrower Subsidiary shall comply with all Environmental, Health or Safety Requirements of Law in all material respects.
(b) Each Borrower shall obtain as needed all material Permits necessary for their operations, and shall maintain such Permits in good standing.
8.13. INSURANCE AND CONDEMNATION PROCEEDS.
(a) DIRECTION TO INSURERS. Each Borrower hereby directs (and, if applicable, shall cause its Subsidiaries to direct) all insurers under policies of Property damage, boiler and machinery and business interruption insurance and payors of any condemnation claim or award relating to the Property to pay all proceeds payable under such policies or with respect to such claim or award directly to the Administrative Agent for deposit in the Domestic Concentration Account or applicable Cash Collateral Account, as appropriate.
(b) APPLICATION OF PROCEEDS. In the event proceeds of insurance received by the Administrative Agent under property damage, boiler and machinery policies, business interruption insurance policies, or with respect to a condemnation claim or award exceed $500,000 and do not constitute Replacement Proceeds, the Administrative Agent shall, upon receipt of such proceeds, apply all of the proceeds so received in repayment of the Obligations in the manner set forth in SECTION 3.01(b)(iii). Notwithstanding the foregoing, in the event proceeds of insurance received by the Administrative Agent under property damage, boiler and machinery policies or business interruption insurance policies (i) is less than $500,000 or (ii) constitutes Replacement Proceeds, Administrative Agent shall, upon receipt of such proceeds, remit the amount so received to the applicable Borrower or Borrower Subsidiary; provided, however, in
the case of an insurance payment or condemnation award in an amount greater
than $500,000, if (i) the Administrative Agent receives notice from the
applicable Borrower that it or its Subsidiary, as applicable, does not intend to
restore, rebuild or replace the Property subject to such insurance payment or
condemnation award, (ii) the applicable Borrower or its applicable Subsidiary
fails to replace or commence the restoration or rebuilding of such Property
within one year after the Administrative Agent's receipt of the proceeds of such
insurance payment or condemnation award, or (iii) upon completion of the
restoration, rebuilding or replacement of such Property, the unused proceeds
from such insurance payment or condemnation award exceed $500,000, then (x) upon
the occurrence of either of the events described in CLAUSES (I) or (II) above,
all such proceeds, and (y) upon the occurrence of the event described in CLAUSES
(III) above, such excess, shall constitute Net Cash Proceeds of Sale received by
the Borrower or a Subsidiary of the Borrower and shall be applied to the
Obligations pursuant to the terms of SECTION 3.01(b)(iii).
ARTICLE IX
NEGATIVE COVENANTS
Each of the Borrowers (other than the Multicurrency Borrowers which so covenant in favor of the Multicurrency Lenders only with respect to themselves and their consolidated liabilities, assets, business and operations) covenants and agrees that it shall comply with the following covenants so long as any Commitment is outstanding and thereafter until Payment In Full of all of the Obligations, unless (except as otherwise provided below) the Requisite Lenders shall otherwise give prior written consent thereto:
9.01. INDEBTEDNESS. No Borrower shall, or shall permit any Borrower Subsidiary to, directly or indirectly create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness for trade payables, wages and other accrued expenses incurred in the ordinary course of business;
(c) Permitted Existing Indebtedness and any extensions, renewals, refundings or replacements of such Indebtedness, provided that any such extension, renewal, refunding or replacement is in an aggregate principal amount not greater than the principal amount of, and, taken as a whole is on terms no less favorable to such Borrower or such Subsidiary than the terms of, such Permitted Existing Indebtedness so extended, renewed, refunded or replaced;
(d) (i) Indebtedness under Capital Leases and Indebtedness secured by purchase money Liens (including the interest of a lessor under a Capital Lease and Liens to which any Property is subject at the time of such Borrower's or Borrower Subsidiary's purchase thereof) ("PURCHASE MONEY LIENS") securing a principal amount not to exceed, together with the amounts permitted under CLAUSE (ii) below, $35,000,000 in the aggregate at any time or from time to time outstanding so long as each Purchase Money Lien shall attach only to the Property to be acquired or constructed and any sale or insurance proceeds thereof (but excluding rental contracts covering such property or any proceeds thereof), (ii) Capital Leases and purchase
money Indebtedness incurred to finance the acquisition of fixed assets, the outstanding principal amount of which in the aggregate and when aggregated with the amount of Indebtedness permitted under CLAUSE (I) above does not exceed $35,000,000 at any time, (iii) Indebtedness under Capital Leases entered into pursuant to a Lease Finance Transaction or with respect to rental equipment, whether or not reflected on the balance sheet of the applicable Borrower or Borrower Subsidiary as Inventory, collectively securing an aggregate principal amount not to exceed $45,000,000 at any time; and (iv) any refinancing of such Indebtedness so long as (A) any Liens granted in connection with such Indebtedness shall only attach to the same Property formerly subject to the Purchase Money Lien and any sale or insurance proceeds thereof (but excluding rental contracts covering such Property or any proceeds thereof), (B) the aggregate principal amount of the Indebtedness so refinanced shall not be increased, (C) the Indebtedness is incurred for the same purpose as the Indebtedness so refinanced and (D) the refinancing shall be on terms and conditions no more restrictive than the terms and conditions of the Indebtedness so refinanced; provided, however, the aggregate outstanding principal amount of Indebtedness permitted under this CLAUSE (D) shall at no time exceed $70,000,000.
(e) Indebtedness in respect of taxes, assessments, governmental charges and Claims for labor, materials or supplies, to the extent that payment thereof is not required pursuant to SECTION 8.04;
(f) Indebtedness constituting Accommodation Obligations permitted by SECTION 9.05;
(g) Indebtedness arising from unsecured intercompany loans (i) from any Credit Party to any other Credit Party, (ii) from any Borrower Subsidiary not a Credit Party to any Credit Party or Pledged Entity, (iii) among Borrower Subsidiaries that are not Credit Parties or Pledged Entities, (iv) among Pledged Entities, or (v) from any Credit Party or Pledged Entity to any Borrower Subsidiary that is not a Credit Party or Pledged Entity not to exceed, with Investments permitted under SECTIONS 9.04(e)(v) and Accommodation Obligations permitted under SECTION 9.05(f)(v) but without duplication, $55,000,000 in principal amount outstanding at any time; provided, that all such loans specified in CLAUSES (i) and (v) (with respect to loans by a Credit Party only) shall be evidenced by promissory notes and pledged to the Administrative Agent pursuant to a Pledge Agreement; provided, further that no additional loans described in CLAUSES (i) THROUGH (v) shall be permitted after the occurrence and during the continuance of an Event of Default;
(h) Indebtedness of any Borrower arising pursuant to Interest Rate Contracts entered into in the ordinary course of business or otherwise reasonably acceptable to the Administrative Agent;
(i) Indebtedness of any Borrower arising pursuant to Currency Agreements entered into in the ordinary course of business or otherwise reasonably acceptable to the Administrative Agent;
(j) Indebtedness of NMHG Holding and the Guarantors in respect of the Senior Notes;
(k) Indebtedness with respect to customary warranties and
indemnities made under (i) any agreements for asset sales permitted under
SECTION 9.02, (ii) Contractual Obligations of any Borrower or any Borrower
Subsidiary entered into in the ordinary course of its business, or (iii) the
payment of the Refinanced Indebtedness owing to Bank of Scotland;
(l) (i) Indebtedness with respect to the Australian Credit Facility, (ii) Indebtedness with respect to any working capital facility guaranteed pursuant to the Foreign Working Capital Guaranty, and (iii) Indebtedness with respect to the Bank of Scotland Overdraft Line, provided that such Bank of Scotland Overdraft Line may not be extended beyond June 30, 2002, unless the Indebtedness thereunder is otherwise permitted under SECTION 9.01(q);
(m) any refinancing of the Multicurrency Facility so long as
(i) in connection therewith the Multicurrency Commitments are permanently
reduced to zero and terminated and the Multicurrency Obligations are Paid in
Full, (ii) any Liens granted in connection with such Indebtedness do not attach
to any Domestic Collateral or other Property of the Domestic Credit Parties,
(iii) the aggregate principal amount of the Indebtedness so refinanced is not
greater than $70,000,000, (iv) the Indebtedness is incurred for the same purpose
as the Indebtedness so refinanced, (v) no Default or Event of Default has
occurred and is continuing or would result after giving effect to such
refinancing, and (vi) the refinancing is on terms and conditions satisfactory to
the Administrative Agent and no more restrictive than the terms and conditions
of the Multicurrency Facility (and all documents requested by the Administrative
Agent in connection with the making of such determination shall have been
provided to the Administrative Agent) (a "PERMITTED MULTICURRENCY REFINANCING");
(n) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its incurrence;
(o) unsecured Indebtedness in respect of obligations owed to an Affiliate of the Parent (other than a Borrower or Borrower Subsidiary) approved by the Administrative Agent and created in connection with the transfer of accrued liabilities of the Borrowers and the Borrower Subsidiaries in respect of transferred self-insured risk to the extent such self-insurance is permitted under SECTION 8.05;
(p) unsecured Indebtedness pursuant to the ING Working Capital Line; and
(q) in addition to the Indebtedness permitted by CLAUSES (A) THROUGH (P) above, other unsecured Indebtedness, in an aggregate principal amount not to exceed $15,000,000 at any time outstanding;
provided, however, that further incurrences of the Indebtedness described in CLAUSES (d) and (g) above shall be prohibited if either (A) a Default or an Event of Default shall have occurred and be continuing at the time of such incurrence or would result therefrom or (B) such Indebtedness is prohibited under the terms of any Indebtedness of any Borrower or Borrower Subsidiary.
9.02. SALES OF ASSETS. No Borrower shall, or shall permit any Borrower Subsidiary to, sell, assign, transfer, lease, convey or otherwise dispose of any Property, whether now owned or hereafter acquired, or any income or profits therefrom, or enter into any agreement to do so, except:
(a) the sale of Inventory in the ordinary course of business (including sales of such Property among any of the Borrowers and the Borrower Subsidiaries);
(b) the sale of Property for consideration not less than the
Fair Market Value thereof and (i) with respect to sales not covered by CLAUSES
(ii) through (v) below, having an aggregate Fair Market Value not in excess of
$10,000,000 in any Fiscal Year; (ii) in connection with the closure or
relocation of any facilities; (iii) such sale is of the assets or the Capital
Stock of the Australian Subsidiaries or the NMHG Mauritius Entities; (iv) such
sale is of the assets of NMHG Distribution or of the assets or the Capital Stock
of NMHG Distribution's Subsidiaries (other than of any Australian Subsidiary)
(collectively, the "DISTRIBUTION PROPERTY"), PROVIDED, that, in the case of any
sale of any Distribution Property of NMHG Distribution (other than Capital Stock
of a Subsidiary thereof), if such Distribution Property includes any Receivables
or Inventory, upon consummation of such sale, an Availability Reserve shall
become effective with respect to the Domestic Borrowing Base in an amount equal
to ten percent (10%) of the positive difference between (A) the portion of the
total consideration for such sale of Distribution Property attributable to such
Receivables and Inventory and (B) the portion of the Domestic Borrowing Base
attributable to such Receivables and Inventory, in each case as determined in
good faith by the Domestic Borrowers and the Administrative Agent; or (v) plants
and/or Property described on SCHEDULE 9.02-B; PROVIDED, HOWEVER, that (w) none
of the Property subject to sales permitted by CLAUSES (i), (ii) or (v) above
shall constitute Collateral, (x) any non-cash consideration resulting from such
sale (which shall be limited to not more than twenty-five percent (25.0%) of the
total consideration for such sale) shall, to the extent received by a Credit
Party, be pledged or assigned to the Administrative Agent pursuant to the
applicable Security Documents to which it is a party, (y) such Borrower complies
with the mandatory prepayment provisions set forth in SECTION 3.01(b) and the
conditions to the release of Collateral described in SECTION 12.09(c) and (z)
before and after giving effect to such sale, no Default or Event of Default
shall have occurred and be continuing;
(c) the transfer of Property from any Borrower Subsidiary to any Credit Party, among any of the Credit Parties, or among any Borrower Subsidiaries not constituting Credit Parties, in each case, otherwise in accordance with the Loan Documents;
(d) the sale of Investments in Cash Equivalents permitted pursuant to SECTION 9.04(a);
(e) (i) sales of Inventory or Receivables by NACCO Materials Handling S.R.L. to the UK Borrower pursuant to any agreement in form and substance satisfactory to the Administrative Agent, and (ii) sales and assignments of Receivables by the Netherlands Borrower to the UK Borrower pursuant to the Receivables Sale Agreements, provided, that all actions under the applicable Requirements of Law required to perfect the UK Borrower's ownership of such Receivables and Inventory, if applicable, shall have been taken;
(f) the sale of Property permitted pursuant to SECTION 9.10 or in connection with transactions permitted in SECTION 9.09; and
(g) additional dispositions of Property other than Inventory and Receivables of the Credit Parties which may be approved by the Administrative Agent in its sole discretion and which result in Net Cash Proceeds of not more than $5,000,000 in the aggregate and $2,000,000 in any Fiscal Year.
9.03. LIENS. No Borrower shall, or shall permit any Borrower Subsidiary to, directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any of their respective Property or assets (including the Capital Stock of each Borrower Subsidiary) except:
(a) Liens created by the Loan Documents;
(b) Permitted Existing Liens;
(c) Customary Permitted Liens;
(d) Purchase Money Liens and Liens securing Indebtedness permitted by SECTION 9.01(d), provided, that such Purchase Money Liens and other Liens are created within 90 days after the incurrence of the related Indebtedness;
(e) extensions, renewals, refundings and replacements of Liens referred to in CLAUSES (a) and (b) of this SECTION 9.03; provided that any such extension, renewal, refunding or replacement of a Lien referred to in CLAUSE (b) shall be limited to the Property covered by the Lien extended, renewed, refunded or replaced and that the obligations secured by any such extension, renewal, refunding or replacement Lien shall be in an amount not greater than the amount of the obligations then secured by the Lien extended, renewed, refunded or replaced;
(f) certain statutory and contractual rights of retention on the Inventory of the Multicurrency Borrowers and their Subsidiaries located outside of the United States which are subordinate to the Administrative Agent's security interest therein;
(g) Liens arising from judgments, decrees or attachments under circumstances that do not otherwise result in an Event of Default;
(h) Liens arising from precautionary UCC-1 financing statement filings regarding Operating Leases covering only the Property subject thereto; and
(i) any Lien approved by the Administrative Agent in
connection with an Acquisition permitted under SECTION 9.04(f) on or affecting
any Property (other than Capital Stock) acquired by a Borrower or a Borrower
Subsidiary or Property of any acquired Borrower Subsidiary or Person which
becomes a Borrower Subsidiary after the date of this Agreement; PROVIDED, that
(i) such Lien is created prior to the date on which such Person becomes a
Borrower Subsidiary, (ii) the Lien was not created in contemplation of such
Acquisition, (iii) such Lien secures Indebtedness permitted hereunder and the
principal amount thereof has not increased in contemplation of or since such
Acquisition and (iv) such Lien is removed or
discharged within ninety (90) days of such Property being acquired or such Person becoming a Borrower Subsidiary, as the case may be.
9.04. INVESTMENTS. No Borrower shall, or shall permit any Borrower Subsidiary to, directly or indirectly make or own any Investment except:
(a) Investments in cash and Cash Equivalents (including, without limitation, Cash Collateral) (i) pledged to the Administrative Agent or deposited in the Lockboxes, the Collection Accounts and the Cash Collateral Accounts in accordance with the provisions of this Agreement and the other Loan Documents and (ii) on deposit in the Disbursement Accounts or other operating or payroll accounts of the Borrower; provided, that the aggregate amount in the Disbursement Accounts identified on SCHEDULE 9.04 on an overnight basis shall not exceed for any consecutive two Business Days, $20,000,000; provided further, that the aggregate amount in such other disbursement or other accounts (excluding payroll accounts and bank errors) on an overnight basis shall not exceed at any time $15,000,000;
(b) Permitted Existing Investments;
(c) Investments received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;
(d) Investments in the form of advances to employees in the ordinary course of business for moving, relocation and travel expenses; and other loans to employees for any lawful purpose, provided that (i) each loan permitted under this CLAUSE (D) shall be evidenced by a promissory note and (ii) the aggregate principal amount of all such advances and loans at any time outstanding shall not exceed $1,500,000 and (iii) no such advances or loans outstanding at any time to any one Person shall exceed $500,000;
(e) (i) Investments by Credit Parties in other Credit Parties;
(ii) Investments by Borrower Subsidiaries that are not Credit Parties in Pledged
Entities or Credit Parties; (iii) Investments by Pledged Entities in other
Pledged Entities; (iv) Investments among Borrower Subsidiaries that are not
Credit Parties or Pledged Entities; or (v) Investments by Credit Parties and
Pledged Entities in Borrower Subsidiaries that are not Credit Parties or Pledged
Entities which, with Indebtedness permitted pursuant to SECTION 9.01(g)(v) and
Accommodation Obligations permitted pursuant to SECTION 9.05(f)(v) but without
duplication, does not exceed $55,000,000;
(f) Investments in connection with the merger with, consolidation with, or acquisition of all or substantially all of the assets or Capital Stock of, or any other combination with or acquisition of any other Person (each a "ACQUISITION") so long as (i) the Administrative Agent has received at least thirty (30) Business Days' prior written notice of such Acquisition and, prior to the consummation thereof, has consented in writing to such Acquisition, (ii) the purchase price payable in cash and non-cash consideration does not exceed $5,000,000 in any one Acquisition or $15,000,000 in the aggregate in any Fiscal Year, (iii) both before and after giving effect to such Acquisition, (A) aggregate Availability under the Credit Facilities will be in excess of $35,000,000, or (B) if the Multicurrency Facility has been refinanced pursuant to
SECTION 9.01(m), aggregate Availability under the Domestic
Facility is in excess of $25,000,000 and Cumulative Availability is in excess of
$35,000,000, (iv) no Default or Event of Default has occurred and is continuing
or would result after giving effect to such Acquisition, (v) to the extent
applicable, the requirements of SECTION 9.07 and SECTION 9.09 have been
satisfied, (vi) to the extent any Lien is required pursuant to SECTION 9.07, the
Administrative Agent has been granted such a first priority secured Lien
(subject only to Customary Permitted Liens and Liens permitted pursuant to
SECTION 9.03(i)) in all Property (other than Property excluded from the
definition of Collateral) acquired in such Acquisition, and the Borrowers and
the target of such Acquisition shall have executed all documents and taken all
actions as may be required by the Administrative Agent in connection therewith,
(vii) the board of directors of the target of such Acquisition shall have
approved such Acquisition and such Acquisition shall otherwise be consensual,
(viii) the Indebtedness acquired in connection with such Acquisition, if any, is
otherwise permitted pursuant to SECTION 9.01, and (ix) the Borrowers shall have
delivered all financial reports and other documents requested by the
Administrative Agent in connection with such Acquisition; provided, that any
Inventory or Receivables acquired in connection with such Acquisition shall not
constitute Eligible Inventory or Eligible Receivables until the Administrative
Agent has received an audit satisfactory to the Administrative Agent and has
otherwise approved such Property for inclusion in Eligible Inventory or Eligible
Receivables, as applicable; and
(g) Investments permitted in connection with Accommodation Obligations permitted under SECTION 9.05(e).
9.05. ACCOMMODATION OBLIGATIONS. No Borrower shall or shall permit any of its Subsidiaries to directly or indirectly create or become or be liable with respect to any Accommodation Obligation, except:
(a) recourse obligations resulting from endorsement of negotiable instruments for collection in the ordinary course of its business;
(b) Permitted Existing Accommodation Obligations and any extensions, renewals or replacements thereof, provided that the aggregate Indebtedness under any such extension, renewal or replacement is not greater than the Indebtedness under, and shall be on terms no less favorable to the Borrower or such Subsidiary than the terms of, the Permitted Existing Accommodation Obligation so extended, renewed or replaced;
(c) Accommodation Obligations (i) arising under the Loan Documents, (ii) with respect to the Indebtedness permitted under SECTIONS 9.01(d) so long as such Accommodation Obligations are unsecured and the remedies thereunder only arise after a default has occurred or is continuing under such related Indebtedness or (iii) otherwise in respect of the Indebtedness permitted under SECTION 9.01(a), (h), (i), (m) or (q);
(d) Accommodation Obligations of the Domestic Credit Parties with respect to the Senior Notes;
(e) Accommodation Obligations of the Credit Parties with respect to Lift Truck Financing Guarantees;
(f) Accommodation Obligations (i) of Credit Parties with respect to Indebtedness of Credit Parties; (ii) of Borrower Subsidiaries not constituting Credit Parties with respect to Indebtedness of Credit Parties or Pledged Entities; (iii) of Pledged Entities with respect to Indebtedness of Pledged Entities; (iv) of Borrower Subsidiaries not constituting Credit Parties with respect to Indebtedness of Borrower Subsidiaries not constituting Credit Parties; and (v) of Credit Parties with respect to Indebtedness of Borrower Subsidiaries not constituting Credit Parties in an aggregate amount, together with Indebtedness permitted pursuant to SECTION 9.01(g)(v) and Investments permitted pursuant to SECTIONS 9.04(e)(v) but without duplication, not to exceed $55,000,000; and
(g) in addition to the Accommodation Obligations permitted by CLAUSES (a) through (f) above, other unsecured Accommodation Obligations in an aggregate amount not to exceed $15,000,000 at any time outstanding.
9.06. RESTRICTED PAYMENTS.
(a) RESTRICTION ON DIVIDENDS.
(i) From the Closing Date and through December 31, 2002, NMHG Holding may not make any cash dividend or other distribution, direct or indirect, on account of any shares of, or interests in, any class of Capital Stock of NMHG Holding (a "DIVIDEND"); and
(ii) NMHG Holding may not make a Dividend after December 31, 2002, unless (A) the aggregate Dividends made in any Fiscal Year do not exceed $5,000,000, (B) as of the end of the most recent fiscal quarter, the Leverage Ratio is less than or equal to 3.0x, (C) after giving effect to such Dividend, (1) aggregate Availability under the Credit Facilities exceeds $50,000,000, or (2) if the Multicurrency Facility has been refinanced pursuant to SECTION 9.01(m), aggregate Availability under the Domestic Facility is in excess of $35,000,000 and Cumulative Availability is in excess of $50,000,000, (D) a Default or Event of Default has not occurred nor is continuing, and after giving effect to such Dividend, no Default or Event of Default would occur or be continuing, and (E) no Bankruptcy Event with respect to the Parent has occurred and is continuing.
(b) OTHER RESTRICTED PAYMENTS. Except as set forth in SECTION 9.06(a) above, no Borrower shall or shall permit any Borrower Subsidiary to otherwise declare or make any Restricted Payment, except:
(i) regularly scheduled payments of principal and interest by NMHG Holding on the Senior Notes;
(ii) cash dividends on the Capital Stock of any Borrower to any other Borrower paid and declared in any Fiscal Year;
(iii) dividends or distributions to the Parent consistent with past practices (A) to pay franchise taxes and other amounts allocable to such Borrower or Borrower Subsidiary required by the Parent to maintain its corporate existence, (B) to pay for all
operating and overhead expenses of the Parent allocable to such Borrower or Borrower Subsidiary (including, without limitation, salaries and other compensation of employees, and directors' fees and expenses) incurred by the Parent in the ordinary course of its business, (C) to pay the Parent fees for services provided by the Parent to such Borrower or Borrower Subsidiary that would otherwise have been performed by third parties and (D) to reimburse the Parent for the payment of amounts relating to travel and entertainment expenses and legal, consulting, software, accounting and other similar services provided by third parties on any Borrower or Borrower Subsidiary's behalf; provided, however, that such aggregate dividends or other distributions by all Borrowers and Borrower Subsidiaries pursuant to CLAUSE (B) of this SECTION 9.06(b)(iii) shall not exceed in any Fiscal Year an aggregate of $3,000,000;
(iv) payments or repayments of advances to the Parent pursuant to the Tax Sharing Agreement to the extent consistent with past practices;
(v) cash dividends (or other distributions) paid solely to a Borrower or Borrower Subsidiary by any of such Person's Subsidiaries;
(vi) payments of intercompany Indebtedness (A) by any Borrower Subsidiary (other than a Borrower) to any Credit Party, (B) by any Borrower Subsidiary (other than a Credit Party) to any other Borrower Subsidiary, and (C) by any Credit Party to any Borrower Subsidiary, in each case, to the extent such Indebtedness is permitted by SECTION 9.01(g) and 9.01(O); and
(vii) payments of Indebtedness permitted by SECTION 9.01(p);
provided, however, that the Restricted Payments described in CLAUSES (iii)(b),
(vi)(c) and (vii) above shall not be permitted if either (A) a Default or an
Event of Default shall have occurred and be continuing at the date of
declaration or payment thereof or would result therefrom or (B) such Restricted
Payment is prohibited under the terms of any Indebtedness or Capital Stock of
any Borrower or Borrower Subsidiary; provided, further, however, that the
Restricted Payments described in CLAUSE (vii) above shall not be subject to the
limitations set forth in this paragraph following the refinancing of the
Multicurrency Facility in accordance with SECTION 9.01(m).
9.07. CONDUCT OF BUSINESS; SUBSIDIARIES; ACQUISITIONS.
(a) No Borrower shall, or shall permit any Borrower Subsidiary to, engage in any business other than the businesses engaged in by it on the date hereof and any business or activities which are substantially similar, related or incidental thereto.
(b) No Borrower shall, or shall permit any Borrower Subsidiary to, create, capitalize or acquire any Subsidiary after the date hereof except with the prior written consent of the Administrative Agent and so long as:
(i) with respect to any Domestic Subsidiary created, capitalized or acquired after the Closing Date, (A) the Capital Stock of such Subsidiary has been pledged to the Administrative Agent as security for the Obligations pursuant a Pledge Agreement, (B)
such Subsidiary has guaranteed the Obligations pursuant to a
Multicurrency Borrower Guaranty and a Domestic Borrower Guaranty, and
(C) such Subsidiary has granted to the Administrative Agent as security
for the Obligations a security interest in all of its assets pursuant
to a Domestic Security Agreement (and a Trademark Security Agreement,
if applicable);
(ii) with respect to any first tier Foreign Subsidiary of any Domestic Borrower created, capitalized or acquired after the Closing Date, (A) sixty-five percent (65.0%) of the Capital Stock of such Subsidiary has been pledged to the Administrative Agent as security for the Obligations pursuant to a Pledge Agreement and (B) and if such Subsidiary owns directly, or indirectly, Capital Stock of a Multicurrency Borrower, (1) such Subsidiary has granted to the Administrative Agent as security for the Multicurrency Obligations a security interest in all of its assets pursuant to a Foreign Security Agreement, (2) such Subsidiary has guaranteed the Multicurrency Obligations pursuant to a Foreign Guaranty and (3) such Subsidiary has pledged the Capital Stock of each of its Foreign Subsidiaries as security for the Multicurrency Obligations pursuant to a Pledge Agreement; provided, however, that until the earlier of (x) the consummation of the Australian Reorganization and (y) July 31, 2002 (which date, in the sole discretion of the Administrative may be extended to September 30, 2002) the Australian Subsidiaries shall not be subject to this CLAUSE (iii);
(iii) with respect to any Subsidiary of any Foreign Credit Party created, capitalized or acquired after the Closing Date, (A) the Capital Stock of such Subsidiary has been pledged to the Administrative Agent as security for the Multicurrency Obligations pursuant to a Pledge Agreement, (B) such Subsidiary has guaranteed the Multicurrency Obligations pursuant to a Foreign Guaranty, and (C) such Subsidiary has granted to the Administrative Agent as security for the Multicurrency Obligations a security interest in all of its assets pursuant to a Foreign Security Agreement (and a Trademark Security Agreement, if applicable) and (D) such Subsidiary has pledged the Capital Stock of each of its Foreign Subsidiaries as security for the Multicurrency Obligations, except that if the total assets of such Subsidiary do not exceed $5,000,000, the foregoing CLAUSE (III) shall not apply until such time as such Subsidiary's total assets are in excess of such amount; and
(iv) with respect to an Acquisition, such Acquisition is otherwise permitted pursuant to SECTION 9.04(f).
(c) No Borrower shall permit any Domestic Subsidiary, first tier Foreign Subsidiary of a Domestic Borrower, or Subsidiary of a Foreign Credit Party to have total assets in excess of $5,000,000 unless (i) all of (or if subject to the following paragraph, sixty-five percent (65.0%) of) the Capital Stock of such Subsidiary has been pledged to the Administrative Agent as security for the Obligations (or, with respect to a Subsidiary of a Multicurrency Borrower, for the Multicurrency Obligations only) pursuant to a Pledge Agreement, (ii) with respect to any Domestic Subsidiary, such Subsidiary has guaranteed the Obligations pursuant to a Multicurrency Borrower Guaranty and a Domestic Borrower Guaranty and has granted to the Administrative Agent as security for the Obligations a security interest in all of its assets pursuant to a Domestic Security Agreement (and a Trademark Security Agreement, if
applicable), and (iii) with respect to any Subsidiary of a Foreign Credit Party, such Subsidiary has guaranteed the Multicurrency Obligations pursuant to a Foreign Guaranty and has granted to the Administrative Agent as security for the Obligations a security interest in all of its assets pursuant to a Foreign Security Agreement (and a Trademark Security Agreement, if applicable).
Notwithstanding anything to the contrary in the foregoing paragraphs (b) and
(c), if any Borrower Subsidiary is a controlled foreign corporation within the
meaning of United States Treasury Regulations Section 1.956-2(c)(1), then no
more than 65.0% of the Capital Stock of such Subsidiary shall be required to be
pledged to the Administrative Agent as security for the Domestic Obligations.
9.08. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. No Borrower shall, or shall permit any Borrower Subsidiary to, directly or indirectly enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder or holders of more than five percent (5%) of any class of equity Securities of any Borrower, or with any other Affiliate of any Borrower which is not its Subsidiary:
(a) on terms that are less favorable to such Borrower or such Borrower Subsidiary, as applicable, than those that might be obtained in an arm's length transaction at the time from Persons who are not such a holder or Affiliate;
(b) if such Affiliate transaction involves an amount in excess of $10,000,000, unless the terms of which are set forth in writing and a majority of the members of such Borrower or Borrower Subsidiary's board of directors disinterested with respect to such Affiliate transaction have determined in good faith that the criteria set forth in CLAUSE (a) are satisfied and have approved the relevant Affiliate transaction as evidenced by a resolution of such board of directors; provided, that for purposes of this paragraph only, in the event of any Affiliate transaction involving the Parent, those members of the board of directors of the applicable Borrower or Borrower Subsidiary who are not Permitted Holders and are members of the board of directors of the Parent shall be deemed disinterested; or
(c) if such Affiliate transaction involves an amount in excess of (i) $10,000,000 in the case of any Affiliate transaction between the Parent, on the one hand, and any Borrower or any Borrower Subsidiary, on the other hand, or (ii) $20,000,000 in the case of any other Affiliate transaction, unless the board of directors of the applicable Borrower or Borrower Subsidiary shall also have received a written opinion from an Independent Qualified Party to the effect that such Affiliate transaction is fair, from a financial standpoint, to NMHG Holding and its Subsidiaries and the applicable Borrower or Borrower Subsidiary or not less favorable to NMHG Holding and its Subsidiaries and the applicable Borrower or Borrower Subsidiary than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate.
Nothing contained in this SECTION 9.08 shall prohibit (w) any transaction expressly permitted by SECTIONS 9.01, 9.02, 9.04, 9.05 and 9.06; (x) increases in compensation and benefits for officers and employees of any Borrower or any Borrower Subsidiary which are customary in the industry or consistent with the past business practice of such Borrower or such Subsidiary, provided that
no Event of Default or Default has occurred and is continuing; (y) payment of customary directors' fees and indemnities; or (z) performance of any obligations arising under the Loan Documents.
9.09. RESTRICTION ON FUNDAMENTAL CHANGES. No Borrower shall, or shall permit any Borrower Subsidiary to, enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of transactions, all or substantially all of such Person's business or Property, whether now or hereafter acquired, except:
(a) in connection with transactions permitted under SECTION 9.02;
(b) for a merger of (i) a Domestic Credit Party into a Domestic Borrower or a Foreign Credit Party into a Multicurrency Borrower, (ii) a Guarantor into another Guarantor, or (iii) any other Borrower Subsidiary into another Borrower Subsidiary, provided that if the non-surviving entity was a Pledged Entity, the Capital Stock of such surviving entity shall be pledged to the Administrative Agent in accordance with SECTION 9.07 as if such surviving entity is a newly acquired entity; provided that the documents governing such merger are satisfactory to the Administrative Agent; and
(c) in connection with the Australian Reorganization, provided that the Capital Stock of each first tier Subsidiary of a Domestic Borrower in existence upon consummation thereof (whether previously existing, newly formed or as the surviving entity of a merger), shall be pledged to the Administrative Agent in accordance with SECTION 9.07 as if such surviving Australian Subsidiary is a newly acquired entity.
9.10. SALE AND LEASEBACK TRANSACTIONS; OPERATING LEASES.
(a) Except with respect to the Property identified on SCHEDULE
9.10 attached hereto, no Borrower shall, or shall permit any Borrower Subsidiary
to, become liable, directly, by assumption or by Accommodation Obligation, with
respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real or personal or mixed) which it or any of its Subsidiaries
(i) sold or transferred or is to sell or transfer to any other Person, or (ii)
intends to use for substantially the same purposes as any other Property which
has been or is to be sold or transferred by it or one of its Subsidiaries to any
other Person, in either instance, in connection with such lease.
(b) None of the Borrowers or the Borrower Subsidiaries shall
become liable in any way, whether directly or by assignment or by Accommodation
Obligation, for the obligations of a lessee under any Operating Lease unless (i)
such Operating Lease is entered into pursuant to a Lease Finance Transaction;
(ii) such Operating Lease is with respect to rental equipment, whether or not
reflected on the balance sheet of the applicable Borrower or Borrower Subsidiary
as Inventory (a "RENTAL EQUIPMENT OPERATING LEASE") and, immediately after
giving effect to the incurrence of liability with respect to such Rental
Equipment Operating Lease, either (A) aggregate Availability under the Credit
Facilities is equal to or greater than $40,000,000 and the Impairment Adjustment
with respect to all Rental Equipment Operating Leases for the immediately
preceding fiscal quarter is less than $2,000,000, or (B) aggregate
Availability under the Credit Facilities is less than $40,000,000 and the Impairment Adjustment with respect to all Rental Equipment Operating Leases for the immediately preceding fiscal quarter is less than $1,000,000; or (iii) such Operating Lease is with respect to Property not constituting Collateral (a "NON-COLLATERAL OPERATING LEASE"), and, immediately after giving effect to the incurrence of liability with respect to such Non-Collateral Operating Lease, the aggregate amount of all rents (whether paid or accrued (without duplication)) in any Fiscal Year under such Non-Collateral Operating Leases of the Borrowers and the Borrower Subsidiaries in any Fiscal Year (determined in conformity with GAAP) is not in excess of $25,000,000.
9.11. MARGIN REGULATIONS; SECURITIES LAWS. No Borrower shall, or shall permit any Borrower Subsidiary to, use all or any portion of the proceeds of any credit extended hereunder to purchase or carry Margin Stock or to violate the Securities Exchange Act or the Securities Act, provided, however, that proceeds of any credit extended hereunder that are distributed to Parent in accordance with SECTION 9.06 may be used by the Parent to purchase and retire its own Capital Stock; provided, further, however, that neither the Borrower nor any Borrower Subsidiary shall at any time own any Margin Stock.
9.12. ERISA. No Borrower shall, or shall permit any Borrower Subsidiary to:
(a) engage, or permit any of its Subsidiaries to engage, in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Internal Revenue Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the DOL;
(b) permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to any Benefit Plan, whether or not waived;
(c) fail, or permit any ERISA Affiliate who is a Borrower or a Borrower Subsidiary to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate who is a Borrower or Borrower Subsidiary to terminate, any Benefit Plan which would result in any liability of Borrower or any ERISA Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer Plan which Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto;
(f) fail, or permit any ERISA Affiliate who is a Borrower or Borrower Subsidiary to fail, to pay any required installment or any other payment required under Section 412 of the Internal Revenue Code on or before the due date for such installment or other payment;
(g) amend, or permit any ERISA Affiliate who is a Borrower or a Borrower Subsidiary to amend, a Benefit Plan resulting in an increase in current liability for the plan year
such that the Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the Internal Revenue Code;
(h) permit any further unfunded liabilities with respect to any Foreign Pension Plan which would trigger a requirement to make a material increase in contributions to fund any such liabilities; or
(i) fail, or permit any of its Subsidiaries to fail, to pay any required contributions or payments to a Foreign Pension Plan on or before the due date for such required installment or payment.
9.13. CONSTITUENT DOCUMENTS. Other than in connection with a transaction permitted pursuant to SECTION 9.09, (a) no Borrower shall, or shall permit any Credit Party or Pledged Entity to, amend, modify or otherwise change any of the terms or provisions in any of their respective Constituent Documents as in effect on the Closing Date, except that any Credit Party may change its name in accordance with the applicable Domestic Security Agreement or Foreign Security Agreement, and (b) no Borrower shall permit any Borrower Subsidiary that is not a Credit Party or Pledged Entity to amend, modify or otherwise change in any material respect any of the terms or provisions in any of their respective Constituent Documents as in effect on the Closing Date.
9.14. FISCAL YEAR. No Borrower or Borrower Subsidiary shall change its Fiscal Year for accounting or tax purposes from a period consisting of the 12-month period ending on December 31 of each calendar year.
9.15. CANCELLATION OF DEBT; PREPAYMENT OF INDEBTEDNESS;
CERTAIN AMENDMENTS. No Borrower shall, or shall permit any Borrower Subsidiary
to, (i) cancel any material claim or debt or amend or modify the terms thereof,
except in the ordinary course of its business or pursuant to the exercise of
reasonable business judgment; (ii) except for regularly scheduled payments as
expressly permitted pursuant to the terms of the Loan Documents, prepay, redeem,
purchase, repurchase, defease or retire any Indebtedness or the Senior Notes;
(iii) terminate, amend, supplement or otherwise modify the terms of the Senior
Notes or the Senior Note Indenture; or (iv) permit the Constituent Documents of
any Borrower Subsidiary which is a limited liability company, or any document or
instrument evidencing a membership interest in such limited liability company,
to provide that membership interests in such Subsidiary are securities governed
by Article 8 of the Uniform Commercial Code as in effect in any applicable
jurisdiction.
9.16. ENVIRONMENTAL MATTERS. Neither NMHG Holding, nor NMHG,
nor any of NMHG's Subsidiaries shall become subject to any Liabilities and Costs
which would have a Material Adverse Effect and which arise out of or relate to
(a) exposure to or the Release or threatened Release to, from or at any location
of any Contaminant, or any Remedial Action in response thereto, or (b) any
violation of any Environmental, Health and Safety Requirements of Law.
9.17. CASH MANAGEMENT. No Borrower shall, or shall permit any Borrower Subsidiary to, (a) open any deposit or payroll account or securities account except in accordance
with SECTION 3.06 or (b) authorize or direct any Person to take any action with respect to amounts deposited in the Lockboxes, the Collection Accounts, the Cash Collateral Accounts, or the Domestic Concentration Account in contravention of the provisions hereof.
9.18. NO RESTRICTIONS ON SUBSIDIARY DIVIDENDS. Except to the extent that any such agreement may be contained in the Loan Documents or the Senior Notes, no Borrower will agree, or permit any Borrower Subsidiary to agree, to create or otherwise permit to exist any consensual encumbrance or restriction of any kind on the ability of any Borrower Subsidiary to pay dividends or make any other distribution or transfer of funds or assets or make loans or advances to or other Investments in, or pay any Indebtedness owing to, any Borrower or any other Borrower Subsidiary.
ARTICLE X
FINANCIAL COVENANTS
Each of the Borrowers covenants and agrees that so long as any Commitment is outstanding and thereafter until Payment In Full of all of the Obligations, unless the Requisite Lenders (or, with respect to SECTION 10.01, all Lenders) shall otherwise give prior written consent thereto:
10.01. EXCESS AVAILABILITY. The Borrowers shall at all times maintain aggregate Availability of $15,000,000 under the Credit Facilities.
10.02. MAXIMUM LEVERAGE RATIO. NMHG Holding and its Subsidiaries shall maintain a Leverage Ratio, as determined as of the last day of each fiscal quarter of NMHG Holding set forth below, of not more than the ratio set forth below opposite such periods:
Period Ratio
------ -----
June 30, 2002 6.60x
September 30, 2002 6.25x
December 31, 2002 5.25x
March 31, 2003 4.25x
June 30, 2003 3.50x
September 30, 2003 3.50x
December 31, 2003 3.50x
March 31, 2004 and every
fiscal quarter thereafter 3.25x
|
10.03. MINIMUM FIXED CHARGE COVERAGE RATIO. NMHG Holding and its Subsidiaries shall maintain a Fixed Charge Coverage Ratio on a consolidated basis, as of the last
day of each fiscal quarter set forth below for the four-fiscal-quarter period then ending (or (i) with respect to the fiscal quarter ending on June 30, 2002, for the two-fiscal-quarter period then ending or (ii) with respect to the fiscal quarter ending on September 30, 2002, for the three-fiscal-quarter period then ending) of at least the ratio set forth below opposite such determination date:
Fiscal Quarter Ending Ratio
--------------------- -----
June 30, 2002 0.50x
September 30, 2002 0.50x
December 31, 2002 0.65x
March 31, 2003 0.70x
June 30, 2003 0.80x
September 30, 2003 1.00x
December 31, 2003 1.10x
March 31, 2004 1.20x
June 30, 2004 1.30x
September 30, 2004 1.40x
December 31, 2004 and every
fiscal quarter thereafter 1.50x
|
10.04. MAXIMUM CAPITAL EXPENDITURES. Capital Expenditures made or incurred by NMHG and its Subsidiaries on a consolidated basis shall not exceed the amounts set forth below during the Fiscal Years set forth below (or such portion thereof) opposite such amounts; provided, that fifty percent (50.0%) of the excess of the maximum specified above for such Fiscal Year over the Capital Expenditures made in such Fiscal Year may be carried over to the next succeeding Fiscal Year (such carry-over amount being available only for use in such succeeding Fiscal Year (or portion thereof) and being treated as the first amount spent in such succeeding Fiscal Year, in each case for purposes of applying this PROVISO to such Fiscal Year).
Period Capital Expenditures ------ -------------------- FYE December 31, 2002 $30,000,000 FYE December 31, 2003 $65,000,000 FYE December 31, 2004 $80,000,000 Through June 30, 2005 $80,000,000 |
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. EVENTS OF DEFAULT. Each of the following occurrences shall constitute an Event of Default hereunder:
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Any Borrower shall fail to pay when due any of the Obligations.
(b) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail to perform or observe duly and punctually any agreement, covenant or obligation binding on such Person under (i) SECTION 7.02, 7.03, 7.07, 7.11 (solely with respect to notices of defaults and nonpayments required pursuant to such section), 8.01, 8.02, 8.03, 8.04, 8.05 (solely with respect to the failure to pay insurance premiums which has the effect of terminating any insurance policy required to be maintained pursuant to such section), 8.06 or 8.12 or (ii) ARTICLE IX or ARTICLE X.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or warranty made or deemed made by any Borrower or any Borrower Subsidiary to the Administrative Agent, any Lender or Issuing Bank herein or in any other Loan Document or in any certificate at any time given by any such Person pursuant to any Loan Document shall be false or misleading in any material respect on the date made (or deemed made).
(d) OTHER DEFAULTS. Other than as covered by PARAGRAPHS (a),
(b) or (c) of this SECTION 11.01, any Borrower or any Borrower Subsidiary (where
applicable) shall fail to perform or observe duly and punctually any agreement,
covenant or obligation binding on such Person under (i) SECTION 7.05 and such
default shall continue for two (2) Business Days after the occurrence thereof,
(ii) SECTION 7.06, 7.08 or 8.13(b), and such default shall continue for five (5)
Business Days after the occurrence thereof, (iii) SECTION 7.01, 7.04, 7.09,
7.11, 8.05, 8.07, 8.08, 8.09, 8.10 or 8.13(a), and such default shall continue
for ten (10) Business Days after the occurrence thereof, (iv) SECTION 7.10,
7.12, 7.13, or the non-monetary provisions of the Letter Agreement, and such
default shall continue for fifteen (15) Business Days after the occurrence
thereof, or (v) any other term contained herein (other than under SECTION 8.11)
or in any other Loan Document, and such default shall continue for thirty (30)
calendar days.
(e) DEFAULT AS TO OTHER INDEBTEDNESS. Any Borrower or Borrower Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) after any grace period applicable thereto with respect to the Senior Notes, or any other Indebtedness (other than an Obligation) in excess of $2,500,000 and, if (i) aggregate Availability under the Credit Facilities is greater than $30,000,000 or (ii) the Multicurrency Facility has been refinanced pursuant to SECTION 9.01(m), and aggregate Availability under the Domestic Facility is in excess of $25,000,000 and Cumulative Availability is in excess of $30,000,000, such default shall continue for three Business Days; or any breach, default or event of default shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to any such, if the effect thereof is (or, with the giving of notice or lapse of time or both, would be) to cause an acceleration, mandatory redemption or other required repurchase of any such Indebtedness, or permit the holders of any such Indebtedness to accelerate the maturity of such Indebtedness or require the redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be otherwise declared to be due and payable (by acceleration or otherwise) or required to be prepaid, redeemed or otherwise repurchased by any Borrower or any Borrower Subsidiary (other than by a regularly scheduled required prepayment, mandatory redemption or required repurchase) prior to the stated maturity thereof.
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) An involuntary case, proceeding or other action shall be commenced against any Borrower or any Borrower Subsidiary under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have any order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, wind-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or seeking appointment of a receiver, administrative receiver, trustee, receiver-manager, liquidator, sequestrator, administrator, custodian or similar official for it or for all or any substantial part of its assets, which case, proceeding or other action results in entry of an order for relief or any such adjudication or appointment or remains undismissed, undischarged or unbonded for period of thirty (30) days; or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of any Borrower or any Borrower Subsidiary in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, receiver-manager, liquidator, administrative receiver, sequestrator, trustee, custodian or other officer having similar powers over any Borrower or any Borrower Subsidiary or over all or a substantial part of the Property of any Borrower or any Borrower Subsidiary shall be entered; or an interim receiver, trustee or other custodian of any Borrower or any Borrower Subsidiary or of all or a substantial part of the property of any Borrower or any Borrower Subsidiary shall be appointed or a warrant of attachment, execution or similar process against any substantial part of the Property of any Borrower or any Borrower Subsidiary shall be issued and any such event shall not be stayed, dismissed, bonded or discharged within thirty (30) days after entry, appointment or issuance.
(g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. Any Borrower or any Borrower Subsidiary shall (i) commence any voluntary case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have any order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, wind-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, receiver-manager, administrative receiver, liquidator, sequestrator, administrator, custodian or similar official for it or for all or any substantial part of its assets or (ii) consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, (iii) consent to the appointment of or taking possession by a receiver, receiver-manager,
liquidator, sequestrator, trustee or other custodian or other officer for all or a substantial part of its property, (iv) generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make any general assignment for the benefit of creditors or shall otherwise become insolvent under any relevant law, (v) take any other action to authorize any of the actions set forth in this paragraph (g), or (vi) any petition is presented by any Person for the appointment of an administrator of any Borrower or any Borrower Subsidiary.
(h) JUDGMENTS AND ATTACHMENTS.
(i) Any money judgment (other than a money judgment covered by insurance as to which the insurance company has acknowledged coverage), writ or warrant of attachment, distress or similar process against any Borrower or any Borrower Subsidiary or any of their respective assets involving in any case an amount in excess of $2,000,000 is entered and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; provided, however, if any such judgment, writ or warrant of attachment or similar process is in excess of $5,000,000, the entry thereof shall immediately constitute an Event of Default hereunder.
(ii) A federal tax Lien is filed against any Borrower, any
Borrower Subsidiary or any Property of any Borrower or any Borrower
Subsidiary which is not discharged of record, bonded over or otherwise
secured to the satisfaction of the Administrative Agent within forty
(40) days after the filing thereof or the date upon which the
Administrative Agent receives actual knowledge of the filing thereof
for an amount which equals or exceeds $2,000,000.
(iii) An Environmental Lien is filed against any Property of any Borrower or any Borrower Subsidiary with respect to Claims in an amount which equals or exceeds $2,000,000.
(i) DISSOLUTION. Any order, judgment or decree shall be entered against any Borrower or any Borrower Subsidiary, decreeing its involuntary dissolution, split up or other similar proceeding, and such order shall remain undischarged and unstayed for a period in excess of thirty (30) days; or any Borrower or any Borrower Subsidiary shall otherwise dissolve or cease to exist except as specifically permitted hereby; or any corporate action or other steps shall be taken to wind-up, liquidate or dissolve NACCO Materials Handling S.R.L.
(j) LOAN DOCUMENTS; FAILURE OF SECURITY. At any time, for any reason, (i) any Loan Document ceases to be in full force and effect (except in accordance with its terms) or any Borrower or any Borrower Subsidiary party thereto seeks to repudiate its obligations thereunder and the Liens intended to be created thereby are, or any Borrower or any Borrower Subsidiary seeks to render such Liens, invalid or unperfected, or (ii) Liens in favor of the Administrative Agent, the Issuing Bank and/or the Lenders contemplated by the Loan Documents shall, at any time, for any reason, be invalidated or otherwise cease to be in full force and effect, or such Liens shall be subordinated or shall not have the priority contemplated hereby or by the other Loan Documents.
(k) TERMINATION EVENT. Any Termination Event occurs which the Administrative Agent reasonably believes could subject any Borrower or any ERISA Affiliate to a liability in excess of $2,000,000.
(l) WAIVER OF MINIMUM FUNDING STANDARD. If the plan administrator of any Plan applies under Section 412(d) of the Internal Revenue Code for a waiver of the minimum funding standards of Section 412(a) of the Internal Revenue Code and the Administrative Agent believes that the substantial business hardship upon which the application for the waiver is based could subject any Borrower or any ERISA Affiliate to liability in excess of $2,000,000.
(m) MATERIAL ADVERSE CHANGE. An event shall exist or occur which has a Material Adverse Effect.
(n) CHANGE OF CONTROL. A Change of Control shall have occurred.
(o) AUSTRALIAN CREDIT FACILITY SUBLIMIT. The outstanding obligations of any Borrower or Borrower Subsidiary under the Australian Credit Facility shall exceed the Australian Credit Facility Sublimit for more than three Business Days after the Administrative Agent sends notice thereof to any Borrower or Borrower Subsidiary or any Borrower or Borrower Subsidiary otherwise has Knowledge thereof.
(p) HITFL CONTRACT. If the closing condition pursuant to
SECTION 5.01(n) shall have been satisfied pursuant to CLAUSE (iii) of such
SECTION, the Borrower shall incur any obligations under the HITFL Contract
unless prior to such incurrence, the conditions pursuant to SECTIONS 5.01(n)(i)
or (ii) have been satisfied.
An Event of Default shall be deemed "continuing" until cured or waived in accordance with SECTION 14.07.
11.02. RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION. Upon the occurrence of any Event of Default described in Sections 11.01(f) or 11.01(g), the Commitments shall automatically and immediately terminate and the unpaid principal amount of, and any and all accrued interest on, the Obligations and all accrued fees shall automatically become immediately due and payable, without presentment, demand, or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrowers; and upon the occurrence and during the continuance of any other Event of Default, the Administrative Agent shall at the request, or may with the consent, of the Requisite Lenders, by written notice to the Borrowers, (i) declare that all or any portion of the Commitments are terminated, whereupon the Commitments and the obligation of each Lender to make any Loan hereunder and of each Lender or Issuing Bank to Issue or participate in any Letter of Credit not then Issued shall immediately terminate, and/or (ii) declare the unpaid principal amount of and any and all accrued and unpaid interest on the Obligations to be, and the same shall thereupon be, immediately due and payable, without presentment, demand, or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment,
notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrowers.
(b) DEPOSIT FOR LETTERS OF CREDIT. In addition, after the occurrence and during the continuance of an Event of Default, (i) with respect to Letter of Credit Obligations under the Domestic Facility, the Domestic Borrowers jointly and severally agree, and (ii) with respect to Letter of Credit Obligations under the Multicurrency Facility, the Multicurrency Borrowers jointly and severally agree, promptly upon demand by the Administrative Agent (given upon the written instructions of the Requisite Lenders or, in the absence of such instructions, in its sole discretion), to deliver to the Administrative Agent, Cash Collateral in such form as requested by the Administrative Agent for deposit in the applicable Cash Collateral Account, together with such endorsements, and execution and delivery of such documents and instruments as the Administrative Agent may reasonably request in order to perfect or protect the Administrative Agent's Lien with respect thereto, in an aggregate principal amount equal to 105% of the then outstanding Letter of Credit Obligations under the applicable Letter of Credit Facility.
(c) RESCISSION. If at any time after termination of the Commitments and/or acceleration of the maturity of the Loans, the Borrowers shall pay all arrears of interest and all payments on account of principal of the Loans and Reimbursement Obligations under the applicable Credit Facility which shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified herein) and all Events of Default and Defaults (other than nonpayment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to SECTION 14.07, then upon the written consent of the Requisite Lenders and written notice to the Borrowers, the termination of the Commitments and/or the acceleration and the consequences of such termination and/or acceleration may be rescinded and annulled; but such action shall not affect any subsequent Event of Default or Default or impair any right or remedy consequent thereon. The provisions of the preceding sentence are intended merely to bind the Lenders and the Issuing Bank to a decision which may be made at the election of the Requisite Lenders; they are not intended to benefit the Borrowers and do not give any Borrower the right to require the Lenders to rescind or annul any termination of the aforesaid obligations of the Lenders or the Issuing Bank or any termination of the aforesaid obligations of the Lenders or the Issuing Bank or any acceleration hereunder, even if the conditions set forth herein are met.
(d) ENFORCEMENT. The Borrowers acknowledge that in the event any Borrower or any Borrower Subsidiary fails to perform, observe or discharge any of its respective obligations or liabilities hereunder or under any other Loan Document, any remedy of law may prove to be inadequate relief to the Administrative Agent, the Issuing Bank and the Lenders; therefore, each Borrower agrees that the Administrative Agent, the Issuing Bank and the Lenders shall be entitled after the occurrence and during the continuance of an Event of Default to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.
11.03. CASH COLLATERAL. The Administrative Agent may, at any time after an Event of Default has occurred and is continuing, and otherwise consistent with the Uniform Commercial Code (or any applicable Requirements of Law in any other relevant jurisdiction),
sell or cause to be sold any Cash Equivalents being held by the Administrative Agent as Cash Collateral (in any Cash Collateral Account, or otherwise) at any broker's board or at public or private sale, in one or more sales or lots, at such price as the Administrative Agent may deem best, without assumption of any credit risk, and the purchaser of any or all such Cash Equivalents so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever. The Administrative Agent, any of the Lenders and the Issuing Bank may, in its own name or in the name of a designee or nominee, buy such Cash Equivalents at any public sale and, if permitted by applicable law, buy such Cash Equivalents at any private sale. The Administrative Agent shall apply the proceeds of any such sale, net of any expenses incurred in connection therewith, and any other funds deposited in (x) the Domestic Cash Collateral Accounts, to the payment of the Domestic Obligations in accordance with this Agreement and (y) the Multicurrency Cash Collateral Account to the payment of the Multicurrency Obligations in accordance with this Agreement. Each Borrower agrees that (a) each sale of Cash Equivalents shall be conducted in conformity with reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to such Cash Equivalents and shall be deemed to be commercially reasonable and (b) any requirement of reasonable notice shall be met if such notice is received by NMHG at its notice address on the signature pages hereto at least ten (10) Business Days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement for sale is waived to the extent permitted by law. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.
11.04. LICENSE FOR USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY. Unless expressly prohibited by the licensor thereof, if any, the Administrative Agent is hereby granted a license to use, without charge, the computer programs, software, printouts and other computer materials, technical knowledge or processes, data bases, materials, trademarks, registered trademarks, trademark applications, service marks, registered service marks, service mark applications, patents, patent applications, trade names, industrial designs, rights of use of any name, labels, fictitious names, inventions, designs, trade secrets, goodwill, registrations, copyrights, copyright applications, Permits, licenses, franchises, customer lists, credit files, correspondence, and advertising materials or any Property of a similar nature of any Credit Party or Borrower Subsidiary, in each case, as it pertains to the Collateral owned by such Person, or any rights to any of the foregoing, in completing production of, advertising for sale, and selling any of such Collateral, and such Person's rights under all licenses and franchise agreements shall inure to the benefit of the Administrative Agent. The Administrative Agent agrees not to use any such license prior to the occurrence of an Event of Default without giving prior notice to the applicable Credit Party or Subsidiary thereof.
ARTICLE XII
THE ADMINISTRATIVE AGENT
12.01. APPOINTMENT.
(a) Each Domestic Lender, Issuing Bank, and Multicurrency Lender hereby designates and appoints CNAI as the Administrative Agent hereunder (and as security trustee or security agent under each Foreign Security Agreement, in each case on and subject to the terms
thereunder), and each such Person hereby irrevocably authorizes the Administrative Agent to execute such documents (including, without limitation, the Loan Documents to which the Administrative Agent is a party) and to take such other action on such Person's behalf under the provisions hereof and of the other Loan Documents and to exercise such powers as are set forth herein or therein together with such other powers as are reasonably incidental thereto. As to any matters not expressly provided for hereby (including, without limitation, enforcement or collection of the Notes or any amount payable under any provision of ARTICLE III when due) or the other Loan Documents, the Administrative Agent shall not be required to exercise any discretion or take any action. Notwithstanding the foregoing, the Administrative Agent shall be required to act or refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or, where required by the express terms hereof, a different proportion of the Lenders) and such instructions shall be binding upon all Lenders, Issuing Bank and Holders; provided, however, the Administrative Agent shall not be required to take any action which (i) the Administrative Agent reasonably believes shall expose it to personal liability unless the Administrative Agent receives an indemnification satisfactory to it from the Lenders with respect to such action or (ii) is contrary hereto, to the other Loan Documents or applicable law. The Administrative Agent agrees to act as such on the express conditions contained in this ARTICLE XII.
(b) The provisions of this ARTICLE XII are solely for the benefit of the Administrative Agent, the Lenders and Issuing Bank, and no Borrower nor any Affiliate of any Borrower shall have any rights to rely on or enforce any of the provisions hereof (other than as expressly set forth in SECTIONS 12.07 and 12.09). In performing its functions and duties hereunder, the Administrative Agent shall act solely as agent of the Lenders and the Issuing Bank and does not assume and shall not be deemed to have assumed any obligation or relationship of agency, trustee or fiduciary with or for any Borrower or any Affiliate of any Borrower. The Administrative Agent may perform any of its duties hereunder, or under the Loan Documents, by or through its respective agents or employees.
12.02. NATURE OF DUTIES. The Administrative Agent shall not have any duties or responsibilities except those expressly set forth herein or in the Loan Documents. The duties of the Administrative Agent shall be mechanical and administrative in nature. The Administrative Agent shall not have by reason hereof a fiduciary relationship in respect of any Holder. Nothing herein or in any of the Loan Documents, expressed or implied, is intended to or shall be construed to impose upon the Administrative Agent any obligations in respect hereof or any of the Loan Documents except as expressly set forth herein or therein. Each Lender and each Issuing Bank shall make its own independent investigation of the financial condition and affairs of the Borrowers and their Subsidiaries in connection with the making and the continuance of the Loans hereunder and with the issuance of the Letters of Credit and shall make its own appraisal of the creditworthiness of the Borrowers and their Subsidiaries initially and on a continuing basis, and the Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Holder with any credit or other information with respect thereto (except for reports required to be delivered by the Administrative Agent under the terms hereof). If the Administrative Agent seeks the consent or approval of any of the Lenders to the taking or refraining from taking of any action hereunder, the Administrative Agent shall send notice thereof to each Lender. The Administrative Agent shall promptly notify each Lender
at any time that the Lenders so required hereunder have instructed the Administrative Agent to act or refrain from acting pursuant hereto.
12.03. RIGHTS, EXCULPATION, ETC.
(a) LIABILITIES; RESPONSIBILITIES. None of the Administrative
Agent, any Affiliate of the Administrative Agent, nor any of their respective
officers, directors, employees or agents shall be liable to any Holder for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection therewith, except for damages caused by such Person's gross
negligence or willful misconduct, as determined in a judgment by a court of
competent jurisdiction. The Administrative Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant to
SECTION 3.02(b), and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Holder to whom
payment was due, but not made, shall be to recover from other Holders any
payment in excess of the amount to which they are determined to have been
entitled. The Administrative Agent shall not be responsible to any Holder for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectibility, or sufficiency hereof or of any of the other Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Borrower or any Borrower's Affiliates. The Administrative Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions hereof or of any of the Loan
Documents or the financial condition of any Borrower or any Affiliate of any
Borrower, or the existence or possible existence of any Default or Event of
Default.
(b) RIGHT TO REQUEST INSTRUCTIONS. The Administrative Agent may at any time request instructions from the applicable Lenders with respect to any actions or approvals which, by the terms of any of the Loan Documents, the Administrative Agent is permitted or required to take or to grant, and the Administrative Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any Person for refraining from any action or withholding any approval under any of the Loan Documents until it shall have received such instructions from those Lenders from whom the Administrative Agent is required to obtain such instructions for the pertinent matter in accordance with the Loan Documents. Without limiting the generality of the foregoing, no Holder shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under the Loan Documents in accordance with the instructions of the Requisite Lenders or, where required by the express terms hereof, a greater proportion of the Lenders.
12.04. RELIANCE. The Administrative Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining hereto or to any of the Loan Documents and its duties hereunder or thereunder, upon advice of legal counsel (including counsel for any Borrower), independent public accountants and other experts selected by it.
12.05. INDEMNIFICATION. To the extent that the Administrative Agent is not reimbursed and indemnified by the Borrowers, the Lenders shall reimburse and indemnify the Administrative Agent for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents, in proportion to such Lender's Pro Rata Share of all Credit Facilities; provided, however, such Lenders shall have no obligation to the Administrative Agent with respect to the matters indemnified pursuant to this SECTION 12.05 resulting from the willful misconduct or gross negligence of the Administrative Agent, as determined in a judgment by a court of competent jurisdiction. The obligations of such Lenders under this SECTION 12.05 shall survive the Payment In Full of the Loans, the Reimbursement Obligations and all other Obligations and the termination hereof.
12.06. CNAI INDIVIDUALLY. With respect to their respective Pro Rata Shares of the Commitments hereunder, if any, and the Loans made by it, if any, CNAI shall have and may exercise the same rights and powers hereunder and are subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender under the applicable Credit Facility. The terms "Lenders", "Domestic Lenders" or "Requisite Lenders" or any similar terms shall, unless the context clearly otherwise indicates, include CNAI in its individual capacity as a Lender, a Domestic Lender or as one of the Requisite Lenders. CNAI and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with NMHG or any of its Subsidiaries as if CNAI were not acting as Administrative Agent pursuant hereto.
12.07. SUCCESSOR ADMINISTRATIVE AGENTS; RESIGNATION OF ADMINISTRATIVE AGENTS.
(a) RESIGNATION. The Administrative Agent may resign from the
performance of its functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to the Borrowers and the
Lenders. The resignation of the Administrative Agent shall take effect upon the
acceptance by a successor Administrative Agent of appointment pursuant to this
SECTION 12.07.
(b) APPOINTMENT BY REQUISITE LENDERS. Upon any such notice of resignation by the Administrative Agent, the Requisite Lenders shall have the right to appoint a successor Administrative Agent selected from among the Lenders, which appointment shall be subject to the prior written approval of the Borrowers (which may not be unreasonably withheld, and shall not be required upon the occurrence and during the continuance of an Event of Default).
(c) APPOINTMENT BY RETIRING ADMINISTRATIVE AGENT. If a
successor Administrative Agent shall not have been appointed within the thirty
(30) Business Day period provided in PARAGRAPH (a) of this SECTION 12.07, the
retiring Administrative Agent, with the consent of any Borrower (which may not
be unreasonably withheld, and shall not be required upon the occurrence and
during the continuance of an Event of Default), shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent until such time, if
any, as the Requisite Lenders appoint a successor Administrative Agent as
provided above.
(d) RIGHTS OF THE SUCCESSOR AND RETIRING ADMINISTRATIVE AGENTS. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder thereafter to be performed. After the resignation of any Administrative Agent hereunder, the provisions of this ARTICLE XII shall inure to such Persons' benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent hereunder.
12.08. RELATIONS AMONG LENDERS. Each Lender and each Issuing Bank agrees that it shall not take any legal action, nor institute any actions or proceedings, against any Borrower or any other obligor hereunder or with respect to any Collateral without the prior written consent of the Requisite Lenders. Without limiting the generality of the foregoing, no Lender may accelerate or otherwise enforce its portion of the Obligations, or terminate its Commitments except in accordance with SECTION 11.02(a) or a setoff permitted under SECTION 14.05.
12.09. CONCERNING THE COLLATERAL AND THE LOAN DOCUMENTS.
(a) PROTECTIVE ADVANCES. The Administrative Agent may from
time to time, from and after the occurrence and during the continuance of a
Default or an Event of Default, make such disbursements and advances to or for
the account of any Borrower pursuant to the Loan Documents which the
Administrative Agent in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral under the applicable Credit Facility or any
portion thereof or to enhance the likelihood or maximize the amount of repayment
of the Loans and other Obligations up to an amount not in excess of the lesser
of (i) an amount equal to (A) the aggregate Commitments under all Credit
Facilities less (B) the sum of the aggregate Credit Facility Outstandings and
(ii) $5,000,000 in the aggregate for all Credit Facilities with respect to
advances made by the Administrative Agent ("PROTECTIVE ADVANCES"). The
Administrative Agent shall notify the Borrowers and each Lender in writing of
each such Protective Advance, which notice shall include a description of the
purpose of such Protective Advance. The Domestic Borrowers jointly and severally
agree and the Multicurrency Borrowers jointly and severally agree to pay the
Administrative Agent, upon demand, the principal amount of all outstanding
Protective Advances under the applicable Credit Facility, together with interest
thereon at the rate from time to time applicable to Floating Rate Loans under
such Credit Facility from the date of such Protective Advance until the
outstanding principal balance thereof is paid in full. If the applicable
Borrower(s) fail to make payment in respect of any Protective Advance within one
(1) Business Day after the date such Borrower receives written demand therefor
from the Administrative Agent, the Administrative Agent shall, unless the notice
in SECTION 2.03(b) has been given, promptly notify each Lender under the
applicable Credit Facility and such Lender agrees that it shall thereupon make
available to the Administrative Agent, in Dollars in immediately available
funds, the amount equal to such Lender's Pro Rata Share under the applicable
Credit Facility of such Protective Advance. If such funds are not made available
to the Administrative Agent by such Lender within one (1) Business Day after the
Administrative Agent's demand therefor, the Administrative Agent shall be
entitled to recover any such amount from such Lender together with interest
thereon at the interest rate applicable to the Loans for each day during the
period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Administrative Agent such Pro Rata Share of any such Protective Advance shall neither relieve any other Lender of its obligation hereunder to make available to the Administrative Agent such other Lender's Pro Rata Share under the applicable Credit Facility of such Protective Advance on the date such payment is to be made nor increase the obligation of any other Lender to make such payment to the Administrative Agent. All outstanding principal of, and interest on, Protective Advances shall constitute Obligations secured by the Collateral until paid in full by the applicable Borrower(s).
(b) AUTHORITY. Each Lender and each Issuing Bank authorizes
and directs the Administrative Agent to enter into the Loan Documents relating
to the Collateral for the benefit of the Lenders and the Issuing Bank. Each
Lender and each Issuing Bank agrees that any action taken by the Administrative
Agent or the Requisite Lenders (or, where required by the express terms hereof,
a different proportion of the Lenders) in accordance with the provisions hereof
or of the other Loan Documents, and the exercise by the Administrative Agent or
the Requisite Lenders (or, where so required, such different proportion) of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders and Issuing Bank. Without limiting the generality of the foregoing, the
Administrative Agent shall have the sole and exclusive right and authority to
(i) act as the disbursing and collecting agent for the Lenders and the Issuing
Bank under the Credit Facilities with respect to all payments and collections
arising in connection herewith and with the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by any Credit
Party; (iii) act as collateral agent for the Lenders and the Issuing Bank for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein, provided, however, the
Administrative Agent hereby appoints, authorizes and directs each Lender and
each Issuing Bank to act as collateral sub-agent for the Administrative Agent,
the Lenders and the Issuing Bank for purposes of the perfection of all security
interests and Liens with respect to the Property at any time in the possession
of such Lender or the Issuing Bank, including, without limitation, the Credit
Parties' respective deposit accounts maintained with, and cash and Cash
Equivalents held by, such Lender or such Issuing Bank; (iv) manage, supervise
and otherwise deal with the Collateral; (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
Liens created or purported to be created by the Loan Documents; and (vi) except
as may be otherwise specifically restricted by the terms hereof or of any other
Loan Document, exercise all remedies given to the Administrative Agent, the
Lenders or the Issuing Bank with respect to the Collateral under the Loan
Documents relating thereto, applicable law or otherwise.
(c) RELEASE OF COLLATERAL.
(i) Each of the Lenders and the Issuing Bank hereby directs the Administrative Agent to release any Lien held by the Administrative Agent for the benefit of the Administrative Agent, the Lenders, the Issuing Bank and the other Holders:
(A) against all of the Collateral, upon final Payment In Full of the Obligations and termination of the Commitments and this Agreement;
(B) against any part of the Collateral sold or disposed of by any Borrower or any Borrower Subsidiary, if such sale or disposition is permitted by SECTION 3.06, 9.02 or 9.06 and certified to the Administrative Agent by such Borrower in an Officer's Certificate (or permitted pursuant to a waiver or consent of a transaction otherwise prohibited by such Section) or, if not pursuant to such sale or disposition, against any part of the Collateral, if such release is consented to by Lenders whose aggregate Pro Rata Shares under all Credit Facilities, in the aggregate, are equal to 100%; and
(C) against the Foreign Collateral if the Multicurrency Commitments have been terminated and permanently reduced to zero and the Multicurrency Obligations have been Paid in Full.
(ii) Each of the Lenders and the Issuing Bank hereby directs the Administrative Agent to execute and deliver or file such termination and partial release statements and do such other things as are necessary to release Liens to be released pursuant to this SECTION 12.09(c) promptly upon the effectiveness of any such release.
(d) NO OBLIGATION. Without limiting the generality of SECTION
12.03, the Administrative Agent shall not have any obligation whatsoever to any
Lender or to any other Person to assure that the Collateral exists, is owned by
any Credit Party, is cared for, protected or insured or has been encumbered or
that the Liens granted to the Administrative Agent herein or pursuant to the
Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Administrative Agent in this
SECTION 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, the Administrative Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Administrative Agent's own interests in the
Collateral as one of the Lenders and that the Administrative Agent shall not
have any duty or liability whatsoever to any Lender, the Issuing Bank or any
other Holder; provided, however, that the Administrative Agent shall not be
relieved of any liability imposed by law for gross negligence or willful
misconduct.
(e) DUTCH PLEDGES. For the purpose of the Dutch Pledges only:
(i) In connection with the Obligations of each Borrower towards any Lender, any Issuing Bank or any Holder (each an "OBLIGEE" and collectively the "OBLIGEES"), each of the parties to this Agreement agrees that CNAI shall, to the extent CNAI is not a creditor itself in respect of such Obligations, be a "joint and several co-creditor" with such Obligee in respect of such Obligations. Accordingly, CNAI shall be entitled to demand as a creditor performance in full of such Obligations by the relevant Borrower owing the same, whereby satisfaction of such Obligations owed to one creditor (either CNAI or the relevant Obligee) shall release such Borrower from its obligations to the other creditor.
(ii) If and to the extent that, notwithstanding SECTION 14.14, Dutch law applies to this SECTION 12.09(e), this Agreement constitutes a management agreement
(beheersregeling) within the meaning of Section 3:168 of the Dutch Civil Code among CNAI and the Obligees; CNAI and the Obligees exclude among them to the greatest extent possible, the applicability of title 7 of book 3 of the Dutch Civil Code with respect to the Obligations.
(iii) The rights of pledge created or to be created by the Dutch Pledges are granted by the applicable Credit Parties to CNAI, as Administrative Agent. Such rights of pledge are therefore not held among the Obligees and CNAI in a community of property (gemeenschap) within the meaning of Section 3:166 of the Dutch Civil Code.
ARTICLE XIII
CO-BORROWER PROVISIONS
13.01. DOMESTIC BORROWERS. Each of the Domestic Borrowers hereby irrevocably designates, appoints and authorizes each other Domestic Borrower as its agent and attorney-in-fact to take actions under this Agreement and the other Loan Documents, together with such powers as are reasonably incidental thereto. The Administrative Agent, the Issuing Bank and the Lenders shall be entitled to rely, and shall be fully protected in relying, upon any communication from or to any Domestic Borrower as having been delivered by or to all Domestic Borrowers. Any action taken by one Domestic Borrower under this Agreement and the other Loan Documents shall be binding upon the other Domestic Borrowers. Each Domestic Borrower agrees that it is jointly and severally liable to the Administrative Agent, the Issuing Bank and the Lenders for the payment of the Domestic Obligations and that such liability is independent of the Obligations of the other Borrowers and whether such Obligations become unenforceable against any other Borrower.
13.02. MULTICURRENCY BORROWERS. Each of the Multicurrency Borrowers hereby irrevocably designates, appoints and authorizes each other Multicurrency Borrower as its agent and attorney-in-fact to take actions under this Agreement and the other Loan Documents, together with such powers as are reasonably incidental thereto. The Administrative Agent, the Issuing Bank and the Lenders shall be entitled to rely, and shall be fully protected in relying, upon any communication from or to any Multicurrency Borrower as having been delivered by or to all Multicurrency Borrowers. Any action taken by one Multicurrency Borrower under this Agreement and the other Loan Documents shall be binding on the other Multicurrency Borrowers. Each Multicurrency Borrower agrees that it is jointly and severally liable to the Administrative Agent, the Issuing Bank and the Lenders for the payment of the Multicurrency Obligations and that such liability is independent of the Multicurrency Obligations of the other Multicurrency Borrowers and whether such Multicurrency Obligations become unenforceable against the other Multicurrency Borrowers.
13.03. SEPARATE ACTIONS. A separate action or actions may be brought and prosecuted against any Borrower whether such action is brought against any other Borrower or whether any other Borrower is joined in such action or actions. Each Borrower authorizes the Administrative Agent and the Lenders to release the other Borrowers without in any manner or to any extent affecting the liability of such Borrower hereunder or under the Loan Documents. Each Borrower waives any defense arising by reason of any disability or other defense of any other Borrower, or the cessation for any reason whatsoever of the liability of any other Borrower
with respect to any of the Obligations, or any claim that any Borrower's liability hereunder exceeds or is more burdensome than the liability of any other Borrower or Borrowers.
13.04. OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. Each Borrower hereby agrees that its Obligations hereunder and under the Loan Documents shall be unconditional, irrespective of:
(a) the validity, enforceability, avoidance or subordination of any of the Obligations or any of the Loan Documents as to any other Borrower;
(b) the absence of any attempt by, or on behalf of, the Administrative Agent, the Issuing Bank or any of the Lenders to collect, or to take any other action to enforce, all or any part of the Obligations whether from or against any Borrower or any other Person liable for such Obligations;
(c) the election of any remedy available under the Loan Documents or applicable Requirements of Law by, or on behalf of, the Administrative Agent, the Issuing Bank or any of the Lenders with respect to all or any part of the Obligations;
(d) the waiver, consent, extension, forbearance or granting of any indulgence by, or on behalf of, the Administrative Agent, the Issuing Bank or any of the Lenders with respect to any provision of any of the Loan Documents;
(e) the failure of the Administrative Agent, the Issuing Bank or any of the Lenders to take any steps to perfect and maintain its security interest in, or to preserve its rights to, any security or collateral for the Obligations;
(f) the election by, or on behalf of, the Administrative Agent, the Issuing Bank or any of the Lenders, in any proceeding which constitutes a Bankruptcy Event, involving any other Borrower of any right which is comparable to the rights set forth in Section 1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by any other Borrower, or any receiver or assignee following the occurrence of a Bankruptcy Event, pursuant to any provision of applicable law comparable to Section 364 of the Bankruptcy Code;
(h) the disallowance, under any provision of applicable law comparable to Section 502 of the Bankruptcy Code, of all or any portion of the claims against any Borrower held by any of the Lenders, the Issuing Bank or the Administrative Agent, for repayment of all or any part of the Obligations;
(i) the insolvency of any other Borrower; and
(j) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of any Borrower (other than Payment In Full of the Obligations).
13.05. WAIVERS AND ACKNOWLEDGEMENTS.
(a) Except as otherwise expressly provided under any provision of the Loan Documents or as required by any mandatory provision of applicable Requirements of Law, each Borrower hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of receivership, insolvency or bankruptcy of any Borrower or any other Person, protest or notice with respect to the Obligations, all setoffs and counterclaims and all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor and notices of acceptance of this Agreement and the other Loan Documents, the benefits of all statutes of limitation, and all other demands whatsoever (and shall not require that the same be made on any other Borrower as a condition precedent to such other Borrower's Obligations hereunder), and covenants that this Agreement (and the joint and several liability of each Domestic Borrower under SECTION 13.01 and the joint and several liability of each Multicurrency Borrower under SECTION 13.02) will not be discharged, except by Payment In Full of the Obligations. Each Borrower further waives all notices of the existence, creation or incurring of new or additional Indebtedness, arising either from additional loans extended to any other Borrower or otherwise, and also waives all notices that the principal amount, or any portion thereof, and/or any interest on any instrument or document evidencing all or any part of the Obligations is due, notices of any and all proceedings to collect from the maker, any endorser or any other Guarantor of all or any part of the Obligations, or from any other Person, and, to the extent permitted by law, notices of exchange, sale, surrender or other handling of any security or Collateral given to the Administrative Agent, the Issuing Bank or any of the Lenders to secure payment of all or any part of the Obligations.
(b) The Administrative Agent, the Issuing Bank and/or the Lenders are hereby authorized, without notice or demand and without affecting the liability of the Borrowers hereunder, from time to time, (i) to accept partial payments on all or any part of the Obligations; (ii) to take and hold security or Collateral for the payment of all or any part of the Obligations, this Agreement, or any other guaranties of all or any part of the Obligations or other liabilities of the Borrowers, and (iii) to settle, release, exchange, enforce, waive, compromise or collect or otherwise liquidate all or any part of the Obligations, this Agreement, any guaranty of all or any part of the Obligations, and, subject to the terms of the relevant Security Documents, any security or Collateral for the Obligations or for any such guaranty, irrespective of the effect on the contribution or subrogation rights of the Borrowers. Any of the foregoing may be done in any manner, without affecting or impairing the obligations of each Borrower hereunder.
13.06. CONTRIBUTION AMONG BORROWERS.
(a) The Domestic Borrowers agree as between themselves and without limiting any liability of any Domestic Borrower hereunder to the Administrative Agent, the Issuing Bank or the Domestic Lenders, that to the extent any payment of the Obligations of the Domestic Borrowers is required to be made under this Agreement, each Domestic Borrower shall be responsible for a portion of such payment equal to the product of (a) a fraction, the numerator of which is the net worth (determined in accordance with GAAP) of such Domestic Borrower on the date of such payment and the denominator of which is the aggregate net worth (computed as aforesaid) of the Domestic Borrowers, MULTIPLIED BY (b) the amount of such payment (such product being such Domestic Borrower's "DB CONTRIBUTION AMOUNT"). To the extent that any
Domestic Borrower (the "PAYING DOMESTIC BORROWER") shall make a payment in respect of the Obligations of the Domestic Borrowers under this Agreement in excess of its DB Contribution Amount, the other Domestic Borrowers shall reimburse the Paying Domestic Borrower in an amount equal to the excess of such payment over the Paying Domestic Borrower's DB Contribution Amount, PRO RATA based on the respective net worths of such other Domestic Borrowers at the date enforcement under this Agreement is sought.
(b) The Multicurrency Borrowers agree as between themselves and without limiting any liability of any Multicurrency Borrower hereunder to the Administrative Agent, the Issuing Bank or the Multicurrency Lenders, that to the extent any payment of the Obligations of the Multicurrency Borrowers is required to be made under this Agreement, each Multicurrency Borrower shall be responsible for a portion of such payment equal to the product of (a) a fraction, the numerator of which is the net worth (determined in accordance with GAAP) of such Multicurrency Borrower on the date of such payment and the denominator of which is the aggregate net worth (computed as aforesaid) of the Multicurrency Borrowers, MULTIPLIED BY (b) the amount of such payment (such product being such Multicurrency Borrower's "MB CONTRIBUTION AMOUNT"). To the extent that any Multicurrency Borrower (the "PAYING MULTICURRENCY BORROWER") shall make a payment in respect of the Obligations of the Multicurrency Borrowers under this Agreement in excess of its MB Contribution Amount, the other Multicurrency Borrowers shall reimburse the Paying Multicurrency Borrower in an amount equal to the excess of such payment over the Paying Multicurrency Borrower's MB Contribution Amount, PRO RATA based on the respective net worths of such other Multicurrency Borrowers at the date enforcement under this Agreement is sought.
13.07. SUBROGATION. Until the Obligations shall have been Paid
In Full, each Borrower hereby agrees that it (i) shall have no right of
subrogation with respect to such Obligations (under contract, Section 509 of the
Bankruptcy Code or any comparable provision of any other applicable law, or
otherwise) or any other right of indemnity, reimbursement or contribution, and
(ii) hereby waives any right to enforce any remedy which the Administrative
Agent, any of the Lenders or the Issuing Bank now have or may hereafter have
against the other Borrowers, any endorser or any other Guarantor of all or any
part of the Obligations or any other Person, and each Borrower hereby waives any
benefit of, and any right to participate in, any security or Collateral given to
the Administrative Agent, the Lenders and the Issuing Bank to secure the payment
or performance of all or any part of the Obligations or any other liability of
the other Borrowers to the Administrative Agent, the Lenders and the Issuing
Bank.
13.08. SUBORDINATION. Each Borrower agrees that any and all claims of such Borrower against the other Borrowers, any Guarantors or any endorser or other guarantor of all or any part of the Obligations, or against any of their respective properties, shall be subordinated to all of the Obligations. Notwithstanding any right of any Borrower to ask for, demand, sue for, take or receive any payment from the other Borrowers, all rights and Liens of such Borrower, whether now or hereafter arising and howsoever existing, in any assets of the other Borrowers (whether constituting part of the Collateral or otherwise) shall be and hereby are subordinated to the rights of the Administrative Agent, the Issuing Bank or the Lenders in those assets. Such Borrower shall have no right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, unless and until all of the Obligations shall have been Paid In Full and any Commitments of the Lenders and the Issuing Bank under, or in respect of,
the Credit Facilities have terminated. If all or any part of the assets of any Borrower, or the proceeds thereof, are subject to any distribution, division or application to the creditors of such Borrower, whether partial or complete, voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding, or if the business of any Borrower is dissolved or if substantially all of the assets of any Borrower are sold, then, and in any such event, any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any Indebtedness of any Borrower to any other Borrower ("INTER-BORROWER INDEBTEDNESS") shall be paid or delivered directly to the Administrative Agent for application to the applicable Obligations, due or to become due, until such Obligations shall have first been Paid In Full and all Commitments of the Lenders and the Issuing Bank under, or in respect of, each Credit Facility, have terminated. Each Borrower irrevocably authorizes and empowers the Administrative Agent, and each of the Lenders and the Issuing Bank to demand, sue for, collect and receive every such payment or distribution and give acquittance therefor and to make and present for and on behalf of such Borrower such proofs of claim and take such other action, in the Administrative Agent's, such Lender's or Issuing Bank's own name or in the name of such Borrower or otherwise, as the Administrative Agent, any Lender or the Issuing Bank may deem reasonably necessary or reasonably advisable for the enforcement of this Agreement. After the occurrence and during the continuance of an Event of Default, each Lender and the Issuing Bank may vote, with respect to the Obligations owed to it, such proofs of claim in any such proceeding, receive and collect any and all dividends or other payments or disbursements made thereon in whatever form the same may be paid or issued and apply the same on account of any of the Obligations. Except as permitted under SECTION 9.06(b), should any payment, distribution, security or instrument or proceeds thereof be received by any Borrower upon or with respect to the Inter-Borrower Indebtedness prior to the Payment In Full of all of the Obligations and the termination of all Commitments, such Borrower shall receive and hold the same in trust, as trustee, for the benefit of the Administrative Agent, the Issuing Bank and the Lenders and shall forthwith deliver the same to the Administrative Agent in precisely the form received (accompanied by the endorsement or assignment of such Borrower where necessary), for application to the Obligations, due or not due, and, until so delivered, the same shall be held in trust by such Borrower as the property of the Administrative Agent, the Issuing Bank and the Multicurrency Lenders. After the occurrence and during the continuance of an Event of Default, if any Borrower fails to make any such endorsement or assignment to the Administrative Agent, the Issuing Bank or the Lenders, the Administrative Agent, the Issuing Bank or the Lenders (or any of their respective officers or employees) are hereby irrevocably authorized to make the same. Each Borrower agrees that until the Obligations have been Paid In Full and all Commitments of the Lenders and the Issuing Bank under or in respect of each Credit Facility have terminated, such Borrower will not assign or transfer to any Person any claim such Borrower has or may have against any other Borrower (other than in favor of the Administrative Agent pursuant to the Loan Documents).
ARTICLE XIV
MISCELLANEOUS
14.01. LENDER ASSIGNMENTS AND PARTICIPATIONS.
(a) GENERAL. No assignments or participations of any Lender's
rights or obligations hereunder shall be made except in accordance with this
SECTION 14.01.
(b) LIMITATIONS ON ASSIGNMENTS. Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations
hereunder (including all of its rights and obligations with respect to the
Revolving Loans and the Letters of Credit) in accordance with the provisions of
this SECTION 14.01. Each assignment by a Lender shall be subject to the
following conditions: (i) each assignment (other than to a Lender, an Affiliate
of a Lender or an Approved Fund) shall be approved by the Administrative Agent
and the Borrowers, which approval shall not be unreasonably withheld or delayed;
(ii) each such assignment shall be to an Eligible Assignee (for the sake of
clarity, no Person shall be considered an Eligible Assignee under any Credit
Facility solely because of its Affiliation with any other Person to whom an
assignment is concurrently being made with respect to the other Credit Facility)
and in the case of an assignment of a Lender's Multicurrency Commitment, the
Administrative Agent shall be satisfied with such assignee's (or its
Affiliates') ability to fund in the Specified Foreign Currencies; (iii) each
assignment of a Lender's Commitment shall be an assignment of the assigning
Lender's (and, where applicable, its Affiliates') Commitments in each Credit
Facility in which such Lender (and, if applicable, its Affiliates) then hold
Commitments and shall be allocated to such Credit Facilities as determined by
such Lender (and, if applicable, its Affiliates) and consented to by the
Administrative Agent; (iv) each assignment shall be in an amount such that,
after giving effect to such assignment, the Eligible Assignee (and, if
applicable, its Affiliates) shall hold aggregate Commitments in an amount at
least equal to $5,000,000 (provided, that more than one Lender (and, if
applicable, its Affiliates) may be the assigning Lender under any such
assignment) except if the Eligible Assignee is a Lender, an Affiliate of a
Lender, or an Approved Fund or if such assignment shall constitute all the
assigning Lender's interest hereunder; and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, and, if such Eligible Assignee is not then a Lender, an
Administrative Questionnaire, for its acceptance and recording in the Register.
Upon such execution, delivery, acceptance and recording in the Register, from
and after the effective date specified in each Assignment and Acceptance and
agreed to by the Administrative Agent and NMHG, (x) the assignee thereunder
shall, in addition to any rights and obligations hereunder held by it
immediately prior to such effective date, if any, have the rights and
obligations hereunder that have been assigned to it pursuant to such Assignment
and Acceptance and shall, to the fullest extent permitted by law, have the same
rights and benefits hereunder as if it were an original Lender hereunder and (y)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations hereunder (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of such
assigning Lender's rights and obligations hereunder, the assigning Lender shall
cease to be a party hereto). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with PARAGRAPH (h) of this SECTION 14.01.
(c) THE REGISTER. The Administrative Agent, acting solely for this purpose as an agent for the Borrowers, shall maintain at its address in effect pursuant to SECTION 14.08 a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Commitments of the Lenders under each Credit Facility, the principal amount of the Loans under each Credit Facility owing to each Lender from time to time and whether such Lender is an original Lender or the assignee of another Lender pursuant to an Assignment and Acceptance. The Register shall include an account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, (ii) the effective date and amount of each Assignment and Acceptance delivered to and accepted by it and the parties thereto, (iii) the amount of any principal or interest or fees due and payable or to become due and payable from each Borrower to each Lender hereunder or under the Notes, and (iv) the amount of any sum received by the Administrative Agent from NMHG Holding, NMHG or any Guarantor hereunder and each Lender's share thereof. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and NMHG and each of its Subsidiaries, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes hereof. The Register shall be available for inspection by NMHG or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) FEE. Upon its receipt of an Assignment and Acceptance
executed by the assigning Lender and an Eligible Assignee and (unless waived by
the Administrative Agent) a processing and recordation fee of $3,500 (payable by
the assigning Lender or the assignee, as shall be agreed between them), the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in compliance herewith and in substantially the form of EXHIBIT B hereto,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to NMHG and the
other Lenders.
(e) INFORMATION REGARDING NMHG. Any Lender may, in connection with any assignment or proposed assignment pursuant to this SECTION 14.01, disclose to the assignee or proposed assignee any information relating to NMHG Holding, NMHG or any of NMHG's Subsidiaries furnished to such Lender by the Administrative Agent or by or on behalf of any Borrower; provided that, prior to any such disclosure, such assignee or proposed assignee shall agree (for the Borrowers' benefit) to preserve in accordance with SECTION 14.20 the confidentiality of any confidential information described therein.
(f) LENDERS' CREATION OF SECURITY INTERESTS. Notwithstanding any other provision set forth herein, any Lender may at any time create a security interest in all or any portion of its rights hereunder to secure obligations of such Lender, including without limitation, in favor of any Federal Reserve bank in accordance with Regulation A; provided, however, such creation of a security interest shall not release such assigning Lender from any of its obligations hereunder or substitute such holder of a security interest for such Lender as a party hereto.
(g) ASSIGNMENTS BY AN ISSUING BANK. If the Issuing Bank (or its Affiliate) ceases to be a Lender hereunder by virtue of any assignment made pursuant to this SECTION 14.01 and another Issuing Bank is obligated to Issue Letters of Credit or will become so obligated after such assignment becomes effective, then, as of the effective date of such cessation, such Issuing Bank's obligations to Issue Letters of Credit pursuant to SECTION 2.02 shall terminate and such Issuing Bank shall be an Issuing Bank hereunder only with respect to outstanding Letters of Credit Issued prior to such date.
(h) PARTICIPATIONS. Each Lender may sell participations to one
or more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities hereunder (including,
without limitation, all or a portion of any or all of its Commitments hereunder
and the Loans owing to it and its undivided interest in the Letters of Credit)
to any Person (the "PARTICIPANT"); provided, however, that (i) such Lender's
obligations hereunder (including, without limitation, its Commitments hereunder)
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) NMHG
Holding, the Borrowers, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations hereunder and (iv) such Participant's rights to
agree or to restrict such Lender's ability to agree to the modification, waiver
or release of any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan Documents or any of their respective
Subsidiaries or Affiliates, or to exercise or refrain from exercising any powers
or rights which any Lender may have under or in respect of the Loan Documents or
any Collateral, shall be limited to the right to consent to (A) reduction of the
principal of, or rate or amount of interest on the Loans(s) subject to such
participation (other than by the payment or prepayment thereof), (B)
postponement of any scheduled date for any payment of principal of, or interest
on, the Loan(s) subject to such participation (except with respect to any
modifications of the applicable provisions relating to the prepayments of Loans
and other Obligations) and (C) release of any guarantor of the Obligations or
all or any substantial portion of the Collateral except for any such release
provided in SECTION 12.09(c). No holder of a participation in all or any part of
the Loans shall be a "Lender" or a "Holder" for any purposes hereunder by reason
of such participation; provided, however, that each holder of a participation
shall have the rights and obligations of a Lender (including any right to
receive payment) under SECTIONS 3.04, 3.05, 4.01(f), 4.02(c), 4.02(e), 12.05,
14.02 and 14.05; provided, however, that all requests for any payments pursuant
to such Sections shall be made by a Participant through the Lender granting such
participation. The right of each holder of a participation to receive payment
under SECTIONS 3.04, 3.05, 4.01(f), 4.02(c), 4.02(e), 12.05, 14.02 and, provided
such Participant agrees to be subject to SECTION 14.06 as though it were a
Lender, 14.05 shall be limited to the lesser of (i) the amounts actually
incurred by such holder for which payment is provided under said Sections and
(ii) the amounts that would have been payable under said Sections by the
Borrowers to the Lender granting the participation in respect of the
participated interest to such holder had such participation not been granted.
Each Lender shall promptly notify the Administrative Agent of the identity of
any holder of a participation.
(i) PAYMENT TO PARTICIPANTS. Anything herein to the contrary notwithstanding, in the case of any participation, all amounts payable by the Borrowers under the Loan
Documents shall be calculated and made in the manner and to the parties required hereby as if no such participation had been sold.
14.02. EXPENSES.
(a) GENERALLY. The Borrowers jointly and severally agree upon demand to pay, or reimburse the Administrative Agent for, all of the Administrative Agent's reasonable internal and external audit, legal, appraisal, valuation, filing, document duplication and reproduction and investigation expenses and for all other reasonable out-of-pocket costs and expenses of every type and nature (including, without limitation, the reasonable fees, expenses and disbursements of the Administrative Agent's counsel, Sidley, Austin Brown & Wood LLP, local legal counsel, auditors, accountants, appraisers, printers, insurance and environmental advisers, and other consultants and agents), incurred by the Administrative Agent in connection with (i) the Administrative Agent's audit and investigation of the Borrowers and their Subsidiaries in connection with the preparation, negotiation, and execution of the Loan Documents and the Administrative Agent's periodic audits of the Borrowers and their Subsidiaries; (ii) the preparation, negotiation, execution and interpretation hereof (including, without limitation, the satisfaction or attempted satisfaction of any of the conditions set forth in ARTICLE V), the other Loan Documents and any proposal letter or commitment letter issued in connection therewith and the making of the Loans hereunder; (iii) the creation, perfection or protection of the Liens under the Loan Documents (including, without limitation, any reasonable fees and expenses for local counsel in various jurisdictions); (iv) the ongoing administration hereof and of the Loans, including consultation with attorneys in connection therewith and with respect to the Administrative Agent's rights and responsibilities hereunder and under the other Loan Documents; (v) the protection, collection or enforcement of any of the Obligations or the enforcement of any of the Loan Documents; (vi) the commencement, defense or intervention in any court proceeding relating in any way to the Obligations, the Property, any Borrower or any Borrower's Subsidiaries, this Agreement or any of the other Loan Documents; (vii) the response to, and preparation for, any subpoena or request for document production with which the Administrative Agent is served or deposition or other proceeding in which the Administrative Agent is called to testify, in each case, relating in any way to the Obligations, the Property, any Borrower or any Borrower's Subsidiaries, this Agreement or any of the other Loan Documents; and (H) any amendments, consents, waivers, assignments, restatements, or supplements to any of the Loan Documents and the preparation, negotiation, and execution of the same.
(b) AFTER DEFAULT. The Borrowers further jointly and severally agree to pay or reimburse the Administrative Agent, the Issuing Bank and the Lenders upon demand for all out-of-pocket costs and expenses, including, without limitation, reasonable attorneys' fees (including allocated costs of internal counsel and costs of settlement), incurred by the Administrative Agent, the Issuing Bank or any Lender (i) in enforcing any Loan Document or Obligation or any security therefor or exercising or enforcing any other right or remedy available by reason of any Event of Default; (ii) in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing, defending or intervening in any litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal proceeding relating to the Obligations, the Property, any Borrower or any Borrower's Subsidiaries and related to or arising out of the transactions contemplated hereby or by any of the other Loan Documents; and
(iv) in taking any other action in or with respect to any suit or proceeding (bankruptcy or otherwise) described in CLAUSES (I) through (III) above.
14.03. INDEMNITY. Each Domestic Borrower further jointly and severally agrees, and each Multicurrency Borrower further jointly and severally agrees, to defend, protect, indemnify, and hold harmless the Administrative Agent, each and all of the Domestic Lenders (in the case of the Domestic Borrowers only), each and all of the Multicurrency Lenders (in the case of the Multicurrency Borrowers only) and the Issuing Bank and each of their respective Affiliates, and each of such Administrative Agent's, Lender's, Issuing Bank's or Affiliate's respective officers, directors, employees, attorneys, advisors, representatives and agents (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in ARTICLE V) (collectively, the "INDEMNITEES"), in each case from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for such Indemnitees)(including in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitees shall be designated a party thereto), imposed on, incurred by, or asserted against such Indemnitees in any manner relating to or arising out of or in connection with (a) this Agreement, the Commitment Letter, the other Loan Documents, or any act, event or transaction related or attendant thereto, whether or not any such Indemnitee is a party thereto and whether or not such transactions are consummated, the making of the Loans, the issuance of and participation in Letters of Credit hereunder, the management of such Loans or Letters of Credit, the use or intended use of the proceeds of the Loans or Letters of Credit hereunder, the execution, delivery and/or performance of Currency Agreements or Interest Rate Contracts, or any of the other transactions contemplated by the Loan Documents, or (b) any Liabilities and Costs under Environmental, Health or Safety Requirements of Law arising from or in connection with this Agreement, the Commitment Letter, the other Loan Documents, or an act, event or transaction attendant thereto, the past, present or future operations of any Credit Party or any Borrower Subsidiary or any of their respective predecessors in interest, or, the past, present or future environmental, health or safety condition of any respective Property of any Credit Party or any Borrower Subsidiary, the Release or exposure to or presence or suspected Release, exposure to, or presence of any Contaminant at, on or from any respective current or former Property of any Credit Party or any Borrower Subsidiary, or other property of third parties (collectively, the "INDEMNIFIED MATTERS"); provided, however, the Borrowers shall have no obligation to an Indemnitee hereunder with respect to Indemnified Matters to the extent resulting from the willful misconduct or gross negligence of such Indemnitee as determined in a final, non-appealable judgment of a court of competent jurisdiction. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, each applicable Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. Each Domestic Borrower jointly and severally agrees, and each Multicurrency Borrower jointly and severally agrees, not to assert any claim against any Indemnitee on any theory of liability for special, indirect, consequential or punitive damages arising out of, or in any way in connection with, the Commitments, the Obligations or any other matters governed by this Agreement and/or the other Loan Documents.
14.04. CHANGE IN ACCOUNTING PRINCIPLES. If any change in the accounting principles used in the preparation of the most recent Financial Statements is hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by NMHG Holding with the agreement of its independent certified public accountants and such change results in a change in the method of calculation of any of the covenants, standards or terms found in ARTICLE IX and ARTICLE X, the parties hereto agree to enter into negotiations in order to amend such provisions so as to equitably reflect such change with the desired result that the criteria for evaluating compliance with such covenants, standards and terms by NMHG Holding shall be the same after such change as if such change had not been made; provided, however, no change in GAAP that would affect the method of calculation of any of the covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Requisite Lenders and NMHG Holding, so to reflect such change in accounting principles.
14.05. SETOFF. In addition to any Liens granted under the Loan Documents and any rights now or hereafter granted under applicable law, upon the occurrence and during the continuance of any Event of Default, each Lender, each Issuing Bank and any Affiliate of any Lender or Issuing Bank is hereby authorized by each Borrower at any time or from time to time, without notice to any Person (any such notice being hereby expressly waived) to combine accounts or to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured (but not including trust accounts)) and any other Indebtedness at any time held or owing by such Lender, Issuing Bank or any of their Affiliates to or for the credit or the account of such Borrower against and on account of the Obligations of any Borrowers to such Lender, Issuing Bank or any of their Affiliates, including, but not limited to, all Loans and Letters of Credit and all claims of any nature or description arising out of or in connection herewith, irrespective of whether or not (i) such Lender or Issuing Bank shall have made any demand hereunder or (ii) the Administrative Agent, at the request or with the consent of the Requisite Lenders, shall have declared the principal of and interest on the Loans and other amounts due hereunder to be due and payable as permitted by ARTICLE XI and even though such Obligations may be contingent or unmatured. Each Lender shall give the applicable Borrower notice of any action taken pursuant to this SECTION 14.05 promptly upon the occurrence thereof provided that any failure to do so shall not limit any right of a Lender to take such action. Each Lender and the Issuing Bank agrees that it shall not, without the express consent of the Requisite Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the request of the Requisite Lenders, exercise its setoff rights hereunder against any accounts of any Credit Party or any Borrower Subsidiary now or hereafter maintained with such Lender, Issuing Bank or any Affiliate of such Lender or Issuing Bank.
14.06. RATABLE SHARING. The Lenders and the Issuing Bank agree among themselves that, except as otherwise expressly provided in any Loan Document,
(a) with respect to all amounts received by a Domestic Lender, an Issuing Bank or a Multicurrency Lender, as the case may be, which are applicable to the payment of the Obligations (excluding (x) the fees described in SECTIONS 2.02(g), 3.04, 3.05, 4.01(f) and 4.02 and (y) and amounts so received in respect of Currency Agreements and/or Interest Rate Contracts)
equitable adjustment shall be made so that, in effect, (i) all such amounts with respect to the Domestic Obligations shall be shared among the Domestic Lenders and the Issuing Bank ratably in accordance with their Pro Rata Shares of the Domestic Facility and (ii) all such amounts with respect to the Multicurrency Obligations shall be shared among the Multicurrency Lenders and the Issuing Bank ratably in accordance with their Pro Rata Shares of the Multicurrency Facility, whether received by voluntary payment, by the exercise of the right of setoff or banker's lien, by counterclaim or cross-action or by the enforcement of any or all of such Obligations (excluding (x) the fees described in SECTIONS 2.02(g), 3.04, 3.05, 4.01(f) and 4.02 and (y) and amounts so received in respect of Currency Agreements and/or Interest Rate Contracts) or the Collateral, and
(b) if any of them shall by voluntary payment or by the exercise of any right of counterclaim, setoff, banker's lien or otherwise, receive payment of a proportion of the aggregate amount of such Obligations held by it which is greater than the amount which such Lender is entitled to receive hereunder, the Lender receiving such excess payment shall purchase, without recourse or warranty, an undivided interest and participation (which it shall be deemed to have done simultaneously upon the receipt of such payment) in such Obligations owed to the others so that all such recoveries with respect to such Obligations shall be applied ratably in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases shall be rescinded and the purchase prices paid for such participation shall be returned to such party to the extent necessary to adjust for such recovery, but without interest except to the extent the purchasing party is required to pay interest in connection with such recovery.
Each Borrower agrees that any Lender purchasing a participation from another Lender pursuant to this SECTION 14.06 may, to the fullest extent permitted by law, exercise all its rights of payment (including, subject to SECTION 14.05, the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation. The Administrative Agent, the Domestic Lenders and the Issuing Bank further agree and acknowledge that in no event shall proceeds of the Collateral of the Multicurrency Borrowers, more than sixty-five percent (65.0%) of the Capital Stock of any Multicurrency Borrower or its Subsidiaries or amounts received from any Multicurrency Borrower as described herein be shared with any Domestic Lender or Issuing Bank for application on any of the Domestic Obligations.
14.07. AMENDMENTS AND WAIVERS.
(a) GENERAL PROVISIONS. Unless otherwise provided for or required in this Agreement, no amendment or modification of any provision hereof shall be effective without the written agreement of the Requisite Lenders (which the Requisite Lenders shall have the right to grant or withhold in their sole discretion) and the Borrowers, and no termination or waiver of any provision of this Agreement or any of the Loan Documents, or consent to any departure by the Borrowers therefrom, shall be effective without the written concurrence of the Requisite Lenders, which the Requisite Lenders shall have the right to grant or withhold in their sole discretion. All amendments, modifications, waivers and consents not specifically reserved to the Lenders, the Issuing Bank and the Administrative Agent in SECTION 14.07(b), SECTION 14.07(c) and in any other provisions of this Agreement shall require only the approval of the Requisite Lenders. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand on any Borrower in any case shall entitle such Borrower to any other or further notice or demand in similar or other circumstances.
(b) AMENDMENTS, CONSENTS AND WAIVERS BY ALL AFFECTED LENDERS. Notwithstanding the foregoing, any amendment, modification, termination, waiver or consent with respect to any of the following provisions of this Agreement shall be effective only by a written agreement, signed by each Lender or Issuing Bank affected thereby:
(i) waiver of any of the conditions specified in SECTION 5.01 or 5.02 (except with respect to a condition based upon another provision this Agreement, the waiver of which requires only the concurrence of the Requisite Lenders),
(ii) increase in the amount of any of the Commitments of such Lender,
(iii) reduction of the principal of, rate or amount of interest on the Loans, the Reimbursement Obligations, or any fees or other amounts payable to such Lender (other than by the payment or prepayment thereof),
(iv) except as provided in SECTION 11.02(c), extension of the Termination Date or postponement of any date on which any payment of principal of, or interest on, the Loans, the Reimbursement Obligations, any fees or other amounts payable to such Lender or Issuing Bank would otherwise be due,
(v) change in the definitions of Commitments, Domestic Commitments or Multicurrency Commitments (other than as set forth in CLAUSE (c)(vi) below),
(vi) the orders of priority set forth in SECTION 3.01, CLAUSES THIRD and FOURTH of SECTION 3.02(b)(i)(B), CLAUSE SECOND of SECTION 3.02(b)(i)(B) or CLAUSES (D) through (J) of SECTION 3.02(b)(ii), and
(vii) amendment of SECTION 3.01(d).
(c) AMENDMENTS, CONSENTS AND WAIVERS BY ALL LENDERS. Any amendment, modification, termination, waiver or consent with respect to any of the following provisions of this Agreement shall be effective only by a written agreement, signed by each Lender:
(i) release of any guarantor of the Obligations or all or any substantial portion of the Collateral (except as provided in SECTION 12.09(c)),
(ii) change in the (A) definition of Requisite Lenders or (B) the aggregate Pro Rata Share of the Lenders which shall be required for the Lenders or any of them to take action under this Agreement or the other Loan Documents,
(iii) amendment of SECTIONS 12.09(c), 14.01, 14.02, 14.06 or this SECTION 14.07,
(iv) assignment of any right or interest in or under this Agreement or any of the other Loan Documents by any Borrower,
(v) waiver of any Event of Default described in SECTIONS 11.01(a), (f), (g), (i) and (n),
(vi) amendment to the definition of Commitments, Domestic Commitments or Multicurrency Commitments with respect to the maximum aggregate amounts set forth in such defined terms, and
(vii) amendment or waiver of SECTION 10.01.
(d) ADMINISTRATIVE AGENT AUTHORITY. The Administrative Agent
may, but shall have no obligation to, with the written concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf of that
Lender. Notwithstanding anything to the contrary contained in this SECTION
14.07, no amendment, modification, waiver or consent shall affect the rights or
duties of the Administrative Agent hereunder or under the other Loan Documents,
including this ARTICLE XIII, unless made in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action; and the order of priority set forth in CLAUSES FIRST and SECOND and the
second CLAUSE FIRST of SECTION 3.02(b)(i)(B) and CLAUSES (a), (b) AND (c) of
SECTION 3.02(b)(ii). Notwithstanding anything herein to the contrary, in the
event that a Borrower shall have requested, in writing, that any Lender agree to
an amendment, modification, waiver or consent with respect to any particular
provision or provisions hereof, and such Lender shall have failed to state, in
writing, that it either agrees or disagrees (in full or in part) with all such
requests (it being understood that any such statement of agreement may be
subject to satisfactory documentation and other conditions specified in such
statement) within thirty (30) days of receipt of such request (or such other
time period as may be designated in such amendment, modification, waiver or
consent), then such Lender shall be deemed to have disagreed with such request.
Furthermore, in the event that any Lender fails to agree to any amendment,
modification, waiver or consent requiring the unanimous approval of the Lenders
pursuant to SECTION 14.07(c), at the joint request of any Borrower and the
Administrative Agent, the Lenders who have so agreed shall have the right (but
not the obligation) to, or to cause an Eligible Assignee to, purchase from such
Lender (at the face amount thereof) all Obligations and Commitments held by such
Lender. Each Lender agrees the if the Administrative Agent or any Borrower
exercises its option hereunder, it shall promptly execute and deliver all
agreements and documentation necessary to effectuate such assignment as set
forth in SECTION 14.01. Any purchase of such Lender's Commitments and all other
Obligations owing to it must (i) occur within 30 Business Days from the date
that such Lender refuses to execute any amendment, waiver or consent which
requires the written consent of all of the Lenders and to which the
Administrative Agent, the other Lenders and the Borrowers have agreed and (ii)
include an amount payable to such Lender which is sufficient to compensate such
Lender for any loss, expense or liability as a result of any such purchase under
this SECTION 14.07(d) which arises out of, or is in connection with, any funds
acquired by such Lender to make, continue or maintain any portion of the
principal amount of any Loan as, or to convert any portion of the principal
amount of any Loan into, a Fixed Rate Loan.
14.08. NOTICES.
(a) Unless otherwise specifically provided herein, any notice, consent or other communication herein required or permitted to be given shall be in writing and may be
personally served, telecopied, sent by e-mail, or sent by courier service or the
United States mails (or with respect to the Multicurrency Borrowers, the mails
of their country of residence) and shall be deemed to have been given (i) four
(4) days following deposit in the United States mails (or with respect to the
Multicurrency Borrowers, the mails of its country of residence), with proper
postage prepaid, (ii) upon delivery thereof to a courier service, (iii) when
delivered in person or (iv) upon confirmation of receipt of a telecopy or of an
email; provided, that no notices with respect to a request for a new, or
conversion of an existing, Borrowing or other extension of credit or providing
notice of any Default or Event of Default may be delivered by e-mail. Notices to
the Administrative Agent pursuant to ARTICLE II, III or IV shall not be
effective until received by the Administrative Agent. For the purposes hereof,
the addresses, telecopy numbers and, if so specified, e-mail addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this SECTION 14.08) shall be as set forth below each party's name on the
signature pages hereof or the signature page of any applicable Assignment and
Acceptance, or, as to each party, at such other address as may be designated by
such party in a written notice to all of the other parties to this Agreement.
The Administrative Agent may refer the relevant Persons (by fax, letter,
telecopy, or, if so specified, e-mail) to a web site (including "e-Disclosure",
the Administrative Agent's delivery system that is part of SSB Direct, Global
Fixed Income's primary web portal) and to the location of the relevant
information on such web site in discharge of such notification or delivery
obligation provided that such notification or delivery obligation shall not be
discharged by the Administrative Agent referring a Person to a web site if such
Person has previously provided written notice to the Administrative agent that
it does not wish to receive notices via a web site. Each Borrower acknowledges
that although such web sites may be secured with a dual firewall and a user
identification/password authorization system, and secured through a single user
per deal authorization method whereby each user may access such web site only on
a deal-by-deal basis, distribution of material through an electronic medium is
not necessarily secure and there are confidentiality and other risks associated
with such distribution.
(b) The Domestic Borrowers jointly and severally agree, and the Multicurrency Borrowers jointly and severally agree, to indemnify and hold harmless each Indemnitee (with respect to the applicable Credit Facility) from and against any and all claims, damages, liabilities, obligations, losses, penalties, actions, judgments, suits, costs, disbursements and expenses of any kind or nature (including, without limitation, reasonable fees and disbursements of counsel to any such Indemnitee) which may be imposed on, incurred by or asserted against any such Indemnitee in any manner relating to or arising out of any action taken or omitted by such Indemnitee in good faith in reliance on any notice or other written communication in the form of a telecopy or facsimile purporting to be from a Borrower; provided that no Borrower shall have any obligation under this SECTION 14.08(b) to an Indemnitee with respect to any indemnified matter caused by or resulting from the gross negligence or willful misconduct of that Indemnitee as determined by a court of competent jurisdiction.
14.09. SURVIVAL OF WARRANTIES AND AGREEMENTS. All representations and warranties made herein and all obligations of the Borrowers in respect of taxes, indemnification and expense reimbursement shall survive the execution and delivery of this Agreement and of the other Loan Documents, the making and repayment of the Loans, the issuance and discharge
of Letters of Credit hereunder, the termination of this Agreement and the termination of the Commitments hereunder and shall not be limited in any way by the passage of time or occurrence of any event and shall expressly cover time periods when the Administrative Agent, the Issuing Bank or any of the Lenders may have come into possession or control of any of the Borrowers' or their Subsidiaries' Property.
14.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the Administrative Agent, any Lender or the Issuing Bank in the exercise of any power, right or privilege under any of the Loan Documents shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under the Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available.
14.11. MARSHALING; PAYMENTS SET ASIDE. None of the Administrative Agent, any Lender or the Issuing Bank shall be under any obligation to marshal any assets in favor of the Borrowers or any other party or against or in payment of any or all of the Obligations. To the extent that a Borrower makes a payment or payments to the Administrative Agent, the Lenders or the Issuing Bank or any of such Persons receives payment from the proceeds of the Collateral or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, right and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
14.12. SEVERABILITY. In case any provision in or obligation hereunder or under the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
14.13. HEADINGS. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect.
14.14. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
14.15. LIMITATION OF LIABILITY. No claim may be made by any Borrower, any Lender, the Issuing Bank, the Administrative Agent or any other Person against the Administrative Agent, the Issuing Bank or any other Lender or the Affiliates, directors, officers, employees, attorneys or agents of any of them for any special, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Borrower, each Lender, the Issuing Bank and the Administrative Agent hereby waives, releases and agrees not to sue upon any such claim for any
such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
14.16. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan Documents shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of the parties hereto and the successors and permitted assigns of the Administrative Agent, the Lenders and the Issuing Bank. The rights hereunder and the interest herein of the Borrowers may not be assigned or otherwise transferred without the written consent of all Lenders. Any attempted assignment without such written consent shall be void. Nothing in this Agreement, express or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided herein and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
14.17. CERTAIN CONSENTS AND WAIVERS.
(a) PERSONAL JURISDICTION.
(i) EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUING BANK, AND THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, AS ITS PROCESS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUING BANK, AND THE BORROWERS AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWERS WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
(ii) EACH OF THE BORROWERS AGREES THAT THE ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST SUCH PERSON OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND THE LENDERS TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK. EACH OF THE BORROWERS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) SERVICE OF PROCESS. EACH OF THE BORROWERS IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT (IN THE CASE OF ANY
BORROWER) OR THE RELEVANT BORROWER'S NOTICE ADDRESS SPECIFIED PURSUANT TO
SECTION 14.08, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING. EACH OF THE BORROWERS IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST ANY BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. EACH OF THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE LENDERS, AND THE BORROWERS IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG ANY OF THE ADMINISTRATIVE AGENT, THE ISSUING BANK, OR THE BORROWERS ARISING OUT OF OR RELATED TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
14.18. COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This Agreement and any amendments, waivers, consents, or supplements hereto may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective against NMHG Holding, the Borrowers, each Lender, each Issuing Bank and the Administrative Agent on the date hereof. This Agreement and each of the other Loan Documents shall be construed to the extent reasonable to be consistent one with the other, but to the extent that the terms and conditions of this Agreement are actually inconsistent with the terms and conditions of any other Loan Document, this Agreement shall govern.
14.19. LIMITATION ON AGREEMENTS. All agreements between the Borrowers, the Administrative Agent, each Lender and the Issuing Bank in the Loan Documents are hereby expressly limited so that in no event shall any of the Loans or other amounts payable by the Borrower under any of the Loan Documents be directly or indirectly secured (within the meaning of Regulation U) by Margin Stock.
14.20. CONFIDENTIALITY. Subject to SECTION 14.01(e), the Administrative Agent, the Lenders and the Issuing Bank shall hold all nonpublic information obtained pursuant to the requirements hereof and identified as such by any Borrower in accordance with safe and sound banking practices and in any event may make disclosure reasonably required by a bona fide offeree, transferee or assignee (or Participant) in connection with the contemplated transfer (or participation), or as required or requested by any Governmental Authority or representative thereof, or pursuant to legal process, or to its accountants, lawyers and other advisors who shall be informed of the confidential nature of such information, and shall require any such offeree or assignee (or Participant) to agree (and require any of its offerees, assignees or Participants to agree) to comply with this SECTION 14.20. In no event shall the Administrative Agent, any Lender or the Issuing Bank be obligated or required to return any materials furnished by any Borrower or any Borrower Subsidiary; provided, however, each offeree shall be required to agree that if it does not become an assignee, transferee (or Participant) it shall return all materials furnished to it by such Borrower or Subsidiary thereof in connection herewith. In the event the Administrative Agent or any Lender or Issuing Bank is requested or required by law to disclose any of such information, the Administrative Agent or such Lender or Issuing Bank agrees to provide NMHG with prompt notice thereof; provided, however, the Administrative Agent or such Lender or Issuing Bank may, without restriction hereunder, including the providing of such notice, provide any and all of such information to any of the agencies or other governmental entities which regularly regulate its ability to engage in any of its businesses under state or federal law. Any and all confidentiality agreements entered into between the Administrative Agent, and Lender or the Issuing Bank and any Borrower shall survive this Agreement.
14.21. CURRENCY CONVERSIONS.
(a) PLACE AND CURRENCY OF PAYMENT. If any Obligation is payable in a currency other than Dollars (a "NON-USD CURRENCY") and/or at a place other than the United States, and such payment is not made as and when agreed, the applicable Borrowers, jointly and severally, will, upon the request of the applicable Lender or Issuing Bank, or the Administrative Agent, on behalf of such Lender or Issuing Bank, either (i) make payment in such Non-USD Currency and at the place where such Obligation is payable, or (ii) pay the Administrative Agent, for the benefit of such Lender or Issuing Bank, in Dollars at the address of the Administrative Agent pursuant to SECTION 14.08 hereof. In the event of a payment pursuant to clause (ii) above, the applicable Borrowers will pay the Administrative Agent, for the benefit of such Lender or Issuing Bank, the equivalent of the amount of such Obligation in Dollars calculated at the rate of exchange at which, in accordance with normal banking procedures, the Administrative Agent or such Lender or Issuing Bank may buy such Non-USD Currency in New York, New York on the date any applicable Borrower makes such payment.
(b) JUDGMENT CURRENCY.
(i) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder or under the Notes in any currency (the "ORIGINAL CURRENCY") to another currency (the "OTHER CURRENCY"), the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be the Spot Rate on the second Business Day preceding that on which judgment is given.
(ii) The obligation of each Borrower in respect of any sum due in the Original Currency from it to any Lender, the Issuing Bank or the Administrative Agent hereunder or under any Note held by any Lender, as applicable, shall, notwithstanding any judgment in any Other Currency, be discharged only to the extent that on the Business Day following receipt by such Lender, Issuing Bank or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such Other Currency, such Lender, Issuing Bank or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the Original Currency with such Other Currency; if the amount of the Original Currency so purchased is less than the sum originally due to such Lender, Issuing Bank or the Administrative Agent (as the case may be) in the Original Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender, Issuing Bank or the Administrative Agent (as the case may be) against any loss resulting from such purchase or from the inability to effect such purchase, and if the amount of the Original Currency so purchased exceeds the sum originally due to any Lender, Issuing Bank or the Administrative Agent (as the case may be) in the Original Currency, such Lender, Issuing Bank or the Administrative Agent (as the case may be) agrees to remit to such Borrower such excess.
14.22. ENTIRE AGREEMENT. This Agreement, taken together with all of the other Loan Documents embodies the entire agreement and understanding among the parties hereto and supersedes the Commitment Letter (except for provisions therein specifically referred to herein) and all prior agreements and understandings, written and oral, relating to the subject matter hereof.
14.23. ADVICE OF COUNSEL. The Borrowers and each Lender and the Issuing Bank understand that the Administrative Agent's counsel represents only the Administrative Agent's and its Affiliates' interests and that the Borrowers, other Lenders and other Issuing Bank (if any) are advised to obtain their own counsel. The Borrowers represent and warrant to the Administrative Agent and the other Holders that it has discussed this Agreement with its counsel.
14.24. JOINT ARRANGERS, JOINT BOOKRUNNERS AND SYNDICATION AGENT. This Loan Agreement places no duties on the Joint Arrangers, Joint Bookrunners or Syndication Agent in their capacities as such.
14.25. TERMINATION OF THE MULTICURRENCY FACILITY. Upon the Payment in Full of the Multicurrency Obligations and the permanent reduction to zero and termination of the Multicurrency Commitments by the Multicurrency Borrowers in accordance with SECTION 3.01 and as permitted pursuant to SECTION 9.01(m), (a) all references herein to Multicurrency Borrowers, Multicurrency Commitments, Foreign Guarantors, Multicurrency Loans, Overdraft Loans, Euro Loans, the Euro Subfacility, Sterling Loans, the Sterling Subfacility and any other defined terms in which "Multicurrency", "Euro", "Overdraft" or "Sterling" is part of such defined term's name and all derivations thereof shall have no effect except to the extent specifically referenced to survive such Payment in Full of the Obligations, (b) the Multicurrency Borrowers shall continue to constitute "Borrower Subsidiaries" for the purposes of this Agreement and the other Loan Documents but shall no longer constitute "Foreign Credit Parties", "Credit Parties", "Borrowers" or "Guarantors", as applicable, (c) the Foreign Collateral shall be released in accordance with SECTION 12.02(i)(C), (d) the Multicurrency Borrower Guaranties and Foreign Guaranties shall be terminated except to the extent specifically referenced to survive such Payment in Full of the Obligations, and shall no longer constitute "Loan Documents" and the Foreign Guarantors shall no longer constitute "Guarantors" or "Foreign Credit Parties", and (e) the Multicurrency Borrower Guaranty shall remain in effect for any Obligations which survive such Payment in Full.
[signature pages follow]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first above written.
NMHG HOLDING CO.
By: /s/ Jeffrey C. Mattern ----------------------------------- Name: Jeffrey C. Mattern Title: Treasurer |
NACCO MATERIALS HANDLING GROUP, INC.
By: /s/ Jeffrey C. Mattern ----------------------------------- Name: Jeffrey C. Mattern Title: Treasurer |
NMHG DISTRIBUTION CO.
By: /s/ Jeffrey C. Mattern ----------------------------------- Name: Jeffrey C. Mattern Title: Treasurer |
NACCO MATERIALS HANDLING LIMITED
By: /s/ Jeffrey C. Mattern ----------------------------------- Name: Jeffrey C. Mattern Title: Treasurer |
NACCO MATERIALS HANDLING B.V.
By: NACCO MATERIALS HANDLING GROUP, LTD.,
its Managing Director
By: /s/ Jeffrey C. Mattern ------------------------------------------ Name: Jeffrey C. Mattern Title: Treasurer |
CITICORP NORTH AMERICA, INC., as Administrative Agent
By: /s/ Keith R. Karako
------------------------------------------------
Name: Keith R. Karako
Title: Managing Director and Vice President
|
CITICORP USA, INC., as a Domestic Lender and as Swing Loan Bank
By: /s/ Keith R. Karako
----------------------------------------------
Name: Keith R. Karako
Title: Managing Director and Vice President
|
CITIBANK, N.A., as a Multicurrency Lender and as Overdraft Line Bank
By: /s/ Keith R. Karako ------------------------------------------- Name: Keith R. Karako Title: Managing Director and Vice President |
European Loans Agency
68 Molesworth Street
Lewisham
London, England SE13 7EU
Attention: Cliff Posner
Telecopier No.: 011-44-207-500-4484
Confirmation No.: 011-44-207-500-4247
E-Mail: cliff.posner@citicorp.com
CITIBANK, N.A., as Issuing Bank
By: /s/ Keith R. Karako
-------------------------------------------
Name: Keith R. Karako
Title: Managing Director and Vice President
|
FOOTHILL CAPITAL CORPORATION, as a Domestic
Lender
By: /s/ Sanat Amladi ---------------------------- Name: Sanat Amladi Title: AVP |
NATIONAL CITY COMMERCIAL FINANCE INC.,
as a Domestic Lender
By: /S/ Thomas R. Poe -------------------------------- Name: Thomas R. Poe Title: President/CEO |
CREDIT SUISSE FIRST BOSTON, as a
Domestic Lender
By: /s/ Kristin Lepri /s/ Bill O'Daly ------------------------------------- Name: Kristin Lepri Bill O'Daly Title: Associate Director |
CREDIT SUISSE FIRST BOSTON, as a
Multicurrency Lender
By: /s/ Kristin Lepri /s/ Bill O'Daly ------------------------------------- Name: Kristin Lepri Bill O'Daly Title: Associate Director |
U.S. BANK NATIONAL ASSOCIATION,
as a Domestic Lender
By: /s/ Scott J. Bell
-----------------------------------
Name: Scott J. Bell
Title: Vice President
|
U.S. BANK NATIONAL ASSOCIATION,
as a Multicurrency Lender
By: /s/ Scott J. Bell
-----------------------------------
Name: Scott J. Bell
Title: Vice President
|
KEY CORPORATE CAPITAL INC.,
as a Domestic Lender
By: /s/ J. Eric Stropkay -------------------------------- Name: /s/ J. Eric Stropkay Title: Vice President |
GMAC BUSINESS CREDIT, LLC, as a
Domestic Lender and a
Multicurrency Lender
KEY CORPORATE CAPITAL INC., as a
Multicurrency Lender
By: /s/ J. Eric Stropkay ----------------------------------- Name: J. Eric Stropkay Title: Vice President |
STATE OF CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM, as a Domestic Lender
By: /s/ Thomas McDonagh -------------------------------- Name: Thomas McDonagh Title: Portfolio Manager |
Exhibit 10.2
This Operating Agreement is made and entered into as of the 31st day of July, 1979, by and between Eaton Corporation, a corporation organized and existing under the laws of the State of Ohio, United States of America and having its principal place of business at 100 Erieview Plaza, Cleveland, Ohio, U.S.A. (hereinafter referred to as "Eaton"), and Sumitomo Heavy Industries, Ltd. a corporation organized and existing under the laws of Japan and having its principal place of business at 2-1, Ohtemachi 2 Chome, Chiyoda-Ku, Tokyo 100, Japan (hereinafter referred to as "SHI").
WHEREAS, Eaton has an established worldwide position in the development, manufacture, sale, lease and rental of certain gas, diesel and electric powered Industrial Trucks (hereinafter defined and referred to as the "Products") and Eaton has acquired and now possesses, through the expenditure of considerable time, effort and money, certain industrial property rights, including (a) letters patent and applications therefore, (b) technical information and (c) trademarks and applications therefor, pertaining to the development, manufacture and marketing of the Products;
WHEREAS, Eaton and SHI have entered into a joint venture in Japan for the manufacture, sale, lease and rental of the Products by the purchase by Eaton from SHI of a 50% interest in a limited liability stock company (Kabushiki Kaisha) originally organized and wholly owned by SHI under the laws of Japan, and are utilizing said industrial property rights of Eaton in connection therewith; and
WHEREAS, SHI and Eaton desire to set forth their agreements governing their joint operation of the joint venture company;
NOW, THEREFORE, in consideration of the mutual agreements, promises and undertakings hereinafter set forth, the parties hereto agree as follows:
"S-Y" as used herein means Sumitomo Yale Company Ltd., the limited liability stock company (Kabushiki Kaisha) now having that name which was originally formed in Japan and wholly owned by SHI and is now equally owned by SHI and Eaton for the manufacture, sale, lease and rental of the Products in accordance with this Agreement.
"Articles of Incorporation" as used herein shall mean the articles of S-Y in the form attached hereto and heretofore adopted by S-Y.
"By-Laws" as used herein shall mean the by-laws of S-Y in the form attached hereto and heretofore adopted by S-Y.
"Associated Agreements" as used herein shall mean those agreements related to this Operating Agreement which have been executed between or among any two or more of SHI,
Eaton, S-Y and Eaton International Inc., a corporation organized and existing under the laws of the Republic of Liberia and having its principal place of business at Poststrass 30, Postfach 26 CH-6301, Zug, Switerland (hereinafter called "International"), as the case may be, pursuant to Article IV of this Agreement.
"Related Company" as used herein shall mean any corporation or other legal entity which (a) owns, directly or indirectly, the majority of the outstanding voting stock of a party hereto, (b) the majority of the outstanding voting stock of which is owned by a party hereto, or (c) the majority of the outstanding voting stock of which is owned, directly or indirectly, by any corporation or other legal entity described in clauses (a) and (b) of this sentence.
"Products" as used herein shall have the same meaning as "Licensed Products" defined in the Associated Agreement annexed hereto entitled "License Agreement".
SECTION 1. APPROVAL BY THE JAPANESE GOVERNMENT.
Promptly after execution of this Operating Agreement, SHI, on behalf of Eaton and International, shall make, without any cost to Eaton or International, such application(s) as may be necessary or appropriate to the appropriate authorities of the Japanese Government for validations under the Foreign Investment Law of Japan of the granting by Eaton to S-Y of license and trademark rights under certain Eaton industrial property rights pursuant to the Associated Agreements. Such applications and validations must also include assurance by the Japanese Government of the convertibility and remittance to a bank or other depository designated by Eaton and/or International in United States dollars or other foreign currency, whichever Eaton and/or International specifies, of any and all cash distributions of any kind which may be paid by S-Y to Eaton and/or International, including but not limited to (1) fees, (2) royalties, (3) reimbursable costs and (4) any other payment to Eaton or International contemplated under this Agreement and all the Associated Agreements, during any period in which this Agreement and the Associated Agreements are in effect.
SECTION 2. ASSISTANCE.
Eaton and International shall have the right to participate with SHI in the making and conduct of said application(s) for validations to the Japanese Government authorities. SHI shall promptly provide Eaton and International with copies of any documents filed with the Japanese Government related to said application(s) for validations plus English translations of (i) the fundamental presentations of such documents and (ii) any correspondence received from the Japanese Government relating to said application(s) for validations.
SECTION 1. ADDITIONAL CAPITAL REQUIREMENTS.
SHI and Eaton anticipate that S-Y may require additional capital from time to time in the future. Such additional capital shall be obtained from any of the following sources as may be mutually agreed upon by SHI and Eaton.
(a) Retained profits of S-Y.
(b) Increases in the capital of S-Y, provided that such increases shall be subject to the provisions of Sections 3 and 4 of this Article III.
(c) Loans to be made to S-Y by (1) its shareholders and/or (2) a Related Company to any of the shareholders, provided that all such loans shall be subject to the provisions of Section 4 of this Article III. It is understood that any such funds as Eaton shall be authorized to lend to S-Y pursuant to Section 4 of this Article III may be supplied by Eaton or one of its Related Companies, at the option of Eaton.
(d) Loans to be obtained by S-Y from Japanese banks and other such independent lending sources (hereinafter referred to as "the banks"). In such event, SHI and Eaton shall exert their best efforts to assist S-Y in obtaining any such loans.
SHI and Eaton shall provide guarantees of loans made to S-Y in proportion to their respective shareholdings in S-Y, provided, however, that in principle SHI and Eaton will not bear any additional charges, such as bank charges, which may be incurred in the guarantee for said loans. When either SHI or Eaton is serving as a guarantor, its guarantee shall be on its standard guarantee form, including customary subordination provisions. SHI and Eaton shall provide such guarantee without charge to S-Y.
SECTION 2. LOAN DEFAULT BY S-Y.
Pursuant to the respective guarantee obligations provided for in
Section 1 of this Article III, SHI and Eaton agree as follows:
(a) In the event S-Y defaults on its loans and the banks make demand and receive payment under their respective guarantees from Eaton and/or SHI, then Eaton will reimburse SHI or SHI will reimburse Eaton, as the case may be, so that SHI and Eaton will each ultimately bear the expense of one-half of all sums paid to the banks. This treatment shall also be applied to any default by S-Y on loans made to S-Y by SHI and/or Eaton.
(b) The right of subrogation to all rights of the banks (including the parties themselves) against S-Y shall run to SHI and Eaton jointly and equally provided the reimbursement described in paragraph (a) above has been
made, and SHI and Eaton agree to take any and all necessary and/or appropriate actions and procedures to accomplish the purpose of the foregoing.
(c) Any S-Y collateral received by S-Y, Eaton or SHI from the banks resulting from any payment under these guarantees will be shared equally provided the reimbursement described in paragraph (a) above has been made.
(d) If exchange controls or any other regulations or conditions prevent Yen reimbursement, then Eaton and SHI will endeavor to make other mutually acceptable arrangements for comparable reimbursement, including but not limited to direct payment to the banks by either party, or payment in another acceptable currency at the prevailing rate of exchange.
(e) Eaton and SHI agree to exert their best efforts to obtain the approval of the Japanese government to any reimbursement or other arrangements made pursuant to this Article III, if and when required, and to make such arrangement as will accomplish the same purpose, if and when such approval cannot be obtained.
SECTION 3. PRE-EMPTIVE RIGHTS, ENCUMBRANCE AND SALE OF SHARES.
The shareholders of S-Y shall have pre-emptive rights to subscribe equally to any shares which may be newly issued in the future by S-Y, in accordance with the Articles of Incorporation of S-Y. Eaton and SHI each agree not to sell or encumber, in any manner, their shares in S-Y without the prior written consent of the other.
SECTION 4. GOVERNMENT AUTHORIZATIONS.
Anything to the contrary in this Article III notwithstanding, neither Eaton nor SHI shall be required to provide any part of additional funds for S-Y, whether in the form of equity or loans pursuant to Section 1 of this Article III, unless Eaton and/or SHI shall first obtain the appropriate authorization(s) under Japanese law and regulations in force at the time such funds are to be provided, including authorization enabling Eaton to receive dividends or interest, as the case may be, deriving from the investment of such funds, or to repatriate such funds, in United States dollars or whatever foreign currency Eaton specifies.
SECTION 1. AGREEMENTS.
Eaton, S-Y, International and/or SHI shall enter into the agreements annexed hereto with respect to the Products, which agreements are titled or otherwise identifiable as follows:
(a) "License Agreement";
(b) "Trademark Agreement";
(c) "Corporate Name Agreement";
(d) "Export Control Regulations Letter Agreement";
(e) "Export Sales Agreement".
SECTION 2. ACCESSION BY S-Y.
The parties hereto shall cause S-Y to accede in writing to all of the provisions of this Agreement and Eaton shall similarly cause International to so accede.
SECTION 1. GENERAL INTENTION.
It is the intention of Eaton and SHI that the Products to be manufactured by S-Y shall (1) conform with Eaton's basic designs of the Products to enable the maximum possible interchangeability with the Products manufactured outside of Japan (Japan includes Okinawa) by Eaton, its subsidiaries and licensees, and (2) be of substantially the same quality and serviceability as the Products manufactured outside of Japan by Eaton, its subsidiaries and licensees.
SECTION 2. EXPORT SALES.
Except for those Licensed Products sold by S-Y directly to Eaton or its designees from time to time, any and all sales outside of Japan of the Products manufactured by S-Y shall be conducted exclusively by S-Y through International in accordance with the Associated Agreement annexed hereto entitled "Export Sales Agreement."
SECTION 1. DIRECTORS.
Except as otherwise provided in the Articles of Incorporation or required by mandatory provisions of law, responsibility for the management, direction and control of S-Y shall be vested in the Board of Directors of S-Y. The Board of Directors shall be composed of eight directors (unless and until increased or decreased in number by agreement of SHI and Eaton) and, as long as Eaton and SHI each own Fifty Percent (50%) of the issued shares of S-Y, SHI and Eaton agree to vote their shares in S-Y so that at all times one-half (1/2) of all the directors of S-Y shall be persons nominated by SHI and one-half (1/2) of all the directors shall be persons nominated by Eaton.
SECTION 2. OFFICERS.
From among the persons constituting the Board of Directors of S-Y, the following officers of S-Y shall be nominated and elected:
A President, a Vice President and a number of Executive Managing Directors and Managing Directors. The President shall be nominated by SHI; the Vice President and the Executive Managing Directors and Managing Directors shall each be selected with consultation and mutual approval of SHI and Eaton.
SECTION 3. REPRESENTATIVE DIRECTORS.
The President, the Vice President, the Executive Managing Directors and the Managing Directors of S-Y shall each have the power to represent S-Y and be appointed the Representative Directors of S-Y and shall act in accordance with the resolutions and instructions of the Board of Directors.
SECTION 4. ACCOUNTING AND AUDITORS.
The annual accounting period of S-Y shall be the 12 month period beginning on April 1 and ending on March 31 of each year. Complete books of account and records shall be kept by S-Y according to sound accounting practices. S-Y shall have two (2) statutory auditors. SHI and Eaton agree, as long as Eaton and SHI each own Fifty Percent (50%) of the issued shares of S-Y, to vote their shares in S-Y so that at all times one (1) statutory auditor shall be a person nominated by SHI and one (1) statutory auditor shall be a person nominated by Eaton.
SECTION 5. AUDIT OF S-Y'S BOOKS.
Either SHI or Eaton may request in writing, at any time or from time to time, an audit of the books and records of S-Y to be conducted by a firm of independent public accountants. A party requesting such audit of books and records of S-Y shall select said independent public accountants and assume all expenses related to said audit.
Eaton, SHI or S-Y shall not, nor shall any Related Company of Eaton or SHI, consent to or aid others in contesting or doing anything which might impair the validity, scope or ownership of any letters patent, secret processes and technical information, trademarks, tradenames or other similar rights owned by Eaton, SHI or S-Y, or any Related Company of Eaton or SHI, which are the subject matter of this Agreement or any of the Associated Agreements.
SECTION 1. SECRECY.
SHI and Eaton each agree to keep strictly secret and confidential and
not to disclose to any third party, except to the extent that disclosures to S-Y
may be required by (a) this Agreement, (b) any Associated Agreement or (c)
participation as a shareholder in S-Y, any of the technical economic, financial
or marketing information acquired from the other, from any Related Company of
the other or from S-Y, unless disclosure of such information is (1) expressly
permitted by this Agreement or an Associated Agreement, (2) required by law or
(3) permitted by supplemental agreement of the parties hereto. To that end and
without limiting the generality of the foregoing provision, SHI and Eaton agree
to cause all written materials relating to or containing such information
obtained from the other or from S-Y, including all sketches, drawings, reports
and notes, and all copies, reproductions, reprints and translations, to be
plainly marked to indicate the secret and confidential nature thereof and to
prevent unauthorized use or reproduction thereof.
SECTION 2. USE OF INFORMATION.
SHI and Eaton agree that they shall not use any information described in Section 1 of this Article VIII and obtained from the other or S-Y for any purpose whatsoever except in a manner expressly provided for in this Agreement, the Associated Agreements or as shareholders of S-Y under the laws of Japan.
SECTION 3. SECRECY AGREEMENTS.
SHI and S-Y each covenants and agrees that each of its directors, officers, employees, agents, subcontractors or other persons to whom any of the information described hereinabove may be disclosed shall execute, in duplicate, prior to disclosure, an agreement in the Japanese language in the form set forth in Appendix A hereto to maintain such information secret and confidential. SHI and S-Y shall maintain an executed copy of each such agreement in its files and shall make such copies available to Eaton upon request.
SECTION 4. SURVIVAL OF OBLIGATIONS.
The obligations undertaken by SHI and Eaton pursuant to this Article VIII shall not apply to any such information obtained from the other or S-Y which otherwise is or becomes published or generally available to the public or which is, at the time of disclosure, in the possession of the party to which the information is furnished, and such obligations shall, as so limited, survive any termination of this Agreement.
SECTION 1. CURRENCY.
Except as otherwise provided in Section 1 of Article II hereof, any and all payments to be made by S-Y to Eaton or International pursuant to this Agreement or any of the Associated Agreements shall be made in United States dollars or other foreign currency specified by Eaton or International, at banks designated by Eaton and International. Conversion between Japanese yen and United States dollars or other foreign currency shall be made at the exchange rate of an authorized foreign exchange bank in Japan most favorable to Eaton and International prevailing on the date of remittance.
SECTION 2. TAXES.
All taxes under the laws of Japan required to be paid by S-Y, SHI, Eaton or International, including all taxes imposed under the Income Tax Law and Corporation Tax Law of Japan, shall be for the account of and paid by or on behalf of S-Y, SHI, Eaton or International. SHI, Eaton, International and S-Y agree to furnish, when available, any other appropriate party the official tax receipt or other evidence issued by the Japanese tax authorities sufficient to enable Eaton, International and SHI to support a claim for United States, Japanese or other nation income tax credit in respect of any sum required under Japanese tax laws to be withheld by S-Y for the account of Eaton, International or SHI.
SECTION 1. DEFAULT.
In the event that either party hereto should default in the performance of any of the provisions, conditions, obligation, undertakings, covenants or liabilities set forth in this Agreement and such default shall not have been remedied within ninety (90) days after written notice thereof from the other party, such other party may terminate this Agreement effective immediately by written notice to the defaulting party.
SECTION 2. DISSOLUTION, LIQUIDATION OR BANKRUPTCY.
Either party may terminate this Agreement by written notice to the other party hereto in the event that such other party shall be dissolved or liquidated or be declared bankrupt or its shares in S-Y are thereby assigned to an individual or company other than a Related Company.
SECTION 3. SURVIVAL OF OBLIGATIONS.
Termination of this Agreement for any cause shall not release either party, any Related Company or S-Y from any liability which at the time of termination has already accrued to the other party or to any Related Company or S-Y, nor affect in any way the survival of the rights, duties and obligation of either party or any Related Company or S-Y provided for in
Article VIII of this Agreement, provided that nothing in this Section 3 shall affect or be construed or operate as a waiver of the right of any party, any Related Company or S-Y aggrieved by any breach of this Agreement to be compensated for any injury or damage resulting from a breach hereof.
SECTION 1. GOVERNING LAW.
Insofar as is consistent with the governmental laws within Japan, the validity, construction and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of Ohio, United States of America, and/or Federal Laws of the United States in a like manner as an agreement made and wholly to be performed in the State of Ohio.
SECTION 2. LANGUAGE.
This Agreement is in the English language, executed in duplicate originals by the parties hereto. In the event that this Agreement is translated into the Japanese or any other language, and any inconsistency or contradiction in meaning or interpretation results therefrom, the English language version shall prevail and be controlling as between the parties hereto, their Related Companies and S-Y.
SECTION 3. HEADINGS.
The headings to Articles and Sections of this Agreement are for convenience of reference only, do not form a part of this Agreement, and shall not in any way affect the interpretation hereof.
SECTION 4. CONSTRUCTION AND AMENDMENT.
No oral explanation or oral information by either party hereto shall alter the meaning or interpretation of this Agreement. No change in the provisions hereof shall be binding on either party hereto unless reduced to writing and duly executed by the parties in the same manner as the execution of this Agreement.
Any and all disputes and differences pertaining to or arising out of this Agreement or the breach thereof shall finally be settled by arbitration to be held in Tokyo, Japan, if Eaton or International shall demand arbitration, or in Cleveland, Ohio, United States of America, if SHI or S-Y shall demand arbitration, in accordance with the provisions of the Japan-America Trade Arbitration Agreement of 1952 under the rules specified in said agreement in effect upon the date that any of the foregoing serves notice upon another of a demand for arbitration. The award rendered by the arbitrator shall be final, binding and enforceable by any court of competent jurisdiction. The dispute shall be arbitrated by one arbitrator (who shall not be a national of
Japan or the United States of America) selected by mutual agreement of the disputants; provided, however, that in the event the disputants cannot agree upon an arbitrator, the arbitrator shall be appointed by the Chairman of the Japan Commercial Arbitration Association, if arbitration is to be in Japan, or by the Chairman of the American Arbitration Association, if arbitration is to be in the United States of America.
SECTION 1. ASSIGNMENTS.
Subject to such governmental approval as may be required by applicable law then in effect, this Agreement shall inure to the benefit of and be binding upon each of the parties hereto and their respective successors and assigns, but it may not be voluntarily assigned in whole or in part by either party without the prior written consent of the other party.
SECTION 2. NOTICES.
All notices and other communications required or permitted to be given or made under this Agreement shall be given or made in writing by personal delivery thereof to the appropriate address below or by registered airmail postage prepaid, in any post office in the United States of America or in Japan, as the case may be, addressed as follows:
If to SHI: Sumitomo Heavy Industries, Ltd.
2-1, Ohtemachi 2 Chome
Chiyoda-Ku
Tokyo 100, Japan
If to Eaton: Office of the Secretary
Eaton Corporation
100 Erieview Plaza
Cleveland, Ohio 44114
U.S.A.
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Either party may change its address for the purpose of this Agreement by notice to the other given in the manner set forth above. Notices given by mail as above provided shall be deemed to have been properly given, upon proof of posting, on the day five (5) days subsequent to the mailing thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first set forth above.
EATON CORPORATION
ATTEST:
By By /s/ Alfred M. Rankin, Jr.
----------------------------------- -------------------------------------
SUMITOMO HEAVY INDUSTRIES, LTD.
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ATTEST:
Exhibit 10.3
EQUITY JOINT VENTURE CONTRACT
BETWEEN
SHANGHAI PERFECT JINQIAO UNITED DEVELOPMENT CO., LTD.
PEOPLE'S REPUBLIC OF CHINA
AND
NACCO MATERIALS HANDLING GROUP, INC.
U. S. A.
AND
SUMITOMO-YALE COMPANY, LTD.
JAPAN
NOVEMBER 27, 1997
1.0 GENERAL PROVISIONS
2.0 DEFINITIONS
3.0 PARTIES TO THE JOINT VENTURE Contract
4.0 ESTABLISHMENT OF JOINT VENTURE COMPANY
5.0 PURPOSES, BUSINESS SCOPE AND RELATED AUTHORIZED ACTIVITIES
6.0 TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
7.0 RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE COMPANY
8.0 TECHNOLOGY AND TRADEMARKS
9.0 SELLING OF Forklift Trucks AND RELATED PRODUCTS 10.0 CONFIDENTIALITY 11.0 BOARD OF DIRECTORS AND EXECUTIVE OFFICERS 12.0 TAXES, FINANCE, AND AUDIT 13.0 Labor MANAGEMENT and operations management 14.0 TRADE union 15.0 DURATION OF THE JOINT VENTURE COMPANY 16.0 INSURANCE 17.0 LIABILITIES FOR BREACH OF CONTRACT 18.0 FORCE MAJEURE 19.0 AMENDMENT 20.0 DISSOLUTION 21.0 SETTLEMENT OF DISPUTES 22.0 APPLICABLE LAW 23.0 LANGUAGE 24.0 PARTIAL ENFORCEABILITY |
25.0 ENTIRE AGREEMENT 26.0 NOTICES 27.0 COMPLIANCE WITH LAWS 28.0 PROHIBITED ACTIONS AND MISCELLANEOUS PROVISIONS 29.0 CONDITIONS PRECEDENT 30.0 EFFECTIVENESS OF THE CONTRACT 31.0 WAIVER 32.0 SIGNATURES |
EXHIBIT A PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT EXHIBIT B LAND USE RIGHT TRANSFER CONTRACT EXHIBIT C SALES AND SUPPLY AGREEMENTS EXHIBIT D HYSTER SHANGHAI EXPORT GUIDING PRINCIPLES EXHIBIT E LIST OF INITIAL BOARD OF DIRECTORS APPOINTEES |
ARTICLE 1.0 GENERAL PROVISIONS
In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment," The Regulations of the People's Republic of China on the Registration and Administration of Joint Venture using Chinese and Foreign Investment, and other relevant Chinese laws and regulations and subject to the terms and conditions set forth herein, Shanghai Perfect Jinqiao United Development Co., Ltd., an enterprise legal person duly formed and existing under the Laws of The People's Republic of China, located in Shanghai, The Peoples Republic of China; AND, NACCO Materials Handling Group, Inc., a corporation registered in the United States of America; AND, Sumitomo-Yale Company, Ltd., a corporation registered in Japan; adhering to the principles of equality and mutual benefit and through friendly consultations, hereby agree to form a joint venture limited liability company in Shanghai, Peoples Republic of China, and to the provisions which follow:
ARTICLE 2.0 DEFINITIONS
Unless indicated otherwise, the following terms will have the meanings described below when used in this Contract.
"AFFILIATE" shall mean any company other than the Joint Venture Company which directly or indirectly controls or is controlled by or is under common control with Party A, Party B, or Party C. The term "control" shall mean ownership, directly or indirectly, of shares entitled to elect not less than fifty percent (50%) of the directors of a company.
"ARTICLES OF ASSOCIATION" shall mean the Articles of Association of the Joint Venture Company.
"EXAMINATION AND APPROVAL AUTHORITY" shall mean the Shanghai Pudong New Area District Administration Commission.
"CHINA" and "THE PRC" shall each mean the People's Republic of China.
"CHINESE LAW" shall mean any and all published and publicly available authorized decrees, rules and regulations of the Government of the People's Republic of China which are applicable to this Contract or the Joint Venture Company, whether issued by central, provincial, municipal or other subdivisions thereof.
"CONFIDENTIAL INFORMATION" shall mean all technical and engineering, construction, economic, financial, sales, marketing and other confidential information developed or owned by Party A, Party B, Party C, Affiliates of any party, or the Joint Venture Company and provided in writing or orally by Party A, Party B, Party C, or Affiliates of any party in connection with the negotiation of this Joint Venture Contract or the implementation of this Joint Venture Contract, or developed by the Joint Venture Company.
"SENIOR MANAGER" OR "SENIOR MANAGEMENT" shall mean the following positions: General Manager, Assistant General Manager, Human Resources Manager, Marketing Manager, Financial Manager, Logistics Manager and Manufacturing/Engineering Advisor. The Board of Directors may re-define these positions by a majority vote, based on recommendations of General Manager of the Joint Venture Company.
"JOINT VENTURE COMPANY" shall mean the company to be formed by this Contract.
"JOINT VENTURE TERM" shall have the meaning set out in Article 15.1 of this Contract.
"JOINT VENTURE CONTRACT" or "CONTRACT" shall mean this document, and the agreement of the parties which is contained in it.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Joint Venture Company to be formed by this Contract.
ARTICLE 3.0 PARTIES TO THE JOINT VENTURE COMPANY
Parties to this Contract are as follows:
A. SHANGHAI PERFECT JINQIAO UNITED DEVELOPMENT CORPORATION (hereinafter referred to as Party A), its legal address is 190 Yuansheng Road, Pudong New Area, Shanghai, People's Republic
of China, Legal representative: Wang Zhuxiang Position: General Manager Nationality: Chinese |
B. NACCO MATERIALS HANDLING GROUP, INC., (hereinafter referred to as Party B), registered with the State of Delaware, United States of America, its legal address at 2701 NW Vaughn,
Portland, Oregon, 97201 USA. Legal representative: Reginald R. Eklund Position: President & CEO Nationality: United States |
C. SUMITOMO-YALE COMPANY, LTD. (hereinafter referred to as Party
C), registered in Japan, its legal address at 2-75 Dai
Toh-Cho, Obu-Shi, Aichi-Ken, 474 Japan
Legal representative: Yoshinori Ohno Position: President Nationality: Japanese |
ARTICLE 4.0 ESTABLISHMENT OF THE JOINT VENTURE COMPANY
4.1 In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment," the "Regulations of the People's Republic of China on the Registration and Administration of Joint Venture using Chinese and Foreign Investment", and other relevant Chinese Laws and regulations, the Parties agree jointly to set up a joint venture limited liability company (hereinafter referred to as the "Joint Venture Company."
4.2 The English name of the Joint Venture Company is "SHANGHAI HYSTER FORKLIFT TRUCK COMPANY LTD." The Chinese name of the Joint Venture Company is . Upon the occurrence of any event specified in Section XXV of EXHIBIT A, PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT, the Joint Venture Company shall change its name and shall not use the words "Hyster" or
" " in its new name. The legal address of the Joint Venture Company is Site Number 76, Jinqiao Export Processing Zone, Pudong New Area, Shanghai, People's Republic of China.
4.3 The Joint Venture Company shall be a legal person under the laws of the PRC, and all activities of the Joint Venture Company shall be governed and protected by the laws, decrees and pertinent regulations of the PRC. The formation, execution, validity, interpretation and implementation of this Contract and the settlement of disputes concerning this Contract shall be governed by Chinese Law. The governing law of any other agreement, including but not limited to the exhibits to this Contract, entered into by the Joint Venture Company in relation to this Contract, or between the parties, shall be as set out in each such contract. The Joint Venture Company may establish branches and invest in or establish joint ventures with other companies in the PRC or abroad for the pursuit of any type of business permissible under this Contract or the Business License, subject to any necessary legal approvals.
4.4 The form of the Joint Venture Company shall be a limited liability company. Each shareholder of the Joint Venture Company shall be liable only within the limit of the registered capital subscribed or to be subscribed by it. Except as otherwise agreed in writing, no Party shall have any obligation to provide funds to the Joint Venture Company in excess of the agreed portion of the registered capital set forth in this Contract. Creditors of the Joint Venture Company (including taxation and other government authorities) shall have recourse only to the assets of the Joint Venture Company for payment and not to any party. Subject to these limitations, the profits, risks, and losses of the Joint Venture Company shall be shared by the parties in proportion to their respective contribution to the registered capital of the Joint Venture Company.
4.5 Simultaneously with execution of this Joint Venture Contract, the parties, acting through their authorized representatives, shall execute the Articles of Association of the Joint Venture Company in a form which is consistent with this Contract. Should there by any discrepancy between the Articles of Association and this Joint Venture Contract, the Contract shall prevail and the Board shall amend the Articles of Association.
4.6 Within thirty (30) days after the receipt of the certificate of approval of this Contract from the Examination and Approval Authority, the Joint Venture Company shall register with the Shanghai Pudong New District State Administration for Industry and Commerce and apply for issuance of a Business License in accordance with the provisions of the "Regulations of the People's Republic of China on the Registration and Administration of Joint Venture using Chinese and Foreign Investment".
4.7 The date of establishment of the Joint Venture Company shall be the date when the Joint Venture Company is issued its Business License by the Shanghai Administration for Industry and Commerce.
4.8 If, after the signing of this Contract, (a) existing Chinese Law is changed or any new Chinese Law is introduced by any department, division or authority of the Chinese government, which is applicable to the Joint Venture Company or the activities of Party A, Party B, or Party C, and, (b) the effect of such changed or new Chinese Law is either to provide for preferential treatment to or to have an adverse effect on any of the Joint Venture Company or Party A or Party B or Party C, then:
a. If the changed or new Chinese Law is more favorable to the Joint Venture Company or any of the Parties than the Chinese Law in effect on the date this Contract was signed (and the other Parties are not materially and adversely affected), the Joint Venture Company and the Party or Parties concerned shall
promptly apply to receive the benefits of such changed or new Chinese Law. All Parties shall use their best efforts to cause such application to be approved by the relevant authorities.
b. If, because of such changed or new Chinese Law, any Party's economic benefits under this Contract are materially and adversely affected, directly or indirectly, then, this Contract shall continue to be implemented in accordance with its original terms and the Parties shall resolve the matter in accordance with Chinese Law, including but not limited to the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment," "The Regulations of the People's Republic of China on the Registration and Administration of Joint Venture using Chinese and Foreign Investment," and the "Foreign Economic Contract Law." However, if in the view of any Party this cannot satisfactorily be achieved, the Parties shall consult promptly and make all such amendments to this Contract and the Articles of Association as are required to maintain the affected Party's economic benefits under this Contract. Should it be impracticable or impossible to maintain the affected party's economic benefits under the new or changed law, the affected party or parties may implement termination proceedings as described in Article 20.0.
4.9 Each of Party A, Party B, and Party C represents and warrants that:
4.9.1 It is a duly organized and validly existing legal person under the laws of the jurisdiction of its establishment.
4.9.2 It is not a party to, nor is it bound by, any contract or agreement which would be violated by its execution or performance of this Joint Venture Contract; and that this Contract does not conflict with or constitute a default under any Party's Articles of Association, Articles of Incorporation, by-laws or other charter documents, or any indenture, mortgage, deed of trust or other instrument, any material contractual covenant or any restriction to which it is a party or its assets are bound, nor does it violate any provision of any law, rule, regulation, order, writ, judgment, or decree determination presently in effect having applicability to such party. The representations and warranties made by each Party in Article 4 of this Contract shall survive the execution and delivering of this Contract and the consummation of the transactions contemplated herein, and shall continue in effect thereafter.
4.9.3 It enters into this Contract on its own account and it and its representatives have been duly authorized to execute this Joint Venture Contract and have taken all necessary corporate action and received all necessary government approvals for its authorized representatives to execute and deliver this Contract and for it to perform its obligations hereunder. This Contract will become effective on the effective date, and constitute each Party's legal and binding obligation, and, assuming due authorization, execution, and delivery by the other Parties hereto, this Joint Venture Contract is a valid and binding Contract enforceable in accordance with its terms.
4.9.4 As of the date it makes its contribution of registered capital to the Joint Venture Company, it owns and has good title to the assets it is contributing to the Joint Venture Company pursuant to Article 6.3 free and clear of any liens, security interests and charges.
4.9.5 To the extent that the co-operation of any party which is not a party to this Contract, (including subsidiaries and other related parties) is required in the performance by any Party of its obligations under this Contract or any related Exhibits or related contract, such Party warrants that it has obtained the binding agreement of such party to co-operate as required for the full performance of this Contract in accordance with its terms.
4.9.6 It has not made any material misrepresentation of fact to any other party to this Contract, nor withheld any material information from any party, which, if such information were known to the other party or parties would have materially affected such party or parties willingness to enter into this Contract.
ARTICLE 5.0 PURPOSES, BUSINESS SCOPE AND RELATED AUTHORIZED ACTIVITIES
5.1 The business purpose of the Company is to introduce the world-famous "HYSTER" material handling machinery manufacturing technology, trademark, and capital; to further develop the competitiveness of China's material handling industry on the basis of the existing domestic market share through the establishment of the Company and the introduction of the advanced management and operation methods, to substitute step by step the import forklift trucks with the Company's products, and to continuously increase the local content as well as to strive for obtaining the international certification and launch the products onto the world market.
5.2 THE BUSINESS SCOPE OF THIS JOINT VENTURE COMPANY IS: "THE MANUFACTURE, SALE, AND LEASING OF VARIOUS TYPES OF FORKLIFT TRUCKS AND MATERIAL HANDLING EQUIPMENT AND COMPONENTS, AND PROVIDING AFTER-MARKET SERVICES, INCLUDING RELATED SUPPLY OF LOCALLY MADE AND IMPORTED SPARE PARTS."
5.3 Additional authorized activities of the Joint Venture Company include:
a. The establishment of all branches or subsidiaries, whether
domestic or overseas, necessary to fulfill any of the
objectives of the Joint Venture Company;
b. The taking of all measure necessary in order to benefit from
any preferential treatment which may be or may become
available to the joint venture;
c. The taking of all measures necessary to ensure that the Joint
Venture Company obtains amounts of foreign exchange sufficient
for its needs.
d. The carrying out of all other related business activities as
provided in this Contract and the Articles of Association, or
as may be determined by majority decision of the Board of
Directors;
e. The carrying out of all other activities as may be necessary
to achieve the economic benefits of the Joint Venture Company
as provided in this Contract and the Feasibility Study.
ARTICLE 6.0 TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
6.1 The total amount of investments, consisting of registered capital and loans, in the Joint Venture Company is US$ 25,000,000 The registered capital is US$ 13,540,000 . The additional investment of US$ 11,460,000 shall be from bank borrowings or other lawful borrowings by the Joint Venture Company.
6.2 The registered capital of the parties of the Joint Venture Company will be as follows:
Party A:US $ 2,031,000 [15%]
Party B:US $ 7,447,000 [55%]
Party C:US$ 4,062,000 [30%]
6.3 The Parties' contributions to the registered capital of the Joint Venture Company shall be made as follows:
PARTY A:
Renminbi Cash: RMB Equivalent of US $ 2,031,000
--------------------------------
PARTY B:
USD Cash: US $ 7,447,000
--------------
PARTY C:
USD Cash: US $ 4,062,000
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6.4 Party A's contribution to registered capital will be in the RMB equivalent of U.S. dollars noted above. The conversion of RMB to U.S. dollars shall be in accordance with the average of the buying and selling exchange rate published by the People's Bank of China, on the date the transaction is entered into the accounts of the Joint Venture Company.
6.5 Each Party's share of registered capital shall be fully paid within two years of issuance of the Business License, according to the following schedule:
A. Within 90 days of issuance of the Joint Venture Business License: Each of Party A, Party B and Party C will contribute 25% of its subscribed contribution to the registered capital.
B. Within One Year of the issuance of the Business License: Each of Party A, Party B, and Party C will contribute a further 45% of its subscribed contribution to the registered capital.
C. Within two years of issuance of the Business License: Each of Party A, Party B, and Party C will contribute the remaining 30% of its subscribed contribution to the registered capital.
6.6 The equipment to be purchased and imported for use by the Joint Venture is listed in the Feasibility Study.
6.7 It is the present intention of the Parties that the Joint Venture Company will purchase from Party A for use as the Joint Venture Company's manufacturing site, the 50 year transferable land use rights to that parcel of land in the identified in EXHIBIT B: LAND-USE RIGHT TRANSFER CONTRACT, and under the terms and conditions stated in EXHIBIT B. Execution of the agreement attached as EXHIBIT B shall be subject to approval of the Board of Directors of the Joint Venture Company. Party A represents and warrants that the information provided in EXHIBIT B is complete and correct and that Party A is authorized to enter into the agreement to transfer the land use rights under the terms of EXHIBIT B.
6.8 After each investment is made by each of the parties to the Joint Venture Company, an internationally recognized Chinese Registered Accountant shall be engaged by the Joint Venture Company to verify each party's investment and to provide a certificate of verification to the Joint Venture Company. The Board shall then issue an investment certificate to each party, based on the verification of the Registered Accountant. The investment certificate shall include the following:
a. Name of the Joint Venture Company;
b. Date of establishment of the Joint Venture Company;
c. Name of party and amount of investment contributed;
d. Date of contribution; and
e. Date of issuance of investment certificate.
6.9 Except as provided for in Article 6.10, no party to this Agreement may sell, assign or transfer all or part of its investment in the Joint Venture Company without prior unanimous consent from the Board of Directors of the Joint Venture Company, and prior approval from the Examination and Approval Authority. Any proposed transferee of any party's interest in the Joint Venture Company must also consent to enter into an agreement substantially equivalent to this Contract with the non-transferring parties, unless agreed otherwise in writing by the non-transferring parties. In addition to this right of prior approval, the non transferring parties shall have the right of first refusal to buy out the investment of the party who intends to sell, assign or transfer its interest, under the same terms and conditions offered to any potential buyer, assignee or transferee. Any party proposing to sell or transfer its interest must give written notice by facsimile and registered airmail of such intent to transfer to all other parties and to the Chairman of the Board of the Joint Venture Company. This notice shall include a copy of such formal offer made to the proposed transferee. Parties receiving such notice, must reply within 30 days of the date of receipt of the notice, either consenting to the transfer or stating their intent to exercise the right of first refusal. Failure to reply within 30 days will be taken as consent to the transfer. If all parties consent to the transfer, such transfer must be effected on exactly same terms represented to the parties to this Contract and consummated within 180 days of consent. In the event that two non transferring parties both wish to exercise the right of first refusal, they shall be permitted to acquire the interest of the transferring party in proportion to the amounts of registered capital which the two non transferring parties have contributed to the Joint Venture, or as otherwise agreed between them.
6.10 It is anticipated that at some time or times during the duration of the Joint Venture Company, Party B may wish to transfer its interest in the Joint Venture Company to one or more of its Affiliates. Party A and Party C agree that they do and will consent to this transfer, and that they will assist Party B in obtaining approval for this transfer from the Examination and Approval Authority. In addition, should Party B and Party C decide that it is in their best interests for Party B to acquire all or part of Party C's interest in the Joint Venture Company, Party A agrees that it does and will consent to such a transfer and that it will assist Party B and C in obtaining any required approval of the Examination and Approval Authority. In both situations described in this paragraph, the provisions of Article 6.9 relating to right of first refusal will not apply.
6.11 The registered capital shall not be reduced or increased within the duration of the Joint Venture Company except by Board approval. Increasing or reducing the registered capital or changes in the investment ratio shall be unanimously agreed by the Board of Directors and approved by the Examination and Approval Authority. In the event of a resolution of the Board calling for increase in Registered Capital, all parties will have a preemptive right to contribute additional capital in proportion to the share of its original contribution of Registered Capital under this Contract. Any party not electing to exercise this right to contribute additional capital hereby agrees to consent to having its percentage share of the Registered Capital reduced as required by the new capital structure, and to any resulting changes in the structure of the Board of Directors or management structure of the Joint Venture Company.
ARTICLE 7.0 RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE COMPANY
7.1 The following responsibilities shall be undertaken by Party A:
7.1.1 To cooperate with the other parties in handling the application, procurement of registration, and approval of the Business License and other matters concerning approval and the establishment of the Joint Venture Company from the relevant government and regulatory departments in China. Required registration and application fees paid by Party A, however, will be reimbursed by the Joint Venture Company.
7.1.2 To provide 15% of the registered capital in the form of Renminbi Cash as per Article 6.0 of this Contract
7.1.3 To assist the Joint Venture Company in various applications to Chinese government authorities for preferential tax benefits and other incentives.
7.1.4 To assist the Joint Venture Company to negotiate raw material supply contracts with Chinese manufacturers at favorable prices.
7.1.5 To assist in processing import customs declarations for imported fork lift kits, fork lift spare parts, machinery, equipment and materials purchased outside China and to arrange transportation for them within China.
7.1.6 To assist the Joint Venture Company in purchasing or leasing any equipment, materials, articles for office use, means of transportation, communication facilities, or other items sourced within China.
7.1.7 To assist the Joint Venture Company with recruitment of necessary local personnel and other employment matters for smooth operation of the Joint Venture Company.
7.1.8 To assist foreign personnel in obtaining entry visas and work licenses and to assist with travel arrangements within China.
7.1.9 To assist the Joint Venture Company in negotiating reliable supplies of basic utilities such as water, sewer, electricity, gas, and communications services, on a cost effective basis.
7.1.10 To provide the General Manager of the Joint Venture Company with information on local laws and regulations and other information necessary to ensure smooth operations and compliance with relevant laws and regulations.
7.1.11 To assist the Joint Venture Company in opening bank accounts and in applying for and obtaining any necessary bank loans from Chinese banks or other Chinese or foreign financial institutions
7.1.12 To assist employees hired by the Joint Venture Company in locating housing to be paid for by themselves (or by the Joint Venture Company, upon approval by its Board of Directors).
7.1.13 To obtain any consents or authorizations from lessors, lenders and other parties who have contractual relationships with Party A that are required for Party A to execute this Contract and perform its obligations hereunder.
7.1.14 To assist in the construction approvals and identification of suitable building contractors for the new JV factory and offices in the Pudong New Area.
7.1.15 To perform and fulfill such other duties which the Joint Venture Company may entrust to Party A from time to time.
7.2 The following responsibilities shall be undertaken by Party B:
7.2.1 To provide 55% of the registered capital in the form of USD Cash as per Article 6.0 of this Contract
7.2.2 To provide personnel to supervise the installation and commissioning of the equipment sold by Party B to the Joint Venture.
7.2.3 To assist the Joint Venture Company with the shipment of equipment sold by Party B to the Chinese port destination.
7.2.4 To advise the Joint Venture Company regarding its marketing plans.
7.2.5 To assist the Joint Venture Company in purchasing components and raw materials which are not available in China.
7.2.6 To provide advanced technical and manufacturing assistance and training to the Joint Venture Company employees in accordance with the PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT (EXHIBIT A) and in consideration for the amounts specified therein.
7.2.7 To assist the Joint Venture Company in opening bank accounts and applying for and obtaining any necessary loans from Chinese banks or other Chinese or foreign financial institutions.
7.2.8 To perform and fulfill such other duties which the Joint Venture Company may entrust to Party B from time to time.
7.3 The following responsibilities shall be undertaken by Party C:
7.3.1 To provide 30% of the registered capital in the form of USD Cash as stated in Article 6.0 of this Contract.
7.3.2 To provide personnel to supervise the installation and commissioning of the equipment sold by Party B or Party C to the Joint Venture Company.
7.3.3 To assist the Joint Venture Company with the shipment of equipment sold by Party C to the Chinese port destination.
7.3.4 To advise the Joint Venture Company regarding its marketing plans.
7.3.5 To assist the Joint Venture Company in purchasing components and raw materials which are not available in China.
7.3.6 To assist the Joint Venture Company in opening bank accounts and applying for and obtaining any necessary loans from Chinese banks or other Chinese or foreign financial institutions.
7.3.7 To perform and fulfill such other duties which the Joint Venture Company may entrust to Party B from time to time.
ARTICLE 8.0 TECHNOLOGY AND TRADEMARKS
8.1 The parties agree that the PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT set out in EXHIBIT A to this Joint Venture Contract shall be signed by the Joint Venture Company and Party B after the Joint Venture Company has obtained its business license.
8.2 The Joint Venture Company may use the trademarks of Party B in accordance with the PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT set out in EXHIBIT A. Such trademarks have been or shall be duly registered in China by Party B to protect their use.
8.3 The Joint Venture Company may establish its own trademarks, as determined by the Board of Directors, which shall be duly registered by the Joint Venture Company in China to protect their use.
ARTICLE 9.0 SELLING OF FORKLIFT TRUCKS AND RELATED PRODUCTS
9.1 The Joint Venture Company will sell its products predominantly in the domestic China market and secondarily in international markets. Plans for export sales to international markets will be determined by the Board of Directors. The Joint Venture Company will make its best efforts to pursue export sales, in part, to assist in foreign exchange balance. The Joint Venture's export ratio target shall be 10% of sales. However, pursuit of export sales will be determined by price levels, quality levels and the ability of the Joint Venture Company to deliver product to the market's expectations. Sales to the international market will be exclusively made through the sales channels determined and selected by Party B, which may include Party B, Party C, or Affiliates thereof. Sales to or through Party B will be governed by EXHIBIT C SALES AND SUPPLY AGREEMENT, and EXHIBIT D HYSTER SHANGHAI EXPORT GUIDING PRINCIPLES, which will be executed by the Joint Venture company and Party B upon issuance of the Business License.
9.2 The Joint Venture Company will establish its own internal marketing, sales and distribution department which will be solely responsible for selling the JV Products and imported spare parts in China. Selling prices for all products and services will be established by the General Manager of the Joint Venture Company .
9.3 The Joint Venture Company will sell the Products directly or via designated agent(s) within China. Sales of Products to the international market will be made per Article 9.1.
ARTICLE 10.0 CONFIDENTIALITY
10.1 Confidential Information shall be protected as follows:
10.1.1 During the Joint Venture Term and thereafter, unless it properly comes into the public domain, or until authorized to disclose the information in advance and in writing by the party owning such confidential information, each party, and the Joint Venture Company, shall maintain the confidentiality of, and not disclose to any third person, firm or company or government entity (unless such disclosure is mandated by publicly available law), any Confidential Information. Each party and the Joint Venture Company shall disclose such Confidential Information only to those employees whose duties require such disclosure and shall take all other reasonable precautions to prevent unauthorized disclosure, including, but not limited to requiring employees to sign appropriate confidentiality agreements.
10.1.2 The parties agree that they shall cause their officers, directors, and employees, and those of their divisions, subsidiaries or Affiliates, to comply with the confidentiality obligations set forth herein.
10.1.3 The confidentiality obligations stated herein shall survive the termination of this Joint Venture Contract and the termination, dissolution or liquidation of the Joint Venture Company.
ARTICLE 11.0 BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
11.1 The Board of Directors of the Joint Venture Company shall be established immediately after the Business License is issued to the Joint Venture Company.
11.2 The Board of Directors shall be composed of seven (7) members, of which one (1) shall be appointed by Party A and four (4) shall be appointed by Party B and two (2) shall be appointed by Party C. Among the appointed directors, Party B shall appoint the Chairman of the Board and Party C shall appoint the Vice Chairman of the Board. The term of office for each director, the Chairman and the Vice Chairman shall be four (4) years, which term may be renewed by the party appointing the relevant director, Chairman or Vice Chairman. Any vacancy created in the Board of Directors shall be filled by the party which originally nominated the director whose absence created the vacancy. The composition of the Board of Directors shall be subject to change if the proportion of investment by the parties changes.
11.3 Any party may at any time change any of its designated members of the Board of Directors for any reason, but the party shall provide written notice to the other parties one month in advance to facilitate clear communications and understanding.
11.4 The General Manager may also be a director.
11.5 The highest authority of the Joint Venture Company shall be the Board of Directors. Decisions shall be made by the Board of Directors as follows:
11.5.1 Unanimous approval by the Board of Directors shall be required before any action is taken concerning "major issues," which are limited to those identified by the laws of China as set forth in Article 36 of the "Regulations for Implementation of the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment". As of the date of this Joint Venture Contract, such issues are:
a. Amendment of the Articles of Association of the Joint
Venture Company;
b. Extension, termination or dissolution or liquidation
of the Joint Venture Company;
c. Any increase, reduction, sale, assignment or transfer
of the Joint Venture Company's registered capital;
and
d. Any merger of the Joint Venture Company with another
entity.
11.5.2 In the event that Chinese law is changed to permit any or all of the "major issues" defined above to be decided by simple majority vote of the Board, then simple majority approval shall be sufficient for such decisions.
11.5.3 Appointment and dismissal of the General Manager as per Sections 11.0 and 13.0, shall require a vote of a majority of the Board of Directors. Decisions regarding distribution of profits shall require unanimous vote of the Board. All other matters may be decided by the Board of Directors by simple majority vote, unless explicitly stated otherwise in this Contract.
11.6 The Chairman of the Board is the legal representative of the Joint Venture Company. Should the Chairman be unable to exercise his responsibilities, he shall authorize the Vice Chairman, or any other director that he may appoint in writing to represent the Joint Venture Company temporarily. No director shall have the power to bind the Joint Venture Company except with the written resolution of the Board of Directors.
11.7 The Board of Directors shall convene at least one meeting every year to be held at the main office of the Joint Venture Company or at such other location as may be determined by the Chairman of the Board. The meeting shall be called and presided over by the Chairman of the Board or such other director that the Chairman has authorized to act on his behalf. The Chairman may convene an interim meeting based on a proposal made by four (4) or more of the directors. Meetings may be held via audio or video tele-conferencing, subject to the notice rules in Article 11.8 Five (5) of the directors shall constitute a quorum for meetings of the Board of Directors. No action taken at a meeting without a quorum shall be valid. Minutes of each meeting shall be recorded by a person designated by the Chairman, signed by all directors or proxies present at the meeting, distributed by mail or facsimile to all board members within 30 days of each meeting, and placed on file in English and Chinese at the office of the General Manager of the Joint Venture Company. Board resolutions may also be passed without a meeting through a written circular vote via facsimile, e-mail, or other electronic exchange. Resolutions passed without a meeting through a written circular vote may be passed only by the signature of all seven (7) Directors.
11.8 The Chairman shall send facsimile notice, followed by registered airmail, at least thirty (30) days prior to any meeting stating the agenda, time and place of the meeting. Meetings may be held by teleconference on 7 days facsimile notice. Such notice shall be in English and Chinese and include a detailed agenda of matters to be discussed at the meeting and shall also include copies of all reports, documents and other materials relevant for adequate and informed consideration of each matter on the agenda. Such notice may be waived by unanimous consent of all directors attending the meeting in person or by proxy.
11.9 In the event of an emergency or other important matter involving substantial risk or opportunity for the Joint Venture Company, the nature of which requires Board approval, the Chairman shall by the most rapid means of communication available, notify each director of the nature of circumstances that require the Joint Venture Company to act, the reason for urgency, the proposed action to be taken, the time within which the action must be taken, and the convening of a meeting of the Board of Directors to consider such action. If due to the urgency of the situation, it is not possible to obtain a quorum of the Board of Directors within the time available for the Joint Venture Company to act, the written/faxed approval of one director from each Party will suffice for the General Manager to act, and a Board of Directors meeting shall be convened as soon as reasonably possible thereafter to ratify such action.
11.10 Should a member of the Board of Directors be unable to attend a Board meeting for any reason, he may appoint a proxy in writing to be present and to vote on his behalf at the meeting. A proxy may represent one or more members of the Board of Directors. Should a member of the Board of Directors neither attend the meeting nor appoint a proxy to attend, he shall be considered to have abstained from voting.
11.11 Members of the Board of Directors shall not be paid by the Joint Venture Company for their duties as members of the Board of Directors. The party nominating each director shall cover all air travel, meal and lodging expenses incurred by members of the Board of Directors (and their proxies) in traveling to and in attending meetings of the Board of Directors.
11.12 Each member of the Board of Directors shall have only one vote.
11.13 Day to day operational management of the Joint Venture Company shall be vested in a General Manager, who shall be nominated by Party B and approved by a majority vote of the Board of Directors. The General Manager shall report to the Board of Directors.
11.14 The Board of Directors shall have the power to dismiss the General Manager at any time as the Board of Directors deems appropriate by a majority vote of the Board.
11.15 Subject to Article 11.14 above, the initial term of office for the General Manager is two years from date of this Contract.
ARTICLE 12.0 TAXES, FINANCE, AND AUDIT
12.1 The Joint Venture Company shall pay taxes in accordance with the requirements of the relevant Chinese laws.
12.2 Staff members and workers of the Joint Venture Company shall pay individual income tax according to the "Individual Income Tax Law of the People's Republic of China".
12.3 Allocations for reserve and expansion funds of the Joint Venture Company and welfare funds and bonuses for staff and workers from after-tax profits shall be set aside in accordance with the stipulations of the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment". The annual allocations shall be determined by the Board of Directors according to the business situation of the Joint Venture Company at the relevant time.
12.4 The fiscal year of the Joint Venture Company shall be January 1 through December 31. All vouchers, statistical statements, account books and reports shall be written in Chinese and English. The quarterly report and financial statement as well as the annual accounts of the Joint Venture Company shall be prepared in Chinese and English for the Board of Directors.
12.5 The Joint Venture Company's annual financial auditing shall be conducted by an internationally recognized auditor registered in China and appointed by the Board of Directors. The results of auditing shall be a report in accordance with international accounting principles to be submitted to and unanimously approved by the Board of Directors. The books of account of the Joint Venture Company will be available for examination by duly authorized representatives of any of the parties provided such examination is made during normal business hours upon reasonable prior notice to and upon the premises of the Joint Venture Company. Any party may appoint its own auditors to audit the accounts of the company at its own expense.
12.6 Within 30 days after each calendar quarter, the General Manager shall submit to the Board of Directors the profit and loss statement for that quarter and the balance sheet as of the close of that quarter.
12.7 Within the first three (3) months of each fiscal year, the General Manager shall present to the Board of Directors for approval the previous year's balance sheet, profit and loss statement, statement of changes in financial position, cash flow statement, and proposals regarding the distribution of profits of the Joint Venture Company. By the end of the third month of each fiscal year, the Board of Directors shall determine the required allowances for funds discussed in Article 12.3 and for the payment of income taxes, and determine by unanimous vote the appropriate distribution out of the balance of retained earnings in the form of dividends to shareholders in proportion to each party's contribution to registered capital as of the end of the previous fiscal year. The Company shall distribute dividends after all the taxes have been paid and the amounts towards the development fund, the reserve fund and the bonus and welfare fund have been deducted in accordance with the Chinese regulations with regard to financial affairs. Dividends shall be distributed after all the previous losses have been recovered.
12.8 The General Manager shall be responsible for the preparation of the Joint Venture Company's budgets. The budgets (including the projected balance sheet, profit and loss statements and cash transaction report) for the next fiscal year shall be submitted to the Board for approval 60 days prior to the commencement of the fiscal year. Detailed information on training and personnel issues shall be included with the annual budget. Once approved, the General manager shall be responsible for implementation of budgets and other operational plans
12.9 In addition, the General Manager shall be responsible for preparation of quarterly reports on the following topics:
a. Marketing and sales reports;
b. Operational reports, and,
c. Capital expenditure reports
12.10 The Joint Venture Company shall establish an accounting system in accordance with the internationally used accrual basis and debit and credit system.
12.11 The Joint Venture Company shall adopt the Chinese RMB as the standard currency for entries in the books of account. For financial statement reporting, conversion of transactions or translation of the financial statement into US dollars or other currencies shall be in accordance with international accounting standards. Financial reporting and control shall satisfy both Chinese and International accounting standards.
12.12 The Joint Venture Company shall open RMB and foreign exchange accounts with banks in China, and the General Manager shall decide the procedure for issuing and signing bank checks.
12.13 The Joint Venture Company may also open foreign exchange accounts with foreign banks in foreign countries as designated by the Board of Directors and approved by the State Administration of Foreign Exchange. All foreign income to the Joint Venture Company earned and paid abroad shall be deposited in those accounts and all payments in foreign exchange currencies outside of China may be made from the same accounts. Any conversion of foreign exchange by the Joint Venture Company must be approved by the General Manager under guidelines approved by the Board of Directors.
12.14 All Parties recognize that maintenance of a Foreign Exchange balance is a goal of the company. For this reason, the Joint Venture Company will make its best efforts to increase international sales as permitted under Chinese law to balance its foreign exchange account on its own. If necessary, in addition to obtaining foreign exchange through export sales, the parties and the Joint Venture Company will be permitted to enter the Foreign Exchange Market. In no event, however, will Party B or Party C be obligated to contribute or otherwise provide foreign currency to the Joint Venture Company after the parties' contributions to the Registered Capital of the Joint Venture Company have been made pursuant to Article 6.5 of this Contract.
ARTICLE 13.0 LABOR MANAGEMENT AND OPERATIONS MANAGEMENT
13.1 Labor contracts covering recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalties, confidentiality, and other matters concerning the staff and workers of the Joint Venture Company shall be drawn up between the Joint Venture Company and its individual employees in accordance with the "Regulations of the People's Republic of China on Labor Management in Joint Venture Using Chinese and Foreign Investment" and the "Labor Law of the People's Republic of China". The General manager will be responsible for appointing all management and other personnel under implementation rules and the labor plan of the Joint Venture Company as approved by the Board of Directors. The General Manager will also have the right to terminate employment of any employee at any time, provided that this procedure is in accordance with the relevant Chinese labor law
13.2 An Assistant General Manager may be nominated by Party A. The Board of Directors must confirm the nominated person by a unanimous vote. Should the General Manager wish to terminate the employment of the Assistant General Manager, the Board of Directors must confirm the dismissal by a unanimous vote.
13.3 The salary or wages, housing benefits, social insurance, welfare, and personal traveling expenses, and similar items for Senior Management personnel will be determined by the Board of Directors, which may delegate such responsibility to the General Manager, except that the compensation of the General Manager will be solely determined by the Board. The principle for establishing salaries is the international market rates (including housing and other expenses) for expatriates in China and the local market rates for Chinese personnel. The General Manager shall submit a recommendation regarding Senior Management compensation packages to the Board of Directors 60 days prior to the beginning of each fiscal year.
13.4 The Joint Venture Company shall provide an incentive fund for rewarding employees who have made a significant contribution to the Joint Venture Company. The actual amount to be reserved and the rules for allocating the funds, shall be decided by the Board of Directors, based on the financial performance of the Joint Venture Company for each year.
13.5 Unless otherwise approved by the Board of Directors, the Joint Venture Company shall have initially five expatriate overseas managers nominated by Party B and Party C who shall serve as the General Manager, Marketing Manager, Financial Manager, Logistics Manager and Manufacturing/Engineering Advisor. The Joint Venture Company will be responsible for the total compensation package of all employees. Initial expatriate staff titles and approximate compensation packages are estimated in the Feasibility Study.
13.6 Provided that the General Manager or any other Senior Manager has acted lawfully and within the scope of his authority, the Joint Venture Company will indemnify such
manager for civil liability incurred as result of actions taken on behalf of the Joint Venture Company.
13.7 The General manager shall be in charge of day to day operation and management of the Joint Venture Company and shall carry out the decisions of the Board. In addition to other powers set forth in the Articles of Association, the General Manager shall have the following powers and responsibilities:
a. To determine the price of all products and services in accordance with guidelines established by the Board.
b. To appoint and dismiss any management personnel and working personnel (except for the Assistant General Manager) according to the personnel guidelines as established and amended from time to time by the Board and to establish or change the organization or structure of the management and working personnel. .
c. To purchase at reasonable prices, any imported or local components, kits, machinery or parts necessary for the Joint Venture Company's operations.
d. To purchase or sell any capital equipment with the approval of the Board.
e. To take the full responsibility for the daily administration, business and financial management, as well as for signing binding contracts on behalf of the Company, under guidelines determined by the Board of Directors.
f. To work out the Company's development plan, annual production and operational programs, budget balance and proposal for profit distribution.
g. All other matters entrusted to the General Manager by the Board and within the limits set by the Board.
h. Senior Managers report directly to the General Manager, and work under the direction of the General Manager.
13.8 In the absence of the General Manager, the General Manager will delegate his responsibilities to another Senior Manager of his choice who would normally report to the General Manager.
ARTICLE 14.0 TRADE UNION
14.1 Labor Protection: The Company shall observe the Chinese regulations concerning labor protection and safe working conditions. Labor insurance shall be provided to the employees according to the regulations adopted by the Chinese government.
14.2 Trade Union: As stipulated in Chapter 13 of the "Regulations for the Implementation of the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment", the employees have the right to set up trade union and carry on trade union activities. Should the employees elect to form a trade union, the Joint Venture Company shall give assistance to the trade union as provided for in the Chinese laws and regulations. The Company shall allocate every month an amount equivalent to 2 percent of all the wages of the Company's employees which are members of the trade union to the trade union fund.
ARTICLE 15.0 DURATION OF THE JOINT VENTURE COMPANY
15.1 The Joint Venture Term shall be fifty (50) years beginning from the date of issuance of the Business License and may be extended for successive periods of ten (10) years each, or other agreed periods, by unanimous approval of the Board of Directors and subject to the approval of the relevant Chinese authorities, if such approval is then required by law.
15.2 An application for the extension of the Joint Venture Term, proposed
by one or more of the parties and unanimously approved by the Board of
Directors, shall be submitted to the relevant Chinese approval authorities six
(6) months prior to the expiration date of the Joint Venture Company's Business
License, if such approval is then required by law.
ARTICLE 16.0 INSURANCE
16.1 The Joint Venture Company shall obtain insurance policies for various kinds of risks from the People's Insurance Company of China (PICC) or any other insurance company which is authorized to conduct business in China and approved by the Board of Directors. The types, value and duration of the insurance shall be decided by the Board of Directors, subject to any provisions of Chinese law which may mandate the carrying of certain types of insurance by the Joint Venture.
ARTICLE 17.0 LIABILITIES FOR BREACH OF CONTRACT
17.1 Should either party, without good cause, fail to make its contribution to registered capital on time as stipulated in Article 6.0 of this Joint Venture Contract, the party in breach shall be required to pay interest on the amount owing starting from 30 days after the date the contribution was due. Interest shall be calculated at the RMB prime rate of interest of the People's Bank of China at the time in question. In addition, the breaching party must compensate the Joint Venture Company for the direct economic losses caused to it by the failure to supply registered capital.
17.2 Should any party fail to pay its contribution to registered capital for more than 3 months beyond the due date stated in Article 6.5 of this Contract, , or should the Joint Venture Company be unable to continue its operations or achieve the business purpose stipulated in this Joint Venture Contract due to any party failing to fulfill any of its other obligations under this Joint Venture Contract or under the Articles of Association, or should any party violate the stipulations of this Joint Venture Contract or the Articles of Association, the parties not in breach shall have the right to terminate this Joint Venture Contract and to start liquidation proceedings in accordance with Articles 12.5 to 12.9 of the Articles of Association and Article 20.3 through 20.7 of the Joint Venture Contract. The parties not in breach shall also be entitled to recover any and all damages, including but not limited to direct economic losses then caused to the Joint Venture Company, from the Party in breach, including damages incurred during the ninety (90) days cure period.
17.3 Any party found to be in breach of contract in regards to Article 10 of this Contract shall be liable to the party or parties owning the confidential information for all actual financial losses and damages resulting from said breach.
ARTICLE 18.0 FORCE MAJEURE
18.1 Should either party be prevented from performing or be delayed in performing its obligations under this Joint Venture Contract due to force majeure, including but not limited to earthquake, typhoon, fire, flood, civil unrest, war, or other events the occurrence of which could not reasonably be predicted and the consequences of which could not reasonably be prevented or avoided, the prevented party shall notify the other parties in writing as soon as possible and shall within fifteen (15) days thereafter provide detailed information of the events, including notarized documentation, giving full explanation of the party's inability to perform or delay in performing this Joint Venture Contract in whole or in part.
18.2 If performance of the Joint Venture Contract cannot be resumed within one hundred eighty (180) days from the giving of written notice, the parties shall through
consultation decide whether to terminate the Joint Venture Contract or to exempt that part of the contract's obligation from performance or whether to delay performance of the contract according to the effects of the events on such performance. If no agreement can be reached, any party may commence liquidation proceedings under Article 20 of this Contract. No party shall claim against the other party or against the Joint Venture Company for compensation for losses caused by force majeure. All parties, however, agree to take all reasonable measures to mitigate losses to other parties or the Joint Venture Company, caused by the affected party's inability to perform due to force majeure. Failure to take such measures will subject the party to liability for damages caused other parties by failure to mitigate.
ARTICLE 19.0 AMENDMENT
19.1 The amendment of this Joint Venture Contract shall be effective only by a writing signed by all parties and approved, and, if required by law, by the applicable examination and approval authority in China.
ARTICLE 20.0 DISSOLUTION
20.1 Party A and Party B and Party C may mutually agree to dissolve the Joint Venture Company before the expiration of the Joint Venture Term, provided, however, that in such case dissolution shall be unanimously approved by the Board of Directors and permission granted by the relevant Chinese authority, if such approval is required at the time of the agreed dissolution.
20.2 Any party may apply unilaterally to the relevant Chinese authority for dissolution of the Joint Venture Company after giving the other parties one hundred and eighty (180) days notice if one or more of the following conditions exist and are not cured within the 180-day period:
20.2.1 Expiration of the term of the Joint Venture Company and the notifying party does not desire to extend the term;
20.2.2 Inability to continue the Joint Venture Company's operations due to bankruptcy, insolvency, or inability of the Joint Venture Company to meet pay its expenses and debts as they fall due, for any reason (including due to force majeure).
20.2.3 Failure of the Joint Venture Company to attain its business objectives, or the prospects of success are minimal;
20.2.4 Sales, assignment, transfer, or attempts to do so, by any party of its investment in the Joint Venture Company in violation of the terms of this Joint Venture Contract or Articles of Association;
20.2.5 Expropriation of all or a significant part of the assets of the Joint Venture Company;
20.2. 6 Revision of any provision of this Joint Venture Contract or the Articles of Association required by a governmental authority after the Business License is granted to the Joint Venture Company and the revision required will have a significant negative effect on the operation or profitability of the Joint Venture Company;
20.2.7 Termination of the PRODUCT TECHNOLOGY AND TRADEMARK AGREEMENT between the Joint Venture Company and Party B, for any legal reason; or
20.2.8 The occurrence of an event or condition that requires the dissolution of the Joint Venture Company in accordance with government laws or regulations, or the occurrence events described in Article 4.8 (b)
20.2.9 If termination is based on the condition in Article 20.2.1 taking place, the Joint Venture Company shall be liquidated as provided for in Articles 20.3 through 20.7 of this Joint Venture Contract and in accordance with Articles 12.5 through 12.9 of the Articles of Association, unless the parties reach an agreement on a mutually acceptable alternative.
20.2.10 If termination is based on the happening of any of the events or conditions stated in Articles 20.2.2 through 20.2.8, the Board of Directors shall cause the Joint Venture Company to file an application for dissolution with the relevant Chinese authority at the end of the 180-day notice period. Upon approval of the request for dissolution from the relevant Chinese authority, liquidation shall proceed as provided for in Articles 20.3 through 20.7 and in accordance with Articles 12.5 through 12.9 of the Articles of Association.
20.3 Upon the determination by the relevant Chinese authority that the dissolution may take place, the Board of Directors shall appoint a liquidation committee to work out the specific dissolution procedures and an independent third-party to evaluate the Joint Venture Company's assets. The tasks of the liquidation committee shall be to conduct a thorough check of the Joint Venture Company's property, its claims and indebtedness; to finalize a statement of assets and liabilities and list of property; to obtain a formal valuation of the Joint Venture's assets, and to formulate a liquidation plan. However, the liquidation committee may take definitive or final action on any of these matters only after approval is granted by the Board of Directors. Party B shall have the right of first refusal to acquire any of the Confidential Information as provided to the Joint Venture Company or developed by the Joint Venture Company.
20.4 During the liquidation process, the liquidation committee shall represent the Joint Venture Company in suing and being sued and in all matters related to the legal aspects of the liquidation process. The liquidation expenses and remuneration of the members of the liquidation committee shall be paid in priority from the existing assets of the Joint Venture Company. Amounts of such remuneration and expenses shall be approved by the Board of Directors.
20.5 After all debts of the Joint Venture Company have been approved and paid by the liquidation committee, the remaining assets shall be distributed to each Party according to the proportion of its investment in the registered capital of the Joint Venture Company or as otherwise mutually agreed in writing.
20.6 On completion of the liquidation process, the Joint Venture Company shall submit a report to the relevant Chinese authority, fulfill all formalities related to cancellation of the Business License, and publish a liquidation notice to the public.
20.7 After dissolution of the Joint Venture Company, Party A shall maintain all the accounts and records for not less than then (10) years, and during this period Party B or Party C shall have the right to inspect any and all such records at any time on giving prior reasonable notice to Party A.
ARTICLE 21.0 SETTLEMENT OF DISPUTES
21.1 Any disputes arising from the performance of, or in connection with, this Joint Venture Contract which are not settled through friendly consultation between the parties
within 30 days from the date that either party informs the other in writing that such dispute or disagreement exists shall be submitted to mediation conducted by a mediator mutually acceptable to the parties.
21.2 In case no settlements can be reached through consultation or mediation within 90 days after first written notice of the dispute, the parties shall submit the dispute to binding arbitration under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, by three arbitrators. Unless all parties agree otherwise, the arbitration shall be conducted in Stockholm, Sweden before the Arbitration Institute of The Stockholm Chamber Of Commerce and the language of the arbitration proceedings shall be English. Each Party shall appoint one arbitrator. The chairman of the arbitral tribunal shall not have the nationality of any party. The decision of the arbitrators shall be final and binding on the parties, and shall be enforceable in any court with jurisdiction over the party against whom the award has been rendered or where assets of that party are located The award of costs shall include reasonable attorney's fees.
21.3 During the mediation and arbitration process, the Joint Venture Contract shall be reformed continuously by all parties except for the matters in dispute. Parties shall continue to exercising their remaining rights and perform their remaining responsibilities in matters which are not in dispute.
ARTICLE 22.0 APPLICABLE LAW
22.1 The formation of this Joint Venture Contract, its validity, interpretation and performance and the settlement of disputes shall be governed by the relevant, published and publicly available laws of the People's Republic of China. In the event that Chinese law does not cover a particular issue, international custom and practice, shall apply. All other agreements between the parties are governed by the choice of law so stated in the agreements.
ARTICLE 23.0 LANGUAGE
23.1 This Joint Venture Contract shall be written in Chinese and English. Both language versions shall be equally effective and valid. Each of the Parties acknowledges that it has reviewed the text in both languages and that it is substantially the same in all material aspects.
ARTICLE 24.0 PARTIAL ENFORCEABILITY
24.1 If any portion of this Joint Venture Contract becomes unenforceable due to operation of law or change of governmental policy, the remaining portions of the Contract shall remain in full effect unless doing so would render it impossible to fulfill the business purpose of the Joint Venture.
ARTICLE 25.0 ENTIRE AGREEMENT
25.1 This Joint Venture Contract constitutes the entire agreement between the parties and supersede all prior or contemporaneous discussions and agreements between them pertaining to the subject matter of this Contract.
ARTICLE 26.0 NOTICES
26.1 Notices in connection with any Party's rights and obligations sent by any Party shall be sent to all other parties to this Contract and shall be delivered by personal service or by facsimile and followed by a registered airmail copy to the party to which notice is sent as
follows. Any party may amend its address for service of notices at any time by informing all other parties in writing by personal service or registered airmail. For the purpose of this paragraph, "registered airmail" may include the use of courier services DHL or Federal Express.
To Party A:
Shanghai Perfect Jinqiao United Development Corporation
Attention: Wang Zhuxiang
190 Yuansheng Road,
Pudong New Area, Shanghai 200120
People's Republic of China
To Party B:
NACCO Materials Handling Group, Inc.
Attention: General Counsel
2701 NW Vaughn, Suite 900
Portland, Oregon, 97201 USA
To Party C:
Sumitomo-Yale Company, Ltd.
Attention: President
2-75 Dai Toh-Cho, Obu-Shi, Aichi-Ken, 474 Japan
A copy of such notices shall also be provided to the General Manager of the Joint Venture Company at the office of the Joint Venture Company.
ARTICLE 27.0 COMPLIANCE WITH LAWS
27.1 The Joint Venture Company shall comply with all published and publicly available laws and regulations of the People's Republic of China. When the Joint Venture Company does business with or within other countries, it will use all reasonable efforts to assure that the Joint Venture Company complies with the laws and regulations of the other countries which are applicable to the Joint Venture Company's conduct of business with or within those countries.
ARTICLE 28.0 PROHIBITED ACTIONS AND MISCELLANEOUS PROVISIONS
28.1 Except as expressly provided in this Joint Venture Contract, no party or its Affiliates or the Joint Venture Company, or any of their respective directors, employees or agents shall:
28.1.1 Give or receive any gift or entertainment of significant cost or value, or any commission, fee or rebate, to or from any of the directors, employees or agents of the other party or their Affiliates in connection with this Joint Venture Contract;
28.1.2 Unless prior written notice is given, enter into any business arrangement with any director, employee or agent of the other party or their Affiliates, other than as a representative of such other party or its Affiliates;
28.1.3 Make any payment or give anything of significant cost or value to any official or employee of any government department, governmental agency, or other
governmental instrumentality or company thereof to influence his or its decision, or to gain any advantage for a party, its Affiliate or the Joint Venture Company, in connection with the business to be conducted under this Joint Venture Contract. If a party has a reasonable basis for believing that a violation of this clause may have occurred, any representatives authorized by such party or an independent auditor, may audit the relevant records of the other party, its Affiliate and the Joint Venture Company for the sole purpose of, and to the extent strictly necessary for, determining whether there has been compliance with this clause.
28.2 No Joint Venture Company employee shall hold concurrent positions in any other organization unless specifically authorized by the Board of Directors.
28.3 So long as the Joint Venture Company is in existence, and for a period of five (5) years thereafter, neither Party A nor any of its respective Affiliates will engage in the design, marketing, manufacture (including assembly), distribution, sales or servicing of any products similar to the Products of the Joint Venture Company, nor will Party A or Affiliates invest in any company which does so, except through the Joint Venture Company, unless with the prior specific written consent of Party B and Party C. Should Party B or C wish to establish other Joint Ventures for the same products in Shanghai, for the period of five years after issuance of the Business License, Party B or Party C will offer Party A a right of first refusal to participate in said Joint Venture up to 15% of the total registered capital.
28.4 The Joint Venture Company shall indemnify Party A, Party B, Party C, and their respective employees, officers and directors from all damages, costs and expenses relating to or arising out of (a) the Joint Venture Company's failure to comply with environmental laws and regulations and (b) the Joint Venture Company burying, spilling, leaking, discharging or otherwise releasing pollutants, contaminants or hazardous or toxic materials
ARTICLE 29.0 CONDITIONS PRECEDENT
29.1 No party shall have any obligation to contribute any installment of registered capital until and unless all of the following conditions have been satisfied:
1. All necessary government approvals have been received, including but not limited to issuance of the Business License, and that none of the approval document adds to or varies any of the terms and conditions of this Contract, any Exhibits, or the Articles of Association, unless all parties agree to such modification or addition in writing.
2. The Business License has been issued and the statement of the scope of business is consistent with the scope of business stated in Article 5.2 this Contract.
3. All agreements attached as Exhibits to this Contract have been duly executed by all parties, approved by government authorities if such approval is necessary for their validity, and are in full force and effect.
ARTICLE 30.0 EFFECTIVENESS OF THE CONTRACT
30.1 After execution by all of the parties hereto, this Joint Venture Contract shall come in to force upon approval of the Examination and Approval Authority.
ARTICLE 31.0 WAIVER
31.1 The delay or failure of any party to exercise its rights under this Contract, including but not limited to rights and remedies for breech of contract, shall not operate as a waiver of any rights under this Contract.
ARTICLE 32.0 SIGNATURES
This document is executed in 16 original copies, eight each in Chinese and English, each party acknowledges receipt of one original Chinese and one original English copy.
In witness whereof, the parties hereto have caused this Contract to be executed by their duly authorized representatives on this 27th day of November, 1997.
For SHANGHAI PERFECT JINQIAO UNITED DEVELOPMENT CO., LTD., BY:
/s/ Wang Zhuxiang ---------------------------------------- Wang Zhuxiang, General Manager |
For NACCO MATERIALS HANDLING GROUP, INC., BY:
/s/ Reginald R. Eklund ---------------------------------------- Reginald R. Eklund, President and CEO |
For SUMITOMO YALE COMPANY, LTD., BY:
/s/ Yoshinori Ohno ---------------------------------------- Yoshinori Ohno, President |
EXHIBIT 10.4
RECOURSE AND INDEMNITY AGREEMENT
THIS RECOURSE AND INDEMNITY AGREEMENT dated as of October 21, 1998 (Agreement) is made and entered into by and between GENERAL ELECTRIC CAPITAL CORPORATION , a New York corporation ("GECC"), NMHG FINANCIAL SERVICES, INC., a Delaware corporation ("Corporation"), and NACCO MATERIALS HANDLING GROUP, INC., a Delaware corporation ("NMHG").
WHEREAS, NMHG, through various subsidiaries and affiliates, manufacturers and distributes materials handling equipment ("NMHG Equipment");
WHEREAS, NMHG also distributes NMHG Equipment through dealers located in the United States of America (such dealers and any future dealers being hereinafter collectively referred to as "DeaIers" and each a "Dealer");
WHEREAS, on October 27, 1989, Yale Materials Handling Corporation ("Yale"), acquired, pursuant to a Stock Purchase Agreement dated as of such date ("Stock Purchase Agreement"), twenty percent (20%) of the issued and outstanding shares of the capital stock of Yale Financial Services, Inc. ("Corporation") from GECC. As a result thereof, the Corporation was then owned twenty percent (20%) by Yale and eighty percent (80%) by GECC;
WHEREAS, in conjunction with the above-described stock purchase, Yale and GECC entered into the Joint Venture and Shareholders Agreement ("Original Shareholders Agreement") as of November 8, 1989 which Agreement related to the internal governance and day-to-day management and operations of the Corporation. In conjunction with the negotiation of the Original Shareholders Agreement and the purchase of certain Wholesale Accounts from Heller Financial, Inc., Yale entered into the Guaranty and Indemnity Agreement dated June 30, 1988 in favor of GECC ("First Guaranty Agreement") pursuant to which Yale unconditionally guaranteed the prompt payment and performance to GECC and the Corporation of all of the obligations of each Dealer under certain inventory/accounts receivable financing accounts purchased at that time and all such future accounts entered into thereafter;
WHEREAS, as a result of a corporate reorganization effective as of January 1, 1994, NMHG and Yale entered into a Stock Purchase Agreement pursuant to which Yale sold all of its interest in the Corporation to NMHG and assigned to NMHG all of Yale's duties, obligations and benefits under the Original Shareholders Agreement and all other agreements related thereto, including, without limitation, the First Guaranty Agreement;
WHEREAS, NMHG and GECC have now determined to revise the nature of their relationship to areas outside of the United States (which global relationship shall be governed by the terms of an Operating Agreement; the "International Operating Agreement") executed between NMHG, GECC and various international affiliates and subsidiaries of GECC and NMHG) and additionally expand the business scope of the Corporation to provide certain types of financing to the Dealers and to the customers of NMHG and/or the Dealers ("Customers") for all types and brands of NMHG Equipment. In conjunction therewith, NMHG and GECC have
determined to amend and restate the Original Agreement (the Restated and Amended Joint Venture and Shareholders Agreement shall be referred to as the "Shareholders Agreement"). It is intended that in conjunction with the commencement of the Shareholders Agreement, the name of the Corporation shall be changed to NMHG Financial Services, Inc.;
WHEREAS, on November 27, 1996, the First Guaranty Agreement was amended to expand the scope of the guaranty contained therein to GECC and certain of its other subsidiaries to induce such subsidiaries to provide other loans and extensions of credit to the Dealers evidencing the financing of inventory/accounts receivable. The amendment and restatement of the first Guaranty Agreement shall hereinafter be referred to as the "Second Guaranty Agreement"; and
WHEREAS, in conjunction with the execution of the Shareholders Agreement and the International Operating Agreement, GECC and NMHG desire, with respect to Wholesale Accounts, to amend the nature of the First and Second Guaranty Agreements to coincide with the new international nature of the arrangement between GECC and NMHG.
NOW THEREFORE, in consideration of the above premises, the mutual promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1.01 "CUSTOMER" shall mean and include any customer of a Dealer.
1.02 "PERSON" shall mean and include any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any political subdivision thereof.
1.03 "WHOLESALE ACCOUNT" shall mean and include any loan or other extension of credit to a Dealer, whether in connection with the acquisition of NMHG Equipment by the Dealer or otherwise, but shall not include any loan or other extension of credit by the Corporation to any Customer.
1.04 "WHOLESALE ACCOUNT DOCUMENTS" shall mean any documents evidencing any Wholesale Account.
2.01 RECOURSE FOR WHOLESALE ACCOUNTS. In the event of a default under any of the Wholesale Accounts entered into by the Corporation during the period beginning on the date hereof and continuing to the date five (5) years from the date hereof ("Base Term"), NMHG will, within twenty (20) days of demand, repurchase any such Wholesale Account(s) affected by such default and pay the Corporation, the amount then owed by the Dealer to the Corporation under the default pursuant to the terms of the respective Wholesale Account Documents ("Repurchase Price"). For purposes of this Section 2.01, default is defined as the occurrence of any event which would, under the terms of the Wholesale Account Documents, constitute a default. It is not contemplated that the Corporation will automatically exercise its rights to demand repurchase of any Wholesale Account(s) under this Section unless collection of such Account(s) is deemed to be unlikely. Failure on the part of the Corporation to exercise such right shall not constitute a waiver of such right. Upon receipt by the Corporation of the full amount of the Repurchase Price for any Wholesale Account(s), and provided that NMHG is not otherwise in Default under this Agreement, the Corporation will assign all of its right, title and interest in such Account(s) to NMHG (or its designee) without recourse to, or warranty from (of any kind whatsoever), the Corporation.
(a) Anything in this Agreement to the contrary notwithstanding, NMHG hereby agrees that its obligations under this Section 2.01 shall be primary, absolute, continuing and unconditional, irrespective of, and unaffected by, any of the following actions or circumstances (regardless of any notice to, or consent of, NMHG): (aa) the genuineness, validity, regularity and enforceability of any Wholesale Account; (bb) any extension, renewal, amendment, change, waiver or other modification by the Corporation of any Wholesale Account; (cc) the absence of, or delay in, any action to enforce the terms of any Wholesale Account; (dd) the release of, extension of time for payment or performance by, or any other indulgence granted to the Dealer or any other person with respect to any Wholesale Account by operation of law or otherwise; (ee) the existence, value, condition, loss, subordination or release (with or without substitution) of, or failure to have title to or perfect and maintain a security interest in, or the time, place and manner of any sale or other disposition of any NMHG Equipment, collateral or security given in connection with any Wholesale Account, or any other impairment (whether intentional or negligent, by operation of law or otherwise) of the Corporation's rights to any such NMHG Equipment, collateral or security; (ff) any Dealer's voluntary or involuntary bankruptcy, assignment for the benefit of creditors, reorganization, or similar proceedings affecting the Dealer or any of its assets; or (gg) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. Notwithstanding any provision to the contrary herein, NMHG shall have no obligation to repurchase any Wholesale Account pursuant to this Section 2.01 under any of the following circumstances: (i) solely with respect to Wholesale Accounts which are documented solely by the Corporation, if a Wholesale Account proves unenforceable due to the fact that the applicable Wholesale Account Documents are incomplete, (ii) solely with respect to Wholesale Accounts where the Corporation is responsible for the perfection of its security interest in the respective NMHG Equipment, if a Wholesale Account proves unenforceable due to a failure of the GE Capital
Company to obtain and perfect a valid first priority security interest in such Equipment, or (iii) if a Wholesale Account falls into default solely because the Corporation is in default of its obligations under the applicable Wholesale Account Documents.
(b) At least One-Hundred and Eighty (180) days prior to the expiration of the Base Term, the Corporation, GE Capital and NMHG shall enter into discussions with respect to the continuing need for recourse on Wholesale Accounts. In the event that the Corporation, GE Capital and NMHG have not reached a mutual agreement as to the provision of recourse on Wholesale Accounts for the period following the expiration of the Base Term on or before the expiration of the Base Term, the Corporation may at the expiration of the Base Term, in its sole discretion, cease providing Wholesale Accounts to Dealers. Notwithstanding any provision to the contrary herein, with respect to any and all obligations of NMHG as set forth in this Section 2.01 with respect to Wholesale Accounts which may arise during the Base Term ("Base Term Obligations"), those Base Term Obligations shall nevertheless continue and remain undischarged until the same are indefeasibly paid and performed in full.
2.02 CERTAIN WAIVERS. With respect to NMHG's recourse obligation set forth in
Section 2.01, notice of acceptance of thereof and of any default by any Dealer
or any other Person is hereby waived. Presentment, protest, demand, and notice
of protest, demand and dishonor of any Wholesale Account, and the exercise of
possessory, collection or other remedies on any Wholesale Account, are hereby
waived. Notice of adverse change in any Dealer's financial condition or of any
other fact which might materially increase the risk of NMHG is also waived. All
settlements, compromises, accounts stated and agreed balances made in good faith
between the Corporation and any Dealer shall be binding upon NMHG.
2.03 NO SUBROGATION. Without the Corporation's prior written consent, NMHG shall not exercise any rights which it may acquire against any Dealer or the NMHG Equipment or any other collateral or security by way of subrogation under this Agreement, nor shall NMHG seek or attempt to exercise or enforce any of the Corporation's rights or remedies against any Dealer or the NMHG Equipment or any of the collateral or security in respect of any payments made by NMHG hereunder, unless and until all of the obligations of such Dealer hereby guaranteed have been paid and performed in full. However, nothing in this Section shall be deemed to prohibit NMHG from making demand upon, or suing, any Dealer for any payment made by NMHG on behalf of such Dealer under this Agreement, so long as such demand or suit does not involve (i) any attempt to accelerate or otherwise require such Dealer to pay any amount not paid by NMHG, or (ii) any attempt to repossess, foreclose upon, or otherwise proceed against the NMHG Equipment or any other collateral or security (whether or not NMHG may also have a security interest in or lien upon the same).
2.04 DEALER CREDIT LINES. In consideration of the recourse set forth above, NMHG and the Corporation shall work together to determine, from time to time, the maximum amount of credit ("Credit Line") that will be extended to each Dealer. However, it is expressly agreed and understood that it shall be no defense to NMHG's obligations under this Article II if such Credit Line is ever exceeded for any reason whatsoever.
2.05 TERMINATION. The recourse obligation set forth above may be terminated by NMHG at any time as to any Dealer upon delivery to the Corporation of a written notice of such termination, but as to all "pretermination obligations" those obligations shall nevertheless continue and remain undischarged until the same are indefeasibly paid and performed in full. For these purposes, "pretermination obligations" shall mean and include all of the Dealer's obligations under any Wholesale Account in existence, or any proposed Wholesale Account for which the Corporation may have made a commitment, on or before delivery of such written notice of termination.
3.01 LENDER LIABILITY. NMHG hereby agrees to indemnify, save and keep harmless the Corporation, its respective agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, claims, actions and suits, including legal expenses and outside attorneys' fees, of whatsoever kind and nature, in contract or tort (collectively, "Losses") arising out of or in connection with (i) any decision or recommendation by NMHG to limit, terminate or otherwise modify any Dealer's Credit Line, (ii) any decision or recommendation by NMHG to the effect that the Corporation should not enter into any Wholesale Account with any Dealer, (iii) any refusal by the Corporation to enter into any Wholesale Account with any Dealer by reason of NMHG's termination of the recourse set forth in Article 2 above with respect to such Dealer's obligations, or (iv) any termination or other modification of any Dealer's franchise by NMHG.
3.02 PRODUCT LIABILITY. NMHG hereby also agrees to indemnify, save and keep harmless, the Corporation, its respective agents, employees, successors and assigns from and against any and all Losses arising out of or in connection with the manufacture, sale, delivery, use, specifications, performance, operation or condition of any NMHG Equipment.
3.03 DEFENSE. NMHG shall, upon written request, defend any actions based on any matter covered by the indemnities contained in Section 3.01 or 3.02 above (collectively, "Indemnities").
3.04 SURVIVAL. The Indemnities shall survive the expiration or termination of this Agreement.
4.01 AUDITS. Upon request, from time to time, by the Corporation, NMHG shall cause an audit to be performed as to all of the collateral or security of any Dealer for any obligation to the Corporation ("Collateral Audit"). At NMHG's option, such Collateral Audit shall be performed by (i) an auditor not related to the Corporation which has been approved by the Corporation in writing (a "Third Party Audit") or (ii) by a representative of NMHG (a "NMHG Audit"). If NMHG elects to have a NMHG Audit, NMHG shall give reasonable advance written notice to the Corporation and the Corporation shall have the right to have a respective representative present at the NMHG Audit. In any case, NMHG shall provide the Corporation with a complete written report shortly after any Collateral Audit ("Audit Report") and such Audit Report shall include, but not be limited to, a duplicate copy of any and all written reports prepared by any third party auditor.
4.02 COSTS. (a) The cost of any Third Party Audits performed in any calendar year shall be borne solely by NMHG. (b) NMHG and the Corporation shall pay their own costs in connection with any NMHG Audit.
5.01 ASSIGNMENT. The Corporation may not assign its respective rights hereunder, without the prior written consent of NMHG. NMHG may not delegate any of its duties or obligations hereunder without the prior written consent of the Corporation.
5.02 SUCCESSORS AND PERMITTED ASSIGNS. The respective rights and obligations of the parties set forth in this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
5.03 NOTICES. All notices permitted or required to be given hereunder shall be in writing and shall be delivered, via certified mail (return receipt requested), overnight courier, hand delivery or telefax, to the parties at the following addresses (or at such other address for a party as may be specified by like notice):
(i) If to the Corporation or GECC:
GENERAL ELECTRIC CAPITAL CORPORATION
44 Old Ridgebury Road
Danbury, CT 06810
Attention: Edward Simoneau
Telefax No.: 203-796-2352
(ii) If to NMHG:
NACCO MATERIALS HANDLING GROUP, INC.
650 NE Holladay Street
Suite 1600
Portland, Oregon 97232
Attn: General Counsel
Telefax No.:503-721-6001
Such notices shall be deemed delivered upon receipt.
5.04 HEADINGS. Article and Section headings used in this Agreement are for convenience of reference only and shall not be used in interpreting or construing or affecting the meaning or construction of this Agreement.
5.05 COUNTERPARTS. This Agreement may be executed by the parties hereto in any number of counterparts, each of which shall be deemed to be an original but all of which together shall constitute but one and the same instrument.
5.06 SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not affect or impair the validity or enforceability of the remaining provisions of this Agreement.
5.07 FURTHER ACTS. The parties agree to take such further action and to execute such further documents or instruments which are necessary and appropriate to complete or give effect to the transactions contemplated hereby.
5.08 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements and understandings, both written and oral, with respect to the subject matter hereof. There are no representations or warranties of, or conditions to the obligation of, any party hereto except as expressly set forth in this Agreement. This Agreement may not be altered or varied nor its provisions waived except in a writing duly executed by GECC, the Corporation and NMHG.
5.09 GOVERNING LAW AND JURISDICTION. This Agreement shall be construed and enforced in accordance with the laws of the State of New York. Any and all disputes, controversies or claims arising out of, or relating to, this Agreement or any of the Other Agreements shall be determined by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The number of arbitrators shall be three. One arbitrator each shall be appointed by NMHG and GECC respectively, and the third arbitrator, who shall serve as chairman of the tribunal, shall be appointed by the American Arbitration Association. The place of arbitration shall be New York City. The language of the arbitration shall be English and any arbitral award arising from any arbitration pursuant to this paragraph shall be final and binding upon all parties hereto and no party shall seek recourse to a court of law or other authorities to appeal for revision of such decision or any other ruling of the arbitrator. The cost of the arbitration
shall be borne by the party who does not prevail in the arbitration proceeding or as is otherwise decided by the arbitration panel. The question of whether a dispute is governed by this arbitration clause shall itself be determined by arbitration.
5.10 CONTINUATION OF LIABILITY. Notwithstanding any of the foregoing, any and all liabilities and obligations of NMHG arising under either the First Guaranty Agreement or the Second Guaranty Agreement currently existing at the time of the execution of this Agreement shall not be modified in any way whatsoever by this Agreement. Additionally, the terms of this Agreement shall not apply to, or otherwise modify the obligations and liabilities of NMHG with respect to: (i) in regard to the Corporation, any Wholesale Account entered into prior to the date of this Agreement or (ii) in regard to GECC or any other party to either the First or Second Guaranty Agreement, any Wholesale Account entered into prior to the execution of the International Operating Agreement by any such party. In either of such cases, the terms of either the First Guaranty Agreement or the Second Guaranty Agreement (as the case may be) shall apply to such Wholesale Accounts. To the extent that any Wholesale Account is entered into by the Corporation, GECC or any of its subsidiaries and affiliates, and such Wholesale Account is the subject of either this Agreement or the International Operating Agreement, the terms of the First Guaranty Agreement and the Second Guaranty Agreement shall be considered to terminated with respect to any such Wholesale Account.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute and deliver this Agreement as of the first date above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS
CORPORATION HANDLING GROUP, INC.
By: /s/ Christopher H. Richmond By: /s/ Jeffrey L. Mattern
----------------------------- ------------------------------
Title: Vice President Title: Treasurer
-------------------------- ---------------------------
NMHG FINANCIAL SERVICES, INC.
By: /s/ Edward J. Simoneau
-----------------------------
Title: Executive Vice President
--------------------------
|
Exhibit 10.5
RESTATED AND AMENDED JOINT VENTURE AND
SHAREHOLDERS AGREEMENT
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AND
NACCO MATERIALS HANDLING GROUP, INC.
April 15, 1998
GECC/NMHG RESTATED AND AMENDED
JOINT VENTURE AND SHAREHOLDERS AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1 Formation and Purposes . . . . . . . . . . . . . . . 2
SECTION 2 Initial Capitalization of the Corporation . . . . . . 3
SECTION 3 Additional Capital Contributions . . . . . . . . . . 3
SECTION 4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5 Management of the Corporation . . . . . . . . . . . . 4
SECTION 6 Service and Financing Agreements . . . . . . . . . . 8
SECTION 7 NMHG Obligations . . . . . . . . . . . . . . . . . . 8
SECTION 8 GECC Obligations . . . . . . . . . . . . . . . . . . 9
SECTION 9 Profitability Criteria . . . . . . . . . . . . . . . 9
SECTION 10 Accounting Records . . . . . . . . . . . . . . . . . 10
SECTION 11 Representations and Warranties. . . . . . . . . . . . 10
SECTION 12 Indemnities . . . . . . . . . . . . . . . . . . . . . 11
SECTION 13 Litigation. . . . . . . . . . . . . . . . . . . . . . 12
SECTION 14 Term and Termination . . . . . . . . . . . . . . . . 13
SECTION 15 Dissolution of Venture . . . . . . . . . . . . . . . 15
SECTION 16 NMHG's Stock Option . . . . . . . . . . . . . . . . . 15
SECTION 17 Staffing and Organization Expenses. . . . . . . . 18
SECTION 18 Trademarks . . . . . . . . . . . . . . . . . . . . . 19
SECTION 19 Exclusivity . . . . . . . . . . . . . 19
SECTION 20 Confidentiality . . . . . . . . . . . . . . . . . . . 20
SECTION 21 Waiver . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 22 Notices . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 23 Entire Agreement; Amendments . . . . . . . . . . . . 21
SECTION 24 Adoption by Corporation; Legend on Certificates . . . 21
SECTION 25 Counterparts . . . . . . . . . . . . . . . . . . . . 22
SECTION 26 Successors and Assigns . . . . . . . . . . . . . . . 22
SECTION 27 Section Headings . . . . . . . . . . . . . . . . . . 22
SECTION 28 Governing Law and Arbitration . . . . . . . . . . 22
SECTION 29 Severability of Provisions . . . . . . . . . . . . . 22
SECTION 30 Advertising . . . . . . . . . . . . . . . . . . . . . 23
SECTION 31 Target Approval Rates 23
SECTION 32 Timetable 23
SECTION 33 Participation Fee 24
SECTION 34 Competitiveness 25
SECTION 35 Condition Precedent 25
EXHIBIT A - Corporate Name Agreement
EXHIBIT B - Certificate of Incorporation
EXHIBIT C - Amended and Restated By-Laws
EXHIBIT D - Financing Agreement
EXHIBIT E - Administrative Services Agreement
EXHIBIT F - Tax Allocation Agreement
EXHIBIT G - Remarketing Services Agreement
EXHIBIT H - Listing of NMHG Competitors
EXHIBIT I - Participation Fee Calculation
EXHIBIT J - Recourse and Indemnity Agreement
|
RESTATED AND AMENDED JOINT VENTURE
AND SHAREHOLDERS AGREEMENT
THIS AGREEMENT, dated April 15, 1998 ("Agreement") by and between NACCO MATERIALS HANDLING GROUP, INC., a Delaware corporation with offices at 650 NE Holladay Street, Suite 1600, Portland, Oregon 97232 ("NMHG"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation with offices at 44 Old Ridgebury Road, Danbury, Connecticut 06810 ("GECC").
NMHG is in the business of manufacturing forklift trucks and other equipment, including without limitation, both Yale and Hyster brand name equipment (collectively, the "NMHG Equipment") which is sold and distributed by NMHG and by its dealers ("Dealers").
GECC is in the business of, among other things, providing financing on equipment similar to the NMHG Equipment.
On October 27, 1989, Yale Materials Handling Corporation ("Yale"), acquired, pursuant to a Stock Purchase Agreement dated as of such date ("Stock Purchase Agreement"), twenty percent (20%) of the issued and outstanding shares of the capital stock of the Yale Financial Services, Inc. ("Corporation") from GECC. As a result thereof, the Corporation was then owned twenty percent (20%) by Yale and eighty percent (80%) by GECC.
In conjunction with the above-described stock purchase, Yale and GECC entered into the Joint Venture and Shareholders Agreement ("Original Shareholders Agreement") as of November 8, 1989 which Agreement (and the related agreements executed concurrently therewith; the Original Shareholders Agreement and the related Agreements shall collectively be referred to as the "JV Agreements") related to the internal governance and day-to-day management and operations of the Corporation.
As a result of a corporate reorganization effective as of January 1, 1994, NMHG and Yale entered into a Stock Purchase Agreement pursuant to which Yale sold all of its interest in the Corporation to NMHG and assigned to NMHG all of Yale's duties, obligations and benefits under all of the JV Agreements.
NMHG and GECC have now determined to revise the nature of their relationship to areas outside of the United States (which global relationship shall be governed by the terms of an Operating Agreement ("International Operating Agreement") executed between NMHG, GECC and various international affiliates and subsidiaries of GECC and NMHG) and additionally expand the business scope of the Corporation to provide certain types of financing to the Dealers and to the customers of NMHG and/or the Dealers ("Customers") for all types and brands of NMHG Equipment. In conjunction therewith,
NMHG and GECC have determined to amend and restate the Original Agreement and certain of the other JV Agreements.
It is intended that in conjunction with the revision of the JV Agreements, the name of the Corporation shall be changed to NMHG Financial Services, Inc. It is further intended that the Corporation shall operate as two divisions operating under the trade names "Yale Financial Services" ("Yale") and "Hyster Credit" ("Hyster") and the services provided by the Corporation as set forth herein shall be shared by both such divisions.
NOW, THEREFORE, in consideration of the above premises and mutual covenants contained hereinbelow, the parties hereto hereby agree as follows:
1. FORMATION AND PURPOSES.
(a) On even date herewith, GECC and NMHG each hereby agree to amend and restate this Agreement with NMHG continuing to own twenty percent (20%) and GECC eighty percent (80%) of the outstanding shares of capital stock of the Corporation. On or after the date that this Agreement commences: (i) the Corporate Name Agreement shall be amended in the form of EXHIBIT A ATTACHED HERETO; (ii) the Certificate of Incorporation of the Corporation shall be amended in the form of EXHIBIT B attached hereto; and (iii) the By-Laws of the Corporation shall be amended and restated in the form of EXHIBIT C attached hereto. NMHG and GECC agree to take all necessary action and will vote their respective shares to so amend and restate the Certificate of Incorporation and the By-Laws.
(b) NMHG and GECC hereby agree that the primary purpose of the Corporation shall be to provide the following types of financial services:
(i) origination and/or acquisition of floor plan and fleet rental financing to the Dealers with respect to their inventory of NMHG Equipment and any related trade-ins ("NMHG Inventory Financing");
(ii) origination and/or acquisition of floor plan and fleet rental financing to the Dealers with respect to their inventory of new and/or used equipment other than NMHG Equipment ("Allied Inventory Financing");
(iii)origination and/or acquisition of parts inventory financing to the Dealers ("Parts Inventory Financing"; the NMHG Inventory Financing, Allied Inventory Financing and Parts Inventory Financing being collectively referred to as "Inventory Financing");
(iv) origination and/or acquisition of accounts receivable financing to the Dealers ("Accounts Receivable Financing"; the Inventory Financing and Accounts Receivable Financing being collectively referred to as "Wholesale Financing");
(v) origination and/or acquisition of financing with respect to any vehicles, computers and/or other types of commercial equipment (other than inventory) for the Dealers ("Commercial Equipment Financing");
(vi) origination and/or acquisition of true leases to the Customers with respect to NMHG Equipment and/or Allied Equipment ("Lease Financing"); and
(vii) origination and/or acquisition of secured loans, conditional sales contracts, financing leases, lease-purchase agreements or other financings (other than Lease Financings) to the Customers with respect to NMHG Equipment and/or Allied Equipment ("Money-Over-Money Financing"; Commercial Equipment Financing, Lease Financing and Money-Over-Money Financing being collectively referred to as "Retail Financing"); and
(viii) any other financing programs mutually agreed to by GECC and NMHG.
(c) Anything in Section 1(b) above to the contrary notwithstanding and subject to the provisions of Section 5(g) below, it is agreed and understood that the Corporation shall have the power and authority to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
2. INITIAL CAPITALIZATION OF THE CORPORATION.
(a) The Corporation has authorized capital stock consisting of One Thousand (1,000) shares of common stock, One Dollar ($1.00) par value (the "Shares").
(b) On the date of this Agreement, there are One Thousand (1,000) Shares issued and outstanding, of which two hundred (200) Shares are owned by NMHG and Eight Hundred (800) Shares are owned by GECC.
(c) NMHG agrees to purchase twenty percent (20%) and GECC agrees to purchase eighty percent (80%) of the number of Shares issued by the Corporation at any time.
3. ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) After giving effect to the initial capitalization of the Corporation as described in Section 2(b) above, and subject to the debt/equity limitations set forth in Section 3(b) below, when, as and if needed (whether on the basis of actual or reasonably forecasted investments to be made) by the Corporation, NMHG and GECC agree to make additional capital contributions to the Corporation, which when added to all previous capital contributions, will not, without the consent of NMHG, exceed an aggregate capitalization of One Hundred Million Dollars ($100,000,000.00). Each such contribution to capital
shall be made twenty percent (20%) by NMHG and eighty percent (80%) by GECC, but neither NMHG nor GECC shall be required to pay its proportion of any such contribution if the other does not pay its proportion thereof. Such additional capital contributions shall be payable in full to the Corporation upon receipt of written notice from GECC requesting such capital contributions. Subject to the provisions of the second sentence of this Section 3(a), it is agreed that GECC shall advance to the Corporation on behalf of NMHG any such additional capital contribution that may be required from NMHG, and NMHG shall pay to GECC on the first day of January, April, July and October the aggregate unpaid amount of any such advances together with interest thereon from the date of such advance by GECC to the Corporation until paid in full at a floating rate equal to the lesser of (i) the Operating Fund Rate (as defined in the Financing Agreement) or (ii) the highest rate not prohibited by applicable law. No additional Shares of the Corporation may be issued in return for any additional capital contributions; PROVIDED, HOWEVER, that if any additional Shares are being issued, then such Shares shall be issued to both NMHG and GECC in proportion to such additional capital contributions.
(b) It will be the financial policy of the Corporation to maintain a Debt/Equity Ratio of approximately 15:1 or such higher ratio as may be agreed to by GECC and NMHG from time to time. As used in this Agreement, the term "Debt/Equity Ratio" shall mean a ratio calculated as follows:
The numerator shall equal the principal amount of the Debt of the Corporation, plus interest accrued thereon; and the denominator shall equal the shareholders equity shown on the Corporation's most recent audited financial statements (adjusted to reflect increases or decreases in shareholders' equity that may have occurred since the date of such most recent audited financial statements).
As used in this Agreement, the term "Debt" shall mean all obligations for borrowed money of the Corporation and shall include, but not be limited to any borrowings by the Corporation from GECC.
4. FISCAL YEAR.
The fiscal year of the Corporation shall end on the last day of December.
5. MANAGEMENT OF THE CORPORATION.
(a) BOARD OF DIRECTORS. GECC and NMHG agree that the By-Laws of the Corporation shall at all times provide for a Board of Directors consisting of seven (7) persons, each of whom shall be an employee of either GECC or NMHG, or an employee of an affiliate of either GECC or NMHG. NMHG and GECC each agrees to vote all of the Shares of the Corporation owned or held of record by it at any time so as to elect, and thereafter for the term of this Agreement to continue in office, a Board of Directors consisting of four (4) persons designated by GECC (the "GECC Directors"), including the chairperson, and three (3) persons designated by NMHG (the "NMHG DIRECTORS"). The Board will determine appropriate levels of synergy and differentiation between the
programs offered by the two brand marketing subsidiaries. The Board of Directors will meet not less often than annually, and in any event ,within two weeks of any submission to the Board of Directors for resolution as contemplated by this Agreement.
(b) EXECUTIVE COMMITTEE. NMHG and GECC agree that the By-Laws of the Corporation shall at all times provide for an Executive Committee consisting of five (5) persons, three (3) of whom shall be GECC Directors (or GECC employees appointed by the GECC Directors to serve in their stead) and the other two shall be NMHG Directors (or NMHG employees appointed by the NMHG Directors to serve in their stead). The Executive Committee shall have such powers (including, without limitation, powers with respect to those matters specified in Section 5(g) below) as shall be granted to it by the Board of Directors. A quorum for all meetings of the Executive Committee shall require attendance of both members thereof designated by NMHG, and all actions to be taken by the Executive Committee must be (i) approved by the unanimous consent of the members and (ii) recorded in writing to be made available to the Board of Directors. The Executive Committee will meet not less often than biannually, and in any event within one week of any submission to the Executive Committee for resolution as contemplated by this Agreement.
(c) OFFICERS. NMHG and GECC agree that the By-Laws of the Corporation shall at all times provide for the following officers: a President, an Executive Vice President, Vice Presidents, a Treasurer, a Secretary and Assistant Secretaries. Subject to confirmation by the Board of Directors, four Vice Presidents (other than the Executive Vice President) will be designated by the NMHG Director ("NMHG OFFICERS"), and all other officers will be designated by the GECC Directors ("GECC OFFICERS"). NMHG and GECC will each instruct the Director(s) designated by it to confirm the Officers designated by the other parties.
(d) STEERING COMMITTEES. The By-Laws of the Corporation shall provide for separate Steering Committees, one each for Yale and Hyster, consisting of four persons each, two of whom shall be NMHG Officers, as applicable, and two of whom shall be GECC Officers. Subject to confirmation by the Board of Directors, the NMHG Officers on the Steering Committees shall be designated by NMHG, and the GECC Officers on the Steering Committees shall be designated by GECC. The Steering Committees shall have the following duties:
(A) providing input for development of new products;
(B) setting response times;
(C) setting target credit approval rates;
(D) monitoring credit approval target achievement and systems;
(E) providing input for development of automated systems;
(F) staffing and personnel matters; and
(G) reviewing competitiveness and adequacy of financing program rates.
NMHG and GECC will each agree that it will instruct the Director(s) designated by it to confirm the Steering Committees Members designated by the other. Either Steering Committee, by the vote of any two of its members, may refer any matter to the Executive Committee for review and resolution, which matter will be considered and resolved by the Executive Committee within two weeks of such referral.
(e) STATUS OF DIRECTORS AND OFFICERS. All directors and officers of the Corporation will be employees of either NMHG or GECC, or employees of an affiliate of NMHG or GECC, and said directors and officers shall remain participants in any retirement or pension plan, insurance, medical or other employee benefit plans of NMHG or GECC, or any such affiliate, as the case may be; it being understood and agreed that the Corporation will not have any employees and shall not be required to adopt, or maintain in force, any such employee benefit plans.
(f) COMPENSATION OF DIRECTORS AND OFFICERS. No director or officer of the Corporation shall be entitled to any compensation from the Corporation in consideration of any services that may be from time to time rendered to the Corporation.
(g) SUPER-MAJORITY PROVISIONS IN BY-LAWS. NMHG and GECC agree that the By-Laws of the Corporation shall at all times provide that any action to be taken by the Corporation on any of the matters listed in this Section 5(g) below must be approved by either the affirmative vote of the entire Board of Directors or the unanimous consent of NMHG and GECC:
(i) entry into any business other than providing the financial
services to the Dealers and the Customers as described in
Section 1(b) above;
(ii) approving each annual budget, each annual operational plan and major variances to each such plan, approving annual financial statements, and any declaration of dividends other than those which are not in excess of current year's earning or those under Section 15(b) hereinbelow;
(iii) guaranteeing the indebtedness or other obligation of any person or entity;
(iv) borrowing any funds (except from GECC);
(v) pledging, mortgaging or otherwise encumbering any assets (tangible or intangible) as security for loans or otherwise;
(vi) acquiring or disposing of any assets, or otherwise entering into any commitment, contract or transaction, other than in the normal course of business;
(vii) merging or consolidating with or into any other entity;
(viii) liquidating or dissolving other than in accordance with the terms and conditions of this Agreement;
(ix) except as otherwise provided in Section 3 above, issuing any new shares or increasing the authorized capital stock of the Corporation, or repurchasing any of the capital stock of the Corporation, or entering into any agreement for the sale, purchase or transfer of any of the shares of the Corporation; or
(x) amending or otherwise modifying the Certificate of Incorporation or By-Laws of the Corporation;
(xi) the grant of any power to the Executive Committee or the Steering Committees; or
(xii) establishing any committee of the Board of Directors, other than the Executive Committee and Steering Committees, or creating or altering the powers and/or responsibilities of any committee of the Board of Directors.
(xiii) approving any accounting records and reports maintained and prepared in accordance with Section 10 hereof.
(h) REMOVAL OF DIRECTORS OR OFFICERS. If at any time NMHG or GECC shall notify the other party that the notifying party desires any director of the Corporation designated by it to be removed as a director, the other party agrees that it will take all action necessary in order to cause the removal of such director. If at any time either NMHG or GECC shall notify the other party that the notifying party desires that any officer of the Corporation designated by it be removed as an officer of the Corporation, the other party agrees that it will take all action necessary in order to cause the removal of such officer.
(i) VACANCIES. Whenever any vacancy on the Board of Directors is to be filled, the party who designated the individual formerly occupying such directorship shall be entitled to designate a successor to fill such vacancy and the other party hereto agrees to take such action as is necessary to cause such individual to be elected as a member of the Board of Directors. Whenever any vacancy occurs with respect to any officer of the Corporation, the party who designated the individual formerly occupying such position shall be entitled to designate a successor to fill such vacancy, subject to confirmation by the Board of Directors, and the other party hereto agrees to take such action as is necessary to cause such individual to be elected as an officer, and to instruct the Director(s) designated by it to confirm the designation of the successor to such position.
6. SERVICE AND FINANCING AGREEMENTS.
On or after the date upon which this Agreement commences, NMHG and GECC agree to cause the Corporation to enter into the following restated and amended agreements ("Other Agreements"):
(i) a Financing Agreement with GECC in the form of EXHIBIT D hereto ("Financing Agreement");
(ii) an Administrative Services Agreement with GECC in the form of EXHIBIT E hereto ("Administrative Services Agreement");
(iii) a Tax Allocation Agreement with GECC in the form of EXHIBIT F hereto ("Tax Allocation Agreement"; the Financing Agreement, Administrative Services Agreement and Tax Allocation Agreement being collectively referred to as the "Other GECC Agreements");
(iv) a Remarketing Services Agreement with NMHG in the form of EXHIBIT G hereto ("Remarketing Agreement"); and
(v) a Recourse and Indemnity Agreement with NMHG in the form of EXHIBIT J hereto ("Recourse Agreement"; the Remarketing Agreement and the Recourse Agreement being collectively referred to as the "Other NMHG Agreements").
To the extent that any term or provision of this Agreement is in conflict with any term or provision of the Other GECC Agreements or Other NMHG Agreements, the terms and provisions of such Other Agreements shall prevail.
7. NMHG OBLIGATIONS.
(a) Subject to the provisions of Section 30 hereinbelow, NMHG shall
have primary responsibility for communicating with the Dealers and the Customers
with respect to marketing the financial services of the Corporation (including,
without limitation, training Dealer sales personnel on the use of financing as a
major sales tool, providing the Dealer from time to time with finance rates and
factors approved by the Corporation, assisting the Dealers in closing major
financing transactions, establishing and administering Dealer credit lines with
respect to Wholesale Financing, scheduling Dealer floor plan audits, collections
follow-up with Dealers in default under Wholesale Financing arrangements and
generally promoting the Wholesale Financing and Retail Financing offered by the
Corporation as an alternative source of financing to the Dealers and the
Customers). All costs and expenses related to the provision of such services by
NMHG shall be reimbursed to NMHG by the Corporation pursuant to the terms of
Section 17(a) below. Anything in the first sentence of this Section 7(a)
notwithstanding, NMHG shall not make any commitment of any kind whatsoever
(written, verbal, implied or otherwise) on behalf of GECC, and NMHG shall not
make any commitment of any kind whatsoever (written, verbal, implied, or
otherwise) on behalf of the Corporation unless such commitment is specifically
authorized by the Board of Directors of the Corporation
or is within the scope of authority delegated to either of the Steering Committees of the Corporation and such commitment is approved specifically or generically by any such Steering Committee. NMHG hereby agrees to indemnify, defend and hold harmless GECC, the Corporation and their respective successors and assigns, from and against any and all claims, suits, actions, judgments, losses, costs and expenses (including, without limitation, reasonable attorneys' fees) arising out of or in connection with, directly or indirectly, any breach by NMHG of its obligations under the immediately preceding sentence.
(b) NMHG agrees to provide information to the extent that GECC requires such information to perform its obligations hereunder or under any of the Other Agreements, at all times during the term hereof.
8. GECC OBLIGATIONS.
(a) GECC agrees to support, assist and cooperate with NMHG in
marketing the financial services of the Corporation to the Dealers and the
Customers. All costs and expenses related to the provision of such services by
GECC shall be reimbursed to GECC by the Corporation pursuant to the terms of
Section 17(a) below.
(b) GECC agrees to provide information to the extent that NMHG requires such information to perform its obligations hereunder or under any of the Other Agreements.
(c) Anything in this Section 8 notwithstanding, GECC shall not make any commitment of any kind whatsoever (written, verbal, implied or otherwise) on behalf of NMHG unless such commitment is specifically authorized in writing by NMHG. GECC hereby agrees to indemnify, defend and hold harmless NMHG and its respective successors and assigns, from and against any and all claims, suits, actions, judgments, losses, costs and expenses (including, without limitation, reasonable attorneys' fees) arising out of or in connection with, directly or indirectly, any breach by GECC of its obligations under the immediately preceding sentence.
9. PROFITABILITY CRITERIA.
(a) The goal of the Corporation is to earn an after tax return on its equity ("ROE") of at least fourteen percent (14%) per annum for each full calendar year throughout the term of this Agreement. For purposes of this Agreement, ROE shall be computed as follows: annualized net income divided by average shareholders' equity and determined in accordance with generally accepted accounting principles. All performance criteria will be reviewed at least every twelve (12) calendar months to ensure that NMHG and GECC are satisfied.
10. ACCOUNTING RECORDS.
(a) It shall be the responsibility of GECC to maintain the books,
records and accounts of the Corporation pursuant to the same accounting
principles which GECC uses for its own accounts. Annual Reports for the
Corporation shall be provided to NMHG by GECC within one-hundred and twenty
(120) days after the close of each calendar year.
(b) NMHG shall have the right to examine and inspect, at any and all times during normal business hours, the books, records and accounts of the Corporation, and GECC shall make available to NMHG appropriate personnel to answer any questions related thereto. Such books, records and accounts shall be maintained by GECC at such location as GECC may from time to time choose; provided however that the choice of such location shall be subject to the consent of NMHG, which consent shall not be unreasonably withheld. GECC and NMHG each acknowledges that such books, records and accounts shall be and remain the property of the Corporation.
11. REPRESENTATIONS AND WARRANTIES.
(a) GECC hereby represents and warrants to NMHG as follows:
(i) GECC has been duly and validly organized, and is a validly existing corporation, under the laws of the State of New York with full power and authority to enter into this Agreement and to perform its obligations hereunder.
(ii) This Agreement has been duly authorized, executed and delivered by GECC and constitutes GECC's valid and binding agreement, enforceable against GECC in accordance with its terms.
(iii) GECC is not a party to, or threatened with any suit, action, arbitration, administrative or other proceeding or governmental investigation which might materially and adversely affect GECC, this Agreement, or any of the transactions contemplated hereby, and there is no judgment, decree, award or order outstanding against GECC which might
materially and adversely affect GECC, this Agreement, or any of the transactions contemplated hereby.
(iv) The execution and delivery of this Agreement, the consummation of the transactions provided for herein, and the fulfillment of the terms of this Agreement by GECC (A) will not result in the breach of any of the terms and provisions of, or constitute a default (after notice, or passage of time, or both) under, or conflict with, any agreement or other instrument by which GECC is bound where such breach, default or conflict would have a material adverse effect on GECC's business or financial condition, (B) will not violate any judgment, decree, order, or award of any court, governmental body, or arbitrator, or any applicable law, rule or regulation where such violation would have a material adverse effect on GECC's business or financial condition, and (C) do not require the consent of any governmental authority.
(b) NMHG hereby represents and warrants to GECC as follows:
(i) NMHG has been duly and validly organized, and is a validly existing corporation, under the laws of the State of Delaware with full power and authority to enter into this Agreement and perform its obligations hereunder.
(ii) This Agreement has been duly authorized, executed and delivered by NMHG and constitutes NMHG's valid and binding agreement enforceable against NMHG in accordance with its terms.
(iii) NMHG is not a party to, or threatened with, any suit, action, arbitration, administrative or other proceeding, or governmental investigation which might materially and adversely affect NMHG, this Agreement, or any of the transactions contemplated hereby, and there is no judgment, decree, award or order outstanding against NMHG which might materially and adversely affect NMHG, this Agreement, or any of the transactions contemplated hereby.
(iv) The execution and delivery of this Agreement, the consummation of the transactions provided for herein, and the fulfillment of the terms of this Agreement by NMHG (A) will not result in the breach of any of the terms and provisions of, or constitute a default (after notice or passage of time, or both) under, or conflict with, any agreement or other instrument by which NMHG is bound where such breach, default or conflict would have a material adverse effect on NMHG's business or financial condition, (B) will not violate any judgment, decree, order, or award of any court, governmental body, or arbitrator, or any applicable law, rule or regulation where such violation would have a material adverse effect
on NMHG's business or financial condition, and (C) do not require the consent of any governmental authority.
12. INDEMNITIES.
Each party agrees to indemnify, defend and hold the other harmless
from, against and in respect of any and all claims, demands, damages suffered,
or losses incurred, by the party to be indemnified as a result of the failure of
any representation or warranty of the indemnifying party, as set forth in
Section 11 hereof, to be true and correct.
13. LITIGATION.
(a) In the event that any litigation and/or claim arising out of the operations conducted under this Agreement or the Other Agreements in which the Corporation, GECC, their subsidiaries and affiliates, or the directors, officers or employees of any of them, is or are involved or potentially will become involved contains solely allegations of product defect or breach of warranty with respect to any NMHG Equipment which is the object of financing provided by the Corporation, NMHG, subject to Section 14(c) hereof, will have sole control of the prosecution or defense of such claim, litigation or potential litigation. NMHG shall prepare a report for the Corporation and GECC each month of such litigation and/or claims. Such report shall include the style of the suit, the nature of the claim, the damages sought and the status of each suit.
(b) In the event that any litigation and/or claim arising out of the operations conducted under this Agreement or the Other Agreements in which the Corporation, GECC, their subsidiaries and affiliates, or the directors, officers or employees of any of them, is or are involved or potentially will become involved contains solely allegations other than of product defect or breach of warranty with respect to any NMHG Equipment, GECC, subject to Section 14(c) hereof, will have sole control of the prosecution or defense of such claim, litigation or potential litigation. GECC shall prepare a report for the Corporation and NMHG each month of such litigation and/or claims. Such report shall include the style of the suit, the nature of the claim, the damages sought and the status of each suit.
(c) The provisions of Sections 14(a) and 14(b) to the contrary
notwithstanding, in the event that (i) any claim or litigation arising out of
operations conducted under this Agreement or the Other Agreements in which the
Corporation, GECC, their subsidiaries or affiliates, or the directors, officers
or employees of any of them, is or are involved or potentially will become
involved exceeds $100,000 (with respect to the amount of the claim or demand) or
(ii) any claim or litigation contains both (A) allegations of product defect or
breach of warranty with respect to any NMHG Equipment and (B) allegations other
than product defect or breach of warranty with respect to any
NMHG Equipment, both NMHG and GECC shall be entitled to participate in the
prosecution and defense of such claims; PROVIDED, HOWEVER, (i) NMHG shall have
control of the prosecution or defense of any claims involving product defect or
breach of warranty with respect to any
NMHG Equipment and (ii) GECC shall have control of the prosecution or defense of all other claims.
(d) In the event that any claim or litigation is subject to indemnity by one party hereto of the other whether under this Agreement or any other agreement, the indemnitor shall have sole control of the litigation thereof (including the negotiation and consummation of any settlement of such claim or of such litigation); PROVIDED, HOWEVER, that the indemnitor acknowledges in writing to the indemnitee(s) its obligation to indemnify with respect to all claims set forth in such litigation and advises in reasonable detail in writing the terms and conditions of any such proposed settlement.
(e) In the event that NMHG and GECC are unable to agree to the applicability of any indemnification provision under this Agreement or any other agreement in connection with any such claim or litigation, then such matter shall only be settled upon terms and conditions satisfactory to both NMHG and GECC.
(f) The Corporation shall bear all outside legal costs and expenses (including, without limitation, attorneys' fees) arising from the prosecution or defense of any claim or litigation by or against the Corporation, its directors, officers or employees, as well as any compromise or settlement thereof, unless such claim or litigation is subject to indemnity by one party hereto whether under this Agreement or any other agreement and, in that case, the indemnitor shall bear all outside legal costs and expenses (including, without limitation, attorneys' fees) arising therefrom or from any compromise or settlement thereof.
14. TERM AND TERMINATION.
(a) This Agreement shall be effective upon the execution and delivery hereof, shall remain in full force and effect until December 31, 2002 (the "Base Term") unless sooner terminated as hereinafter provided, and will automatically renew for additional periods of one year (each a "Renewal Term") unless either party at any time not less than 180 days prior to the end of the Base Term or any Renewal Term notifies the other that the notifying party will not renew this Agreement, in which event this Agreement will expire at the end of such Base Term or Renewal Term. Anything herein to the contrary notwithstanding, either party shall have the right to terminate this Agreement without cause during any Renewal Term upon at least 180 days prior written notice to the other party.
(b) Notwithstanding anything to the contrary contained in Section
14(a) hereof, this Agreement may be terminated during the Base Term or any
Renewal Term for "cause" (x) upon five days prior written notice by either party
to the other in the case of events specified in clauses (i) and (ii) below, and
(y) upon 30 days prior written notice by either party to the other in the case
of events specified in clauses (iii), (iv), (v) and (vi) below and failure to
cure the default or event within such period. "Cause" shall be defined as
follows:
(i) dissolution or liquidation of the other party or the Corporation;
(ii) insolvency of the other party or the Corporation or the voluntary institution by the other party or the Corporation of any proceeding under any statute of any governmental authority for the relief of debtors, seeking relief from or readjustment of its indebtedness, either through reorganization, composition, extension or otherwise, or the involuntary institution against the other party or the Corporation of any such proceeding which is not vacated within sixty days from the institution thereof, or the appointment of a receiver, custodian or other officer having similar powers for the other party or the Corporation or for the other party's or the Corporation's business who is not removed within sixty days after such appointment;
(iii) any breach or violation by the other party of any obligation contained in this Agreement (including, without limitation, the exclusivity provisions of Section 19 hereof), or in any other agreement between such party and the Corporation or the other party hereto, which breach or violation is not corrected within thirty (30) days after written notice thereof; or
(iv) if the Corporation shall fail to achieve the minimum goal set forth in Section 9(a) hereof, unless both parties hereto agree to take such actions as may be mutually satisfactory to achieve such minimum goals within the next year and at all times thereafter.
(v) if the Corporation shall fail to meet any applicable Target Approval Rates as may be mutually agreed to by NMHG and GECC, from time to time pursuant to the provisions as set forth in Section 31 hereof, unless both parties hereto agree to take such actions as may be mutually satisfactory to achieve such minimum approval rates within the next year and at all times thereafter.
(vi) if the parties hereto shall fail to meet the provisions of the timetable set forth in Section 32 hereof.
(c) If this Agreement terminates for any reason whatsoever, the obligations of either party hereto under this Agreement and the Other Agreements shall not be affected or impaired in any manner except as specifically provided for in such agreements. NMHG and GECC agree to take such action as may be necessary to cause the Corporation to cease providing any new Wholesale Financing, Retail Financing or other financing after the effective date of the termination (including, but not limited to, calling, terminating or otherwise canceling any Wholesale Financing, Retail Financing or other financing as of such date to the extent legally permitted). NMHG and GECC further agree that, upon the effective date of such termination, they will cause the Corporation to immediately wind up its business and affairs and shall proceed to liquidate and dissolve the Corporation. Such liquidation and dissolution shall be achieved through an orderly
program calculated to protect the interests of each of NMHG and GECC and shall take place over a period of time not to exceed the unexpired term of any contract for financing provided by the Corporation outstanding on the effective date of termination (which contract cannot legally be called, terminated or otherwise canceled by the Corporation) plus six months. In such event, the parties agree that they will use their best efforts to effect the prompt liquidation and dissolution of the Corporation and to bring about the distribution of the assets of the Corporation in accordance with the provisions of this Agreement. The provisions of this Section 14(c) to the contrary notwithstanding, it is understood by the parties hereto that the Corporation shall not make distributions "in kind" except upon their prior mutual agreement.
15. DISSOLUTION OF VENTURE.
(a) In the event that the Corporation be dissolved and liquidated, the proceeds of such liquidation shall be applied and distributed in the following order of priority, except to the extent otherwise required by applicable provisions of law:
(i) First, to the payment of debts and liabilities of the Corporation (other than any debts and liabilities owed to either of the parties hereto) and the expenses of liquidation;
(ii) Next, to the payment of any debts and liabilities of the Corporation to either of the parties hereto; and
(iii) Finally, the balance of the assets remaining after the distributions set forth under (i) and (ii) above, PRO RATA to the shareholders in accordance with the Shares held by them at the time of distribution.
(b) It is understood that the Corporation shall, from time to time and as available, make interim cash distributions to the parties hereto, PRO RATA to the shareholders in accordance with the Shares held by them at the time of distribution.
16. NMHG'S STOCK OPTION.
(a) The provisions of Section 14(c) to the contrary notwithstanding, upon the termination of this Agreement by GECC for cause, or by NMHG for cause, pursuant to Section 14(b) above, then NMHG shall be entitled, at its sole option, to purchase all, but not less than all, of the Shares of the Corporation held by GECC (the "GECC Shares"), such purchase to be made in accordance with the provisions of this Section 16. In order to exercise its option hereunder (the "Stock Option"), NMHG shall give written notice to GECC to such effect no later than forty-five (45) days after NMHG has given or received written notice of termination of the kinds described above.
(b) The purchase price ("Purchase Price") for the GECC Shares under the Stock Option shall be the "net book value" (as hereinafter defined) of such GECC Shares determined as of the date on which such GECC Shares are purchased and sold (the
"Purchase Date"). For purposes of this Section 16, the "net book value" of the GECC Shares shall be determined by reference to the "net book value of the Corporation" on the Purchase Date. The "net book value of the Corporation" shall be determined in accordance with generally accepted accounting principles and the regular methods and practices used by the Corporation in keeping its books, applied on a consistent basis, except that the following provisions, even though not necessarily consistent with generally accepted accounting principles, shall apply:
(i) Goodwill, trade names, trademark, copyrights and similar intangible assets shall be of no value unless such assets shall have been acquired and paid for in cash and, in such event, the value thereof, if any, shall be taken at the amount paid therefor, less any amortization thereof;
(ii) Fixed assets, if any, consisting of, but not limited to, furniture and fixtures, shall be taken at cost less accumulated depreciation;
(iii) Real estate, if any, shall be stated at the fair market value thereof, as determined by an independent appraiser to be selected by the mutual consent of NMHG and GECC;
(iv) Money-over-money retail contracts and wholesale contracts shall be at the outstanding principal balance thereof, plus all accrued and unpaid interest, late charges and other amounts due thereunder;
(v) True leases shall be at the termination value thereof (as of the rental payment date immediately preceding the Purchase Date) and all rentals, late charges and other amounts under such leases that are due and unpaid as of the Purchase Date;
(vi) Adequate provisions for reserves for federal, state and local taxes shall be accrued and applied as a liability as of the balance sheet date;
(vii) All loss reserves shall be valued at zero;
(viii) Prepaid insurance and other prepaid expenses and charges shall be reflected as prepaid assets as of the balance sheet date; and
(ix) Adequate provisions for accounts payable and any other known liabilities of the Corporation shall be taken as a liability as of the balance sheet date.
(c) On the Purchase Date, NMHG shall make an initial payment ("Initial Payment") to GECC in an amount equal to the estimated "net book value" of the GECC Shares as indicated on the books and records of GECC as of the Purchase Date and shall be paid by wire transfer of immediately available funds to an account designated by GECC.
(d) On or before the date ninety (90) days from the Purchase Date, GECC shall submit to NMHG an unaudited balance sheet of the Corporation dated as of the Purchase Date ("Purchase Date Balance Sheet") which shall be prepared in accordance with generally accepted accounting principles by GECC. If requested by NMHG by written notice delivered to GECC no later than 30 days after the receipt of the Purchase Date Balance Sheet, the independent public accountants regularly engaged by the Corporation will audit (the "Audit"), at NMHG's sole cost and expense, the Purchase Date Balance Sheet. Such Audit shall be conducted in accordance with generally accepted audit standards and shall be sufficient to permit such accountants to render their unqualified opinion to the effect that the original Purchase Date Balance Sheet, or an adjusted Purchase Date Balance Sheet prepared by such accountants ("Adjusted Purchase Date Balance Sheet"), fairly presents the consolidated financial position of the Corporation on the Purchase Date in conformity with generally accepted accounting principles (except as set forth in subsection (b) above) applied on a consistent basis. The Audit shall be final, binding and conclusive on the parties. If NMHG does not request for any reason whatsoever the Audit in the time and manner required by this Section 16(d), then the original Purchase Date Balance Sheet shall be deemed final, binding and conclusive on the parties.
(e) On the date which is the thirtieth (30th) day following the date of delivery to NMHG of the Purchase Date Balance Sheet (or, alternatively, the fifth (5th) business day following the date on which the audit requested pursuant to paragraph (d) above is finalized), the Purchase Price shall be adjusted as follows:
(i) if the Purchase Price pursuant to the Purchase Date Balance Sheet exceeds the Initial Payment, NMHG shall pay to GECC the difference between said amounts (plus interest thereon at the Prime Rate that was in effect on the Purchase Date calculated from the Purchase Date); however
(ii) if the amount of the Initial Payment exceeds the Purchase Price, pursuant to the Purchase Date Balance Sheet, GECC shall pay to NMHG the difference between said amounts (plus interest thereon at the Prime Rate that was in effect on the Purchase Date calculated from the Purchase Date).
As used herein, the "Prime Rate" shall mean the highest rate of interest announced by any member bank of the N.Y. Clearinghouse Association as its prime or base lending rate for commercial loans of short term maturities.
(f) The Purchase Date for the Stock Option shall be on the later of
(i) the effective date of termination of this Agreement or (ii) the expiration
of any waiting period imposed under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, if applicable. On the Purchase Date, NMHG shall pay to GECC
the Purchase Price for the GECC
Shares (determined on the basis of the Purchase Date Balance Sheet but subject to the possibility of a Post-Closing Adjustment). Such payment shall be made by wire transfer of NMHG to GECC against delivery of the GECC Shares in the following manner: certificates representing such Shares shall be endorsed in blank, with signatures guaranteed. THE PURCHASE BY NMHG OF THE GECC SHARES SHALL BE WITHOUT ANY RECOURSE TO, OR REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER BY, GECC, except that (i) GECC has been duly and validly organized, and is a validly existing corporation, under the laws of the State of New York with full power and authority to sell the GECC Shares to NMHG, (ii) the sale of the GECC Shares has been duly authorized by GECC, and (iii) GECC has good and marketable title to the GECC Shares and has the absolute right, power and capacity to sell assign and transfer the GECC shares to NMHG free and clear of any liens, claims and encumbrances arising by, through or under GECC (other than restrictions imposed generally by state and federal securities laws with respect to unregistered securities).
(g) Anything in the foregoing to the contrary notwithstanding, the Stock Option shall be deemed null and void, and GECC shall have no duty or obligation under this Section 16 or otherwise to sell the GECC Shares to NMHG, if such sale would require such GECC Shares or the transaction to be registered under any applicable federal or state securities laws. In connection with any purchase of the GECC Shares pursuant to the Stock Option, NMHG understands and agrees that it will be required to provide GECC with representations and warranties substantially similar to those contained in Section 4.6 of the Stock Purchase Agreement.
(h) In the event that NMHG exercises its Stock Option, NMHG shall, unless GECC has terminated this Agreement without cause, be obligated to reimburse GECC upon demand for all out-of-pocket fees, costs and expenses of any kind whatsoever incurred by GECC in connection therewith and/or in connection with its sale of the GECC Shares to NMHG (including, without limitation, any fees and disbursements of outside counsel or outside accountants and any costs related to the prepayment of any debt incurred by GECC as a result of its obligations under the Financing Agreement).
17. STAFFING AND ORGANIZATION EXPENSES.
(a) NMHG shall initially supply frontroom personnel (frontroom personnel are those that primarily dedicate their time to working on Wholesale and Retail Financing prior to closing and booking) to both the Hyster and Yale divisions of the Corporation to the extent of a total of 20 personnel, which personnel shall compromise the following positions: managers, field representatives, account representatives, wholesale administrators and administrative assistants. All salary, benefits and other employee costs for such NMHG supplied personnel will not exceed $1.8 million in the first calendar year and will be charged to the Corporation. To the extent that GECC supplies frontroom personnel, all salary, benefits and other employee costs for such GECC supplied personnel will not exceed $1.5 million in the first calendar year and will be charged to the Corporation. All such personnel (whether supplied by NMHG or GECC) will be fully dedicated to the Corporation. Frontroom staffing, and the costs associated therewith, for the period following the first year of operation under this Agreement shall be mutually agreed upon by the parties from time to time based on the needs of the Corporation. Frontroom locations will be at Hyster and Yale brand headquarters and/or such other location(s) designated by Hyster and Yale, respectively.
(b) GECC shall perform all administrative responsibilities with respect to all Wholesale and Retail Financing entered into by the Corporation pursuant to the terms of the Revised and Restated Administrative Services Agreement attached hereto as Exhibit E.
(c) The Corporation will pay all reasonable external, out-of-pocket expenses incurred by NMHG and GECC in connection with the establishment of the Corporation, the qualification and licensing of the Corporation and preparation of the documentation for Wholesale and Retail Financing; provided, however, that the specific type of out-of-pocket expenses to be borne by the Corporation are mutually agreed to by GECC and NMHG in writing.
(d) The Corporation will pay or reimburse all external, out-of-pocket expenses incurred by NMHG and/or GECC in connection with the design, creation and publication of financing and remarketing literature, bulletins, price sheets and promotional literature, provided, however, that the specific type of out-of-pocket expenses to be borne by the Corporation are mutually agreed to by GECC and NMHG in writing.
18. TRADEMARKS.
(a) GECC hereby waives any right, title and interest in and to the trade names "NMHG", "NMHG Financial Services", "Hyster Credit" and "Yale Financial Services", as well as any and all variations thereof, and the related trademarks. NMHG hereby grants to GECC, on the same basis as NMHG has already granted to the Corporation under the Tradename Agreement, the right to use the tradenames "NMHG", "NMHG Financial Services", "Hyster Credit" and "Yale Financial Services" and the related trademarks in
connection with the performance of GECC's obligations hereunder or under any of the Other Agreements.
(b) NMHG hereby waives any right, title and interest in and to the trade names "General Electric Company", "GE", "General Electric Capital Corporation" and "GECC", as well as any and all variations thereof, and the related service marks and trademarks.
19. EXCLUSIVITY.
(a) As to GECC, GECC will endeavor to not enter into any other significant financing program arrangements with NMHG Competitors. GECC shall additionally endeavor not to develop any business unit whose primary function is to finance forklift trucks. For the purposes of this paragraph the term "NMHG Competitors" shall be as set forth on Exhibit H attached hereto which shall be amended from time by mutual agreement of the parties hereto.
(b) AS TO NMHG. NMHG will endeavor to not solicit, or enter into, any Retail or Wholesale Financing (or enter into any partnership, joint venture or other arrangement with any other party to provide any of the foregoing) for either NMHG or Allied Equipment, except that NMHG may make equity investments in, or general loans and other extensions of credit to or for the benefit of, Dealers from time to time which may be secured by general liens on inventory, receivables, equipment and other assets of the Dealer.
20. CONFIDENTIALITY.
All information with respect to the Corporation, NMHG or GECC, or with respect to the business, operations, products and customers of the Corporation, NMHG or GECC, shall be kept confidential and shall not be disclosed to third parties, except for (i) any disclosures required by law or required to be made to any governmental agencies, or (ii) with respect to the Corporation, any disclosures to its independent certified public accounting firm or to other persons or entities that may need to know for the purpose of the business or operations of the Corporation, or (iii) any disclosures of information that was in the public domain at the time of receipt or subsequently comes into the public domain (other than as a result of an unauthorized disclosure), or (iv) disclosures of the type that are customary in the ordinary course of business (e.g., the terms of financing available from the Corporation).
21. WAIVER.
Waiver by any party hereto of any breach or default by any other party of any of the terms and conditions of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived.
22. NOTICES.
Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
TO NMHG:
NACCO Materials Handling Group, Inc.
650 NE Holladay Street
Suite 1600
Portland, Oregon 97232
Attn: General Counsel
TO GECC:
General Electric Capital Corporation
44 Old Ridgebury Road
Danbury, CT 06810
Attention: Edward Simoneau
Either party hereto may change the address to which each such notice or communication shall be sent by giving written notice of such change of address to the other party hereto in the manner above stated.
23. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement (along with the attached Exhibits) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, representations and agreements made by and among the parties with respect thereto. No alteration, amendment, assignment or modification of any of the terms or provisions of this Agreement shall be void unless made pursuant to an instrument in writing signed by each of the parties hereto; provided that the waiver by either party hereto of compliance with a provision hereof or of any breach or default by the other party hereto need be signed only by the party waiving such provision, breach or default.
24. ADOPTION BY CORPORATION; LEGEND ON CERTIFICATES.
(a) Each of NMHG and GECC agrees that it will consent to and approve any amendment to the Certificate of Incorporation or By-Laws of the Corporation which may be necessary or advisable in order to conform to any of the provisions of this Agreement or any amendments hereto to the applicable laws of the State of Delaware as now or hereafter enacted, including, without limitation, the General Corporation Law of the State of Delaware. Each party further agrees to vote its Shares in the Corporation and to
execute and deliver such documents as may be necessary in order to implement the provisions of the preceding sentence.
(b) The certificates representing the Shares shall have endorsed upon them the following legend:
The sale, assignment, transfer, pledge, encumbrance or hypothecation of the Shares represented by this Certificate are subject to compliance with the terms and conditions of a Joint Venture and Shareholders Agreement, dated November 8, 1989, as amended and restated on April 15, 1998 by and between NMHG Materials Handling Corporation and General Electric Capital Corporation, a copy of which is on file at the offices of the Corporation.
25. COUNTERPARTS.
This Agreement may be executed in any number of counterparts each of which shall be an original, but all of which taken together shall constitute one and the same instrument.
26. SUCCESSORS AND ASSIGNS.
Neither party hereto may sell, assign, transfer, pledge, encumber or hypothecate any of its rights or obligations hereunder or any Shares without the prior written consent of the other party hereto. Any attempted sale, assignment, transfer, pledge, encumbrance or hypothecation in violation of this Section shall be void and of no force and effect. All of the terms and provisions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto.
27. SECTION HEADINGS.
All of Sections, subsections and clauses contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
28. GOVERNING LAW AND ARBITRATION.
This Agreement shall be construed and enforced in accordance with the laws of the State of New York. Any and all disputes, controversies or claims arising out of, or relating to, this Agreement or any of the Other Agreements shall be determined by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The number of arbitrators shall be three. One arbitrator each shall be appointed by NMHG and GECC respectively, and the third arbitrator, who shall serve as chairman of the tribunal, shall be appointed by the American Arbitration Association. The place of arbitration shall be New York City. The language of the arbitration shall be English and any arbitral award arising from any arbitration pursuant to this paragraph
shall be final and binding upon all parties hereto and no party shall seek recourse to a court of law or other authorities to appeal for revision of such decision or any other ruling of the arbitrator. The cost of the arbitration shall be borne by the party who does not prevail in the arbitration proceeding or as is otherwise decided by the arbitration panel. The question of whether a dispute is governed by this arbitration clause shall itself be determined by arbitration.
29. SEVERABILITY OF PROVISIONS.
If any covenant or other provision of this Agreement is invalid, unlawful, or incapable of being enforced by reason of any rule of law or public policy, all other covenants and provisions of this Agreement which can be given effect without the invalid, unlawful or unenforceable provision shall, nevertheless, remain in full force and effect, and no covenant or provision shall be deemed dependent upon any other covenant or provision unless so expressed.
30. ADVERTISING.
Without the prior written consent of the other party hereto, neither NMHG nor GECC shall advertise in any manner the financial services of the Corporation (whether by written brochure, newspaper advertisement, radio commercial, television commercial or otherwise), even if such advertisement is intended solely for the Dealers and the Customers, except that NMHG may advertise the financial services of the Corporation without mentioning GECC and without the consent of GECC, but, if NMHG does so without the prior written consent of GECC, NMHG shall be solely responsible for any costs or liabilities arising from any such advertisement.
31. TARGET APPROVAL RATES.
GECC will use its best efforts to coordinate with NMHG to initially determine mutually acceptable standards for the approval of Customers for proposed Yale and Hyster Retail Financings ("Target Approval Rates"). Target Approval Rates shall be reviewed by each of the Yale and Hyster Steering Committees annually with their recommendations being submitted to the Board of Directors. Target Approval Rates applicable to any calendar year following the end of the calendar year in which this Agreement is executed shall be set by the Board of Directors at the Annual Meeting of the Board of Directors for such calendar year.
32. TIMETABLE.
GECC and NMHG will mutually commit to work together to achieve the following schedule for implementation of the terms of this Agreement and the related International Operating Agreement:
(a) TWO MONTH TIME FRAME. Within two (2) months after the date upon which this Agreement shall become effective ("Effective Date"):
(i) GECC will provide full and workable Retail and Wholesale Financing structures for the U.S. and Phase One Countries.
(ii) GECC and NMHG will develop mutually acceptable Target Approval Rates pursuant to the terms of Section 31 hereof to be operational for the U.S. and for all Phase One Countries.
(iii) GECC and NMHG will cooperate to ensure that all legal requirements for operations under this Agreement and in the Phase One Countries are met, marketing literature is produced, Wholesale and Retail documentation is printed, Wholesale and Retail rates are set and relevant personnel are appointed.
(iv) GECC must ensure that the Corporation and any applicable GECC affiliates or subsidiaries have the legal, financial and operational capacity to provide commercially acceptable financing in the U.S. and Phase One Countries.
(b) PHASE TWO COUNTRIES TIME FRAME. Within six (6) months after the Effective Date, GECC and NMHG shall ensure that all of the requirements set forth in subparagraphs (a)(i), (ii) (iii) and (iv) are met with respect to all Phase Two Countries.
(c) PHASE THREE COUNTRIES TIME FRAME. Within twelve (12) months after the Effective Date, GECC and NMHG shall ensure that all of the requirements set forth in subparagraphs (a)(i), (ii) (iii) and (iv) are met with respect to all Phase Three Countries.
(d) PHASE FOUR COUNTRIES. GECC and NMHG shall ensure that all of the requirements set forth in subparagraphs (a)(i), (ii) (iii) and (iv) are met with respect to all Phase Four Countries within the time frame agreed to by the parties.
(e) With respect to this Section 32, the terms "Phase One Countries", "Phase Two Countries", "Phase Three Countries" and "Phase Four Countries" shall be defined as follows:
(i) Phase One Countries shall be Canada, the United Kingdom, Germany and France.
(ii) Phase Two Countries shall be Australia, Brazil, Chile, The Netherlands, Mexico and Spain.
(iii) Phase Three Countries shall be Argentina, Poland, Hungary, Czech Republic, Italy, Malaysia and Taiwan.
(iv) Phase Four Countries shall be any other countries mutually agreed upon by GECC and NMHG.
33. PARTICIPATION FEE.
In consideration for the referral by NMHG to the Corporation of Tax Leases for Hyster and Yale forklift trucks, the Corporation shall pay to NMHG an annual "PARTICIPATION FEE". During the term of this Agreement, the Participation Fee will be paid to NMHG within sixty (60) days of the close of any calendar year and shall be based on the aggregate volume of Tax Leases related to Hyster and Yale forklift trucks booked by the Corporation in such calendar year. The calculation of the Participation Fee shall be done in the manner as set forth in Exhibit I (attached hereto). For the purposes of this Section 33, the term "Tax Lease" shall mean any financial transaction which is in the form of a lease or rental agreement under which the Corporation is the lessor, and owner for Federal income tax purposes, of the Equipment leased thereunder.
34. COMPETITIVENESS.
Both GECC and NMHG will use their best efforts to ensure that the Corporation offers products which are competitive within the U.S. market. The Company shall provide to Dealers and Customers (as the case may be) financing at the following rates:
(i) For Wholesale Financing, the interest rate shall not exceed 50 Basis Points over the Prime Rate where (x) the Prime Rate shall mean the per annum rate of interest announced, from time to time, by The First National Bank of Chicago (or such other major banking institution as chosen by the Company) as its "corporate base rate" and (y) the term Basis Point shall mean one hundredth (100th) of one percent (1%);
(ii) For Retail Financing, the interest rate shall not exceed 325 Basis Points over the then applicable interest rate of Treasury Bills offered for terms similar or identical to the term of each applicable Retail Financing. For each Retail Financing, an interest rate quote to any Customer shall be valid for a term equal to the earlier of thirty days from such quote or the end of a calendar year and, for a Retail Financing transaction approved by the Company, the applicable interest rate will be effective for a term equal to the earlier of ninety days from such approval or the end of a calendar year.
35. CONDITION PRECEDENT.
This Agreement shall not be effective unless and until that certain Third Amended and Restated Operating Agreement between Hyster Company and Hyster Credit Corporation dated as of November 21, 1985, as amended and restated as of December 19, 1985 (the "AT&T Agreement") is terminated and all transactions after such termination date which would have been subject to the terms of said AT&T Agreement are referred to the Corporation.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the day and year first above written.
NACCO MATERIALS HANDLING
GROUP, INC.
By: /s/ Reginald R. Eklund
-------------------------------------
Title: President
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GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Christopher H. Richmond
-------------------------------------
Title: Vice President and General Manager
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Exhibit 10.6
Amendment No. 1 to
the Restated and Amended Joint Venture and Shareholders Agreement Between General Electric Capital Corporation and NACCO Material Handling Group, Inc. Dated April 15, 1998
WHEREAS, General Electric Capital Corporation ("GECC") and NACCO Materials Handling Group, Inc ("NMHG") each have determined that it is in their best interest to make certain amendments to the above-captioned Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the above premises and mutual covenants contained hereinbelow, the parties hereto hereby agree that as of October 21, 1998, the Agreement is hereby amended as follows:
1. All references to "Hyster Credit" in the Agreement shall be deleted in their entirety and shall be replaced by the term "Hyster Capital".
2. Section 17(a) shall be deleted in its entirety and the following shall be substituted in its stead:
(a) NMHG shall initially supply frontroom personnel (frontroom personnel are those that primarily dedicate their time to working on Wholesale and Retail Financing prior to closing and booking) to both the Hyster and Yale divisions of the Corporation to the extent of a total of 20 personnel, which personnel shall compromise the following positions: managers, field representatives, account representatives, wholesale administrators and administrative assistants. For the calendar year 1999, all salary, benefits and other employee costs for such NMHG supplied personnel will not exceed $1.8 million in the first calendar year and will be charged to the Corporation; PROVIDED HOWEVER, that in the event that the total amount of Retail Financing booked by the Corporation in calendar year 1999 is less than US$220,000,000 (the "1999 Required Retail Volume"), then the amount of total NMHG expenses to be charged to the Corporation shall be reduced by a fraction equal to the actual volume of Retail Financing booked in 1999 over the 1999 Required Retail Volume. To the extent that GECC supplies frontroom personnel, for the calendar year 1999, all salary, benefits and other employee costs for such GECC supplied personnel will not exceed $1.5 million in the first calendar year and will be charged to the Corporation. All such personnel (whether supplied by NMHG or GECC) will be fully dedicated to the Corporation. Frontroom staffing, and the costs associated therewith, for the period following the calendar year 1999 shall be mutually agreed upon by the parties from time to time based on the needs of the Corporation; PROVIDED HOWEVER, that in the event that, in the event that the Third Amended and Restated Operating Agreement between Hyster Company and Hyster Credit Corporation dated as of November 21, 1985, as amended and restated as of December 19, 1985 (the "HCC Agreement") is not terminated prior to January 1, 2000, the "2000 Required Retail Volume" shall be equal to US$253,000,000 and the NMHG expenses charged to the Corporation for calendar year 2000 shall be reduced accordingly for any failure to achieve said Required Retail Volume in the calendar year 2000. Frontroom locations will be at Hyster and Yale brand headquarters and/or such other location(s) designated Hyster and Yale, respectively.
3. Section 19(b) shall be deleted in its entirety and the following shall be substituted in its stead:
(b) AS TO NMHG. NMHG will endeavor not to solicit, or enter into, any Retail or Wholesale Financing (or enter into any partnership, joint venture or other arrangement with any other party to provide any of the foregoing) for either NMHG or Allied Equipment, except that NMHG may make equity investments in, or general loans and other extensions of credit to or for the benefit of, Dealers from time to time which may be secured by general liens on inventory, receivables, equipment and other assets of the Dealer, and except that NMHG may fulfill all of its obligations under the HCC Agreement so long as the HCC Agreement shall be effective, but not beyond December 19, 2000.
4. Section 34 is hereby amended by deleting the word "Company" in each place where it appears in said Section and replacing it with the word "Corporation".
5. Section 35 is hereby deleted in its entirety.
The Agreement shall become fully effective as of the date of execution of this Amendment by both GECC and NMHG. Except as modified hereby, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING
CORPORATION GROUP, INC.
By: /s/ Christopher H. Richmond By: /s/ Reginald R. Eklund
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Title: Vice President Title: President and Chief Executive Officer
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Exhibit 10.7
INTERNATIONAL OPERATING AGREEMENT
This INTERNATIONAL OPERATING AGREEMENT (the "Agreement") is made and entered into this 15th day of April, 1998, by and between NACCO Materials Handling Group, Inc. ("NMHG") and the subsidiaries and affiliates of NMHG listed on Exhibit A, attached hereto (all such subsidiaries and affiliates as listed on said Exhibit, as it may be amended from time to time, shall be referred to collectively as the "NMHG Companies" and individually as an "NMHG Company") and General Electric Capital Corporation ("GE Capital") and the subsidiaries and affiliates of GE Capital listed on Exhibit B, attached hereto (all such subsidiaries and affiliates as listed on said Exhibit, as it may be amended from time to time and shall be referred to collectively as the "GE Capital Companies", individually as a "GE Capital Company").
WHEREAS, NMHG and the NMHG Companies are in the business of manufacturing and distributing various types of materials handling equipment (collectively, "Equipment") which they either: (i) ship to dealers (each, a "Dealer", collectively "Dealers") who purchase the Equipment as inventory for resale to third-party customers (each, a "Customer", collectively "Customers") or (ii) sell directly to Customers;
WHEREAS, the GE Capital Companies are in the business of providing financing in various forms for the acquisition and/or purchase of items such as the Equipment to non-U.S. Dealers and Customers;
WHEREAS, in order to promote the sale and distribution of Equipment on an international basis, NMHG and the NMHG Companies have agreed to, pursuant to the terms and conditions of this Agreement, refer their respective Customers and Dealers to the GE Capital Companies, and the GE Capital Companies, pursuant to the terms of this Agreement, may enter into retail or wholesale financing with such Customers or Dealers, as the case may be.
NOW THEREFORE, in consideration of the above premises and mutual covenants contained hereinabove, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1.1 "ACCOUNT" shall mean any Wholesale or Retail Account.
1.2 "ACCOUNT PARTY" shall mean, with respect to any Account, any respective Customer, Dealer or any other Person (including, but not limited to, any guarantors) named in any of the Documentation related to such Account.
1.3 "AUTHORIZED SALE PRICE" shall mean, with respect to any Equipment subject to remarketing, the minimum sales price that the NMHG Group (or any of its designated agents) may accept regarding a third party's offer to buy such Equipment, without submitting the offer to any of the GE Capital Companies for approval. The Authorized
Sale Price shall be determined by the GE Capital Companies as is set forth in Article 5 below.
1.4 "BOOK VALUE" shall mean with respect to each Wholesale or Retail Account, the balance of any such Account, including, without limitation, periodic payments and other amounts due and accrued thereunder and any residual value taken on the Equipment.
1.5 "BUSINESS DAY" shall mean, with respect to any obligation of a GE Capital Company or NMHG Company to which this term applies, any day other than a Saturday, Sunday or a day on which banking institutions in the capital city of the country in which such GE Capital Company or NMHG Company has its principal place of business (as the case may be) are authorized or required to close.
1.6 "CUSTOMER" shall have the meaning ascribed to it in the first paragraph of the Recitals. A non-U.S. Customer shall be any Customer which is domiciled outside of the United States of America.
1.7 "DEALER" shall have the meaning ascribed to it in the first paragraph of the Recitals. A non-U.S. Dealer shall be any Dealer which is domiciled outside of the United States of America.
1.8 "DEFAULT" under this Agreement shall, with respect to any party, mean: (i) if such party breaches any of its obligations under this Agreement and fails to cure within thirty (30) days after written notice thereof; (ii) if any representation or warranty made by such party in connection with this Agreement shall be false or misleading in any material respect; (iii) if such party becomes insolvent, ceases to do business as described above or ceases to exist as a separate corporate entity; or (iv) if a petition is filed by or against such party under any bankruptcy or insolvency laws (or similar proceeding).
1.9 "DOCUMENTATION" shall mean any and all documents evidencing an Account, including but not limited to leases, lease/purchase agreements, notes, security agreements and all schedules, supplements, addenda and annexes attached thereto.
1.10 "EQUIPMENT" shall have the meaning ascribed to it in the Recitals above.
1.11 "EXTENSION OF CREDIT" shall mean any loan made by a GE Capital Company to a Dealer pursuant to a Wholesale Account for the purpose of funding the purchase of inventory by the Dealer.
1.12 "FAIR MARKET VALUE" shall mean an amount equal to the value which would be obtained in an arm's-length transaction between an informed and willing buyer (other than a lessee currently in possession or a used equipment dealer) and an informed and willing seller under no compulsion to sell and, in such determination, costs of removal from the location of current use shall not be a deduction from such value.
1.13 "NMHG GROUP" shall have the meaning ascribed to it in Article 2.1.
1.14 "NET REMARKETING PROCEEDS" shall mean the gross cash proceeds
actually received by the GE Capital Companies from the sale of Equipment
remarketed pursuant to Article 5 less: (i) any applicable sales or other taxes,
(ii) any costs incurred by the GE
Capital Companies with respect to any of its duties hereunder, including but not limited to, any repair or other costs or expenses incurred pursuant to Article 5 hereof
1.15 "RETAIL ACCOUNT" shall mean any conditional sale contracts, lease agreements, chattel mortgages, promissory notes or other choses in action executed between a GE Company and a non-U.S. Customer.
1.16 "PERSON" shall mean any entity, including without limitation, any natural person, trust, corporation, estate, joint stock association, partnership, firm, sovereign entity, government or governmental agency.
1.17 "WHOLESALE ACCOUNT" shall mean and include any loan or other extension of credit, now or hereafter, by a GE Capital Company to any non-U.S.Dealer for the acquisition of Equipment by the Dealer.
2.1 CUSTOMER REFERRALS GENERALLY. NMHG and the NMHG Companies (collectively, the "NMHG Group") hereby agree to refer all non-U.S. Customers who are interested in financing the acquisition of Equipment to the applicable GE Capital Company. Said GE Capital Company may enter into Retail Accounts with such Customers, in its sole discretion, upon such terms and conditions as said GE Capital Company deems acceptable, but shall not be obligated to do so. To induce the GE Capital Companies to offer financing to non-U.S. Customers hereunder (but without obligating any GE Capital Company to do so), each of the NMHG Group agrees with respect to any country subject to this Agreement: (i) to notify each non-U.S. Customer, or use their respective best efforts to have their respective non-U.S. Dealers notify their respective non-U.S. Customers, that financing may be available from the GE Capital Companies; and (ii) otherwise assist the GE Capital Companies in making proposals for financing available to each non-U.S. Customer. Each of the NMHG Group further agrees not to recommend, or direct any of their respective majority-owned subsidiaries or affiliates to recommend, any other finance source to a non-U.S. Customer unless and until: (x) the applicable GE Capital Company has submitted a proposal for financing to such Customer; (y) the applicable GE Capital Company has rejected such Customer; or (z) such Customer has indicated that it is not interested in obtaining financing from any of the GE Capital Companies. Notwithstanding any provision to the contrary herein, it is expressly understood by each of the NMHG Group, GE Capital and each of the GE Capital Companies that all Customers shall be free to utilize any financing source of their own choosing. The obligations of the NMHG Group as set forth in this Section 2.1 shall be applicable only to countries where a GE Capital Company has the ability to enter into Retail Accounts.
2.2 STANDARD RATES AND PRODUCTS. The respective members of the NMHG Group and the respective GE Capital Companies shall mutually develop and agree on the products (including, without limitation, products which contain specific references to the private label brands sold by the NMHG Companies) and standard rates, terms and conditions related thereto which shall be offered, from time to time, to the non-U.S.
Customers with respect to Retail Accounts on a country by country or region by region basis.
2.3 CREDIT REVIEW PROCESS. For each proposed Retail Account, the referring member of the NMHG Group or the applicable Dealer (as the case may be) shall provide such financial and business information as they may possess concerning a Customer upon the reasonable request of the respective GE Capital Company. Said member of the NMHG Group or the applicable Dealer (as the case may be) shall also provide the following to the respective GE Capital Company for every proposed Retail Account: (i) an itemized list of the Equipment to be financed, including, but not limited to a complete description of such Equipment; and (ii) a description of any additions, improvements or reconfigurations to, or of, the Equipment which deviate from NMHG's standard specifications for the Equipment. Each respective GE Capital Company will be primarily responsible for obtaining from the respective Customer the financial and business information which the GE Capital Company deems necessary in order to consider a Customer for any Retail Account. Upon the request of the respective GE Capital Company, the referring member of the NMHG Group shall assist said GE Capital Company in obtaining such information from Customer. Each member of the NMHG Group further acknowledges that each GE Capital Company shall have the absolute right to approve or disapprove Customers and proposed Retail Accounts in its sole discretion pursuant to its independently determined internal credit and investment standards and shall have no liability for its disapproval of any Customer or proposed Retail Accounts; provided however, that the respective GE Capital Companies and the NMHG Group shall, on a country by country or region by region basis, use their best efforts to determine mutually acceptable standards for the approval of Customers for proposed Retail Accounts (collectively, "Target Approval Rates"). Target Approval Rates shall be reviewed annually by the respective GE Capital Companies and the NMHG Group and set by mutual agreement of the applicable members of the NMHG Group and the GE Capital Companies.
2.4 DOCUMENTATION. All Documentation shall be developed by and in form and substance satisfactory to each of the GE Capital Companies in its sole discretion. A GE Capital Company may, in its sole discretion, request a member of the NMHG Group, or its respective agents or employees to assist in the delivery of Documentation to, and the execution of Documentation by, Customers. All Documentation for each Retail Account shall be prepared and negotiated solely by each respective GE Capital Company.
2.5 REPRESENTATIONS AND WARRANTIES. For all Documentation which a member of the NMHG Group assists in the execution and delivery of at the request of a GE Capital Company pursuant to Paragraph 2.4 above, the respective member of the NMHG Group will warrant and represent that: (i) all names, addresses, dates and signatures are true and correct; (ii) the Equipment has been duly delivered, installed and accepted by the Customer; and (iii) such Documents have not been amended, changed, settled or compromised without the prior written consent of the respective GE Capital Company.
2.6 ACCOUNT FUNDING. For each Retail Account, each respective GE Capital Company shall pay to the respective member of the NMHG Group the full amount of all invoices related to the Equipment that is the subject of the Retail Account within five (5) Business Days after the date that such GE Capital Company has received: (i) all fully executed and completed Documentation as required pursuant to Paragraph 2.4 hereof; and (ii) where applicable, all documentation necessary and appropriate to evidence and record the GE Capital Company's interest in the Retail Account and the related Equipment. Notwithstanding any provision to the contrary herein, if any invoice states trade terms different than those set forth in the previous sentence, then the respective GE Capital Company shall pay such invoices on the later of: (x) the date specified in any such invoice; or (y) the date specified in this Paragraph 2.6.
3.1 DEALER REFERRALS GENERALLY. Each of the NMHG Group hereby agree to refer all non-U.S. Dealers who are interested in financing the acquisition of Equipment to the applicable GE Capital Company. Said GE Capital Company may enter into Wholesale Accounts with such Dealers based upon the considerations set forth in Section 3.3 hereof, upon such terms and conditions as said GE Capital Company deems acceptable. To induce the GE Capital Companies to offer financing to non-U.S. Dealers hereunder (but without obligating any GE Capital Company to do so), each of the NMHG Group agrees: (i) to notify each non-U.S. Dealer, or use their respective best efforts to have their respective distributors notify their respective non-U.S. Dealers, that financing may be available from the GE Capital Companies; and (ii) otherwise assist the GE Capital Companies in making proposals for financing available to each non-U.S. Dealer. Each of the NMHG Group further agrees not to recommend, or direct any of their respective majority-owned subsidiaries or affiliates to recommend, any other finance source to a non-U.S. Dealer unless and until: (x) the applicable GE Capital Company has submitted a proposal for wholesale financing to such Dealer; (y) the applicable GE Capital Company has rejected such Dealer; or (z) such Dealer has indicated that it is not interested in obtaining financing from any of the GE Capital Companies. Notwithstanding any provision to the contrary herein, it is expressly understood by each of the NMHG Group, GE Capital and each of the GE Capital Companies that all Dealers shall be free to utilize any financing source of their own choosing. The obligations of the NMHG Group as set forth in this Section 3.1 shall be applicable only to countries where a GE Capital Company has the ability to enter into Wholesale Accounts.
3.2 STANDARD RATES AND PRODUCTS. The respective members of the NMHG Group and the respective GE Capital Companies shall mutually develop and agree on the products and the standard rates, terms and conditions related thereto which shall be offered, from time to time, to the non-U.S. Dealers with respect to Wholesale Accounts on a country by country or region by region basis.
3.3 CREDIT REVIEW PROCESS. For each proposed Wholesale Account, the
referring member of the NMHG Group shall provide such financial and business
information as they may possess concerning a Dealer upon the reasonable request
of the respective GE Capital Company. Each respective GE Capital Company will be
primarily responsible for obtaining from the respective Dealer the financial and
business information which the GE Capital Company deems necessary in order to
consider a Dealer for any Wholesale Account. Upon the request of the respective
GE Capital Company, the referring member of the NMHG Group shall assist said GE
Capital Company in obtaining such information from Dealer. During the Base Term
(as that term is defined in Section 6.8 hereof), each respective GE Capital
Company shall approve any Dealer for a Wholesale Account so long as at the time
of such approval: (i) the Dealer is not insolvent, a receiver has not been
appointed for all or of any part of the property of such Dealer, no assignment
for the benefit of creditors has been made by such Dealer, a petition in
bankruptcy (or any similar law) has not been filed by or against such Dealer:
(ii) the consummation of such Wholesale Account shall not cause the aggregate
investment in Wholesale Accounts by all of the GE Capital Companies to exceed
seventy-five million U. S. dollars (US$75,000,000) (this maximum investment
amount shall be reviewed by GE Capital operations management on an annual basis
and adjusted accordingly based on the financial status of NMHG); (iii) the
consummation of such Wholesale Account shall not violate any the corporate
business practices or policies of the respective GE Capital Company (as set
forth in The Spirit and the Letter of Our Commitment as published by GE Capital
from time to time and any addenda or amendments thereto) or any law or statute
applicable to such GE Capital Company. Following the expiration of the Base
Term, each member of the NMHG Group further acknowledges that each GE Capital
Company shall have the absolute right to approve or disapprove Dealers and
proposed Wholesale Accounts in its sole discretion pursuant to its independently
determined internal credit and investment standards and shall have no liability
for its disapproval of any Dealer or proposed Wholesale Accounts.
3.4 WHOLESALE ACCOUNT DOCUMENTS. All Wholesale Account Documents shall be developed by each of the respective GE Capital Companies for the NMHG Group taking into consideration the NMHG Group's specifications and needs, provided however that any such Wholesale Account Documents shall, in their final form, be in form and substance satisfactory to each of the respective GE Capital Companies in its sole discretion. A GE Capital Company may, in its sole discretion, request a member of the NMHG Group, or its respective agents or employees to assist in the delivery of Documentation to, and the execution of Documentation by, Dealers. All Documentation for each Wholesale Account shall be prepared and negotiated solely by each respective GE Capital Company.
3.5 REPRESENTATIONS AND WARRANTIES. For all Documentation which a member of the NMHG Group assists in the execution and delivery of at the request of a GE Capital Company pursuant to Paragraph 3.4 above, the respective member of the NMHG Group will warrant and represent that: (i) all names, addresses, dates and signatures are true and correct; (ii) the Equipment has been duly delivered and
accepted by the Dealer; and (iii) such Documents have not been amended, changed, settled or compromised without the prior written consent of the respective GE Capital Company.
3.6 WHOLESALE ACCOUNT FUNDING. For each Wholesale Account, the respective GE Capital Company shall pay to the respective member of the NMHG Group the full amount of all invoices related to the Equipment that is the subject of the Wholesale Account within five (5) Business Days after the date that the respective GE Capital Company has received such invoices. The respective member of the NMHG Group will aggregate all invoices issued pursuant to any Wholesale Accounts in any one day and send all such invoices to the respective GE Capital Company on a periodic basis to be determined by mutual agreement of the respective NMHG and GE Capital Companies.
3.7 RECOURSE FOR WHOLESALE ACCOUNTS.
(a) For the Base Term (as that term is described in Section 6.8 hereof) of this Agreement, in the event of a default under any of the Wholesale Accounts executed pursuant to this Agreement, NMHG will, within twenty (20) days of demand, repurchase any such Wholesale Account(s) affected by such default and pay the applicable GE Capital Company the amount then owed by the Dealer to such GE Capital Company under the default pursuant to the terms of the respective Documentation ("Repurchase Price"). For purposes of this Section 3.7, default is defined as: (i) any amount payable under the applicable Documentation being 61 days past due; (ii) when a Dealer files, or has filed against it, a petition in bankruptcy (or similar proceeding); (iii) the initiation of any insolvency proceeding; or (iv) the occurrence of any other event which would, under the terms of the Documentation, constitute a default. It is not contemplated that the GE Capital Companies will automatically exercise their respective rights to demand repurchase of any Wholesale Account(s) under this Section unless collection of such Account(s) is deemed to be unlikely. Failure on the part of any GE Capital Company to exercise such right shall not constitute a waiver of such right. Upon receipt by the applicable GE Capital Company of the full amount of the Repurchase Price for any Wholesale Account(s) and provided that NMHG is not otherwise in Default under this Agreement, the GE Capital Company will assign all of its right, title and interest in such Account(s) to NMHG (or its designee) without recourse to, or warranty from, of any kind whatsoever, the applicable GE Capital Company.
(b) Anything in this Agreement to the contrary notwithstanding, NMHG hereby agrees that its obligations under this Section 3.7 shall be primary, absolute, continuing and unconditional, irrespective of, and unaffected by, any of the following actions or circumstances (regardless of any notice to, or consent of, NMHG): (aa) the genuineness, validity, regularity and enforceability of any Wholesale Account; (bb) any extension, renewal, amendment, change, waiver or other modification by a GE Capital Company of any Wholesale Account; (cc) the absence of, or delay in, any action to enforce the terms of any Account; (dd) the release of, extension of time for payment or performance by, or any other indulgence granted to the Dealer or any other person with respect to any Wholesale Account by operation of law or otherwise;
(ee) the existence, value, condition, loss, subordination or release (with or without substitution) of, or failure to have title to or perfect a security interest in, or the time, place and manner of any sale or other disposition of, any Equipment, collateral or security given in connection with any Wholesale Account, or any other impairment (whether intentional or negligent, by operation of law or otherwise) of a GE Capital Company's rights to any such Equipment, collateral or security; (ff) any Dealer's voluntary or involuntary bankruptcy, assignment for the benefit of creditors, reorganization, or similar proceedings affecting the Dealer or any of its assets; or (gg) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. Notwithstanding any provision to the contrary herein, NMHG shall have no obligation to repurchase any Wholesale Account pursuant to this Section 3.7 under any of the following circumstances: (i) if a Wholesale Account proves unenforceable due to the fact that the Documentation is incomplete, (ii) solely with respect to Wholesale Accounts where a GE Capital Company is responsible for the perfection of its title or security interest in the respective Equipment, if a Wholesale Account proves unenforceable due to a failure of the GE Capital Company to obtain and perfect a valid first priority security interest in such Equipment, or (iii) if a Wholesale Account falls into default solely because the applicable GE Capital Company is in default of its obligations under the applicable Documentation.
(c) At least One-Hundred and Eighty (180) days prior to the expiration of the Base Term, GE Capital and NMHG shall enter into discussions with respect to the continuing need for recourse on Wholesale Accounts on a country-by-country or region-by-region basis. In the event that GE Capital and NMHG have not reached a mutual agreement as to the provision of recourse on Wholesale Accounts for the period following the expiration of the Base Term on or before the expiration of the Base Term, GE Capital or any of the GE Capital Companies may at the expiration of the Base Term, in their sole discretion, terminate all or a part of this Agreement with respect to the provision of Wholesale Accounts to Dealers. Notwithstanding any provision to the contrary herein, with respect to any and all obligations of the NMHG Companies under this Article 3.7 with respect to any Wholesale Accounts which may arise during the Base Term ("Base Term Obligations"), those Base Term Obligations shall nevertheless continue and remain undischarged until the same are indefeasibly paid and performed in full.
3.8 AUDITS. Upon request, from time to time, by any of the GE Capital Companies, the respective NMHG Company shall cause an audit to be performed as to all of the collateral or security of any Dealer for any Wholesale Account obligation to the respective GE Capital Company ("Collateral Audit"). At the NMHG Company's option, such Collateral Audit shall be performed by (i) an auditor not related to the GE Capital Companies which has been approved by the respective GE Capital Company in writing (a "Third Party Audit") or (ii) by a representative of the NMHG Companies (a "NMHG Audit"). If the respective NMHG Company elects to have a NMHG Audit, the NMHG Company shall give reasonable advance written notice to the respective GE Capital Company and such GE Capital Company shall have the right to have a respective representative present at the NMHG Audit. In any case, the NMHG company shall provide the respective GE Capital Company with a complete written report shortly after any Collateral Audit ("Audit Report") and such Audit Report shall include, but not be limited to, a duplicate copy of any and all written reports prepared by any third party auditor. The cost of any Third Party Audits performed in any calendar year shall be borne solely by
NMHG; provided however that the respective NMHG and GE Capital Companies shall each pay their own costs in connection with any NMHG Audit.
4.1 RETAIL ACCOUNTS REFERRAL FEE. For Retail Accounts closed from the
date hereof up to and including the second anniversary of this Agreement, no
Referral Fee shall be paid to any NMHG Company by any GE Capital Company. For
the period following the second anniversary of this Agreement and continuing for
the term of this Agreement, in the event that a GE Capital Company enters into a
Retail Account, said GE Capital Company shall pay a Referral Fee for that
Account to the referring member of the NMHG Group. On or before a date ninety
(90) days prior to the second anniversary of this Agreement, each of the NMHG
and GE Capital Companies shall meet to discuss the level at which the Referral
Fees shall be set (by mutual agreement of the respective parties) on a
region-by-region or county-by-country basis (as the case may be) based on an
analysis of historical financial data and experience over the previous period
since the inception of this Agreement. The Referral Fees shall be fixed for the
next calendar year period which will follow the second anniversary. The
respective NMHG and GE Capital Companies shall thereafter meet annually to
determine the Referral Fees for the coming calendar year. In the event that any
of the respective GE Capital and NMHG Companies cannot mutually agree on a
Referral Fee for any particular region or country (as the case may be) the
Referral Fee for Retail Accounts closed in such particular region or country
shall be equal to .0025 of the total funding made by the respective GE Capital
Company for each such Retail Account pursuant to Section 2.6 above (each, a
"Retail Funding"). Referral Fees shall be aggregated on an annual basis and
shall be paid within forty-five (45) days following the end of each calendar
year. All Referral Fee payments shall be denominated in U.S. Dollars equivalent
of local currency amounts in the manner used by the GE Capital Companies for
similar financing programs or in such other currencies and amounts that the
relevant parties shall agree.
4.2 ACCOUNTING PRACTICES AND REPORTS. Each GE Capital Company will
provide the respective NMHG Company or Companies (as the case may be) a monthly
report (sorted by country and issued on or before the twentieth day of each
month) which shall contain a listing of all Accounts which were delinquent as of
the end of previous month. Each GE Capital Company will provide the respective
NMHG Company or Companies (as the case may be) a quarterly report (sorted by
country) which shall contain the following: (i) a listing of all Accounts funded
during the previous quarter; (ii) a listing of all Accounts approved but not yet
funded as of the date of the report; (iii) a listing of Retail Accounts which
are due to expire over the twelve months subsequent to date of the report; and
(iv) any other data which NMHG and GE Capital mutually agree should be included
as part of such quarterly report.
4.3 COMPETITIVENESS. Each the GE Capital Companies and the NMHG Companies will use their respective best efforts to ensure that each such Company offers products which are competitive within their respective markets. At the inception of this Agreement, the GE Capital Companies operating in the United Kingdom, Germany and France shall endeavor to provide to Dealers and Customers (as the case may be) financing at or near the following Target Rates:
(i) For Wholesale Accounts, the Target Rate shall be equal to 225 Basis Points over the then applicable Five (5) year Swap Rate;
(ii) For Retail Accounts, the Target Rate shall be equal to 250 Basis Points over the then applicable Five (5) year Swap Rate.
For the purposes of this Section 4.3, the term "Five (5) year Swap Rate" means the five year swap rate as quoted on the following systems:
Currency System -------- ------ UK Pounds ICAQ - Reuters page German DM ICAR - Reuters page French Francs ICAS - Reuters page |
The Target Rates for periods following the inception of this Agreement shall be reviewed by the applicable GE Capital and NMHG Companies on a periodic basis no less than every calendar quarter during the term of this Agreement and said Target Rates shall be adjusted as deemed necessary by mutual agreement of the applicable GE Capital and NMHG Companies based on a country-by-country or region-by-region analysis (as the case may be).
4.4 MANAGEMENT OF THE PROGRAM. The overall management of the program established by this Agreement will be subject to the review and recommendation of several regional steering committees. Separate steering committees, one each for Yale Brand and the Hyster Brand, will be established for each of (i) the Americas (other than the U.S.), (ii) Europe and (iii) Asia and the Pacific Rim, each consisting of four persons, two of whom shall be NMHG Company employees, as applicable, designated by NMHG and two of whom shall be GE Capital Company employees designated by GE Capital. The Steering Committees shall each be responsible for coordinating the various periodic reviews which are specified in this Agreement and determining the final disposition of such reviews in their respective regions. Additionally, the Steering Committees shall perform the following functions for their respective regions: (a) providing input for development of new products; (b) setting response times; (c) setting and monitoring Target Approval Rates;(d) providing input for development of automated systems; (e) staffing and personnel matters; (f) reviewing competitiveness and adequacy of program rates; and (g) oversight of general program operations and mediation of problems to ensure the effectiveness of the various retail and wholesale financing programs. All members of the Steering Committees and other personnel utilized in connection therewith will be employees of either NMHG, the NMHG Companies, GE Capital or the GE Capital Companies and shall remain participants in any retirement or pension plan, insurance, medical or other employee benefit plans of their respective employers. No Steering Committee member designated by one shall be entitled to any compensation from any of the parties to this Agreement for their participation on a Steering Committee.
5.1 REMARKETING SERVICES. For all Equipment, GE Capital and the GE Capital Companies shall appoint any member of the NMHG Group as remarketing agent to act and serve during the Remarketing Period (as defined below) as their respective attorney-in-fact to provide the Remarketing Services (as defined below) and such other
additional reasonable services as GE Capital or the GE Capital Companies may
request in connection with the sale and remarketing of the Equipment. As used in
this Agreement, the term "Remarketing Services" means and includes (i) use of
best efforts, including the advertisement of the Equipment in publications
distributed to potential buyers, to solicit firm cash offers for the purchase of
the Equipment as provided in Section 5.6 below, (ii) providing GE Capital or the
GE Capital Companies with information concerning the Fair Market Value of the
Equipment, (iii) inspecting and repairing the Equipment in accordance with
Section 5.3 below, and (iv) storing the Equipment as provided in Section 5.4
below. For Equipment which is subject to a Retail Account (which contemplates
the return of the Equipment to GE Capital or the GE Capital Companies) the term
of which is about to expire, the term "Remarketing Period" means a period
beginning on such expiration date and ending ninety (90) days thereafter. For
Equipment recovered or to be recovered as a result of a default under an
Account, the term "Remarketing Period" means a period beginning on the date of
default and ending one-hundred and eighty (180) days thereafter.
5.2 VALUATION OF THE EQUIPMENT. Within ten (10) Business Days after receipt of the Equipment, the respective member of the NMHG Group shall submit to the respective GE Capital Company an estimate of the Fair Market Value of the Equipment. The respective GE Capital Company will then set the Authorized Sale Price for the Equipment.
5.3 INSPECTION AND REPAIR OF EQUIPMENT. Within five (5) Business Days after the receipt by the respective member of the NMHG Group of the Equipment, said member shall, at no expense to the respective GE Capital Company, inspect such Equipment and provide the respective GE Capital Company with a written report describing any repairs that are necessary to put the Equipment into salable condition. If requested in writing by said GE Capital Company, the respective member of the NMHG Group shall promptly perform such repairs at such cost. The respective GE Capital Company shall, upon completion of all such repairs, and within thirty (30) days of receipt of an invoice detailing the costs for repair actually incurred by said member of the NMHG Group, reimburse said member for such costs. IT IS AGREED AND UNDERSTOOD THAT THE NMHG GROUP SHALL HAVE NO AUTHORITY TO PERFORM ANY REPAIRS ON ANY EQUIPMENT EXCEPT TO THE EXTENT SPECIFICALLY AUTHORIZED BY THE RESPECTIVE GE CAPITAL COMPANY, EXCEPT THAT NO SUCH AUTHORIZATION IN WRITING BY ANY GE CAPITAL COMPANY SHALL BE REQUIRED IF THE TOTAL COST OF THE REPAIRS SHALL NOT EXCEED THE EQUIVALENT OF US$500, SO LONG AS SUCH AMOUNT IS EXPENDED ON A REPAIR OR REPAIRS WHICH ENHANCE THE FAIR MARKET VALUE OF THE EQUIPMENT.
5.4 STORAGE OF EQUIPMENT. If storage of the Equipment is necessary during the Remarketing Period, the respective member of the NMHG Group shall, at no expense to the GE Capital Companies, store the Equipment on the respective member of the NMHG Group's premises (or at another site designated thereby), in a secure and commercially reasonable manner and shall make such Equipment available for inspection by any prospective purchaser or the GE Capital Companies during regular business hours. During such storage, risk of loss or damage shall be borne by the NMHG Group.
5.5 STORAGE INDEMNITY. While any Equipment is being stored by the NMHG Group, the NMHG Group shall indemnify, save and keep harmless GE Capital and the GE Capital Companies, their respective agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, actions and suits
(collectively, "Liabilities"), including litigation costs and attorneys' fees, of whatsoever kind and nature, which may arise, directly or indirectly, out of the duties and obligations of the NMHG Group under this Article V, including without limitation, Liabilities related to personal injuries caused by the Equipment and property damage suffered by the Equipment.
5.6 SOLICITATION OF OFFERS; SALE OF EQUIPMENT. The NMHG Group shall, at its sole cost and expense, use its best efforts to obtain firm cash offers for the purchase of the Equipment for the best price obtainable during the Remarketing Period. The NMHG Group may accept such an offer within its sole discretion if the purchase price is equal to, or exceeds, the Authorized Sale Price. Any offer for less than the Authorized Sale Price may be submitted to the respective GE Capital Company, but said GE Capital Company may accept or reject such offer in its sole discretion. If the respective GE Capital Company rejects such offer, the NMHG Group shall continue to solicit offers in the manner described herein for the full term of the Remarketing Period. If an offer is accepted, either by the NMHG Group or by the respective GE Capital Company, as the case may be, the NMHG Group shall collect the purchase price, plus any applicable sales or other taxes, in cash, and shall immediately remit same to the respective GE Capital Company. Said GE Capital Company shall thereupon execute a bill of sale (or such other form of documentation which is used to show a transfer of title in the respective location of sale) and appropriate title documentation to transfer ownership of the applicable Equipment to the purchaser thereof on an "AS IS, WHERE IS", BASIS WITHOUT RECOURSE OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, BY THE GE CAPITAL COMPANY ("AS IS BASIS"). EXCEPT AS SPECIFIED IN THIS SECTION 5.6, THE NMHG GROUP SHALL HAVE NO AUTHORITY, EXPRESS OR IMPLIED, TO SELL OR COMMIT TO SELL ANY EQUIPMENT ON ANY OF THE GE CAPITAL COMPANIES' BEHALF WITHOUT THEIR RESPECTIVE PRIOR WRITTEN CONSENT, AND THE NMHG GROUP SHALL ADVISE EACH PARTY FROM WHOM IT SOLICITS A BID THAT EACH OFFER WITH AN OFFERING PRICE BELOW THE AUTHORIZED SALE PRICE IS SUBJECT TO ACCEPTANCE OR REJECTION BY THE RESPECTIVE GE CAPITAL COMPANY AT ITS SOLE DISCRETION.
5.7 REMARKETING FEE. As the NMHG Group's sole and exclusive compensation for providing the Remarketing Services, the GE Capital Companies will pay the NMHG Group a remarketing fee ("Remarketing Fee") if the Equipment is sold by the respective GE Capital Company to any purchaser (other than the NMHG Group) pursuant to a bid solicited by the NMHG Group during the Remarketing Period. The Remarketing Fee shall be calculated as follows:
(i) For Equipment that is remarketed hereunder pursuant to an expiration of a Retail Account, the Remarketing Fee shall be as follows: (i) in the event that the Net Remarketing Proceeds are less than or equal to the Book Value of the respective Account, no Remarketing Fee shall be paid; or (ii) in the event that the Net Remarketing Proceeds are more than the applicable Book Value, the Remarketing Fee shall be equal to fifty percent (50%) of the amount of the excess of the Net Remarketing Proceeds over the Book Value;
(ii) For Equipment that is remarketed hereunder pursuant to a default or other early termination of an Account, the Remarketing Fee shall be equal to five percent (5%) of the Gross Proceeds.
5.8 EXPIRATION OF REMARKETING PERIOD. If any Equipment has not been sold by the expiration of the Remarketing Period (including any extensions thereof mutually
agreed upon), then the respective member of the NMHG Group shall have the option to, within five (5) Business Days following such expiration, submit a bid for the Equipment, which bid may be accepted or rejected by the applicable GE Capital Company in its sole discretion. In the event that such bid is accepted, upon receipt of the full amount of the bid price, the applicable GE Capital Company shall thereupon execute a bill of sale (or such other form of documentation which is used to show a transfer of title in the respective location of sale) and appropriate title documentation to transfer ownership of the applicable Equipment to the applicable NMHG Company on an AS IS BASIS. In the event that the NMHG Group chooses not to exercise the above-described purchase option or the bid is not accepted, the respective GE Capital Company may arrange for sale of such Equipment at a commercially reasonable public or private sale. The NMHG Group shall, unless otherwise directed by said GE Capital Company, store the Equipment at no cost to said GE Capital Company until such sale is consummated. The NMHG Group may bid at such sale, and may continue to solicit offers for such Equipment prior to such sale.
6.1 SCOPE OF AUTHORITY.
(a) Except as specifically set forth herein, each of the NMHG Group agrees and understands that neither it nor any of its subsidiaries, affiliates or dealers shall have any power or authority to bind any of the GE Capital Companies in any way hereunder, including but not limited to: (i) committing any GE Capital Company, directly or indirectly, to purchase or enter into any Accounts; (ii) to sell, transfer, encumber or otherwise dispose of the Equipment covered by any Account; (iii) to repossess or make substitutions for any Equipment that is the subject of an Account; or (iv) to take any action contrary to those actions expressly authorized hereunder. None of the NMHG Group and their respective subsidiaries and affiliates shall have any power to make representations, promises, agreements or commitments for or on behalf of any of the GE Capital Companies, and each of the NMHG Group agrees it shall take any and all actions necessary to advise each Customer or Dealer (as the case may be) accordingly. The NMHG Group will each have primary decision-making responsibility with respect to the marketing and distribution of their respective brands of Equipment and for the following: (i) any recourse from the NMHG group to a GE Capital Company with respect to any Retail Account; (ii) communication with the Dealers with respect to marketing the financial products offered pursuant to this Agreement; (iii) coordination and determination of Dealer training programs with respect to the use of financing as a major sales tool; (iv) providing the Dealers with finance rates and factors; (v) assisting the Dealers in closing Retail Accounts, and (vi) generally promoting the Wholesale and Retail financing products offered pursuant to this Agreement as the prime source of financing to the Dealers and the Customers.
(b) In addition to the obligations of the GE Capital Companies set forth herein, each GE Capital Company will each have primary responsibility with respect to the following: (i) providing Dealer training programs on reasonable request of the NMHG
Companies; (ii) administration of the Accounts, including without limitation, invoicing, collections, legal and tax expertise, treasury, finance, accounting, and booking; (iii) preparation of documentation and marketing materials for each product; (iv) maintenance of the systems that will support all tracking and accounting for remarketing and funding of all Accounts.
6.2 NATURE OF AGREEMENT. It is expressly understood and agreed that at no time will this Agreement be deemed to create a partnership, joint venture, employment contract, or any other relationship other than that of limited agent as set forth herein. No universal or general power of agency or attorney has been created hereunder.
6.3 EXCLUSIVITY. Each of the GE Capital Companies will endeavor to not enter into any other financing program arrangements with NMHG Competitors (the term "NMHG Competitors" shall be as set forth on Exhibit C attached hereto which shall be amended from time by mutual agreement of the parties hereto). Each of the GE Capital Companies shall additionally endeavor not to develop any business unit whose primary function is to finance fork lift trucks. Each of the NMHG Group will not solicit, or enter into, any Wholesale or Retail Account (or enter into any partnership, joint venture or other arrangement with any other party to provide any of the foregoing) for Equipment, except that any of the NMHG Group may make equity investments in, or general loans and other extensions of credit to or for the benefit of, Dealers from time to time which may be secured by general liens on inventory, receivables, equipment and other assets of the Dealer. The parties hereto agree that the enforceability of this Section 6.3 shall be subject to the applicable laws and regulations of the countries in which each GE Capital and NMHG Company conducts business and the rulings of any extra-territorial agency (including, without limitation, the European Economic Commission ("EEC")) which may have jurisdiction over this Agreement. Additionally, the parties agree that no provision of this Agreement which, for the purposes of any regulation or directive of the EEC or any similar or equivalent agency in any other jurisdiction (each, a Competition Authority") renders or would render this Agreement (or any provision which is a part thereof) liable to registration with any such Competition Authority, shall be effective until thirty (30) days after the relevant details of the provision are filed with such Competition Authority and either written consent or a "no-action" letter or its equivalent has been obtained from such Competition Authority.
6.4 REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE NMHG GROUP. Each of the NMHG Group hereby represents, covenants and warrants to GE Capital that on the date hereof:
(a) each is duly organized, validly existing and in good standing under the laws of the state or country of its incorporation;
(b) each has full power and authority and legal rights to execute, deliver and perform this Agreement and the execution, delivery and performance hereof have been duly authorized by all necessary corporate action;
(c) this Agreement has been duly executed and delivered by each and constitutes a legal, valid and binding obligation of each;
(d) the execution, delivery and performance of this Agreement does not require any stockholder approval or any approval or consent of, or filing or registration with, any governmental body or regulatory authority or agency or any approval or consent of any trustee or holders of any indebtedness or obligations of each, or such approval or
consent has been obtained and does not contravene any law, regulation, judgment or decree applicable to each or their respective certificates of incorporation or by-laws.
Each of the NMHG Group further represents, covenants and warrants to GE Capital and the GE Capital Companies that on the date hereof and for the term of this Agreement: (i) each is, and will remain, fully licensed and in good standing in all states, territories or countries in which they are respectively doing business under all applicable laws governing such businesses; and (ii) and the actions contemplated hereby will not violate any confidence or any state, federal or other applicable law.
6.5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF GE CAPITAL. Each of GE Capital and the GE Capital Companies hereby represents, warrants and covenants to the NMHG Group that on the date hereof:
(a) GE Capital is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and each of the GE Capital Companies is duly organized, validly existing and in good standing under the laws of the state or country of its incorporation;
(b) each has full power and authority and legal rights to execute, deliver and perform this Agreement and the execution, delivery and performance hereof have been duly authorized by all necessary corporate action;
(c) this Agreement has been duly executed and delivered by each of GE Capital and the GE Capital Companies and constitutes a legal, valid and binding obligation thereof; and
(d) the execution, delivery and performance of this Agreement does not require any stockholder approval or any approval or consent of, or filing or registration with, any governmental body or regulatory authority or agency or any approval or consent of any trustee or holders of any indebtedness or obligations of GE Capital or the GE Capital Companies, or such approval or consent has been obtained, and does not contravene any law, regulation, judgment or decrees applicable thereto or their respective certificates of incorporation or by-laws.
6.6 GENERAL INDEMNIFICATIONS.
(a) Each of the NMHG Group hereby agrees to indemnify, save and keep harmless GE Capital and the GE Capital Companies, their respective agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, actions and suits, including litigation costs and attorneys' fees, of whatsoever kind and nature directly or indirectly arising by reason of their breach or default of any term, condition, representation, warranty or agreement set forth in this Agreement or by reason of any improper act or omission to act of any of the NMHG Group in relation to the subject matter of this Agreement.
(b) GE Capital and each of the GE Capital Companies hereby agrees to indemnify, save and keep harmless the NMHG Group, their respective agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, actions and suits, including litigation costs and attorneys' fees, of whatsoever kind and nature directly or indirectly arising by reason of their breach or default of any term, condition, representation, warranty or agreement set forth in this
Agreement or by reason of any improper act or omission to act of GE Capital or any of the GE Capital Companies in relation to the subject matter of this Agreement.
6.7 INDEMNIFICATION RELATING TO EQUIPMENT. The NMHG Group hereby agrees to indemnify, save and keep harmless GE Capital and the GE Capital Companies, their respective agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, claims, actions and suits, including legal expenses, of whatsoever kind and nature, in contract or tort, whether caused by the active or passive negligence of GE Capital or the GE Capital Companies or otherwise, and including, but not limited to, their strict liability in tort, arising out of the selection, manufacture, purchase, acceptance or rejection of Equipment, the ownership of Equipment, and the delivery, lease, possession, maintenance, use, condition, return or operation of Equipment (including, without limitation, latent and other defects, whether or not discoverable by GE Capital, the GE Capital Companies, the Dealers or a Customer and any claim for patent, trademark or copyright infringement). The NMHG Group shall, at its own expense, defend any and all actions based on, or arising out of, any of the foregoing.
6.8 TERM AND TERMINATION.
(a) This Agreement shall be effective upon the execution and delivery hereof, shall remain in full force and effect for five (5) years (the "Base Term") unless sooner terminated as hereinafter provided, and will automatically renew for additional periods of one year (each a "Renewal Term") unless either NMHG or GE Capital, at any time not less than 180 days prior to the end of the Base Term or any Renewal Term, notifies the other that the notifying party will not renew this Agreement, in which event this Agreement will expire at the end of such Base Term or Renewal Term. Anything herein to the contrary notwithstanding, either NMHG or GE Capital shall have the right to terminate this Agreement without cause during any Renewal Term upon at least 180 days prior written notice to the other party.
(b) Notwithstanding anything to the contrary contained in paragraph (a) hereof, this Agreement may be terminated (in whole or only as it relates to one or more of the NMHG Companies or the GE Capital Companies (as the case may be))during the Base Term or any Renewal Term for "cause", upon 120 days prior written notice by either party to the other. "cause" shall be defined as follows:
(i) dissolution or liquidation of NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies;
(ii) insolvency of NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies or the voluntary institution by NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies of any proceeding under any statute of any governmental authority for the relief of debtors, seeking relief from or readjustment of its indebtedness, either through reorganization, composition, extension or otherwise, or the involuntary institution against NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies of any such proceeding which is not vacated
within sixty days from the institution thereof, or the appointment of a receiver, custodian or other officer having similar powers for NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies who is not removed within sixty days after such appointment;
(iii) any breach or violation by NMHG, any of the NMHG Companies, GE Capital or any of the GE Capital Companies of any of their respective obligations contained in this Agreement (including without limitation, the exclusivity provisions set forth above), or in any other agreement between such parties, which breach or violation is not corrected within thirty (30) days after written notice thereof;
(iv) if NMHG management determines, in its sole discretion, that any GE Capital Company(ies) is offering products and rates which are not competitive in their respective regional markets, then this Agreement may be terminated for "cause" solely with respect to such GE Capital Company(ies); or
(v) a termination, for any reason whatsoever, of the Restated and Amended Joint Venture and Shareholders Agreement between General Electric Capital Corporation and NACCO Materials Handling Group, Inc. dated April 15, 1998 (the "Joint Venture Agreement").
(c) It is hereby understood by NMHG, the NMHG Companies, GE Capital and the GE Capital Companies that after any termination, the terms and conditions of this Agreement shall continue in full force and effect and the parties shall continue to have the rights and duties set forth in this Agreement with respect to all Accounts outstanding or committed to by GE Capital or the GE Capital Companies on or before the date of any such termination.
7.1 Each of the GE Capital Companies hereby acknowledges that any and
all rights in the words "NMHG, NACCO Materials Handling Group, Inc., YALE or
HYSTER" are proprietary to NMHG, and hereby agree not to: (i) take any action,
directly or indirectly, to defeat any proprietary rights of NMHG in such words,
(ii) claim any proprietary rights in such words or the goodwill attached thereto
except as provided in this Agreement; or (iii) use any such words except in
conducting the ongoing business with respect to Retail and Wholesale Accounts as
contemplated in this Agreement.
7.2 Each of the GE Capital Companies hereby acknowledges that NMHG, its subsidiaries and any authorized dealers of NMHG or NMHG's subsidiaries have the right to use, or may be granted permission by NMHG to use, the words "NACCO Materials Handling Group, Inc.", "NMHG", "YALE", "YALE Industrial Trucks", "Yale Materials Handling", "HYSTER", "HYSTER Industrial Trucks" and "HYSTER Materials Handling" in a trade name or as part of a corporate name for any business relating to industrial trucks owned or controlled by NMHG, its subsidiaries or such dealers; and shall execute any consents which NMHG may consider necessary relating to the
exercise of those rights. Each of the GE Capital Companies also hereby: (i)
admits that NMHG has the right to register "NACCO Materials Handling Group,
Inc.", "NMHG", "YALE", "YALE Industrial Trucks", "Yale Materials Handling",
"HYSTER", "HYSTER Industrial Trucks" and "HYSTER Materials Handling" as service
trademarks; (ii) agrees not to take any action, directly or indirectly, to
defeat any trademark application which NMHG has filed or may file therefor; and
(iii) agrees to execute all documentation prepared by NMHG which may be required
to prosecute such trademark application.
7.3 For the duration of this Agreement, NMHG hereby consents to the use of the words "NACCO Materials Handling Group, Inc.", "NMHG", "YALE" and "HYSTER" by any of the GE Capital Companies solely with respect to conducting the business as contemplated in this Agreement. NMHG hereby agrees to defend, indemnify and hold harmless each of the GE Capital Companies against all claims, demands, suits or other proceedings (and all related costs and losses suffered by any such GE Capital Company including reasonable attorney's fees), brought against any such GE Capital Company based upon an allegation that the use of any such words in conducting such business constitutes an infringement of any trademark or other proprietary right. The provisions of this paragraph shall survive any termination of this Agreement.
8.1 TITLE TO EQUIPMENT. With regard to all Accounts, title to, and ownership of, any related Equipment by GE Capital or any of the GE Capital Companies shall not be modified by this Agreement. The NMHG Group acknowledges that it has no right, title or interest in or to any Equipment that is the subject of any Account or the proceeds of any sale thereof, except as expressly provided herein. Each member of the NMHG Group agrees, upon any request by GE Capital or the GE Capital Companies, to execute any instrument necessary or expedient for filing or recording the interest of GE Capital or the GE Capital Companies in any such Equipment.
8.2 WAIVER OF LIENS. To the extent that any of the NMHG Group may have a statutory, common law or other right or interest in, or lien upon, any Equipment for storage, labor, maintenance, repair or otherwise, each member of the NMHG Group hereby releases and waives such right, interest or lien and agrees to look only to its rights as a general creditor of GE Capital or the GE Capital Companies for compensation for performing the services provided under this Agreement, and not to the Equipment.
8.3 SURVIVAL OF INDEMNITIES. The indemnities contained herein shall continue in full force and effect notwithstanding the termination of this Agreement whether by expiration of time, operation of law or otherwise.
8.4 ADVERTISING. Without the prior written consent of the other parties hereto, neither NMHG, the NMHG Companies, GE Capital or the GE Capital Companies shall advertise in any manner the financial services to be offered pursuant to this Agreement. (whether by written brochure, newspaper advertisement, radio commercial, television commercial or otherwise), even if such advertisement is intended solely for the Dealers and the Customers.
8.5 SUCCESSORS AND ASSIGNS. No party hereto may assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party hereto; provided however, that GE Capital may assign this Agreement to any of its subsidiaries or affiliates without the consent of any of the NMHG Group. All of
the terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the parties hereto.
8.6 ENFORCEMENT. Time is of the essence of this Agreement. If any sum is not paid when due hereunder, then interest shall accrue thereon, from such due date until paid in full (both before and after any judgment) at a per annum rate equal to the London Interbank Offered Rate for one month dollar deposits (as published in the "Money Rates" section of The Wall Street Journal, U.S. Eastern Edition, on the respective due date) plus five percent (5%). If at any time pursuant to this Agreement, or any other agreement between GE Capital, the GE Capital Companies and the NMHG Group, each party to this Agreement owes the other party any sum, all such sums may be set-off against one another so that only the party owing the larger sum is required to make payment to the other. Such payment need only be made in the amount equal to the difference between sums which are due to one another.
8.7 NO MODIFICATION; SEVERABILITY. This Agreement exclusively and completely states the rights of the parties hereto with respect to the subject matter hereof and supersedes all other agreements, written or oral, with respect thereto. None of the terms of, or obligations under, this Agreement may be changed, waived, modified or varied in any manner whatsoever, including, but not limited to, any action or inaction of either party, unless in a writing duly signed and executed by the parties. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
8.8 HEADINGS. The headings of Sections and Articles contained in this Agreement are provided for convenience only. They form no part of this Agreement and shall not affect its construction or interpretation. All references to Articles and Sections refer to the corresponding Articles and Sections of this Agreement unless otherwise specified.
8.9 NOTICES. Any notices to the parties hereto under this Agreement shall be written, signed by a duly authorized representative, and shall be deemed to have been given when mailed to the intended recipient by certified mail or registered mail, return receipt requested, postage prepaid at the following addresses, unless the mailing party has received prior written notice that the address has changed;
IF TO GE CAPITAL OR THE GE CAPITAL COMPANIES:
General Electric Capital Corporation
44 Old Ridgebury Road
Danbury, Connecticut 06810
Attention: Edward Simoneau
with a copy to the following for any correspondence related to matters in Europe:
GE Capital Services (EEF) Limited
Trinity Square
23/59 Staines Road
Hounslow, Middlesex TW3 3HF
United Kingdom
Attention: Legal Director
IF TO NMHG OR THE NMHG COMPANIES:
NACCO Materials Handling Group, Inc.
650 NE Holladay Street
Suite 1600
Portland, Oregon 97232
Attn: General Counsel
8.10 FUTURE COOPERATION. All of the parties hereto agree to sign such further documents and take such further action as may reasonably be necessary to effectuate this Agreement.
8.11 TIME; NON-WAIVER OF REMEDIES. All of the parties hereto mutually agree that in performing any act under this Agreement, that time shall be of the essence and that the failure of either party to exercise any right or remedy shall not be deemed a waiver of any of the obligations of the other party or any right or remedy of either party.
8.12 GOVERNING LAW. The laws of the State of New York shall govern this Agreement (without regard to its choice of law rules).
8.13 ARBITRATION. Any and all disputes, controversies or claims arising out of, or relating to, this Agreement shall be determined by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The number of arbitrators shall be three. One arbitrator each shall be appointed by NMHG and GE Capital respectively, and the third arbitrator, who shall serve as chairman of the tribunal, shall be appointed by the American Arbitration Association. The place of arbitration shall be New York City. The language of the arbitration shall be English and any arbitral award arising from any arbitration pursuant to this paragraph shall be final and binding upon all parties hereto and no party shall seek recourse to a court of law or other authorities to appeal for revision of such decision or any other ruling of the arbitrator. The cost of the arbitration shall be borne by the party who does not prevail in the arbitration proceeding or as is otherwise decided by the arbitration panel. The question of whether a dispute is governed by this arbitration clause shall itself be determined by arbitration.
8.14 CONFIDENTIALITY. All information with respect to the NMHG Group,
GE Capital or the GE Capital Companies, or with respect to the business,
operations, products and customers thereof, shall be kept confidential and shall
not be disclosed to third parties, except for (i) any disclosures required by
law or required to be made to any governmental agencies, or (ii) any disclosures
to the parties respective independent certified public accounting firm or to
other persons or entities that may need to know for the purpose of the business
or operations of the NMHG Group, GE Capital or the GE Capital Companies, or
(iii) any disclosures of information that was in the public domain at the time
of receipt or subsequently comes into the public domain (other than as a result
of an unauthorized disclosure), or (iv) disclosures of the type that are
customary in the ordinary course of business (e.g., the terms of financing
available from the GE Capital Companies).
8.15 FIVE-YEAR REVIEW. GE Capital and NMHG each agree that, within five years of the execution of this Agreement, they will mutually review the results of the transactions referred and closed in each country or region (as the case may be) to determine if it would be economically practical to establish a joint venture structure
through the use of management accounting similar in form to the U.S. joint venture established by the Joint Venture Agreement in some or all of such countries or regions.
8.16 COMMITMENT TO TIMETABLE. Each of the NMHG Group and the GE Capital Companies agrees to use their best efforts to cooperate with GE Capital and NMHG to implement the Timetable set forth in Section 32 of the JV Agreement (a copy of which is attached as Exhibit D hereto) as such Timetable relates to the respective country or region for which the NMHG Group or the GE Capital Company is responsible.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING
CORPORATION GROUP, INC.
By: /s/ Christopher H. Richmond By: /s/ Reginald R. Eklund
----------------------------- -----------------------------
Title: Vice President and Title: President
General Manager --------------------------
--------------------------
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Exhibit 10.8
Amendment No. 1 to
the International Operating Agreement
Between
General Electric Capital Corporation and
Certain of its Subsidiaries and Affiliates and NACCO Material Handling Group, Inc. and Certain of its Subsidiaries and Affiliates Dated April 15, 1998
WHEREAS, General Electric Capital Corporation ("GECC") and NACCO Materials Handling Group, Inc ("NMHG") each have determined that it is in their best interest to make certain amendments to the above-captioned Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the above premises and mutual covenants contained hereinbelow, the parties hereto hereby agree that as of October 21, 1998, the Agreement is hereby amended as follows:
1. Section 1.17 shall be deleted in its entirety and the following substituted in its stead:
1.17 "WHOLESALE ACCOUNT" shall mean and include any loan or other extension of credit, now or hereafter, by a GE Capital Company to any non-U.S. Dealer secured by Equipment (whether or not such Equipment s purchased by the proceeds thereof or is kept as inventory for sale or as part of the respective Dealer's rental fleet).
2. The following shall be added after the last sentence in Section 2.1:
Notwithstanding any provision to the contrary herein, solely with respect to any Customer whose principal residence is in Canada, until the earlier of (i) the termination of the Third Amended and Restated Operating Agreement between Hyster Company and Hyster Credit Corporation dated as of November 21, 1985, as amended and restated as of December 19, 1985 (the "HCC Agreement") or (ii) December 20, 2000, NMHG shall only be required to fulfill its obligations under this Section 2.1 to the extent that such compliance would not, in NMHG's reasonable opinion, violate the terms of the HCC Agreement.
3. The following shall be added after the last sentence in Section 3.1:
Notwithstanding any provision to the contrary herein, solely with respect to any Dealer whose principal residence is in Canada, until the earlier of (i) the termination of the Third Amended and Restated Operating Agreement between Hyster Company and Hyster Credit Corporation dated as of November 21, 1985, as amended and restated as of December 19, 1985 (the "HCC Agreement") or (ii) December 20, 2000, NMHG shall only be required to fulfill its obligations under this Section 2.1 to the extent that such compliance would not, in NMHG's reasonable opinion, violate the terms of the HCC Agreement.
4. The third sentence of Section 6.3 shall be deleted in its entirety and the following shall be substituted in its stead:
Each of the NMHG Group will endeavor not to solicit, or enter into, any Retail or Wholesale Account (or enter into any partnership, joint venture or other arrangement with any other party to provide any of the foregoing) for Equipment, except that any of the NMHG Group may make equity investments in, or general loans and other extensions of credit to or for the benefit of, Dealers from time to time which may be secured by general liens on inventory, receivables, equipment and other assets of the Dealer, and except that NMHG may fulfill all of its obligations under the HCC Agreement so long as the HCC Agreement shall be effective, but not beyond December 19, 2000.
This Agreement shall become fully effective as of its execution by both GECC and NMHG. Except as modified hereby, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING
CORPORATION GROUP, INC.
By: /s/Christopher H. Richmond By: /s/Reginald R. Eklund
____________________________ ________________________________
Title: Vice President Title: President and Chief Executive
Officer
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Exhibit 10.9
Amendment No. 2 to
the International Operating Agreement
Between
General Electric Capital Corporation and Certain of its Subsidiaries and Affiliates and NACCO Materials Handling Group, Inc. and Certain of its Subsidiaries and Affiliates Dated April 15, 1998 as amended on ________, 1998
WHEREAS, General Electric Capital Corporation ("GECC") and NACCO Materials Handling Group, Inc. ("NMHG") each have determined that it is in their best interest to make certain amendments to the above-captioned Agreement, as amended (the "Agreement").
NOW, THEREFORE, in consideration of the above premises and mutual covenants contained hereinbelow, the parties hereto hereby agree that as of DECEMBER 31, 1999, the Agreement is hereby amended as follows: -----------
1. Section 1.17 shall be deleted in its entirety and the following substituted in its stead:
1.17 "WHOLESALE ACCOUNT" shall mean and include any loan or other extension of credit, now or hereafter, by a GE Capital Company to either: (i) any non-U.S. Dealer (whether or not owned by any of the NMHG Group or any of their respective affiliates or subsidiaries), or (ii) any of the NMHG Group or any of their respective affiliates or subsidiaries secured by Equipment (whether or not such Equipment is purchased directly from the proceeds of any such loan or other extension of credit or is kept as inventory for sale or as part of the respective party's rental fleet).
2. Section 3.7(a) shall be deleted in its entirety and the following substituted in its stead:
For the Base Term (as that term is described in Section 6.8 hereof) of this
Agreement, in the event of a default under any of the Wholesale Accounts
executed pursuant to this Agreement, NMHG will, within twenty (20) days of
demand, repurchase any such Wholesale Account(s) affected by such default and
pay the applicable GE Capital Company the amount then owed by the respective
party thereto to such GE Capital Company under the default pursuant to the terms
of the respective Documentation ("Repurchase Price"). For purposes of this
Section 3.7, default is defined as: (i) any amount payable under the applicable
Documentation being 61 days past due; (ii) when the respective party files, or
has filed against it, a petition in bankruptcy (or similar proceeding); (iii)
the initiation of any insolvency proceeding; or (iv) the occurrence of any other
event which would, under the terms of the Documentation, constitute a default.
It is not contemplated that the GE Capital Companies will automatically exercise
their respective rights to demand repurchase of any Wholesale Account(s) under
this Section unless collection of such Account(s) is deemed to be unlikely.
Failure on the part of any GE Capital Company to exercise such right shall not
constitute a waiver of such right. Upon receipt by the applicable GE Capital
Company of the full amount of the Repurchase Price for any Wholesale Account(s)
and provided that NMHG is not otherwise in Default under this Agreement, the GE
Capital Company will assign all of its right, title and interest in such
Account(s) to NMHG (or its designee)
all of its right, title and interest in such Account(s) to NMHG (or its designee) without recourse to, or warranty from (of any kind whatsoever), the Corporation.
Paragraphs (a) and (b) of Section 2.01 shall remain unmodified and in full force and effect.
This Amendment shall become fully effective as of its execution by both GECC and NMHG. Except as modified hereby, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING
CORPORATION GROUP, INC.
By:/s/Illegible By: /s/Jeffrey C. Mattern
---------------------------- ------------------------------
Title: MGR. - Dealer Finance Title: Treasurer
------------------------- ---------------------------
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Amendment No. 3 to the International Operating Agreement Between General Electric Capital Corporation and Certain of its Subsidiaries and Affiliates and NACCO Materials Handling Group, Inc. and Certain of its Subsidiaries and Affiliates Dated April 15, 1998 as amended on October 21, 1998 and December 31, 1999
WHEREAS, General Electric Capital Corporation ("GECC") and NACCO Materials Handling Group, Inc ("NMHG") each have determined that it is in their best interest to make certain amendments to the above-captioned Agreement, as amended (the "Agreement").
1.17 "WHOLESALE ACCOUNT" shall mean and include any loan or other extension of credit, now or hereafter, by a GE Capital Company to either: (i) any non-U.S. Dealer (whether or not owned by any of the NMHG Group or any of their respective affiliates or subsidiaries), or (ii) any of the NMHG Group or any of their respective affiliates or subsidiaries whether secured by Equipment (whether or not such Equipment is purchased directly from the proceeds of any such loan or other extension of credit or is kept as inventory for sale or as part of the respective party's rental fleet) or any other collateral.
This Amendment shall become fully effective as of its execution by both GECC and NMHG. Except as modified hereby, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING
CORPORATION GROUP, INC.
By: /s/ Illegible By: /s/ Jeffrey C. Mattern
---------------------------- ---------------------------------------
Title: MGR. - Dealer Finance Title: Treasurer
------------------------- ------------------------------------
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Exhibit 10.11
LETTER AGREEMENT
November 22, 2000
NACCO Materials Handling Group, Inc.
650 N.E. Holladay Street
Suite 1600
Portland, Oregon 97232
Attn: Geoffrey D. Lewis
RE: FINANCING FOR AUSTRALIAN NMHG SUBSIDIARIES
Under the auspices of that certain International Operating Agreement dated April 19, 1998, as amended ("Operating Agreement") between General Electric Capital Corporation ("GE Capital") and you, GE Capital Australia ("GECA") and GE Capital Finance Pty Limited ("GECF") (GECA and GECF shall hereinafter be collectively referred to as "GE Capital Australia"), both wholly-owned subsidiaries of GE Capital, have each consented, individually and collectively, to enter into several financing arrangements with National Fleet Network Pty Limited ("NMHG Fleet") and NMHG Distribution Pty Ltd. ("NMHG Distribution") (NMHG Fleet and NMHG Distribution shall collectively be referred to as the "NACCO Subsidiaries"). NMHG Fleet and NMHG Distribution are Australian corporations which are affiliated to you and both serve to distribute your products throughout Australia. The Financing Transactions described below will facilitate the sale and distribution (directly and indirectly) of your products throughout Australia and you hereby agree that the benefits to you shall constitute adequate consideration for the guaranty contained herein. Additionally, the NACCO Subsidiaries have entered into a Letter of Offer with you dated on or about the date hereof wherein they have paid you a Guarantee Fee as further consideration for the guaranty contained herein.
In consideration of the foregoing, by their respective signatures below, GE Capital and NACCO Materials Handling Group, Inc. ("NMHG") hereby agree that the Operating Agreement shall be amended to add the following as Section 3.7(1).
3.7(1) AUSTRIALIAN FINANCING TRANSACTIONS
(a) The term "Financial Transaction Documentation" as hereinafter used shall collectively refer to all of the following:
1. Master Operating Lease Agreement (No. 1) dated on or about the date hereof between GECA and NMHG Fleet as it may be amended from time to time.
2. Master Operating Lease Agreement (No. 2) dated on or about the date hereof between GECA and NMHG Fleet as it may be amended from time to time.
3. A$ Facility Agreement dated on or about the date hereof between GECA, GECF, NMHG Fleet and NMHG Distribution as it may be amended from time to time.
4. Two Sale and Purchase Agreements dated on or about the date hereof between GECA and NMHG Fleet as it may be amended from time to time.
5. Any and all documents or agreements related to the agreements set forth in 1, 2, 3 and 4 above.
(b) NMHG does hereby guarantee to GE Capital Australia, individually and collectively, and to their respective successors and assigns, the due regular and punctual payment of any sum or sums of money which the NACCO Subsidiaries may owe to GE Capital Australia now or at any time hereafter arising out of the Financial Transaction Documentation, whether it represents principal, interest, rent, late charges, indemnities, an original
balance, an accelerated balance, liquidated damages, a balance reduced by partial payment, a deficiency after sale or other disposition of any leased equipment, collateral or security, or any other type of sum of any kind whatsoever that the NACCO Subsidiaries may owe to GE Capital Australia now or at any time hereafter, and does hereby further guarantee to GE Capital Australia, individually and collectively, and to their successors and assigns, the due, regular and punctual performance of any other duty or obligation of any kind or character whatsoever that the NACCO Subsidiaries may owe to GE Capital Australia now or at any time hereafter (all such payment and performance obligations being collectively referred to as "Obligations"). NMHG does hereby further guarantee to pay upon demand all losses, costs, attorneys' fees and expenses which may be suffered by GE Capital Australia by reason of any NACCO Subsidiary's default or default of NMHG.
(c) The Guaranty set forth in Subparagraph (b) above is a guaranty of prompt payment and performance (and not merely a guaranty of collection). Nothing herein shall require GE Capital Australia to first seek or exhaust any remedy against the NACCO Subsidiaries, its successor and assigns, or any other person obligated with respect to the Obligations, or to first foreclose, exhaust or otherwise proceed against any leased equipment, collateral or security which may be given in connection with the Obligations. It is agreed that GE Capital Australia may, upon any breach or default of the NACCO Subsidiaries, or at any time thereafter, make demand upon NMHG and receive payment and performance of the Obligations, with or without notice or demand for payment or performance by the NACCO Subsidiaries, or their respective successors or assigns, or any other person. Suit may be brought and maintained against NMHG, at GE Capital Australia's election, without joinder of any of the NACCO Subsidiaries or any other person as parties thereto.
(d) NMHG agrees that its obligations under the above-described Guaranty
shall be primary, absolute, continuing and unconditional, irrespective of and
unaffected by any of the following actions or circumstances (regardless of any
notice to or consent of NMHG): (a) the genuineness, validity, regularity and
enforceability of the Financial Transaction Documentation or any other document;
(b) any extension, renewal, amendment, change, waiver or other modification of
the Financial Transaction Documentation; (c) the absence of, or delay in, any
action to enforce the Financial Transaction Documentation or this Letter
Agreement; (d) GE Capital Australia's failure or delay in obtaining any other
guaranty of the Obligations; (e) the release of, extension of time for payment
or performance by, or any other indulgence granted to the NACCO Subsidiaries or
any other person with respect to the Obligations by operation of law or
otherwise; (f) the existence, value, condition, loss, subordination or release
(with or without substitution) of, or failure to have title to or perfect and
maintain a security interest in, or the time, place and manner of any sale or
other disposition of any leased equipment, collateral or security given in
connection with the Obligations, or any other impairment (whether intentional or
negligent, by operation of law or otherwise) of the rights of NMHG; (g) the
NACCO Subsidiaries' voluntary or involuntary bankruptcy, assignment for the
benefit of creditors, reorganization, or similar proceedings affecting the NACCO
Subsidiaries or any of their respective assets; or (h) any other action or
circumstances which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor.
(e) NMHG agrees that the above-described Guaranty shall remain in full force and effect or be reinstated (as the case may be) if at any time payment or performance of any of the Obligations (or any part thereof) is rescinded, reduced or must otherwise be restored or returned by GE Capital Australia, all as though such payment or performance had not been made. If, by reason of any bankruptcy, insolvency or similar laws effecting the rights of creditors, GE Capital Australia shall be prohibited from exercising any of its rights or remedies against the NACCO Subsidiaries or any other person or against any property, then, as between GE Capital Australia and NMHG, such prohibition shall be of no force and effect, and GE Capital Australia shall have the right to make demand upon, and receive payment from, NMHG of all amounts and other sums that would be due to GE Capital Australia upon a default with respect to the Obligations.
(f) Notice of acceptance of the above-described Guaranty and of any default by the NACCO Subsidiaries or any other person is hereby waived. Presentment, protest demand, and notice of protest, demand and dishonor of any of the Obligations, and the exercise of possessory, collection or other remedies for the Obligations, are hereby waived. NMHG warrants that it has adequate means to obtain from the NACCO Subsidiaries on a continuing basis financial data and other information regarding the NACCO Subsidiaries and is not relying upon GE Capital Australia to provide any such data or other information. Without limiting the foregoing, notice of adverse change in either of
the NACCO Subsidiaries' financial condition or of any other fact which might materially increase the risk of NMHG is also waived. All settlements, compromises, accounts stated and agreed balances made in good faith between the NACCO Subsidiaries, their respective successors or assigns, and GE Capital Australia shall be binding upon and shall not affect the liability of NMHG.
(g) All payments due under the above-described Guaranty shall be made in Australian Dollars shall be calculated and made without any deduction, set-off, counterclaim or withholding whatsoever for, or on account of, any taxes, duties and fees which may be due as a result of such payment. All such taxes shall be borne by NMHG or, if under the provisions of applicable law this stipulation cannot be applied, NMHG shall increase the amount of any such payments due hereunder so that the net amount received by GE Capital Australia after such deduction or withholding (and after the payment of any additional taxes due to GE Capital Australia as a consequence of the payment of any such additional amount) shall be equal to the full amount which GE Capital Australia would have been paid had payment not been made subject to such taxes.
(h) If, any payment due hereunder is paid to, or recovered by, GE Capital Australia in a currency (the "other currency") other than Australian Dollars for any reason whatsoever (including, without limitation, as a result of a judgment against NMHG or the liquidation of NMHG's assets), then, to the extent that such payment (or, in the case of a liquidation, the value as of the latest date for the determination of liabilities permitted by the applicable law) falls short of the applicable amount which is required to be paid hereunder based upon the rate of exchange for the other currency, NMHG shall, as a separate and independent obligation, fully indemnify GE Capital Australia against the amount of the shortfall. For the purposes of this paragraph, the term "rate of exchange" means the rate at which GE Capital Australia is able, at 11:00 a.m. (Sydney time), on the relevant date to purchase Australian Dollars in Sydney, Australia with the other currency.
The amendment set forth above shall become fully effective as of the date set forth above. Additionally, by its signature below NMHG hereby acknowledges receipt of an accurate copy of the form of each of the Financial Transaction Documentation and all annexes, exhibits and schedules thereto which GE Capital Australia intends to execute on or before November 25, 2000 with the parties described above and represents that it understands and agrees to all of the terms and conditions contained therein.
Except as modified hereby, the terms and conditions of the Operating Agreement shall remain in full force and effect.
Very truly yours,
GENERAL ELECTRIC CAPITAL
CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
Accepted and Agreed to:
NACCO MATERIALS HANDLING GROUP, INC.
By: /s/ Geoffrey D. Lewis ------------------------- Geoffrey D. Lewis Vice President |
GE CAPITAL FINANCE PTY LIMITED
ACN 075 554 175
(COLLECTIVELY, THE LENDER)
NATIONAL FLEET NETWORK PTY LIMITED
ACN 094 802 141
(COMPANY)
NMHG DISTRIBUTION PTY LIMITED
ACN 053 370 291
(GUARANTOR)
CONTENTS
GENERAL TERMS.......................................................... 9
INTERPRETATION......................................................... 9
1. THE FACILITY........................................................... 9
THE FACILITY........................................................... 9
CONDITIONS PRECEDENT TO THE FACILITY................................... 9
FURTHER CONDITION PRECEDENT TO THE FACILITY............................ 9
2A. USING THE OPERATING LEASE FACILITY.....................................10
2B. [INTENTIONALLY OMITTED]................................................10
2C. USING THE REVOLVING LOAN FACILITY......................................10
DRAWINGS...............................................................10
REQUESTING A DRAWING...................................................10
EFFECT OF A DRAWDOWN NOTICE............................................10
CONDITIONS TO FIRST DRAWING............................................10
CONDITIONS TO ALL DRAWINGS.............................................11
BENEFIT OF CONDITIONS..................................................11
3. AVAILABILITY REVOLVING LOAN FACILITY LIMIT.............................11
4. INTEREST ON REVOLVING LOAN FACILITY....................................11
INTERPRETATION.........................................................11
INTEREST CHARGES.......................................................11
INTEREST PAYMENT.......................................................12
5. PAYMENTS...............................................................12
REPAYMENT..............................................................12
PREPAYMENT.............................................................12
MANNER OF PAYMENT......................................................12
PAYMENT APPLICATION....................................................12
CONVERSION OF CURRENCY.................................................12
APPLICATION OF PAYMENTS................................................13
6. CANCELLATION...........................................................13
7. FEES .................................................................13
FEES...................................................................13
8. LOAN ACCOUNT...........................................................14
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9. WITHHOLDING TAX........................................................14
PAYMENTS TO THE LENDER.................................................14
10. COMPENSATION FOR CHANGED CIRCUMSTANCES.................................15
COMPENSATION...........................................................15
CALCULATION IN REASONABLE DETAIL.......................................15
11. ILLEGALITY OR IMPOSSIBILITY............................................15
RIGHT TO SUSPEND OR CANCEL.............................................15
EXTENT AND DURATION....................................................16
NOTICE REQUIRING REPAYMENT.............................................16
FEES...................................................................16
12. REPRESENTATIONS AND WARRANTIES.........................................16
REPRESENTATIONS AND WARRANTIES.........................................16
CONTINUATION AND REPETITION OF REPRESENTATIONS AND WARRANTIES..........20
13. UNDERTAKINGS...........................................................21
GENERAL UNDERTAKINGS...................................................21
FINANCIAL UNDERTAKINGS.................................................25
NEGATIVE COVENANTS.....................................................26
FINANCIAL REPORTING....................................................28
OTHER REPORTS..........................................................29
14. OTHER RIGHTS OF THE COMPANY............................................30
15. EVENTS OF DEFAULT AND REVIEW EVENT.....................................30
EVENTS OF DEFAULT......................................................30
CONSEQUENCES OF DEFAULT................................................33
EFFECT OF AN EVENT OF DEFAULT..........................................33
REVIEW EVENT...........................................................34
16. COSTS AND INDEMNITIES..................................................34
REIMBURSEMENT AND INDEMNITY............................................34
OTHER LOSS.............................................................35
ITEMS INCLUDED IN LOSS, LIABILITY AND COSTS............................36
PAYMENT OF LOSSES......................................................36
CURRENCY CONVERSION ON JUDGMENT DEBT...................................36
CERTIFICATE BY GE SYNDICATION..........................................37
17A. INTEREST ON OVERDUE AMOUNTS............................................37
OBLIGATION TO PAY......................................................37
COMPOUNDING............................................................37
INTEREST FOLLOWING JUDGMENT............................................37
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17B. INSURANCE, RISK AND INDEMNITIES........................................38
18. GUARANTEE AND INDEMNITY................................................40
REQUEST AND CONSIDERATION..............................................40
19. ATTORNEY...............................................................40
APPOINTMENT OF ATTORNEY................................................40
ATTORNEYS' POWERS......................................................40
APPLICATION OF INSOLVENCY DIVIDENDS....................................40
RIGHT OF PROOF LIMITED.................................................41
20. DEALING WITH INTERESTS.................................................41
NO DEALING BY COMPANY..................................................41
DEALINGS BY THE LENDER.................................................41
NO SET-OFF AGAINST ASSIGNEES...........................................43
21. NOTICES................................................................43
FORM...................................................................43
DELIVERY...............................................................43
WHEN EFFECTIVE.........................................................43
DEEMED RECEIPT - POSTAL................................................43
DEEMED RECEIPT - FACSIMILE.............................................43
22. GENERAL................................................................44
SET-OFF................................................................44
SUSPENSE ACCOUNT.......................................................44
CERTIFICATES...........................................................44
PROMPT PERFORMANCE.....................................................44
DISCRETION IN EXERCISING RIGHTS........................................44
CONSENTS...............................................................44
PARTIAL EXERCISING OF RIGHTS...........................................44
NO LIABILITY FOR LOSS..................................................45
CONFLICT OF INTEREST...................................................45
REMEDIES CUMULATIVE....................................................45
RIGHTS AND OBLIGATIONS ARE UNAFFECTED..................................45
INDEMNITIES............................................................45
VARIATION AND WAIVER...................................................45
CONFIDENTIALITY........................................................45
FURTHER STEPS..........................................................46
INCONSISTENT LAW.......................................................46
SUPERVENING LEGISLATION................................................46
TIME OF THE ESSENCE....................................................46
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APPLICABLE LAW.........................................................46
SERVING DOCUMENTS......................................................46
ADVERTISING............................................................46
COUNTERPARTS...........................................................47
SEVERANCE..............................................................47
23. INTERPRETATION.........................................................47
MEANINGS...............................................................47
REFERENCES TO CERTAIN GENERAL TERMS....................................63
NUMBER AND HEADINGS....................................................64
HEADINGS...............................................................64
BUSINESS DAYS..........................................................64
SCHEDULE 1 - CONDITIONS PRECEDENT (CLAUSE 2.4)................................65
SCHEDULE 2 - INITIAL DRAWDOWN NOTICE (CLAUSE 2.2).............................69
SCHEDULE 3 - BORROWING BASE CERTIFICATE.......................................70
SCHEDULE 4 - EXCLUSIONARY CRITERIA............................................71
SCHEDULE 5 - [INTENTIONALLY OMITTED]..........................................73
SCHEDULE 6 - DISCLOSURES......................................................74
SCHEDULE 7 - GUARANTEE AND INDEMNITY (CLAUSE 18.1)............................75
GUARANTEE..............................................................75
NATURE OF GUARANTEE....................................................75
INDEMNITY..............................................................75
REINSTATEMENT OF RIGHTS................................................75
RIGHTS OF GE CAPITAL ARE PROTECTED.....................................76
NO MERGER..............................................................76
EXTENT OF GUARANTOR'S OBLIGATIONS......................................77
GUARANTOR'S RIGHTS ARE SUSPENDED.......................................77
CROSS GUARANTEE........................................................78
SCHEDULE 8 - FORM OF SUBSTITUTION CERTIFICATE.................................79
SIGNING PAGE..................................................................81
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A$ FACILITY AGREEMENT
================================================================================
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PARTIES
-------------------------------------------------------------------------------
LENDER:
GE CAPITAL AUSTRALIA ACN 008 562 534 ("GE CAPITAL AUSTRALIA")
Level 5, 55 Hunter Street, Sydney NSW 2000
Facsimile No: 02 9338 4390
GE CAPITAL FINANCE PTY LIMITED ACN 075 554 175
Level 5, 55 Hunter Street
Sydney NSW 2000
Facsimile No: 02 9338 4390
(individually and collectively, the "Lender" but, in the context of the
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revolving loan facility, "Lender" means GE Capital Finance Pty Limited and/or GE Capital Australia and, in the context of the operating lease facility, "Lender" means GE Capital Australia)
COMPANY:
NATIONAL FLEET NETWORK PTY LIMITED ACN 094 802 141
1 Bullecourt Avenue, Milperra, NSW 2214
Facsimile No: (02) 9772 6390
GUARANTOR:
NMHG DISTRIBUTION PTY LIMITED ACN 053 370 291
1 Bullecourt Avenue, Milperra, NSW 2214
Facsimile No: (02) 9772 6390
Facility Agreement Page 6 of 83 Pages
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DETAILS
-------------------------------------------------------------------------------
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FACILITIES (1) DESCRIPTION:
Revolving loan facility to be provided by GE
Capital Finance Pty Limited and/or GE Capital
Australia.
REVOLVING LOAN FACILITY LIMIT:
A$5,000,000.
AVAILABILITY PERIOD:
5 years from the date of this agreement.
INTEREST RATE:
The index rate plus 2.75% per annum.
PURPOSE:
Working capital.
MATURITY DATE:
5 years from the date of this agreement.
(2) DESCRIPTION:
Operating lease facility to be provided by GE
Capital Australia
OPERATING LEASE FACILITY LIMIT:
A$81,000,000
AVAILABILITY PERIOD:
7 years from the date of this agreement.
PURPOSE:
Funding the acquisition of the business.
Funding the acquisition of new equipment and used
equipment acceptable to the Lender.
MATURITY DATE:
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Facility Agreement Page 7 of 83 Pages
The seventh anniversary of the date of this
agreement.
TOTAL FACILITY LIMIT: $86,000,000
-------------------------------------------------------------------------------
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FEES UNUSED FACILITY FEE:
0.5% per annum on the undrawn revolving loan
facility limit on a daily balance - see clause
7.1(a)
MONITORING FEE:
A$100,000 per annum - see clause 7.1(b).
ESTABLISHMENT FEE:
A$1,290,000 on the date of the first drawdown
under this agreement - see clause 7.1(c).
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INTERPRETATION
Definitions of terms printed like this are at the end of these General Terms before the Schedules.
THE FACILITY
1.1 Subject to this agreement, the Lender agrees to provide the company with the facility in Australian dollars of an amount not exceeding the total facility limit until the termination date. The parties agree that the facility includes:
(a) the revolving loan facility; and
(b) the operating lease facility.
The total facility limit is an overall collective limit which includes the revolving loan facility limit and the operating lease facility limit as sub limits.
CONDITIONS PRECEDENT TO THE FACILITY
1.2 The obligations of the Lender under the transaction documents including the obligation to provide the facility is subject to and conditional upon the Lender being satisfied that it has received:
(i) the items listed in Schedule 1;
(ii) any other information or document related to the transactions contemplated by the transaction documents which the Lender reasonably requests in relation to the company or the guarantor.
FURTHER CONDITION PRECEDENT TO THE FACILITY
1.3 The Lender need not provide any financial accommodation under any facility unless:
(a) it is to be provided during the relevant availability period set out in the Details; and
(b) providing the financial accommodation will not result in the total facility limit to be exceeded or the facility limit for each of the revolving loan facility and the operating lease facility to be exceeded; and
(c) the Lender has received all authorisations necessary or required; and
(d) the representations and warranties in clause 12 ("Representations and warranties" and (in the case of the revolving loan facility only) the statements in the drawdown notice
Facility Agreement Page 9 of 83 Pages
are true, complete and not misleading at the date of the
drawdown notice and at the drawdown date; and
(e) no event of default has occurred (other than one which has
either been waived by the Lender or remedied) and no event of
default would result from the provision of the financial
accommodation.
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The company may request the lease of the equipment under the terms of the operating lease facility. GE Capital Australia's obligation to lease the equipment is subject to and conditional upon the conditions precedents referred to in clauses 1.2 and 1.3 being satisfied. Each of the company and the guarantor acknowledge and agree that should the company use the operating lease facility, it is bound by the terms and conditions of this agreement and the operating lease facility.
[Intentionally omitted.]
DRAWINGS
2.1 The company need not use the revolving loan facility. However, if the company wants to use the revolving loan facility, it may do so by one or more drawings.
REQUESTING A DRAWING
2.2 If the company wants a drawing, the company agrees to give a drawdown notice to the Lender by 11am on the business day it wants the drawing.
EFFECT OF A DRAWDOWN NOTICE
2.3 A drawdown notice is effective when the Lender actually receives it in legible form. An effective drawdown notice is irrevocable.
CONDITIONS TO FIRST DRAWING
2.4 Before the company requests the first drawing, the company must:
(a) ensure that the Lender receives every item listed in Schedule 1 in form and substance satisfactory to the Lender; and
(b) ensure that the Lender receives all other documents reasonably required by the Lender to verify the items in Schedule 1 in form and substance satisfactory to the Lender; and
Facility Agreement Page 10 of 83 Pages
(c) allow a complete review and inspection of the receivables
portfolio of the company to be conducted by the Lender and the
Lender must confirm the review is acceptable to it.
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2.5 The Lender is entitled to rely on the items in Schedule 1 and the information contained in them without further enquiry.
2.6 Any transaction document required to be certified must be certified by a secretary or a director of the relevant entity as being true, complete and correct as at the time of certification and at the date of this agreement.
2.7 The Lender agrees to notify the company as soon as practicable after the Lender is satisfied that the conditions to first drawing are satisfied.
CONDITIONS TO ALL DRAWINGS
2.8 The Lender need not provide any financial accommodation under any facility, unless clauses 1.2 and 1.3 are satisfied.
BENEFIT OF CONDITIONS
2.9 Each condition precedent to drawing is for the sole benefit of the Lender and may be waived or modified by the Lender.
3.1 The total of the current drawings at any time must not exceed the lesser of:
(a) revolving loan facility limit; and
(b) the aggregate borrowing base at that time.
3.2 If the total of the current drawings exceeds the limit set out in clause 3.1, the company agrees to immediately repay to the Lender so much of the current drawings equal to the excess.
4. INTEREST ON REVOLVING LOAN FACILITY
INTERPRETATION
4.1 [Intentionally omitted].
INTEREST CHARGES
4.2 The company agrees to pay interest on the daily balance of each current drawing. The interest charge for each day is calculated by applying the interest rate to the daily balance of
the current drawing on the basis of a 360 day year. The interest rate for any day will be determined on the first business day of the calendar month in which the day falls.
INTEREST PAYMENT
4.3 On each interest payment date the company agrees to pay the Lender the interest which has accrued from and including the first day of the calendar month of the preceding month up to and including the last day of that calendar month.
REPAYMENT
5.1 The company agrees to pay within 5 business days of receipt all cash receipts, by way of deposit into a controlled account. To the extent not already paid, the company agrees to repay to the Lender the total of the current drawings on the maturity date for the revolving loan facility.
PREPAYMENT
5.2 The company may prepay a current drawing at any time. The facility limit for the revolving loan facility is not reduced by the amounts prepaid under this clause 5.2.
MANNER OF PAYMENT
5.3 Each obligor agrees to make payments payable by it under each transaction document to the Lender on the due date (or, if that is not a business day, on the next business day) in Australian dollars to an account in Australia in immediately available funds without set-off or counterclaim and without any deduction in respect of taxes (unless prohibited by law) into the account nominated by the Lender. The obligor satisfies a payment obligation only when the Lender receives the amount.
PAYMENT APPLICATION
5.4 [Intentionally omitted.]
CONVERSION OF CURRENCY
5.5 All payments by the obligors under this agreement must be made in Australian dollars. If the Lender receives an amount in a currency other than Australian dollars:
(a) it may convert the amount received into Australian dollars (even though it may be necessary to convert through a third currency to do so) on the day and at the rates (including spot rate, same day value rate or value tomorrow rate) as it considers appropriate. It may deduct its usual costs in connection with the conversion; and
Facility Agreement Page 12 of 83 Pages
(b) the obligor satisfies its obligation to pay in Australian
dollars only to the extent of the amount of Australian dollars
obtained from the conversion after deducting the costs of the
conversion.
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5.6 Where the Lender is obliged to make a payment under this agreement in a currency other than Australian dollars, the obligor must reimburse the Lender for that payment in Australian dollars unless the Lender specifies otherwise. For the purpose of calculating the amount payable in Australian dollars, the Lender may:
(a) convert the amount payable into Australian dollars (even though it may be necessary to convert through a third currency to do so) on the day and at the rates (including spot rate, same day value rate or value tomorrow rate) as it considers appropriate. It may add its usual costs in connection with the conversion in calculating the amount payable; and
(b) the obligor satisfies its obligation to make any payment under this agreement only to the extent that the moneys received by the Lender are sufficient to pay the liability in the other currency including the costs of the conversion to that currency.
APPLICATION OF PAYMENTS
5.7 While an event of default subsists, the Lender will apply amounts paid by the obligor or on its behalf and/or to the Lender from any controlled account, towards satisfying obligations under the revolving loan facility in the manner the Lender sees fit, unless the transaction documents expressly provide otherwise.
5.8 [Intentionally omitted].
6.1 The company may cancel or terminate the revolving loan facility. It may do this if the company gives the Lender at least 20 business days notice in writing. Once given, the notice is irrevocable. When the cancellation or termination takes effect, the total of the current drawings and all other amounts payable or to become payable in the future under the revolving loan facility are immediately due and payable.
FEES
7.1 The company agrees to pay the Lender:
(a) the non-refundable unused facility fee on the undrawn revolving loan facility limit payable monthly in arrears on the first business day of each month and on the maturity date of the revolving loan facility, such fee to accrue on a daily basis;
Facility Agreement Page 13 of 83 Pages
(b) the non-refundable monitoring fee calendar quarterly in
arrears commencing on the last day of the calendar quarter
that contains the first drawdown under any facility and
expiring on (and also being payable on) the last day of the
availability period applicable to the revolving loan facility,
such fee to accrue on a daily basis;
(c) the non-refundable establishment fee on the date of the first
drawdown under any facility.
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8.1 The Lender agrees to maintain a loan account on its books to record:
(a) all current drawings;
(b) all other amounts due and payable by the obligor to the Lender under the transaction documents including but not limited to interest, fees and amounts deemed to be current drawings;
(c) all payments made by or on behalf of the obligor or by means of the locked box agreement or blocked account agreement; and
(d) all other debits and credits as provided for in the transaction documents.
The balance in the loan account is sufficient evidence of the amounts due and owing to the Lender by the obligors in the absence of error. However, a failure to record or an error in recording does not limit or otherwise affect an obligor's obligations under the transaction documents.
8.2 the Lender agrees to provide the company with a monthly statement of transactions for the facility. Unless the company notifies the Lender of any objection to any item in that statement (specifically describing the basis for the objection), within 60 days after the date of the statement, each item in the statement is (absent obvious error) prima facie evidence of the correctness of the item in the absence of error.
PAYMENTS TO THE LENDER
9.1 If a law requires the obligor to deduct an amount in respect of taxes from a payment under any transaction document such that the Lender would not actually receive on the due date the full amount provided for under the transaction document, then:
(a) the amount payable is increased so that, after making the deduction and further deductions applicable to additional amounts payable under this clause 9.1, the Lender is entitled to receive (at the time the payment is due) the amount it would have received if no deductions had been required; and
Facility Agreement Page 14 of 83 Pages
(b) the obligor agrees to make the deductions; and
(c) the obligor agrees to pay the amounts deducted to the relevant
authority in accordance with applicable law and deliver the
original receipts to the Lender.
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COMPENSATION
10.1 The company agrees to compensate the Lender on demand if, any law or
change in law taking effect after the date of this agreement, a change
in any law's interpretation or application by an authority after the
date of this agreement or compliance by the Lender or any of its
related entities with any such law, changed law or changed
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interpretation or application directly:
(a) increases the cost of the facility to the Lender; or
(b) reduces any amount received or receivable by the Lender, or its effective return, in connection with the facility; or
(c) reduces the Lender's return on capital allocated to the facility, or its overall return on capital.
Compensation need not be in the form of a lump sum and may be demanded as a series of payments. If the company so requests, the Lender will use reasonable endeavours to put in place revised arrangements (satisfactory to the Lender and the company) to avoid or minimise the increased costs or reduced receipt or return (as the case may be).
CALCULATION IN REASONABLE DETAIL
10.2 If the Lender makes a demand under clause 10.1, it agrees to provide
the company with reasonably detailed calculations of how the amount
demanded has been ascertained. However, nothing in this clause 10.2
obliges the Lender to provide details of its business or tax affairs
which it considers in good faith to be confidential.
11. ILLEGALITY OR IMPOSSIBILITY
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RIGHT TO SUSPEND OR CANCEL
11.1 This clause 11 applies if:
(a) a change in a law; or
(b) a change in the interpretation or administration of a law by an authority; or
(c) a new law taking effect after the date of this agreement,
makes it (or will make it) illegal or impossible for the Lender to fund, provide, or continue to fund or provide, financial accommodation under the transaction documents. In these circumstances, the Lender, by giving a notice to the company, may suspend or cancel some or all of the Lender's obligations under this agreement as indicated in the notice.
EXTENT AND DURATION
11.2 The suspension or cancellation:
(a) must apply only to the extent necessary to avoid the illegality or impossibility; and
(b) in the case of suspension, may continue only for so long as the illegality or impossibility continues.
NOTICE REQUIRING REPAYMENT
11.3 If the illegality or impossibility relates to a current drawing, the
Lender by giving a notice to the company, may require repayment of all
or part of that current drawing. The company agrees to repay the amount
specified within 5 business days after receiving the notice.
FEES
11.4 [Intentionally omitted.]
11.5 The unused facility fee is not payable by the company for that part of
the facility that is cancelled or suspended under this clause, and
provided no event of default has occurred or occurs, for the period of
the suspension or cancellation.
12. REPRESENTATIONS AND WARRANTIES
================================================================================
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REPRESENTATIONS AND WARRANTIES
12.1 Each obligor (to the extent applicable) represents and warrants (except
in relation to matters disclosed to the Lender by the company and
accepted by the Lender in writing) that:
(a) (INCORPORATION AND EXISTENCE) it has been incorporated as a
company limited by shares in accordance with the laws of its
place of incorporation, is validly existing under those laws
and has power and authority to carry on its business as it is
now being conducted; and
(b) (POWER) it has power to enter into the transaction documents
to which it is a party and observe its obligations under them;
and
(c) (AUTHORISATIONS) it has in full force and effect all
authorisations necessary for it to enter into the transaction
documents to which it is a party, to observe its obligations
under them, to carry on its business and exercise its rights
under them and to allow them to be enforced and such
authorisations are valid and subsisting; and
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Facility Agreement Page 16 of 83 Pages
(d) (NO CONTRAVENTION OR EXCEEDING POWER) the transaction
documents and the transactions under them which involve it do
not contravene its constituent documents or any law or
obligation or agreement by which it is bound or to which any
of its assets are subject or cause a limitation on its powers
or the powers of its directors to be exceeded; and
(e) (OBLIGATIONS VALID, BINDING AND ENFORCEABLE) its obligations
under the transaction documents are valid and binding and
enforceable against it in accordance with their terms; and
(f) (FILINGS) it is not necessary or desirable, to ensure that any
transaction document is legal, valid, binding or admissible in
evidence, that any transaction document or any other document
be filed or registered with any government authority, other
than registration of the fixed and floating charge at the
Australian Securities and Investments Commission; and
(g) (FINANCIAL STATEMENTS) its most recent audited or unaudited
(as the case may be) financial statements and any other of its
financial statements which it has given to the Lender are a
true and fair statement of its financial position as at the
date to which they are prepared, are prepared in accordance
with the laws of Australia and (unless inconsistent with those
laws) accounting standards and disclose or reflect all its
actual and contingent liabilities as at that date, and there
has been no change in its financial position since the date of
those statements that is likely to have a material adverse
effect; and
(h) (CONSOLIDATED ACCOUNTS) the most recent audited consolidated
financial statements of the reporting group are a true and
fair statement of the reporting group's financial position as
at the date to which they are prepared, are prepared in
accordance with the laws of Australia and (unless inconsistent
with those laws) accounting standards and disclose or reflect
all the economic entity's actual and (in respect of the end of
the financial year audited consolidated financial statements
only) contingent liabilities as at that date, and there has
been no change in its financial position since the date of
those statements that is likely to have a material adverse
effect; and
(i) (EVENT OF DEFAULT) no event of default or potential event of
default has occurred or continues unremedied; and
(j) (DEFAULT UNDER LAW - MATERIAL ADVERSE EFFECT) neither it nor
any of its subsidiaries is in default under a law or
obligation affecting any of them or their assets in a way
which is likely to have a material adverse effect; and
(k) (LITIGATION) as far as it is aware, there is no pending or
threatened proceeding affecting it or any of its subsidiaries
or any of their assets before a court, governmental agency,
commission or arbitrator except those in which a decision
against it or the subsidiary (either alone or together with
other decisions) would be insignificant; and all actual
proceedings which seek damages in excess of $500,000 or
injunctive relief or allege criminal misconduct of it or any
of its subsidiaries have been disclosed to the Lender; and
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Facility Agreement Page 17 of 83 Pages
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(l) [Intentionally omitted.]
(m) [Intentionally omitted.]
(n) [Intentionally omitted.]
(o) (EMPLOYMENT MATTERS) in the case of the company only, as far as it is aware, there are no pending or threatened strikes or other material employment disputes against it or any of its subsidiaries; and hours worked and payments made to its employees or the employees of any of its subsidiaries comply with all applicable laws and except as disclosed to the Lender set out in the disclosure statement neither it nor any of its subsidiaries is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement or any employment agreement, in each case involving more than $500,000 and except as disclosed to the Lender set out in the disclosure statement and there are no complaints or charges against it or any of its subsidiaries pending or, to its knowledge, threatened to be filed with any authority or arbitrator in connection with the employment or termination of employment by it or any of its subsidiaries of any individual which is likely to have a material adverse effect; and
(p) (JOINT VENTURES, SUBSIDIARIES AND AFFILIATES) in the case of the company only, except disclosed to the Lender neither it nor any of its subsidiaries has any subsidiaries, is engaged in any joint venture or partnership, or is an affiliate of any other person; and
(q) (CAPITAL STRUCTURE) all of its issued and outstanding share capital and the issued and outstanding share capital of any of its subsidiaries is owned by each of the persons and in the amounts disclosed to the Lender set out in the disclosure statement; and there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which it or any of its subsidiaries may be required to issue, sell, repurchase or redeem any of their share capital or other equity securities or any share capital or other equity securities of its subsidiaries; and
(r) (INDEBTEDNESS) all of its indebtedness in excess of $500,000 (excluding indebtedness under this agreement) and the indebtedness in excess of $500,000 of each of its subsidiaries is described in the disclosure statement; and
(s) (TAXES) in the case of the company only, all taxes (including taxes on overall net income of the company) which are due and payable by it and each of its subsidiaries have been paid or provision has been made for them to be paid, except where the amount of the tax is the subject of a good faith contest with the appropriate authority and meeting the requirements set out in clause 13.1 (k) and details of any of its tax returns or any tax return of its subsidiaries which are currently being audited are disclosed to the Lender along with any assessments or to its knowledge, threatened assessments in connection with those audits;; and
(t) (BROKERS) in the case of the company only, no broker or finder acting on its behalf or on behalf of any of its subsidiaries brought about the obtaining or making of the facility other than as disclosed in writing to the Lender; and
Facility Agreement Page 18 of 83 Pages
(u) (INTELLECTUAL PROPERTY) in the case of the company only, it
and each of its subsidiaries owns or has rights to use all
intellectual property necessary to conduct that business, and
each patent, trademark, copyright and licence is listed,
together with application or registration numbers, as
applicable, in the disclosure statement; and it and each of
its subsidiaries conducts its business without infringing or
interfering with any intellectual property of any person; and
(v) (RANKING OF SECURITY) in the case of the company only, the
Lender has been granted a first ranking fixed and floating
charge over all present and future assets of the company which
takes priority over all other security interests; and
(w) (ENVIRONMENTAL MATTERS) in the case of the company only, and
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to the extent that it has a material adverse effect:
(i) [Intentionally omitted.]
(ii) it and each of its subsidiaries are and have been in compliance with all environmental laws;
(iii) it and each of its subsidiaries have obtained, and are in compliance in all material respects with, all environmental permits required for the operations of their business as presently conducted or as proposed to be conducted;
(iv) it and each of its subsidiaries are not involved in operations or know of any facts, circumstances or conditions that are likely to result in any environmental liabilities;
(v) neither it nor any of its subsidiaries has received a notice identifying any of them as a person who may be the potential recipient of any clean-up notice or potential recipient of any claim for contribution or indemnity by any other person who may be served with a clean-up notice or requesting information under any statutes, and, to its knowledge, there are no facts, circumstances or conditions that may result in it or any of its subsidiaries being identified as a person who may be the potential recipient of any clean-up notice or potential recipient of any claim for contribution or indemnity by any other person who may be served with a clean-up notice under any statutes;
(vi) it and each of its subsidiaries have provided to the Lender copies of all existing environmental reports, reviews and audits and all written information pertaining to their actual or potential environmental liabilities; and
(x) [Intentionally omitted.]
(y) [Intentionally omitted.]
(z) [Intentionally omitted]
(aa) (OWNERSHIP OF PROPERTY) in the case of the company only, it has good title to all property held by it or on its behalf and all undertakings carried on by it, as legal and beneficial owner as disclosed to the Lender free from encumbrances other than
Facility Agreement Page 19 of 83 Pages
permitted security interests, and there are no facts known to
it or any of its subsidiaries which may result in any
encumbrances arising over that property; and
(bb) (BENEFIT) its entry into and the performance by the obligor of
its obligations under the transaction documents to which it is
a party is for its commercial benefit and is in its commercial
interests; and
(cc) (SOLVENCY) there are no reasonable grounds to suspect that it
or any of its subsidiaries is unable to pay its debts as and
when they become due and payable; and
(dd) (NO BENEFIT TO RELATED PARTY) no person has contravened or
will contravene section 208 of the Corporations Law by
entering into any transaction document or participating in any
transaction in connection with a transaction document; and
(ee) (FULL DISCLOSURE) in the case of the company only, it has
disclosed by it in writing to the Lender all facts relating to
it and its subsidiaries, the transaction documents and all
things in connection with them which are material to the
assessment of the nature and amount of the risk undertaken by
the Lender in entering into the transaction documents and
doing anything in connection with them; and
(ff) (DISCLOSURES) in the case of the company only, all information
disclosed to the Lender in connection with any transaction
document is true and complete and is not misleading or
deceptive in any material way, including information contained
in any borrowing base certificate, drawdown notice and
disclosure statement; and
(gg) (NO IMMUNITY) neither it nor any of its subsidiaries has
immunity from the jurisdiction of a court or from legal
process; and
(hh) (NO CONTROLLER) no controller is currently appointed in
relation to it; and
(ii) (RANKING) its payment obligations under the transaction
documents to which it is a party rank and will rank at all
times at least equally with all its present and future
unsecured payment obligations, other than those which are
mandatorily preferred by law.
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CONTINUATION AND REPETITION OF REPRESENTATIONS AND WARRANTIES
12.2 The obligor repeats each of the representations and warranties in this
clause 12:
(a) on the date each rental schedule is entered into under the
operating lease facility and on each purchase date under the
operating lease facility; and
(b) if no repetition occurs under paragraph (a) in a month, on the
date in that month on which a borrowing base certificate is
delivered by the company.
12.3 Each obligor must notify the Lender of anything that happens at any
time that makes any one or more of the representations and warranties
in this clause 12 untrue, incomplete or misleading and deceptive when
made.
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GENERAL UNDERTAKINGS
13.1 Each obligor undertakes to:
(a) (ACCOUNTING RECORDS) keep proper accounting records in accordance with the laws of Australia and (unless inconsistent with those laws) accounting standards and ensure that each of its subsidiaries does the same; and
(b) (INFORMATION) promptly give the Lender any document or other information that the Lender reasonably requests from time to time; and
(c) (STATUS CERTIFICATES) on request from the Lender, give the Lender a certificate signed by two of its directors which states whether (to the best of their knowledge after making due enquiries) an event of default continues unremedied; and
(d) (MAINTAIN AUTHORISATIONS) obtain, renew on time and comply with the terms of, each authorisation necessary for it to enter into the transaction documents to which it is a party, to observe its obligations and exercise its rights under them and to allow them to be enforced; and
(e) (INCORRECT REPRESENTATION OR WARRANTY) promptly notify the Lender if it becomes aware that any representation or warranty made by it or on its behalf in connection with a transaction document is found to be incorrect or misleading when made; and
(f) (ENSURE NO EVENT OF DEFAULT) do everything reasonably necessary to ensure that no event of default occurs and ensure that each of its subsidiaries does the same; and
(g) (NOTIFY DETAILS OF EVENT OF DEFAULT) if an event of default occurs, notify the Lender as soon as possible but, in any event, within five business days giving full details of the event and any step taken or proposed to remedy it; and
(h) (PURPOSE) in the case of the company only, use the facility only for the purpose set out in the Details; and
(i) (CONTINUE BUSINESS) in the case of the company only, conduct its business and not to change significantly the general character of its business contemplated to be conducted or as otherwise permitted under the transaction documents; and
(j) (CONDUCT BUSINESS) in the case of the company only conduct its business (including collecting debts owed to it) in a proper, orderly and efficient manner;
(k) (MAKE PAYMENTS) in the case of the company only, duly and punctually pay and discharge or cause to be paid and discharged all taxes (including taxes on overall net income of the company), assessments and other charges imposed by any authority on it or its property. However, it may in good faith contest by appropriate proceedings the validity or amount of any such charge if:
Facility Agreement Page 21 of 83 Pages
(i) at the time it commences the contest no event of
default has occurred and is continuing; and
(ii) adequate reserves in respect of the charge are
maintained in its books; and
(iii) the contest is maintained and prosecuted continuously
with due diligence and operates to suspend collection
or enforcement of the charge or any encumbrance in
respect of it; and
(iv) no encumbrance arises in respect of the charge other
than a permitted security interest; and
(v) the charge does not result in a material adverse
effect; and
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(l) (LANDLORD, AND MORTGAGEE AGREEMENTS) in the case of the company only, promptly, at the request of the Lender, obtain agreements in form and substance satisfactory to the Lender from each landlord or mortgagee of the company, of real property where the computer system owned, used or occupied by the company is located, containing a waiver or subordination of all encumbrances or claims that that person may assert against the company's property; and
(m) (DEPOSIT OF FUNDS) in the case of the company only, within 5 business day of receipt of any cheques, cash or other items of payment deposit those items into a controlled account; and
(n) (PUBLIC NOTICES) give to the Lender copies of all:
(vi) documents issued by it as required by applicable law to be issued to its shareholders; and
(vii) material documents filed by it with the Australian Securities and Investments Commission,
promptly following issue or filing of the relevant document or statement; and
(o) [Intentionally omitted]
(p) [Intentionally omitted]
(q) [Intentionally omitted]
(r) (ENVIRONMENTAL MATTERS) in the case of the company only, conduct its operations and keep and maintain its property (including, without limitation, all plant and equipment) in compliance with all environmental laws and material environmental permits other than non-compliance which could not reasonably be expected to have a material adverse effect; and implement any and all investigation, remediation, removal and response actions which are appropriate or necessary to maintain the value and marketability if its property (including, without limitation, all plant and equipment) or to otherwise comply with environmental laws and material
Facility Agreement Page 22 of 83 Pages
environmental permits; and notify the Lender promptly after it
becomes aware of any violation of environmental laws or
material environmental permits and of any fact, matter or
circumstance which it knows or reasonably anticipates may make
it or any of its subsidiaries a person who may be the
potential recipient of any clean-up notice or potential
recipient of any claim for contribution or indemnity by any
other person who may be served with a clean-up notice; and
promptly forward to the Lender a copy of any order, notice,
request for information or any communication or report
(including any actual or threatened clean-up notice) received
by it in connection with any such violation or any other
matter relating to any environmental laws or material
environmental permits that could reasonably be expected to
result in environmental liabilities, in each case whether or
not any authority has taken or threatened any action in
connection with any such violation or other matter; and
(s) (INTELLECTUAL PROPERTY) conduct its business without
infringing or interfering with any intellectual property of
any person; and obtain all patents, trademarks, copyrights
permits and licences necessary or required for the conduct of
its business; and
(t) (MAINTAIN STATUS) maintain its status as a company limited by
shares that is incorporated (or is taken to be incorporated)
under the Corporations Law; and
(u) (COMPLY WITH LAW) comply with all applicable law including by
paying when due all taxes (including taxes on overall net
income of the obligor) for which it or any of its property is
assessed or liable (except to the extent that these are being
diligently contested in good faith and by appropriate
proceedings and it has made adequate reserves for them); and
(v) (HOLD AUTHORISATIONS) obtain and maintain each authorisation
that is necessary or desirable to:
(i) execute the transaction documents to which it is a
party and to carry out the transactions;
(ii) ensure that the transaction documents to which it is
a party are legal, valid, binding and admissible in
evidence; or
(iii) enable it to properly carry on its business,
and must comply with any conditions to which any of these
authorisations is subject where a failure to comply with any
or all of those conditions could have a material adverse
effect on it; and
(w) (NO ADMINISTRATOR) not appoint an administrator without prior
notice to the Lender; and
(x) (NOTICE TO GE SYNDICATION) immediately give notice to the
Lender as soon as it becomes aware of:
(i) any event of default or any potential event of
default occurring, which notice must include full
details and the steps being taken to remedy such
default;
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Facility Agreement Page 23 of 83 Pages
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(ii) any litigation, arbitration, mediation, conciliation or administrative proceeding, which it is affected by (not being frivolous or vexatious) where such a claim is in excess of $500,000 and which could have a material adverse effect on it;
(iii) any other event, circumstance or occurrence which will have a material adverse effect on it;
(iv) any proposal by, or notification being given to it by, a government agency to compulsorily acquire the whole or substantial part of its assets or business;
(v) any dispute between it and any government agency which will have a material adverse effect on it; and
(vi) any representation or warranty made or taken to be made by it or on its behalf in connection with a transaction document is found to be incorrect or misleading when made or taken to be made; and
(y) (PAY INDEBTEDNESS) pay or cause to be paid in full as and when due (or within any period of grace applicable thereto) all of its indebtedness except for:
(i) amounts in respect of which it is disputing its liability and contesting the matter in good faith by appropriate mediation, judicial or arbitral proceedings; and
(ii) amounts (excluding amounts due and payable or which may become due and payable under the transaction documents) payable to any party not in excess of A$100,000 in any calendar year;
(z) (COMPLIANCE WITH DOCUMENTS) use its best endeavours to ensure that no event of default by it occurs and must, at all times fully comply with, observe and perform all its obligations under the transaction documents to which it is a party; and
(aa) [Intentionally omitted]
(bb) (ASSET REGISTER) ensure that the company creates and maintains a written register of all the equipment which records and identifies details of each item of equipment and the location of each item of equipment at all times (the "asset register"). The asset register must be in form and substance acceptable to the Lender; and
(cc) (ASSET TRACKING SYSTEM) ensure that the company owns and maintains an asset tracking system reasonably acceptable, at all times, to the Lender and provides reasonable access to the Lender at reasonable times to inspect the asset tracking system operated as part of its business; and
(dd) (EQUIPMENT INSPECTION) ensure that the Lender has reasonable access to the equipment provided reasonable notice is given to the company; and
Facility Agreement Page 24 of 83 Pages
(ee) (EQUIPMENT ASSET AUDIT) ensure that the Lender is given access
to the relevant assets and records to conduct a stocktake
audit of approximately 15% of the equipment and the rental
agreements relating to that equipment to be completed within
15 business days of the first drawdown under any facility and
the company agrees to give the Lender access on reasonable
notice, at the Lender's cost (unless otherwise agreed), to
conduct a further stocktake audit if so required.
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FINANCIAL UNDERTAKINGS
13.2 The company agrees:
(a) (NEGATIVE PLEDGE) not to create or permit to exist, a security interest over any of its property, other than a permitted security interest without the prior written consent of the Lender; and
(b) (EBITDAR) to ensure that indebtedness of the company will not be greater than:
(i) 5.0 x EBITDAR plus acquisition costs for the 4 calendar quarter period ending 30/6/2001 and, for each subsequent (cumulative) period of calendar quarters in 2001 then completed, in each case with EBITDAR for such (cumulative) period to be annualised; and
(ii) 4.5 x EBITDAR for each rolling 4 calendar quarter period ending 31 March and 30 June in 2002; and
(iii) 4.0 x EBITDAR for each rolling 4 calendar quarter period ending after 30 June 2002.
The ratios in this paragraph (b) shall only apply and be tested as at the end of each calendar quarter.
(c) (CAPITAL EXPENDITURE) to ensure that the capital expenditures of the company in any financial year does not (in total) exceed A$25 million per annum; and
(d) (TANGIBLE NET WORTH) to ensure that, tangible net worth of the company is at least:
(i) A$6,000,000 throughout the calendar year ending 31 December 2001; and
(ii) A$8,000,000 thereafter; and
(e) (FIXED CHARGE COVER) to ensure that the fixed charge coverage ratio of the company (measured calendar quarterly at the end of the calendar quarter) is not less than:
(i) 1.0:1 for the cumulative 6 months to 30 June 2001;
(ii) 1:05 for the cumulative 9 months to 30 September 2001;
(iii) 1:10 for the cumulative 12 months to 31 December 2001; and
Facility Agreement Page 25 of 83 Pages
(iv) 1:15:1 thereafter calculated on a rolling 4 calendar
quarter basis measured calendar quarterly at the end
of each quarter; and
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(f) (DIVIDENDS) to ensure that the aggregate of declared or paid dividends of the company in a financial year are limited to 50% of Excess Cash Flow for the preceding financial year.
NEGATIVE COVENANTS
13.3 The company undertakes that it will not (in its own capacity or as
trustee of any trust or in respect of any property subject to any trust
of which it is a trustee), without the prior consent of the Lender:
(a) (MERGERS) form or acquire any subsidiary or merge or
consolidate with, acquire all or substantially all of the
assets or share capital or otherwise combine with or acquire
any person; or
(b) (INVESTMENTS) make or permit to exist any investment in, or
any loan or other financial accommodation to any person other
than loans to or from a related entity otherwise permitted
under this agreement; or
(c) (INDEBTEDNESS) incur, assume or permit to exist any
indebtedness except permitted indebtedness; or
(d) (REPAYMENT) voluntarily prepay, redeem, purchase, defease or
otherwise satisfy indebtedness prior to its due date except
under the transaction documents, other than amounts not in
excess of A$500,000 in any calendar year and permitted
payments; or
(e) (RELATED PARTY TRANSACTIONS) enter into or be party to any
transaction with any other company or related entity to the
company except:
(i) for the payment of permitted dividends or permitted
payments; or
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(ii) where the transaction is:
(A) pursuant to the reasonable requirements of its business; and
(B) upon terms that are no less favourable to it than would be obtained in a comparable arm's length transaction with a person who is not another company or a related entity, or affiliate of the company; or
(f) (LOANS TO EMPLOYEES) enter into any lending transaction with any of its employees or any employees of any of its subsidiaries for a principal amount of more than A$250,000, or in aggregate A$1,000,000; or
(g) (CAPITAL STRUCTURE) other than a contribution of new equity, make any change in its capital structure as described in the disclosure statement or otherwise disclosed to the Lender; or
Facility Agreement Page 26 of 83 Pages
(h) (BUSINESS) make any change to any of its business objectives,
purposes or operations if that change could have a material
adverse effect; or
(i) (GUARANTEES) enter into or give any guarantee or other
assurance against financial loss in connection with money
borrowed or raised by it or at its request or any of its
subsidiaries other than permitted indebtedness or in respect
of permitted indebtedness; or
(j) (SECURITY INTERESTS) create or allow to exist a security
interest on the whole or any part of its present or future
property except permitted security interests; or
(k) (DISPOSE OF PROPERTY) dispose of all or a substantial part of
its property (either in a single transaction or in a series of
transactions whether related or not and whether voluntarily or
involuntarily) except:
(i) the sale of equipment or inventory in the ordinary
course of business; or
(ii) disposals (other than those referred to in paragraphs
(i) or (iii)) of equipment, real property or fixtures
that are obsolete or no longer used or useful in its
business where the value of the property disposed of
is less than $1,000,000 in total for the company in
any financial year; or
(iii) disposals (other than those referred to in paragraphs
(i) or (ii)) of other equipment or fixtures where the
value of the property disposed of is less than
$1,000,000 in total for the company in any financial
year; or
(l) [Intentionally omitted]
(m) (CANCELLATION OF INDEBTEDNESS) cancel any claim or debt owing
to it except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of business
consistent with past practices; or
(n) (RESTRICTED PAYMENTS) make any restricted payment or permitted
dividends; or
(o) (COMPANY CONSTITUTION) change its constitution; or
(p) [Intentionally omitted]
(q) [Intentionally omitted]
(r) [Intentionally omitted]
(s) (SPECULATIVE TRANSACTIONS) enter into any transaction
involving commodity options, futures contracts, interest rate
swaps or similar transactions except solely to hedge against
fluctuations in the prices of foreign currencies receivable or
payable by it or under a firm purchase order; or
(t) [Intentionally omitted]
--------------------------------------------------------------------------------
Facility Agreement Page 27 of 83 Pages
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(u) [Intentionally omitted]
(v) [Intentionally omitted]
(w) [Intentionally omitted]
(x) (NEW BANK ACCOUNTS) open any new deposit or other accounts with any bank or financial institution or create any term deposit, unless the Lender has consented to the opening of the account or it is an "Operating Account" as defined in the blocked account agreement; or
(y) (RELATED PARTY INDEBTEDNESS) pay or otherwise satisfy indebtedness owed or payable to any related entity of the company .
FINANCIAL REPORTING
13.4 The company undertakes to:
(a) (MONTHLY FINANCIAL INFORMATION) give the Lender:
(i) within 30 days of the end of each month, an unaudited consolidated balance sheet of the company as at the last day of that financial month; and
(ii) within 30 days of the end of each month, unaudited consolidated profit and loss and cash flow statements both for that month and the financial year to date for the company setting out in comparative form the figures for the corresponding period in the previous year and the figures contained in the projections for that year; and
(iii) within 45 days of the end of each calendar quarter, an unaudited consolidated balance sheet of the guarantor as at the last day of that calendar quarter;
(iv) within 45 days of the end of each calendar quarter, unaudited consolidated profit and loss and cashflow statements both for that quarter and the financial year to date for the guarantor setting out in comparative form the figures for the corresponding period in the previous year and the figures contained in the projections for that year;
(v) within 45 days after the last day of each quarter, a certificate signed by a director of the company showing the calculations used in determining compliance with the financial undertakings set out in clauses 13.2(b), (c), (d), (e) and (f) and stating that the financial information gives a true and fair view in accordance with laws of Australia and (unless inconsistent) accounting standards of the financial position and results of operations of the reporting group, any other information presented is true and complete in all material respects and that no event of default has occurred or is continuing or, if that statement cannot be made, the nature of each event of default and the steps taken to correct them; and
Facility Agreement Page 28 of 83 Pages
(b) (OPERATING PLAN) give to the Lender as soon as it is available
but by no later than 60 days after the end of each financial
year an annual operating plan on a monthly basis for the
company approved by the directors of each company in the
company. The operating plan must include:
(i) a statement of all of the material assumptions on
which the plan is based; and
(ii) monthly balance sheets and a monthly profit and loss
and cash flow statements for the following year.
The operating plan must include sales, gross profits,
operating expenses, operating profit, cash flow projections,
excess borrowing availability and all prepared on the same
basis and in similar detail as that on which the financial
information referred to in sub-paragraph (a) are provided (and
in the case of cash flow projections, representing
management's good faith estimates of future financial
performance based on historical performance), and include
plans for capital expenditures; and
(c) (MANAGEMENT LETTER) give to the Lender within 20 business days
after the audit committee or the board of NMHG has received
any auditor's management letter, exception report or similar
letters or reports relating to the business or operations of
the company, , a copy (in so far as it relates to the company)
of any such management letter, exception report or similar
letters or reports; and
(d) (ANNUAL FINANCIAL STATEMENTS) give the audited consolidated
financial statements of each obligor and NMHG for each
financial year to the Lender within 120 days after the end of
that year. Those consolidated financial statements must set
out in comparative form the figures for the corresponding
period in the previous year; and
(e) (OFFICER'S CERTIFICATE) give to the Lender at the same time as
the financial statements in clause 13.4(d), a certificate
signed by a director showing in reasonable detail the
calculations used in determining compliance with each of the
financial undertakings in clause 13.2 and stating that the
financial information gives a true and fair view in accordance
with laws of Australia and (unless inconsistent) accounting
standards of the financial position and results of operations
of each obligor and its subsidiaries, any other information
presented by it is true, complete and not misleading or
deceptive in any material respects and that no event of
default has occurred or is continuing or, if that statement
cannot be made, the nature of each event of default and the
steps taken to correct them; and
(f) (RECONCILIATION REPORT) give the Lender at the same time as
the delivery of the monthly financial reports referred to in
clause 13.4(a) a reconciliation of the accounts receivable and
accounts payable trial balances and month end inventory
reports of the reporting group to the general ledger of the
reporting group and monthly financial reports delivered under
clause 13.4(a).
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OTHER REPORTS
13.5 The company undertakes to provide to the Lender in form and substance satisfactory to the Lender:
Facility Agreement Page 29 of 83 Pages
(a) (BORROWING BASE CERTIFICATE) on request by the Lender, but no
less frequently than 10 business days after the end of each
month, a borrowing base certificate for the company; and
(b) (ACCOUNTS RECEIVABLE ROLL FORWARD ANALYSIS) within 10 business
days after the end of each month, reports showing all
additions and reductions (cash and non-cash) to the accounts
receivable of the company for that month; and
(c) (OUTSTANDING ACCOUNTS) on request by the Lender, and within 10
business days after the end of each month, a summary report of
accounts outstanding of the company aged from as follows: 1 to
30 days, 31 to 60 days, 61 to 90 days and 91 days or more; and
(d) (ASSET REGISTER) on request by the Lender, but no less than
every six months, a complete and up-to-date copy of the asset
register.
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14.1 If the Lender at any time has a reasonable basis to believe that there
may be a violation of any environmental laws or environmental permits
by any obligor or any environmental liability or any threatened or
actual service of any clean-up notice or any claim for contribution or
indemnity against any obligor by any other person served or threatened
to be served with any clean-up notice, which, in each case, could
reasonably be expected to have a material adverse effect, then the
obligor on the request of the Lender agrees to:
(a) cause the performance of such environmental investigations and
preparation of such environmental reports as the Lender may
reasonably request, which must be conducted by reputable
environmental consulting firms acceptable to the Lender and be
in form and substance acceptable to the Lender; and
(b) permit the Lender or its representatives to have access to all
property for the purpose of conducting such environmental
investigations and testing as it deems reasonably appropriate.
15. EVENTS OF DEFAULT AND REVIEW EVENT
================================================================================
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EVENTS OF DEFAULT
15.1 Each of the following is an event of default:
(a) (NON PAYMENT - TRANSACTION DOCUMENT) the obligor does not pay on time any amount payable under any transaction document in the manner required under it, unless that failure results solely from technical difficulties relating to the transfer of such amounts to the Lender and such failure is not remedied within 2 business days after the due date for payment; or
Facility Agreement Page 30 of 83 Pages
(b) (CROSS DEFAULT) any present or future monetary obligations of:
(i) the obligor or any of its subsidiaries for amounts
totalling more than A$1,000,000 (or its equivalent in
another currency); or
(ii) NMHG for amounts totalling more than US$10,000,000,
are not satisfied on time (or at the end of their period of
grace) or become prematurely payable and are not paid.
(A "monetary obligation" means a monetary obligation in
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connection with:
(i) money borrowed or raised; or
(ii) any hiring arrangement, redeemable preference share, letter of credit or financial markets transaction (including a swap, option or futures contract); or
(iii) a guarantee or indemnity in connection with money borrowed or raised);
or
(c) (NON OBSERVANCE OF OBLIGATIONS) the obligor does not observe any of its obligations under any transaction documents or under any other agreement or obligation with the Lender or its related entities (not being a non-observance or failure referred to elsewhere in this clause 15.1) and that failure is incapable of remedy or, if capable of remedy, continues for 10 business days after the obligor receives a notice from the Lender requiring that failure be remedied; or
(d) (ENFORCEMENT AGAINST ASSETS) distress is levied or a judgment, order or encumbrance is enforced, or becomes enforceable, against any property of the obligor or any of its subsidiaries for amounts in total exceeding A$1,000,000 (or the equivalent in any other currency in which the enforcement occurs); or
(e) (INCORRECT DOCUMENT) any document or information contained in any document given under clause 2.4 ("Conditions to first drawing") is untrue, incomplete or misleading; or
(f) (INCORRECT REPRESENTATION OR WARRANTY) a representation or warranty made by or in respect of the obligor in connection with a transaction document is found to have been untrue, incorrect or misleading when made, or the obligor fails to make a disclosure in accordance with clause 12.3 in any material respect ("Continuation of representations and warranties"); or
(g) (INSOLVENCY) the obligor or NMHG is or becomes insolvent or steps are taken to make any of those persons insolvent; or
(h) (CEASING BUSINESS) the obligor stops payment, ceases to carry on its business or a material part of it, or threatens to do either of those things except to reconstruct or amalgamate while solvent on terms approved by the Lender; or
Facility Agreement Page 31 of 83 Pages
(i) (VOIDABLE TRANSACTION DOCUMENT) a transaction document or a
transaction in connection with it is or becomes (or is claimed
to be) wholly or partly void, voidable or unenforceable or is
terminated without the written consent of the Lender or does
not have (or is claimed not to have) the priority the Lender
intended it to have ("claimed" in this case means claimed by
the obligor or any of its related entities or anyone on behalf
of any of them); or
(j) (CHANGE OF CONTROL) the persons who at the date of this
agreement have control of the obligor cease to have control of
the obligor, or one or more other persons acquire control of
the obligor after the date of this agreement in each case,
without the prior consent of the Lender; or
(k) [Intentionally omitted]
(l) (REDUCTION OF CAPITAL) the obligor, without the consent of the
Lender, takes action to reduce its capital or buy back any of
its ordinary shares or passes a resolution referred to in
section 254N(1) of the Corporations Law; or
(m) (APPOINTMENT OF MANAGER) a person is appointed under
legislation to manage any part of the affairs of the obligor;
or
(n) (MATERIAL ADVERSE CHANGE) an event occurs that has a material
adverse effect (ignoring for the purpose of this paragraph (n)
only, paragraph (i) of the definition of "material adverse
effect"); or
(o) (BREACH OF UNDERTAKING) a written undertaking given to the
Lender or its solicitors by the obligor in a transaction
document is breached or not wholly performed within any period
specified in the undertaking or, where no period is specified
and the undertaking is not an on-going undertaking, within 7
days after the date of the undertaking and that failure is
incapable of remedy or, if capable of remedy, continues for 10
business days after the obligor receives a notice from the
Lender requiring that failure to be remedied; or
(p) (DEFAULT UNDER OTHER TRANSACTION DOCUMENT) an event occurs
which is called an event of default under any transaction
document other than this agreement and that failure is
incapable of remedy or, if capable of remedy, continues for 10
business days after the obligor receives a notice from the
Lender requiring that failure to be remedied; or
(q) (NON-OBSERVANCE OF CONDITIONS SUBSEQUENT) the company fails to
comply with any condition subsequent and fails to comply
within 10 business days of notice from the Lender to rectify
the default; or
(r) (NON COMPLIANCE WITH FINANCIAL UNDERTAKINGS) the company does
not observe any of its obligations under clause 13.2 of this
agreement;
(s) [Intentionally omitted]
--------------------------------------------------------------------------------
Facility Agreement Page 32 of 83 Pages
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(t) (INSURANCES) the insurances required under clause 17B are not
in full force or effect; or
(u) (NON-COMPLIANCE WITH RETURN CONDITIONS) the company fails to
comply with the return conditions in respect of 10% or more of
the equipment located in any Australian State, at any time; or
(v) (LOSS OF AUTHORISATION) any authorisation, exemption, filing
or registration or other requirement necessary:
(i) to enable any obligor to comply with any of its
obligations under any transaction document to which
it is a party; and
(ii) for the conduct of its business,
is breached, revoked or refused or does not remain in full
force and effect and such event will have a material adverse
effect.
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CONSEQUENCES OF DEFAULT
15.2 If an event of default occurs and is subsisting, then at the option of
the Lender:
(a) the interest rate applicable to the current drawings and the
rent instalments is the default rate;
(b) the total of the current drawings, interest on them, the rent
instalments, the termination value and all other amounts
payable under the transaction documents, (the "AMOUNT OWING")
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are either:
(i) payable on demand; or
(ii) immediately due for payment; and
(c) any of the Lender's obligations under the transaction documents may be terminated.
the Lender may elect any or all of these options in its absolute discretion. The election of any of these options gives immediate effect to those provisions, without any need for notice to the obligor.
EFFECT OF AN EVENT OF DEFAULT
15.3 If the Lender declares that the amount owing is immediately due and payable it may, at its discretion:
(a) enforce the fixed and floating charge; and
(b) take possession of the equipment.
The company acknowledges that, upon the occurrence of an event of default, and while it subsists, the Lender is entitled to exercise its rights and remedies expressly provided for under the terms of the other transaction documents.
REVIEW EVENT
15.4 If a Review Event occurs, the Lender will in writing notify the company
as soon as it becomes aware of the Review Event and the Lender will be
entitled to consider and to unilaterally notify a variation to the
operating lease facility limit. The occurrence of a Review Event does
not prevent the occurrence of an event of default.
16. COSTS AND INDEMNITIES
================================================================================
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REIMBURSEMENT AND INDEMNITY
16.1 Except as expressly provided under any other transaction document, the
company agrees to pay or reimburse the Lender and indemnifies the
Lender for and against loss, liability and costs it suffers or incurs,
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on demand for:
(a) the Lender's costs in connection with:
(i) the negotiation, preparation, execution, stamping and registration of all transaction documents; and
(ii) it being satisfied that all conditions precedent relating to the provision of the facility have been met; and
(iii) the general on-going administration of the facility (including the giving and considering consents, waivers and releases and any valuation costs (to the extent previously agreed (in writing) by the parties) and inspection costs); and
(iv) non-compliance with the return conditions; and
(v) transfer of the equipment under the option deed; and
(b) the Lender's costs and any receiver's costs in otherwise acting in connection with the transaction documents, such as enforcing or preserving rights (or considering enforcing or preserving them) or doing anything in connection with any enquiry by a government authority involving the company or any of its related entities; and
(c) taxes and fees (including registration fees) and fines and penalties in respect of fees paid or that the Lender reasonably believes are payable in connection with any transaction document or a payment or receipt or any other transaction contemplated by any transaction document or any supply of anything by the Lender to the company under the transaction documents. However, the company need not pay a fine or penalty in connection with taxes or fees to the extent that it has placed the Lender in sufficient cleared funds for the Lender to be able to pay the taxes or fees by the due date; and
Facility Agreement Page 34 of 83 Pages
(d) if GST has application to any supply made under or in
connection with this agreement or a transaction document, in
addition to any other consideration expressed as payable
elsewhere in this agreement or a transaction document, an
additional amount on account of GST, such amount to be
calculated by multiplying the amount or consideration payable
by the company for the relevant supply by the prevailing GST
rate (taking into account any input tax credit actually
received by the Lender which relates to a GST payment made in
respect of any supply made under or in connection with this
agreement). Any amount payable on account of GST by the
company under this clause must be calculated without any
deduction or set off of any other amount (other than as
expressly permitted under this clause) and is payable by the
company on demand by the Lender whether the demand is by means
of an invoice or otherwise; and
(e) if the Lender is unable to obtain a full input tax credit for
an amount paid on account of GST by the Lender to another
person in respect of a supply made by another person to the
Lender in respect of this agreement or a transaction document
or matters arising under this agreement or a transaction
document, an amount equal to the input tax credit to which the
Lender is not entitled under the GST legislation.
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OTHER LOSS
16.2 The company indemnifies the Lender from and against any costs,
liability or loss suffered or incurred by the Lender arising from, or
in connection with:
(a) any claim made against it by reason of financial accommodation
requested under a transaction document not being provided in
accordance with the request for any reason except default of
the Lender; and
(b) financial accommodation under a transaction document being
repaid, discharged or made payable other than on its due date;
and
(c) the Lender acting in connection with a transaction document in
good faith on fax or telephone instructions purporting to
originate from the offices of the company given by an
authorised officer of the company; and
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(d) a Review Event or an event of default; and
(e) the Lender exercising or attempting to exercise rights in connection with a transaction document after an event of default; and
(f) any indemnity the Lender gives a controller or an administrator of the company; and
(g) any:
(i) consent, approval, waiver, release or discharge; and
(ii) variation, which is requested by any obligor,
of or under any transaction document; and
(h) any amount becoming due for payment or repayment other than on
its due date or any other amount required to be paid or repaid
under the transaction documents not being paid or repaid by
the company on its due date including, without limitation:
(i) by reason of the cancellation, termination or
alteration of any swap or other arrangement made by
the Lender to fund, whether in whole or in part, any
of those moneys or other payment;
(ii) by reason of any liquidation or re-employment of
deposits or other funds acquired by the Lender to
fund any of those moneys or other payment; or
(iii) in connection with any prepayment under, or early
termination or acceleration of, any transaction
document.
Nothing in this clause limits any other indemnities contained
in this agreement.
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ITEMS INCLUDED IN LOSS, LIABILITY AND COSTS
16.3 The company agrees that:
(a) the costs referred to in clause 16.1 ("Reimbursement and indemnity") and the liability, loss or costs in clause 16.2 ("Other loss") include legal costs in accordance with any written agreement as to legal costs or, if no agreement, on whichever is the higher of a full indemnity basis or solicitor and own client basis; and
(b) the costs referred to in clauses 16.1(a) and (b) ("Reimbursement and indemnity") include those paid or payable, to persons engaged by the Lender in connection with the transaction documents (such as consultants); and
(c) the costs referred to in clauses 16.1 and 16.2 include those suffered or incurred by any receiver or attorney appointed under the fixed and floating charge and any of the Lender's officers, agents or contractors.
PAYMENT OF LOSSES
16.4 The company agrees to pay the Lender an amount equal to any liability,
loss or costs of the kind referred to in clause 16.2 ("Other loss")
suffered or incurred by any officer, agent or contractor of the Lender.
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CURRENCY CONVERSION ON JUDGMENT DEBT
16.5 If a judgment or proof of debt for an amount in connection with a
transaction document is expressed in a currency other than Australian
dollars, then the company indemnifies the Lender against:
(a) any difference arising from converting the other currency if
the rate of exchange used by the Lender under clause 5.5
("Conversion of currency") for converting currency when it
receives a payment in the other currency is less favourable to
the Lender than
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Facility Agreement Page 36 of 83 Pages
the rate of exchange used for the purpose of the judgment or
acceptance of proof of debt; and
(b) the costs of conversion.
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CERTIFICATE BY GE SYNDICATION
16.6 A statement or certificate given by the Lender setting out the amount
of any loss, liability or costs incurred or suffered by the Lender
(including the extent of the Lender's entitlement to a full or reduced
input tax credit for GST paid in respect of any matter contemplated in
a transaction document) is, absent error, final, binding and conclusive
evidence against the obligor of the amount of that loss, liability or
cost.
17A. INTEREST ON OVERDUE AMOUNTS
================================================================================
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OBLIGATION TO PAY
17.1 If the obligor fails to pay any amount under this agreement on the due
date for payment, the obligor agrees to pay to the Lender on demand
interest on that amount at the default rate. The interest accrues from
day to day from and including the due date up to but excluding the date
of actual payment and is calculated on actual days elapsed and a year
of 360 days.
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COMPOUNDING
17.2 Interest payable under clause 17.1 ("Obligation to pay") which is not
paid when due for payment may be added to the overdue amount by the
Lender at intervals which the Lender determines from time to time or,
if no determination is made, every 30 days. Interest is payable on the
increased overdue amount at the default rate in the manner set out in
clause 17.1 ("Obligation to pay").
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INTEREST FOLLOWING JUDGMENT
17.3 If a liability becomes merged in a judgment, then the company agrees to
pay the Lender on demand interest on the amount of that liability as an
independent obligation. This interest:
(a) accrues from the date the liability becomes due for payment
both before and after the judgment until the liability is
paid; and
(b) is calculated at the rate that is the higher of the judgment
rate and the default rate.
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Facility Agreement Page 37 of 83 Pages
17B. INSURANCE, RISK AND INDEMNITIES
================================================================================
17B.1 INSURANCE POLICIES TO BE TAKEN OUT BY THE COMPANY
The company must take out and maintain with insurers in the name of the
company and the Lender for their respective rights and interests (with
the Lender's interest as chargee noted) the following insurance
policies in respect of:
(a) a public liability policy in respect of the business and the
equipment and activities carried on at the business for an
amount reasonably required by the Lender which:
(i) contains all provisions that are normally contained
in public liability policies and any other provisions
reasonably required by the Lender; and
(ii) without limiting the rest of this clause 17B covers
death and injury to any person and damage to property
of any person sustained when that person is using the
equipment or entering or near any entrance, passage
or stairway to the business;
(b) building insurance against fire, storm, tempest, flood,
earthquake, lightning, explosion, impact, aircraft (other than
hostile aircraft) and aerial devices and articles dropped from
them, riot, civil commotion and malicious damage, busting or
overflowing of water tanks, apparatus or pipes and such other
risks as the Lender may reasonably require, subject to such
exclusions, excesses and limitations as may be imposed by the
insurers.
17B.2 PROCEEDS OF INSURANCE
If any loss or damage occurs which is covered by any insurance the
company is required to maintain under this agreement (even if taken out
in the name of the company alone in contravention of this agreement)
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the company must:
(a) apply for the insurance proceeds immediately;
(b) use the proceeds:
(i) in the case of property of the company other than the equipment, to restore, replace, repair or reinstate the loss or damage and use the company's own money to the extent that the proceeds are insufficient; and
(ii) in the case of the equipment and where clause 8 of the operating lease facility applies, to pay the Lender in accordance with clause 8 of the operating lease facility;
(c) to the extent insurance proceeds exceed the amount required to be expended under paragraph (b)(i), pay the excess to the company and the Lender in equitable
Facility Agreement Page 38 of 83 Pages
proportions having regard to their respective interests in the thing insured or the effect on them of the event insured against. |
If any partial damage to the equipment or any other property occurs which is covered by any insurance and such damage is capable of repair, where a claim is made by the company under the insurance for an amount of less than A$100,000 such insurance proceeds are to be paid to the company to be applied by it to repair the damage.
17B.3 POLICIES
The company must do the following in respect of each policy that it is
required to maintain under this agreement:
(a) take it out with an insurance company approved by the Lender,
whose approval must not be unreasonably withheld; and
(b) if requested by the Lender, give the Lender a copy of the
policy and a certificate of currency for the policy; and
(c) ensure that the company's insurance broker from time to time
will notify the Lender of any impending cancellation or
proposed change in insurance; and
(d) pay each premium before the due date and when asked by the
Lender, produce receipts for the payments;
(e) immediately rectify anything which might prejudice any
insurance and reinstate the insurance if it lapses; and
(f) notify the Lender promptly when any event occurs which may
give rise to a material claim under or which could prejudice a
policy of insurance, or if any policy of insurance is
cancelled.
17B.4 MAINTAIN INSURANCE
The company must not do anything without THE Lender prior written
approval which approval shall not be unreasonably withheld which could
affect the Lender's rights under any insurance policy or make the
policy invalid or able to be cancelled.
17B.5 INDEMNITY
The company indemnifies the Lender on demand against any claim, action,
damage, loss, liability, cost or expense which the Lender incurs or is
liable for in connection with other than one arising out of any
negligent or wilful act, error or omission of the Lender:
(a) any damage, loss, injury or death to or of any person or
property on or near the equipment;
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(b) the use of the equipment;
(c) any defect in the equipment.
REQUEST AND CONSIDERATION
18.1 By signing this agreement, the guarantor requests the Lender to enter
into this agreement and agrees to be bound by this guarantee, the
provisions set out in Schedule 7, and this agreement in consideration
of the Lender doing so.
19. ATTORNEY
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APPOINTMENT OF ATTORNEY
19.1 The obligor irrevocably appoints the Lender and each of its authorised
officers individually as its attorney and agrees to ratify all action
taken by an attorney under clause 19.2 ("Attorneys' powers").
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ATTORNEYS' POWERS
19.2 Each attorney may:
(a) where a Review Event or event of default occurs and subsists, perform and observe the obligations of the obligor under this agreement to enable the Lender to exercise its rights under this agreement; and
(b) where a Review Event or event of default occurs and subsists, do anything which an obligor may lawfully do to exercise their right of proof after an event relating to insolvency occurs in respect of obligor (these things may be done in the obligor's name or the attorney's name and they include signing and delivering documents, taking part in legal proceedings and receiving any dividend arising out of the right of proof); and
(c) delegate its powers (including this power) and may revoke a delegation; and
(d) exercise its powers even if this involves a conflict of duty and even if it has a personal interest in doing so.
APPLICATION OF INSOLVENCY DIVIDENDS
19.3 The attorney need not account to an obligor for any dividend received
on exercising the right of proof under clause 19.2 ("Attorneys'
powers") except to the extent that any dividend remains after the
Lender has received all amounts payable or to become payable in the
future under this agreement.
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Facility Agreement Page 40 of 83 Pages
RIGHT OF PROOF LIMITED
19.4 Each obligor agrees not to exercise a right of proof after an event
occurs relating to the insolvency of the company or any other obligor
independently of an attorney appointed under clause 19.1 ("Appointment
of attorney").
20. DEALING WITH INTERESTS
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NO DEALING BY COMPANY
20.1 The obligor may not assign or otherwise deal with its rights under any
transaction document or allow any interest in them to arise or be
varied, in each case without the Lender's written consent.
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DEALINGS BY THE LENDER
20.2
(a) Subject to the succeeding paragraphs of this clause 20.2, except where the assignment by the Lender is to or with a related body corporate, the Lender may not assign its rights under any transaction documents without prior written consent of the obligor such consent not to be unreasonably withheld or delayed. Approval of the obligor will be deemed to have been given if within 10 business days of receipt by the obligor of an application for approval it has not been expressly refused.
(b) At the cost and expense of the Lender the obligor will co-operate with and assist the assigning party.
(c) The assignment or transfer shall not require the obligor to make any payment or incur any liability that it would not have made or incurred had such assignment not occurred or taken place.
(d) The consent of the obligor is not required under paragraph (a) if an event of default has occurred and is subsisting.
(e) Each assignee acknowledges that it has made its own independent review of the creditworthiness and business of the obligor and that it has not relied on any representation made by the assigning party in connection with its participation under the transaction documents. In those circumstances the assigning party is not responsible for the performance by the obligor of their obligations under the transaction documents and the assigning party is not obliged to make good any loss suffered by the assignee by virtue of non-performance by the obligor of any term of the transaction documents or to accept a re-transfer of any rights or obligations transferred under the relevant substitution certificate.
(f) Any assignment shall, subject to subparagraph (a), be effective only if a substitution certificate is delivered by the Lender and the assignee to the other parties and:
Facility Agreement Page 41 of 83 Pages
(i) each party, including the obligor and any person that
becomes a party pursuant to this clause, to this
agreement irrevocably authorises the Lender to
execute any duly completed substitution certificate
on its behalf. An assignment is effected either at
the time (or if more than one time, the later time)
the Lender executes a duly completed substitution
certificate delivered to it or otherwise as specified
in the substitution certificate;
(ii) from the date on which the substitution take effect
(which shall be the date of the substitution
certificate or, if later, the date specified in the
substitution certificate) and to the extent to the
substitution expressed in the substitution
certificate;
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(A) the assignee:
(I) succeeds to all the rights, benefits and entitlements (other than accrued rights, benefits and entitlements) of the Lender under the transaction documents; and
(II) assumes all the obligations and responsibilities (other than accrued obligations and liabilities) of the Lender and the transaction documents;
(B) the Lender is released from all its future obligations and responsibilities under the transaction documents and the rights of the Lender against the other parties to this agreement and vice versa will be cancelled; and
(C) the other parties are:
(I) released from all their obligations and responsibilities (other than accrued obligations and liabilities) under the transaction documents to the Lender; and
(II) bound to perform those obligations and discharge those responsibilities in favour of the Lender; and
(iii) the Lender shall promptly provide a copy of any substitution certificate to the other parties.
(g) Nothing in this clause restricts the ability of the Lender to sub-contract or participate an obligation if the Lender remains liable under the transaction documents for the obligation and the Lender shall be entitled to sub-participate or otherwise sell-down its obligations under the transaction documents provided it remains liable under the transaction documents for that obligation. Any such sub-contracting, participation or sell-down shall not affect the respective rights and liabilities of the Lender and the other parties in respect of the transaction documents and each party to the transaction documents need only recognise the Lender of record.
Facility Agreement Page 42 of 83 Pages
(h) The parties may from time to time agree in writing that this
clause 20.2 applies mutatis mutandis to novations as well as
assignments.
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NO SET-OFF AGAINST ASSIGNEES
20.3 If the Lender assigns or otherwise deals with its rights under this
agreement, the obligor may not claim against any assignee (or any other
person who has an interest in this agreement) any right of set-off or
other right the obligor has against the Lender.
21. NOTICES
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FORM
21.1 All notices, certificates, consents, approvals, waivers and other
communications in connection with a transaction document ("Notices")
must be in writing, signed by an authorised officer of the sender and
marked for attention as set out in the Parties or, if the recipient has
notified otherwise in writing, then marked for attention in the way
last notified.
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DELIVERY
21.2 All Notices must be:
(a) left at the address set out in the Parties; or
(b) sent by prepaid post (airmail, if outside Australia) to the address set out in the Parties; or
(c) sent by facsimile to the number set out in the Parties.
If the intended recipient has notified the sender in writing of a changed postal address or changed facsimile number, then the Notice must be to the address or number notified.
WHEN EFFECTIVE
21.3 A Notice takes effect from the time it is received unless a later time is specified in it.
DEEMED RECEIPT - POSTAL
21.4 If sent by post, a Notice is taken to be received one business day
after posting (or seven days after posting if sent to or from a place
outside Australia).
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DEEMED RECEIPT - FACSIMILE
21.5 If sent by facsimile, a Notice is taken to be received at the time
shown in the transmission report of the sender as the time that the
whole facsimile was sent.
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SET-OFF
22.1 At any time after an event of default, the Lender may set off any
amount due for payment by the Lender to the obligor against any amount
due for payment by the obligor to the Lender under the transaction
documents. The obligor must not claim or set-off any money owing by the
Lender to it against money owing by the obligor to the Lender.
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SUSPENSE ACCOUNT
22.2 Where a Review Event or event of default occurs and subsists, the
Lender may place in a suspense account any payment it receives from the
obligor for as long as it thinks prudent and need not apply it towards
satisfying any money owing to the Lender under this agreement.
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CERTIFICATES
22.3 The Lender may give the obligor a certificate about an amount payable
or other matter in connection with a transaction document. The
certificate is (absent error) final, binding and conclusive evidence of
the amount or matter.
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PROMPT PERFORMANCE
22.4 If this agreement specifies when the obligor must perform an
obligation, the obligor agrees to perform it by the time specified. The
obligor agrees to perform all other obligations promptly.
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DISCRETION IN EXERCISING RIGHTS
22.5 the Lender may exercise a right or remedy or give or refuse its consent
in any way it considers appropriate, including by imposing conditions
unless a transaction document states otherwise.
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CONSENTS
22.6 The obligor agrees to comply with all conditions in any consent the Lender gives in connection with any transaction document.
PARTIAL EXERCISING OF RIGHTS
22.7 If the Lender does not exercise a right or remedy fully or at a given time, the Lender can still exercise it later.
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NO LIABILITY FOR LOSS
22.8 the Lender is not liable for loss caused by the exercise or attempted
exercise of, failure to exercise, or delay in exercising, a right or
remedy.
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CONFLICT OF INTEREST
22.9 The Lender's rights and remedies under any transaction document may be
exercised even if this involves a conflict of duty or the Lender has a
personal interest in their exercise.
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REMEDIES CUMULATIVE
22.10 The rights and remedies of the Lender under any transaction document
are in addition to other rights and remedies given by law independently
of that transaction document.
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RIGHTS AND OBLIGATIONS ARE UNAFFECTED
22.11 Rights given to the Lender under this agreement and the obligor's
liabilities under it are not affected by any law that might otherwise
affect them.
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INDEMNITIES
22.12 The indemnities in this agreement are continuing obligations,
independent of the obligor's other obligations under this agreement and
continue after this agreement ends. It is not necessary for the Lender
to incur expense or make payment before enforcing a right of indemnity
conferred by this agreement.
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VARIATION AND WAIVER
22.13 Unless this agreement expressly states otherwise, a provision of this
agreement, or right created under it, may not be waived or varied
except in writing signed by the party or parties to be bound.
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CONFIDENTIALITY
22.14 The obligors consent to the Lender disclosing information provided by
the obligors that is not publicly available:
(a) in connection with any person exercising rights or dealing
with rights or obligations under a transaction document
(including in connection with preparatory steps such as
negotiating with any potential assignee or potential
participant of the Lender's rights or other person who is
considering contracting with the Lender in connection with a
transaction document); or
(b) to a person considering entering into (or who does enter into)
a credit swap with the Lender involving credit events relating
to the obligor or any of its related entities; or
(c) to officers, employees, legal and other advisers and auditors
of the Lender; or
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Facility Agreement Page 45 of 83 Pages
(d) to any party to a transaction document or any related entity
of the Lender; or
(e) with the consent of the obligor about whom the information
relates (which consent must not be unreasonably withheld); or
(f) as allowed necessary or required by any law court, regulatory
body, tribunal, authority, judicial or quasi-judicial
proceedings or by any stock exchange.
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FURTHER STEPS
22.15 The obligor agrees to do anything the Lender asks (such as obtaining
consents, signing and producing documents and getting documents
completed and signed) to bind the obligor and any other person intended
to be bound under the transaction documents.
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INCONSISTENT LAW
22.16 To the extent permitted by law, each transaction document prevails to the extent it is inconsistent with any law.
SUPERVENING LEGISLATION
22.17 Any present or future legislation which operates to vary the
obligations of an obligor in connection with a transaction document
with the result that the Lender's rights, powers or remedies are
adversely affected (including by way of delay or postponement) is
excluded except to the extent that its exclusion is prohibited or
rendered ineffective by law.
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TIME OF THE ESSENCE
22.18 Time is of the essence in any transaction document in respect of an obligation of the obligor to pay money.
APPLICABLE LAW
22.19 The transaction documents are governed by the law in force in Victoria.
The obligor and the Lender submit to the non-exclusive jurisdiction of
the courts of Victoria.
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SERVING DOCUMENTS
22.20 Without preventing any other method of service, any document in a court
action may be served on a party by being delivered to or left at that
party's address for service of notices under clause 21 ("Notices").
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ADVERTISING
22.21 [Intentionally omitted]
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COUNTERPARTS
22.22 This agreement may consist of a number of copies of this agreement each
signed by one or more parties to the agreement. When taken together,
the signed copies are treated as making up the one document. Any copy
of this agreement signed by a party is binding on that party whether or
not that or any other copy is signed by or binding upon any other
party.
SEVERANCE
22.23 Each word, phrase, sentence, paragraph and clause in each transaction
document is severable no matter how they are linked. If any word,
phrase, sentence, paragraph or clause is defective, unenforceable, void
or voidable they may be severed and the remaining words will continue
to be of full force and effect.
23. INTERPRETATION
================================================================================
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MEANINGS
23.1 These meanings apply in each transaction document unless the contrary
intention appears:
ACCOUNTING STANDARDS means accounting standards and principles
generally and consistently applied in Australia.
ACQUISITION COSTS means the costs and expenses of the company relating
to the acquisition of the business including, without limitation,
signage, stationery, and advertising costs in a total amount not
exceeding A$3,000,000.
A$ means the lawful currency of Australia.
AFFILIATE means, in relation to a person:
(a) each person that directly or indirectly owns or controls 5% or
more of the share capital having ordinary voting power in the
election of directors of that corporation; and
(b) each person that controls, is controlled by or is under common
control with that corporation.
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AGGREGATE BORROWING BASE means, for a particular day, an amount equal to:
(a) 85% (less the borrowing base dilution) of the value (as determined by the Lender) of the company's eligible accounts;
less:
(b) any reserves established by the Lender from time to time.
AUTHORISATION means any approval, authorisation, consent, exemption, filing, licence, authority, notarisation, registration or waiver, however described of a government authority.
AUTHORISED OFFICER means:
(a) in the case of the Lender, a director, secretary or an officer whose title contains the word "manager" or a person performing the functions of any of them or the solicitor of the Lender; and
(b) in the case of an obligor, a person appointed in writing by the relevant obligor to act as an authorised officer under the transaction documents to which it is a party.
BLOCKED ACCOUNT AGREEMENT means an agreement dated on or after the date of this agreement between the company, the Lender and Citibank.
BORROWING BASE CERTIFICATE means a certificate in the form set out in Schedule 3, or any other form required by the Lender, duly completed by the company and signed by an authorised officer of the company.
BORROWING BASE DILUTION is the amount expressed as a percentage by which the dilution exceeds 5% at the time of calculation.
BUSINESS has the same meaning as "Business" in the BUSINESS SALE
AGREEMENT.
BUSINESS DAY means a day on which banks are open for general banking business in Sydney (not being a Saturday, Sunday or public holiday in Sydney).
BUSINESS SALE AGREEMENT means the document so entitled dated 10 November 2000 between Brambles Australia Limited (ACN 000 164 938) and the company and others.
CAPITAL EXPENDITURE means any expenditure for fixed assets or improvements (or for replacements, substitutions or additions to them) that have a useful life of more than one year (regardless of how the expenditure is financed).
CAPITAL LEASES means any lease of property that in accordance with accounting standards would be required to be classified and accounted for as a finance lease on the balance sheet of the lessee.
CAPITAL LEASE OBLIGATIONS means with respect to any capital lease the amount of the obligation of the lessee that, in accordance with accounting standards, would appear on the balance sheet of the lessee in respect of that capital lease.
CLEAN-UP NOTICE means any order, direction, notice or other requirement of any government authority in respect of remediation.
COMPANY means person so described in the Parties.
CONTROL of a corporation includes the direct or indirect power to directly or indirectly:
(a) direct the management or policies of the corporation; or
(b) control the membership of its board of directors,
whether or not the power has statutory, legal or equitable force or is based on statutory, legal or equitable rights and whether or not it arises by means of trusts, agreements, arrangements, understandings, practices, the ownership of any interest in shares or stock of the corporation or otherwise.
CONTROLLER has the meaning it has in the Corporations Law.
CONTROLLED ACCOUNT means each account governed and operated by the blocked account agreement.
COSTS includes charges, expenses and internal administration costs; and costs, charges and expenses in connection with advisers on a full indemnity basis, and any GST paid or payable by the Lender except to the extent that The Lender is entitled to a full or reduced input tax credit.
CURRENT DRAWINGS means the outstanding principal amount of a drawing made under the revolving loan facility and any amount deemed to be a drawing under the revolving loan facility.
DEFAULT RATE means the interest rate plus 2% per annum.
DEPRECIATION EXPENSE means depreciation expense of the reporting group determined in accordance with accounting standards.
DILUTION, which is to be calculated monthly, means for the company, the total of non-cash credits made to the accounts receivable of the company for the 12 month period ending on the date of determination divided by the total sales for that period, expressed as a percentage and rounded to the nearest whole number. The dilution is calculated at any time by reference to the most recent accounts receivable roll forward analysis provided by the company to the Lender under clause 13.5 or as otherwise determined by the Lender.
DIRECTION TO PAY means the document dated on or about the date of this agreement entitled 'payment direction' between the company, the Lender, Brambles Australia Limited (ACN 094 082 141) and Cowley Hearne lawyers.
DISCLOSURE STATEMENT means a statement or notice containing or purporting to contain the disclosures referred to in Schedule 6 or otherwise required or made under this agreement, duly completed by the and signed by an authorised officer of the as being true, correct and not misleading or deceptive at the date of the statement or notice and includes each statement or notice given prior to the date of this agreement.
DRAWDOWN DATE means the date on which a drawing is or is to be made.
DRAWDOWN NOTICE means a completed and signed notice containing the information and representations and warranties set out in Schedule 2, or otherwise in the form required by the Lender from time to time.
EBITDAR means an amount equal to net income of the company less the sum of:
(a) income tax credits; and
(b) interest income; and
(c) gain from extraordinary items; and
(d) any aggregate net gain (but not any aggregate net loss) arising from the sale, exchange or other disposition of fixed assets, whether tangible or intangible, other than those made in the ordinary course of business; and
(e) any other non-cash abnormal gains (excluding non-cash revenue and non cash reserve adjustments) which have been added in determining net income, in each case to the extent included in the calculation of net income in accordance with accounting standards, but without duplication;
plus (to the extent deducted in determining net income), the sum of:
(f) amortisation; and
(g) depreciation expenses; and
(h) any income tax expense; and
(i) interest expense;
(ii) any letter of credit fees paid in respect of letters of credit issued in favour of Westpac ; and
Facility Agreement Page 50 of 83 Pages
(j) rentals paid in respect of any operating lease
(excluding real property leases); and
(k) loss from extraordinary items; and
(l) any other non-cash abnormal losses (excluding
non-cash expenses and non cash reserve adjustments)
which have been deducted in determining net income,
in each case to the extent included in the
calculation of net income in accordance with
accounting standards, but without duplication;
(m) the amount of any deduction to net income as the
result of any grant to any members of the management
of any shares, in each case to the extent included in
the calculation of net income in accordance with
accounting standards, but without duplication; and
(n) new common equity contributions.
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For purposes of the definition of EBITDAR, the following items are excluded in determining net income:
(a) the income (or deficit) of any person accrued prior to the date it became a subsidiary of, or was merged or consolidated into, the company or any of its subsidiaries;
(b) the income (or deficit) of any person (other than a subsidiary) in which the company or any of it's subsidiaries has an ownership interest, except to the extent any such income has actually been received in the form of cash dividends or distributions;
(c) the undistributed earnings of any subsidiary of the company or any of its subsidiaries to the extent that the declaration or payment of dividends or similar distributions by such subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such subsidiary;
(d) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during the relevant period;
(e) any write-up of any asset;
(f) any net gain from the collection of the proceeds of life insurance policies;
Facility Agreement Page 51 of 83 Pages
(g) any net gain arising from the acquisition of any
securities, or the extinguishment, under accounting
standards, of any indebtedness, of the company or any
of its subsidiaries;
(h) in the case of a successor to the company or any of
its subsidiaries by consolidation or merger or as a
transferee of its assets, any earnings of such
successor prior to such consolidation, merger or
transfer of assets; and
(i) any deferred credit representing the excess of equity
in any subsidiary of the company or any of its
subsidiaries at the date of acquisition of such
subsidiary over the cost to the company or any of its
subsidiaries of the investment in such subsidiary.
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ELIGIBLE ACCOUNTS means those accounts of each company which the Lender, in its reasonable judgment, determines to be eligible accounts based on the most recent borrowing base certificate and excluding, among other accounts, the exclusionary criteria.
ENCUMBRANCE means any security interest, notice under section 218 or 255 of the Income Tax Assessment Act 1936 (Cwlth) or under section 74 of the Sales Tax Assessment Act 1992 (Cwlth) or under any similar provision of a State, Territory or Commonwealth law, right to remove things from land (known as a "profit a prendre"), easement, restrictive or positive covenant (other than easements and covenants burdening real property), equity, interest, garnishee order, writ of execution, right of set-off, lease, licence to use or occupy, assignment of income or monetary claim, and any agreement to create any of them or allow any of them to exist.
ENVIRONMENTAL LAWS means any law concerning the environment and includes laws, statutes, ordinances, codes, rules, standards and regulations from time to time concerning:
(a) emissions of substances into the atmosphere, waters and land;
(b) pollution and contamination of the atmosphere, waters and land;
(c) production, use, handling, storage, transportation and disposal of:
(i) waste;
(ii) hazardous substances; and
(iii) dangerous goods;
(d) conservation, heritage and natural resources;
(e) threatened, endangered and other flora and fauna species;
(f) the erection and use of structures; and
(g) the health and safety of people,
whether made or in force before or after the date of this agreement.
ENVIRONMENTAL LIABILITIES means, with respect to any person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages (including all consequential and indirect damages) costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions, claims for contribution and indemnity, whether arising under statute or otherwise, and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any environmental laws or environmental permits.
ENVIRONMENTAL PERMITS means all permits, licences, authorisations, consents, certificates, approvals, registration or other written documents required by any government authority under any environmental laws.
ESTABLISHMENT FEE means the fee set out in clause 7.1(c) and in the Details.
EVENT OF DEFAULT means an event of default so described in this agreement (see clause 15 ("Events of default")).
EXCESS AVAILABILITY means at any time:
(a) the lesser of the facility limit for the revolving loan facility and the aggregate borrowing base;
LESS
(b) current drawings under the revolving loan facility at that time,
as calculated by the Lender.
EXCESS CASH FLOW means without duplication, with respect to any financial year of the company and its subsidiaries, as contained in the annual audited financial statements consolidated net income:
(a) PLUS depreciation, amortization and interest expense to the extent deducted in determining consolidated net income;
(b) PLUS decreases or MINUS increases (as the case may be) in working capital;
Facility Agreement Page 53 of 83 Pages
(c) MINUS capital expenditure during such financial year
(excluding the financed portion thereof);
(d) MINUS interest expense paid or accrued (excluding any original
issue discount, interest paid in kind or amortized debt
discount, to the extent included in determining interest
expense paid or accrued) and scheduled principal payments paid
or payable in respect of indebtedness;
(e) PLUS extraordinary gains or MINUS extraordinary losses which
are cash items not included in the calculation of net income;
(f) PLUS taxes (including income tax) deducted in determining
consolidated net income to the extent not paid for in cash.
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For purposes of the definition, working capital means Current Assets less Current Liabilities, "Current Assets" means accounts receivable, inventory and prepaid expenses and "Current Liabilities" means accounts payable and accrued expenses.
EXCLUSIONARY CRITERIA means the criteria set out in Schedule 4.
EXERCISE DATE has the same meaning as in the residual value facility.
EQUIPMENT means, at any time, the equipment the subject of the operating lease facility.
FACILITY means each of the revolving loan facility and operating lease facility made available under this agreement and the transaction documents or any one of them.
FACILITY LIMIT means, for a facility, the amount set out as such in the Details.
FINANCIAL STATEMENTS means:
(a) a profit and loss statement;
(b) a balance sheet; and
(c) a statement of cash flows,
together with any notes to those documents and a directors' declaration as required under the Corporations Law and any other information necessary to give a true and fair view prepared in accordance with accounting standards.
FIXED AND FLOATING CHARGE means the document dated 20 November 2000 between the Lender and the company.
FIXED CHARGE COVERAGE RATIO means, for a period the ratio of:
(a) in respect of clauses 13.2(e)(i), (ii) and (iii):
(i) EBITDAR for that period, plus acquisition costs; less
any capital expenditures for the same period which are not financed through the incurrence of indebtedness (excluding indebtedness under the revolving loan facility),
to
(ii) fixed charges for that period.
(b) in respect of clause 13.2(e)(iv):
(i) EBITAR for that period; less
(ii) any capital expenditures for the same period which are not financed through the incurrence of indebtedness (excluding indebtedness under the revolving loan facility),
to
(iii) fixed charges for that period.
FIXED CHARGES means the total of all cash interest expense and fee expense on borrowings of the company paid plus scheduled payments of principal with respect to indebtedness, plus operating lease rentals (excluding real property lease expenses) paid.
FUNDED DEBT means all indebtedness of the reporting roup for borrowed money evidenced by notes, bonds, debentures, or similar evidences of indebtedness and which by its terms matures more than one year from, or is directly or indirectly renewable or extendable at the debtor's option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including capital lease obligations, current maturities of long term debt, revolving credit and short term debt extendable beyond one year at the option of the debtor, and also including its obligations under the transaction documents.
GOVERNMENT AUTHORITY means any government or government department, any governmental, fiscal, monetary, supervisory or any person charged with the administration of any applicable law.
GST means any tax in the nature of a consumption tax, a goods and services tax, a value added tax or similar tax including without limitation any tax arising out of the passage of the
"A New Tax System (Goods and Services Tax) Act, 1999" (Commonwealth) and associated legislation.
GUARANTEE means the guarantee and indemnity in clause 18 ("Guarantee and indemnity").
GUARANTEED MONEY means, at any time, all amounts then due for payment or which will or may become due for payment in the future by the company to the Lender in connection with the transaction documents (including transactions in connection with them).
GUARANTOR means each of the persons so described in the Parties, jointly and severally.
HAZARDOUS MATERIAL means any substance, material or waste which is regulated by or forms the basis of liability (including, without limitation any environmental liability) now or hereafter under, any environmental laws, including any material or substance which is:
(a) defined as a "solid waste", "hazardous waste", "hazardous material", "hazardous substance", "extremely hazardous waste", "restricted hazardous waste", "pollutant", "contaminant", "hazardous constituent", "special waste", "toxic substance" or other similar term or phrase under any environmental laws;
(b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls or any radioactive substance; or
(c) may be the subject of any clean-up notice.
INDEBTEDNESS means all indebtedness, actual or contingent, including but without duplication:
(a) all indebtedness for borrowed money or for the deferred purchase price of property payment for which is deferred six months or more;
(b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances and surety bonds, whether or not matured;
(c) all obligations evidenced by notes, bonds, debentures or similar instruments;
(d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property);
(e) all capital lease obligations;
(f) the net present value of the minimum operating lease payments (excluding real property lease payments) plus the residual value discounted at the rate implicit in the lease.
Facility Agreement Page 56 of 83 Pages
(g) all obligations under commodity purchase or option agreements
or other commodity price hedging arrangements, in each case
whether contingent or matured;
(h) all net unrealised losses under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed
to alter risks arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured;
(i) all indebtedness secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise,
to be secured by) any encumbrance upon or in property or other
assets (including accounts and contract rights) owned by the
company and its subsidiaries on a consolidated basis, even
though the company and its subsidiaries on a consolidated
basis has not assumed or become liable for the payment of such
indebtedness; and
(j) obligations under the transaction documents,
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but excluding obligations to trade creditors incurred in the ordinary course of business that are not overdue by more than six months unless being contested in good faith.
INDEX RATE means in respect of each month:
(a) the 30 day Bank Bill Swap Rate for the first business day of that month which is quoted as the "Bank Bill Swap Reference Rate Average Bid" in the Money Market section in the following business day's edition of the Australian Financial Review; or
(b) if there is an obvious error in the rate described in (a), or if that rate or publication is not published, the average bid rate for bills having a tenor of 30 days as displayed on the Reuters Monitor System designated "BBSY" on the first business day of that month; or
(c) if there is an obvious error in the rate described in (b) or if that rate is not displayed by 10:30am Sydney time on the relevant day, the rate set by the Lender in good faith at 10:30am on that date.
INSOLVENT means being an insolvent under administration or insolvent (each as defined in the Corporations Law), or having a controller appointed, or being in receivership, in receivership and management, in liquidation, in provisional liquidation, under administration, wound up, subject to any arrangement, deed of company arrangement, assignment or composition, protected from creditors under any statute, dissolved (other than to carry out a reconstruction while solvent) or otherwise being unable to pay debts when they fall due or having something similar happen.
INTELLECTUAL PROPERTY means all patents, copyrights, trademarks, trade secrets, customer lists and any licence to use any of them.
INTEREST EXPENSE means interest expense of the company (whether cash or non-cash) determined in accordance with accounting standards. It also includes interest expense with respect to any funded debt.
INTEREST PAYMENT DATE means the first business day of each month and the maturity date.
INTEREST RATE means the interest rate set out in the Details.
LAW means a treaty, a law, regulation, ordinance, an official directive or request having the force of law, and an official directive, request, guideline or policy with which obligors similar to or of the same class as the obligor carrying on business in Australia normally comply.
MATERIAL ADVERSE EFFECT means any effect or series of effects, or any event or combination of events which is, or is more likely than not to be, materially adverse to:
(i) the ability of the obligor to perform its obligations under a transaction document to which it is a party; or
(ii) the business, assets or financial condition of any obligor taken as a whole.
MATURITY DATE means, for each facility, the maturity date set out as such in the Details, but if that is not a business day, then the preceding business day.
MONITORING FEE means the fee set out in clause 7.1(b) and the Details.
NOVATION AGREEMENT means the agreement so entitled between the company, Brambles Australia Limited and others.
NMHG means NACCO Materials Handling Group, Inc.
OBLIGOR means the company and the guarantor.
OPERATING LEASE FACILITY means (individually and collectively) the documents dated on or about the date of this agreement entitled the "Master Operating Lease Agreement" (No. 1) or (No. 2) between GE Capital Australia and the company in respect of the equipment and annexed as annexure "A".
OPERATING LEASE FACILITY LIMIT means, subject to clause 15.4, the amount set out as such in the Details.
OPTION means the option granted under the option deed.
OPTION DEED means the deed so entitled between the guarantor and the GE Capital Australia dated on or about the date of this agreement.
PERFORMANCE GUARANTEE means the guarantee so entitled between the guarantor and Westpac Banking Corporation.
PERMITTED DIVIDEND means each dividend or distribution of cash or property or assets in respect of the company provided:
(a) there is no event of default subsisting;
(b) the dividend or the aggregate dividends declared or paid by the company for the financial year is limited to up to 50% of Excess Cash Flow for the preceding financial year based on the financial statements required by subclauses 13.4(d) and 13.4(e) of this agreement; and
(c) until such time as the revolving loan facility is cancelled or has expired, the company will have an excess availability of not less than A$1,000,000 immediately on the day of the payment of any such dividend.
PERMITTED INDEBTEDNESS means all indebtedness of the company provided the company is in compliance with clause 13.2. For the avoidance of doubt, permitted indebtedness includes:
(a) indebtedness arising under the transaction documents; and
(b) indebtedness otherwise expressly permitted or required under the transaction documents.
PERMITTED PAYMENT means a payment by the obligor to a person that has entered into a transaction document with the Lender provided the payment is made in accordance with the terms of the transaction document, and no event of default has occurred or will occur by making the payment.
PERMITTED SECURITY INTERESTS means:
(a) a security interest created under a transaction document; and
(b) a security interest arising by operation of law to secure a monetary obligation maturing not more than 90 days after the date on which it is originally incurred.
POTENTIAL EVENT OF DEFAULT means an event with the passage of time would become an event of default.
PROJECTIONS means forecasted balance sheets, profit and loss statements and cash flow statements, all prepared on a consolidated basis, and otherwise consistent with the historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.
REAL PROPERTY means, in respect of a person, the real property owned, leased, subleased used or controlled by that person.
RELATED ENTITY has the meaning it has in the Corporations Law.
REMEDIATION means the investigation, clean-up, removal, abatement, disposal, control, containment, encapsulation or other treatment of any hazardous material and includes the monitoring and risk management of any hazardous material.
RENTAL AGREEMENT has the same meaning as in the operating lease facility.
RENTAL SCHEDULE has the same meaning as in the operating lease facility.
RENT INSTALMENTS has the same meaning as in the operating lease facility.
REPORTING GROUP means each of the obligors that are companies, and their subsidiaries on a consolidated basis jointly and severally, in their own capacities and as trustee of any trust.
RESTRICTED PAYMENT means:
(a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of a company's share capital; or
(b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of a person's share capital or any other payment or distribution made in respect of the company's share capital, either directly or indirectly; or
(c) any payment or repayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission or with respect to, any subordinated debt of the company; or
(d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire the company's share capital; or
(e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of shares in the company's share capital or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; or
(f) any payment, repayment, loan, contribution, or other disposition or transfer of funds or other property to any affiliate or related entity of the company; or
(g) management or consultancy fees paid or payable to a related entity or affiliate of the company.
RETURN CONDITIONS means the conditions set out in annexure "A" of the operating lease facility.
REVIEW EVENT means the occurrence of an event that has a material adverse effect.
REVOLVING LOAN FACILITY means the revolving cash advance facility made available by the Lender under clause 2C of this agreement.
REVOLVING LOAN FACILITY LIMIT means the amount set out as such in the Details.
SALE AND PURCHASE AGREEMENT means each of:
(a) the document so entitled dated on or about the date of this agreement between the Lender and the company in respect of the equipment and annexed as annexure "B"; and
(b) the agreement arising from the acceptance by the Lender of an offer made by the company on or about the date of this agreement.
SECURITY INTEREST means any security for the payment of money or performance of obligations including a mortgage, charge, lien, pledge, trust or power. Security interest also includes a guarantee.
SUBSIDIARY of an entity means another entity which is a subsidiary of the first within the meaning of part 1.2 division 6 of the Corporations Law or is a subsidiary of or otherwise controlled by the first within the meaning of any approved accounting standard.
SUBSTITUTION CERTIFICATE means a substitution certificate in the form of schedule 8.
TANGIBLE NET WORTH means the book value of the assets of the company less, without duplication:
(a) goodwill, capitalised organisational expenses, capitalised research and development expenses, capitalised marketing costs, trademarks, trade names, copyrights, patents, patent applications, licences and rights in any of them and other intangible items;
(b) unamortised debt discount and expense;
(c) prepaid expenses;
(d) any write up in the book value of any asset not resulting from a revaluation attributable to an acquisition; and
(e) the liabilities of the company (including accrued and deferred income taxes),
all as determined in accordance with accounting standards.
TAXES means present or future taxes, levies, imposts, charges, duties or withholdings imposed by any authority (including without limitation GST, stamp duty, Financial Institution Duty, Bank Accounts Debits Tax and any other transaction duties) (together with any related interest, penalties, fines and expenses in connection with them), except if imposed on the overall net income of the Lender.
TERMINATION DATE means the seventh anniversary of the date of this agreement.
TERMINATION VALUE has the same meaning as in the operating lease facility.
TOTAL FACILITY LIMIT means the collective limit of the revolving loan facility limit and the operating lease facility limit.
TRANSACTION DOCUMENTS means:
(a) this agreement;
(b) the operating lease facility;
(c) the sale and purchase agreement;
(d) the fixed and floating charge;
(e) the direction to pay;
(f) the US Guarantee;
(g) the option deed;
(h) the blocked account agreement;
(i) the pari passu deed referred to in clause 2.5 of the fixed and floating charge;
(i) each document required to be provided by or on behalf of an obligor under this agreement;
(k) each document which the company acknowledges in writing to be a transaction document;
(l) each document including or containing obligations of any of the obligors to the Lender; and
(m) each other document connected with any of the documents set out in sub-clauses (a) to (l).
UNUSED FACILITY FEE means the fee described in clause 7.1(a) and the Details.
US$ means the lawful currency of the United States of America.
US GUARANTEE means the guarantee and indemnity and covenant to pay granted by NMHG in favour of the Lender.
WORKING CAPITAL means current assets less current liabilities as those terms are defined in schedule 5 to the regulations to the Corporations Law.
WESTPAC means Westpac Banking Corporation ARBN 007 457 141.
REFERENCES TO CERTAIN GENERAL TERMS
23.2 Unless the contrary intention appears, a reference
in a transaction document to:
(a) a group of persons is a reference to any two or more of them
collectively and to each of them individually;
(b) an agreement, representation or warranty in favour of two or
more persons is for the benefit of them collectively and each
of them individually;
(c) an agreement, representation or warranty by two or more
persons binds them collectively and each of them individually;
(d) anything (including an amount) is a reference to the whole and
each part of it;
(e) a document (including this agreement) includes any variation
or replacement of it;
(f) any legislation includes any consolidation, amendment,
re-enactment or replacement of it and any regulations and
other instruments made under it;
(g) an accounting term is a reference to that term as it is used
in accounting standards under the Corporations Law, or, if not
inconsistent with those standards, in accounting principles
and practices generally accepted in Australia;
(h) Australian dollars or $ is a reference to the lawful currency
of Australia;
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(i) a time of day is a reference to Sydney time;
(j) a week is a reference to the period of seven consecutive days commencing on each Sunday;
Facility Agreement Page 63 of 83 Pages
(k) the word "person" includes an individual, a firm, a body
corporate, an unincorporated association and an authority;
(l) a particular person includes a reference to the person's
executors, administrators, successors, permitted substitutes
(including persons taking by novation) and permitted assigns;
(m) the word "payable" in relation to an amount, means an amount
which is currently payable or will or may be payable in the
future; and
(n) the words "including", "for example" or "such as" when
introducing an example, do not limit the meaning of the words
to which the example relates to that example or examples of a
similar kind; and
(o) an event of default subsists until it is cured or remedied to
the satisfaction of the Lender.
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NUMBER AND HEADINGS
(a) The singular includes the plural and vice versa.
HEADINGS
(b) Headings are for convenience only and do not affect the interpretation of this agreement.
BUSINESS DAYS
23.3 If the day on which any act, matter or thing is to be done under or
pursuant to a transaction document is not a business day, that act,
matter or thing:
(a) if it involves a payment, other than a payment due on demand,
shall be done on the preceding business day; and
(b) in all other cases, shall be done no later than the next
business day.
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Facility Agreement Page 64 of 83 Pages
ITEM FORM RESPONSIBLE
--------------------------------------------------------------- -------------------- ----------------------------------
1 Extract of minutes of a meeting of each obligor's Certified Format provided by the Lender.
board of directors which evidences the resolutions: Copy Executed copy from company
(a) authorising the signing and delivery of
transaction documents to which the entity is
a party and the observance of obligations
under those documents; and
(b) appointing authorised officers of the
entity; and
(c) which acknowledge that the transaction
documents (to which the entity is a party)
will benefit that entity; and
(d) authorising the execution of a power of
attorney to enable execution of transaction
documents to which it is a party by the
attorney.
--------------------------------------------------------------- -------------------- ----------------------------------
2 Each document which evidences any other necessary Certified copy company
corporate or other action of each obligor in
connection with the transaction documents to which
it is party.
--------------------------------------------------------------- -------------------- ----------------------------------
3 Certificate of specimen signatures of: Original Format supplied by the Lender
(a) each authorised officer of the company; and Executed copy from company
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Facility Agreement Page 65 of 83 Pages
ITEM FORM RESPONSIBLE
---------------------------------------------------------------------------------------------------------------------
(b) each other person who is authorised to sign
a transaction document for the company.
--------------------------------------------------------------------------------------------------------------------
4 This agreement, each other transaction document Original company
(other than the blocked account agreement, which is
a condition precedent only for the revolving loan
facility), Novation Agreement, Performance
Guarantee and the Business Sale Agreement fully
signed by each obligor.
--------------------------------------------------------------- -------------------- ----------------------------------
5 Fixed and floating charge over all presen and Original company
future assets and undertaking of the company fully
signed and in registrable form.
--------------------------------------------------------------- -------------------- ----------------------------------
6 Fully signed Corporations Law Forms 309 and Form Original company
350.
--------------------------------------------------------------- -------------------- ----------------------------------
7 A statutory declaration from a director or Original company
secretary of each company providing the charge
setting out the value and location of the assets of
the company.
--------------------------------------------------------------- -------------------- ----------------------------------
8 Evidence of payment of stamp duty or a cheque for Original Company
the amount of the estimated duty.
--------------------------------------------------------------- -------------------- ----------------------------------
9 Initial borrowing base certificate completed and Original Format from the Lender.
certified for the revolving loan facility only. Completed by company.
--------------------------------------------------------------- -------------------- ----------------------------------
10 Financial statements for the year ended 31 December Original US Guarantor
1999 for the US Guarantor.
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Facility Agreement Page 66 of 83 Pages
ITEM FORM RESPONSIBLE
--------------------------------------------------------------- -------------------- ----------------------------------
11 Initial disclosure statement completed and Original Format from the Lender.
certified by company for the revolving loan Completed by company.
facility only.
-----------------------------------------------------------------------------------------------------------
12 A legal opinion from the company's legal advisers Original Company
regarding the corporate authorisations for
execution of the Sale and Purchase Agreement, this
agreement, the fixed and floating charge and the
operating lease facility.
-----------------------------------------------------------------------------------------------------------
13 The Lender has received all fees payable by the - Company
company under this agreement.
-----------------------------------------------------------------------------------------------------------
14 Evidence of insurance on terms and in amounts Copy company
approved by the Lender and noting the Lender's
interest.
-----------------------------------------------------------------------------------------------------------
15 Blocked account agreement fully signed, in respect Original company
of all bank accounts operated by the company for
the revolving loan facility only.
-----------------------------------------------------------------------------------------------------------
16 Release of all security interests over assets of Original company
the obligors other than those approved by the
Lender.
-----------------------------------------------------------------------------------------------------------
17 Evidence of the corporate structure and capital Copies company
structure of the reporting group.
-----------------------------------------------------------------------------------------------------------
18 Evidence of all authorisations, waivers and Copies company
consents required by government or semi government
authorities or third parties allowing the obligors
to enter into the transaction documents on terms
acceptable to the Lender.
-----------------------------------------------------------------------------------------------------------
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Facility Agreement Page 67 of 83 Pages
ITEM FORM RESPONSIBLE
----------------------------------------------------------------------------------------------------------
19 Statutory declaration as to corporate matters Original company
disclosing matters required by the Lender.
-----------------------------------------------------------------------------------------------------------
20 Legal opinion relating to the US Guarantee. Original company
-----------------------------------------------------------------------------------------------------------
21 The transaction documents are in full force and Original company
effect and all conditions precedent referred to
there in have been satisfied in form and
substance satisfactory to the Lender.
-----------------------------------------------------------------------------------------------------------
22 Evidence of the contribution by the company of Original company
$18,000,000 in new cash equity on acceptable terms
-----------------------------------------------------------------------------------------------------------
23 Evidence of receipt of the purchase price payable
under the Business Sale Agreement.
-----------------------------------------------------------------------------------------------------------
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To: GE Capital Finance Pty Limited
ACN 075 554 175
Level 5, 55 Hunter Street
Sydney NSW 2000
Attention: The Account Manager -
[DATE]
DRAWDOWN NOTICE - A$ FACILITY AGREEMENT BETWEEN ____________ AND GE CAPITAL FINANCE PTY ACN 075 554 175DATED [ ] ("FACILITY AGREEMENT")
Under clause 2.2 ("Requesting a drawing") of the facility agreement, we give notice that the company wants to borrow under the facility as follows:
(a) the requested drawdown date is ;
(b) the amount of the proposed drawing is A$ ;
(c) the proposed drawing is to be paid to:
(d) the company making the proposed drawing is _________________.
_________________ represents and warrants that the representations and warranties by it in clause 12 ("Representations and warranties") of the facility agreement are true complete and correct and not misleading on the date of this notice and that each will be true complete and correct and not misleading on the drawdown date and that I am an authorised officer of the company.
The Interpretation clause of the facility agreement applies to this notice as if it was fully set out in this notice.
Previously faxed: YES NO
-------------------------- ---------------- ---------------------------------
Company name: Date: BBC Number
-------------------------- ---------------- ---------------------------------
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I certify that the above information is true and correct and not misleading and that the eligible accounts in line 6 include only those accounts and inventory as those terms are defined in the A$ Facility Agreement dated _____________ between GE Capital Australia, GE Capital Finance Pty Limited and others..
PREPARED BY: BY:
----------------------------------- -----------------------
TITLE:
----------------------
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1. In respect of eligible accounts, the exclusionary criteria excludes any account:
(a) which does not arise from the sale of goods or the performance of services by the company in the ordinary course of its business;
(b) if the company's right to receive payment is not absolute or is contingent;
(c) if the company is not able to bring suit or otherwise enforce its remedies against the account debtor through judicial process;
(d) to the extent any defence, counterclaim, set-off or dispute is asserted as to the account;
(e) if the account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the account debtor's obligation to pay that invoice is subject to the company's completion of further performance under that contract;
(f) that is not a true and correct statement of bona fide indebtedness incurred in the amount of the account for goods sold to or services rendered and accepted by the applicable account debtor;
(g) with respect to which an invoice, acceptable to the Lender in form and substance, has not been sent to the applicable account debtor;
(h) that is not owned by the company;
(i) that is subject to any right, claim, security interest or other interest of any other person, other than in favour of or the Lender;
(j) that arises from a sale to any officer, other employee, related entity or affiliate of the obligor, or to any entity which has any common officer with the obligor;
(k) that is not paid within 90 days following its invoice date;
(l) if the relevant account debtor is or becomes insolvent:
(m) if the Lender's interest in it is not a first priority perfected security interest;
(n) as to which any of the representations or warranties pertaining to accounts set forth in any transaction document is untrue;
(o) which is payable in any currency other than Australian Dollars;
Facility Agreement Page 71 of 83 Pages
(p) that is the obligation of a debtor to whom the company is or
may become liable for goods sold or services rendered by the
debtor to the company, to the extent of the company's
liability to the debtor;
(q) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the
debtor may be conditional;
(r) payable by a debtor where the total unpaid accounts of that
debtor exceed 20% of the aggregate of all accounts payable to
the company at that time, to the extent of that excess;
(s) that are accounts of a debtor if 50% or more of the accounts
owing from that debtor remain unpaid within the periods
specified in (k) for the debtor;
(t) that arises from any bill-and-hold or other sale of goods
which remain in the company's possession or under the
company's control;
(u) to the extent that the account exceeds any credit limit
established by the Lender in the Lender's sole discretion;
(v) that represents interest payments or service charges owing to
the company; or
(w) which is unacceptable to the Lender in its reasonable credit
judgment.
--------------------------------------------------------------------------------
Facility Agreement Page 72 of 83 Pages
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1 CLAUSE 12.1 K) - LITIGATION MATTERS
2 [INTENTIONALLY OMITTED]
3 [INTENTIONALLY OMITTED]
4 CLAUSE 12.1 O) - EMPLOYMENT MATTERS
5 CLAUSE 12.1 P) - JOINT VENTURES, SUBSIDIARIES AND AFFILIATES
6 CLAUSE 12.1 Q) - SHARE CAPITAL
SHAREHOLDER SHARES HELD FULLY PAID
7 CLAUSE 12.1 R) - INDEBTEDNESS
8 CLAUSE 12.1 S) - TAXES
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9 CLAUSE 12.1 U) - INTELLECTUAL PROPERTY
10 [INTENTIONALLY OMITTED]
11 [INTENTIONALLY OMITTED]
12 [INTENTIONALLY OMITTED]
13 [INTENTIONALLY OMITTED]
GUARANTEE
s7.1 The guarantor unconditionally and irrevocably guarantees payment to the Lender of the guaranteed money and guarantees to the Lender the due performance by the company of the company's obligations to the Lender under the transaction documents as a principal obligation. If the company does not pay the guaranteed money on time and in accordance with the transaction documents, then the guarantor agrees to pay the guaranteed money to the Lender on demand. A demand may be made at any time and from time to time and whether or not the Lender has made demand on the company.
NATURE OF GUARANTEE
s7.2 This guarantee is a continuing obligation and extends to all of the guaranteed money.
INDEMNITY
s7.3 The guarantor unconditionally and irrevocably indemnifies the Lender as a principal obligation against any liability or loss (including consequential or economic loss) arising, and any costs the Lender suffers or incurs:
(a) if an obligor does not, is not obliged to, or is unable to, pay the guaranteed money in accordance with the transaction documents; or
(b) if the guarantor is not obliged to pay the Lender an amount under clause s7.1 ("Guarantee"); or
(c) if the Lender is obliged, or agrees, to pay an amount to a trustee in bankruptcy or liquidator (of an insolvent person) in connection with a payment by an obligor (for example, the Lender may have to, or may agree to, pay interest on the amount); or
(d) if the guarantor defaults under this guarantee; or
(e) in connection with any person exercising, or not exercising, rights under this guarantee; or
(f) if any obligor defaults under this agreement or any transaction document; or
(g) if the guaranteed money is not recoverable or recovered by the Lender from any obligor.
REINSTATEMENT OF RIGHTS
s7.4 A trustee in bankruptcy, liquidator or controller or any other person may ask the Lender to refund a payment it has received or otherwise repay money it has received
Facility Agreement Page 75 of 83 Pages
in connection with this guarantee the guaranteed money or the transactions documents. To the extent the Lender is obliged to, or agrees to, make a refund or repayment it may treat the payment as if it had not been made. It is then entitled to its rights against the guarantor under this guarantee as if the payment had never been made. This applies despite anything in this guarantee. |
RIGHTS OF GE CAPITAL ARE PROTECTED
s7.5 Rights given to the Lender under this guarantee (and the guarantor's liabilities under it) are not affected by any act or omission by the Lender or by anything else that might otherwise affect them under law or otherwise, including:
(a) the fact that it varies or replaces any arrangement under which the guaranteed money is expressed to be owing, such as by increasing the facility limit or extending the term; or
(x) the fact that it releases the company or an obligor or gives it a concession, such as more time to pay or compromises any of the guaranteed money; or
(y) the fact that the company opens an account with it; or
(z) the fact it releases, loses the benefit of or does not obtain any transaction document; or
(aa) the fact that it does not register any transaction document which could be registered; or
(bb) the fact that it releases any person who guarantees any of the company's obligations; or
(cc) the fact that a person becomes a guarantor after the date of this agreement; or
(dd) the fact that the obligations of any person who guarantees any of the company's obligations may be void or may not be enforceable; or
(ee) the fact that any person who was intended to guarantee any of the company's obligations does not do so or does not do so effectively; or
(ff) the death, mental or physical disability or insolvency of any person including an obligor; or
(gg) changes in the membership, name or business of any person; or
(hh) any neglect, omission, default or delay of the Lender.
NO MERGER
s7.6 This guarantee does not merge with or adversely affect, and is not adversely affected by, any of the following:
Facility Agreement Page 76 of 83 Pages
(a) any other guarantee, indemnity, or security interest,
or other right or remedy to which the Lender is
entitled; or
(b) a judgment which the Lender obtains against the
guarantor in connection with the guaranteed money or
any other amount payable under this guarantee.
|
the Lender may still exercise rights under this guarantee as well as under the judgment, other guarantee, indemnity, security interest, or other right or remedy.
EXTENT OF GUARANTOR'S OBLIGATIONS
s7.7 If more than one person is named as "guarantor" each of them is liable for all the obligations under this guarantee both separately on its own and jointly with any one or more other persons named as "guarantor". This guarantee binds each person who signs as "guarantor" even if another person who was intended to sign does not sign it or is not bound by it.
GUARANTOR'S RIGHTS ARE SUSPENDED
s.7.8 As long as any of the guaranteed money remains unpaid, the
guarantor may not, without the Lender's written consent:
(a) reduce its liability under this guarantee by claiming
that it or any obligor or any other person has a
right of set-off subrogation or counterclaim against
the Lender; or
(b) exercise any legal right to claim to be entitled to
the benefit of another guarantee, indemnity, or
security interest given in connection with the
guaranteed money or any other amount payable under
this guarantee (for example, the guarantor may not
try to enforce any security interest the Lender has
taken to ensure repayment of the guaranteed money);
or
(c) claim an amount from the company, or another
guarantor of the company's obligations, under a right
of indemnity or any other claim, or enforce any right
against either of them; or
|
(d) claim an amount in the insolvency of any obligor; or
(e) directly or indirectly withdraw or seek to withdraw any money loaned by the guarantor to the company or otherwise owing to the guarantor by the company or accept or receive any property or payment of the company or take any encumbrance or security interest from the company; or
(f) transfer, assign or otherwise dispose of any claim the guarantor may have against the company other than by way of complete release or make or cause any other person to claim, demand or bring an action against the company directly or indirectly.
Facility Agreement Page 77 of 83 Pages
Any money, property or other benefit received by the guarantor from the company in contravention of this clause is received on the basis that it is held on trust for the Lender and will be paid to the Lender on receipt by the guarantor. |
CROSS GUARANTEE
s7.9 This guarantee takes effect as a cross-guarantee and cross-indemnity when one or more of the company are the same as one or more of the guarantor. In those circumstances it is a separate guarantee and indemnity in relation to each obligor as if that person were:
(s) the only person included in the definition of "company"; and
(t) excluded from the definition of "guarantor".
THIS CERTIFICATE is given on the day of
BY: [ ] A.C.N. [ ] (the "EXISTING LENDER");
AND: [ ] A.C.N. [ ] (the "NEW FINANCIER");
TO:
RECITALS:
A. Pursuant to clause 20.2 of a Facility Agreement dated [ ] between [ ] and others (the "FACILITY AGREEMENT"), the Lender may assign all or part of its rights and obligations under the transaction documents.
B. The Lender proposes to substitute the New Financier for a part of its participation under the transaction documents as provided by this certificate.
DEFINITIONS
1.1 Defined terms in the Facility Agreement have the same meanings in this certificate, unless the context otherwise requires.
1.2 This is a transaction document for the purposes of the Facility Agreement.
2. SUBSTITUTION
2.1 The Lender hereby substitutes the New Financier as Lender under the transaction documents to the extent set out below.
2.2 [Details of rights and obligations of the Lender to be assigned].
2.3 The assignment will take effect upon the [date of this notice/[ ] ].
3. ADDRESS FOR NOTICES
The address for notices of the New Financier for the purposes of each transaction document to which it is a party is [ ].
4. LAW AND JURISDICTION
This certificate is governed by the laws of the Australian Capital Territory and the parties submit to the non-exclusive jurisdiction of the courts exercising jurisdiction in the Australian Capital Territory and any courts that may hear appeals from those courts in respect of any proceedings in connection with this certificate.
5. CAPACITY
The execution by the Relevant Financier of this certificate binds each party, and will cause this certificate to enure for the benefit of each party, referred to in clause 20.2 of the Facility Agreement on whose behalf it executes this certificate.
[Lender] [New Financier]
By: By:
Date: Date:
By:
Date:
--------------------------------------------------------------------------------
Facility Agreement Page 80 of 83 Pages
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EXECUTED AS AN AGREEMENT
DATE: 22 November 2000
SIGNED by
as attorney for GE CAPITAL
AUSTRALIA under power of attorney
dated
in the presence of:
/s/ Rebecca King /s/ David Thrift
-------------------------------- ------------------------------------------
Signature of witness By signing this agreement as attorney the
attorney states that the attorney has not
received notice of revocation of the power
of attorney
Rebecca King
--------------------------------
Name of witness (block letters)
225 George St., Sydney NSW 2000
--------------------------------
Address of witness
/s/ B. D. Brown
Soliciter -----------------------------------------
--------------------------------- By signing this agreement as attorney the
Occupation of witness attorney states that the attorney has not
received notice of revocation of the power
of attorney
|
SIGNED by
as attorney for
GE CAPITAL
FINANCE PTY LIMITED under
power of attorney dated
in the presence of:
/s/ Rebecca King
-------------------------------- /s/ David Thrift
Signature of witness ---------------------------------------------
By signing this agreement as attorney the
attorney states that the attorney has not
Rebecca King received notice of revocation of the power of
-------------------------------- attorney
Name of witness (block letters)
|
225 George St., Sydney NSW 2000
-------------------------------- /s/ B. D. Brown
Address of witness ---------------------------------------------
By signing this agreement as attorney the
attorney states that the attorney has not
Soliciter received notice of revocation of the power of
-------------------------------- attorney
Occupation of witness
|
EXECUTED by NATIONAL FLEET
NETWORK PTY LIMITED
ACN 094 802 141:
/s/ Geoffrey D. Lewis /s/ Kenneth L. Fish --------------------------------------------- -------------------------------- Signature of director Signature of director/secretary Geoffrey D. Lewis Kenneth L. Fish --------------------------------------------- -------------------------------- Name: Geoffrey D Lewis Name: Kenneth L Fish EXECUTED by NMHG DISTRIBUTION PTY LIMITED ACN 053 370 291: /s/ Geoffrey D. Lewis /s/ Kenneth L. Fish --------------------------------------------- -------------------------------- Signature of director Signature of director/secretary Geoffrey D. Lewis Kenneth L. Fish --------------------------------------------- -------------------------------- Name: Geoffrey D Lewis Name: Kenneth L Fish |
EXHIBIT 10.13
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 28, 1996 (this "Agreement"), between NACCO MATERIALS HANDLING GROUP, INC., a Delaware corporation having its principal executive offices at 2701 NW Vaughn, Suite 900, Portland, Oregon 97210 (hereinafter called "Borrower"), and NACCO INDUSTRIES, INC., a Delaware corporation having its principal executive offices at 5875 Landerbrook Drive, Mayfield Heights, Ohio 44124 (hereinafter called "Lender").
BACKGROUND
Lender has agreed to loan Borrower an amount not to exceed Fifty Million Dollars ($50,000,000) for the purposes set forth herein. Lender is willing to extend such credit, subject to the terms and conditions hereinafter set forth.
In consideration of the mutual convenants and agreements contained herein, and other good and valuable consideration, receipt of which is hereby acknowledged by all parties hereto, the parties agree as follows:
ARTICLE I
DEFINITIONS
"AFFILIATE" shall mean a Person (other than Borrower) that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, Borrower.
"AUTHORIZED REPRESENTATIVE" shall mean the Chief Financial Officer, Treasurer or any Assistant Treasurer of Borrower, or any other individual designated by Borrower in writing to Lender.
"DEBTOR RELIEF LAWS" shall mean the Federal Bankruptcy Code, together with any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar debtor relief laws affecting the rights of creditors generally from time to time in effect.
"DEFAULT" shall mean any event specified in Section 6.1 hereof, whether or not any requirement for the giving of notice, or the lapse of time, or the happening of any further condition, event or act has been satisfied.
"DEFAULT RATE" shall mean a rate of interest per annum equal to the interest rate per annum determined from time to time pursuant to the Note, plus two percent (2%); provided, however, that in no event shall such rate exceed the maximum rate allowed by law.
"DOLLARS" and the sign "$" shall refer to lawful money of the United States of America.
"EVENT OF DEFAULT" shall have the meaning assigned to it in Section 6.1 hereof.
"EXISTING DEBT" shall mean Borrower's debts and liabilities in existence on the date of this Agreement.
"LAWS" shall mean all statutes, laws, ordinances, rules, regulations, orders, writs, judgments, injunctions, or decrees of the United States, any state or commonwealth, any municipality, any foreign country, any territory or possession, or any Tribunal.
"LITIGATION" shall mean any proceeding, claim, lawsuit and/or investigation conducted or threatened by or before any Tribunal, including, but not limited to, proceedings, claims, lawsuits, and/or investigations under or pursuant to any environmental, occupational, safety and health, antitrust, unfair competition, securities, tax, or other Laws, or under or pursuant to any contract, agreement or other instrument.
"LOAN" OR "LOANS" shall mean any credit extended by Lender pursuant to the first sentence of Section 2.1 hereof.
"LOAN PAPERS" shall mean this Agreement, the Note and all other instruments and documents, if any, to be executed and delivered by Borrower or any Person pursuant to the terms of this Agreement.
"MATERIAL ADVERSE CHANGE OR EFFECT" shall mean any act or event or circumstance which (i) causes an Event of Default or Default, (ii) otherwise might be material and adverse to the financial condition or business operations of Borrower, or (iii) in any manner whatsoever could affect adversely the validity or enforceability of any of the Loan Papers.
"NOTE" shall mean the promissory note of Borrower delivered to Lender pursuant to Section 2.1 hereof, or any promissory note delivered thereafter in substitution therefor.
"OBLIGATION" shall mean all present and future obligations, indebtedness and liabilities, and all renewals, modifications, increases or extensions of all or any part thereof, of Borrower to Lender arising from, by virtue of, or pursuant to this Agreement, the Note, the other Loan Papers and any and all renewals, modifications, increases and extensions thereof, or any part thereof, or future amendments thereto, and all interest accruing on all or any part thereof, whether such obligations, indebtedness and liabilities are direct, indirect, fixed, contingent, joint, several, or joint and several.
"PERSON" shall mean and include an individual, a general or limited partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department, Tribunal, agency or political subdivision thereof.
"REQUEST" shall mean the request by Borrower in writing for a Loan in accordance with Section 2.6 hereof.
"TAXES" shall mean all taxes, assessments, fees or other charges from time to time or at any time imposed by any Laws or by any Tribunal.
"TOTAL PRINCIPAL DEBT" shall mean, at any time, the unpaid principal balance of the Note.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign, territorial, or other court or governmental department, commission, board, bureau, agency or instrumentality.
ARTICLE II
LOAN
2.1 FACILITY. Lender agrees, upon the terms and subject to the conditions of this Agreement, to make a loan or loans to Borrower, as revolving credit, in such amount or amounts as Borrower may from time to time request, but not exceeding in the aggregate outstanding at any time under this Agreement, Fifty Million Dollars ($50,000,000). The obligation of Borrower to repay the Loans made pursuant to this Section 2.1 shall be evidenced by a note substantially in the form of Exhibit "A" hereto (the "Note"), dated the date of this Agreement. Within the limit of the credit provided by the first sentence of this Section 2.1, and upon the terms and subject to the conditions of this Agreement, Borrower may borrow, prepay and reborrow under the facility created hereby. As sums are borrowed or repaid by Borrower pursuant to this facility, Lender (a) shall revise the grid on the final page of the Note to reflect such borrowing or repayment, and (b) cause its Chief Financial Officer, the Treasurer or any Assistant Treasurer or any Assistant Treasurer to initial such changes.
2.2 PAYMENT OF PRINCIPAL. Lender shall have the right to demand payment of the Total Principal Debt outstanding in whole or in part at any time, with twenty-four (24) hours notice. Borrower may prepay the aggregate principal amount outstanding under the Note in whole or in part at any time, without penalty.
2.3 INTEREST ON NOTE. Except as otherwise provided herein, all unpaid principal under the Note from the dates of any borrowings shown thereon shall bear interest, and interest shall be due and payable, as provided in the Note; provided, however, that in no event shall the interest rate on the Note exceed the highest rate permitted by law.
2.4 AUTHORIZATION. Each of the Authorized Representatives is hereby authorized to make borrowings in the name of and on behalf of Borrower and to receive money pursuant to the terms of this Agreement at any time, and from time to time, to the full extent of the facility established pursuant to Section 2.1 hereof.
2.5 PURPOSE. Except as otherwise provided herein, the proceeds of all Loans may be used for any general corporate purpose of the Borrower, including investments.
2.6 BORROWING PROCEDURES. To make a borrowing under the facility established pursuant to Section 2.1 hereof, Borrower shall submit, by or through an Authorized Representative, a request in writing for a Loan substantially in the form of Exhibit "B" hereto (the "Request") to the Chief Financial Officer or Treasurer of Lender, or any designee of such officers, for a Loan under the facility in an amount to be specified by such Authorized Representative. Such Request may be made at any time, and from time to time. Upon receipt of such a Request, unless a Default has occurred and is continuing, or as otherwise limited by this Agreement, Lender shall fund the Request.
2.7 LIMITATION ON BORROWINGS. Notwithstanding any other provision hereof, Lender shall not be obligated to honor any Request or to fund such Loan if, in the opinion of Lender's Chief Financial Officer, as evidenced by a certificate to such effect, the funding of such Loan would have a material adverse effect on Lender or its business operations.
ARTICLE III
AFFIRMATIVE COVENANTS
3.1 GENERAL COVENANTS. During the term of this Agreement, or as long as any part of the Obligation is outstanding, Borrower covenants that it shall:
(a) PAYMENT: Duly and punctually pay or cause to be paid the principal of and interest on the Loans.
(b) CORPORATE EXISTENCE. Maintain its corporate existence under the Laws of the State of Delaware in good standing and maintain its rights to transact business in all other states where the nature of its activities require it to do so and where the failure to be so qualified would have a Material Adverse Change or Effect.
(c) NOTICE OF DEFAULT. Immediately upon the happening of any condition or event which constitutes a Default, deliver to Lender a written notice specifying the nature and period of existence thereof and what action Borrower is taking and proposes to take with respect thereto.
(d) TAXES, ETC. Duly and punctually pay and discharge, or cause to be paid and discharged, prior to any default, all valid claims and charges of any Tribunal of every nature, and all Taxes levied or imposed upon it, unless contested in good faith and by appropriate proceedings.
(e) INSURANCE. Procure and maintain in force with financially sound and reputable insurers, insurance policies with respect to its property and business against such casualties and contingencies (including but not limited to fire, public liability, larceny, embezzlement or other criminal misappropriation insurance) and in such amounts as are usual, customary and then-available for companies in the same line of business as Borrower.
(f) MATERIAL ADVERSE CHANGE. Promptly after Borrower becomes aware of
(i) any Material Adverse Change or Effect, or (ii) the pendency or threat of any
Litigation or of any Tax deficiency which, if decided adversely to Borrower,
would have a Material Adverse Change or Effect, give notice to Lender thereof.
(g) COMPLIANCE WITH OTHER OBLIGATIONS. Perform and observe all Obligations.
(h) NOTICE; COMPLIANCE. From time to time, take such steps as may be necessary or advisable to render fully valid and enforceable under all applicable Laws the rights of Lender, in each case in such form and at such times as shall be satisfactory to Lender and its counsel, and pay all fees and expenses (including attorney's fees) incidental to compliance with this Section 3.1 (h).
(i) LAWS. Comply with all applicable Laws, and secure or cause to be secured all necessary approvals or authorizations required in the conduct of its business where failure to obtain such approvals or authorizations would have a Material Adverse Change or Effect.
(j) OTHER INDEBTEDNESS. Duly and punctually pay or cause to be paid all principal and interest on any debt of Borrower to third parties, comply with and perform all conditions, terms and obligations of the notes evidencing such debt and the deeds of trust and mortgages or other security documents securing it.
(k) TAX. If at any time any law shall be enacted imposing or authorizing the imposition of any Tax upon any of the Loan Papers, or upon any rights, titles or interests created thereby, or upon the Obligation or any part thereof, immediately pay all such Taxes.
(l) INSPECTION. Permit any representatives of Lender to visit and inspect any of the properties of Borrower, to examine all books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss its affairs, finances and accounts with its officers, employees and auditors at all such reasonable times and as often as may be reasonably requested by Lender.
(m) FURTHER ASSURANCES. Promptly correct any defect, error or omission which may be discovered in the contents of this Agreement or any of the other Loan Papers or in the execution or acknowledgment thereof, and execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such further instruments and do such further acts as may be necessary or as may be requested by Lender to carry out more effectively the purposes of this Agreement and any of the other Loan Papers.
3.2 ACCOUNTS, REPORTS AND OTHER INFORMATION. During the term of this Agreement, or as long as any part of the Obligation is outstanding, Borrower covenants it will maintain a standard system of accounting in accordance with sound accounting practice, and furnish or cause to be furnished to Lender the following:
(a) QUARTERLY STATEMENTS. As soon as practicable after the end of each fiscal quarter of Borrower, commencing September 30, 1996, and in any event within 45 days after the end of each such quarter:
(i) A balance sheet of Borrower as of the end of such quarter; and
(ii) Statements of income and retained earnings of Borrower for such quarter, all in reasonable detail and prepared in accordance with sound accounting practice.
(b) ANNUAL STATEMENTS. As soon as practicable after the end of each fiscal year of Borrower, and in any event within ninety (90) days thereafter:
(i) A balance sheet of Borrower at the end of such year; and
(ii) Statements of income and retained earnings of Borrower for such year, all in reasonable detail and prepared in accordance with sound accounting practice.
(c) NOTICE FROM REGULATORY AGENCIES. Promptly upon receipt thereof, information with respect to and copies of any notices received from federal or state regulatory agencies or any Tribunal relating to an order, ruling, statute or other Law or information which might have a Material Adverse Change or Effect.
ARTICLE IV
NEGATIVE COVENANTS
4.1 GENERAL COVENANTS. During the term of this Agreement or as long as any part of the Obligation is outstanding, Borrower covenants it will not, without the prior consent of Lender:
(a) DISPOSITION OF ASSETS. Other than in the ordinary course of business, sell, lease, transfer or otherwise dispose of more than five percent (5%) in the aggregate of its assets or any of its assets which contribute to at least five percent (5%) of its gross income; provided, however, that the foregoing provision (i) shall not be applicable if the proceeds of such sale, lease or transfer (to the extent such proceeds are not in excess of the Obligation) are used to prepay the Obligation, or (ii) shall not be applicable to sales, leases, transfers or other dispositions of any assets of Borrower to any Affiliate.
(b) MERGER, ACQUISITION AND CONSOLIDATION. Consolidate or merge with any other Person, nor permit any other Person to consolidate with or merge into it; provided, however, that the foregoing shall not apply to any transaction involving solely one or more Affiliates.
(c) LIMITATION ON DEBT. Create, incur, assume, become or be liable, in any manner in respect of, or suffer to exist, any debt (except Existing Debt and the Obligation) if, when combined with all other debt and liabilities, such debt would exceed Borrower's surplus.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows:
(a) ORGANIZATION AND QUALIFICATION. Borrower is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Borrower has the corporate power and authority to own the property that it owns and to carry on the business that it conducts and proposes to conduct.
(b) EXECUTION, DELIVERY AND PERFORMANCE. Borrower has the corporate power and authority to enter into this Agreement, to execute the Note, all other Loan Papers and all other documents that constitute a part of this Loan transaction, and Borrower has the corporate power and authority to carry out the terms and provisions of each of such Loan Papers. This Agreement and the Note constitute duly authorized, valid and legally binding obligations of Borrower. The execution and delivery of all of the Loan Papers by Borrower and the performance by Borrower of the Obligations have been authorized by all corporate actions necessary to create such authorization.
(c) LITIGATION. There is no Litigation affecting Borrower that will or could (whether individually or in the aggregate with other Litigation) have a Material Adverse Change or Effect.
(d) CONFLICTING AGREEMENTS AND OTHER MATTERS. No default which could result in a Material Adverse Change or Effect exists under any order, writ, injunction, decree or demand of any Tribunal or in the performance or observance of any obligation, covenant, or condition in any agreement to which Borrower is bound. Borrower is not a party to or otherwise subject to any contract or agreement which, absent waiver or consent, would restrict or otherwise affect the right or ability of Borrower to execute this Agreement or any of the other Loan Papers or the performance of any of their respective terms other than such contracts and agreements as to which requisite waivers or consents have been obtained by Borrower and furnished to Lender. Neither the execution nor delivery of this Agreement or any of the other Loan Papers, nor fulfillment of, nor compliance with, their respective terms and provisions, will (i) violate or conflict with any
provision of any Law, determination or award presently in effect by which Borrower or any of its properties is bound or affected, or any provision of the Certificate of Incorporation or Bylaws of Borrower (as amended to the date hereof); (ii) result in any breach of or constitute a default under any mortgage, deed of trust, indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which Borrower or any of its properties may be bound or affected; (iii) require the consent of any other Person, except such authorizations, consents, approvals and licenses as have been obtained by Borrower and furnished to Lender; or (iv) require the authorization, consent or approval of, or any license from, or any filing or registration with, any Tribunal, except such authorizations, consents, approvals and licenses as have been obtained by Borrower and furnished to Lender.
(e) OTHER AGREEMENTS. Borrower has performed all material obligations required to be performed by it and is not in material default under any agreements or other instrument to which it is a party or by which it is bound.
(f) DISCLOSURE. Neither this Loan Agreement, any of the other Loan Papers nor any other document, financial statement, projection, credit information, certificate or statement furnished or required herein to be furnished to Lender by Borrower in connection with this Agreement contains any untrue, incorrect or misleading statement of fact, and all of these documents taken as a whole do not omit to state a fact material to this Agreement, to Lender's decision to enter into this Agreement or to the transaction contemplated hereunder. All representations and warranties made herein or in any certificate, projection or other document delivered to Lender by or on behalf of Borrower, pursuant to or in connection with this Agreement, shall be deemed to have been relied upon by Lender, notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf, and shall survive the making of any and all Loans contemplated hereby.
ARTICLE VI
DEFAULT
6.1 DEFAULT. The term "Event of Default," as used herein, means the occurrence and continuance of any one or more of the following events (including the passage of time, if any, specified therefor):
(a) PAYMENTS. The failure or refusal by Borrower to pay the principal of, or interest on, the Loans or any other fee or obligation created pursuant to this Agreement, the Note or any of the other Loan Papers on or before ten (10) days after the date such payment is due.
(b) OTHER COVENANTS. The failure or refusal by Borrower punctually and properly to perform, observe and comply with any other covenant, term or provision contained in this Agreement or any of the other Loan Papers, within ten (10) days after the obligation to report such failure or refusal to Lender has occurred.
(c) VOLUNTARY DEBTOR RELIEF. Borrower shall (i) execute an assignment for the benefit of creditors, or (ii) admit in writing its inability, or be generally unable, to pay its debts generally as they become due, or (iii) voluntarily seek the benefit or benefits of any Debtor Relief Law, or (iv) voluntarily become a party to any proceeding provided for by any Debtor Relief Law that could suspend or otherwise affect any of the rights of Lender granted in this Agreement or any of the other Loan Papers.
(d) INVOLUNTARY PROCEEDINGS. Borrower shall involuntarily (i) have an order, judgment or decree entered against it by any Tribunal pursuant to any Debtor Relief Law that could suspend or otherwise affect any of the rights granted to Lender in this Agreement or any of the other Loan Papers, and such order, judgment or decree is not stayed or reversed within thirty (30) days after the entry thereof, or (ii) have a petition filed against it seeking the benefit or benefits provided for by any Debtor Relief Law that would suspend or otherwise affect any of the rights granted to Lender in this Agreement or any of the other Loan Papers, and such petition is not discharged within thirty (30) days after the filing thereof.
(e) MISREPRESENTATION. Any statement, representation or warranty in this Agreement, any of the other Loan Papers, or in any writing at any time delivered to Lender pursuant to any of such documents, is materially false or misleading.
6.2 REMEDIES UPON DEFAULT. If an Event of Default occurs, the aggregate unpaid principal balance of and accrued interest on the Obligations shall thereupon become due and payable concurrently therewith, without any action by Lender and without diligence, presentment, demand, protest, notice of protest or intent to accelerate, or notice of any other kind, all of which are hereby expressly waived by Borrower. In lieu of the interest rate established by the terms of the Note, Borrower shall pay Lender interest at the Default Rate on any principal outstanding thereunder and on any unpaid interest due thereon from the date of the Default.
Upon the occurrence of an Event of Default, Lender may, at its election, do any one or more of the following:
(i) JUDGMENT. Reduce any claim to judgment.
(ii) RIGHTS. Exercise any and all rights afforded by the Laws of the State of Ohio or any other jurisdiction, or by this Agreement or any of the Loan Papers, or by Law or equity, or otherwise, as Lender shall deem appropriate.
(iii) OFFSET. Exercise the right of offset against the interest of Borrower in and to any funds or property in possession of Lender to the fullest extent of the Obligation.
(a) PERFORMANCE BY LENDER. Should any covenant, duty or agreement of Borrower fail to be performed in all respects in accordance with the terms of the Loan papers, Lender may, at its option, perform, or attempt to perform, such covenant, duty or agreement on behalf of Borrower. In such event, Borrower shall, at the request of Lender, promptly pay any amount expended by Lender in such performance or attempted performance to Lender at Lender's principal corporate offices, together with interest thereon at the Default Rate from the date of such expenditure by Lender until paid. Notwithstanding the foregoing, it is expressly understood that Lender neither assumes nor shall ever have, except by express written consent of Lender, any liability or responsibility for the performance of any duties of Borrower hereunder.
(b) LENDER NOT IN CONTROL. None of the covenants or other provisions contained in this Agreement or any of the other Loan Papers shall, or shall be deemed to, give Lender the rights or power to exercise control over the affairs and/or management of Borrower, the power of Lender under the Loan Papers being limited to the right to exercise the remedies provided in this Agreement or any of the other Loan Papers.
(c) WAIVERS. The acceptance by Lender at any time and from time to time of part payment on the Obligation shall not be deemed to be a waiver of any Event of Default then existing. No waiver by Lender of any particular Event of Default shall be deemed to be a waiver of any Event of Default other than said Event of Default. No delay or omission by Lender in exercising any right hereunder or under the Loan Papers shall impair such right or be construed as a waiver thereof or an acquiescence therein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof, or the exercise of any other right hereunder or under the Loan Papers or otherwise.
(d) CUMULATIVE RIGHTS. All rights available to Lender hereunder or under any of the other Loan Papers shall be cumulative of, and in addition to, all other rights granted to Lender at Law or inequity, whether or not the Obligation be due and payable and whether or not Lender shall have instituted any suit for collection or other action in connection with the Loan Papers.
6.3 POWER OF ATTORNEY. Effective immediately upon the occurrence of any Event of Default hereunder, Borrower appoints Lender as Borrower's attorney-in-fact with full power in Borrower's name and behalf to do every act which Borrower is obligated to do or may be required to do hereunder; however, nothing in this Section 6.3 shall be construed to obligate Lender to take any action hereunder.
6.4 WAIVERS BY BORROWER. Borrower waives notices of the creation, advance, increase, existence, extension or renewal of, and of any indulgence with respect to, the Obligation; waives presentment, demand, notice of dishonor, and protest; waives notice of the amount of the Obligation outstanding at any time and all other notices respecting the Obligation; and agrees that maturity of the Obligation and any part thereof may be extended or renewed one or more times by Lender in its discretion, without notice to Borrower.
6.5 RIGHTS AND POWERS OF LENDER. Upon the occurrence of an Event of Default, Lender, without liability to Borrower, shall be entitled to obtain from any Person information regarding Borrower or Borrower's business, which information any such Person also may furnish without liability to Borrower. Lender shall not be liable for any act or omission on the part of the lender, its officers, agents or employees, except willful misconduct. The foregoing rights and powers of Lender will be in addition to, and not a limitation upon, any rights and powers of Lender given by Law, elsewhere in this Agreement, or otherwise.
ARTICLE VII
MISCELLANEOUS
7.1 NUMBER AND GENDER OF WORDS. Wherever herein the singular number is used, the same shall include the plural where appropriate, and vice versa, and words of any gender shall include each other gender where appropriate.
7.2 HEADINGS. The headings, captions and arrangements used in this Agreement and in any of the other Loan Papers are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify their respective terms, nor affect the meaning thereof.
7.3 ARTICLES, SECTIONS, DESCRIPTIONS AND EXHIBITS. All references to "Article," "Sections," "subparagraphs" or "subsections" contained herein are, unless specifically indicated otherwise, references to articles, sections, subparagraphs and subsections of this Agreement. All references to "hereof," "hereto," "hereunder" and similar terms shall refer to this Agreement and not to any particular section or provision of this Agreement. Any reference to an "Exhibit" contained herein is a reference to an exhibit attached hereto, which exhibit is made a part hereof for all purposes, the same as if et forth herein verbatim. If any exhibit attached hereto which is to be executed and delivered contains blanks or is otherwise required to be updated from time to time, it shall be completed correctly and in accordance with the terms and provisions contained and as contemplated herein prior to, at the time of or after the execution and delivery thereof.
7.4 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations and warranties made herein shall survive the execution and the delivery of this Agreement or any of the other Loan Papers and shall be deemed to be remade in connection with each borrowing under Section 2.1 hereof. All statements contained in any certificate or other instrument delivered by or on behalf of Borrower in connection therewith, shall be deemed to constitute representations and warranties made by Borrower.
7.5 PARTIES IN INTEREST. All convenants and agreements contained in this Agreement and all other Loan Papers shall bind and insure to the benefit of the respective successors and assigns of the parties hereto, except that Borrower may not assign its rights hereunder without the prior written consent of Lender.
7.6 GOVERNING LAW. This Agreement and the Note shall be deemed to be contracts made under the Laws of Ohio and shall be construed and enforced in accordance with the Laws of Ohio. Without excluding any other jurisdiction, Borrower agrees that the courts of Ohio will have jurisdiction over proceedings in connection herewith.
7.7 INDEMNITY. Borrow agrees to, and does indemnify and hold harmless Lender against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or assessed against Lender in any way relating to, or arising out of, any of the Loan Papers or any other transaction contemplated therein, to the extent that any of the same results, directly or indirectly, from any claims made or actions, suits or proceedings commenced by or on behalf of any Person other than Lender. The obligation of Borrower under this Section 7.7 shall survive termination of this Agreement.
7.8 SEVERABILITY. If any provision of this Agreement or any of the other Loan Papers is held to be illegal, invalid or unenforceable under present or future Laws during the term thereof, such provision shall be fully severable, the appropriate Loan Paper shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part thereof, and the remaining provisions thereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of such Loan Paper a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and legal, valid and enforceable.
7.9 AMENDMENT. The provisions of this Agreement and the other Loan Papers may not be amended, modified or waived except by the written agreement of Borrower and Lender.
7.10 ENTIRE AGREEMENT. This Agreement and the other Loan Papers embody the entire agreement among the parties and supersede all prior agreements and understanding, if any, relating to the subject matter thereof.
7.11 EXCEPTIONS TO COVENANTS. Borrowers shall not be deemed to be permitted to take any action or fail to take any action which is permitted as an exception to any of the covenants contained herein or which is within the permissible limits of any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
BORROWER: NACCO MATERIALS HANDLING GROUP, INC.
5875 Landerbrook Drive
Mayfield Heights, Ohio 44124 By /s/ Jeffrey C. Mattern
Attention: Chief Financial Officer -------------------------------------
Its Treasurer
------------------------------------
LENDER: NACCO INDUSTRIES, INC.
5875 Landerbrook Drive By /s/ J. C. Butler
Mayfield Heights, Ohio 44124 -------------------------------------
Attention: Treasurer Its: Treasurer
------------------------------------
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Fluctuating Balance
Promissory Note
June 28, 1996
FOR VALUE RECEIVED, the undersigned NACCO Materials Handling Group, Inc., a Delaware corporation ("Borrower"), hereby promises to pay to the order of NACCO Industries, Inc., a Delaware corporation ("Lender"), upon demand, at the principal executive offices of Lender in the City of Mayfield Heights, Ohio (or such other address as Lender shall hereinafter designate in writing), in lawful money of the United States of America, the principal sum of Fifty Million Dollars ($50,000,000) or, if less, the last amount appearing in the "unpaid principal balance" column of the grid attached hereto as EXHIBIT A, and to pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof to maturity, whether by acceleration or otherwise, on September 30, 1996 and on each December 31, March 31, June 30 and September 30 thereafter (each, an "Interest Payment Date"; each period commencing on the day immediately following an Interest Payment Date and ending on the immediately following Interest Payment Date being an "Interest Period"). Interest hereon shall be calculated on the basis of a 360 day year consisting of twelve 30 day months, and shall be calculated at a rate per annum equal to the interest rate calculated pursuant to the terms of the Amended and Restated Credit Agreement dated as June 4, 1996 among NACCO Materials Handling Group, Inc., the Banks party thereto, the Co-Arrangers and Co-Agents listed on the signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent (the "Credit Agreement"). The interest rate will be calculated and fixed on the first day of each Interest Period and compounded daily through each Interest Period. Lender shall have the right to demand payment of the unpaid principal balance hereunder, in whole or in part, at any time, and Borrower shall have the right to prepay, in whole or in part, the unpaid balance hereunder at any time.
This Note evidences borrowings under a Loan Agreement dated as of June ___, 1996 between Borrower and Lender, to which reference is hereby made for a statement of the terms and conditions applicable to the Note.
NACCO Materials Handling Group, Inc.
Attest:
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PRINCIPAL AGGREGATE
AMOUNT PRINCIPAL PRINCIPAL APPROVED BY
DATE ADVANCED AMOUNT PAID OUTSTANDING LENDER
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NACCO MATERIALS HANDLING GROUP, INC.
PORTLAND, OREGON
Request for Loans and Certificate
Pursuant to Section 2.6 of the Loan Agreement Dated as of
To: NACCO Industries, Inc.
Mayfield Heights, Ohio
The undersigned hereby requests a loan under the Loan Agreement in the amount of ___________ to be made on _______________ and to be evidenced by the undersigned's Note.
In support of this request, the undersigned hereby certifies that:
1. The representation and warranties made by the Borrower in
Section 5.1 of the Loan Agreement are true and correct on and
as of this date.
2. No Event of Default set forth in Section 6.1 of the Loan Agreement, and no event which might become such an Event of Default after the lapse of time or the giving of notice and the lapse of time, has occurred and is continuing or will exist upon the disbursement of such loan.
NACCO MATERIALS HANDLING GROUP, INC.
Exhibit 10.14
[COWLEY HEARNE LOGO]
BRAMBLES AUSTRALIA LIMITED
(ACN 000 164 938)
and
A.C.N. 094 802 141 PTY LIMITED
(ACN 094 802 141)
and
NACCO MATERIALS HANDLING GROUP, INC.
(C) COWLEY HEARNE
Website: www.cowleyhearne.com.au
Tel: 61 2 9956 2100 Fax: 61 2 9959 3614
REF: DRZ/SPW 1093
1. DEFINITIONS.....................................................1
2. SALE AND PURCHASE OF ASSETS....................................14
3. PURCHASE PRICE.................................................15
4. COMPLETION.....................................................17
5. STOCK AT THE CALCULATION TIME..................................19
6. COMPLETION STATEMENT...........................................20
7. PAYMENT OF THE PURCHASE PRICE..................................21
8. APPORTIONMENT..................................................23
9. CONDUCT OF BUSINESS PENDING COMPLETION.........................23
10. RISK AND INSURANCE.............................................25
11. ASSIGNMENT OF CUSTOMER CONTRACTS, AND LICENCES.................25
12. PROPERTY LEASES AND VEHICLE LEASES.............................26
13. EMPLOYEES......................................................28
14. SUPERANNUATION.................................................29
15. BOOK DEBTS/TRADE CREDITORS.....................................32
16. CUSTOMERS' AND SUPPLIERS' NOTICE/USE OF TRADE NAME.............33
17. WARRANTIES.....................................................33
18. RESTRAINT OF TRADE AND OFFER OF FUTURE BUSINESS................35
19. DISPUTE........................................................38
20. COSTS, STAMP DUTY AND GST......................................39
21. NOTICES........................................................40
22. ASSIGNMENT.....................................................41
23. GENERAL........................................................41
24. GUARANTEE AND INDEMNITY........................................43
25. ACCESS TO BWANA COMMUNICATION SYSTEM...........................46
SCHEDULE 1..............................................................47 SCHEDULE 2..............................................................48 SCHEDULE 3..............................................................49 SCHEDULE 4..............................................................50 SCHEDULE 5..............................................................51 ORIX LEASES AS AT 31/10/2000............................................53 NEW SOUTH WALES.........................................................53 SOUTH AUSTRALIA.........................................................53 QUEENSLAND..............................................................54 SCHEDULE 7..............................................................55 |
1. ACCURACY OF INFORMATION........................................58
2. POWER AND AUTHORITY............................................59
3. TITLE..........................................................59
4. SOLVENCY.......................................................60
5. FINANCIAL ARRANGEMENTS.........................................61
6. LIABILITIES....................................................61
7. ENVIRONMENTAL LAWS.............................................62
8. ACCOUNTS.......................................................64
9. PRE-COMPLETION DATE EVENTS.....................................66
10. TAXATION.......................................................67
11. ASSETS.........................................................69
12. LEASED PREMISES................................................71
13. CONTRACTS AND COMMITMENTS......................................72
14. INTELLECTUAL PROPERTY..........................................74
15. EMPLOYEES......................................................75 16. INSURANCE......................................................76 17. COMPLIANCE WITH LEGISLATION AND ABSENCE OF LITIGATION..........77 18. AUTHORISATIONS.................................................77 19. RECORDS AND CORPORATE MATTERS..................................78 20. POWERS OF ATTORNEY.............................................79 21. FINDER'S FEES..................................................79 SCHEDULE 9..............................................................85 SCHEDULE 10.............................................................87 ANNEXURE A..............................................................96 |
AGREEMENT dated 10 November 2000
BETWEEN: BRAMBLES AUSTRALIA LIMITED (ACN 000 164 938) whose registered
office is situated at Level 40, Gateway Plaza, 1 Macquarie Place
Sydney NSW 2000 trading as "BRAMBLES EQUIPMENT" and "Brambles
Industrial Services" (VENDOR)
AND: A.C.N. 094 802 141 PTY LIMITED (ACN 094 802 141) whose registered
office is situated at 1 Bullecourt Avenue, Milperra NSW 2214
(PURCHASER)
AND NACCO MATERIALS HANDLING GROUP, INC., A DELAWARE CORPORATION,
whose registered office is situated at 650 NE Holladay Street,
Suite 1600, Portland, Oregon 97232 USA (PURCHASER'S GUARANTOR)
RECITAL
A. The Vendor has agreed to sell and the Purchaser to purchase the
Business on the basis set out in this agreement.
B. The Purchaser's Guarantor has agreed to guarantee the obligations of
the Purchaser under and pursuant to this agreement.
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OPERATIVE PROVISIONS
1. DEFINITIONS
1.1 DEFINITIONS
ACCOUNTING STANDARDS means the accounting standards issued by the Australian Accounting Standards Board from time to time and, if and to the extent that any matter is not covered by accounting standards issued by the Australian Accounting Standards Board, means generally accepted accounting principles applied from time to time in Australia for a business similar to the Business.
ACCRUED EMPLOYEE ENTITLEMENTS means the following, as at the Calculation Time:
(a) the accrued annual leave entitlements including leave loading of the Transferring Employees determined under the legislation, awards and enterprise bargaining agreements applicable to the Transferring Employees;
(b) the accrued long service leave entitlements of Transferring Employees determined under the legislation applicable to the Transferring Employees recognising their continuous service, with the Vendor, either actual or deemed pursuant to the applicable legislation; and
(c) the accrued rostered day off entitlements of Transferring Employees determined under the legislation, awards and enterprise bargaining agreements applicable to the Transferring Employees.
For the avoidance of doubt, the actual Accrued Employee Entitlements will be different from the amounts accrued by the Vendor in its Records for the relevant Employees' entitlements. This is because, for convenience, the Vendor adopts a national rather than a State by State policy of accrual of employee entitlements, which policy does not recognise each separate State's particular statutory provisions in relation to the accrual of employee entitlements.
ACCRUAL means any payment by the Purchaser after the Calculation Time in the ordinary course of business for goods or services supplied to the Business before the Calculation Time, or any other payment by the Purchaser after the Calculation Time in respect of the Business where the benefit was received by the Business before the Calculation Time.
ADJUSTMENT PAYMENT means the payment pursuant to CLAUSE 7.3 as determined in accordance with CLAUSE 3.1.
ASSETS means all of the:
(a) Book Debts;
(b) Goodwill;
(c) Intellectual Property Rights;
(d) Plant and Equipment;
(e) rights and benefits of the Vendor under the Contracts and the Principal and Agency Arrangements;
(f) rights and benefits of the Vendor under the Property Leases (including leasehold improvements);
(g) Records;
(h) rights and benefits of the Vendor under the Software Licences;
(i) Prepayments;
(j) Stock; and
(k) Work in Progress.
AUSTRALIAN DOLLARS AND THE SIGN $ means the lawful currency of the
Commonwealth of Australia.
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BUSINESS SALE AGREEMENT Page 3
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AUTHORISATION means:
(a) an authorisation, consent, declaration, exemption, or waiver,
of whatever nature; and
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(b) in relation to anything that could be prohibited by law if a Government Agency acts in any way within a specified period, the expiry of that period without that prohibition being implemented,
and includes any renewal or amendment.
BOOK DEBT means a trade or other debt invoiced by and owed to the Vendor in respect of the Business.
BUSINESS means:
(a) the business of the Vendor which trades nationally under the name "Brambles Equipment" and provides forklift fleet management services, rental and maintenance services in respect of forklifts, materials handling equipment, sweepers, loaders, excavators, bobcats and other specialised plant; and
(b) the forklift component of the business carried on by the Vendor in Tasmania under the name "Brambles Industrial Services", as detailed in the Information Memorandum dated 12 September 2000. The Brambles Industrial Services business provides heavy industrial contracting services for fleet management, transport, earthmoving, mining industry related, steel industry related, industrial maintenance, logistics management and lifting activities; and
(c) (i) the forklift component of the business the Vendor carries on in Newcastle under the name "Brambles Industrial Services", as described in Section 2 "Proposed Sale of Assets" (not Section 1 "Proposed Sale and Leaseback Arrangements) of the Information Memorandum dated 25 September 2000; and
(ii) the forklift component of the business the Vendor
carries on in North Queensland under the name
"Brambles Industrial Services", as described in
Section 2 "Proposed Sale of Assets" (not Section 1
"Proposed Sale and Leaseback Arrangements) of the
Information Memorandum dated 25 September 2000.
BUSINESS DAY means a day on which banks are open for business and:
(a) for the purpose of receiving a notice, a day which is not a Saturday, Sunday, public holiday or bank holiday in the city in which the notice is received; and
(b) for any other purpose, a day which is not a Saturday, Sunday , public holiday or bank holiday in Sydney.
BWANA COMMUNICATION SYSTEM means the Vendor's proprietary wide area computer network which it operates throughout Australia, which is utilised by all of its divisions and businesses including the Business.
CALCULATION TIME means the close of business on the Completion Date.
CALCULATION TIME ASSET AND LIABILITY STATEMENT means the statement referred to in clause 6.1(b)(i), which forms part of the comprehensive Completion Statement as specified in clause 6.1(b).
CAPITAL WIP means all plant and equipment owned by the Vendor (including forklifts, sweepers, loaders, excavators, bobcats and other specialised plant and equipment) as at the Calculation Time which has undergone, or is undergoing, modification (including by the fitting of additional equipment) to satisfy the requirements and specifications of Customers under Customer Contracts, but which has not been supplied to those Customers. The Capital WIP as at 30 June 2000 is identified in the list of Capital WIP attached as Annexure A.
COMPLETION means the date the parties complete the sale and purchase of the Assets in accordance with CLAUSE 4.
COMPLETION STATEMENT means the statement prepared in accordance with clause 6.1(b).
COMPLETION DATE means 17 November 2000 or another date agreed between the Purchaser and the Vendor on which Completion occurs.
CONFIDENTIAL INFORMATION means any trade secret, financial, marketing, customer related and technical information, idea, concept, know how, technology, process or knowledge which relates to the Business and which is confidential or of a sensitive nature and includes material in the Information Memorandum but excluding that which is:
(a) in the public domain otherwise than by virtue of a breach of the confidentiality obligations in this agreement;
(b) lawfully in the possession of the recipient of the information through sources other than the party who supplied the information; or
(c) lawfully or properly required to be disclosed by law.
CONTRACTS means the agreements or arrangements relating to the Business to which the Vendor is a party as at the Calculation Time including the Customer Contracts and the Principal and Agency Arrangements.
CONTRACT TASK MANAGEMENT means the services provided by the Vendor's "Brambles Industrial Services" division as a contractor of performing specific customer tasks, such as the transport of ore from site to site, and pursuant to which the Vendor provides the customer the vehicles, materials handling equipment, vehicle operators and maintenance of the vehicles and bears all vehicle running costs necessary to perform and manage the specified task.
CORPORATIONS LAW means the Corporations Law under the Corporations Act 1989, as amended from time to time.
CUSTOMER means a customer of the Business.
CUSTOMER CONTRACTS means the Contracts and commitments entered into by the Vendor with Customers of the Business for the provision of services to those customers.
DATA ROOM MATERIAL means the written material relating to the Business made available by the Vendor to the Purchaser in the data room at the Vendor's solicitors' offices prior to Completion and in written correspondence between them, an index of which is attached to this agreement as Schedule 16, and complete identical sets of which have been exchanged by the Vendor and the Purchaser in sealed and initialled boxes simultaneously with the execution of this Agreement.
EMPLOYEE means an employee of the Business engaged in the Business as at the Calculation Time. The employees of the Business at the date of this agreement are identified in Schedule 4.
ENCUMBRANCE means an interest or power:
(a) reserved in or over an interest in any asset including, but not limited to, any retention of title; or
(b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power,
by way of security for the payment of a debt, any other monetary obligation or the performance of any other obligation, and includes, but is not limited to, any agreement to grant or create any of the above.
ENVIRONMENT means components of the earth, including:
(a) land, air and water;
(b) any layer of the atmosphere;
(c) any organic or inorganic matter and any living organism; and
(d) human-made or modified structures and areas, and includes interacting natural ecosystems that include components referred to in paragraphs (a) and (c).
ENVIRONMENTAL LAW means a provision of law, or a law, which provision or law relates to any aspect of the Environment, safety, health or the use of substances or activities which may harm the Environment or be hazardous or otherwise harmful to health.
EXCLUDED ASSETS means the assets listed is Schedule 11.
EXCLUDED EMPLOYEES means the employees listed in Schedule 17.
EXCLUDED RECORDS means those Records which the Vendor is required by law to retain.
GOODWILL means the goodwill of the Business including the exclusive right of the Purchaser to represent itself as carrying on the Business as the successor of the Vendor and the expertise and systems of operation developed by the Vendor relating to the Business, but does not include any right whatsoever to the names "Brambles Equipment" or "BED", save as specifically provided for in clause 16.2.
GOVERNMENTAL AGENCY means a government or any governmental, semi-governmental, administrative or judicial entity, agency, tribunal, commission or authority, including a self regulating organisation established under statute or a stock exchange.
GST means any goods and services tax or other form of value added or consumption tax and includes GST as defined in Section 195-1 of A New Tax System (Goods and Services Tax) Act 1999.
INFORMATION MEMORANDUM means (i) the Information Memorandum dated 3
August 2000 in relation to the Brambles Equipment component of the
Business, provided by the Vendor to the Purchaser; (ii) the Information
Memorandum dated 12 September 2000 relating to the forklift rental
business of the Tasmania division of the Brambles Industrial Services
component of the Business provided by the Vendor to the Purchaser; and
(iii) the Information Memorandum dated 25 September 2000 relating to
the Sale & Leaseback and Sale outright of Assets of the North
Queensland, Southern New South Wales and Newcastle divisions of the
Brambles Industrial Services component of the Business, provided by the
Vendor to the Purchaser referred to in Schedule 10.
INDEPENDENT VALUER means the person appointed to resolve a dispute under CLAUSE 19.
INTELLECTUAL PROPERTY RIGHTS means the rights and interests of the Vendor:
(a) in respect of confidential information, trade secrets, know-how, scientific, technical and product information used in or forming part of the Business; and
(b) in any copyright (including any software), patent, design or trade mark used in or forming part of the Business.
INVENTORY means spare parts for the forklifts for sale forming part of the Stock used or intended to be used in the Business.
LAST BALANCE DATE ASSET AND LIABILITY STATEMENT means the statement referred to in clause 6.1(b)(ii) which forms part of the comprehensive Completion Statement provided for in clause 6.1.
LAST ACCOUNTS means:
(a) the consolidated pro-forma balance sheet of the Brambles Equipment component of the Business on the Last Balance Date, derived from the audited balance sheet of the Vendor as at that date;
(b) the pro-forma balance sheet of the forklift component of the Brambles Industrial Services component of the Business in Tasmania on the Last Balance Date, derived from the audited balance sheet of the Vendor as at that date; and
(c) the pro-forma balance sheet of the non-contracted (or contracted for a term of 1 year or less) forklift component of the Brambles Industrial Services component of the Business in North Queensland and Newcastle on the Last Balance Date, derived from the audited balance sheet of the Vendor as at that date attached as Schedule 3.;
LAST BALANCE DATE means 30 June 2000.
LEASED PREMISES means the properties leased by the Vendor from third parties as at the Calculation Time, listed in Schedule 7.
LIABILITIES means the Accrued Employee Entitlements, the Trade Creditors, the obligations of the Vendor under the Principal and Agency Arrangements and the Vehicle Leases, and the Accruals, all as at the relevant time for determination, but excludes all other liabilities of the Business as at the relevant time for determination (including any liability for any current, pending or threatened litigation against the Business).
MIXED FLEET SERVICES means the service provided by the Vendor's "Brambles Industrial Services" division whereby a fleet comprising of a combination of forklifts and other materials handling equipment of which the forklifts, as a proportion of total units in the fleet, is less than 50%, is provided in its entirety by the Vendor to the customer by the Vendor on the basis that it be fully maintained by the Vendor.
NMHG APPROVED FORKLIFTS means (a) any forklifts Vendor buys or leases from Purchaser, or Hyster or Yale dealers affiliated with Purchaser, with full maintenance; (b) any forklifts the Vendor buys or leases from Purchaser, or Hyster or Yale dealers affiliated with Purchaser, for which Purchaser or such dealers decline to quote on the full maintenance of such forklifts on terms which are commercially satisfactory to the Vendor; or (c) forklifts which Vendor buys or leases from Purchaser, or Hyster or Yale dealers affiliated with Purchaser, but on which Vendor provides maintenance, subject to these forklifts being used only in internal applications of Vendor that are non-revenue generating.
NON-CAPITAL WIP means:
(a) the refurbishment, repair and maintenance services provided by the Vendor to Customers in respect of equipment owned by those Customers, for which the Vendor has the right to charge those Customers, but for which no obligation of those Customers to pay the Vendor has arisen as at the Calculation Time; and
(b) refurbishment, repair and maintenance services performed by the Vendor in respect of the equipment owned by the Vendor in the process of being commissioned for hire to Customers (but not yet on hire to them) ,as at the Calculation Time. The Non-Capital WIP as at 30 June 2000 is identified in the list of Capital WIP attached as Annexure A.
OWNED PROPERTIES means the freehold properties owned by the Vendor and more particularly described in Schedule 1.
OWNED PROPERTY LEASES means the leases of the Owned Properties on the terms and conditions set out in Schedule 13.
PLANT AND EQUIPMENT means the equipment (including but not limited to forklifts) for hire, plant, equipment, motor vehicles, machinery, furniture, and fixtures and fittings owned by the Vendor, and used by or forming part of the Business. The Plant and Equipment of the Business as at 30 June 2000 is identified in the list of Plant and Equipment attached as Schedule 2.
PROPERTY LEASES means the leases and other informal occupation arrangements between the Vendor and the owners of the Leased Premises as more particularly described in Schedule 7.
PREPAYMENTS means:
(a) any payments in advance of the Calculation Time made by the Vendor for goods or services to be supplied to the Business in the ordinary course of ordinary business after the Calculation Time to the benefit of the Purchaser; and
(b) any other payments in advance made by the Vendor in respect of the Business in the ordinary course of ordinary business before the Calculation Time, the benefit of which is received by the Business after the Calculation Time.
PRINCIPAL AND AGENCY ARRANGEMENTS means the principal and agency agreement dated 14 September 1998 (as amended) entered into by the Vendor with Westpac Banking Corporation, providing for the funding of selected Plant and Equipment by Westpac, with the Vendor acting as its agent, as listed in Part 1 of schedule 6, and as more fully described in that schedule and PRINCIPAL AND AGENCY ASSETS has a corresponding meaning.
PURCHASE PRICE means the consideration for the Assets and Liabilities calculated under CLAUSE 3.
PURCHASER'S ACCOUNTANTS means Arthur Andersen.
PURCHASER'S AFFILIATE means, for the purposes of the right of first refusal provided for in clause 18.1(d), any of the Purchaser, NACCO Materials Handling Group Pty Ltd. ACN 000 297 914, NMHG Distribution Pty Limited ACN 053 380 291, or any of their owned or independent duly authorised dealers in Hyster or Yale branded forklifts, as nominated by the Purchaser or NACCO Materials Handling Group Pty Ltd. ACN 000 297 914..
RECORDS means the following, relating to the Business:
(a) sales and purchasing records;
(b) customer lists;
(c) supplier lists;
(d) price lists;
(e) records of the Contracts and Principal and Agency Arrangements;
(f) Property Leases;
(g) all books of account, accounts records and data; and
(h) records relating to Transferring Employees and the Accrued Employee Entitlements,
except the Excluded Records.
REGISTERED INDUSTRIAL AGREEMENTS means any agreement between the Vendor and a registered union of Employees, or any agreement between the Vendor and the employees of a location as a whole, certified by the Australian Industrial Relations Commission under the Workplace Relations Act 1996 or similar document developed and registered under the auspices of a State Industrial Commission.
RELATED BODY CORPORATE means in relation to a body corporate, another body corporate deemed to be related to it under the Corporations Law.
SOFTWARE LICENCES means the Baseplan, Prism for Windows, MYOB and other licences and related agreements described in Schedule 9 held by the Vendor pursuant to which it uses the software described in that schedule.
STATUTORY LICENCES means the statutory and regulatory licences used in the operation and performance of the Business.
STOCK means the stock of the Business as at the Calculation Time including all forklifts for sale, office supplies, stock-in-trade, raw materials, packaging, consumable spare parts,
tools or other maintenance items that are used or intended for use in connection with the Business.
SUBLEASES means the subleases and in respect of the property at Hendra Queensland, the sub-sublease specified in Schedule 15.
SUPPLIER CONTRACTS means all contracts and arrangements entered into by or on behalf of the Vendor with suppliers in the ordinary course of business for the provision of goods or services to the Vendor which are to be delivered in whole or in part after Completion or which contain obligations to be satisfied in whole or in part after Completion.
SUPPLY has the meaning given under section 195-1 of A New Tax System (Goods and Services) Tax Act 1999.
TAX means any tax, levy, charge, impost, duty, fee, deduction, compulsory loan or withholding (including stamp and transaction duty and any goods and services tax) which is assessed, levied, imposed or collected by any Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge, fee or other amount imposed in respect of the above.
TRADE CREDITORS means the trade creditors of the Vendor in respect of the Business as at the Calculation Time.
TRADE NAMES means BRAMBLES EQUIPMENT, BED, BRAMBLES INDUSTRIAL SERVICES or BIS or a combination of any of those words with another, or others, whether in a business name, company name, logo, trade mark, or other representation used or owned at any time by the Vendor in connection with the Business and whether registered or unregistered.
TRANSFERRING EMPLOYEES means the Employees who accept the Purchaser's offer of employment under CLAUSE 13.
TRANSITIONAL PROCEDURES means the procedures and arrangements specified in Schedule 14 relating to payroll arrangements, migration of computer systems and banking generally, which are necessary to assist the Purchaser to effect an orderly and effective transfer of the Business following Completion.
VEHICLE LEASES means the vehicle leases more particularly described in
Part 2 of Schedule 6.
WARRANTIES means the warranties and representations expressly stated in this agreement.
WORK IN PROGRESS means the aggregate of all Capital WIP and Non-capital WIP as at the Calculation Time.
1.2 INTERPRETATION
The following rules of interpretation apply unless the context requires otherwise:
(a) headings are for convenience only and do not affect interpretation;
(b) the singular includes the plural and conversely;
(c) a gender includes any gender;
(d) if a word or phrase is defined, then its other grammatical forms have a corresponding meaning;
(e) a reference to PERSON includes:
(i) a body corporate, an unincorporated or other entity and conversely; and
(ii) a reference to that person's executors, administrators, successors, permitted assigns and substitutes including but not limited to a person to whom this agreement is novated;
(f) a reference to CLAUSE, SCHEDULE, ANNEXURE or EXHIBIT is to a clause, schedule annexure or exhibit to this agreement;
(g) a reference to an agreement or document is to that agreement or document as amended, novated, supplemented, varied or replaced;
(h) a reference to legislation or to a provision of that legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument under it;
(i) a provision of this agreement must not be construed adversely to a party on the grounds that the party is responsible for the preparation of it;
(j) a reference to MONTH is a reference to a calendar month;
(k) a reference to YEAR is a reference to a calendar year;
(l) a reference to WRITING includes any mode of representing and reproducing words in tangible and permanently visible form and includes telex, email and facsimile transmission;
(m) a reference to LIQUIDATION includes an arrangement, compromise, winding up, dissolution, appointment of an administrator, assignment for the benefit of a creditor, scheme of arrangement with creditors, insolvency, bankruptcy or a similar procedure or if it applies, a merger, amalgamation, reconstruction or
change in the constitution of an entity for the purpose or having the effect of altering a party's rights with its creditors;
(n) a reference to a day including a Business Day is a reference to the period which starts at midnight and ends 24 hours later;
(o) if a period of time is specified and that period begins:
(i) at the time of an act or event; or
(ii) on a specified date,
then the calculation of the period begins on the day following the day of the act, the event or the specified date.
1.3 BUSINESS DAY
If the day on which anything must be done is not a Business Day, then that thing must be done on the preceding Business Day.
2. SALE AND PURCHASE OF ASSETS
2.1 SALE AND TRANSFER
(a) The Vendor, as legal and beneficial owner, will sell to the Purchaser all of the Assets of the Business free of any Encumbrance or third party rights for the Purchase Price, on the terms and conditions of this agreement, with effect from Completion.
(b) The Purchaser will purchase the Assets referred to in clause 2.1(a) free of any Encumbrance or third party rights with effect from Completion on the terms and conditions of this agreement.
2.2 LEASES OF OWNED PROPERTIES
At completion the Purchaser will enter into leases of the Owned
Properties in the form of the Owned Property Leases.
2A CONDITIONS PRECEDENT
2A.1 CONDITIONS TO COMPLETION
The obligation of the Purchaser to purchase the Business is subject to
the following conditions precedent, (and the Purchaser may waive the
condition precedent set out in clause 2A.1(b), in whole or in part
without prior notice, but none of the parties may waive either of the
conditions precedent set out in Clauses 2.1A(a) or 2.1A(c)):
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(a) the Purchaser shall have received from Westpac Banking
Corporation:
(i) approval for the assignment/novation/amendment of the
Principal and Agency Arrangements to the Purchaser on
terms and conditions acceptable to the Purchaser;
(ii) signed documentation relating to such
assignment/novation/amendment in a form acceptable to
the Purchaser
(b) the Purchaser shall have received from GE Commercial:
(i) a written commitment to provide the financing for the
Purchaser's acquisition of the Business on terms and
conditions acceptable to the Purchaser; and
(ii) signed documentation relating to such financing in a
form acceptable to the Purchaser.
(c) the Purchaser and the Vendor being satisfied with the content
of each of the schedules and exhibits to this Agreement and
the indexes and contents of the Data Room Material, with each
party having confirmed in writing to one another that they are
so satisfied.
2A.2 FULFILMENT OF CONDITIONS
The Purchaser will use its best endeavours to procure the due
fulfilment of the conditions precedent referred to in CLAUSE 2A.1 (a)
AND (b) as expeditiously as possible and the parties will work together
to procure the due fulfilment of the conditions precedent referred to
in CLAUSE 2A.1 (c) as expeditiously as possible.
2A.3 TERMINATION
If the conditions precedent in CLAUSE 2A.1 are not fulfilled by 15
November 2000 then this Agreement may be terminated by notice given by
either the Purchaser or the Vendor to the other, with immediate effect,
and without penalty save in respect of any breach of this Agreement
prior to that date."
3. PURCHASE PRICE
3.1 AMOUNT
The Purchase Price for the Assets and the Liabilities is $83,666,571
($91,500,000 for the Assets net of $7,833,429 for the Liabilities),
which will be adjusted post-completion for the movement in value
between the Calculation Time Asset and Liabilities Statement and the
Last Balance Date Asset and Liability Statement as provided for in
CLAUSE 6.1, and paid in accordance with CLAUSE 7.
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3.2 APPORTIONMENT OF PURCHASE PRICE
The Purchase Price for the Assets will be recorded in the Completion Statement, and apportioned as follows:
(a) for the Plant and Equipment - $74,500,000, plus or minus any increase or decrease in value as at the Calculation Time;
(b) for the Stock, $3,170,000, plus or minus any increase or decrease in value as at the Calculation Time, subject to the conditions of clause 5.3(b);
(c) for the Software Licences - $1.00;
(d) for the Contracts - $1.00;
(e) for the Prepayments - $430,000, plus or minus any increase or decrease in value as set out in the Records at the Calculation Time ;
(f) for the Property Leases and leasehold improvements - $1.00;
(g) for the Records - $1.00;
(h) for the Work in Progress -$714,995, plus or minus any increase or decrease in value as set out in the Records at the Calculation Time;
(i) for the Intellectual Property Rights - $1.00;
(j) for the Book Debts -$7,685,000, plus or minus any increase or decrease in value as at the Calculation Time, to be determined on the following basis:
(i) In respect of Book Debts owed by Customers as at Completion who are not Related Bodies Corporate or divisions of the Vendor and which have not been paid in full within (a) 90 days of the date they were invoiced to the relevant Customers, 85% of their aggregate face value at the Calculation Time, or (b) 150 days of the date they were invoiced to the relevant Customers, 0% of their aggregate face value at the Calculation Time; and
(ii) In respect of Book Debts other than those referred to in sub-paragraph 3.2(j)(i) the aggregate of their face value as at the Calculation Time less any provision in the Records for bad or doubtful Book Debts; and
(k) for the Goodwill -$5,000,000.
4. COMPLETION
4.1 The steps to be taken on Completion of the sale and purchase of the Assets as provided in clause 4 and as otherwise provided in this Agreement will be so taken at 2.00pm on the Completion Date at the offices of Cowley Hearne, Level 10, 60 Miller Street, North Sydney, or any other earlier time and place agreed by the Vendor and the Purchaser, but in any event Completion will only be deemed to have taken place at 5pm on the date that Completion occurs. Without limiting any other provision of this agreement, it is a condition precedent to Completion that prior to Completion the Purchaser:
(a) procures the consent of Westpac Banking Corporation to the assignment/novation of the Principal and Agency Arrangements to the Purchaser, effective from Completion; and
(b) if and only if prior to Completion the Purchaser receives notice from the Australian Competition and Consumer Commission ("ACCC") that it proposes to, or it threatens to, take action to prevent the completion of any of the transactions contemplated by this Agreement, the Purchaser receives a further notice from the ACCC either to the effect that the transactions contemplated by this Agreement do not contravene the Trade Practices Act 1974 or to the effect that the ACCC will not take action to prevent the completion of those transactions, and if such notice is given subject to conditions, requirements or undertakings by the parties, that such conditions, requirements or undertakings are reasonably acceptable to the Purchaser.
4.2 The Vendor will on Completion, or afterwards if expressly permitted by the other relevant provisions of this agreement, cause to be delivered to the Purchaser:
(a) evidence of release of all Encumbrances and other third party rights affecting any Assets of the Business;
(b) PROPERTY LEASES and VEHICLE LEASES: (after Completion and in accordance with CLAUSE 12 in respect of the Property Leases, and on Completion and in accordance with CLAUSE 12 in respect of the Vehicle Leases):
(i) undisturbed possession of the Leased Premises;
(ii) assignments or novations of each of the Property Leases duly executed by the relevant lessor, assignee and assignor;
(iii) the Vendor's original Property Leases bearing evidence of the payment of all stamp duty, or where not available, certified copies of the originals; and
(iv) assignments or novations of each of the Vehicle Leases duly executed by the relevant Employee, the Vendor and the relevant financial institution and possession of the vehicles subject to the Vehicle Leases.
(c) SOFTWARE LICENCE TRANSFERS: (after Completion, if required or applicable, executed transfers or assignments, in favour of the Purchaser of the Software Licences in accordance with CLAUSE 11).
(d) CUSTOMER CONTRACTS AND SUPPLIER CONTRACTS: (after Completion, if required or applicable, assignments of the Customer Contracts and Supplier Contracts , together with the Vendor's original copies of any documentation confirming them, in accordance with and subject to CLAUSE 11).
(e) PLANT AND EQUIPMENT CERTIFICATES: certificates of registration (where necessary) in the name of the Vendor or other documents evidencing ownership pertaining to the Plant and Equipment.
(f) ASSETS GENERALLY: those Assets capable of transfer by delivery by leaving them where they are normally located, and permitting the Purchaser to take possession of those Assets and the remainder of the assets in situ.
(g) COMPLETION STATEMENT: (after Completion in accordance with CLAUSE 6) a Completion Statement.
(h) RECORDS: the Records, providing always that the Vendor will have the right to examine those Records at all reasonable times and to freely make copies of them.
(i) SERVICES: the transfer forms, if any, in relation to the telephone and other similar services to the Business.
(j) BOOK DEBTS AND PREPAYMENTS: evidence of the Book Debts and Prepayment in the form usually maintained by the Vendor.
(k) TRADE CREDITORS AND ACCRUALS: evidence of the Trade Creditors and Accruals in the form usually maintained by the Vendor of the Trade Creditors and Accruals.
(l) OWNED PROPERTY LEASES: counterparts of the Owned Property Leases duly executed by the Vendor and undisturbed possession of the Owned Properties.
(m) PRINCIPAL AND AGENCY ARRANGEMENTS:
assignment/novation/amending documents in respect of the
Principal and Agency Arrangements which have been duly
executed by the Vendor.
4.3 On Completion the Purchaser will:
(a) pay the Vendor the payment identified in CLAUSE 7.2(a);
(b) assume liability for the Liabilities;
(c) deliver to the Vendor counterparts of the Owned Property Leases duly executed by the Purchaser; and
(d) deliver to the Vendor assignment/novation/amending documents in respect of the Principal and Agency Arrangements which have been duly executed by the Purchaser and Westpac Banking Corporation.
4.4 Except as otherwise provided in this agreement unencumbered legal and beneficial title to the Businesses and in the Assets will pass to the Purchaser on Completion.
4.5 If reasonably requested by the Purchaser for the purposes of the continued operation of the Business, the Vendor must provide the Purchaser with copies of the Excluded Records which are relevant to the operation of the Business.
4.6 If requested by the Vendor for the purposes of defending or investigating any claim which arose before Completion, the Purchaser must provide the Vendor with copies of those Records which are in the Purchaser's possession. This clause does not merge on Completion. Further, the Purchaser undertakes to allow the Vendor or its duly authorised representatives access to the Records from time to time for a maximum period of 3 months following Completion, and always subject to the provision of reasonable advance notice to the Purchaser for the specific purpose of determining the Vendor's cost base for the Assets sold pursuant to this agreement.
5. STOCK AT THE CALCULATION TIME
5.1 The parties agree that the amount and value of the Stock at the Calculation Time will be determined by a stocktake conducted by the Vendor immediately after the Calculation Time at which representatives of the Purchaser are entitled to attend.
5.2 On conclusion of the stocktake, representatives of the Purchaser and Vendor must agree and initial lists setting out the amount and value of the Stock at the Calculation Time. Such lists shall be made a part of the Completion Statement.
5.3 The Stock, including tires, batteries and similar items, other than the forklifts for sale (which will be valued as set out below), will be valued, as at the Calculation Time, at the lowest of its:
(a) cost to the Vendor;
(b) its written down book value in the Records in respect of such of the Stock as the Vendor writes down in the ordinary course of its Business; or
(c) its wholesale fair-market value;
and such Stock which has been previously expensed shall be valued at
zero.
5.4 The Stock comprising forklifts for sale will be divided into 2 categories and valued as follows:
(a) forklifts for sale acquired by the Vendor up to and including 30 June 2000 will be valued at the lower of its cost or its written down book value in the Records; and
(b) forklifts for sale acquired by the Vendor after 30 June 2000 up to an including Completion will be valued at the lowest of its:
(a) cost to the Vendor;
(b) its written down book value in the Records; or
(c) its wholesale fair-market value.
6. COMPLETION STATEMENT
6.1 VENDOR TO PREPARE
(a) Subject to there being no dispute under CLAUSE 5.2 or CLAUSE 6.1(f), the Vendor will prepare the Completion Statement on a basis consistent with the preparation of the Last Accounts within 15 BUSINESS DAYS of the Completion Date and will give to the Purchaser a copy of the Completion Statement within 20 BUSINESS DAYS of the Completion Date.
(b) The Completion Statement must set out:
(i) a separate sub-statement setting out the value of the Assets (valuing Book Debts in accordance with CLAUSE 3.2(j), the Liabilities, recognising in respect of annual leave 68% (rather than 100%) and recognising in respect of long service leave 70% (rather than 100%) of the Accrued Employee Entitlements as part of the Liabilities, and the apportionments referred to in CLAUSE 8, all as at the Calculation Time;
(ii) a separate sub-statement setting out the value of the Assets and Liabilities as set out in the Last Accounts;
(iii) the movement in value between the Calculation Time Asset and Liability Statement and the Last Balance Date Asset and Liability Statement;
(iv) provide for a $100,000 adjustment in favour of the Purchaser in recognition of part of the Purchaser's costs in procuring the assignment or novation of the Principal and Agency Arrangements to the Purchaser as required by the Vendor, on a basis satisfactory to the Purchaser.
(iv) the final Purchase Price calculated in accordance with CLAUSE 3.1,
state the net adjusting payment to be made under CLAUSE 7.3, taking into account the final Purchase Price for the Assets, the Liabilities to be assumed by the Purchaser and the payments already made by the Purchaser under CLAUSES 7.1 and 7.2.
(c) The Vendor must provide the Purchaser's Accountants full access to the books and records of the Vendor to verify the figures in the Completion Statement and ensure that the Vendor provides the Purchaser's Accountants full access to the working papers used in preparing the Completion Statement.
(d) The parties must ensure that the Purchaser and the Vendor confer and use their best endeavours to agree on the Completion Statement within 10 Business days after the delivery of the draft Completion Statement to the Purchaser.
(e) If the contents of the Completion Statement are agreed between the Purchaser and the Vendor, the Completion Statement will be final and binding on the parties.
(f) If the Purchaser and the Vendor do not agree on the value of
an item in the Completion Statement within the period referred
to in CLAUSE 6.1(d), then either party may at any time within
5 BUSINESS DAYS after the end of that period refer the matter
to the Independent Valuer for determination under CLAUSE 19.
If no referral is made to the Independent Valuer, then the
value determined by the Vendor will be final and binding on
the parties and payable by the date specified in CLAUSE
6.1(a). If a referral is made to the Independent Valuer,
payment shall be made within three (3) Business Days of the
final determination of the Independent Valuer.
(g) Any dispute in relation to the Completion Statement will be resolved in accordance with CLAUSE 19.
6.2 PURCHASER MUST CO-OPERATE
The Purchaser must give the Vendor reasonable access to the Records and the Transferring Employees to enable the Vendor to prepare the Completion Statement.
7. PAYMENT OF THE PURCHASE PRICE
7.1 PAYMENT IN ESCROW
(a) On Completion the Purchaser must pay $5,000,000.00 of the Purchase Price to Cowley Hearne lawyers, to be held in escrow in accordance with this clause. Cowley Hearne must procure the deposit of such monies into an interest bearing controlled monies trust account at the Commonwealth Bank, such account to be styled as the "Cowley Hearne - Athletics/Brambles Escrow Account" and to be disbursed in accordance with clause 7.3A (ESCROW AMOUNT).
(b) Subject to clause 7.3A, all interest earned on the Escrow Amount will be paid to the Vendor.
7.2 PAYMENT AT COMPLETION
(a) The Purchaser must pay to the Vendor the sum of $78,666,571 on Completion.
(b) The amount specified in CLAUSE 7.2(a) is an estimate of the final Purchase Price less the Liabilities to be assumed by the Purchaser, based on the Last Accounts and the agreed value of the Goodwill, less the Escrow Amount provided for in CLAUSE 7.1(a).
7.3 ADJUSTMENT PAYMENT
If an adjustment payment is necessary following the calculation of the
Purchase Price pursuant to CLAUSE 3.1 and after determination of the
Completion Statement, and the Completion Statement is not disputed,
then the party required to pay to the other party the adjustment
payment shall do so within 3 Business Days of the final determination
of this amount. The adjustment payment shall not be subject to the
`Limitation on Quantum and General" provisions set out in paragraph 9
of Schedule 8A, and shall be made on a dollar for dollar basis, and
shall be the value of:
(a) the Purchase Price determined in accordance with CLAUSE 3.1
after the Completion Statement has been agreed; less
(b) $78,666,571 (being the payment made by the Purchaser on
Completion pursuant to CLAUSE 7.2.
If the adjustment payment is positive (greater than zero) then the
Purchaser shall pay the adjustment payment to the Vendor and if the
adjustment payment is negative (less than zero) then the Vendor shall
pay the (positive) value of the Adjustment Payment to the Purchaser.
7.3A The Escrow Amount will be applied in satisfaction of any adjusting
payment as required pursuant to clause 7.3. If any part of the said
adjusting payment remains unpaid after the application of the Escrow
Amount in accordance with this clause, then the outstanding balance of
such adjusting payment must be paid by the relevant party to the other
party simultaneously with and in the same manner as the payment
required under clause 7.3. Any part of the Escrow Amount remaining
after payment of such adjusting payment to the Vendor will be paid to
the Purchaser with the interest attributable to that amount.
7.4 METHOD OF PAYMENT
(a) Subject to CLAUSE 7.4(b), a party making a payment under this
agreement must pay by bank cheque.
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(b) A party may agree in writing to accept payment in another form.
8. APPORTIONMENT
Parties must apportion
The Vendor will ensure the Completion Statement apportions between the Vendor and the Purchaser as at the Completion Date all expenses and outgoings normally apportioned on the purchase of a business similar to the Business, including but not limited to rent, rates, registration fees, licence fees and other similar items.
9. CONDUCT OF BUSINESS PENDING COMPLETION
9.1 VENDOR'S OBLIGATION
Until Completion, the Vendor must carry on the Business in the normal manner and in the ordinary course of business.
Before Completion the Vendor must:
(a) consult with and keep the Purchaser informed in relation to Customer Contracts lost or won;
(b) use its best endeavours to obtain and maintain in full force and effect all Authorisations and Statutory Licences required for or in connection with the Business and the Assets;
(c) comply in all material respects with all laws, regulations, ordinances and orders binding on it or affecting any of the Assets; and
(d) meet the Liabilities as they fall due and make no change to its policy or manner of collection of Book Debts.
9.2 Before Completion the Vendor must not:
(a) dispose of any material Asset other than the sale of Stock in the ordinary course of ordinary business;
(b) place orders for or acquire any material Asset (including forklifts and other equipment usually hired out to customers by the Business, in the ordinary course of business). If the Vendor wishes to acquire any such Asset it must first obtain the Purchaser's consent which may not be unreasonably withheld;
(c) enter into a material contract other than in the ordinary course of business;
(d) terminate any Employee other than in the ordinary course of business; or
(e) do, or omit to do, or allow to happen, anything which would make any Warranty materially false, misleading or incorrect when made or regarded as made under this Agreement;
(f) add any additional trucks to the Principal and Agency Arrangements;
(g) induce or attempt to induce any Employee of the Business to terminate his or her employment with the Business or to accept employment with the Vendor in the remainder of its business or any Related Body Corporate;
(h) enter into any Registered Industrial Agreement without the consent of the Purchaser which will not be unreasonably withheld;
(i) employ any new person without the consent of the Purchaser which will not be unreasonably withheld;
(j) change any term of employment including remuneration or provide any bonus to any Employee without the consent of the Purchaser which will not be unreasonably withheld. In this regard the Purchaser acknowledges that bonuses for the year ended 30 June 2000 were paid prior to the execution of this Agreement and the Vendor has advised the Purchaser of the bonus scheme for the financial year ending June 2001 previously discussed with current senior Employees but not yet formalised or implemented by the Vendor, and that there is some expectation amongst those current Employees that the bonus scheme for the financial year ending June 2001 will be implemented in accordance with the proposed scheme previously discussed with them.
9.3 Before the Completion Date the Vendor must:
(a) allow the Purchaser, and any person authorised by the Purchaser, reasonable access during normal business hours to inspect the Assets, the Records and the Leased Premises;
(b) promptly provide the Purchaser with all explanations and information it reasonably requests in respect of the Business and the Assets and the Property Leases; and
(c) use its reasonable efforts to allow the Purchaser to have access to Customer premises, as the ongoing requirements of the Business and circumstances permit.
9A. TRANSITIONAL ARRANGEMENTS
For the 6 months following Completion the Vendor and the Purchaser will use their best endeavours to assist the Purchaser to effect an orderly and effective transfer of the Business by implementing the Transitional Procedures.
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9B CONFIDENTIALITY
9B.1 MAINTENANCE OF CONFIDENTIALITY
Prior to the conditions precedent specified in clause 2A being
satisfied, except if ordered to do so by a court having jurisdiction:
(a) the negotiations of the parties and the subject matter and
terms of this document are to be kept strictly confidential
and not released to the public or any third parties (other
than the parties' professional advisers); and
(b) any press release, public circular or announcement related to
the subject matter of this Agreement will require the prior
agreement of each of the parties.
10. RISK AND INSURANCE
RISK
(a) Until Completion, the Vendor remains the owner of and bears
all risks in connection with the Business and the Assets.
(b) From Completion, the Purchaser becomes the owner of and bears
all the risk of the Business and the Assets.
11. ASSIGNMENT OF CUSTOMER CONTRACTS, AND LICENCES
11.1 On and before Completion the parties shall use their best endeavours to
obtain the assignment or novation of the Customer Contracts, Supplier
Contracts and the Software Licences in favour of the Purchaser,
effective from Completion. The Vendor's best endeavours obligations in
this regard will be satisfied by introducing the Purchaser to the
relevant third parties at the appropriate management level, making
Employees available to communicate verbally and in writing with third
parties in connection with the assignments, making the payments if any
pursuant to CLAUSE 11.4 and providing all documentation reasonably
requested by the Purchaser.
11.2 In respect of any Customer Contract, Supplier Contract or Software
Licence that is not assigned or novated at Completion, the Vendor's
beneficial interest in the Customer Contracts, Supplier Contracts and
the Software Licences are deemed to have been assigned to the Purchaser
to the extent lawfully permitted under their terms. From Completion,
the Vendor will use its best endeavours to ensure that the Purchaser
obtains the full benefit of the Customer Contracts, Supplier Contracts
and the Software Licences.
11.3 The Purchaser undertakes to the Vendor to duly perform the Vendor's
obligations under the Customer Contracts Supplier Contracts and the
Software Licences that the Purchaser obtains the full benefit of at the
Purchaser's sole cost.
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11.4 The parties will pay their own costs, charges and expenses incurred in
connection with the assignment of the Customer Contracts, Supplier
Contracts and the Software Licences.
11.5 The Vendor indemnifies the Purchaser against any liability, loss or
claim arising under any of the Customer Contracts, Supplier Contracts
and the Software Licences after the Calculation Time to the extent that
such liability, loss or claim, relates to an event, omission or
circumstance that existed as at or before the Calculation Time, and
which constituted a breach of any of those contracts by the Vendor.
11.6 The Purchaser indemnifies the Vendor against any liability or loss
arising under any of the Customer Contracts, Supplier Contracts and the
Software Licences after the Calculation Time the benefit of which has
been assigned to the Purchaser effective from Completion to the extent
that such liability, loss or claim, relates to an event, omission or
circumstance that occurred after the Calculation Time and is not caused
by a breach of Vendor's Warranties.
12. PROPERTY LEASES AND VEHICLE LEASES
12.1 PAYMENTS
(a) The Vendor undertakes to continue to comply with the terms of
the Property Leases until Completion.
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(b) From Completion, the Purchaser must:
(i) pay any payments due from Completion under the Property Leases and in respect of the Subleases; and
(ii) comply with all other terms of the Property Leases and in respect of the Subleases.
(c) The Purchaser indemnifies the Vendor against liability or loss arising from and any cost, charge or expense incurred in connection with a breach by the Purchaser of this CLAUSE 12.1 and is not caused by a breach of Vendor's Warranties.
(d) The Vendor indemnifies the Purchaser against any liability, claim or loss arising as a consequence of the Purchaser being disturbed in its use or occupation of the Leased Premises, pending, or as a result of a failure to effect, the assignment or novation of the Property Leases to the Purchaser.
(e) The Vendor indemnifies the Purchaser against any liability, claim, expense or loss arising pursuant to the Property Leases that results from an act, omission or circumstance that occurred or existed at or prior to the Calculation Time pursuant to the Property Leases.
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12.2 As soon as possible after Completion, the Vendor will subject to the
co-operation of the Purchaser, use its best endeavours to assign all of
the Property Leases (other than the Subleases) to the Purchaser. If the
consent of another party is required, the Vendor will use its best
endeavours to obtain such consent. The Vendor will pay any costs,
expenses, penalty or consideration requested or required by the third
party in connection with the grant of that consent.
12.3 Until the Property Leases are effectively assigned, novated or
subleased to the Purchaser, subject to compliance by the Purchaser with
the terms of the Property Leases, the Vendor undertakes to the
Purchaser:
(a) to allow the Purchaser unfettered use and occupation of the
property the subject of the Property Leases in the manner
provided in the Property Leases from the Completion Date until
such leases are assigned to the Purchaser;
(b) to enforce its rights under the Property Leases against other
parties to those leases in such manner as the Purchaser may
reasonably direct from time to time, at no expense to the
Vendor; and
(c) not to agree to any amendment to the Property Leases or waiver
of the Vendor's rights under the relevant Property Lease
without the prior written approval of the Purchaser.
12.4 The Purchaser agrees, to execute the forms of deed of assignment of the
Property Leases or subleases that are reasonably required by the
lessors under the Property Leases and to provide such lessors
information concerning the Purchaser as the lessors reasonably require.
12.5 (a) The Vendor will procure the novation or assignment of
the Vehicle Leases to the Purchaser on Completion.
(b) From Completion, the Purchaser must:
(i) pay any payments due from Completion under the
Vehicles Leases; and
(ii) comply with all other terms of the Vehicles Leases.
12.6 As soon as possible after Completion, the Purchaser will enter into a
sublease from the Vendor in respect of those premises the subject of
the Subleases on the terms set out in Schedule 15.
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13. EMPLOYEES
13.1 OFFER OF EMPLOYMENT
On or before the Completion Date, the Purchaser must make an offer of
employment to each Employee other than Excluded Employees listed in
Schedule 17 (being an offer on terms taken as a whole, not less
favourable than the terms of employment of the Employee with the Vendor
at the Completion Date; provided, however, that such terms shall not
include share options) with effect from and conditional upon
Completion. The offers to be made by the Purchaser will be
substantially in the form set out in schedule 5 and will be settled by
the parties prior to Completion.
The Purchaser must state in its offer of employment and in any contract
arising from acceptance of that offer that:
(a) the offer is conditional upon Completion;
(b) an Employee must advise the Purchaser of his acceptance within
5 Business Days after the later of:
(i) the date of the offer; and
(ii) if the Employee is on leave, the date the Employee
returns from leave.
The Vendor must use its best endeavours to encourage the Employees to
accept the Purchaser's offer of employment.
13.2 TERMINATION BY VENDOR
On Completion the Vendor must:
(a) release the Transferring Employees from employment with the
Vendor, that release to take effect at the Calculation Time;
and
(b) pay the Transferring Employees any entitlement to wages,
salaries, remuneration, compensation or benefits arising out
of their employment (other than superannuation benefits), due
to or accrued by them at the Calculation Time;
(c) CLAUSE 13.2(b) does not apply to annual leave, leave loading,
or long service leave.
13.3 NON-TRANSFERRING EMPLOYEES
The Vendor is solely responsible for the wages, salaries, annual leave,
leave loading, long service leave, sick leave and any other
remuneration, compensation or benefits of those Employees who do not
accept the Purchaser's offer of employment, arising out of their
employment or the termination of their employment, whether under any
agreement, statute, industrial award or in any other way. If any
Employee is made redundant by the
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Vendor following that Employee legitimately refusing the Purchaser's
offer of employment under clause 13.1 on the grounds that he or she
would have to relocate an unreasonable distance to take up employment
with the Purchaser, the Purchaser will pay the Vendor in full any
redundancy payment which the Vendor is required to pay such Employee,
forthwith on demand by the Vendor.
13.4 INDEMNITY
The Purchaser indemnifies the Vendor against any liability to a
Transferring Employee for annual leave, leave loading or long service
leave.
13.5 CALCULATING THE PERIOD OF SERVICE
(a) When calculating a benefit to a Transferring Employee, the
parties must count as service with the Vendor the period of
service which a Transferring Employee has had with the Vendor
before and up to the Transferring Employee's commencement of
employment with the Purchaser.
(b) CLAUSE 13.5(a) applies to a benefit which arises under law,
award or agreement between the Vendor and the Transferring
Employee.
(c) The continuity of a Transferring Employee's period of service
is not broken because the Transferring Employee ceases to be
an employee of the Vendor and becomes an employee of the
Purchaser on the Completion Date.
(d) This CLAUSE is subject to any relevant law, award or
agreement.
(e) The service period includes any period of service deemed by
law or contract.
13.6 The Vendor will provide Purchaser with evidence of satisfaction of its
obligations to Transferring Employees regarding the payment of bonuses
to those Employees for the fiscal year completed 30 June 2000.
14. SUPERANNUATION
14.1 Up to the Calculation Time the Vendor will make all superannuation
contributions it is obliged to make in respect of the period up to the
Calculation Time, to the Vendor's Fund for those of the Transferring
Employees that are Members of the Vendor's Fund and to the relevant
industry superannuation funds for those of the Transferring Employees
that are members of those funds.
As from the Calculation Time the Purchaser will be responsible for
making all superannuation contributions for the Transferring Employees
that must be made:
(a) under any industrial award, industrial agreement or contract
of employment; or
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(b) to avoid any tax or charge under the superannuation guarantee
charge legislation,
in respect of the period after Completion.
14.2 The Vendor and the Purchaser will co-operate to ensure the lawful
transfer on the Completion Date or as soon as reasonably practicable
thereafter of the withdrawal benefit of each Transferring Employee who
is a member of the Vendor's Fund as determined in accordance with the
Governing Rules of the Vendor's Fund:
(a) to a complying fund established or identified by the Purchaser
(being the Purchaser's Fund);
(b) to any other superannuation fund or approved deposit fund
nominated by any Transferring Employee; or
(c) if required to do so by a Transferring Employee, to the
Transferring Employee, if and to the extent permitted by law.
Clauses 14.2,,14.5 and 14.6 have no application to those Transferring
Employees who are members of any industry superannuation fund.
14.3 Other than as previously disclosed in writing by the Vendor to the
Purchaser, the Vendor does not know of any facts which will result in
any present or former employee of the Vendor having any valid claim on
the date of termination of his or her employment as contemplated in
this agreement against the Vendor, whether under any law or employment
agreement or otherwise.
14.4 In this CLAUSE 14.4:
VENDOR'S FUND means the Brambles Superannuation Fund established by
deed dated 27 September 1978;
GOVERNING RULES means, in relation to a superannuation fund, the trust
deed, rules or other documents governing that fund;
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MEMBER means a member of the Brambles Fund at Completion;
PURCHASER'S FUND means a superannuation fund which is a "complying superannuation fund" (within the meaning of section 45 of SIS) to be established or identified by the Purchaser before Completion;
SIS means the Superannuation Industry (Supervision) Act 1993 (Cth).
14.5 MEMBERSHIP OF PURCHASER'S FUND
(a) The Purchaser must use best endeavours to ensure that each Transferring Member becomes a member of the Purchaser's Fund as soon as reasonably practicable after Completion.
(b) The Vendor must provide, and must use its best endeavours to ensure that the trustee of the Vendor's Fund provides to the Purchaser and to the trustee of the Purchaser's Fund any information reasonably required by them for the transfer of membership of the Transferring Employees in accordance with this CLAUSE 14.
14.6 CONTINUATION OF TRANSFERRING EMPLOYEE'S SALARY CONTINUANCE AND DEATH INSURANCE BENEFITS FOR 30 DAYS AFTER COMPLETION
(a) The Vendor will procure the continuation, (at the same level as applies at the date of this Agreement), of each Transferring Employee's:
(i) salary continuance insurance, based on the salary of the relevant Transferring Employees as at Completion; and
(ii) insured death benefit;
for a maximum period of up to 30 days following Completion;
(b) (i) The Purchaser must secure the agreement of the trustee of the Purchaser's Fund to provide the Transferring Employees that become members of the Purchaser's Fund similar insurance benefits to those enjoyed by the Transferring Employee's under the Vendor's Fund from Completion; and
(ii) In any event, if not maintained by the Purchaser's Fund, the Purchaser itself must procure equivalent insurance covers for the Transferring Employees to those referred to in clause 14.6(a) within the time period stipulated in that clause,
and the Purchaser must ensure that such insurance is in place no later than 30 days from Completion; and
(c) Any claim by a Transferring Employee pursuant to the insurance benefits to be procured by the Vendor under clause 14.6(a), will be reduced to the extent of any recovery by the Transferring Employee under its corresponding insurance benefits with the Purchaser's Fund or insurance benefits as procured by the Purchaser itself (as provided for in clause 14.6(b)(ii)), and any overpayment to a Transferring Employee will be similarly reimbursed to the Vendor or the Vendor's Fund as the case may be.
(d) The cost to the Vendor of procuring the continuity of insurance benefits for the Transferring Employees as provided for in clause14.6(a) will be borne by the Purchaser and will be adjusted for accordingly in the Completion Accounts.
15. BOOK DEBTS/TRADE CREDITORS
15.1 PURCHASER ACQUIRES OWNERSHIP OF BOOK DEBTS
(a) The Purchaser will acquire ownership of all of the Book Debts. For the avoidance of doubt, the claim by the Vendor in respect of overpaid Sales Tax as referred to in Warranty 10.2 will not form part of the Book Debts.
(b) On Completion the Vendor must procure payment of all Book Debts as at Completion owed to the Business by those Customers who are Related Bodies Corporate or divisions of the Vendor.
15.2 COLLECTION OF BOOK DEBTS
(a) The Purchaser will immediately following Completion, be responsible for the collection of each Book Debt as and when it falls due.
15.3 PAYMENT OF TRADE CREDITORS
(a) The Purchaser accepts sole liability for the Trade Creditors, and will pay the Trade Creditors as and when they fall due, and the Purchaser indemnifies the Vendor and will keep the Vendor indemnified against all claims arising out of its failure to satisfy them.
(b) The Purchaser agrees to use its best endeavours to obtain releases on Completion, or as soon as reasonably practicable thereafter, of the Vendor and any of its Related Bodies Corporate from all bonds, bank guarantees, security deposits, customs bonds and any other third party obligation entered into by the Vendor or its Related Bodies Corporate in relation to the Business, including by offering equivalent replacement securities for such obligations in relation to the Business all of which are listed in Schedule 12. The Purchaser indemnifies the Vendor and will keep the Vendor indemnified against any liability or loss arising under any bonds, bank guarantees, security deposits, customs bonds and any other third party obligation entered into by the Vendor or its Related Bodies Corporate in relation to the Business, after the Calculation Time effective from Completion to the extent that such liability, loss or claim, relates to an event, omission or circumstance that occurred after the Calculation Time.
(c) The Vendor indemnifies the Purchaser and will keep the Purchaser indemnified against any liability or loss arising under any bonds, bank guarantees, security deposits, customs bonds and any other third party obligation suffered by the Purchaser or its Related Bodies Corporate in relation to the Business, after the
Calculation Time effective from Completion to the extent that such liability, loss or claim, relates to an event, omission or circumstance that occurred before the Calculation Time.
16. CUSTOMERS' AND SUPPLIERS' NOTICE/USE OF TRADE NAME
16.1 JOINT NOTICE TO CUSTOMERS AND SUPPLIERS
On or about the Completion Date, the parties will send to each of the
customers and suppliers of the Business a notice in a form agreed by
the parties before Completion.
16.2 To the extent it is lawful to do so, the Purchaser will be entitled to
use the Trade Names for a period of 12 months following Completion by:
(a) leaving the Trade Names on items of Plant and Equipment
currently bearing the Trade Names initially following
Completion, and progressively removing the Trade Names from
the items of Plant and Equipment during the 12 month period;
(b) prefacing the use of the Trade Names on any stationery and
other written materials of the Business with the word
"formerly", in sufficient prominence so as not to mislead any
recipient of the material; and
(c) in the case of BIS/ Brambles Industrial Services by the use of
the words "formerly part of the forklift division of Brambles
Industrial Services".
17. WARRANTIES
17.1 PURCHASER'S WARRANTIES
The Purchaser warrants that:
PURCHASER AUTHORISED
(a) it has taken all necessary action to authorise the execution,
delivery and performance of this agreement in accordance with
its terms and obtained any necessary consents to such
performance;
POWER TO PERFORM
(b) it has full power to enter into and perform its obligations
under this agreement;
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NO LIQUIDATION OR WINDING UP
(c) it has not gone into liquidation nor passed a winding up resolution, nor received a notice under the Corporations Law;
NO PETITION
(d) as far as it is aware:
(i) there is no petition or other process for winding up presented or threatened against the Purchaser;
(ii) there are no circumstances justifying a petition of this nature;
NO RECEIVER
(e) no receiver or manager of any part of the undertaking or asset of the Purchaser has been appointed;
17.2 DUE DILIGENCE
(a) The Purchaser has:
(i) had the opportunity to make and has made reasonable
enquiries in relation to all matters material to it
which are not covered by the Warranties;
(ii) has satisfied itself in relation to these matters.
(b) Subject to any law and the Warranties, all terms, conditions,
warranties and statements, whether express, implied, written,
oral, collateral, statutory or otherwise, are excluded;
(c) The Vendor disclaims all liability in relation to CLAUSE
17.2(b) to the maximum extent permitted by law.
17.3 VENDOR'S WARRANTIES
GENERAL NATURE OF WARRANTIES
The Vendor gives the Warranties set out at Schedule 8 in favour of the
Purchaser at the date of this agreement and at Completion unless
otherwise specifically provided in the Warranty, subject absolutely to
the limitations contained in Schedule 8A.
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18. RESTRAINT OF TRADE AND OFFER OF FUTURE BUSINESS
18.1 RESTRAINT OF TRADE
The following definitions apply in this clause 18:
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RESTRAINT AREA means:
(a) Australia;
(b) Victoria, New South Wales, Queensland, Western Australia, South Australia, Tasmania, Australian Capital Territory;
(c) Victoria, New South Wales, Queensland, Western Australia, South Australia, Tasmania;
(d) Victoria, New South Wales, Queensland, Western Australia, South Australia;
(e) Victoria, New South Wales, Queensland, Western Australia;
(f) Victoria, New South Wales, Queensland;
(g) New South Wales Victoria;
(h) New South Wales.
RESTRAINT PERIOD means:
(a) 3 years from Completion;
(b) 2 years from Completion;
(c) 1 year from Completion.
Each of:
(a) the restraint obligations set out in this clause18;
(b) the Restraint Period; and
(c) the Restraint Area,
must be combined and each combination imposes a separate and independent covenant on the Vendor. If a covenant is prohibited, invalid or unenforceable, that covenant will be ineffective but will not affect the validity or enforceability of the other covenants.
(a) Subject to CLAUSE 18.1(b) AND (c), the Vendor must procure for the Restraint Period and in the Restraint Area that neither the Vendor nor any Related Body Corporate of the Vendor:
(i) engages or involves itself in any forklift hire and maintenance or forklift fleet management business;
(ii) induces or attempts to induce any Transferring Employee of the Business post Completion to terminate his or her employment with the Purchaser;
(iii) use the Trade Names in connection with any business which the Vendor is prohibited from conducting under clause 18.1(a)(i);
(iv) and CLAUSE 18.1(a) applies whether the Vendor's or any Related Body Corporate's activities under that clause are:
(A) direct or indirect;
(B) as a principal, agent, partner, employee, shareholder, unitholder, director, trustee, beneficiary, manager, consultant, advisor or financier.
(b) Nothing in this clause 18 in any way prohibits or otherwise restricts the Vendor from:
(i) permitting its "Brambles Industrial Services"
business from (aa) providing customers with Mixed
Fleet Services, including adding additional forklifts
to the fleet of a Mixed Fleet Services customer or
(bb) providing customers with Contract Task
Management Services including adding additional
forklifts to the fleet of a Contract Task Management
Services customer; provided, however, that Brambles
Industrial Services (including its Mixed Fleet
Services and Contract Task Management Services) may
not acquire (through purchase, lease or other means
and whether for replacement of currently owned
forklifts or new business needs) more than 300
forklifts that are not NMHG Approved Forklifts; and
(ii) continuing to conduct its "Wreckair" short-term equipment hire business, which it conducts throughout Australia, and in respect of which the Vendor will not increase its fleet of forklifts above 250.
(c) (i) For the Restraint Period the Vendor agrees to procure that its Brambles Industrial Services division and its Wreckair division each gives the Purchaser's Affiliate the first opportunity to quote on the sale of additional forklifts before any other forklift supplier.
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(ii) The Vendor must provide the Purchaser's Affiliate with
a description of the number of forklifts, capacities
and model types in respect of which the quote is
required and any other specifications which the Vendor
considers material for an informed quote by the
Purchaser's Affiliate. The Vendor will also specify
the period within which the Vendor requires the quote
from the Purchaser's Affiliate.
(iii) Both parties will endeavour to negotiate in good faith
mutually acceptable commercial terms for the purchase
of the forklifts by the Vendor from the Purchaser's
Affiliate.
(iv) If the quote by the Purchaser's Affiliate is not
received within the time period specified by the
Vendor, or if the quote received from the Purchaser's
Affiliate is not on terms which are commercially
satisfactory to the Vendor then:
(A) the Vendor may purchase the additional
forklifts from a third party, but only on
terms that are more favourable to the Vendor
than those offered by the Purchaser's
Affiliate; and
(B) in that event, the Vendor's obligations to
the Purchaser under this clause in respect of
those specific forklifts will be
extinguished.
(e) In addition, following Completion, the Vendor will procure
introductions for the Purchaser to the senior management and
relevant purchasing personnel of all of the Vendor's other
businesses within Australia which require or may require
forklifts.
18.2 VENDOR ACKNOWLEDGMENT
The Vendor acknowledges that the prohibitions and restrictions
contained in this CLAUSE 18 are reasonable and necessary to protect the
Goodwill and ongoing viability of the Business, and that any breach by
the Vendor of these undertakings will diminish the value of the
Goodwill and ongoing viability of the Business.
18.3 If any part of the undertakings contained in this CLAUSE 18 is
unenforceable it may be severed without affecting the remaining
enforceability of the undertakings. The Vendor acknowledges that it has
received legal advice in relation to this CLAUSE 18 and that monetary
damages may not be sufficient to compensate the Purchaser for breach of
this undertaking, and that the Purchaser shall be entitled to seek
injunctive relief.
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18.4 After Completion the Vendor must promptly and at its own cost refer to the Purchaser any enquiry made to it in respect of the Business and not refer any such enquiry to any person other than the Purchaser.
BUSINESS SALE AGREEMENT Page 38
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18.5 On and after Completion, the Vendor agrees to allow the Purchaser and
its representatives reasonable access to the Excluded Records at all
reasonable times upon receipt of reasonable notice from the Purchaser
in accordance with clause 4.5. The Purchaser shall be entitled to
inspect and make copies of these Records at the Purchaser's expense.
18.6 The Vendor undertakes that it shall preserve the Excluded Records for
the period required by law.
18.7 The Vendor undertakes that for a period of 2 years after Completion
where its divisions within Australia require services of a nature
offered by the Business as carried on by the Purchaser after
Completion, it will use reasonable endeavours to procure that such
division or divisions will;
(a) before contracting for such services from a third party, give
the Purchaser the first opportunity to provide such services
at a reasonable commercial rate; and
(b) in the event that reasonable commercial terms cannot be agreed
between the parties, the Vendor may obtain such services from
a third party provided that the terms of the agreement such
third party are not less favourable to the Vendor than those
offered by the Purchaser pursuant to clause 18.7(a).
19. DISPUTE
19.1 REFERENCE TO INDEPENDENT VALUER
(a) If the parties are in dispute either of them may notify the
other of that fact in writing. If they cannot settle the
dispute within 21 Business Days of the dispute being so
notified, then either party may refer the dispute to the
Independent Valuer.
(b) The Vendor and the Purchaser must jointly appoint the
Independent Valuer.
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(c) The Independent Valuer must be an expert in the relevant area.
(d) If the Vendor and the Purchaser cannot agree on the appointment within 21 days of either of them notifying the other of the dispute in writing either party may then request the President of the Institute of Chartered Accountants in Australia to appoint a suitable expert to the position of Independent Valuer.
(e) The referring party must request the Independent Valuer to make a decision on the dispute as soon as practicable, (but in any event no later than 1 month after referral of the dispute to him or her), and to establish a suitable timetable to ensure he or she receives:
(i) the reference; and
(ii) any submissions from the parties,
sufficiently promptly to allow the Independent Valuer to make his or her determination within the specified 1 month period.
(f) The decision of the Independent Valuer is conclusive and binding on the parties in the absence of manifest error, and, where applicable, must be incorporated into the Completion Statement.
(g) The Independent Valuer in its absolute discretion determines the proportion of the Independent Valuer's costs and expenses that each party must pay.
(h) The Independent Valuer is an expert and not an arbitrator.
(i) The procedures for determination are to be decided by the Independent Valuer in its absolute discretion.
(j) Each party:
(i) must provide the Independent Valuer full access to its books and records and any information required by the Independent Valuer to complete any valuation under this agreement; and
(ii) is entitled to make written submissions to the Independent Valuer in respect of any valuation under this agreement; and
(iii) must provide to the other party a copy of any written submissions to the Independent Valuer contemporaneously with that submission.
(k) The costs of the Valuer must be borne equally by the parties unless the Independent Valuer determines otherwise.
20. COSTS, STAMP DUTY AND GST
(a) Subject to CLAUSE 20(b), the Vendor and the Purchaser must pay their own legal and other costs and expenses of and incidental to the preparation, execution and completion of this agreement.
(b) The Purchaser must pay stamp duty payable or assessed:
(i) on this agreement;
(ii) the transfer of the Assets to the Purchaser; and
(iii) any other document which relates to this sale.
(c) If a GST is imposed on any Supply made by a party (PAYEE) under this agreement, the other party (PAYER) must pay to the Payee (without any deduction or set-off), in addition to any consideration payable or to be provided by Payer under this agreement, an additional amount calculated by multiplying the Prevailing GST Rate by the consideration for the relevant Supply. Any amount payable by Payer under this clause is payable on demand by the Payee, whether that demand is by means of an invoice or otherwise.
(d) Solely for Tax purposes, the Vendor and the Purchaser agree that the supply constituted by the sale and purchase of the Business made under this agreement is of a going concern as defined within A New Tax System (Goods and Services Tax) Act 1999. In the event that a party (SUPPLIER) breaches a term or condition of this agreement, including without limitation any warranty provided by it, Supplier indemnifies the other parties in respect of any Tax which may be payable by the other parties arising out of the remedying of such breach.
21. NOTICES
21.1 NOTICE
(a) A notice, approval, consent or other communication to a person
in connection with this agreement must be in legible writing.
(b) If the notice is to the Vendor, then it must be addressed as
follows:
Name: Brambles Australia Limited
Attention: Company Secretary
Address: Level 40, Gateway, 1 Macquarie Place, Sydney 2000
Facsimile: (02) 9256 5299
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(c) If the notice is to the Purchaser, then it must be addressed as follows:
Name: A.C.N. 094 802 141 Attention: Managing Director Address: 1 Bullecourt Avenue, Milperra, 2214 Facsimile: (02) 9772 3690 |
(d) If the notice is to the Purchaser's Guarantor, then it must be addressed as follows:
Name: NACCO Materials Handling Group, Inc.
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Attention: General Counsel
Address: 650 NE Holladay Street, Suite 1600, Portland,
Oregon 97232 USA
Facsimile: (503) 721-6059
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Notices to either the Purchaser or the Purchaser's Guarantor must always be copied to both of them simultaneously.
(e) Notice is sent by the sender and received by the receiver:
(i) if the notice is hand delivered, upon delivery to the receiving party;
(ii) if the notice is sent by facsimile, upon the successful completion of the relevant transmission evidenced by the production of a transmission report;
(iii) if the notice is sent by registered mail within Australia 2 Business Days from and including the registration of notice of posting;
(iv) if the notice is sent by ordinary mail within Australia 3 Business Days from and including the date of postage; and
(v) If the notice is sent to or from overseas 7 Business Days from and including the date of posting.
22. ASSIGNMENT
(a) Each party's rights arising under this agreement are the personal rights of that party.
(b) Subject to clause 22(c) the rights of the Purchaser under this agreement may be assigned in law or equity.
(c) The Purchaser acknowledges that the Vendor may withhold
consent to an assignment by the Purchaser to a third party of
the Purchaser's right to use the Trade Name pursuant to clause
16. The Vendor will not withhold consent to an assignment by
the Purchaser to a Related Body Corporate of the Purchaser's
right to use the Trade Name pursuant to clause 16.
23. GENERAL
23.1 PROPER LAW
(a) The laws of NSW and the Commonwealth of Australia apply to this agreement to the exclusion of any other law.
(b) The parties submit to the jurisdiction of the courts of NSW.
23.2 SEVERABILITY
(a) If a provision of this agreement is invalid, illegal or
unenforceable, then that provision to the extent of the
invalidity, illegality or unenforceability must be ignored in
the interpretation of this agreement.
(b) All other provisions of this agreement remain in full force
and effect.
23.3 NO WAIVER
(a) A party does not waive a right or entitlement it may have
under this agreement unless that waiver is notified in writing
to the party seeking the benefit of the alleged waiver.
(b) Waiver by a party in respect of an act or thing required to be
done under this agreement does not act as a waiver of any
other act or thing required to be done under this agreement.
(c) A failure or delay in exercise of a right arising from a
breach of this agreement does not result in a waiver of that
right.
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23.4 VARIATION AND FURTHER ASSURANCE
(a) The parties can only vary a term of this agreement if the variation is in writing and executed by both parties.
(b) Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.
23.5 ENTIRE AGREEMENT
(a) This agreement embodies the entire agreement between the parties.
(b) This agreement supersedes all previous agreements.
23.6 COUNTERPARTS
(a) A party may execute this agreement by signing any counterpart.
(b) All counterparts constitute one document when taken together.
23.7 CUMULATIVE RIGHTS
A right, power, discretion and remedy arising out of this agreement in
favour of a party:
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(a) is cumulative; and
(b) does not diminish any other right, power, discretion and
remedy of a party.
23.8 PUBLICITY
(a) A party may only make an announcement or release including a
press announcement or release relating to this agreement and
the transaction related to this agreement if it first obtains
the approval in writing of the other party.
(b) This clause does not apply if a party must announce or release
information to comply with a law or by a stock exchange, in
which event the party having to make the announcement or
release the information will consult with the others before
doing complying with its obligations to the extent reasonable
and practicable in the circumstances.
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23.9 NON-MERGER AND SURVIVAL OF THE WARRANTIES
(a) Neither the Warranties nor any other provision of this agreement merges on Completion.
(b) The Warranties survive Completion of this agreement.
23.10 SURVIVAL OF INDEMNITIES
(a) Each indemnity of the parties contained in this agreement is a continuing obligation of the parties despite any settlement of account or the occurrence of any other thing and remains in full force and effect until all money owing under any indemnity, contingently or otherwise, has been paid in full.
(b) Each indemnity of the parties contained in this agreement survives the termination of the agreement and is separate and independent.
24. GUARANTEE AND INDEMNITY
24.1 The Purchaser's Guarantor warrants that:
(a) it has taken all necessary action to authorise the execution, delivery and performance of this agreement in accordance with its terms and obtained any necessary consents to such performance;
(b) it has full power to enter into and perform its obligations under this agreement;
(c) it has not gone into liquidation nor passed a winding up resolution, nor received a notice under the Corporations Law;
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(d) as far as it is aware:
(i) there is no petition or other process for winding up
presented or threatened against the Purchaser's
Guarantor;
(ii) there are no circumstances justifying a petition of
this nature;
(e) no receiver or manager of any part of the undertaking or asset
of the Purchaser has been appointed.
24.2 The Purchaser's Guarantor gives the guarantee and indemnity in this
CLAUSE 24 in consideration of the Vendor agreeing to enter into this
agreement. The Purchaser's Guarantor acknowledges the receipt of
valuable consideration from the Vendor for the Purchaser's Guarantor
incurring obligations and giving rights under this guarantee and
indemnity.
24.3 The Purchaser's Guarantor unconditionally and irrevocably guarantees to
the Vendor the due and punctual performance and observance by the
Purchaser of its obligations under this agreement including the
obligations to pay money.
24.4 As a separate undertaking, the Purchaser's Guarantor unconditionally
and irrevocably indemnifies the Vendor against all liability or loss
arising from, and any costs, charges or expenses incurred in connection
with, a breach by the Purchaser of this agreement, including a breach
of the obligations to pay money. It is not necessary for the Vendor to
incur expenses or make payment before enforcing that right of
indemnity.
24.5 The Purchaser's Guarantor waives any right it has of first requiring
the Vendor to commence proceedings or enforce any other right against
the Purchaser or any other person before claiming under this guarantee
and indemnity.
24.6 TIME OF GUARANTEE
(a) This guarantee and indemnity does not merge on completion.
This guarantee and indemnity is a continuing security.
(b) This guarantee will continue in full force and effect until
the obligations of the Purchaser to the Vendor the subject of
the proceedings have been satisfied.
24.7 The liabilities of the Guarantor under this guarantee and indemnity are
as a guarantor, indemnifier and principal debtor and the rights of the
Vendor under this guarantee and indemnity are not affected by anything
which might otherwise affect them at law or in equity including, but
not limited to, one or more of the following:
(a) the Vendor granting time or other indulgence to, compounding
or compromising with or releasing the Purchaser, or any other
guarantor;
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(b) acquiescence, delay, acts, omissions or mistakes on the part
of the Vendor;
(c) any novation of a right of the Vendor;
(d) any variation of this agreement, or any agreement entered into
in performance of it; and
(e) the invalidity or unenforceability of an obligation or
liability of a person other than the Purchaser's Guarantor.
24.8 The Purchaser's Guarantor may not, without the consent of the Vendor:
(a) raise a set-off or counterclaim available to it or the
Purchaser against the Vendor in reduction of its liability
under this guarantee and indemnity; or
(b) claim to be entitled by way of contribution, indemnity,
subrogation, marshalling or otherwise to the benefit of any
security or guarantee held by the Vendor in connection with
this agreement; or
(c) prove in competition with the Vendor if a liquidator,
provisional liquidator, receiver, official manager or trustee
in bankruptcy is appointed in respect of the Purchaser or the
Purchaser is otherwise unable to pay its debts when they fall
due,
until all money payable to the Vendor in connection with this agreement
are paid.
24.9 If a claim that a payment or transfer to the Vendor in connection with
this agreement is void or voidable (including, but not limited to, a
claim under laws relating to liquidation, insolvency or protection of
creditors) is upheld, conceded or compromised then the Vendor is
entitled immediately as against the Purchaser's Guarantor to the rights
to which it would have been entitled under this guarantee and indemnity
if the payment or transfer had not occurred.
24.10 The Purchaser's Guarantor agrees to pay or reimburse the Vendor on
demand for:
(a) its costs, charges and expenses in making, enforcing and doing
anything in connection with this guarantee and indemnity
including, but not limited to, legal costs and expenses on a
full indemnity basis; and
(b) all stamp duties, fees, taxes and charges which are payable in
connection with this guarantee and indemnity or a payment,
receipt or other transaction contemplated by it.
Money paid to the Vendor by the Purchaser's Guarantor must be applied
first against payment of costs, charges and expenses under CLAUSE 24.9
then against other obligations under the guarantee and indemnity.
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24.11 The Purchaser's Guarantor acknowledges having been given a copy of this
agreement and having had full opportunity to consider its provisions
before entering into this guarantee and indemnity.
25. ACCESS TO BWANA COMMUNICATION SYSTEM
25.1 The Vendor acknowledges and agrees that in order to assist the
Purchaser to effect an orderly and effective transfer of the
information and communication capability components of the Business to
the Purchaser, the Vendor will grant the Purchaser reasonable access to
the BWANA Communication System for a period of 6 months after
Completion. The Purchaser will be entitled to access to the Vendor's
BWANA Communication System in the same manner as Vendor had access
prior to Completion, (subject to any security requirements of the
Vendor), and to reasonable assistance from the Vendor, at the sole cost
of the Purchaser, to procure the migration of the relevant data and
systems from the Vendor's network to one established by the Purchaser.
25.2 The Purchaser will reimburse the Vendor for its costs incurred pursuant
to clause 25.1 at a rate of $2,000.00 per month, per site of the
Business which remain on the said network, together with any applicable
GST.
25.3 Consistent with the Vendor's obligations under this clause, the Vendor
will ensure that all JD Edwards software used in the Business is
replaced with Base Plan software before the expiry of the 6 months
after Completion.
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SCHEDULE 1
OWNED PROPERTIES
PART A
A. OWNED PROPERTIES
ADDRESS TITLE PARTICULARS
1. Factory/Warehouse building with associated offices Lot 2 in Deposited Plan 502272, Certificate of Title
and amenities at 767 The Horsley Drive Smithfield Folio Identifier 2/502272.
NSW
2. Industrial facility at 2161-2181 Princes Highway Part Lot 1 on Plan of Subdivision No 6439, Certificate
Clayton VIC of Title Volume 9161 Folio 594.
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SCHEDULE 2
PLANT AND EQUIPMENT
SEE EXHIBITED CD (DULY INITIALLED BY THE PARTIES)
SCHEDULE 3
THE LAST ACCOUNTS
SEE EXHIBIT 1 DULY INITIALLED BY THE PARTIES
SCHEDULE 4
NAMES OF EMPLOYEES AND EMPLOYMENT DETAILS
SEE EXHIBIT 1 DULY INITIALLED BY THE PARTIES
SCHEDULE 5
FORM OF OFFER OF EMPLOYMENT BY #[INSERT NAME OF PURCHASER]
Date:
Name:
Location:
[insert name of Purchaser] (ACN #[insert ACN of Purchaser]) (#[INSERT DEFINITION OF PURCHASER]) has signed an agreement with #[insert name of Vendor] (ACN #[insert ACN of Vendor]) (#[INSERT DEFINITION OF VENDOR]).
#[insert definition of Vendor] is selling (#[insert name of Business] to #[insert definition of Purchaser].
Following completion of the sale arrangement between #[insert definition of Purchaser] and #[insert definition of Vendor], and assuming you accept this offer, the terms of your employment with #[insert definition of Purchaser] will be as specified in the attached standard conditions of employment #[insert definition of Purchaser] undertakes that the conditions of employment are, taken as a whole, not less favourable than currently apply to you at #[insert definition of Vendor] including all entitlements in respect of retrenchment, redundancy and superannuation; provided however, that such conditions of employment do not include share options.
Your continuous service with #[insert definition of Vendor] will be recognised by #[insert definition of Purchaser] and all benefits and entitlements you have accrued at #[insert definition of Vendor] for annual leave, sick leave, long service leave and rostered days off (where applicable) will be transferred.
Please sign and return the enclosed copy letter to acknowledge your acceptance of this arrangement by #[insert time]. We look forward to welcoming you to #[insert definition of Purchaser].
Yours faithfully
Signed
I wish to continue in employment with #[insert definition of Purchaser] following the sale to #[insert definition of the business] to [insert the name of the Purchaser] on terms and conditions [as attached].
Name:
Date:
Signature:
SCHEDULE 6
PART 1
PRINCIPAL AND AGENCY ARRANGEMENTS
See exhibit 1
PART 2
VEHICLE LEASES
ORIX LEASES AS AT 31/10/2000.
NEW SOUTH WALES
NIL
SOUTH AUSTRALIA
Holden VT II Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1416325
Holden VT II Commodore Berlina Wagon 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1472362
QUEENSLAND
Holden VT II Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1410731
Holden VT II Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1410758
WESTERN AUSTRALIA.
Holden VT II Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1426155
Holden VX Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1474421
VICTORIA/TASMANIA.
HSV VT II Club Sport R8 5.71 PFI 4 Speed Auto 4 Dr Sedan - Contract No. 1398710
Holden VT II Commodore Supercharged 4 Speed Auto 4 Dr Sedan - Contract No. 1405638
AWAITING ORIX DELIVERY.
Holden VX Commodore Exec 3.81 PFI 4 Speed Auto 4 Dr Sedan - Quote No. Q1476193
(WA)
SCHEDULE 7
PARTICULARS OF PROPERTY LEASES
All annual rentals are stated as at the date of commencement of the lease unless stated otherwise.
1. PROPERTY ADDRESS: Unit 5, Locked 10 Littlebourne Street
KELSO (Bathurst) NSW
LESSOR: Walter Ernest Carter, Raymond Wade Carter and
Ian Rodney Carter
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $14,280 per annum
TERM: 3 years from 12 February 1999 to 11 February 2002
OPTIONS: Nil
2. PROPERTY ADDRESS: 5 Cellana Court
Portland VIC
LESSOR: Pentrans Cargo Pty Ltd
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $35,642 per annum
TERM: 2 years from 1 March 1998 to 28 February 2001
OPTIONS 2 options each of 3 years
3. PROPERTY ADDRESS: 50 - 58 Grandview Parade
Moolap (Geelong) VIC
LESSOR: D & M SGRO Properties Pty Ltd
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $25,500 per annum
TERM: 3 years commencing 1 July 1998 to 30 June 2001
OPTIONS: 1 option for 3 years
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4. PROPERTY ADDRESS: 23 Mint Street, Wodonga VIC
LESSOR: D&J Calder Nominees Pty Ltd ACN 005 715 417
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $18,720 per annum
TERM: 10 years from 21 November 1994 to 20 November 2004
OPTIONS: 2 options each of 5 years
5. PROPERTY ADDRESS: 217 Hanson Road, Athol Park SA
LESSOR: Yornelg Pty Ltd ACN 060 506 694
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $56,000 per annum
TERM: 6 months from 1 September 2000 to 31 March 2001
OPTIONS: Nil
6. PROPERTY ADDRESS: 209 Bannister Road Canning Vale WA
LESSOR: William Barton Ryan and Patricia Annette Ryan
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $150,000 per annum
TERM: 5 years from 20 August 1998 to 19 August 2002
OPTIONS: 1 option of 5 years
7. PROPERTY ADDRESS: 11/66 Coonawara Winnellie NT
LESSOR: Interpret Pty Ltd ACN 009 637 405
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: $28,291.93 per annum
TERM: 3 years from 14 August 1998 to 13 August 2001
OPTIONS: NIL
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8. PROPERTY ADDRESS: Wendoree VIC
LESSOR: Brambles Australia Limited division - Wreckair
LESSEE: Brambles Australia Limited division - Brambles
Equipment Division
ANNUAL RENTAL: $120.00 per week
TERM: Month to Month
OPTIONS: Nil
9. PROPERTY ADDRESS: Shed at Clovelly Park SA
LESSOR: Mitsubishi
LESSEE: Brambles Australia Limited ACN 000 164 938
ANNUAL RENTAL: Nominal rent
TERM: Periodic
OPTION Nil
10.PROPERTY ADDRESS 511 Nudgee Road Hendra Qld
SUB LESSOR Brambles Australia Limited Division - BIS
SUB LESSEE Brambles Australia Limited - BED
ANNUAL RENTAL $10,833 per month
TERM Month to Month
OPTIONS: Nil
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SCHEDULE 8
GENERAL WARRANTIES
1. ACCURACY OF INFORMATION
1.1 (SCHEDULES)
The information set out Schedules 1 to 16 is complete and accurate in all respects.
1.2 (DATA ROOM MATERIAL)
(a) The Data Room Material, (the Data Room Material being made up of the original material provided by the Vendor in the relevant data room, the written questions from the Purchaser to the Vendor regarding the Business and the written responses of the Purchaser to those questions, as well as material progressively added to the data room during the period the Purchaser conducted its due diligence investigations in relation to the Business), provides an accurate record of the affairs of the Business to which that information relates:
(b) The index to the Data Room Material is complete, and for the avoidance of any doubt it separately and clearly identifies each item of information subsequently added as part of the Data Room Material, after the first date upon which the Purchaser was given access to the room in which the Data Room Material was located.
(c) To the best of the Vendor's knowledge and belief, the information is not misleading in any material particular, whether by inclusion of misleading information or omission of material information or both and the Vendor has included in the Data Room Material all that information covering the Business which it would have required from a vendor of a similar business.
1.3 (FORECASTS AND PROJECTIONS)
Each forecast or projection (if any) in the Data Room Material:
(a) was made after due and careful consideration by its author;
(b) was based on information which the author reasonably believed was reliable;
(c) is, to the best of the Vendor's knowledge and belief, fair and reasonable in the circumstances prevailing at the time the forecast or projection was made and in the light of the assumptions made;
(d) was based on assumptions which to the best of the Vendor's knowledge and belief were fair and reasonable in the context of the forecast or projection.
1.4 (FULL DISCLOSURE)
The Data Room Material discloses all information which the Vendor to the best of its knowledge and belief considers is material to be disclosed to a purchaser for value of the Assets.
2. POWER AND AUTHORITY
2.1 (INCORPORATION AND POWER)
The Vendor:
(a) is a body corporate is duly incorporated under the laws of the place of its incorporation;
(b) has the power to own its assets and carry on its business as it is now being conducted; and
(c) is duly registered and authorised to do business in every jurisdiction which, by the nature of its business and assets, makes registration or authorisation necessary, and each of these jurisdictions is noted in Schedule 1.
2.2 (CONSTITUENT DOCUMENTS)
The business and affairs of the Vendor have been conducted in accordance with the Constitution or other constituent documents of the Vendor.
2.3 (POWER AND AUTHORITY)
The Vendor has the power and authority to execute and exchange this agreement and perform and observe all its terms. This agreement has been duly executed by the Vendor and is a legal, valid and binding agreement of the Vendor enforceable against the Vendor in accordance with its terms.
2.4 (NO RESTRICTION ON VENDOR)
The Vendor is not bound by any contract arrangement or understanding (written or unwritten) which may restrict the Vendor's right or ability to enter into or perform this agreement.
3. TITLE
As of the Completion Date:
(a) the Vendor is the legal and beneficial owner of the Assets;
(b) the Assets are free and clear of any Encumbrance or other third party interests or rights and the Vendor has not agreed to grant any of the foregoing;
(c) the Purchaser will acquire the full beneficial ownership of the Assets;
(d) the Assets are fully paid for; and
(e) the Assets are in the possession of the Vendor.
4. SOLVENCY
4.1 (ADMINISTRATION, WINDING UP, ARRANGEMENTS, INSOLVENCY ETC)
None of the following has occurred and is subsisting, or is threatened, in relation to the Vendor:
(a) The appointment of an administrator.
(b) An application or an order made, proceedings commenced, a resolution passed or proposed in a notice of meeting or other steps taken for:
(i) the winding up, dissolution, or administration of the Vendor, or
(ii) the Vendor entering into an arrangement, compromise or composition with or assignment for the benefit of its creditors or a class of them.
(c) The Vendor:
(i) being (or being taken to be under applicable legislation) unable to pay its debts, other than as the result of a failure to pay a debt or claim the subject of a good faith dispute; or
(ii) stopping or suspending, or threatening to stop or suspend, payment of all or a class of its debts.
(d) The appointment of a receiver, receiver and manager, administrative receiver or similar officer to any of the Assets and undertakings of the Vendor.
4.2 (CLAIM AGAINST ASSET)
None of the Assets is, or may in the future be, liable to a claim by a trustee in bankruptcy or liquidator of the Vendor or any predecessor in title.
5. FINANCIAL ARRANGEMENTS
5.1 (DISCLOSURE)
The Data Room Material discloses every Encumbrance other than those which arise by operation of law affecting any asset of the Vendor.
5.2 (ARMS-LENGTH NATURE OF COMMITMENTS AND BENEFITS)
The Data Room Material contains full details and complete terms of every material written Contract under which the Vendor has any obligations to (whether financial or otherwise) or receives any benefit from (whether financial or otherwise), any third party or from any Related Body Corporate which is not on an arm's length basis.
5.3 (FOREIGN CURRENCY TRANSACTIONS)
The Data Room Material contains full details of each foreign currency transaction related to the Business to which the Vendor is a party as at the date of this agreement and involving any forward cover contracts, or otherwise involving any exposure to fluctuations in foreign currency exchange rates.
6. LIABILITIES
6.1 (CONSUMER CLAIMS: GOODS)
No goods supplied by a Vendor have:
(a) failed to comply with the express or implied terms of sale or the requirements of any law; or
(b) been supplied in circumstances which would entitle the recipient to make a claim against a Vendor.
6.2 (CONSUMER CLAIMS: SERVICES)
No services supplied by the Vendor have:
(a) been supplied in a negligent or unworkmanlike manner;
(b) failed to comply with the requirements of law or the express or implied terms of any agreement to supply the services; or
(c) been supplied in the manner which would entitle the recipient to make a claim against the Vendor.
7. ENVIRONMENTAL LAWS
For the purposes of Warranties 7.1 to 7.11, LEASED PREMISES includes property formerly occupied by a Vendor, to the extent referrable to the period of occupation by the Vendor.
7.3 (AUTHORISATION)
(a) Each Authorisation required for the conduct of the Business and the conduct of all activities being conducted on the Leased Premises including those Authorisations necessary for the handling, storage and maintenance of all containers and substances used in connection with the Business and in which the Vendor has an interest:
(i) is and has been at all relevant times effective; and
(ii) has been complied with in all respects.
(b) No event has occurred nor does any fact or circumstance exist which, with the giving of notice or lapse of time or both, would cause the Vendor to be in breach of any Authorisation.
7.4 (RENEWAL OR AMENDMENT OF AUTHORISATIONS)
The Vendor is not aware of any fact or circumstance, other than facts or circumstances which relate to the Purchaser, that would cause any Governmental Agency:
(a) (assuming that the Governmental Agency is aware of all such facts or circumstances) not to renew any Authorisation of a Vendor which relates to the Business or the Leased Premises; or
(b) to revise or amend the terms of any Authorisation in any material respect.
7.5 (COMPLIANCE WITH LAW)
(a) The Vendor complies with and has not committed any offences under any Environmental Law.
(b) No event has occurred nor does any fact or circumstance exist which, with the giving of notice or lapse of time or both, would cause the Vendor to be in breach of any Environmental Law.
7.6 (OCCURRENCE OF EVENT)
No event has occurred and no fact or circumstance exists which could give rise to a claim from, and no claim is pending or threatened by, and no notice to this effect has been received from, any person (including a Governmental Agency) against the Vendor relating to:
(a) a breach by the Vendor of any Environmental Law or Authorisation;
(b) the handling, storage, transportation or use of any substance by the Vendor in respect of the Business;
(c) the discharge, release or emission of any substance, smell or noise from the Leased Premises into the Environment; or
(d) any damage or contamination to property or injury or illness to any person arising in connection with the Business from exposure to any substance, whether present on the Leased Premises or not.
7.7 (ACT OR OMISSION)
No act or omission has occurred and there is no circumstance relating to the Leased Premises or the Business which had or is likely to have an effect on the Environment and which has given rise to or may give rise to:
(a) the requirement of expenditure in respect of the Business or the Leased Premises; or
(b) the cessation or alteration of any activity of the Business or at the Leased Premises.
7.8 (PRESENCE OF SUBSTANCES)
(a) There is no substance present on the Leased Premises, in its present state or after reaction with any other substance stored in proximity to it, has caused or could or might reasonably be expected to cause damage or contamination to any property or the Environment or injury or illness to any person, except substances which are in containers which are in good operating and leakproof condition and are maintained, operated and placed in accordance with Environmental Law and all applicable Authorisations and best international practice and utilise best available technology.
(b) There is no condition of the Leased Premises and no substance is present on or within the Leased Premises which entitles any Governmental Agency or any other person to require the Vendor to restore any property, remove contamination, expend money or perform any work in or around the Leased Premises or to contribute to the costs of doing so.
7.9 (FILINGS AND REPORTS)
(a) All filings, reports and notices required by any Authorisation applicable to the Business or the Leased Premises:
BUSINESS SALE AGREEMENT Page 64
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(i) have been prepared and, where applicable, lodged with
the relevant Governmental Agency; and
(ii) are accurate and complete.
(b) Complete copies of these documents are in the possession of
the Group and will be delivered to the Purchaser on
Completion.
7.10 (BOND OR SECURITY)
There is no:
(a) bond or security deposit given by the Vendor in favour of any
Governmental Agency in connection with any Authorisation which
relates to the Business or the Leased Premises;
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(b) underground container present on the Leased Premises;
(c) agreement with any contractor for disposal of hazardous waste which relates to the Business or the Leased Premises; or
(d) asbestos present on the Leased Premises.
8. ACCOUNTS
8.1 (LAST ACCOUNTS)
The Last Accounts:
(a) have been prepared in accordance with the Corporations Law (or previous applicable corresponding legislation) and the Accounting Standards;
(b) of the Vendor show a true and fair view of:
(i) the assets and liabilities and of the state of affairs, financial position and results of the Business as at and up to the Completion Date; and
(ii) the profit or loss of the Business for the financial period ended on the Completion Date;
(c) in respect of Completion have been prepared in accordance with the same accounting policies as were applied in the corresponding accounts for the preceding three financial periods;
(d) are not affected by any abnormal or extraordinary item, except as expressly disclosed in the Last Accounts;
(e) take account of all gains and losses, whether realised or unrealised, arising from foreign currency transactions and on translation of foreign currency financial statements;
(f) include reserves and provisions for taxation that are sufficient to cover all tax liabilities of the Business in respect of all periods up to the Completion Date;
(g) provide for all liabilities for long service leave and annual leave entitlements;
(h) provide for all other liabilities (whether quantified, contingent or otherwise) of the Business at the Completion Date; and
(i) give full particulars in the notes of all contingent liabilities and commitments and any other liabilities which cannot be quantified.
8.2 (NO WRITE DOWNS)
No receivable owed to the Business has been written down or written off in the year ended on the Completion Date and since the Completion Date other than those for which a provision has been made in the Last Accounts.
8.3 (FINANCING)
The Vendor has not or is not engaged in financing of a type that is not required to be shown or reflected in the Last Accounts except for Principal and Agency Agreements.
8.4 (PROFITS)
The profits or losses of the Business shown in the Last Accounts for the financial period ended on the Completion Date and by the audited accounts (if any) of the Business for the previous two financial periods, and the trend of profits or losses shown in those accounts over those three periods, have not resulted to any material extent from:
(a) material inconsistencies of accounting practices;
(b) the inclusion of abnormal or extraordinary items of income or expenditure (but only in relation to the Last Accounts); and
(c) transactions entered into other than on normal commercial terms.
8.5 (ASSETS)
Each of the following is reflected in the Last Accounts.
(a) Redundant, obsolete, excessive and slow moving inventories of the Business have been written off or written down to an amount not greater than their net realisable value in the ordinary and usual course of business.
(b) The basis of valuation for Stock, (except to the extent
otherwise expressed in the accounting principles set out in
the Last Accounts, or in respect of the forklifts for sale
referred to in those accounts which were valued at the lower
of their cost or their written down book value IS the lower of
cost and net realisable value, and has remained substantially
the same in respect of the commencement and end of each of the
3 accounting periods of the Business referred to in Warranty
8.1(c) (inclusive).
(c) Other than in respect of the entry in the Last Accounts referred to as "Other Debtors", and subject to the provisions of Warranty 8.1(b), the rate of depreciation applied to each item of depreciable property, plant and equipment
(i) has been consistently applied over previous accounting periods of the Business; and
(ii) is adequate to write down the value of each fixed asset to its net realisable value as at the end of its useful working life;
8.6 (NO SET OFFS)
There is no set off arrangement between the Vendor and any other person relating to the Business.
9. PRE-COMPLETION DATE EVENTS
9.1 EVENTS
In the 12 month period prior to the Completion Date, each of the following has occurred.
(a) (CONDUCT OF BUSINESS) The Business has been continued in the ordinary and usual course and not otherwise.
(b) (NO DISPOSALS) Except for disposals in the ordinary and usual course of business and at not less than market value, the property of the Business has been and remains in the possession or under the control of the Vendor. The Vendor has not created an Encumbrance over or declared itself trustee of any of its assets.
(c) (DEALINGS) The Vendor has not dealt with any person except at arm's length relating to the Business. No property of the Business has been acquired by the Vendor for more than market value.
(d) (CAPITAL EXPENDITURE) The Vendor has not made any capital expenditure relating to the Business, other than as referred to in the Accounts.
(e) (DEFERRAL OF CAPITAL EXPENDITURE) No decision has been made to defer any capital expenditure of the Business.
(f) (NO MATERIAL ADVERSE CHANGE) There has been no material adverse change in the financial condition or prospects of the Business.
(g) (INVENTORY) No inventories with an aggregate value in excess of $100,000 in respect of a provision (if any) in the Last Accounts which the Vendor has acquired or produced relating to the Business has become, or is, redundant, obsolete or excessive.
(h) (CONTRACTS) No Contract has been terminated or has expired which could reasonably be expected to have a material adverse effect on the profitability of the Business.
(i) (NOTICE OF TERMINATION) The Vendor has not received any written notice or threat of termination of a Contract which could reasonably be expected to have a material adverse effect on the profitability of the Business.
(j) (AUTHORISATIONS) No Authorisation from which the Business benefits has been terminated or has expired and in either case could reasonably be expected to have a material adverse effect on the profitability of the Business.
(k) (EMPLOYEES) As at the Completion Date, there has been no material change in the number of persons employed by the Business. No material change has been made in the remuneration or other benefits paid or allowed to, or expected by, any employee of the Business, except as required under any award, determination or legislation.
(l) (NO DEFAULT) The Business has not defaulted in paying any creditor.
(m) (WAIVER) The Vendor has not waived any right or a debt owed to the Business.
9.2 (STOCK)
The level of Stock of the Business at the Completion Date will not be materially different from its level of Stock shown in the most recent balance sheet date in the Last Accounts.
10. TAXATION
10.1 (ACCOUNTS)
The Last Accounts contain provisions adequate to cover Taxes for or in
respect of the Business for all periods up to the Completion Date. No
additional or other Taxes are or will be payable (whether on, before or
after the Completion Date) by the Purchaser relating to the Business.
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BUSINESS SALE AGREEMENT Page 68
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10.2 (DEDUCTIONS)
The Vendor has deducted all Tax required to be deducted from any
payments made by it relating to the Business. When necessary, the
relevant Vendor has accounted for that Tax in accordance with relevant
law. The Vendor has made an overpayment of sales Tax in an amount of
$250,000.00 in respect of which it is seeking a refund as at the date
of this agreement, and in respect of which the Purchaser will provide
such information from the Records as the Vendor may reasonably require
from time to time to allow the Vendor to pursue such claim.
10.3 (PAYMENT OF TAX)
All Taxes which have been or deemed to have been assessed or imposed on
the Vendor relating to the Business, or have been required to be
withheld from any payment made by the Vendor to another person relating
to the Business:
(a) which are due and payable, have been paid by the final date
for payment by that Vendor; and
(b) which are not yet payable but become payable before the
Completion Date, shall be paid by the due date.
The Vendor has not entered into any agreement or arrangement which
extends the period for assessment or payment of any Taxes.
10.4 (APPLICATIONS)
All particulars given to any Governmental Agency in connection with or
affecting any application for any ruling, consent or clearance on
behalf of the Business fully and accurately disclosed all facts and
circumstances material for the decision of the Governmental Agency.
Each ruling, consent or clearance is valid and effective. Each
transaction for which that ruling, consent or clearance has previously
been obtained has been carried into effect in accordance with the terms
of the relevant application, ruling, consent or clearance.
10.5 (NO ADDITIONAL TAXES)
Prior to the Completion Date, the Vendor has not become liable to pay
any additional taxes, interest, penalty, charge, fee or other like
amount imposed or made on or in respect of the failure to file a return
in respect of or to pay any Taxes relating to the Business.
10.6 (INVESTIGATIONS)
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All necessary information, notices, computations and returns have:
BUSINESS SALE AGREEMENT Page 69
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(a) been properly and duly submitted by the Vendor to each
relevant Governmental Agency in respect of Taxes for or in
respect of the Business for all periods up to the date of this
agreement; and
(b) will continue to be submitted in respect of periods after the
date of this agreement until the Completion Date in respect of
those later periods.
There is no unresolved correspondence or dispute with any Governmental
Agency. Neither the Commissioner of Taxation nor any other fiscal
authority is at present conducting any investigation into all or any
part of the Business. The Vendor knows of no reason why any such
investigation may be initiated.
10.7 (STAMP DUTY)
All stamp duty and other similar tax payable in respect of every
Contract or transaction to which a Vendor is or has been a party in
relation to the Business, or by which a Vendor derives, has derived or
will derive a substantial benefit in respect of the Business, have been
duly paid. No Contract is unstamped or insufficiently stamped unless
stamping has not been legally required..
11. ASSETS
11.1 (TITLE)
Each Asset (other than inventory disposed of prior to the Completion
Date in the ordinary and usual court of business), is the absolute
property of, and legally and beneficially owned by, the Vendor free of
any encumbrance, except for:
(a) any Encumbrance disclosed in the Data Room Material; or
(b) any item disclosed in the Data Room Material as being subject
to hire purchase, lease or rental agreements.
11.2 (CONDITION)
Other than in accordance with normal business practices, each item of
Plant and Equipment of the Vendor with a market value in excess of
$10,000:
(a) is, consistent with its age, in good repair and condition, and
the purpose for which it has been used;
(b) is in satisfactory working order and has been maintained in
accordance with prudent business practice and (where
applicable) manufacturer's recommended maintenance procedures;
(c) to the best of the Vendor's knowledge and belief, is capable
of doing the work for which it was designed or purchased and
will be capable (subject to fair wear and
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tear) of doing so over the period of time in which it will be
written down to the net amount expected to be recovered on
disposal of the asset at the end of its useful life in the
accounts of the relevant Vendor under its current accounting
policies;
(d) is not surplus to the requirements of the Business; and
(e) is recorded in the plant and equipment register of the Vendor.
11.3 (PLANT AND EQUIPMENT REGISTER)
The plant and equipment register is complete and accurate in all
material respects. It sets out, in respect of each item recorded in it,
the date the item was acquired, its cost, current book value, its
location, and its current tax depreciated value, such tax depreciated
value having been determined in accordance with allowable and
applicable taxation rates permitted by the Commissioner of Taxation.
11.4 (INVENTORIES)
All current assets of the Business comprising inventories,
work-in-progress, raw and processed materials, finished goods and
merchandise, whether in hand, in transit or in bond, are of good and
merchantable quality consistent with their age and the purpose for
which the assets have been used. They are fit for the purpose for which
they are intended to be used. They conform with all relevant
descriptions, specifications and standards.
11.5 (LOCATION AND ALL RELEVANT ASSETS HELD)
All assets owned, leased or hired by the Business are located at the
Owned Properties or the Leased Premises (other than forklifts for hire
at customer locations, any vehicles in the course of being used for the
purposes of the Vendor's business and inventory in transit or bond or
in vehicles owned by a Vendor) and are all the assets:
(a) used in the Business; and
(b) needed to conduct that Business in the manner in which it was
conducted in the 12 months before the date of this agreement.
No asset located at the Leased Premises (except an asset leased or
hired by the Vendor) is owned by any person other than the Vendor,
other than usual employee personal effects.
11.6 (NO IMPAIRMENT)
No notice has been served on the Vendor by any Governmental Agency
which might materially impair, prevent or otherwise interfere with that
Vendor's use of or proprietary rights in any of the Assets.
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12. LEASED PREMISES
12.1 (LEASED PREMISES)
The Leased Premises comprises all the freehold and leasehold land and
premises owned, used or occupied by the Vendor. The Vendor does not
have any freehold or leasehold interest in land relating to the
Business except for the Leased Premises.
12.2 (OCCUPATION)
The Vendor has exclusive occupation and quiet enjoyment of the Leased
Premises.
12.3 (EASEMENTS)
The Vendor holds all easements, rights, interests and privileges
necessary or appropriate for the carrying on of its business and the
protection of the value of the Leased Premises.
12.4 (LEASES)
The Data Room Material contains accurate copies of each lease in
respect of the Leased Premises. Any lease required by law to be
registered has been registered.
12.5 (COMPLIANCE WITH LEASES)
The Vendor has duly performed and complied with all covenants,
restrictions, reservations, conditions, agreements, leases, licences,
statutory requirements, by-laws, orders, building regulations and other
stipulations and regulations affecting the Leased Premises and its use.
Without limitation, all outgoings have been paid to date and for the
Leased Premises, all rents and service charges have been duly paid. No
notice of any alleged breach of any terms of any lease has been served
on the Vendor.
12.6 (USE)
The existing use of each of the Leased Premises is the lawful permitted
use under the terms of the relevant lease.
12.7 (SUB-LEASE)
The Data Room Material contains full particulars of any lease,
sub-lease, tenancy, licence or agreement granted by or entered into by
the Vendor of any Leased Premises and accurate and up to date copies of
each lease, sub-lease or licence have been delivered to the Purchaser.
12.8 (COVENANTS ETC)
There are no covenants, restrictions or arrangements affecting the
Leased Premises which conflict with the present use of all or any part
of the Leased Premises.
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BUSINESS SALE AGREEMENT Page 72
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12.9 (NO BREACH OF LEGISLATION)
The past and present use of the Leased Premises for the carrying on of
the business of the Vendor has not breached and does not breach any
legislation. No breach of any other legislation has been committed in
relation to the Leased Premises.
12.10 (CONSENTS)
Each consent required under any legislation for every development
carried out in relation to any Leased Premises has been properly
obtained. Any conditions or restrictions imposed in any consent have
been observed and performed.
12.11 (NOTICES)
The Vendor has not received any notice from any Governmental Agency
related to any Leased Premises. So far as it is aware, there are no
proposals made or intended to be made by any Governmental Agency:
(a) concerning the acquisition or resumption of, or the change of
the planning, zoning or other legislation affecting the whole
or any part of the Leased Premises;
(b) requiring the doing of work or expenditure of money on or in
relation to the Leased Premises or any footpath or road
adjoining any of the Leased Premises where the total cost
could reasonably be expected to exceed $10,000;
(c) which would adversely affect the whole or any part of the
Leased Premises, or its use.
12.12 (SAFETY)
The Leased Premises and all buildings and other improvements and
equipment on the Leased Premises are safe and are maintained and
operated in accordance with the standards of law and best Australian
practice. All activities conducted on the Leased Premises (or on any
other property in connection with the Business of the Vendor) are
conducted safely in accordance with the standards of law and best
Australian practice and utilise appropriate available technology.
13. CONTRACTS AND COMMITMENTS
13.1 (PROFIT SHARING)
No Vendor is a party to any Contract in terms of which it is or will be
bound to share profits, pay any royalties or waive or abandon any
rights.
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BUSINESS SALE AGREEMENT Page 73
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13.2 (BINDING CONTRACTS)
No Contract:
(a) is outside the ordinary and proper course of business or is
otherwise unusual;
(b) imposes or is likely to impose an obligation on the Vendor to
make payments exceeding $200,000 after the date of this
agreement;
(c) has a period of more than 36 months to run from the date of
this agreement until its expiration or termination;
(d) is incapable of being fulfilled or performed on time, or only
with undue or unusual expenditure of money or effort;
(e) is not on arm's length terms;
(f) other than the Western Australian Manitou contract provides
that a Vendor will act as distributor of goods or services or
as agent for another person or provides that another person
will so act for a Vendor;
(g) limits the freedom of the Vendor, or any of its officers,
employees or agents, to carry on the Business or activity,
including in competition with any person or in any area;
(h) other than in respect of employment, is with the Vendor or a
person controlling or controlled by the Vendor; or
13.3 (EMPLOYEES)
No Contract limits the freedom of Vendor, or that of any of its
employees, to carry on the Business in any area other than
confidentiality requirements.
13.4 (CONTRACTS AFFECTED BY THIS AGREEMENT)
Other than in respect of the Property Leases, the Principal and Agency
Arrangements and the Contracts with Qantas in Queensland and Victoria,
no party is entitled under any Contract because of any change in the
legal or beneficial ownership of the Assets or any of them, or the
compliance with this agreement (including the effect of the change in
the ultimate ownership or control of any subsidiary):
(a) to terminate the Contractor accelerate the maturity or
performance of any obligation; or
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BUSINESS SALE AGREEMENT Page 74
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(b) to require the adoption of terms less favourable to the
Vendor; or
(c) to do anything which would adversely affect the interests,
Business or assets of the Vendor.
13.5 (NO DEFAULT)
No party to any Contract:
(a) is in default; or
(b) but for the requirements of notice or lapse of time or both,
would be in default and the default could be reasonably
expected to have a material adverse effect on its business,
assets or financial condition.
13.6 (SECURITY)
All security (including any guarantee or indemnity) held by a Vendor is
valid and enforceable by the Vendor against the grantor in accordance
with the terms of the security.
14. INTELLECTUAL PROPERTY
14.1 (INTELLECTUAL PROPERTY COMPLETE)
The Vendor does not own, use or require in its Business the use of any
copyright, patent, trade mark, service mark, design, business name,
trade secret, confidential information or other intellectual or
industrial property rights, except for the Trade Names.
14.2 (NO INFRINGEMENTS)
No right, title or interest in the Trade Names is at present being
infringed or under threat of infringement or subject to a claim of
invalidity. The conduct of the Business by the Vendor does not infringe
the confidential information or intellectual or industrial property
rights of any other party, nor has there been at any time a claim of
such infringement.
14.3 (REGISTRATION)
The Trade Names have been registered by the Vendor and each
registration is valid and in full force and effect. No person has
sought or threatened to seek the cancellation of any such registration.
14.4 (CONFIDENTIAL INFORMATION OF VENDOR)
No disclosure has been made to any person of any Confidential
Information relating to the Business except:
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(a) in the ordinary and proper course of business of the Vendor, on receipt of an undertaking to keep the information confidential; and
(b) in respect of negotiations for the sale of the Assets to the Purchaser, on receipt of an undertaking to keep the information confidential.
15. EMPLOYEES
15.1 (DISCLOSURE)
The Data Room Material in relation to Employees of the Business
contains complete and accurate particulars as at 30 September 2000 of:
(a) the position and age of each Employee of the Business;
(b) all remuneration and other benefits paid to or conferred on
each Employee;
(c) the period of service of each Employee of the Vendor and the
accrued long service leave, annual leave, leave loading and
entitlements of each employee;
(d) sample written contracts of service or consultancy to which
the Business is a party.
(e) each oral contract of service or consultancy between the
Business and any person (except for any oral contract which
may be terminated on three months' notice or less without
payment of compensation) other than bona fide redundancy under
Australian law.
(f) the employment details contained in Schedule 4.
15.2 (OUTSTANDING CLAIM)
No amount due to or in respect of any Employee or former Employee of
the Business is in arrears and unpaid other than his current salary for
the relevant period at the date of this agreement.
15.3 (UNIONS)
The Data Room Material contains the details of any agreement between
the Business and any union or industrial organisation in respect of its
employees and their employment.
15.4 (COMPLIANCE WITH LAW)
The Business has, in relation to each of its Employees and each of its
former Employees, complied in all material respects with all
legislation, collective agreements, orders, awards and codes of conduct
and practice relevant to conditions of service and to the relations
between it and its Employees and any trade union.
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BUSINESS SALE AGREEMENT Page 76
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15.5 (INDUSTRIAL DISPUTES)
Other than in respect of the industrial dispute in Victoria as
disclosed to the Purchaser prior to execution of this agreement, the
Business is not involved in, and there are no present circumstances
which are likely to give rise to, any industrial or trade dispute or
any dispute or negotiation regarding a claim of material importance
with any trade union or association of trade unions or organisation or
body of employees.
15.6 (DISCIPLINARY MEASURES)
Other than in respect of the disciplinary measures undertaken in
respect of 1 employee in Western Australia as disclosed to the
Purchaser prior to execution of this agreement, full particulars of all
disciplinary measures involving dishonesty (including warnings) taken
in relation to any employees of the Business in the period of 6 months
before the date of this agreement are included in the Data Room
Material.
15.7 (TERMINATION OF EMPLOYMENT)
No Employee of the Business:
(a) has been given an unexpired notice terminating his contract of
employment;
(b) is under notice of dismissal; or
(c) has been terminated in circumstances which may give rise to a
claim against the Business in relation to loss of office or
termination of employment (including, without limitation,
redundancy).
15.8 (LIABILITY TO GOVERNMENTAL AGENCY)
The Business does not have any undischarged liability to pay to any
Governmental Agency any contribution, Taxes or other impost which has
fallen due arising in connection with the employment or engagement of
personnel by the Business.
15.9 (OCCUPATIONAL HEALTH AND SAFETY)
To the best of the Vendor's knowledge and belief, the Business has not
breached any legislation or Authorisation relating to the health or
safety of its employees.
16. INSURANCE
16.1 (NO CLAIMS)
There are no claims relating to the Business made by the Vendor or any
person on its behalf under any insurance policy held or previously held
by the Vendor which are outstanding. No event (other than one which has
given rise to a claim which is not
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BUSINESS SALE AGREEMENT Page 77
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outstanding) has arisen which may give rise to such a claim under any
insurance policy. Without limiting the preceding provisions, any claim
which might be made against the Business by an employee or workman or
third party in respect of any accident or injury is fully covered by
insurance.
16.2 (NO NOTICE)
The Business has not been notified by any insurer that it is required
or it is advisable for it to carry out any maintenance, repairs or
other works in relation to any of its assets.
17. COMPLIANCE WITH LEGISLATION AND ABSENCE OF LITIGATION
17.1 (NO CONTRAVENTION OF LEGISLATION)
The Business has not committed or omitted to do any act or thing the
commission or omission of which is in contravention of any legislation.
17.2 (TRADE PRACTICES)
The Business is not a party to any contract which is in breach of any
applicable restrictive trade practices legislation. The Business has
not engaged and does not engage in any conduct or practice which is in
breach of that legislation.
17.3 (DISPUTES)
There are no matters pending or threatened in respect of which verbal
or written communication has been given or received by or against the
Vendor in relation to the Business. There are no facts or disputes
which may or might give rise to any such matters.
17.4 (ASIC INVESTIGATION)
There is no outstanding correspondence between the Vendor and the
Australian Securities and Investments Commission relating to the
Business.
17.5 (ORDERS)
The Vendor is not the subject of any order, waiver, declaration,
exemption or notice relating to the Business granted or issued by the
Australian Securities Commission, the Australian Securities and
Investments Commission or any predecessor of that body or any other
person under the Corporations Law or any previous corresponding
legislation.
18. AUTHORISATIONS
The Vendor had and has all necessary Authorisations to carry on the
Business properly. In respect of each such Authorisation:
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(a) all fees due have been paid;
(b) all conditions or requirements have been duly complied with; and
(c) the Vendor does not know of any factor that might prejudice its continuance or renewal.
19. RECORDS AND CORPORATE MATTERS
19.1 (Accounts and records)
All accounts, books, ledgers and financial and all other records of the
Vendor relating to the Business:
(a) have been fully and properly maintained and contain complete
and accurate records of all matters required to be entered in
them by any relevant legislation and the Accounting Standards;
(b) do not contain or reflect any material inaccuracies or
discrepancies;
(c) give a true and fair view of the trading transactions, state
of affairs, results, financial and contractual position and
assets and liabilities of the Business;
(d) are in the possession and unqualified control of the Vendor;
and
(e) for Employee records, contain adequate and suitable records
regarding the service of each of its Employees.
19.2 (CONSTITUENT DOCUMENTS)
Accurate and up to date copies of the Constitution or other constituent
documents of the Vendor are included in the Data Room Material.
19.3 (FILINGS)
All documents required to be filed with the Australian Securities &
Investments Commission (or equivalent predecessor bodies) under any
relevant legislation have been duly filed.
19.4 (RECTIFICATION OF REGISTERS)
The Vendor has no notice of any application or intended application
under the Corporations Law or other relevant legislation to rectify any
register which it is required by law to maintain.
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20. POWERS OF ATTORNEY
20.1 (POWERS OF ATTORNEY)
There is no power of attorney or other authority in force by which a
person is able to bind the Business other than normal authorities under
which officers or employees of a Vendor may carry out the Business in
the ordinary course.
20.2 (OFFERS)
To the best of the Vendors' knowledge and belief, no outstanding offer,
tender, quotation or the like given or made by the Vendor relating to
the Business is capable of giving rise to a contract merely by any
unilateral act of a third party, other than in the ordinary course of
business and on terms calculated to yield a gross profit margin
consistent with that usually obtained by the Vendor.
21. FINDER'S FEES
The vendor has not taken any action under which any person other than
deutsche bank ag is or will be entitled to receive from the vendor or
the purchaser any finder's fee, brokerage or other commission in
connection with the acquisition of the assets.22.superannuation and
other benefits fund.
22.3 NO AGREEMENTS
The Vendor is not a party to any agreement with any union or industrial
organisation in respect of superannuation benefits for the Employees
other than as disclosed in the Data Room Material.
22.4 NO OTHER FUNDS
Other than the Vendor's Funds and the industry superannuation funds:
(a) there are no superannuation, retirement or provident funds or
other arrangements providing for any payment to Employees on
their retirement or death or on the occurrence of any
permanent or temporary disability in operation by or in
relation to the Business or its Employees; and
(b) the Vendor does not contribute to any funds which will provide
its Employees or their respective dependents with pensions,
annuities or lump sum payments on retirement or earlier death
or otherwise.
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BUSINESS SALE AGREEMENT Page 80
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22.5 VENDOR FUNDS
The following applies with respect to each of the Vendor's Funds and
the industry superannuation funds:
(a) otherwise than in the ordinary course of administration, there
are no outstanding and unpaid contributions on the part of the
Vendor in respect of Employees of the Business;
(b) no Employee of the Business who is a member of the fund has
any right or entitlement to have any benefit under the fund
augmented, increased or accelerated by reason of this
Agreement or by reason of any other arrangement, agreement or
understanding;
(c) a list of the names of all directors, Employees of the
Business who are members of the fund has been supplied to the
Purchaser; and
(d) no undertaking or assurance has been given to Employees of the
Business as to the continuance, introduction, increase or
improvement of any benefits under the fund, except as provided
for in clause 14.
22.6 SUPERANNUATION GUARANTEE CHARGE
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The Vendor will not be liable to pay the superannuation guarantee charge in respect of any of the Employees of the Business for any contribution period as defined in the Superannuation Guarantee (Administration) Act 1992 up to Completion.
SCHEDULE 8A
LIMITATIONS ON LIABILITY
1. DEFINITIONS
The following definitions apply in this agreement.
PURCHASER COMPANY means the Purchaser and any related body corporate of the Purchaser.
CLAIM means a claim against the Vendor or against a Related Person:
(a) under a Warranty;
(b) under an indemnity in this agreement;
(c) of any kind, for example, in tort, for negligence, under a statutory provision or under a contractual term implied by statute, in connection with or relating to this agreement or the transactions it records, or in connection with or relating to an Interdependent Agreement or the transactions they record.
RELATED PERSON means each related body corporate of the Vendor and each agent, director, officer, employee, representative and adviser of the Vendor or of a related body corporate of the Vendor.
2. GENERAL
(a) Where the Purchaser cannot make a Claim because of this schedule, the Purchaser:
(i) must not make a Claim against the Vendor or against any Related Person;
(ii) must ensure that no Purchaser Company brings against the Vendor or against a Related Person a Claim; and
(iii) acknowledges that the Vendor enters this paragraph 2 for itself, and on behalf of each Related Person, each of whom may rely on this paragraph 2 in consideration of an undertaking to pay to the Purchaser the sum of $1 on demand after the bringing of such a claim, or a Claim, against that Related Person.
3. DISCLOSURE
The Purchaser cannot claim that anything fully and properly disclosed in the Data Room Material, or recorded in this agreement, or in any annexure or exhibit to this agreement, causes any of the Warranties to be breached.
4. KNOWLEDGE OF PURCHASER
The Warranties are further qualified by, and the Purchaser cannot Claim in relation to:
(a) any information about the Business available to the public from any registers of the Australian Securities and Investments Commission and the Land Property Information New South Wales Titles Office;
(b) any consequence of any law or regulation, or of any administrative practice of a Government Agency taking effect after Completion, in any jurisdiction affecting the Business; and
(c) anything relating to the Business which the Purchaser or any of its related bodies corporate or any of its officers, employees, agents or advisers actually knows, or is disclosed in the Data Room Material.
5. NO FURTHER WARRANTIES
(a) Except for the Warranties, neither the Vendor nor any Related Person makes any express or implied representation or warranty.
(b) Neither the Vendor nor any Related Person makes any express or implied representation or warranty as to future matters, including future or forecast costs, revenues or profits.
(c) To the maximum extent permitted by law, all conditions, warranties, representations and undertakings (express, implied, written, oral, collateral, statutory or otherwise) except the Warranties are excluded.
6. PURCHASER ACKNOWLEDGMENTS
(a) the Purchaser acknowledges, represents and warrants that:
(i) the Purchaser has had independent legal, financial and technical advice relating to the purchase of the Business and to the terms of this agreement and the documents to be executed pursuant to it;
(ii) the Purchaser and its representatives have had an opportunity to make and conduct, and have made and conducted, inquiries and due diligence investigationS and evaluationS of the Business.
7. CLAIMS BY PURCHASER ONLY
Except as otherwise provided in this agreement, only the Purchaser, or its assignee as permitted by CLAUSE 22(b), can make a Claim for anything under this agreement including
a Claim for a breach of a Warranty or under an indemnity in this agreement, and then only strictly in accordance with this schedule.
8. MITIGATION
The Purchaser must take all reasonable action to mitigate any loss suffered by the Purchaser for which a Claim could be made. Nothing in this agreement restricts or limits the Purchaser general obligation at law to mitigate any loss or damage.
9. LIMITATION ON QUANTUM AND GENERAL
(a) The Purchaser cannot make any Claim:
(i) for less than $100,000.00 (but a series of related Claims about the same facts or circumstances or a series of similar facts and circumstances is taken to be 1 Claim); and
(ii) unless and until the aggregate amount of all Claims exceeds $500,000.00 and then the Purchaser may claim the full amount including the first $500,000.00
(b) The maximum liability of the Vendor in respect of any Claims arising in respect of this Agreement is limited in aggregate to an amount equivalent to the final Purchase Price.
10. TIME LIMITS FOR BRINGING CLAIMS
The Purchaser cannot make any Claim, and the liability of the Vendor for a Claim shall absolutely terminate, unless the Claim is bona fide and:
(a) in respect of all Claims of which the Purchaser is aware before 15 May 2001 the Purchaser gives to the Vendor prompt notice of the Claims on or before 1 June 2001, specifying (in detail) the matter which gives rise to the Claim, the nature of the Claim, the amount claimed, and how the amount is calculated; and
(b) in respect any Claims the Purchaser gives to the Vendor prompt notice of the Claim, specifying (in detail) the matter which gives rise to the Claim, the nature of the Claim, the amount claimed, and how the amount is calculated within 12 months after the Completion Date; and
(c) legal proceedings for the Claim have been properly issued and validly served upon the Vendor within 6 months from the date on which Purchaser gave notice of the Claim.
SCHEDULE 9
SOFTWARE LICENCES
1. Microsoft - O/S, BackOffice and Office
2. Lotus
3. Citrix
4. MYOB
5. Adaptec DirectCD
6. Adobe Acrobat Reader
7. Backup Exec
8. CBA Diammond Services
9. Maximiser
10. MicroGrafx Flowcharter
11. Microsoft TechNet
12. Reflection (access to SLAM)
13. Tracker 97
14. Ulead Photo Impact
15. WINEBS (Software supplied by Telstra)
16. WinFax Pro
17. PowerChute UPS
18. Diskeeper
19. HP JetAdmin
20. Crystal Info
21. Symantec PC Anywhere
22. Baseplan
SCHEDULE 10
INFORMATION MEMORANDUM
SEE EXHIBIT 1
SCHEDULE 11
EXCLUDED ASSETS
Nine Fantuzzi trucks (or any contractual obligation associated therewith) ordered by Brambles Industrial Services, Tasmania.
SCHEDULE 12
BONDS BANK GUARANTEES AND SECURITY DEPOSITS
NIL
1.
SCHEDULE 13
TERMS OF OWNED PROPERTY LEASES
1. PROPERTY ADDRESS: 767 The Horsley Drive, Smithfield NSW
LESSOR: Brambles Australia Limited (ACN 000 164 938)
LESSEE:
ANNUAL RENTAL: $3,000.00 per week
TERM: 3 months
OPTIONS: Nil
2. PROPERTY ADDRESS: 2161 - 2181 princes Highway Clayton Vic
LESSOR: Brambles Australia Limited (ACN 000 164 938)
LESSEE:
ANNUAL RENTAL: $20,000.00 per month
TERM: 12 months with Athletics right to terminate on
90 days notice.
OPTIONS: Nil
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SCHEDULE 14
TRANSITIONAL PROCEDURES
The Vendor and the Purchaser to agree appropriate transitional procedures in relation to the following matters:
Migration of computer systems in accordance with clause 25
Banking generally
Payroll arrangements
SCHEDULE 15
TERMS OF SUBLEASES 209 Bannister Road Canning Vale WA
1. PROPERTY ADDRESS:
LESSOR: Brambles Australia Limited
LESSEE:
ANNUAL RENTAL: Consistent with headlease
TERM: 12 months from Completion
OPTIONS: Nil
SPECIAL CONDITION: During term of Sub-lease Athletics has
right to request assignment of lease from
Brambles Australia Ltd. This right is
extinguished if it is not exercised before
30 June 2001.
3. PROPERTY ADDRESS: 23 Mint Street Wodonga Vic
LESSOR: Brambles Australia Limited
LESSEE:
ANNUAL RENTAL: Consistent with headlease
TERM: 6 months from Completion
OPTIONS: Nil
SPECIAL CONDITION: During term of Sub-lease Athletics has
right to request assignment of lease from
Brambles Australia Ltd.
4. PROPERTY ADDRESS: 511 Nudgee Road Hendra Qld
SUB-LESSOR: Brambles Australia Limited division -
Brambles Equipment division
SUB-LESSEE:
ANNUAL RENTAL: Consistent with headlease
TERM: Month to Month
OPTIONS: Nil
SPECIAL CONDITION: Nil
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SCHEDULE 16
DATA ROOM INDEX
SEE EXHIBIT 1
SCHEDULE 17
EXCLUDED EMPLOYEES
1. Employees engaged as sweeper drivers at Portland, Victoria
2. Jesus Munoz
3. Paul Mete
4. Graham Turner
5. Therese Whithington
6. Any employees engaged on a casual basis.
7. Victor Fielden
ANNEXURE A
CAPITAL WIP
SEE EXHIBIT 1
BUSINESS SALE AGREEMENT Page 97
--------------------------------------------------------------------------------
THE COMMON SEAL of BRAMBLES )
AUSTRALIA LIMITED was affixed in )
the presence of: )
/s/ Robert John Anderson /s/ John Edward Fletcher
-------------------------------------- -------------------------------------
Signature Signature
Robert John Anderson John Edward Fletcher
-------------------------------------- -------------------------------------
Print Name Print Name
Director Director
-------------------------------------- -------------------------------------
Office Held Office Held
THE COMMON SEAL of A.C.N. 094
802 141 PTY LIMITED was )
affixed in the presence of: )
)
)
/s/ Geoffrey D. Lewis /s/ Kenneth L. Fish
-------------------------------------- -----------------------------------
Signature Signature
Geoffrey D. Lewis Kenneth L. Fish
-------------------------------------- -----------------------------------
Print Name Print Name
THE COMMON SEAL of NACCO )
MATERIALS HANDLING GROUP, )
INC. was affixed in the presence )
of: )
/s/ Geoffrey D. Lewis
-------------------------------------- -----------------------------------
Signature of Witness Signature
Geoffrey D. Lewis
-------------------------------------- -----------------------------------
Print Name Print Name
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EXHIBIT 12.1
NMHG HOLDING CO. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF RATIOS
(dollars in millions)
Three Months
Ended
Year Ended December 31, March 31,
--------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2001 2002
--------------------------------------------------------------------------------
Earnings (loss) as defined:
Income (loss) from operations before
taxes $ 52.6 $ 118.9 $ 42.3 $ 39.3 $ (66.8) $ 15.8 $ 2.2
Plus: fixed charges 17.5 17.2 22.6 28.0 34.1 7.7 8.9
--------------------------------------------------------------------------------
Earnings (loss) $ 70.1 $ 136.1 $ 64.9 $ 67.3 $ (32.7) $ 23.5 $ 11.1
================================================================================
Fixed Charges as defined:
Interest expense, including
amortization of debt issue costs
$ 14.6 $ 14.1 $ 19.1 $ 21.3 $ 24.0 $ 5.2 $ 5.5
Estimated interest factor on rental
expense 2.9 3.1 3.5 6.7 10.1 2.5 3.4
--------------------------------------------------------------------------------
Fixed Charges $ 17.5 $ 17.2 $ 22.6 $ 28.0 $ 34.1 $ 7.7 $ 8.9
================================================================================
Ratio of Earnings to Fixed Charges (1)
4.0 7.9 2.9 2.4 --- 3.1 1.2
================================================================================
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(1) The ratio of earnings to fixed charges is determined by dividing income
(loss) before income taxes, minority interest and cumulative effect of
accounting changes, adjusted for equity in earnings and distributions
received from equity investees, interest expense, debt expense amortization,
capitalized interest and the portion of rental expense deemed representative
of an interest factor by the sum of interest expense, debt expense
amortization, capitalized interest and the portion of rental expense deemed
representative of an interest factor. For the year ended December 31, 2001,
earnings were insufficient to cover fixed charges by $66.8 million.
Exhibit 16.1
May 24, 2002
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir or Madam:
We have read the second, third, fourth and fifth paragraphs of "Other Matters" included in the Form S-4 dated May 24, 2002 of NMHG Holding Co. to be filed with the Securities and Exchange Commission and are in agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP cc: Mr. Ray Ulmer |
Exhibit 21.1
NMHG Distribution Co.
NMHG Distribution B.V.
NMHG Distribution France S.A.R.L.
NACCO Materials Handling Distribution
(France) S.A.
NACCO Materials Handling Deutschland GmbH
Hyster Ost Stapler-und Systemtechnik GmbH
Hyster T.F.G. Stapler-und Systemtechnik GmbH
Hyster Nord Stapler-und Systemtechnik GmbH
Hyster FKF Stapler-und Systemtechnik GmbH
Yale SLT Fordertechnik GmbH
Yale Materials Handling UK Limited
Mach (Sales & Hire) Limited
Notionfactor Limited
Yale Nederland B.V.
Hyster Singapore Pte Ltd
National Fleet Network Pty Limited Trentcorp Pty. Limited NMHG Distribution Pty Limited KS Coy & Sons Pty Limited Yale-LTC Industrial Trucks Pty Limited LTC Forklift Rentals Pty Limited
Hyster-Yale Materials Handling, Inc
NACCO Materials Handling Group, Inc.
Hyster Canada Limited
Hyster New England, Inc.
Hyster Overseas Capital Corporation, LLC
NACCO Materials Handling (FSC), Inc.
NACCO Materials Handling Group Brasil Ltda.
NACCO Materials Handling Group Pty., Ltd.
NMHG Employees Superannuation Fund Pty. Limited
NMHG Superannuation Programme Pty. Limited
NMHG Financial Services Inc. NMHG Mexico, S.A. de C.V.
NMHG Oregon, Inc.
N.M.H. Holding B.V.
NACCO Materials Handling B.V.
NACCO Materials Handling S.r.l.
NMHG Mauritius (Mauritius)
Hyster (H.K.) Limited
Shanghai Hyster Forklift, Ltd.
Shanghai Hyster International Trading Company
NACCO Materials Handling Group, Ltd.
Hyster France S.A.R.L.
NACCO Materials Handling Group (UK) Pension Co. Ltd.
NACCO Materials Handling Limited
Hyster Italia S.r.L.
Hyster Germany GmbH
Yale France Manutention S.A.R.L.
Yale Fordertechnik Handelsgesellschaft mbH
Sumitomo NACCO Materials Handling Co., Ltd.
SNP Estate Corporation
Suminac Philippines, Inc.
Sumitomo NACCO Materials Handling Sales Co., Ltd.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report (and to all references to our Firm) included in or made a part of this registration statement.
/s/ Arthur Andersen LLP Cleveland, Ohio May 24, 2002 |
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of NMHG Holding Co., a Delaware corporation (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Jeffrey C. Mattern, Geoffrey D. Lewis, Charles A. Bittenbender, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's debt securities, with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 13th day of March 2002.
/s/ Reginald R. Eklund /s/ David H. Hoag -------------------------------------- ------------------------------------- Reginald R. Eklund David H. Hoag President and Chief Executive Officer Director (Principal Executive Officer) /s/ Jeffrey C. Mattern /s/ Dennis W. LaBarre -------------------------------------- ------------------------------------- Jeffrey C. Mattern Dennis W. LaBarre Treasurer Director (Principal Financial Officer ) /s/ Raymond C. Ulmer /s/ Richard de J. Osborne -------------------------------------- ------------------------------------- Raymond C. Ulmer Richard de J. Osborne Controller Director (Principal Accounting Officer) /s/ Alfred M. Rankin, Jr. /s/ Claiborne R. Rankin -------------------------------------- ------------------------------------- Alfred M. Rankin, Jr. Claiborne R. Rankin Director Director /s/ Owsley Brown II /s/ Ian M. Ross -------------------------------------- ------------------------------------- Owsley Brown II Ian M. Ross Director Director /s/ Eiichi Fujita /s/ Britton T. Taplin -------------------------------------- ------------------------------------- Eiichi Fujita Britton T. Taplin Director Director /s/ Robert M. Gates /s/ David F. Taplin -------------------------------------- ------------------------------------- Robert M. Gates David F. Taplin Director Director |
/s/ Leon J. Hendrix, Jr. /s/ Frank F. Taplin
-------------------------------------- -------------------------------------
Leon J. Hendrix, Jr. Frank F. Taplin
Director Director
/s/ John F. Turbin
-------------------------------------
John F. Turbin
Director
|
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of NMHG DISTRIBUTION CO., a Delaware corporation (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Geoffrey D. Lewis, Jeffrey C. Mattern, Raymond C. Ulmer, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's guarantee of the debt securities of NMHG Holding Co., with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 8th day of May 2002.
/s/ Edward W. Ryan /s/ Reginald R. Eklund -------------------------------------- ------------------------------------- Edward W. Ryan Reginald R. Eklund President and Director Chairman and Director (Principal Executive Officer) /s/ Jeffrey C. Mattern /s/ Geoffrey D. Lewis -------------------------------------- ------------------------------------- Jeffrey C. Mattern Geoffrey D. Lewis Treasurer Director (Principal Financial Officer) |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of NMHG OREGON, INC., an Oregon corporation (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Geoffrey D. Lewis, Jeffrey C. Mattern, Raymond C. Ulmer, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's guarantee of the debt securities of NMHG Holding Co., with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 8th day of May 2002.
/s/ Reginald R. Eklund /s/ Geoffrey D. Lewis -------------------------------------- ------------------------------------- Reginald R. Eklund Geoffrey D. Lewis President and Director Director (Principal Executive Officer) /s/ Jeffrey C. Mattern /s/ Raymond C. Ulmer -------------------------------------- ------------------------------------- Jeffrey C. Mattern Raymond C. Ulmer Treasurer Controller (Principal Financial Officer) (Principal Accounting Officer) |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned managers and officers of HYSTER OVERSEAS CAPITAL CORPORATION, LLC, a Delaware limited liability company (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Geoffrey D. Lewis, Jeffrey C. Mattern, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's guarantee of the debt securities of NMHG Holding Co., with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 8th day of May 2002.
/s/ Reginald R. Eklund /s/ Geoffrey D. Lewis -------------------------------------- ------------------------------------- Reginald R. Eklund Geoffrey D. Lewis President and Manager Manager (Principal Executive Officer) /s/ Jeffrey C. Mattern -------------------------------------- Jeffrey C. Mattern Treasurer and Manager (Principal Financial Officer and Principal Accounting Officer) |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of HYSTER-YALE MATERIALS HANDLING, INC., a Delaware corporation (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Geoffrey D. Lewis, Jeffrey C. Mattern, Raymond C. Ulmer, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's guarantee of the debt securities of NMHG Holding Co., with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 8th day of May 2002.
/s/ Reginald R. Eklund /s/ David H. Hoag -------------------------------------- ------------------------------------- Reginald R. Eklund David H. Hoag President, Chief Executive Officer and Director Director (Principal Executive Officer) /s/ Jeffrey C. Mattern /s/ Dennis W. LaBarre -------------------------------------- ------------------------------------- Jeffrey C. Mattern Dennis W. LaBarre Treasurer Director (Principal Financial Officer ) /s/ Raymond C. Ulmer /s/ Richard de J. Osborne -------------------------------------- ------------------------------------- Raymond C. Ulmer Richard de J. Osborne Controller Director (Principal Accounting Officer) /s/ Alfred M. Rankin, Jr. /s/ Claiborne R. Rankin -------------------------------------- ------------------------------------- Alfred M. Rankin, Jr. Claiborne R. Rankin Director Director /s/ Owsley Brown II /s/ Ian M. Ross -------------------------------------- ------------------------------------- Owsley Brown II Ian M. Ross Director Director /s/ Eiichi Fujita /s/ Britton T. Taplin -------------------------------------- ------------------------------------- Eiichi Fujita Britton T. Taplin Director Director /s/ Robert M. Gates /s/ David F. Taplin -------------------------------------- ------------------------------------- Robert M. Gates David F. Taplin Director Director |
/s/ Leon J. Hendrix, Jr. /s/ Frank F. Taplin
-------------------------------------- -------------------------------------
Leon J. Hendrix, Jr. Frank F. Taplin
Director Director
/s/ John F. Turben
-------------------------------------
John F. Turben
Director
|
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of NACCO MATERIALS HANDLING GROUP, INC., a Delaware corporation (the "Company"), hereby constitutes and appoints Reginald R. Eklund, Geoffrey D. Lewis, Jeffrey C. Mattern, Raymond C. Ulmer, Dennis W. LaBarre and Thomas C. Daniels, and each of them, as the true and lawful attorney-in-fact or attorneys-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 one or more registration statement(s) on Form S-4 relating to the registration of the Company's guarantee of the debt securities of NMHG Holding Co., with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements or any additional registration statement filed pursuant to Rule 462 promulgated under the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorneys and any of them and any such substitute.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.
Executed as of this 8th day of May 2002.
/s/ Reginald R. Eklund /s/ David H. Hoag -------------------------------------- ------------------------------------- Reginald R. Eklund David H. Hoag President, Chief Executive Officer and Director Director (Principal Executive Officer) /s/ Jeffrey C. Mattern /s/ Dennis W. LaBarre -------------------------------------- ------------------------------------- Jeffrey C. Mattern Dennis W. LaBarre Treasurer Director (Principal Financial Officer ) /s/ Raymond C. Ulmer /s/ Richard de J. Osborne -------------------------------------- ------------------------------------- Raymond C. Ulmer Richard de J. Osborne Controller Director (Principal Accounting Officer) /s/ Alfred M. Rankin, Jr. /s/ Claiborne R. Rankin -------------------------------------- ------------------------------------- Alfred M. Rankin, Jr. Claiborne R. Rankin Director Director /s/ Owsley Brown II /s/ Ian M. Ross -------------------------------------- ------------------------------------- Owsley Brown II Ian M. Ross Director Director /s/ Eiichi Fujita /s/ Britton T. Taplin -------------------------------------- ------------------------------------- Eiichi Fujita Britton T. Taplin Director Director /s/ Robert M. Gates /s/ David F. Taplin -------------------------------------- ------------------------------------- Robert M. Gates David F. Taplin Director Director |
/s/ Leon J. Hendrix, Jr. /s/ Frank F. Taplin
-------------------------------------- -------------------------------------
Leon J. Hendrix, Jr. Frank F. Taplin
Director Director
/s/ John F. Turben
-------------------------------------
John F. Turben
Director
|
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)
U.S. BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
31-0841368
I.R.S. Employer Identification No.
------------------------------------------------------------ ---------------------------------------------------------
180 East Fifth Street
St. Paul, Minnesota 55101
------------------------------------------------------------ ---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
------------------------------------------------------------ ---------------------------------------------------------
|
Frank Leslie U.S. Bank National Association 180 East Fifth Street St. Paul, MN 55101 (651) 244-8677
(Name, address and telephone number of agent for service)
NMHG HOLDING CO.
(AND ITS SUBSIDIARIES IDENTIFIED ON THE FOLLOWING PAGE)
(Issuer with respect to the Securities)
------------------------------------------------------------ ---------------------------------------------------------
------------------------------------------------------------ ---------------------------------------------------------
Delaware 31-1637659
------------------------------------------------------------ ---------------------------------------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
------------------------------------------------------------ ---------------------------------------------------------
------------------------------------------------------------ ---------------------------------------------------------
650 N.E. Holladay Street, Suite 1600 97232
Portland, Oregon
------------------------------------------------------------ ---------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
------------------------------------------------------------ ---------------------------------------------------------
|
10% SENIOR NOTES DUE 2009
(TITLE OF THE INDENTURE SECURITIES)
ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
EXACT NAME OF STATE OR OTHER PRIMARY STANDARD NUMBER, INCLUDING
REGISTRANT AS SPECIFIED JURISDICTION OF INDUSTRIAL IRS EMPLOYER AREA CODE, OF
IN ITS INCORPORATION OR CLASSIFICATION CODE IDENTIFICATION REGISTRANT'S PRINCIPAL
CHARTER ORGANIZATION NUMBER NUMBER EXECUTIVE OFFICES
------- ------------ ------ ------ -----------------
NMHG Distribution Co. Delaware 3537 93-1119223 650 N.E. Holladay Street
Portland, OR 97232
(503) 721-6000
NMHG Oregon, Inc. Oregon 3537 93-1320748 650 N.E. Holladay Street
Portland, OR 97232
(503) 721-6000
Hyster Overseas Capital Delaware 3537 52-2212730 650 N.E. Holladay Street
Corporation, LLC Portland, OR 97232
(503) 721-6000
Hyster-Yale Materials Delaware 3537 34-1617886 650 N.E. Holladay Street
Handling, Inc. Portland, OR 97232
(503) 721-6000
NACCO Materials Delaware 3537 93-0160700 650 N.E. Holladay Street
Handling Group, Inc. Portland, OR 97232
(503) 721-6000
|
ITEM 1. GENERAL INFORMATION. Furnish the following information as to the
Trustee.
a) Name and address of each examining or supervising authority to which it is subject.
Comptroller of the Currency
Washington, D.C.
b) Whether it is authorized to exercise corporate trust powers. Yes
ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
Trustee, describe each such affiliation.
None
ITEMS 3-15 Items 3-15 are not applicable because to the best of the Trustee's knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.
ITEM 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this
statement of eligibility and qualification.
1. A copy of the Articles of Association of the Trustee.*
2. A copy of the certificate of authority of the Trustee to commence business.*
3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers.*
4. A copy of the existing bylaws of the Trustee.*
5. A copy of each Indenture referred to in Item 4. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6.
7. Report of Condition of the Trustee as of December 31, 2001, published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7.
* Incorporated by reference to Registration Number 333-67188.
NOTE
The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors. While the Trustee has no reason to doubt the accuracy of any such information, it cannot accept any responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of St. Paul, State of Minnesota on the 15th day of May, 2002.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Frank P. Leslie III
----------------------------------
Frank P. Leslie III
Vice President
By: /s/ Lori-Anne Rosenberg
--------------------------------
Lori-Anne Rosenberg
Assistant Vice President
|
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.
Dated: May 15, 2002
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Frank P. Leslie III
---------------------------------
Frank P. Leslie III
Vice President
By: /s/ Lori-Anne Rosenberg
--------------------------------
Lori-Anne Rosenberg
Assistant Vice President
|
($000'S)
12/31/2001
------------
ASSETS
Cash and Due From Depository Institutions $9,775,116
Federal Reserve Stock 0
Securities 26,316,516
Federal Funds 1,261,731
Loans & Lease Financing Receivables 109,012,892
Fixed Assets 1,414,464
Intangible Assets 8,158,687
Other Assets 6,637,699
------------
TOTAL ASSETS $162,577,105
LIABILITIES
Deposits $104,077,584
Fed Funds 4,365,180
Treasury Demand Notes 0
Trading Liabilities 313,719
Other Borrowed Money 25,030,765
Acceptances 201,492
Subordinated Notes and Debentures 5,348,437
Other Liabilities 3,894,231
------------
TOTAL LIABILITIES $143,231,408
EQUITY
Minority Interest in Subsidiaries $981,870
Common and Preferred Stock 18,200
Surplus 12,068,893
Undivided Profits 6,276,734
------------
TOTAL EQUITY CAPITAL $19,345,697
TOTAL LIABILITIES AND EQUITY CAPITAL $162,577,105
|
To the best of the undersigned's determination, as of the date hereof, the above financial information is true and correct.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Frank P. Leslie III
-------------------------------
Vice President
Date: April 22, 2002
|
Exhibit 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
10% SENIOR NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OUTSTANDING
10% SENIOR NOTES DUE 2009
OF
NMHG HOLDING CO.
DELIVER TO:
U.S. BANK NATIONAL ASSOCIATION, EXCHANGE AGENT
U.S. Bank Trust Center Facsimile Transmission Number:
180 East Fifth Street 2nd Floor (For Eligible Institutions
St. Paul, MN 55101 Only)
Attention: Corporate Trust Services (651) 244-0711
Confirm Receipt of Facsimile
by Telephone
(651) 244-8677
|
Your delivery of this letter of transmittal will not be valid unless you deliver it to the address, or transmit it to the facsimile number, set forth above. Please carefully read this entire document, including the instructions, before completing this letter of transmittal.
DO NOT DELIVER THIS LETTER OF TRANSMITTAL TO NMHG.
By completing this letter of transmittal, you acknowledge that you have received and reviewed our prospectus, dated , 2002, and this letter of transmittal, which together constitute the "Exchange Offer." This letter of transmittal and the prospectus have been delivered to you in connection with NMHG's offer to exchange $1,000 in principal amount at maturity of its 10% Senior Notes due 2009, which have been registered under the Securities Act (the "Exchange Notes"), for $1,000 in principal amount at maturity of its outstanding 10% Senior Notes due 2009 (the "Outstanding Notes"). $250,000,000 in principal amount of the Outstanding Notes are currently issued and outstanding.
NMHG reserves the right, at any time or from time to time, to extend this Exchange Offer at its discretion, in which event the Expiration Date will mean the latest date to which the Exchange Offer is extended.
This letter of transmittal is to be completed by holder (this term is defined below) of Outstanding Notes if:
(1) the holder is delivering certificates for Outstanding Notes with this document, or
(2) the tender of certificates for Outstanding Notes will be made by book-entry transfer to the account maintained by U.S. Bank National Association, the exchange agent for the notes, at The Depository Trust Company ("DTC") according to the procedures described in the prospectus under the heading "The Exchange Offer -- Procedures for Tendering." Please note that delivery of documents required by this letter of transmittal to DTC does not constitute delivery to the exchange agent.
You must tender your Outstanding Notes according to the guaranteed delivery procedures described in this document if:
(1) your Outstanding Notes are not immediately available,
(2) you cannot deliver your Outstanding Notes, this letter of transmittal and all required documents to the exchange agent before the Expiration Date, or
(3) you are unable to obtain confirmation of a book-entry tender of your Outstanding Notes into the exchange agent's account at DTC on or before the Expiration Date.
More complete information about guaranteed delivery procedures is contained in the prospectus under the heading "The Exchange Offer -- Guaranteed Delivery Procedures." You should also read Instruction 1 to determine whether or not this section applies to you.
As used in this letter of transmittal, the term "holder" means (1) any person in whose name Outstanding Notes are registered on the books of NMHG, (2) any other person who has obtained a properly executed bond power from the registered holder or (3) any person whose Outstanding Notes are held of record by DTC who desires to deliver such notes by book-entry transfer at DTC. If you decide to tender your Outstanding Notes, you must complete this entire letter of transmittal.
YOU MUST FOLLOW THE INSTRUCTIONS IN THIS LETTER OF TRANSMITTAL -- PLEASE READ THIS ENTIRE DOCUMENT CAREFULLY. IF YOU HAVE QUESTIONS OR NEED HELP, OR IF YOU WOULD LIKE ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, YOU SHOULD CONTACT THE EXCHANGE AGENT AT (651) 244-8677 OR AT ITS ADDRESS SET FORTH ABOVE.
Please describe your Outstanding Notes below.
------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES
------------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
AMOUNT OF PRINCIPAL
NAME(S) AND OUTSTANDING AMOUNT OF
ADDRESS(ES) OF NOTES OUTSTANDING
REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY NOTES
(PLEASE COMPLETE, IF BLANK) NUMBER(S) CERTIFICATE(S) TENDERED*
------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL
------------------------------------------------------------------------------------------------------------------------
|
* You will be deemed to have tendered the entire principal amount of Outstanding Notes represented in the column labeled "Aggregate Principal Amount of Outstanding Notes Represented by Certificate(s)" unless you indicate otherwise in the column labeled "Principal Amount of Outstanding Notes Tendered."
If you need more space, list the certificate numbers and principal amount of Outstanding Notes on a separate schedule, sign the schedule and attach it to this letter of transmittal.
[ ] CHECK HERE IF YOU HAVE ENCLOSED OUTSTANDING NOTES WITH THIS LETTER OF TRANSMITTAL.
[ ] CHECK HERE IF YOU WILL BE TENDERING OUTSTANDING NOTES BY BOOK-ENTRY TRANSFER MADE TO THE EXCHANGE AGENT'S ACCOUNT AT DTC.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
COMPLETE THE FOLLOWING ONLY IF YOU ARE AN ELIGIBLE INSTITUTION (THIS TERM
IS DEFINED BELOW):
[ ] CHECK HERE IF YOU ARE DELIVERING TENDERED OUTSTANDING NOTES THROUGH A NOTICE OF GUARANTEED DELIVERY AND HAVE ENCLOSED THAT NOTICE WITH THIS LETTER OF TRANSMITTAL.
COMPLETE THE FOLLOWING ONLY IF YOU ARE AN ELIGIBLE INSTITUTION:
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
Complete this section ONLY if: (1) certificates for untendered
Outstanding Notes are to be issued in the name of someone other than you;
(2) certificates for Exchange Notes issued in exchange for tendered and
accepted Outstanding Notes are to be issued in the name of someone other
than you; or (3) Outstanding Notes tendered by book-entry transfer that
are not exchanged are to be returned by credit to an account maintained at
DTC.
Issue Certificate(s) to:
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
Complete this section ONLY if certificates for untendered Outstanding Notes, or Exchange Notes issued in exchange for tendered and accepted Outstanding Notes, are to be sent to someone other than you or to you at an address other than the address shown above.
Mail and deliver Certificate(s) to:
(PLEASE ALSO COMPLETE SUBSTITUTE FORM W-9)
Ladies and Gentlemen:
According to the terms and conditions of the Exchange Offer, I hereby tender to NMHG Holding Co. the principal amount of Outstanding Notes indicated above. At the time these notes are accepted by NMHG, and exchanged for the same principal amount of Exchange Notes, I hereby sell, assign and transfer to NMHG all right, title and interest in and to the Outstanding Notes I have tendered. I am aware that the exchange agent also acts as the agent of NMHG. By executing this document, I irrevocably appoint the exchange agent as my agent and attorney-in-fact for the tendered Outstanding Notes with full power of substitution to:
1. deliver certificates for the Outstanding Notes, or transfer ownership of the Outstanding Notes on the account books maintained by DTC, to NMHG and deliver all accompanying evidences of transfer and authenticity to NMHG; and
2. present the Outstanding Notes for transfer on the books of NMHG, receive all benefits and exercise all rights of beneficial ownership of these Outstanding Notes, according to the terms of the Exchange Offer.
The power of attorney granted in this paragraph is irrevocable and coupled with an interest.
I represent and warrant that I have full power and authority to tender, sell, assign and transfer the Outstanding Notes that I am tendering. I represent and warrant that NMHG will acquire good and unencumbered title to the Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and that the Outstanding Notes will not be subject to any adverse claim at the time NMHG acquires them. I further represent that:
1. any Exchange Notes I will acquire in exchange for the Outstanding Notes I have tendered will be acquired in the ordinary course of business;
2. I have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of any Exchange Notes issued to me; and
3. I am not an "affiliate" (as defined in Rule 405 under the Securities Act) of NMHG Holding Co.
I understand that the Exchange Offer is being made in reliance on interpretations contained in letters issued to third parties by the staff of the Securities and Exchange Commission ("Commission"). These letters provide that the Exchange Notes issued in exchange for the Outstanding Notes in the Exchange Offer may be offered for resale, resold and otherwise transferred by a holder of Exchange Notes, unless that person is an "affiliate" of NMHG within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act. The Exchange Notes must be acquired in the ordinary course of the holder's business and the holder must not be engaging in, must not intend to engage in, and must not have any arrangement or understanding with any person to participate in, a distribution of the Exchange Notes.
If I am a broker-dealer that will receive Exchange Notes for my own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities (a "Participating Broker-Dealer"), I acknowledge that I will deliver a prospectus in connection with any resale of the Exchange Notes. However, by this acknowledgment and by delivering a prospectus, I will not be deemed to admit that I am an "underwriter" within the meaning of the Securities Act.
Upon request, I will execute and deliver any additional documents deemed by the exchange agent or NMHG to be necessary or desirable to complete the assignment, transfer and purchase of the Outstanding Notes I have tendered.
I understand that NMHG will be deemed to have accepted validly tendered Outstanding Notes when NMHG gives oral or written notice of acceptance to the exchange agent.
If, for any reason, any tendered Outstanding Notes are not accepted for exchange in the Exchange Offer, certificates for those unaccepted Outstanding Notes will be returned to me without charge at the address shown below or at a different address if one is listed under "Special Delivery Instructions." Any unaccepted
Outstanding Notes which had been tendered by book-entry transfer will be credited to an account at DTC, as promptly as practicable after the Expiration Date.
All authority granted or agreed to be granted by this letter of transmittal will survive my death, incapacity or, if I am a corporation or institution, my dissolution and every obligation under this letter of transmittal is binding upon my heirs, personal representatives, successors and assigns.
I understand that tenders of Outstanding Notes according to the procedures described in the prospectus under the heading "The Exchange Offer -- Procedures for Tendering" and in the instructions included in this document constitute a binding agreement between myself and NMHG subject to the terms and conditions of the Exchange Offer.
Unless I have described other instructions in this letter of transmittal under the section "Special Issuance Instructions," please issue the certificates representing Exchange Notes issued and accepted in exchange for my tendered and accepted Outstanding Notes in my name, and issue any replacement certificates for Outstanding Notes not tendered or not exchanged in my name. Similarly, unless I have instructed otherwise under the section "Special Delivery Instructions," please send the certificates representing the Exchange Notes issued in exchange for tendered and accepted Outstanding Notes and any certificates for Outstanding Notes that were not tendered or not exchanged, as well as any accompanying documents, to me at the address shown below my signature. If the "Special Issuance Instructions" and the "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes issued in exchange for my tendered and accepted Outstanding Notes in the name(s) of, and/or return any Outstanding Notes that were not tendered or exchanged and send such certificates to, the person(s) so indicated. I understand that if NMHG does not accept any of the tendered Outstanding Notes for exchange, NMHG has no obligation to transfer any Outstanding Notes from the name of the registered holder(s) according to my instructions in the "Special Issuance Instructions" and "Special Delivery Instructions" sections of this document.
PLEASE SIGN HERE WHETHER OR NOT
OUTSTANDING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
The above lines must be signed by the registered holder(s) of Outstanding Notes as their name(s) appear(s) on the certificate for the Outstanding Notes or by person(s) authorized to become registered holders(s) by a properly completed bond power from the registered holder(s). A copy of the completed bond power must be delivered with this letter of transmittal. If any Outstanding Notes tendered through this letter of transmittal are held of record by two or more joint holders, then all such holders must sign this letter of transmittal. If the signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (1) state his or her full title below and (2) unless waived by NMHG, submit evidence satisfactory to NMHG of such person's authority to act on behalf of the holder. See Instruction 4 for more information about completing this letter of transmittal.
Signature(s) Guaranteed by an Eligible Institution, if required by Instruction 4:
Dated
------------------------------------ , 2002
Please complete the Substitute Form W-9 below.
SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue Service
Payer's Request for Taxpayer
Identification Number ("TIN")
Certification
PART 1--PLEASE PROVIDE
YOUR TIN IN THE BOX AT ---------------------------------------
RIGHT AND CERTIFY BY Social Security Number
SIGNING AND DATING OR
BELOW: ---------------------------------------
Employer Identification Number
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PART 2--Certification--Under Penalties of Perjury, I certify that:
(1) The number shown on this form is my correct TIN (or I am
waiting for a number to be issued to me),
(2) I am not subject to backup withholding because (a) I am exempt
from backup withholding, (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) I am a U.S. person (including a U.S. resident alien).
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PART 3--Awaiting TIN [ ]
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Signature Date
------------------------------------------------------- -----------------------------,
2002
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NOTE: IF YOU DO NOT COMPLETE AND RETURN THIS FORM YOU MAY BE SUBJECT TO BACKUP
WITHHOLDING ON PAYMENTS MADE TO YOU UNDER THIS EXCHANGE OFFER. FOR MORE
INFORMATION, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, up to 30% of all reportable payments made to me thereafter will be withheld until I provide a number.
------------------------------------------------------------ ----------------------------------
Signature Date
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INSTRUCTIONS
PART OF THE TERMS AND CONDITIONS OF THE
EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES. The tendered Outstanding Notes or a confirmation of book-entry delivery, as well as a properly completed and executed copy or facsimile of this letter of transmittal or an agent's message through ATOP and any other required documents must be received by the exchange agent at its address listed on the cover of this document before 5:00 p.m., New York City time, on the Expiration Date. YOU ARE RESPONSIBLE FOR THE DELIVERY OF THE OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL REQUIRED DOCUMENTS TO THE EXCHANGE AGENT. EXCEPT UNDER THE LIMITED CIRCUMSTANCES DESCRIBED BELOW, THE DELIVERY OF THESE DOCUMENTS WILL BE CONSIDERED TO HAVE BEEN MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. WHILE THE METHOD OF DELIVERY IS AT YOUR RISK AND CHOICE, NMHG RECOMMENDS THAT YOU USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED, RATHER THAN REGULAR MAIL. YOU SHOULD SEND YOUR DOCUMENTS WELL BEFORE THE EXPIRATION DATE TO ENSURE RECEIPT BY THE EXCHANGE AGENT. YOU MAY REQUEST THAT YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE DELIVER YOUR OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL REQUIRED DOCUMENTS TO THE EXCHANGE AGENT. DO NOT SEND YOUR OUTSTANDING NOTES TO NMHG.
If you wish to tender your Outstanding Notes, but:
(a) your Outstanding Notes are not immediately available;
(b) you cannot deliver your Outstanding Notes, this letter of transmittal and all required documents to the exchange agent before the Expiration Date; or
(c) you are unable to obtain confirmation of a book-entry tender of your Outstanding Notes into the exchange agent's account at DTC on or before the Expiration Date,
you must tender your Outstanding Notes according to the guaranteed delivery procedure. A summary of this procedure follows, but you should read the section in the prospectus titled "The Exchange Offer -- Guaranteed Delivery Procedure" for more complete information. As used in this letter of transmittal, an "Eligible Institution" is any participant in a Recognized Signature Guarantee Medallion Program within the meaning of Rule 17Ad-15 of the Securities Exchange Act of 1934.
For a tender made through the guaranteed delivery procedure to be valid, the exchange agent must receive a properly completed and executed Notice of Guaranteed Delivery or a facsimile of that notice before 5:00 p.m., New York City time, on the Expiration Date. The Notice of Guaranteed Delivery must be delivered by an Eligible Institution and must:
(a) state your name and address;
(b) list the certificate numbers and principal amounts of the Outstanding Notes being tendered;
(c) state that tender of your Outstanding Notes is being made through Notice of Guaranteed Delivery; and
(d) guarantee that this letter of transmittal, or a facsimile of it, the certificates representing the Outstanding Notes, or a confirmation of DTC book-entry transfer, and all other required documents will be deposited with the exchange agent by the Eligible Institution within three New York Stock Exchange trading days after the Expiration Date.
The exchange agent must receive your Outstanding Notes certificates, or a
confirmation of DTC book entry, in proper form for transfer, this letter of
transmittal and all required documents within three New York Stock Exchange
trading days after the Expiration Date or your tender will be invalid and may
not be accepted for exchange.
NMHG has the sole right to decide any questions about the validity, form, eligibility, time of receipt, acceptance or withdrawal of tendered Outstanding Notes, and its decision will be final and binding. NMHG's interpretation of the terms and conditions of the Exchange Offer, including the instructions contained in this letter of transmittal and in the prospectus under the heading "The Exchange Offer -- Conditions," will be final and binding on all parties.
NMHG has the absolute right to reject any or all of the tendered Outstanding Notes if
(1) the Outstanding Notes are not properly tendered or
(2) in the opinion of counsel, the acceptance of those Outstanding Notes would be unlawful.
NMHG may also decide to waive any conditions, defects, or invalidity of tender of Outstanding Notes and accept such Outstanding Notes for exchange. Any defect or invalidity in the tender of Outstanding Notes that is not waived by NMHG must be cured within the period of time set by NMHG.
It is your responsibility to identify and cure any defect or invalidity in the tender of your Outstanding Notes. Your Outstanding Notes will not be considered to have been made until any defect is cured or waived. Neither NMHG, the exchange agent nor any other person is required to notify you that your tender was invalid or defective, and no one will be liable for any failure to notify you of such a defect or invalidity in your tender of Outstanding Notes. As soon as reasonably possible after the Expiration Date, the exchange agent will return to the holder tendering any Outstanding Notes that were invalidly tendered if the defect of invalidity has not been cured or waived.
2. TENDER BY HOLDER. You must be a holder of Outstanding Notes in order to participate in the Exchange Offer. If you are a beneficial holder of Outstanding Notes who wishes to tender, but you are not the registered holder, you must arrange with the registered holder to execute and deliver this letter of transmittal on his, her or its behalf. Before completing and executing this letter of transmittal and delivering the registered holder's Outstanding Notes, you must either make appropriate arrangements to register ownership of the Outstanding Notes in your name, or obtain a properly executed bond power from the registered holder. The transfer of registered ownership of Outstanding Notes may take a long period of time.
3. PARTIAL TENDERS. If you are tendering less than the entire principal amount of Outstanding Notes represented by a certificate, you should fill in the principal amount you are tendering in the third column of the box entitled "Description of Outstanding Notes." The entire principal amount of Outstanding Notes listed on the certificate delivered to the exchange agent will be deemed to have been tendered unless you fill in the appropriate box. If the entire principal amount of all Outstanding Notes is not tendered, a certificate will be issued for the principal amount of those untendered Outstanding Notes not tendered.
Unless a different address is provided in the appropriate box on this letter of transmittal, certificate(s) representing Exchange Notes issued in exchange for any tendered and accepted Outstanding Notes will be sent to the registered holder at his or her registered address, promptly after the Outstanding Notes are accepted for exchange. In the case of Outstanding Notes tendered by book-entry transfer, any untendered Outstanding Notes and any Exchange Notes issued in exchange for tendered and accepted Outstanding Notes will be credited to accounts at DTC.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES.
- If you are the registered holder of the Outstanding Notes tendered with this document, and are signing this letter of transmittal, your signature must match exactly with the name(s) written on the face of the Outstanding Notes. There can be no alteration, enlargement or change in your signature in any manner. If certificates representing the Exchange Notes, or certificates issued to replace any Outstanding Notes you have not tendered are to be issued to you as the registered holder, do not endorse any tendered Outstanding Notes, and do not provide a separate bond power.
- If you are not the registered holder, or if Exchange Note or any replacement Outstanding Note certificates will be issued to someone other than you, you must either properly endorse the Outstanding Notes you have
tendered or deliver with this letter of transmittal a properly completed separate bond power. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.
- If you are signing this letter of transmittal but are not the registered holder(s) of any Outstanding Notes listed on this document under the "Description of Outstanding Notes," the Outstanding Notes tendered must be endorsed or accompanied by appropriate bond powers, in each case signed in the name of the registered holder(s) exactly as it appears on the Outstanding Notes. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.
- If this letter of transmittal, any Outstanding Notes tendered or any bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, that person must indicate their title or capacity when signing. Unless waived by NMHG, evidence satisfactory to NMHG of that person's authority to act must be submitted with this letter of transmittal. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.
- All signatures on this letter of transmittal must be guaranteed by an Eligible Institution unless one of the following situations apply:
- If this letter of transmittal is signed by the registered holder(s) of the Outstanding Notes tendered with this letter of transmittal and such holder(s) has not completed the box titled "Special Issuance Instructions" or the box titled "Special Delivery Instructions;" or
- If the Outstanding Notes are tendered for the account of an Eligible Institution.
5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If different from the name and address of the person signing this letter of transmittal, you should indicate, in the applicable box or boxes, the name and address where Outstanding Notes issued in replacement for any untendered or tendered but unaccepted Outstanding Notes should be issued or sent. If replacement Outstanding Notes are to be issued in a different name, you must indicate the taxpayer identification or social security number of the person named.
6. TRANSFER TAXES. NMHG will pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes in the Exchange Offer. However, transfer taxes will be payable by you (or by the tendering holder if you are signing this letter on behalf of a tendering holder) if:
- certificates representing Exchange Notes or notes issued to replace any Outstanding Notes not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, a person other than the registered holder;
- tendered Outstanding Notes are registered in the name of any person other than the person signing this letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of Outstanding Notes according to the Exchange Offer.
If satisfactory evidence of the payment of those taxes or an exemption from payment of transfer taxes is not submitted with this letter of transmittal, the amount of those transfer taxes will be billed directly to the tendering holder. Until those transfer taxes are paid, NMHG will not be required to deliver any Exchange Notes required to be delivered to, or at the direction of, such tendering holder.
Except as provided in this Instruction 6, it is not necessary for transfer tax stamps to be attached to the Outstanding Notes listed in this letter of transmittal.
7. FORM W-9. You must provide the exchange agent with a correct Taxpayer Identification Number ("TIN") for the holder on the enclosed Form W-9. If the holder is an individual, the TIN is his or her social security number. If you do not provide the required information on the Form W-9, you may be subject to up to 30% Federal income tax withholding on certain payments made to the holders of Exchange Notes. Certain holders, such as corporations and certain foreign individuals, are not subject to these backup withholding and reporting requirements. For additional information, please read the enclosed Guidelines for Certification of
TIN on Substitute Form W-9. To prove to the exchange agent that a foreign individual qualifies as an exempt holder, the foreign individual must submit a Form W-8, signed under penalties of perjury, certifying as to that individual's exempt status. You can obtain a Form W-8 from the exchange agent.
8. WAIVER OF CONDITIONS. NMHG may choose, at any time and for any reason, to amend, waive or modify certain of the conditions to the Exchange Offer. The conditions applicable to tenders of Outstanding Notes in the Exchange Offer are described in the prospectus under the heading "The Exchange Offer -- Conditions."
9. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. If your Outstanding Notes have been mutilated, lost, stolen or destroyed, you should contact the exchange agent at the address listed on the cover page of this document for further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. If you have questions, need assistance, or would like to receive additional copies of the prospectus or this letter of transmittal, you should contact the exchange agent at the address listed in the prospectus. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GUIDE THE
PAYER.--Social Security Numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer Identification Numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
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GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
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1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds, the
first individual on the account(1)
3. Custodian account of a minor (Uniform Gift to Minors The minor(2)
Act)
4. a. The usual revocable savings trust account (grantor The grantor-trustee(1)
is also trustee)
b. So-called trust account that is not a legal or valid The actual owner(1)
trust under State law
5. Sole proprietorship account The owner(3)
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GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
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6. A valid trust, estate, or pension trust The legal entity (Do not furnish the identifying number of
the personal representative or trustee unless the legal
entity itself is not designated in the account title.)(4)
7. Corporate account The corporation
8. Religious, charitable, or education organization The organization
account
9. Partnership The partnership
10. Association, club or other tax exempt organization The organization
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture in the name The public entity
of a of a public entity (such as a State or local
government, school district, or prison) that receives
agricultural program payments
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(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Show the name of the owner. You may also enter your business name. You may use your Social Security Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a Taxpayer Identification Number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a), an individual retirement plan, or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2).
- The United States or any agency or instrumentality thereof, a State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities required to be registered in the United States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A futures commissions merchant registered with the Commodity Futures Trading Commission.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
- A person registered under the Investment Advisors Act of 1940 who regularly acts as a broker.
Payments of dividends not generally subject to backup withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in money.
- Payments made by certain foreign organizations.
- Payments described in Section 404(k) made by an employee stock ownership plan.
Payments of interest not generally subject to backup withholding include the following:
- Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct Taxpayer Identification Number to the payer.
- Payments of tax-exempt interest (including tax-exempt interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend, interest, or other payments to give Taxpayer Identification Numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold from taxable interest, dividend, and certain other payments to a payee who does not furnish a Taxpayer Identification Number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your Taxpayer Identification Number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.
(DO NOT WRITE IN SPACE BELOW)
CERTIFICATE OUTSTANDING NOTES OUTSTANDING NOTES
SURRENDERED TENDERED ACCEPTED
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Delivery Prepared by:
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Checked by:
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Date:
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Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
10% SENIOR NOTES DUE 2009
OF
NMHG HOLDING CO.
As set forth in the prospectus dated , 2002 (the "prospectus"), of NMHG Holding Co. and in the letter of transmittal, this form or one substantially similar must be used to accept NMHG's offer to exchange all of its outstanding 10% Senior Notes due 2009 (the "Outstanding Notes") for its 10% Senior Notes due 2009, which have been registered under the Securities Act of 1933, if certificates for the Outstanding Notes are not immediately available or if the Outstanding Notes, the letter of transmittal or any other required documents cannot be delivered to the exchange agent, or the procedure for book-entry transfer cannot be completed, prior to 5:00 p.m., New York City time, on the Expiration Date (as defined below). This form may be delivered by an Eligible Institution by hand or transmitted by facsimile transmission, overnight courier or mail to the exchange agent as indicated below.
Deliver to:
U.S. BANK NATIONAL ASSOCIATION,
EXCHANGE AGENT
U.S. Bank Trust Center Facsimile Transmission Number:
180 East Fifth Street 2nd Floor (For Eligible Institutions
St. Paul, MN 55101 Only)
Attention: Corporate Trust Services (651) 244-0711
Confirm Receipt of Facsimile
by Telephone
(651) 244-8677
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DELIVERY OF THIS NOTICE TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the letter of transmittal to be used to tender Outstanding Notes is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the letter of transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to NMHG Holding Co., upon the terms and subject to the conditions set forth in the prospectus and the letter of transmittal (which together constitute the "Exchange Offer"), receipt of which is hereby acknowledged, Outstanding Notes pursuant to guaranteed delivery procedures set forth in Instruction 1 of the letter of transmittal.
The undersigned understands that tenders of Outstanding Notes will be accepted only in principal amounts equal to $1,000 or integral multiples thereof. The undersigned understands that tenders of Outstanding Notes pursuant to the Exchange Offer may be withdrawn only in accordance with the procedures set forth in "The Exchange Offer -- Withdrawal of Tenders" section of the prospectus.
All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death, incapacity or dissolution of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned.
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
Certificate No(s). for Outstanding Notes (if Principal Amount of Outstanding Notes
available)
-------------------------------------------- --------------------------------------------
Principal Amount of Outstanding Notes Signature(s)
Tendered
-------------------------------------------- --------------------------------------------
Dated: If Outstanding Notes will be delivered by
book-entry transfer at the Depository Trust
Company, Depository Account No.:
-------------------------------------------- --------------------------------------------
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This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Outstanding Notes exactly as its (their) name(s) appear on certificates of Outstanding Notes or on a security position listing as the owner of Outstanding Notes, or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
------------------------------------------------------------
------------------------------------------------------------
Capacity:
------------------------------------------------------------
------------------------------------------------------------
Address(es):
------------------------------------------------------------
------------------------------------------------------------
Area Code and Telephone No.:
------------------------------------------------------------
------------------------------------------------------------
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GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934 (the "Exchange Act"), hereby
(a) represents that the above named person(s) "own(s)" the Outstanding Notes to be tendered within the meaning of Rule 14e-4 under the Exchange Act,
(b) represents that such tender of Outstanding Notes complies with Rule 14e-4 under the Exchange Act, and
(c) guarantees that delivery to the exchange agent of certificates for the Outstanding Notes to be tendered, proper form for transfer (or confirmation of the book-entry transfer of such Outstanding Notes into the exchange agent's account at The Depository Trust Company, pursuant to the procedures for book-entry transfer set forth in the prospectus), with delivery of a properly completed and duly executed (or manually signed facsimile) letter of transmittal with any required signatures and any other required documents, will be received by the exchange agent at one of its addresses set forth above within three trading days after the Expiration Date.
I HEREBY ACKNOWLEDGE THAT I MUST DELIVER THE LETTER OF TRANSMITTAL AND OUTSTANDING NOTES TO BE TENDERED TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD SET FORTH AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO ME.
--------------------------------------------- ---------------------------------------------
Name of Firm Authorized Signature
--------------------------------------------- ---------------------------------------------
Address Title
Name:
--------------------------------------------- ---------------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No.: ---------------- Dated: -------------------------------------
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NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS FORM; OUTSTANDING NOTES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE
EXCHANGE AGENT WITHIN THREE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER THE
EXPIRATION DATE.
Exhibit 99.3
NMHG HOLDING CO.
EXCHANGE OF ALL OUTSTANDING
10% SENIOR NOTES DUE 2009
FOR
10% SENIOR NOTES DUE 2009
To Our Clients:
We are enclosing herewith a prospectus, dated , 2002, of NMHG Holding Co., and the accompanying letter of transmittal that together constitute the offer by NMHG (the "Exchange Offer"), to exchange its 10% Senior Notes due 2009 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), for a like principal amount of its issued and outstanding 10% Senior Notes due 2009 (the "Outstanding Notes"), upon the terms and subject to the conditions set forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Outstanding Notes being tendered.
We are the holder of record of Outstanding Notes held by us for your own account. A tender of such Outstanding Notes can be made only by us as the record holder and pursuant to your instructions. The letter of transmittal is furnished to you for your information only and cannot be used by you to tender Outstanding Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the Outstanding Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. We also request that you confirm that we may, on your behalf, make the representations contained in the letter of transmittal.
Pursuant to the letter of transmittal, each holder of Outstanding Notes will represent to NMHG that:
(i) any Exchange Notes that the holder will acquire in exchange for Outstanding Notes that the holder has tendered will be acquired in the ordinary course of business of the holder,
(ii) the holder has not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of any Exchange Notes issued to the holder, and
(iii) the holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of NMHG Holding Co.
If the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. However, by this acknowledgement and by delivering a prospectus, the broker-dealer will not be deemed to admit that it is an "underwriter" under the meaning of the Securities Act.
Please return your instructions to us in the enclosed envelope within ample time to permit us to submit a tender on your behalf prior to the Expiration Date.
INSTRUCTION TO
BOOK ENTRY TRANSFER PARTICIPANT
To Participant of the DTC:
The undersigned hereby acknowledges receipt of the prospectus, dated , 2002 (the "prospectus") of NMHG Holding Co., and the accompanying letter of transmittal, that together constitute NMHG's offer (the "Exchange Offer") to exchange its 10% Senior Notes due 2009 (the "Exchange Notes"), for all of its outstanding 10% Senior Notes due 2009 (the "Outstanding Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the prospectus or the letter of transmittal.
This will instruct you, the DTC participant, as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned.
The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (FILL IN AMOUNT):
$ ____________ of the 10% Senior Notes due 2009.
With respect to the Exchange Offer, we hereby instruct you (CHECK
APPROPRIATE BOX):
[ ] TO TENDER the following amount of Outstanding Notes you hold for our
account
(INSERT PRINCIPAL AMOUNT OF OUTSTANDING NOTES TO BE TENDERED, IF ANY):
$ ____________ .
[ ] NOT TO TENDER any Outstanding Notes you hold for our account.
If we instruct you to tender the Outstanding Notes held by you for our account, it is understood that you are authorized to make, on behalf of us (and, by signing below, we hereby make to you), the representations contained in the letter of transmittal that are to be made with respect to us as a beneficial owner, including, but not limited to, the representations, that:
(i) any Exchange Notes that the holder will acquire in exchange for Outstanding Notes that the holder has tendered will be acquired in the ordinary course of business of the holder,
(ii) the holder has not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of any Exchange Notes issued to the holder, and
(iii) the holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of NMHG Holding Co.
If we are a broker-dealer that will receive Exchange Notes for our own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, we acknowledge that we will deliver a prospectus in connection with any resale of the Exchange Notes. However, by this acknowledgement and by delivering a prospectus, we are not be deemed to admit that we are an "underwriter" under the meaning of the Securities Act.
Exhibit 99.4
NMHG HOLDING CO.
LETTER TO
DEPOSITORY TRUST COMPANY PARTICIPANTS
EXCHANGE OF ALL OUTSTANDING
10% SENIOR NOTES DUE 2009
FOR
10% SENIOR NOTES DUE 2009
OUTSTANDING NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
To Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer by NMHG Holding Co., to exchange its 10% Senior Notes due 2009 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), for a like principal amount of its issued and outstanding 10% Senior Notes due 2009 (the "Outstanding Notes"), upon the terms and subject to the conditions set forth in NMHG's prospectus, dated , 2002, and the related letter of transmittal (which together constitute the "Exchange Offer").
Enclosed are copies of the following documents:
1. Prospectus, dated , 2002;
2. Letter of transmittal (together with accompanying Substitute Form W-9 Guidelines);
3. Notice of guaranteed delivery; and
4. Letter that may be sent to your clients for whose account you hold Outstanding Notes in your name or in the name of your nominee, with space provided for obtaining such client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Outstanding Notes being tendered.
Pursuant to the letter of transmittal, each holder of Outstanding Notes will represent to NMHG that:
(i) any Exchange Notes that the holder will acquire in exchange for Outstanding Notes that the holder has tendered will be acquired in the ordinary course of business of the holder,
(ii) the holder has not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of any Exchange Notes issued to the holder, and
(iii) the holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of NMHG Holding Co.
If the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. However, by this acknowledgement and by delivering a prospectus, the broker-dealer will not be deemed to admit that it is an "underwriter" under the meaning of the Securities Act.
The enclosed letter to clients contains an authorization by the beneficial owners of the Outstanding Notes for you to make the foregoing representations.
NMHG will not pay any fee or commission to any broker or dealer to any other persons (other than the Exchange Agent) in connection with the solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer. NMHG will pay or cause to be paid any transfer taxes payable on the transfer of Outstanding Notes to it, except as otherwise provided in Instruction 6 of the enclosed letter of transmittal.
Additional copies of the enclosed material may be obtained from the undersigned
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION