SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 1996
OSHKOSH TRUCK CORPORATION

(Exact name of registrant as specified in its charter)

     Wisconsin                0-13886                     39-0520270
------------------       ------------------            ------------------
(State or other               (Commission              (I.R.S. Employer
jurisdiction of               File Number)             Identification No.)
incorporation)

2307 Oregon Street, P. O. Box 2566, Oshkosh, Wisconsin           54903
------------------------------------------------------      -------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including
area code:                                            (414) 235-9151
                                                  ----------------------

                         NOT APPLICABLE
       -------------------------------------------------------------
       (Former name or former address, if changed since last report.)	

Item 2 Acquisition or Disposition of Assets
On September 18, 1996, Oshkosh Truck Corporation (Oshkosh) acquired all of the issued and outstanding stock of Pierce Manufacturing Inc. (Pierce) pursuant to a Stock Purchase Agreement dated August 7, 1996. The previous shareholders included The Northwestern Mutual Life Insurance Company and affiliates which controlled 51.4% of the outstanding stock and the remainder was owned or controlled by the senior management and directors of Pierce. The transaction encompassed all of the assets, liabilities and the ongoing business of Pierce.
Pierce is a leading U.S. fire truck manufacturer and offers a broad array of specialty fire apparatus including custom and commercial pumpers, aerial units, and rescue trucks. Oshkosh intends to continue to operate Pierce as a fire truck manufacturer. A total of 1,200 employees are located at Pierce's facilities near Appleton, Wisconsin. Pierce will continue to operate under its own name as a wholly owned subsidiary of Oshkosh.
The purchase price, established by a competitive bid process set by the sellers, totaled $158 million, payable in cash at the date of the closing of September 18, 1996. As of the date of the acquisition, Pierce had cash of approximately $4 million and no outstanding debt.
No material relationship exists between the shareholders of Seller and shareholders of the Registrant or any of their affiliates, any director or officer of Seller and the Registrant or any associate of any such director or officer.
The acquisition was financed by a $200 million bank credit facility syndicated by Firstar Bank Milwaukee, N.A., as agent. The facility consists of a $150 million term loan and a $50 million revolving credit facility for the continuing working capital requirements of Oshkosh.
- Item 7 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of Pierce Manufacturing Inc. are included as follows:
- As of October 31, 1995 and 1994 and for the years ended October 31, 1995, 1994 and 1993.
- Report of Independent Public Accountants
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Shareholders' Equity
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements
- As of July 31, 1996 and 1995 and for the nine month periods ended July 31, 1996 and 1995.
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Cash Flow
- Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
It is anticipated that Pro Forma Financial Statements for the periods specified in Rules 11-01 and 11-02 of Regulation S-X will be filed not later than 60 days after the date this report on Form 8-K must be filed.
(c) Exhibits
Reference number per
item 601 of Regulation
S-K
2.1 Stock Purchase Agreement by and among Pierce Manufacturing Inc., the shareholders of Pierce Manufacturing Inc., and Oshkosh Truck Corporation dated August 7, 1996.
2.2 First Amendment to Stock Purchase Agreement by and among Pierce Manufacturing Inc., the shareholders of Pierce Manufacturing Inc., and Oshkosh Truck Corporation dated September 18, 1996.
4 Credit Agreement dated as of September 18, 1996 among Oshkosh Truck Corporation, and certain lenders with Firstar Bank Milwaukee, N.A., as Agent.
23 Consent of Arthur Andersen LLP

PIERCE MANUFACTURING INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 1995, 1994 AND 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Pierce Manufacturing Inc.:
We have audited the accompanying consolidated balance sheets of Pierce Manufacturing Inc. (a Wisconsin corporation) and subsidiaries as of October 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended October 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pierce Manufacturing Inc. and subsidiaries as of October 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
December 8, 1995.

PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993

                                  1995           1994           1993

SALES                         $179,998,000    $168,521,000   $172,212,000

COST OF SALES                  152,343,000     146,032,000    144,796,000
                               -----------     -----------    -----------
  Gross profit                  27,655,000      22,489,000     27,416,000

SELLING AND ADMINISTRATIVE
  EXPENSES                      15,356,000      14,764,000     14,288,000
                               -----------     -----------    -----------
  Income from operations        12,299,000       7,725,000     13,128,000

OTHER (INCOME) EXPENSE:

  Interest expense               1,753,000       2,666,000      3,018,000
  Interest income                 (336,000)       (150,000)      (417,000)
  Other income, net                 (7,000)         (2,000)        (3,000)
                               -----------     -----------    -----------
  Other expense, net             1,410,000       2,514,000      2,598,000
                               -----------     -----------    -----------
  Income before taxes and
    extraordinary item          10,889,000       5,211,000     10,530,000

PROVISION FOR INCOME TAXES       4,201,000       2,075,000      4,189,000
                               -----------     -----------   ------------
  Income before
    extraordinary item           6,688,000       3,136,000      6,341,000

EXTRAORDINARY ITEM:

  Early extinguishment of
   debt (less related income
   tax benefit of $241,000)        377,000             -               -
                                ----------     -----------    -----------
          Net income            $6,311,000      $3,136,000     $6,341,000
                                 =========       =========      =========	

The accompanying notes to consolidated financial statements are an integral part of these statements.

PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 1995 AND 1994
1995 1994
ASSETS
CURRENT ASSETS:

  Cash and cash equivalents                $1,987,000     $1,669,000
  Accounts receivable, less allowance for
   doubtful accounts of $363,000 and
   $324,000, respectively                   7,747,000     14,064,000
  Inventories                              27,966,000     27,758,000
  Prepaid expenses and advances               969,000        646,000
  Income taxes receivable                     201,000              -
  Future tax benefits                         493,000        878,000
                                           ----------     ----------
   Total current assets                    39,363,000     45,015,000

PROPERTY, PLANT AND EQUIPMENT:
  Land                                      1,674,000      1,674,000
  Buildings                                13,660,000     13,584,000
  Machinery and equipment                  23,001,000     21,634,000
                                           ----------     ----------
                                           38,335,000     36,892,000
  Less- Accumulated depreciation          (17,757,000)   (14,969,000)
                                          -----------    -----------
   Net property, plant and equipment       20,578,000     21,923,000

GOODWILL                                    4,467,000      4,731,000

OTHER ASSETS                                1,305,000      1,078,000
                                           ----------     ----------

                                          $65,713,000    $72,747,000
                                          ===========    ===========
   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                         $8,957,000     $8,090,000
  Advances from customers                  25,294,000     21,456,000
  Payroll-related obligations               5,137,000      4,494,000
  Accrued warranty expense                  1,936,000      3,453,000
  Accrued liabilities                       1,424,000      1,558,000
  Income taxes payable                             -          40,000
                                           ----------     ----------
Total current liabilities                  42,748,000     39,091,000

LONG-TERM DEBT                                     -      16,902,000

DEFERRED INCOME TAXES                       2,021,000      1,938,000

SHAREHOLDERS' EQUITY:
  Common stock ($.05 par value, 442,000
   shares authorized, 408,852 and 410,806
   shares issued and outstanding,
   respectively)                               21,000         21,000
  Additional paid-in capital                9,564,000      9,620,000
  Retained earnings                        11,359,000      5,175,000
                                          -----------    -----------
Total shareholders' equity                 20,944,000     14,816,000
                                           ----------     ----------
                                          $65,713,000    $72,747,000
                                           ==========     ==========	

The accompanying notes to consolidated financial statements are an integral part of these balance sheets.

                         PIERCE MANUFACTURING INC.

              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

            FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993

                                                               Additional Paid-
                                                                  in Capital                               Total
                                      Common Stock          Common                       Retained      Shareholders'
                                  Shares       Amount        Stock        Warrants       Earnings         Equity

BALANCE, October 31, 1992           258,181     $13,000    $4,238,000      $1,522,000    $18,481,000     $24,254,000

  Issuance of common stock            3,908           -       150,000               -              -         150,000

  Exercise of warrants              150,671       8,000     5,281,000      (1,522,000)             -       3,767,000

  Net income                              -           -             -               -      6,341,000       6,341,000

  Dividends declared                      -           -             -               -    (22,650,000)    (22,650,000)
                                   --------    --------     ---------       ---------     ----------      ----------
BALANCE, October 31, 1993           412,760      21,000     9,669,000               -      2,172,000      11,862,000

  Repurchase of common stock         (1,954)          -       (49,000)              -       (133,000)       (182,000)

  Net income                              -           -             -               -      3,136,000       3,136,000
                                   --------   ---------    ----------       ---------      ---------     -----------
BALANCE, October 31, 1994           410,806      21,000     9,620,000               -      5,175,000      14,816,000

  Repurchase of common stock         (1,954)          -       (56,000)              -       (127,000)       (183,000)

  Net income                              -           -             -               -      6,311,000       6,311,000
                                  ---------  ----------   -----------       ---------     ----------      ----------
BALANCE, October 31, 1995           408,852     $21,000    $9,564,000    $          -    $11,359,000     $20,944,000
                                  =========   =========    ==========       =========     ==========      ==========	

The accompanying notes to consolidated financial statements are an integral part of these statements.

                          PIERCE MANUFACTURING INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

             FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993

                                                1995            1994           1993

 CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                 $6,311,000     $3,136,000     $6,341,000
   Adjustments to reconcile net income to
     net cash provided by operating
     activities-
      Depreciation and amortization-
        Property, plant and equipment          2,866,000      3,409,000      2,847,000
        Goodwill and other                       682,000        492,000        473,000
      Loss on disposal of property, plant
       and equipment                                   -         35,000              -
      Deferred income taxes                      467,000       (773,000)      (347,000)
      Changes in assets and liabilities-
        Accounts receivable                    6,317,000     (6,844,000)       982,000
        Inventories                             (208,000)      (855,000)     3,965,000
        Prepaid expenses and advances           (323,000)      (199,000)      (153,000)
        Accounts payable                         867,000       (197,000)     2,410,000
        Advances from customers                3,838,000      4,868,000     (9,365,000)
        Accrued liabilities                     (962,000)     2,385,000              -
        Other                                   (530,000)    (1,439,000)       (45,000)
                                             -----------    -----------    -----------
        Net cash provided by operating
          activities                          19,325,000      4,018,000      7,108,000
                                             -----------    -----------    -----------
 CASH FLOWS FROM INVESTING ACTIVITIES:

   Capital expenditures                       (1,524,000)    (2,104,000)    (7,484,000)
                                            ------------   ------------   ------------
 CASH FLOWS FROM FINANCING ACTIVITIES:

   Principal payments on long-term debt      (17,300,000)    (4,400,000)    (8,800,000)
   Borrowings of long-term debt                        -      2,700,000      8,800,000
   Repurchase of common stock                   (183,000)      (182,000)             -
   Proceeds from exercise of warrants                  -              -      3,767,000
   Proceeds from issuance of common stock              -              -        150,000
   Payment of dividend                                 -              -    (22,650,000)
                                             -----------     ----------   ------------
        Net cash used by financing
          activities                         (17,483,000)    (1,882,000)   (18,733,000)
                                             -----------    -----------   ------------

INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                   318,000         32,000    (19,109,000)

CASH AND CASH EQUIVALENTS, beginning of
   year                                        1,669,000      1,637,000     20,746,000
                                             -----------    -----------    -----------

 CASH AND CASH EQUIVALENTS, end
   of year                                    $1,987,000     $1,669,000     $1,637,000
                                               =========      =========      =========
 SUPPLEMENTAL DISCLOSURES:
   Cash payments for-
     Interest                                   $745,000     $1,922,000     $2,179,000
     Income taxes                              3,775,000      4,023,000      4,227,000	

The accompanying notes to consolidated financial statements are an integral part of these statements.

PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
(1) Nature of Business-
Pierce Manufacturing Inc. (the "Company") designs and manufactures fire and emergency vehicles for sale primarily to municipalities throughout the United States.
(2) Summary of Significant Accounting Policies-
(a) Principles of consolidation-
The consolidated financial statements as of October 31, 1995, 1994 and 1993, include the accounts of the Company, Dover Technologies, Inc. (an inactive marketing corporation) and Pierce Manufacturing International Inc. (a foreign sales corporation).
All intercompany transactions have been eliminated in consolidation.
(b) Cash and cash equivalents-
The Company considers cash and cash equivalents to be all cash and short-term investments with original maturities of 90 days or less.
(c) Property, plant and equipment-
Property, plant and equipment are stated at cost. Additions and improvements which extend the useful life of property and equipment since the date of acquisition are capitalized at their cost while repair and maintenance costs are expensed. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in results of operations.
Depreciation for financial reporting purposes is made on a straight-line basis over the following estimated useful lives:
Buildings 30 years Machinery and equipment 7 years
Depreciation expense included in the consolidated statements of income was $2,866,000, $3,409,000 and $2,847,000 for the years ended October 31, 1995, 1994 and 1993, respectively.
(d) Goodwill-
Goodwill is amortized using the straight-line method over 25 years.
(e) Product warranty-
The Company provides for the estimated cost of warranty work related to specific shipments. Amounts expensed related to continuing operations in 1995, 1994 and 1993 were $1,508,000, $3,702,000 and $1,878,000, respectively.
(f) Customer advances-
Customer advances represent amounts received from customers in advance of the completion of the truck. Certain of these advances bear interest to the customer. Interest rates on the advances are variable based on current lending rates. Interest expense included in the consolidated statements of income was $737,000, $518,000 and $409,000 for the years ended October 31, 1995, 1994 and 1993, respectively.
(g) Postretirement benefits other than pensions-
The Company does not provide health, life insurance or any related benefits to its retirees.
(h) Advertising costs-
All advertising costs are generally expensed when incurred. Advertising expense included in the consolidated statements of income was $357,000, $318,000 and $418,000 for the years ended October 31, 1995, 1994 and 1993, respectively.
(i) Income taxes-
Income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under this method, deferred income taxes are provided for temporary differences in the financial reporting and income tax bases of certain assets and liabilities at the tax rate expected to be in effect when the temporary differences reverse.
(j) Use of estimates-
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
(k) Reclassifications-
Certain reclassifications of prior year amounts have been made in order to conform to the current year presentation.
(3) Inventories-
Inventories are carried at the lower of cost or market. Cost is determined principally on the last-in, first-out (LIFO) method. Inventories consisted of the following:

                                               October 31,
                                            1995          1994
Current cost-

  Raw materials                           $6,057,000     $6,615,000
  Fabricated parts                           769,000      1,101,000
  Work-in-process and finished goods      24,730,000     23,317,000
                                          ----------     ----------
                                          31,556,000     31,033,000

Excess of current cost over LIFO cost     (3,590,000)    (3,275,000)
                                          ----------     ----------
     Net inventories                     $27,966,000    $27,758,000
                                          ==========     ==========	

(4) Long-Term Debt-
Long-term debt consists of the following:

                                          October 31,
                                        1995          1994

Revolving Credit Agreement, interest
  at prime plus .25%                 $      -        $2,700,000

Unsecured Senior Note payable to a
bank, interest at 6.47%, paid August
30, 1995                                    -         4,400,000

Unsecured Senior Subordinated Note,
interest at 12%, less unamortized
original discount of $398,000 at
October 31, 1994, paid March 20,
1995                                        -         9,802,000
                                     ----------      ----------
Total                                $      -       $16,902,000
                                     ==========      ==========	

On March 20, 1995, the Company paid the outstanding balance of the Unsecured Senior Subordinated Note which was due in equal amounts of $5,100,000 on August 31, 1996 and 1997. In connection with the early retirement of this debt, the Company recognized an extraordinary charge of $377,000 (net of tax) which included accelerated amortization of original issue discount and a premium paid to the lender for the early payment of principal.
The Company has a $15,000,000 Revolving Credit Agreement (the "Agreement") with a bank, which expires on January 31, 1998. Borrowings under the Agreement bear interest at the prime rate plus .25% (9.0% at October 31, 1995). As shown above, there were no borrowings under the Agreement at October 31, 1995. There are no compensating balance requirements.
The terms of the Agreement require the Company, among other things, to maintain certain financial ratios and balances, primarily net worth and current ratio. In addition, this Agreement includes covenants restricting further indebtedness, capital expenditures and the payment of dividends. The Company has met all of the requirements of the Agreement, as of October 31, 1995.
(5) Employee Benefit Plans-
The Company sponsors a defined benefit pension plan covering substantially all employees. Employee benefits are based upon years of credited service. Pension expense for 1995, 1994 and 1993 is comprised of the following:

                                      1995        1994        1993

Service cost                         $163,000    $163,000    $165,000
Interest cost                         186,000     161,000     133,000
Actual return on plan assets         (362,000)    (77,000)   (132,000)
Net amortization and deferral         160,000    (105,000)    (19,000)
                                     --------    --------    --------
     Net pension expense             $147,000    $142,000    $147,000
                                     ========    ========    ========	

The following table sets forth the funded status of the Company's pension plan and the amount recognized in the Company's consolidated balance sheets as of October 31:

                                             1995            1994
Projected benefit obligation:
Vested benefits                            $(2,702,000)    $(2,351,000)

Nonvested benefits                             (25,000)        (57,000)
                                            ----------      ----------
Projected benefit obligation                (2,727,000)     (2,408,000)

Plan assets at fair value                    3,120,000       2,531,000
                                             ---------       ---------
Plan assets in excess of projected
  benefit obligation                           393,000         123,000
Unrecognized prior service cost                210,000         223,000
Unrecognized net losses                        705,000         811,000
Unrecognized transition asset                 (377,000)       (414,000)
                                              --------        --------
Prepaid pension asset                         $931,000        $743,000
                                               =======         =======	

Assumptions used in determining the funded status of the pension plan for the 1995, 1994 and 1993 plan years were:

                                       1995    1994     1993

Discount rate                          7.75%    7.75%   7.75%

Long-term rate of return               7.75%    7.75%   8.00%	

The Company makes a contribution to the qualified plan each year, at least equal to the minimum required contribution as defined by the Employee Retirement Income Security Act of 1974. The unrecognized net asset arising from the transition to Financial Accounting Standards Board Statement No. 87, is being amortized through 2003. Plan assets consist primarily of common trust funds.
The Company makes a discretionary profit sharing payment to substantially all employees each year. The Company recorded a provision of $458,000, $350,000 and $615,000 in 1995, 1994 and 1993, respectively.
The Company also sponsors a retirement savings plan in which all employees may voluntarily elect to participate. Under this plan, the Company matches a portion of the amounts contributed by employees. The Company recorded expense related to this plan of $325,000, $315,000 and $298,000 in 1995, 1994 and 1993, respectively.
(6) Income Taxes-
The provision for income taxes consisted of the following for the years ended October 31, 1995, 1994 and 1993:

                                1995          1994          1993
Current:
   Federal                    $3,003,000    $2,265,000     $3,596,000
   State                         731,000       583,000        940,000
                               ---------     ---------
                               3,734,000     2,848,000      4,536,000
Deferred                         467,000      (773,000)      (347,000)
                               ---------     ---------      ---------
     Total income tax
        provision             $4,201,000    $2,075,000     $4,189,000
                               =========     =========      =========	

The reasons for the differences between the income tax provision and the amount computed by applying the Federal statutory income tax rate to the book net income before taxes are as follows:

                                    1995          1994           1993

Tax provision at Federal          $3,702,000     $1,772,000   $3,580,000
 statutory rate
State income taxes net of            462,000        381,000      620,000
 Federal taxes
Other                                 37,000        (78,000)     (11,000)
                                   ---------      ---------    ---------
                                  $4,201,000     $2,075,000   $4,189,000
                                   =========      =========    =========	

Net current future tax benefits arise primarily from accrued liabilities which are not currently deductible for income tax purposes. The net current future tax benefits at October 31, 1995 and 1994, are comprised of the following:

                                           1995          1994
Current deferred taxes-
   Inventory valuation                    $(804,000)    $(967,000)
   Warranty claims                          755,000     1,347,000
   Accrued vacation                         660,000       764,000
   Pension adjustment                      (363,000)     (290,000)
   Accrued health claims                   (171,000)      (92,000)
   Other                                    416,000       116,000
                                            -------       -------
     Net future tax benefits               $493,000      $878,000
                                            =======       =======	

Net noncurrent deferred income tax liabilities arise primarily from differences in the bases of property, plant and equipment. The net deferred tax liabilities at October 31, 1995 and 1994, are comprised of the following:

                                              1995            1994

Noncurrent deferred taxes-
Depreciation                                $(2,071,000)    $(2,006,000)
Other                                            50,000          68,000
                                             ----------      ----------
Net noncurrent deferred tax
  liabilities                               $(2,021,000)    $(1,938,000)
                                             ==========      ==========	

The Company did not record any valuation allowances against deferred tax assets at October 31, 1995 or 1994.
(7) Commitments and Contingencies-
The Company has guaranteed certain customers' debt obligations under deferred payment contracts and lease purchase agreements. The Company is contingently liable for $6,155,000 and $6,617,000 as of October 31, 1995 and 1994, respectively, under these guarantees.
Under the terms of a Shareholders' agreement, after the expiration of the ten-year period commencing on September 16, 1987, each management shareholder has the right from time to time, solely at his option, to require the Company to purchase all or any portion of his shares, subject to specific terms in the agreement. The purchase price will be equal to the value per share as determined pursuant to an appraisal conducted in accordance with the appraisal procedures set forth in the agreement on April 30 of the fiscal year in which such notice was delivered. Under the same agreement, management and nonmanagement shareholders have the right to transfer all or a portion of their stock in accordance with specific terms of the agreement.
(8) Stock Appreciation Rights Plan-
The Company sponsors the Pierce Manufacturing Inc. Stock Appreciation Rights Plan. Key executives of the Company, as determined by the Compensation Committee of the Board, are eligible to receive appreciation rights at the beginning of each performance cycle. At the end of the performance cycle, participants will receive an award for each right granted in the form of cash equal to the difference in the formula value of one share of common stock at the end of the performance cycle and the formula value of one share of common stock at the beginning of the performance cycle. Each performance cycle is five years.
At October 31, 1995, the following rights were outstanding:

                         Number of
     Award Date           Rights      Award Price

November 1, 1993           1,344            $27.50

November 1, 1994           1,638            $50.39	

The formula value of one share of common stock at October 31, 1995 is $121.33. At October 31, 1995, the Company had $119,000 reserved related to the outstanding rights.
(9) Related Party Transactions-
On December 4, 1992, the holder of the original Unsecured Senior Note and the Unsecured Subordinated Note (the "Holder") exercised the detachable warrants related to the issuance of the Unsecured Senior Subordinated Note. The warrants were exercised on 150,671 shares at $25 per share. As of October 31, 1995, 1994 and 1993, respectively, the Holder and its subsidiary together own 210,671 shares, or approximately 51% of the common stock of the Company. In fiscal 1993, subsequent to the exercise of the warrants, a dividend totaling $22,650,000 was declared and paid to all common shareholders. No dividends were paid during fiscal 1995 or 1994. During fiscal 1995, 1994 and 1993, the Company incurred $473,000, $1,224,000 and $1,224,000 of interest expense related to the Unsecured Senior Subordinated Note payable to the Holder.

PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(Unaudited)

                                          Nine Months Ended July 31,
                                               1996            1995

SALES                                     $144,276,000     $129,303,000

COST OF SALES                              121,102,000      110,379,000
                                           -----------      -----------
    Gross profit                            23,174,000       18,924,000

SELLING AND ADMINISTRATIVE
 EXPENSES                                   17,343,000       11,640,000
                                           -----------      -----------
 Income from operations                      5,831,000        7,284,000

OTHER (INCOME) EXPENSE:
 Interest expense                              865,000        1,352,000

 Interest income                              (549,000)        (189,000)

 Other expense                                 289,000           11,000
                                           -----------      -----------
    Other expense, net                         605,000        1,174,000
                                           -----------      -----------
    Income before taxes and extraordinary
      item                                   5,226,000        6,110,000

PROVISION FOR INCOME TAXES                   2,091,000        2,548,000
                                           -----------      -----------
    Income before extraordinary item         3,135,000        3,562,000

EXTRAORDINARY ITEM:
 Early extinguishment of debt (less
  related income tax benefit of $241,000)           -           377,000

    Net income                            $  3,135,000     $  3,185,000
                                           ===========      ===========	

The accompanying notes are an integral part of these statements.

PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND OCTOBER 31, 1995

    ASSETS                                (Unaudited)
                                         JULY 31,         OCTOBER 31,
CURRENT ASSETS:                           1996                1995

  Cash and cash equivalents           $ 8,657,000         $ 1,987,000

  Accounts receivable, net              8,708,000           7,747,000

  Inventories                          31,253,000          27,966,000

  Other current assets                  4,248,000           1,663,000
                                       ----------          ----------
     Total current assets              52,866,000          39,363,000

PROPERTY, PLANT AND EQUIPMENT,
  NET                                  19,754,000          20,578,000

GOODWILL                                4,269,000           4,467,000

OTHER ASSETS                            1,063,000           1,305,000
                                       ----------          ----------
                                      $77,952,000         $65,713,000
                                       ==========          ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                    $ 9,367,000         $ 8,957,000

  Advances from customers              28,130,000          25,294,000

  Payroll-related obligations          10,464,000           5,137,000

  Accrued liabilities                   3,744,000           3,360,000
                                       ----------          ----------
     Total current liabilities         51,705,000          42,748,000

DEFERRED INCOME TAXES                   2,021,000           2,021,000

SHAREHOLDERS' EQUITY
  Common stock issued at $.05
     par value                             21,000              21,000

  Additional paid in capital            9,711,000           9,564,000

  Retained earnings                    14,494,000          11,359,000
                                       ----------          ----------
     Total shareholders' equity        24,226,000          20,944,000
                                       ----------          ----------
                                      $77,952,000         $65,713,000
                                       ==========          ==========	

The accompanying notes are an integral part of these balance sheets.

PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995

                                                  (Unaudited)
                                          Nine Months Ended July 31,
                                               1996            1995

NET CASH PROVIDED BY OPERATING ACTIVITIES   $7,954,000      $12,189,000

NET CASH FLOWS USED IN INVESTING
 ACTIVITIES:
 Capital expenditures                       (1,431,000)      (1,407,000)

NET CASH FLOWS PROVIDED BY (USED IN)
  FINANCING ACTIVITIES:
 Principal payments of long term debt               -       (11,229,000)

 Repurchase of common stock                         -          (183,000)

 Proceeds from issuance of common stock        147,000              -
                                           -----------      -----------
 Net cash provided by (used in) financing
  activities                                   147,000      (11,412,000)
                                           -----------      -----------

INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                 6,670,000         (630,000)

CASH AND CASH EQUIVALENTS at beginning
 of period                                   1,987,000        1,669,000
                                             ---------       ----------
CASH AND CASH EQUIVALENTS at end of
 period                                     $8,657,000      $ 1,039,000
                                             =========       ==========	

The accompanying notes are an integral part of these statements.

PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(1) General-
The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments necessary to present a fair statement of the results for the periods reported, subject to normal year-end audit adjustments, none of which is material. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the audited financial statements as of October 31, 1995, 1994 and 1993, and the notes thereto included elsewhere in this Filing.
(2) Inventories-
The components of inventories at as of July 31, 1996, are as follows:

Current cost-
     Raw materials                          $6,463,000
     Fabricated parts                          847,000
     Work-in-process and finished goods     27,687,000
                                           -----------
                                            34,997,000

Excess current cost over LIFO cost          (3,744,000)
                                            ----------
Net inventories                            $31,253,000
                                            ==========	

(3) Selling and Administrative Expenses-
Selling and Administrative Expenses for the nine month period ended July 31, 1996 include provisions for retention bonuses of $4,014,000 and stock appreciation rights of $1,038,000 recorded in anticipation of the sale to Oshkosh Truck Corporation discussed in Note (4) below.
(4) Subsequent Event-
On September 18, 1996, all of the Company's outstanding common stock was acquired by Oshkosh Truck Corporation for $158 million in cash.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:     October 2, 1996

                              OSHKOSH TRUCK CORPORATION

                              By:  R. Eugene Goodson
                                   ----------------------------------
                                   R. Eugene Goodson
                                   Chairman and Chief Executive Officer

                              By:  Charles L. Szews
                                   ----------------------------------
                                   Charles L. Szews
                                   Vice President and Chief Financial
                                   Officer	

                               Exhibit Index

Exhibit No.         Description

     2.1       Stock Purchase Agreement by and among Pierce Manufacturing
               Inc., the shareholders of Pierce Manufacturing Inc., and
               Oshkosh Truck Corporation dated August 7, 1996.

     2.2       First Amendment to Stock Purchase Agreement by and among
               Pierce Manufacturing Inc., the shareholders of Pierce
               Manufacturing Inc., and Oshkosh Truck Corporation dated
               September 18, 1996.

     4         Credit Agreement dated as of September 18, 1996 among
               Oshkosh Truck Corporation, and certain lenders with Firstar
               Bank Milwaukee, N.A., as Agent.

     23        Consent of Arthur Andersen LLP	

STOCK PURCHASE AGREEMENT
dated August 7, 1996, among
PIERCE MANUFACTURING INC.,
THE SHAREHOLDERS OF PIERCE MANUFACTURING INC.,
and
OSHKOSH TRUCK CORPORATION

                             TABLE OF CONTENTS

                                                                      Page

ARTICLE I - Purchase and Sale of Stock  . . . . . . . . . . . . . . .    1
   1.1.    Purchase of Stock  . . . . . . . . . . . . . . . . . . . .    1
   1.2.    Purchase Price; Payment  . . . . . . . . . . . . . . . . .    1

ARTICLE II - Conditions Precedent to Closing  . . . . . . . . . . . .    2
   2.1.    Conditions Precedent to the Buyer's Obligation . . . . . .    2
   2.2.    Conditions Precedent to the Company's and the Sellers'
           Obligation . . . . . . . . . . . . . . . . . . . . . . . .    4

ARTICLE III - Closing . . . . . . . . . . . . . . . . . . . . . . . .    5
   3.1.    Time and Place of Closing  . . . . . . . . . . . . . . . .    5
   3.2.    Deliveries of the Buyer  . . . . . . . . . . . . . . . . .    5
   3.3.    Deliveries of the Company and the Sellers  . . . . . . . .    6

ARTICLE IV - Warranties and Representations of the Sellers  . . . . .    7
   4.1.    Individual Warranties and Representations of the Sellers .    7
           4.1.1.   Title to Shares . . . . . . . . . . . . . . . . .    7
           4.1.2.   Authority . . . . . . . . . . . . . . . . . . . .    7
           4.1.3.   Stockholder Agreements  . . . . . . . . . . . . .    9
   4.2.    Warranties and Representations of the Company  . . . . . .   10
           4.2.1.   Organization and Standing . . . . . . . . . . . .   10
           4.2.2.   Capitalization  . . . . . . . . . . . . . . . . .   10
           4.2.3.   Authorization; No Violations  . . . . . . . . . .   11
           4.2.4.   Litigation and Compliance with Laws . . . . . . .   12
           4.2.5.   Subsidiaries, Investments . . . . . . . . . . . .   13
           4.2.6.   Ownership and Use of Tangible Assets  . . . . . .   13
           4.2.7.   Patents, Trademarks, and Other Intellectual
                    Property. . . . . . . . . . . . . . . . . . . . .   15
           4.2.8.   Financial Statements  . . . . . . . . . . . . . .   15
           4.2.9.   Conduct Out of Ordinary Course  . . . . . . . . .   16
           4.2.10.  Taxes . . . . . . . . . . . . . . . . . . . . . .   17
           4.2.11.  Contracts and Other Agreements  . . . . . . . . .   18
           4.2.12.  Product Warranty and Product Liability  . . . . .   20
           4.2.13.  Employee Benefit Matters  . . . . . . . . . . . .   20
           4.2.14.  Labor Practices . . . . . . . . . . . . . . . . .   22
           4.2.15.  Brokers; Agents . . . . . . . . . . . . . . . . .   22
           4.2.16.  Permits and Licenses  . . . . . . . . . . . . . .   22
           4.2.17.  Major Customers . . . . . . . . . . . . . . . . .   23
           4.2.18.  Dealers and Other Agents  . . . . . . . . . . . .   23
           4.2.19.  Material Suppliers of Inventories . . . . . . . .   24
           4.2.20.  Insurance . . . . . . . . . . . . . . . . . . . .   24
           4.2.21.  Environmental Matters . . . . . . . . . . . . . .   25
           4.2.22.  Bank Accounts . . . . . . . . . . . . . . . . . .   27
           4.2.23.  Inventory . . . . . . . . . . . . . . . . . . . .   27
           4.2.24.  Accounts Receivable . . . . . . . . . . . . . . .   27
   4.3.    Warranties Survive Closing . . . . . . . . . . . . . . . .   27
   4.4.    Knowledge  . . . . . . . . . . . . . . . . . . . . . . . .   28

ARTICLE V - Warranties and Representations of the Buyer . . . . . . .   28
   5.1.    Warranties and Representations . . . . . . . . . . . . . .   28
           5.1.1.   Authority . . . . . . . . . . . . . . . . . . . .   28
           5.1.2.   Investment Representations  . . . . . . . . . . .   29
           5.1.3.   Brokers; Agents . . . . . . . . . . . . . . . . .   30
           5.1.4.   Guarantees  . . . . . . . . . . . . . . . . . . .   30
   5.2.    Warranties Survive Closing . . . . . . . . . . . . . . . .   30

ARTICLE VI - Covenants  . . . . . . . . . . . . . . . . . . . . . . .   30
   6.1.    Covenants of the Company.      . . . . . . . . . . . . . .   30
           6.1.1.   Access  . . . . . . . . . . . . . . . . . . . . .   30
           6.1.2.   Records . . . . . . . . . . . . . . . . . . . . .   31
           6.1.3.   Conduct of the Business of the Company and its
                    Subsidiaries  . . . . . . . . . . . . . . . . . .   31
           6.1.4.   Title Insurance . . . . . . . . . . . . . . . . .   33
           6.1.5.   Surveys . . . . . . . . . . . . . . . . . . . . .   33
           6.1.6.   Tax Matters . . . . . . . . . . . . . . . . . . .   34
           6.1.7.   Bonuses . . . . . . . . . . . . . . . . . . . . .   34
   6.2.    Covenants of the Sellers . . . . . . . . . . . . . . . . .   34
           6.2.1.   Solicitation  . . . . . . . . . . . . . . . . . .   34
           6.2.2.   Stock Transfer  . . . . . . . . . . . . . . . . .   34
           6.2.3.   Delivery of Documents . . . . . . . . . . . . . .   34
   6.3.    Mutual Covenants . . . . . . . . . . . . . . . . . . . . .   35
           6.3.1.   Cooperation . . . . . . . . . . . . . . . . . . .   35
           6.3.2.   Records . . . . . . . . . . . . . . . . . . . . .   35
           6.3.3.   Publicity . . . . . . . . . . . . . . . . . . . .   35
           6.3.4.   Execution of Additional Documents . . . . . . . .   36
           6.3.5.   Reasonable Efforts  . . . . . . . . . . . . . . .   36
   6.4.    Covenants of the Buyer . . . . . . . . . . . . . . . . . .   36
           6.4.1.   Severance Payments  . . . . . . . . . . . . . . .   36
           6.4.2.   Incentive Compensation Plan . . . . . . . . . . .   36
           6.4.3.   Other Benefits  . . . . . . . . . . . . . . . . .   37

ARTICLE VII - Disclosure Schedule . . . . . . . . . . . . . . . . . .   37
   7.1.    General  . . . . . . . . . . . . . . . . . . . . . . . . .   37
   7.2.    Updates to Disclosure Schedule . . . . . . . . . . . . . .   37

ARTICLE VIII - Non-Disclosure . . . . . . . . . . . . . . . . . . . .   38
   8.1.    Non-Disclosure of Confidential Information . . . . . . . .   38
   8.2.    Enforcement  . . . . . . . . . . . . . . . . . . . . . . .   38

ARTICLE IX - Indemnification  . . . . . . . . . . . . . . . . . . . .   39
   9.1.    Indemnification of the Buyer . . . . . . . . . . . . . . .   39
   9.2.    Indemnification of the Sellers . . . . . . . . . . . . . .   40
   9.3.    Procedure Relative to Indemnification  . . . . . . . . . .   40
   9.4.    Effect of Taxes, Other Benefits and Insurance  . . . . . .   42
   9.5.    Limits on Indemnification Claims . . . . . . . . . . . . .   42
           9.5.1.   Basket  . . . . . . . . . . . . . . . . . . . . .   42
           9.5.2.   Maximum Amount of Indemnification . . . . . . . .   42
   9.6.    Sole Remedy; Termination . . . . . . . . . . . . . . . . .   43
   9.7.    No Indemnification for Known Breaches of Representations and
           Warranties . . . . . . . . . . . . . . . . . . . . . . . .   43

ARTICLE X - Termination . . . . . . . . . . . . . . . . . . . . . . .   44
   10.1.   Termination  . . . . . . . . . . . . . . . . . . . . . . .   44
   10.2.   Effect of Termination  . . . . . . . . . . . . . . . . . .   44

ARTICLE XI - Miscellaneous  . . . . . . . . . . . . . . . . . . . . .   45
   11.1.   Expenses . . . . . . . . . . . . . . . . . . . . . . . . .   45
   11.2.   Notices  . . . . . . . . . . . . . . . . . . . . . . . . .   45
   11.3.   Entire Agreement . . . . . . . . . . . . . . . . . . . . .   46
   11.4.   Assignment . . . . . . . . . . . . . . . . . . . . . . . .   46
   11.5.   Binding Effect . . . . . . . . . . . . . . . . . . . . . .   47
   11.6.   Paragraph Headings . . . . . . . . . . . . . . . . . . . .   47
   11.7.   Severability . . . . . . . . . . . . . . . . . . . . . . .   47
   11.8.   Applicable Law . . . . . . . . . . . . . . . . . . . . . .   47
   11.9.   Counterparts . . . . . . . . . . . . . . . . . . . . . . .   47
   11.10.  Passage of Title . . . . . . . . . . . . . . . . . . . . .   47
   11.11.  Use of Terms . . . . . . . . . . . . . . . . . . . . . . .   47	

LIST OF SCHEDULES AND EXHIBITS*

Schedule 1          Schedule of Stock Ownership/Payment of Purchase Price

Schedule 2          Disclosure Schedule

Exhibit 6.1.7       Bonus Plan

Exhibit 6.3.3       Form of Announcement and Press Release Regarding Sale
                    of the Company

Exhibit 6.4.1       Management Employees With Six Month Severance

Exhibit 6.4.2       Incentive Compensation Plan	

* Such schedules and exhibits are not filed herewith. Oshkosh Truck Corporation agrees to furnish supplementally a copy of any such omitted schedule or exhibit to the Commission upon request.

STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of August 7, 1996, by and among PIERCE MANUFACTURING INC., a Wisconsin corporation (the "Company"), all of the SHAREHOLDERS OF THE COMPANY, each of which is listed on Schedule 1 attached hereto (individually a "Seller"; collectively, the "Sellers") and OSHKOSH TRUCK CORPORATION, a Wisconsin corporation (the "Buyer").
BACKGROUND
The Sellers own collectively all of the issued and outstanding shares of Five Cent ($.05) par value Common Stock (the "Common Stock") of the Company. The Sellers desire to sell to the Buyer, and the Buyer desires to purchase from the Sellers, all of the issued and outstanding shares of Common Stock, upon the terms and conditions set forth herein.
NOW, THEREFORE, the Buyer, the Sellers and the Company, in consideration of the mutual promises hereinafter set forth, do hereby promise and agree as follows:
ARTICLE I
Purchase and Sale of Stock
1.1. Purchase of Stock. Subject to the terms and conditions set forth in this Agreement, the Sellers shall sell to the Buyer, and the Buyer shall purchase from the Sellers at the Closing (as hereinafter defined), all of the issued and outstanding shares of capital stock of the Company, consisting of Four Hundred Ten Thousand Seventy-Nine (410,079) shares of Common Stock (collectively, the "Subject Shares"). The number and percentage of the Subject Shares to be transferred by each Seller shall be as set forth opposite such Seller's name on Schedule 1 attached hereto.
1.2. Purchase Price; Payment. The purchase price for the Subject Shares (the "Purchase Price") shall be Three Hundred Ninety-Two and 6,073/10,000 Dollars ($392.6073) per share for an aggregate amount of One Hundred Sixty-One Million Dollars ($161,000,000.00); provided, however, that the aggregate Purchase Price shall not change based on the issuance by the Company of shares pursuant to options, stock appreciation rights or other commitments which increase the number of Subject Shares prior to the Closing and provided, further, that the aggregate Purchase Price and the resulting proportionate per share amount shall be reduced by the aggregate After Tax Bonus Amount (as defined in Paragraph 6.1.7). At the Closing, the Buyer shall pay the Purchase Price by wire transfer of immediately available funds to the Sellers in the amounts and per the wire transfer instructions set forth on Schedule 1 attached hereto.
ARTICLE II
Conditions Precedent to Closing
2.1. Conditions Precedent to the Buyer's Obligation. The obligation of the Buyer to consummate the transactions contemplated herein is subject to the satisfaction as of the Closing of each of the following conditions:
(a) Each of the representations and warranties of the Sellers made in this Agreement and the statements contained in the Disclosure Schedule and Attachments thereto shall be true and correct in all material respects when made and on and as of the Closing Date (as hereinafter defined), as though made on and as of the Closing Date, except as amended by the Sellers prior to the Closing as provided in Article VII, below or by the terms of this Agreement or consented to in writing by the Buyer; the Company and the Sellers shall have performed in all material respects the respective covenants, agreements or obligations of the Company and the Sellers contained in this Agreement required to be performed on or prior to the Closing Date; and the Company and the Sellers shall have delivered to the Buyer a certificate dated as of the Closing Date and signed by the President on behalf of the Company, and by the Sellers confirming the foregoing. The statements in such certificate shall be a warranty of the Sellers for purposes of this Agreement, which warranty shall be subject to the provisions of Paragraphs 4.3 and 4.4, below.
(b) The Company or its ultimate parent entity, as the case may be, shall have filed, if required by law, proper pre-merger notification forms with the United States Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"), and the waiting period following the filing of proper pre-merger notification forms by the Buyer (or its ultimate parent entity) and the Company (or its ultimate parent entity) shall have expired, whether pursuant to early termination or by passage of time.
(c) All material consents, licenses, permits, authorizations or approvals from, filings with and notifications to any federal, state, local or other governmental or regulatory body required to be made or obtained by the Company and the Sellers in connection with the consummation of the transactions contemplated by this Agreement or necessary to operate the Company which are specifically noted in the Disclosure Schedule (as hereinafter defined) shall have been made or obtained including, without limitation, requirements under the HSR Act as contemplated by Paragraph 2.1(b), above. All material approvals, consents and waivers of third parties required to be obtained by the Company and the Sellers (as specifically noted in the Disclosure Sched- ule in connection with the consummation of such transactions) shall have been obtained.
(d) No injunction or order of any court or administrative agency of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the consummation of the transactions contemplated by this Agreement nor shall any action, suit or proceeding requesting such an injunction or order have been commenced or threatened by a party other than the Buyer.
(e) The Company and the Sellers shall have delivered to the Buyer the documents, certificates, agreements and instruments required under Paragraph 3.3, below.
(f) The Buyer shall have obtained good and valid title insurance policies or, in final form, irrevocable title insurance commitments serving as the title insurance policies, dated as of the Closing Date, conforming to the specifications set forth in Paragraph 6.1.4 hereof, and surveys conforming to the specifications set forth in Paragraph 6.1.5 hereof.
(g) Since the date of the Interim Balance Sheet (as defined in Paragraph 4.2.8) no event or circumstance shall have occurred or be in effect which has or is reasonably likely to have a Material Adverse Effect (as defined in Paragraph 4.2.3); provided, however, that for purposes of this clause (g), any change in management or other employees of the Company will not be deemed to have or be reasonably likely to result in a Material Adverse Effect.
In the event that any of the foregoing conditions to the Closing shall not have been satisfied prior to October 31, 1996, the Buyer may elect to (i) terminate this Agreement without liability to the Buyer, provided that any such termination shall be without prejudice to any claims by the Buyer for intentional breach of this Agreement by the Company or the Sellers; or (ii) waive all such unsatisfied conditions and consummate the transactions contemplated herein despite such failure.
2.2. Conditions Precedent to the Company's and the Sellers' Obligation. The obligation of the Company and the Sellers to consummate the transactions contemplated herein is subject to the satisfaction as of the Closing of each of the following conditions:
(a) Each of the representations and warranties of the Buyer made in this Agreement shall be true and correct in all material respects when made and on and as of the Closing Date, as though made on and as of the Closing Date; the Buyer shall have performed in all material respects the covenants, agreements and obligations of the Buyer contained in this Agreement required to be performed on or prior to the Closing; and the Buyer shall have delivered to the Sellers a certificate dated as of the Closing Date and signed by an authorized officer of the Buyer confirming the foregoing. The statements made in such certificate shall be a warranty of the Buyer for purposes of this Agreement, which warranty shall be subject to the provisions of Paragraph 5.2, below.
(b) The Buyer shall have caused its ultimate parent entity to file, if required by law, proper pre-merger notification forms with the FTC and the DOJ under the HSR Act, and the waiting period following the filing of proper pre-merger notification forms by the Buyer and the Company (or its ultimate parent entity) shall have expired, whether pursuant to early termination or by passage of time.
(c) All consents, licenses, permits, authorizations, approvals from, filings with and notifications to any federal, state, local or other governmental or regulatory body required to be made or obtained by the Buyer in connection with the consummation of the transactions contemplated by this Agreement shall have been made or obtained including, without limitation, requirements under the HSR Act as contemplated by Paragraph 2.2(b), above. All consents of third parties required to be obtained by the Buyer in connection with the consummation of such transactions shall have been obtained.
(d) All management and employee bonuses for the current year through the date of the Closing and projected to year-end shall have been paid and all stock appreciation rights and other similar benefits as described on the Disclosure Schedule shall have been or be paid at or prior to Closing as if fully vested on Closing and the bonuses referred to in Paragraph 6.1.7 shall have been paid at or simultaneously with the Closing.
(e) All guarantees of Company obligations by any Seller to United States Fidelity and Guaranty Company ("USF&G") shall be released as of Closing.
(f) No injunction or order of any court or administrative agency of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the consummation of the transactions contemplated under this Agreement nor shall any action, suit or proceeding requesting such an injunction or order have been commenced or threatened by a party other than Sellers or the Company.
(g) The Buyer shall have delivered to the Sellers the documents, certificates, agreements and instruments required under Paragraph 3.2, below.
In the event that any of the foregoing conditions to the Closing shall not have been satisfied prior to October 31, 1996, the Sellers may elect to (i) terminate this Agreement without liability to the Sellers, provided that any such termination shall be without prejudice to any claims by the Company or the Sellers for intentional breach of this Agreement by the Buyer; or (ii) waive any such unsatisfied conditions and consummate the transactions contemplated herein despite such failure.
ARTICLE III
Closing
3.1. Time and Place of Closing. The closing of the purchase and sale contemplated herein (the "Closing") shall be held at the offices of Godfrey & Kahn, S.C., in Appleton, Wisconsin, at 10:00 AM local time, on September 16, 1996, or at such other time or place as the Company, the Sellers and the Buyer shall mutually agree. The date on which the Closing shall occur is hereinafter referred to as the "Closing Date."
3.2. Deliveries of the Buyer. At the Closing, the Buyer shall deliver to the Sellers the following:
(a) The payment of the Purchase Price in the manner specified in Paragraph 1.2, above.
(b) A certificate from the Secretary of the Buyer, in a form reasonably satisfactory to the Sellers and their counsel, setting forth the resolutions of the Board of Directors of the Buyer authorizing the execution of this Agreement, all agreements, documents and instruments to be executed by the Buyer in connection herewith (the "Buyer Ancillary Documents") and the taking of any and all actions deemed necessary or advisable to consummate the transactions contemplated herein or therein.
(c) The certificate of the Buyer required to be delivered pursuant to Paragraph 2.2(a), above.
3.3. Deliveries of the Company and the Sellers. At the Closing, the Company and the Sellers shall deliver to the Buyer the following:
(a) Certificates representing the Subject Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank by the Sellers.
(b) The certificate of the Company and the Sellers required to be delivered pursuant to Paragraph 2.1(a), above.
(c) Resignations of the President of the Company in his capacity as a statutory officer and of all of the directors of the Company and each person who is a trustee, custodian, or authorized signatory under any employee benefit plan, bank account, depository account or safe deposit box of the Company, effective as of the Closing, as designated by the Buyer.
(d) Constructive possession of the complete books and records relating to the business of the Company including, without limitation, minute books, stock ledgers, all keys or articles required for access thereto and the combinations for all safes, vaults and other places of safekeeping or storage of the Company.
(e) A certificate of each of the Sellers, in a form reasonably satisfactory to the Buyer and its counsel, certifying that such Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code").
(f) Documentary evidence reasonably satisfactory to the Buyer and its counsel as to the termination of the Stockholder Agreements (as hereinafter defined).
(g) A certificate of the Secretary of the Company, in a form reasonably satisfactory to the Buyer and its counsel, setting forth the resolutions of the Board of Directors of the Company authorizing the execution of this Agreement and all agreements, documents and instruments to be delivered by the Company or any of the Sellers hereunder (collectively the "Seller Ancillary Documents") which will be executed by the Company in connection herewith and the taking by the Company of any and all actions deemed necessary or advisable to consummate the transactions contemplated herein or therein.
ARTICLE IV
Warranties and Representations of the Sellers
4.1. Individual Warranties and Representations of the Sellers. Except as set forth in the disclosure schedule attached hereto as Schedule
2 (hereinafter the "Disclosure Schedule") each of the Sellers hereby individually, but only with respect to the Subject Shares owned by such Seller and the authority of such Seller to consummate the transactions contemplated hereby, warrants and represents to the Buyer, which warranties and representations shall survive the Closing for the period set forth in Paragraph 4.3, below, and shall be subject to the provisions of Paragraph 4.4, below, as follows:
4.1.1. Title to Shares. Such Seller is the record owner of and has good, valid and marketable title to the respective number of the Subject Shares set forth opposite his, her or its name on Schedule 1 attached hereto, and at the Closing will deliver to the Buyer good, valid and marketable title to such shares free and clear of all liens, security interests, claims, options, charges, pledges and encumbrances of any kind whatsoever, except as otherwise provided herein or in the Stockholder Agreements (as hereinafter defined) or in Section 180.0622(2)(b) of the Wisconsin Statutes and the cases decided thereunder.
4.1.2. Authority.
(a) Such Seller has full right, power, legal capacity and authority to sell, transfer and deliver to the Buyer the full legal and beneficial ownership in the portion of Subject Shares to be sold by such Seller pursuant to this Agreement and to consummate the transactions contemplated herein and in any of the Seller Ancillary Documents to which such Seller is a party.
(b) If such Seller is a corporation, partnership or limited liability company, such Seller is duly organized and validly existing under the laws of its jurisdiction of organization, has the corporate or other appropriate power and authority to enter into this Agreement and the Seller Ancillary Agreements to which such Seller is a party and to consummate the transactions contemplated hereby and thereby, and the execution and delivery of this Agreement and the Seller Ancillary Docu- ments to which such Seller is a party and the consummation of the transactions contemplated hereby and thereby by such Seller have been approved by all necessary action on behalf of such Seller.
(c) If such Seller is a trust or a charitable foundation (a "Trust"): (i) the trustees or other fiduciaries thereof who have signed this Agreement (and any relevant Seller Ancillary Document) on behalf of such Trust are the duly appointed trustees, fiduciaries or other repre- sentatives of such Trust and they have not resigned or been removed or replaced from such positions as of the date hereof; (ii) no beneficiary or other remainderman of such Trust has heretofore in any way assigned, transferred, or encumbered, or permitted the assignment, transfer or other encumbrance of the Subject Shares held by such Trust; (iii) the execution and delivery of this Agreement and any relevant Seller Ancillary Document by such trustees or fiduciaries and the performance by such trustees or fiduciaries of their obligations hereunder and thereinafter have been duly and validly authorized and approved by all actions required under applicable law relating to such Trust and under the terms of the relevant instruments governing such Trust; and (iv) such trustees and other fiduciaries have full power and authority under the terms of the applicable instruments governing such Trust and under any document relating to or applicable to such Trust to execute and deliver this Agreement and any relevant Seller Ancillary Document on behalf of such Trust and to perform their respective obligations hereunder.
(d) This Agreement has been duly and validly executed and delivered by such Seller and is the legal, valid and binding obligation of such Seller enforceable in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other laws generally affect- ing the rights of creditors and general principles of equity and applicable federal or state laws which may affect the availability of equitable remedies. No action, consent or approval by or filing with any federal, state, municipal, foreign or other court or governmental or administrative body or agency or any other regulatory or self-regulatory body is required in connection with the execution and delivery by such Seller of this Agreement or the Seller Ancillary Documents to the extent such Seller is a party thereto or the consummation by such Seller of the transactions contemplated hereby and thereby other than the pre-merger notification with the FTC and the DOJ under the HSR Act, except for any action, consent or approval, with respect to which a failure to obtain would not reasonably be expected to impair in any material respect the performance by such Seller of such Seller's obligations hereunder. No claim, action, suit, proceeding, arbitration, investigation or inquiry before any federal, state, municipal, foreign or other court or governmental or administrative body or agency, any securities or commodities exchange or any private arbitration tribunal is now pending or, to the knowledge of such Seller, threatened, against or relating to such Seller which would have a material adverse effect on the ability of such Seller to consummate the sale of the Subject Shares or the other transactions contemplated by this Agreement or the Seller Ancillary Documents. Neither the execution and delivery by such Seller of this Agreement or any Seller Ancillary Document to which such Seller is a party, nor the consummation of the transactions contemplated hereby and thereby, will breach, violate or constitute an event of default (or an event which with the lapse of time or the giving of notice or both would constitute an event of default) under, give rise to any right of termination, cancellation, modification or acceleration under, or require any consent or the giving of any notice under, any contract or instrument to which such Seller is a party or by which any of such Seller's Subject Shares may be bound, except as provided in the Stockholder Agreements and except for such breaches, violations or defaults which would not reasonably be expected to impair in any material respect the performance by such Seller of such Seller's obligations hereunder.
4.1.3. Stockholder Agreements. Except for this Agreement, the Seller Ancillary Documents, that certain Shareholders Agreement dated September 16, 1987, amended most recently on April 19, 1996 and July 1, 1996 (the "Shareholders Agreement"), that certain Directors Stock Subscription Agreement dated May 26, 1993, amended most recently on April 19, 1996 (the "Directors Stock Subscription Agreement"), and that certain Key Employee Stock Subscription Agreement dated May 25, 1993, amended most recently on April 19, 1996 (the "Key Employee Stock Subscription Agree- ments," and with the Shareholders Agreement and the Directors Stock Subscription Agreement being collectively referred to as "the Stockholder Agreements"), there are no voting trust agreements, powers of attorney, proxies or any other contracts, agreements, arrangements, commitments, plans or understandings, written or oral, restricting or otherwise relating to the voting, dividend rights or disposition of that portion of the Subject Shares owned by such Seller or otherwise granting any person any right in respect of that portion of the Subject Shares owned by such Seller and no restrictions on the transfer of such portion of the Subject Shares presently exist.
4.2. Warranties and Representations of the Company. Except as set forth in the Disclosure Schedule, the Company hereby warrants and represents to the Buyer, which warranties and representations shall survive the Closing for the period set forth in Paragraph 4.3, below, and shall be subject to the provisions of Paragraph 4.4, below, as follows:
4.2.1. Organization and Standing. The Company is a corporation duly organized and validly existing under the laws of the State of Wisconsin. Each corporation, partnership, joint venture or other business entity in which the Company maintains a majority voting interest (each, a "Subsidiary"; collectively, the "Subsidiaries") is set forth in the Disclosure Schedule and is a corporation duly organized and validly existing under the laws of its state or other jurisdiction of incorporation. The Company has the power and authority to own or lease its properties and to carry on all business activities which it now conducts. The Disclosure Schedule contains a true, complete and correct list of all states in which the Company and each Subsidiary is qualified to do business as a foreign corporation. The stock certificate, transfer books and minute books of the Company and each Subsidiary (a copy of which has been made available for inspection by the Buyer and its representa- tives) are materially true and complete. The Articles of Incorporation and By-Laws or other constituent documents of the Company and each Subsidiary (true and complete copies of which have been provided to the Buyer) are true, complete and correct and are in full force and effect without amendment or modification.
4.2.2. Capitalization. The entire duly authorized capital stock of the Company consists of Four Hundred Forty-Two Thousand (442,000) shares of Common Stock, of which Four Hundred Ten Thousand Seventy-Nine (410,079) shares are currently issued and outstanding. All of the Subject Shares are fully paid and nonassessable, except as provided in Section 180.0622 of the Wisconsin Statutes and cases decided thereunder. The Subject Shares have not been issued in violation of, and are not subject to, any preemptive or subscription rights other than as provided in the Stockholder Agreements. Other than the Stockholder Agreements and the items described in the Disclosure Schedule, there are no outstanding warrants, options, agreements, subscriptions, convertible or exchangeable securities or other commitments or rights pursuant to which the Company is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of the Company. All of the Subject Shares have been issued in material compliance with all applicable federal and state securities laws or in accordance with exemptions therefrom. The Subject Shares constitute all of the issued and outstanding shares of capital stock of the Company of whatever class, series or designation. Schedule 1 hereto contains a complete and correct list of all holders of any class of capital stock or other securities of the Company.
4.2.3. Authorization; No Violations.
(a) The Company has full corporate power and authority to execute, deliver and perform this Agreement and the other documents and instruments to be executed and delivered by the Company pursuant hereto. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly approved by the Board of Directors of the Company, and no other corporate action on the part of the Company is necessary to authorize and approve the Company's execution and delivery of this Agreement or its consummation of the transactions contemplated hereby. This Agreement has been, and when executed and delivered by the Company, the other documents and instruments to be executed and delivered by the Company will be, duly executed and delivered by the Company, and constitutes, or will constitute valid and legally binding agreements of the Company enforceable in accordance with its terms, except that the enforceability of this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other laws generally affecting the rights of creditors and general principles of equity and applicable federal or state laws which may affect the availability of equitable remedies.
(b) Except for the requirements of the HSR Act, or except as otherwise disclosed in the Disclosure Schedule, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby will not: (i) violate or conflict with any provision of the Articles of Incorporation, By-Laws or other constituent documents of the Company or any Subsidiary, (ii) breach, violate or (whether immediately or with the lapse of time or the giving of notice or both) constitute an event of default under or an event which would give rise to any right of termination, cancellation, modification, acceleration or foreclosure under, or require any consent of or the giving of any notice to any third party under, any note, bond, indenture, credit facility, mortgage, security agreement, lease, license, franchise, permit or other agreement, instrument or obligation to which the Company or any Subsidiary is a party, or by which the Company or any Subsidiary, or any of their respective material prop- erties or assets may be bound, or give rise to the creation of any pledge, lien, claim, charge, security interest or other encumbrance upon the properties or assets of the Company or any Subsidiary, or give rise to the creation of any pledge, lien, claim, charge, security interest or other encumbrance on the Subject Shares except in each case for any matter which would not have a Material Adverse Effect (the term "Material Adverse Effect" when used in this Agreement shall mean having such effect as described in the context of the reference either (i) individually or (ii) in the aggregate when such individual events or circumstances are based on or arise from or are related to the same or substantially similar underlying facts which would have a material adverse effect on the business, properties or financial condition of the Company and its Subsidiaries taken as a whole), (iii) violate or conflict with any law, statute, rule, regulation, ordinance, code, judgement, order, writ, injunction, decree, determination, award or other requirement of any court or of any governmental body or agency thereof applicable to the Company or any Subsidiary or by which any of their respective properties or assets may be bound, except for any violation or conflict which would not have a Material Adverse Effect, or
(iv) require any registration or filing by the Company, any Subsidiary or any of the Sellers with, or any permit, license, exemption, consent, authorization or approval of, or the giving of any notice by the Company, any Subsidiary, or any of the Sellers to, any governmental or regulatory body, agency or authority, except where the failure to make such registration or filing or obtain such permit, license, exemption, consent, authorization or approval, or to give such notice would not have a Material Adverse Effect.
4.2.4. Litigation and Compliance with Laws. Except as described in the Disclosure Schedule, there is no litigation, proceeding (including, without limitation, arbitral proceedings) or other legal or administrative proceeding pending or, to the knowledge of the Company (as hereinafter defined in Paragraph 4.4), threatened against the Company or any Sub- sidiary. There are no such suits, actions, proceedings or claims pending, or, to the knowledge of the Company, threatened, challenging the validity or propriety of, or otherwise relating to or involving, this Agreement or the transactions contemplated hereby. There is no judgement, order, writ, injunction, decree or award (whether issued by a court, an arbitrator, a governmental body or agency thereof or otherwise) to which the Company or any Subsidiary is party, or involving the properties, assets or business of the Company or any Subsidiary, which is unsatisfied or which requires continuing compliance therewith by the Company or any Subsidiary. Except with respect to Taxes (as defined and covered in Paragraph 4.2.10, below), ERISA (as defined and covered in Paragraph 4.2.13, below), and Environmental Laws (as defined and covered in Paragraph 4.2.21, below), neither the Company nor any Subsidiary has received any written notice that the Company or any Subsidiary has not complied in all material respects with all applicable foreign and domestic laws, statutes, ordinances, codes, rules, regulations, judgements, orders, writs or decrees of any federal, state, local or foreign court or governmental or regulatory body or agency thereof to which the Company or any Subsidiary may be subject or which are applicable to the operations, businesses or assets of the Company or any Subsidiary.
4.2.5. Subsidiaries, Investments. The Disclosure Schedule contains a list of all of the Company's ownership or investment interests in any Subsidiary. Except as set forth in the Disclosure Schedule, all of the issued and outstanding shares of capital stock (or other equity interests) of each Subsidiary are owned beneficially and of record by the Company or by a Subsidiary (as indicated in the Disclosure Schedule), in each case free and clear of all liens, security interests, claims, charges, pledges and encumbrances of any kind whatsoever.
4.2.6. Ownership and Use of Tangible Assets.
(a) The Company and its Subsidiaries have good, valid and marketable title to or lease pursuant to a lease described in the Disclosure Schedule (if required to be set forth therein) all tangible personal property and assets which are material to the operation of the businesses of the Company and its Subsidiaries as they are currently conducted free and clear of all encumbrances except those which would not have a Material Adverse Effect on the Company's or its Subsidiaries' ability to use or enjoy beneficial ownership and except as set forth in the Disclosure Schedule.
(b) The Disclosure Schedule contains a complete list and description of all real property owned by the Company and its Subsidiaries (the "Owned Real Property"), in each case indicating the entity owning such property. The Disclosure Schedule also contains a complete list and description of all real property leased by the Company and its Subsidiaries (collectively, the "Leased Real Property"), in each case indicating the entity leasing such property and the persons or entities from whom such property is being leased. The Owned Real Property and the Leased Real Property are collectively referred to herein as the "Real Property." With respect to all such Owned Real Property, the Company or its Subsidiaries have good, valid and marketable title in fee simple thereto free and clear of all encum- brances, except (i) as specifically disclosed in the Disclosure Schedule or in the title policy obtained by the Buyer pursuant to Paragraph 6.1.4 hereof, or encumbrances which would not have a Material Adverse Effect,
(ii) Taxes not yet due, (iii) easements, rights-of-way and similar covenants and restrictions of record, and (iv) municipal and zoning ordinances. To the Company's knowledge, none of the matters in the foregoing clauses (i) through (iv) interfere with the use of the Real Property as currently utilized. Except as set forth in the Disclosure Schedule, no work has been performed on or with respect to or in connection with any of the Real Property that would cause such Real Property to become subject to any mechanics', materialmen's, workmen's, repairmen's, carriers' or similar lien. The structures, plants, improvements, systems (including, without limitation, heating, venti- lation, air conditioning, electrical, plumbing, fire sprinkler, light- ing, elevator and other mechanical systems) and fixtures located in or about each such parcel of Real Property have been maintained in accordance with reasonable maintenance standards generally followed in the industry.
(c) To the knowledge of the Company, all tangible personal property of the Company which is material to the Company's operations has been maintained in accordance with reasonable maintenance standards generally followed in the industry and is physically located at or about the places of business of the Company and its Subsidiaries. None of such tangible personal property is subject to any agreement, arrangement or understanding for its use by any person other than the Company and its Subsidiaries, the presence of which would have a Material Adverse Effect.
(d) The Disclosure Schedule sets forth a complete and correct list of all tangible personal property leases to which the Company and its Subsidiaries are parties which involve annual lease payments of more than One Hundred Thousand Dollars ($100,000.00). Each such lease is in full force and effect against the Company or one of its Subsidiaries. All lease payments due to date on any such lease have been paid, and neither the Company nor any Subsidiary is in default under any such lease, and to the knowledge of the Company no event has occurred which constitutes, or with the lapse of time or the giving of notice or both would constitute, a default by the Company or any Subsidiary under such lease. To the knowledge of the Company, there are no disputes or disagreements between the Company and its Subsidiaries, on the one hand, and any other party with respect to any such lease.
4.2.7. Patents, Trademarks, and Other Intellectual Property. The Disclosure Schedule contains a list of all patents, patent applications, trademarks, trademark applications, trade names, service marks and copyrights, and licenses and rights to any of the foregoing (collectively the "Intellectual Properties") which are owned, controlled, used or held (under license or otherwise) by and which are material to the Company and its Subsidiaries in connection with the conduct of their businesses. The Company or its Subsidiaries are the sole and exclusive owner of the Intellectual Properties described as owned in the Disclosure Schedule, free and clear of all encumbrances except as set forth in the Disclosure Schedule. No claims have been asserted or, to the knowledge of the Company, threatened by any person challenging the Company's or its Subsidiaries' ownership or use of any of the Intellectual Properties. To the knowledge of the Company, none of the Intellectual Properties infringes or otherwise violates the rights of others or is being infringed by others in any manner which would have a Material Adverse Effect. In order to conduct the business of the Company as such is currently being conducted, to the knowledge of the Company, the Company does not require any Intellectual Properties that it does not already have the use of. The Company has not granted any license or made any assignment of any Intellectual Properties listed in the Disclosure Schedule. The Company does not pay any royalties or other consideration for the right to use any intellectual properties of others. All Intellectual Properties of the Company are valid, enforceable and in good standing, and to the knowledge of the Company, there are no equitable defenses to enforcement based on any act or omission of the Company.
4.2.8. Financial Statements. Included in the Disclosure Schedule are true and correct copies of the consolidated financial statements of the Company and its Subsidiaries for the fiscal periods ended October 31, 1994, and October 31, 1995 (the "Historical Financial Statements") and the interim financial statements for the period ended June 30, 1996 (the "Interim Financial Statements" and with the Historical Financial State- ments, collectively the "Financial Statements". The Financial Statements fairly present the financial condition of the Company and its Subsidiaries (as applicable) on such dates and the results of operations for the periods designated therein, and were prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied during the periods covered thereby; subject, in the case of Interim Financial Statements, to appropriate year-end adjustments and omitted disclosures customarily placed in footnotes. The Historical Financial Statements were audited by Arthur Andersen, LLP, whose reports thereon are attached to the Disclosure Schedule. There has been no material adverse change in the capitalization, assets or liabilities of the Company and its Subsidiaries since the date of the Interim Financial Statements (the balance sheet included therewith referred to as the "Interim Balance Sheet"), other than changes in the ordinary course of business consistent with past practice.
4.2.9. Conduct Out of Ordinary Course. The Company has, since the date of the Interim Balance Sheet, conducted its business and the businesses of its Subsidiaries in the normal and ordinary course and has not since such date, other than in the ordinary course of business or as described in the Disclosure Schedule: (i) mortgaged, pledged or subjected to, or agreed to mortgage, pledge or subject to, any Encumbrance, any of the assets or business of the Company and its Subsidiaries, except as contemplated in this Agreement; (ii) sold, transferred, leased to others or otherwise disposed of or agreed to sell, transfer, lease or otherwise dispose of any of the assets of the Company and its Subsidiaries; (iii) suffered any damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting any of the material assets of the Company, reasonable wear and tear excepted, or materially and adversely affecting the Company and its Subsidiaries; (iv) borrowed, or agreed to borrow, funds in excess of One Million Dollars ($1,000,000.00); (v) discharged or satisfied any Encumbrance, cancelled or compromised any material debt or claim or paid any material obligation or liability; (vi) directly or indirectly paid, or agreed to pay, any severance or termination pay to any employee or otherwise granted any general or specific increase in the salary, commission rate or other compensation payable to any employee which was not accrued at such date;
(vii) issued, or agreed to issue, any securities of the Company or any Subsidiary other than pursuant to the stock options described in the Dis- closure Schedule; (viii) declared, paid, made or agreed to declare, pay or make any dividends, distributions, redemptions, equity repurchases or other transactions with respect to any securities of the Company or any Subsidiary; (ix) had any change in its accounting principles, methods or practices or any change in its depreciation or amortization policies or rates; (x) had any change in the relationship or course of dealing with any of any of its suppliers, customers, distributors, lenders or creditors that has had or could reasonably be expected to have a Material Adverse Effect; or (xi) had any labor disputes or disturbances, other than grievances, which have had or could reasonably be expected to have a Material Adverse Effect.
4.2.10. Taxes.
(a) Definitions. For purposes of this Paragraph 4.2.10, the following terms shall have the following meanings:
The terms "Tax" and "Taxes" shall mean and include any and all United States, state, local, foreign income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, profits, windfall profits, gross receipts, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, severance, environmental (including taxes under section 59A of the Internal Revenue Code of 1986, as amended (the "Code"), real property, personal property, ad valorem, occupancy, license, occupation, employment, payroll, social security, disability, unemployment, workers' compensation, withholding, or other taxes, assessments, social security obligations, deficiencies, fees, customs duties or other governmental charges from time to time imposed by or required to be paid to any governmental authority (including penalties and additions to tax thereon, penalties for failure to file a return or report, and interest on any of the foregoing).
The term "Tax Return" shall mean and include any return, declaration, report, claim for refund, or information return or statement filed or required to be filed relating to Taxes, including any schedule or attachment thereto, and any amendment thereof.
(b) Warranties and Representations. Except as described in the Disclosure Schedule:
(i) All Tax Returns which the Company or any Subsidiary was required to file prior to the date hereof (including, without limitation, sales, payroll, employee withholding, social security and unemployment Tax Returns) have been filed when due and when filed were true and correct in all material respects.
(ii) All Taxes that the Company or any Subsidiary is required by law to withhold or to collect for payment have been duly withheld and collected, and have been paid or accrued, reserved against and entered on the books of the Company.
(iii) There has been no claim or issue (other than a claim or issue that has been finally settled) concerning any liability for Taxes of the Company or any Subsidiary asserted, raised or to the knowledge of the Company, threatened by any taxing authority.
(iv) There are no agreements or applications by the Company or any Subsidiary for an extension of time for the assessment or payment of any Taxes or for the filing of any Tax Return, or waivers of a statute of limitations by the Company or any Subsidiary in respect of Taxes.
(v) The Company is not a party to any agreement, contract, or other arrangement that would result, separately or in the aggregate, in the requirement to pay any "excess parachute payment" within the meaning of Section 280G of the Code.
(vi) There are no Tax sharing agreements or other similar arrangements with respect to or involving the Company or any Subsidiary.
4.2.11. Contracts and Other Agreements.
(a) The Disclosure Schedule sets forth a true and complete list of all of the following to which the Company or any Subsidiary is a party or by which it or any Subsidiary is bound (collectively, the "Contracts"):
(i) any lease of personal property which involves annual expenditures or receipts in excess of One Hundred Thousand Dollars ($100,000.00);
(ii) each lease with respect to the Leased Real Property;
(iii) any license agreement or other agreements of the Company or any Subsidiary providing in whole or in part for the use of any patents, trademarks, trade names, service marks, copyrights, inventions, trade secrets or other proprietary know-how or other intellectual property, whether the Company is the licensor or the licensee thereunder, and all settlements, consents or forbearance to sue agreements relating thereto;
(iv) any contract, arrangement or understanding not made in the ordinary course of business and consistent with past practice which is material to the business of the Company;
(v) any note, bond, indenture, credit facility, mortgage, security agreement or other instrument or document relating to or evidencing indebtedness for money borrowed, or a security interest or mortgage in the assets of the Company or any Subsidiary in excess of One Million Dollars ($1,000,000.00);
(vi) any indemnity or guaranty issued by the Company or any Subsidiary during the past three (3) years (other than customary product warranties provided by the Company or any Sub- sidiary in the ordinary course of business);
(vii) any contract, arrangement or understanding materially restricting the right of the Company or any Subsidiary to engage in any business activity or compete with any business;
(viii) any contract, arrangement or understanding by the Company or any Subsidiary to customers or distributors which aggregate in excess of Four Hundred Thousand Dollars ($400,000.00) to any one customer or distributor;
(ix) any power of attorney given by the Company or any Subsidiary, which is currently in effect, to any person, firm or corporation for any purpose whatsoever;
(x) any collective bargaining agreements with any unions, guilds, shop committees or collective bargaining groups; or
(xi) any contracts or agreements with current officers, other employees, consultants or advisors other than contracts which by their terms are cancelable by the Company with notice or not more than sixty (60) days.
(b) The Company has previously provided to the Buyer complete and correct copies of each written Contract (and any amendments thereto). (i) Each Contract is in full force and effect against the Company; (ii) neither the Company nor any Subsidiary is in default under any Contract, and no event has occurred which constitutes, or with the lapse of time or the giving of notice or both would constitute, a material default by the Company or any Subsidiary under any such Contract; and (iii) to the knowledge of the Company, there are no material disputes or disagreements between the Company or its Subsidi- aries and any other party with respect to any such Contract. Copies of the standard terms and conditions of sale, delivery or lease of the Company are included in the Disclosure Schedule.
4.2.12. Product Warranty and Product Liability. The Disclosure Schedule contains a true, correct and complete copy of the Company's standard warranty or warranties provided for Products (as defined below) sold and subject to such warranties as of the Closing. Except as stated in the warranties or otherwise set forth on the Disclosure Schedule, there are no warranties, commitments, policies or obligations with respect to the return, repair or replacement of Products. The Disclosure Schedule contains a description of all product liability claims and similar claims, actions, litigation and other proceedings relating to Products manufactured or sold, or services rendered, which are presently pending or which to the Company's knowledge are threatened, or which have been asserted or commenced against the Company within the last five (5) years, in which a party thereto either requests injunctive relief (whether temporary or permanent) or alleges damages (which are not covered by insurance). Except as set forth in the Disclosure Schedule, to the knowledge of the Company there are no defects in design, construction or manufacture of Products which would adversely affect performance or create an unusual risk of injury to persons or property. Except as set forth in the Disclosure Schedule, to the knowledge of the Company no facts or conditions exist which could reasonably be expected to result in a recall campaign. To the knowledge of the Company, the Products have been designed and manufactured so as to meet and comply with all governmental standards and specifications currently in effect, and have received all governmental approvals necessary to allow their sale and use. As used in this Paragraph 4.2.12, the term "Products" means any and all products currently or at any time previously manufactured, distributed or sold by the Company, or by any predecessor of the Company for which the Company has legal liability under any brand name or mark under which products are or have been manufactured, distributed or sold by the Company.
4.2.13. Employee Benefit Matters. The Disclosure Schedule sets forth all of the Company's bonus, deferred or incentive compensation, profit sharing, retirement, vacation, sick leave, hospitalization, insurance, disability stock options or severance plans, programs, arrangements and policies and all "employee pension benefit plans" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans" (as defined in Section 3(1) of ERISA) (collectively, the "Plans") sponsored or contributed to by the Company or by any trade or business, whether or not incorporated (an "ERISA Affiliate") that together with the Company would be deemed a "single employer" within the meaning of Section 4001 of ERISA, for the benefit of an employee or former employee of the Company or any ERISA Affiliate. To the knowledge of the Company, each such Plan is in compliance, and has been administered in accordance with the applicable provisions of ERISA and the Code and all other applicable laws, rules and regulations, the violation of which would have a Material Adverse Effect. The Company has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each such Plan and no accumulated funding deficiency exists with respect to any such Plan which would have a Material Adverse Effect. All contributions required to be made with respect to all Plans on or prior to the Closing Date have been timely made. To the knowledge of the Company, neither the Company nor any ERISA Affiliate nor any Plan, Trust or Trustee or administrator thereof has (i) engaged in any transaction prohibited by ERISA or the Code or which would subject the Company to a material tax or civil penalty thereunder; (ii) breached any fiduciary duty owed by it with respect to the Plans described above; or (iii) failed to file and distribute in a timely and proper manner all reports and information required to be filed or distributed in accordance with ERISA. Neither the Company nor any ERISA Affiliate has incurred any liability to the Pension Benefit Guaranty Corporation (the "PBGC") nor, to the knowledge of the Company has the PBGC taken any action to terminate any of the Plans described above. The Company is not a participating or contributing employer in any multi- employer benefit plan with respect to employees of the Company or its Subsidiaries nor has the Company or its Subsidiaries incurred any withdrawal liability with respect to any multi-employer plan or any liability in connection with the termination or reorganization of any multi-employer plan. Each Plan intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code. There are no pending, or to the knowledge of the Company, threatened or anticipated claims by or on behalf of any Plan, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan (other than routine claims for benefits).
4.2.14. Labor Practices. Except as set forth in the Disclosure Schedule, within the last three (3) years the Company has not experienced any labor disputes, union organization attempts or any work stoppage due to labor disagreements in connection with its business. Except to the extent set forth in the Disclosure Schedule (a) the Company is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours which would have a Material Adverse Effect, and is not engaged in any unfair labor practices; (b) there is no unfair labor practice charge or complaint against the Company pending or threatened to the knowledge of the Company;
(c) there is no labor strike, dispute, request for representation, slowdown or stoppage actually pending or to the knowledge of the Company, threatened against or affecting the Company nor any secondary boycott with respect to products of the Company; (d) to the knowledge of the Company, no question concerning representation has been raised or is threatened respecting the employees of the Company; (e) no grievance which might have a Material Adverse Effect on the Company, nor any arbitration proceeding arising out of or under collective bargaining agreements, is pending and no such claim therefor exists; and (f) there are no administrative charges or court complaints against the Company concerning alleged employment discrimination or other employment related matters pending or to the knowledge of the Company, threatened before the U.S. Equal Employment Opportunity Commission or any state or federal court or agency.
4.2.15. Brokers; Agents. The Company has not dealt with retained, employed or used any agent, finder, broker or other representative in any manner which could result in the Company or the Buyer being liable for any fee or commission in the nature of a finder's fee or originator's fee in connection with the subject matter of this Agreement, other than any fees which may be payable to Robert W. Baird & Co. Incorporated, whose fees and expenses shall be paid by the Sellers.
4.2.16. Permits and Licenses. To the knowledge of the Company, the Company has all licenses, permits, approvals, authorizations and consents of all governmental and regulatory authorities and all certification organizations required for the conduct of the business operation of its facilities. All such licenses, permits, approvals, authorizations and consents described in the Disclosure Schedule are in full force and effect. To the knowledge of the Company, except as set forth in Disclosure Schedule, the Company (including its operations, properties and assets) is and has been in compliance with all such permits and licenses, approvals, authorizations and consents, except where such noncompliance would not have a material Adverse Effect. Neither the Company nor any Subsidiary has received any notice of, and neither the Company nor any Subsidiary has any knowledge of, any intention on the part of any government authority to cancel, revoke or modify any permit, license, exemption, consent, authorization or approval of the Company, which in each case will have a Material Adverse Effect.
4.2.17. Major Customers. The Disclosure Schedule sets forth a complete and correct list of the five (5) largest customers of the Company and its Subsidiaries in terms of contracted work during the eight (8) month period ended on the date of the Interim Balance Sheet, showing the total value of such contracts. No such customer has given the Company or any Subsidiary any notice terminating, rescinding, suspending or reducing in any material respect, or specifying an intention to terminate, suspend or reduce in any material respect in the future, or otherwise reflecting a material adverse change in, the business relationship between such customer and the Company and such Subsidiary. The Company has no sales contracts or commitments except those made in the ordinary course of business, at arm's length.
4.2.18. Dealers and Other Agents. The Disclosure Schedule sets forth a complete and correct list of the names and addresses of each authorized dealer, sales representative or other agent (a "Representative") currently engaged by the Company and its Subsidiaries and who is not an employee of the Company or its Subsidiaries, to whom the Company has made annual payments during the year ended October 31, 1995, aggregating more than Two Hundred Fifty Thousand Dollars ($250,000.00), a summary description of the services provided by each such Representative and the territory assigned to each such Representative. True and correct copies of all agreements between any such Representative and the Company and its Subsidiaries are included in the Disclosure Schedule. The Company is not in default under any agreement with any Representative, nor has any event or omission occurred which through the passage of time or the giving of notice, or both, constitute a default thereunder, except such defaults which would not have a Material Adverse Effect. To the knowledge of the Company, no Representative is in default under any such agreement, nor has any event or omission occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or give rise to an automatic termination or the right of discretionary termination, thereof, except such defaults which would not have a Material Adverse Effect. The Disclosure Schedule sets forth a complete and correct list of all stocking or demonstration units, as such term is customary used by the Company, located at, consigned, en route or sold to any Representative as of July 31, 1996.
4.2.19. Material Suppliers of Inventories. The Disclosure Schedule sets forth a complete and correct list of all written supply contracts between the Company and its Subsidiaries and each supplier of goods and services to the Company and its Subsidiaries who provided goods and services to the Company and its Subsidiaries which involved an aggregate value of Two Million Dollars ($2,000,000.00) or more during the year ended October 31, 1995 with such supplier. The Disclosure Schedule also correctly identifies all currently outstanding purchase orders of the Company and its Subsidiaries for goods or services with an aggregate value of Two Million Dollars ($2,000,000.00) or more. No supplier identified in the Disclosure Schedule has given the Company or any Subsidiary any notice terminating, suspending or reducing in any material respect, or specifying an intention to terminate, suspend or reduce in any material respect, or otherwise reflecting a material adverse change in, the business relation- ship between such supplier and the Company and its Subsidiaries.
4.2.20. Insurance. The Disclosure Schedule contains a complete and correct list of all material insurance policies carried by, or covering, the Company and its Subsidiaries with respect to their businesses, together with, in respect of each such policy, the name of the insurer, the policy number, the expiration date thereof and each pending claim thereunder known to the Company. Complete and correct copies of each such policy have previously been provided to the Buyer. No written notice of cancellation has been received by the Company with respect to any such policy. To the knowledge of the Company, (i) all premiums due thereon have been paid in a timely manner and (ii) the Company and its Subsidiaries have complied in all material respects with the terms and provisions of such policies. Except as set forth in the Disclosure Schedule, to the knowledge of the Company, the Company has not been refused any insurance with respect to any aspect of its operations of its business nor has its coverage been limited by any insurance carrier to which it has applied for insurance or with which it has carried insurance during the last three (3) years. There is no claim by the Company pending under any such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. Such policies are sufficient in all material respects for compliance by the Company with all requirements of law and with the requirements of all material contracts to which the Company is a party.
4.2.21. Environmental Matters.
(a) Definitions. For purposes of this Paragraph 4.2.21 the following terms shall have the following meanings:
"Environmental Claim" shall mean any investigation, notice, violation, demand, suit, injunction, order, consent decree, penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or private in nature) arising (a) pursuant to, or in connection with, a violation by the Company or any Subsidiary of any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, corrective, or other response action by the Company or any of its Subsidiaries in connection with a Hazardous Material, Environmental Law or order of a Governmental Authority or (d) from any damage, injury, threat, or harm to the environment by the Company or any of its Subsidiaries.
"Environmental Law" shall mean any past or current Legal Requirement pertaining to the protection of the environment, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 et seq. ("RCRA"), and any implementing law, and any amendment, rule, or regulation issued thereunder.
"Governmental Approval" shall mean any permit, license, variance, certificate, clearance, closure, exemption, decision or action or approval of a Governmental Authority which is required under an Environmental Law.
"Governmental Authority" shall mean any federal, state, regional, county, or local person or body having legal authority to administer any Environmental Law.
"Hazardous Material" shall mean any material which is hazardous or toxic to the environment and/or which is subject to regulation, control or remediation under Environmental Law, including, without limitation, asbestos, polychlorinated biphenyl ("PCBs") and petroleum (including crude oil and any fraction thereof).
"Legal Requirement" shall mean any treaty, convention, statute, law, regulation, ordinance, Governmental Approval, injunction, judgement, order, consent decree, or other requirement of any Govern- mental Authority relating to health, safety, natural resources and the environment.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injection, escaping, leaching, dumping, or disposing into the indoor or outdoor environment including, without limitation, the abandonment or discarding of barrels, drums, containers, tanks, and other receptacles containing or previously containing any Hazardous Material.
(b) Warranties and Representations. Except as described in the Disclosure Schedule:
(i) The Subsidiaries and the Real Estate comply in all material respects with any and all applicable Environmental Laws.
(ii) The Company and its Subsidiaries have obtained all necessary Governmental Approvals necessary for the operations of their businesses and properties.
(iii) Neither the Company nor any Subsidiary (a) has caused any Release or disposal of any Hazardous Material at the Real Property or (b) caused any Release of any Hazardous Material at any third party property.
(iv) Neither the Company nor any Subsidiary has received any notification of any actual or potential responsibility for any Release at any third party property.
(v) The Real Property does not contain any: (a) under- ground storage tank, (b) asbestos containing building material, PCBs, radon, or urea formaldehyde foam, (c) landfill or dump, or
(d) hazardous waste management facility as defined pursuant to RCRA or any comparable state law.
(vi) There is no Environmental Claim involving the Real Property or other property formerly owned, leased or operated by the Company and its Subsidiaries or to the knowledge of the Company threatened against the Company or any Subsidiary.
(vii) There are no conditions on, under or in any way affecting the Real Property which would impose liability to the Company or any of its Subsidiaries under any Environmental Law.
4.2.22. Bank Accounts. The Disclosure Schedule sets forth the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which the Company maintains a safe deposit box, lock box or checking, savings, custodial or other account of any nature, the type and number of each such account and the names of all persons authorized to draw thereon or who have access thereto.
4.2.23. Inventory. Except to the extent a violation hereof will not have a Material Adverse Effect and except as set forth in the Disclosure Schedule (i) inventories of finished goods reflected on the Interim Balance Sheet were and will be of a quality and quantity useable and saleable in the ordinary course of business and had and are currently expected to have a commercial value at least equal to the value shown thereof, (ii) inventories of raw materials, work in process, and replacement parts (whether located at the Company's facilities or in transit) are (a) of good and merchantable quality, except commercial liabilities and obligations incurred in the ordinary course of business of the Company; (b) in conformity with warranties customarily given to purchasers of like products; and (c) at levels adequate for and not excessive in relation to the ordinary course of the operations and in accordance with past inventory stocking practices of the Company. Except as set forth in the Disclosure Schedule, all inventory of the Company is located on premises owned or leased by the Company or its Subsidiaries.
4.2.24. Accounts Receivable. All accounts receivable of the Company reflected on the Interim Balance Sheet, and as incurred in the normal course of the Company's business since the date thereof, represent arm's length sales actually made in the ordinary course of business and not in dispute (net or their reserve shown on the Interim Balance Sheet for doubtful accounts).
4.3. Warranties Survive Closing. The respective warranties and representations of the Company and the Seller herein contained shall be true and correct on the date hereof and on the Closing Date, and shall survive the Closing: (i) with respect to any claim for a breach of any warranty or representation made in Paragraph 4.2.10, until such time as the underlying tax obligation is barred by the applicable period of limitation under federal and state laws relating thereto (which may not be extended without the consent of the Sellers); (ii) for a period of three
(3) years following the Closing Date for any claim based upon a breach of any warranty or representation made in Paragraph 4.2.21; (iii) indefinitely for any claim based upon a breach of any warranty or representation made in Paragraph 4.1; and (iv) for a period of one (1) year following the Closing Date with respect to any claim other than a claim referred to in clauses (i) through (iii), above. Notwithstanding the provisions of the previous sentence, if the Buyer provides written notice to the Company and each Seller as specified in Paragraph 9.3, below, of any claim for which the Buyer seeks indemnification pursuant to Article IX, below, within the applicable period referred to in the previous sentence, the claim so made shall survive the Closing until resolved but, in any event, only for so long as the applicable statute of limitations for matters covered by such claim. Any claim not so made in writing prior to the expiration of the applicable period referred to in the previous sentence shall be deemed to have been waived by the Buyer and no other party shall have further liability therefor.
4.4. Knowledge. For each of those warranties and representations which is made in Paragraph 4.1 and which is subject to the qualification "to the knowledge of such Seller," such warranty and representation shall be deemed limited to those matters of which the Seller who is making such warranty or representation has actual knowledge. For those warranties and representations which are made in Paragraph 4.2 and which are subject to the qualification "to the knowledge of the Company," "to the Company's knowledge," or similar words or phrases, such warranties and representations shall be deemed limited to those matters of which any of the following officers of the Company has actual knowledge: President Michael R. Reese, Vice-President William H. Peters, Vice-President Jeffrey W. Strenger, or Vice-President David A. Ogilvie.
ARTICLE V
Warranties and Representations of the Buyer
5.1. Warranties and Representations. The Buyer hereby warrants and represents to the Sellers, which warranties and representations shall survive the Closing for the period set forth in Paragraph 5.2, below, as follows:
5.1.1. Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin and has the power and authority to carry on all business activities which it currently conducts. The Buyer has the corporate power and authority to execute and deliver this Agreement and the Buyer Ancillary Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Buyer Ancillary Documents by the Buyer and the consummation of the transactions contemplated hereby and thereby by the Buyer have been approved by all necessary corporate action on behalf of the Buyer and are and shall constitute valid and legally binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other laws generally affecting the rights of creditors and general principles of equity and applicable federal and state laws which may affect the availability of equitable remedies. The execution and delivery of this Agreement and the Buyer Ancillary Documents by the Buyer does not, and the consummation of the transactions contemplated hereby and thereby and compliance with the terms hereof and thereof by the Buyer will not (a) conflict with, or result in any breach or violation of (i) any provision of the Articles of Incorpora- tion or By-Laws of the Buyer or (ii) any law, statute, rule, regulation, ordinance, code, judgement, order, writ, injunction, decree, determination or award applicable to the Buyer, or (b) violate or conflict with, or result in a breach under, any agreement, instrument or document to which the Buyer is a party or is subject, except for any breach, violation or default which would not adversely affect the ability of the Buyer to consummate the purchase of the Subject Shares or the other transaction contemplated by this Agreement or the Buyer Ancillary Documents. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, governmental authority or instrumentality, or other third party is required to be obtained or made in connection with the execution and delivery of this Agreement or the Buyer Ancillary Documents by the Buyer or the consummation by the Buyer of the transactions contemplated hereby and thereby other than the pre-merger notification with the FTC and DOJ under the HSR Act. No claim, action, suit, proceeding, arbitration, investigation or inquiry by any federal, state, municipal, foreign or other court or governmental or administrative body or agency, any securities or commodities exchange or any private arbitration tribunal is now pending or, to the knowledge of the Buyer, threatened, against or relating to the Buyer which would adversely affect the ability of the Buyer to consummate the purchase of the Subject Shares or the other transactions contemplated by this Agreement or the Buyer Ancillary Documents.
5.1.2. Investment Representations. The Subject Shares to be purchased by the Buyer pursuant to this Agreement are being acquired by the Buyer for investment only and not with a view to any public distribu- tion thereof. The Buyer has such knowledge and experience in business matters as to be capable of evaluating the merits and risks in purchasing the Subject Shares. The Buyer acknowledges that the Subject Shares have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state (collectively, the "Securities Laws"), and have been issued in reliance upon exemptions from the registration requirements of the Securities Laws. The Buyer understands that any transfer or disposition of the Subject Shares may only be made pursuant to an effective registration under applicable Securities Laws or pursuant to an exemption from the registration requirements of the Securities Laws. The Buyer understands that any certificates representing the Subject Shares may bear an appropriate legend consistent with the foregoing.
5.1.3. Brokers; Agents. The Buyer has not dealt with any agent, finder, broker or other representative in any manner which could result in the Sellers or the Company being liable for any fee or commission in the nature of a finder's or originator's fee in connection with the subject matter of this Agreement or the Buyer Ancillary Documents.
5.1.4. Guarantees. The Buyer has completed all arrangements necessary to secure the release of any obligations or guarantees of any Seller of obligations of the Company with USF&G and agrees to deliver the release of same at the Closing.
5.2. Warranties Survive Closing. The warranties and representations of the Buyer herein contained shall be true and correct on the date hereof and on the Closing Date and shall survive the Closing until resolved among the Sellers and the Buyer.
ARTICLE VI
Covenants
6.1. Covenants of the Company. The Company covenants and agrees as follows:
6.1.1. Access. Prior to the Closing, the Company will (i) give the Buyer and its representatives, employees, counsel and accountants reasonable access to the properties, books and records of the Company and its Subsidiaries, and (ii) furnish the Buyer and its designated representatives with financial and operating data and other information with respect to the Company and its Subsidiaries for the purpose of permitting the Buyer, among other things, to (a) conduct its due diligence review, (b) review the financial statements of the Company and its Subsidiaries and (c) prepare for the consummation of the transactions contemplated by this Agreement. Without limiting the foregoing, the Sellers and the Company will permit the Buyer and its accountants to have access during normal business hours to examine and make copies of all work papers and schedules of the Company, its Subsidiaries and its accountants. In connection therewith, the Buyer shall be permitted to discuss the business affairs and financial statements of the Company and its Subsidi- aries with the Company's accountants, to review the work papers of such accountants regarding the Company, and in the presence of such members of management of the Company as reasonably designated by Buyer and at reasonable times with proper notice, after prior consultation with such management, to interview the employees of the Company regarding continued employment and to discuss with the appropriate employees of the Company and its Subsidiaries such matters regarding the business and assets of the Company and its Subsidiaries as the Buyer may deem necessary or appro- priate. The Buyer and the Company agree that nothing in this Agreement shall be interpreted or construed as limiting, waiving, terminating or otherwise affecting that Confidentiality Agreement between Buyer and the Company dated April 22, 1996. The Buyer and the Company acknowledge that the terms of such Confidentiality Agreement remain in full force and effect.
6.1.2. Records. On the Closing Date, the Company will deliver to the Buyer all original records relating to the Company and its Subsidiaries which are in the possession of any of the Sellers, provided that the Sellers shall have the right to make copies of any and all materials which they may deem necessary and shall have the continual right to have access to such records in accordance with Paragraph 6.2.2, below.
6.1.3. Conduct of the Business of the Company and its Subsidiaries. The Company covenants and agrees with the Buyer that, between the date hereof and the Closing Date (except as otherwise agreed in writing by the Buyer):
(a) the business of the Company and its Subsidiaries will be conducted in the ordinary course consistent with past practice;
(b) no change will be made in the Articles of Incorporation or By-Laws or other constituent documents of the Company or any Subsidiary;
(c) the Company will use reasonable efforts to keep available the services of its employees and to preserve the goodwill of the customers, suppliers, dealers and others having business relationships with the Company and its Subsidiaries; provided, however, that the Company shall not be deemed to have violated this covenant unless it fails to take reasonable action to prevent any of its management employees from continuing to take the action of which the Company has received written notice from the Buyer, which the Buyer deems to be a failure to use such reasonable efforts;
(d) the Company shall promptly advise the Buyer in writing of the commencement or threat of any suit, proceeding or investigation against, relating to or involving the Company or any Subsidiary or which could otherwise affect the assets or the businesses of the Company and its Subsidiaries and which in each case would, if determined adversely to the Company, have a Material Adverse Effect, whether or not covered by insurance;
(e) the Company shall advise the Buyer of (i) any material adverse change in the assets, liabilities or financial condition of the Company and its Subsidiaries and (ii) in any event, any condition or state of facts which results in the failure to satisfy any of the conditions of the Buyer's obligations hereunder;
(f) the Company shall not create or permit to become effective any encumbrances on the assets of the Company and its Subsidiaries other than encumbrances created in the ordinary course of business;
(g) the Company will maintain its current liability, casualty, property and other insurance coverage in full force and effect;
(h) the Company will not issue any additional shares of capital stock or any options, warrants or other rights to purchase, or securities convertible into or exchangeable for, shares of capital stock of the Company (except upon exercise of options described in the Stock- holder Agreements or the Disclosure Schedule);
(i) the Company will not declare or pay any dividends on or make any distributions (however characterized) in respect of shares of its capital stock;
(j) the Company will not repurchase or redeem any shares of its capital stock except as provided in the Stockholder Agreements;
(k) the Company will not make any change in the accounting principles or practices reflected in the Interim Financial Statements other than as required by GAAP or in the Company's methods of applying such principles or practices, or in the credit criteria utilized by them in connection with its businesses;
(l) the Company will not directly or indirectly (through a representative or otherwise) solicit or furnish any information to any prospective buyer, or commence or conduct presently ongoing negotiations with any other party or enter into any agreement with any other party concerning the sale of the Company, the Company's assets or business or any part thereof or any equity securities of the Company (an "Acquisition Proposal"), and the Company shall immediately advise the Buyer of the receipt of any Acquisition Proposal;
(m) the Company shall refuse to accept any certificates for Subject Shares to be transferred or otherwise to allow such transfers to occur upon its books;
(n) the Company and its Subsidiaries will not enter into any agreement or commitment that violates any of the foregoing; and
(o) the Company will not hire a replacement for any of the individuals listed on Exhibit 6.1.7 or Exhibit 6.4.1 attached hereto.
6.1.4. Title Insurance. Within fifteen (15) days after the date of this Agreement, the Company, at its expense, shall provide to the Buyer title insurance commitments, issued by a title insurance company reasonably satisfactory to the Buyer, committing to issue to the Company standard form owner's policies of title insurance with respect to all Owned Real Property, together with a copy of each document to which reference is made in such commitments. Such polices shall be standard ALTA Form B-1992 owner's policies in the full fair market value of the Owned Real Property, insuring good and marketable title thereto (expressly including all easements and other appurtenances). All policies shall insure title in full accordance with the representations and warranties set forth herein and shall be subject only to such conditions and exceptions as shall be reasonably acceptable to Buyer, and shall contain such endorsements as Buyer shall reasonably request (including, but not limited to, a non-imputation endorsement, owners' comprehensive endorsement, zoning endorsement, and an endorsement over rights of creditors, if requested by the Buyer or the Buyer's lender).
6.1.5. Surveys. Within thirty (30) days after the date of this Agreement, the Company, at its expense, shall provide to Buyer original current surveys of the Owned Real Property, certified to Buyer and to the title company issuing the title insurance policies in Paragraph 6.1.4, prepared by registered surveyors reasonably satisfactory to the Buyer, which surveys shall be prepared in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (including all Table A Items), and pursuant to the accuracy of an Urban Class A Survey.
6.1.6. Tax Matters. No new elections with respect to Taxes, or changes in current elections with respect to Taxes, affecting the Company shall have been made after the date of this Agreement without the prior written consent of the Buyer.
6.1.7. Bonuses. At the Closing, the Company shall have the authority to pay and upon approval of the shareholders of the Company shall pay to the management employees of the Company listed on Exhibit 6.1.7 attached hereto in accordance with the general terms set forth therein, in consideration for the agreement of such individuals to remain employed with the Company through the Closing Date and to facilitate the Closing and in addition to and not in lieu of any other bonuses or other payments due to such employees as disclosed in the Disclosure Schedule, the amount set forth opposite such management employees' names on Exhibit 6.1.7 hereof. For purposes hereof, the "After Tax Bonus Amount" shall be an amount equal to the aggregate amount of bonuses paid by the Company under this Paragraph 6.1.7, less forty percent (40%) of such amount.
6.2. Covenants of the Sellers. Each of the Sellers severally covenants and agrees as follows:
6.2.1. Solicitation. Each Seller severally agrees that such Seller will not directly or indirectly (through a representative or otherwise) solicit or furnish information to any prospective buyer or commence or conduct presently ongoing negotiations with any other party or enter any agreement with any other party concerning an Acquisition Proposal and each Seller shall advise the Buyer of the receipt by such Seller of any Acquisition Proposal.
6.2.2. Stock Transfer. No Seller shall transfer or attempt to transfer any of the Subject Shares except to the Buyer pursuant hereto.
6.2.3. Delivery of Documents. Each Seller shall have provided the Buyer with (i) all forms, certificates and/or other instruments required to pay the transfer and recording taxes and charges arising from the transactions contemplated by this Agreement, together with evidence satisfactory to the Buyer that such transfer taxes and charges have been paid by the Company, (ii) an affidavit, stating, under penalty of perjury, each Seller's United States taxpayer identification number and that the transferor is not a foreign person, pursuant to section 1445(b)(2) of the Code (or any similar provisions of state or other tax law), and (iii) a clearance certificate or similar document(s) which may be required by any state taxing authority to relieve the Buyer of any obligation to withhold any portion of the payments to the Sellers pursuant to this Agreement.
6.3. Mutual Covenants. Each of the Company, each Seller severally and the Buyer covenant and agree as follows:
6.3.1. Cooperation. The Buyer, the Company and the Sellers shall cooperate with each other and shall cause their respective officers, employees, agents, accountants and representatives to cooperate with each other after the Closing to ensure the orderly transition of the ownership of the Company and its business from the Sellers to the Buyer and to minimize any disruption to the business of the Company that might result from the transactions contemplated hereby.
6.3.2. Records. For a period of six (6) years after the Closing, upon reasonable written notice, the Buyer and the Sellers agree to furnish or cause to be furnished to each other and their respective repre- sentatives, counsel and accountants access, during normal business hours, to such information (including records pertinent to the Company and its Subsidiaries) relating to the Company and its Subsidiaries as is reasonably necessary for financial reporting tax and accounting matters, assistance in the preparation and filing of any returns, reports or forms or the defense of any tax claim or assessment; provided, however, that such access does not unreasonably disrupt the normal operations of the Company and its Subsidiaries. Without limiting the foregoing, each of the Sellers shall have access to and the right, at such Seller's expense, to copy any books or records of the Company or any of its Subsidiaries which relate to matters or events prior to the Closing.
6.3.3. Publicity. At the Closing, the parties shall issue the press release in the form annexed as Exhibit 6.3.3 hereto. Except for this disclosure, the Buyer, the Company and the Sellers agree that no further public releases or announcements concerning the transactions contemplated hereby shall be issued by any party without the prior consent of the other parties, except as such release or announcement may be required by law, in which case the party required to make the release or announcement shall allow the other parties reasonable time to comment on such release or announcement in advance of its issuance.
6.3.4. Execution of Additional Documents. From time to time, as and when requested by a party hereto, each party hereto shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as such other parties may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement or the agreements, documents or instruments associated herewith.
6.3.5. Reasonable Efforts. Prior to the Closing, the Buyer and the Sellers shall undertake all reasonable efforts to take or cause to be taken all action and to do or cause to be done all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated hereby; provided, however, that no party shall be required to respond to any "second request" of the FTC or DOJ under the HSR Act and in the event such second request is received, the Buyer or the Sellers, as the case may be, shall have the right to terminate this Agreement under Paragraph 10.1, below.
6.4. Covenants of the Buyer. The Buyer covenants and agrees as follows:
6.4.1. Severance Payments. In the event that during the twelve
(12) month period after the Closing Date the employment of any salaried employee is terminated by the Company or the Buyer without Cause, or the base compensation or Other Benefits (as defined below) of such employee as of the Closing are reduced in any respect, the Buyer will, or will cause the Company, to pay to each such affected employee within ten (10) days after the triggering event, an amount calculated as follows: (i) for each of the management employees listed on Exhibit 6.4.1 attached hereto, an amount equal to six (6) months of base compensation and benefits; and (ii) for each of the salaried employees of the Company not listed on Exhibit 6.4.1, an amount equal to three (3) months of base compensation and benefits. For purposes hereof, "Cause" shall mean the material breach by an employee of such employee's duties after the Closing Date to the Company or the Buyer which is not cured after such employee has received written notice of such breach and has been provided with a reasonable opportunity to cure such breach.
6.4.2. Incentive Compensation Plan. The Buyer shall offer, or cause the Company to offer, to the senior management of the Company the right to participate in an incentive compensation plan on the general terms and conditions set forth on Exhibit 6.4.2 attached hereto.
6.4.3. Other Benefits. The Buyer covenants and agrees that it will offer or cause the Company to continue to offer to employees of the Company hereunder the incentive arrangements described in Paragraph 6.4.2 and all fringe benefits due employees of the Company which are reasonably comparable to the benefits disclosed on the Disclosure Schedule, except for (i) the stock appreciation rights described in the Disclosure Schedule and (ii) the incentive bonus arrangements described in the Disclosure Schedule. For purposes hereof, all such fringe benefits (except for the benefits described in clauses (i) and (ii)) shall be referred to herein as the "Other Benefits."
ARTICLE VII
Disclosure Schedule
7.1. General. Although the schedules and information set forth in the Disclosure Schedule specifically refer to the paragraph of this Agreement to which such schedule and information is responsive, each such schedule and information shall be deemed to have been disclosed with respect to any other paragraph of this Agreement or for any other purpose to which such disclosure is applicable and reasonably apparent. Terms used in the Disclosure Schedule and not otherwise defined therein shall have the same meanings as are ascribed to such terms in this Agreement. Any documents attached to the Disclosure Schedule are incorporated in their entirety into the Disclosure Schedule.
7.2. Updates to Disclosure Schedule. The Company or the Sellers shall have the right to supplement the Disclosure Schedule prior to the Closing by delivery to the Buyer prior to the Closing Date of any such supplement (a "Disclosure Supplement"). Each Disclosure Supplement shall be in writing and shall be delivered in accordance with Paragraph 11.2 of this Agreement. Unless the existence of any matter set forth in any such Disclosure Supplement which was not disclosed at the time of the signing of this Agreement (a "New Matter") would have a Material Adverse Effect, the Disclosure Schedule referred to herein shall be deemed amended and supplemented as of the Closing Date by all information including, without limitation, any New Matter set forth in any Disclosure Supplement and the warranties and representations of the Sellers made in Article IV hereof shall be deemed amended and supplemented by all such information set forth in each Disclosure Supplement. In such event all references to Disclosure Schedule shall include all Disclosure Supplements. To the extent that the existence of any New Matter would have a Material Adverse Effect, the Buyer shall have the right under Paragraph 10.1, below, (a) to terminate this Agreement by written notice to the Sellers within five (5) days after receipt of the Disclosure Supplement which includes the New Matter but prior to the Closing or (b) to consummate the transactions contemplated hereby. To the extent that the Buyer elects to so consummate the transactions contemplated hereby, the Disclosure Schedule shall be deemed amended and supplemented by all information set forth in each Disclosure Supplement, and the warranties and representations of the Sellers made in Article IV hereof shall be deemed amended and supplemented by all such information set forth in each Disclosure Supplement as if amended on the date of execution hereof.
ARTICLE VIII
Non-Disclosure
8.1. Non-Disclosure of Confidential Information. Except as may be agreed to in writing by the Buyer, each of the Sellers acknowledges and agrees, severally but not jointly, that such Seller shall not, at any time during the two (2) year period following the Closing Date, disclose any Confidential Information (as hereinafter defined) to anyone other than to employees and representatives of the Buyer. For purposes of this Paragraph 8.1, the term "Confidential Information" shall mean all propri- etary information which is not in or does not come into, the public domain through any fault of such Seller or information which such Seller is required by law or court order to disclose relating to the Company and its Subsidiaries, their customers, products and services including, without limitation, the following: (i) all technical information relating to the provision of goods or services by the Company and its Subsidiaries; (ii) information concerning pricing policies of the Company and its Subsidiaries, prices charged by the Company and its Subsidiaries to their customers, the volume of orders of such customers and all other information concerning the transactions of the Company and its Subsidiaries with their customers or proposed customers; (iii) the customer lists of the Company and its Subsidiaries; (iv) information concerning the marketing programs or strategies of the Company and its Subsidiaries; (v) financial information concerning the Company and its Subsidiaries; and (vi) information concerning salaries or wages paid to, the work records of and other personal information relating to employees of the Company and its Subsidiaries.
8.2. Enforcement. In addition to all other legal remedies available to the Buyer for the enforcement of the covenants of this Article VIII, each of the Sellers hereby agrees severally but not jointly, that the Buyer shall be entitled to an injunction by any court of compe- tent jurisdiction to prevent or restrain any breach or threatened breach hereof. Each of the Sellers further agrees severally, but not jointly, that if any of the covenants set forth herein shall at any time be adjudged invalid to any extent by any court of competent jurisdiction, such covenant shall be deemed modified to the extent necessary to render it enforceable.
ARTICLE IX
Indemnification
9.1. Indemnification of the Buyer.
(a) Subject to the limitations, restrictions and conditions set forth in this Agreement, each of the Sellers shall severally but not jointly indemnify the Buyer and the Company and hold them harmless from and against any and all damages, losses, deficiencies, actions, judgements, costs expenses, debts, liabilities and obligations (including reasonable attorneys' and accountants' fees) ("Claims") of or against the Buyer or the Company resulting from or arising out of (i) any misrepresentation or breach of any warranty made by such Seller (but not by any other Seller) in Paragraphs 4.1.1, 4.1.2 or 4.1.3, (regardless of whether such breach is deemed material for purposes of Paragraph 2.1(a), above) above, or (ii) any nonfulfillment by such Seller of any covenant or agreement which is to be performed by such Seller (but only by such Seller) under this Agreement or any of the Seller Ancillary Documents including, without limitation, the covenants to be performed by such Seller in Paragraph 8.1, above.
(b) Subject to the limitations, restrictions and conditions set forth in this Agreement, each of the Sellers shall severally but not jointly indemnify the Buyer and hold it harmless from and against any and all Claims of or against the Buyer or the Company resulting from or arising out of (i) any misrepresentation or breach of any warranty made by the Company in Paragraph 4.2 of this Agreement (regardless of whether such breach is deemed material for purposes of Paragraph 2.1(a), above), or any Claim based upon a fact or circumstance which would constitute a breach of any warranty or representation set forth in Paragraph 4.2.21, above, whether or not disclosed on the Disclosure Schedule (for purposes hereof any such Claim shall be referred to as a "Deemed Environmental Breach") or (ii) any nonfulfillment of any covenant or agreement on the part of the Company under this Agreement which is to be performed by the Company prior to the Closing.
9.2. Indemnification of the Sellers. The Buyer shall indemnify the Sellers and hold them harmless from and against any and all Claims of or against the Sellers resulting from or arising out of (i) any misrepresentation or breach of warranty of the Buyer contained in this Agreement or any of the Buyer Ancillary Documents on the part of the Buyer (regardless whether such breach is deemed material for purposes of Paragraph 2.2(a), above or (ii) the nonfulfillment of any covenant or agreement on the part of the Buyer contained in this Agreement or any of the Buyer Ancillary Documents.
9.3. Procedure Relative to Indemnification.
(a) In the event that any party hereto shall claim that it is entitled to be indemnified pursuant to the terms of this Article IX, it (the "Claiming Party") shall so notify the party against which the claim is made (the "Indemnifying Party") in writing of such claim promptly after discovery of the facts supporting the claim or receipt of a written notice of any claim of a third party (a "Third Party Claim") that may reasonably be expected to result in a claim by such party against the party to which such notice is given, as the case may be. Such notice shall specify the breach of representation, warranty, covenant or agreement claimed by the Claiming Party and the liability, loss, cost or expense incurred by or imposed upon or expected to be incurred by or imposed upon the Claiming Party on account thereof. If such liability, loss, cost or expense is liquidated in amount, the notice shall so state. If the amount is not liquidated, the notice shall so state and in such event a claim shall be deemed asserted against the Indemnifying Party on behalf of the Claiming Party, but no payment shall be made on account thereof until the amount of such claim is liquidated and the claim is finally determined.
(b) The Indemnifying Party may, upon receipt of written notice of a Third Party Claim and at its expense, defend such claim in its own name or, if necessary, in the name of the Claiming Party, unless the aggregate potential liability of the Claiming Party exceeds the aggregate potential liability of the Indemnifying Party (calculated assuming indemnification by the Indemnifying Party with reference to the limitations set forth in Paragraph 9.5, below), in which event the Indemnifying Party shall only have the right to defend the Third Party Claim with the consent of the Claiming Party, but shall have the right to participate at its expense in the defense thereof. The Claiming Party will cooperate with and make available to the Indemnifying Party such assistance and materials as may be reasonably requested of it, and the Claiming Party shall have the right, at its expense, to participate in the defense. The Indemnifying Party shall have the right to settle and compromise such claim only with the consent of the Claiming Party which consent shall not be unreasonably withheld. However, if the Claiming Party fails to consent to such settlement or compromise offer, the Indemnifying Party may continue to contest or defend such Third Party Claim and, in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim will not exceed the amount of such settlement or compromise offer.
(c) In the event the Indemnifying Party shall fail or not have the right to assume the defense under Paragraph 9.3(b), above, or shall notify the Claiming Party that it shall refuse to conduct a defense against a Third Party Claim, then the Claiming Party shall have the right to conduct a defense against such claim and shall have the right to settle and compromise such claim with the consent of the Indemnifying Party which consent shall not be unreasonably withheld. Once the amount of such claim is liquidated and the claim is finally determined, the Claiming Party shall be entitled to pursue each and every remedy available to it at law or in equity to enforce the indemni- fication provisions of this Article IX and, in the event such amount is determined, or the Indemnifying Party agrees, that it is obligated to indemnify the Claiming Party for such claim, the Indemnifying Party agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees which may be incurred by the Claiming Party in attempting to enforce indemnification under this Article IX, whether the same shall be enforced by suit or otherwise.
(d) Upon judgment, determination, settlement or compromise of any Third Party Claim, the Indemnifying Party shall pay on behalf of the Claiming Party, and/or to the Claiming Party in reimbursement of any amount theretofore required to be paid by the Claiming Party, the amount so determined by judgment, determination, settlement or compromise and all other Claims of the Claiming Party with respect thereto within fifteen (15) days of the date of such judgment, determination, settlement or compromise, unless in the case of a judgment an appeal is made from the judgment. If the Indemnifying Party desires to appeal from an adverse judgment, then the Indemnifying Party shall post and pay the cost of the security or bond to stay execution of the judgment pending appeal.
9.4. Effect of Taxes, Other Benefits and Insurance. The determination of any liability, claim, lien, encumbrance, charge, fine or penalty for which indemnification may be claimed under this Article IX shall be net of insurance proceeds received (but also net of recovery costs and adjusted for any tax incurred as a result of the receipt of such insurance proceeds except to the extent of any tax benefits received from the loss which gave rise to such insurance proceeds) by the party bearing such liability, claim, lien, encumbrance, charge, fine or penalty as a result thereof.
9.5. Limits on Indemnification Claims.
9.5.1. Basket. Except with respect to Claims for breaches of the warranties or representations contained in Paragraph 4.1 or in Paragraph 4.2.10(b)(v), the Sellers shall not be required to provide indemnification under Paragraph 9.1, above: (i) unless the damages of the Buyer for all Claims of indemnification under Paragraph 9.1, except for breaches of the warranties and representations contained in Paragraph 4.2.21 and Deemed Environmental Breaches, shall exceed in the aggregate Seven Hundred Fifty Thousand Dollars ($750,000.00), (the "Non-Environmental Basket Amount") and then only for amounts in excess of the Non-Environmental Basket Amount; and (ii) unless the damages of the Buyer (excluding any costs related to environmental consultants and audits) for breaches of the warranties and representations set forth in Paragraph 4.2.21 and Deemed Environmental Breaches shall exceed in the aggregate Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Environmental Basket Amount") and then only for amounts in excess of the Environmental Basket Amount.
9.5.2. Maximum Amount of Indemnification.
(a) Except with respect to Claims (i) for breaches of the warranties or representations contained in Paragraph 4.1, or (ii) for breaches of the warranties or representations contained in Paragraph 4.2.21 or for Deemed Environmental Breaches (as to both of which the limits in Paragraph 9.5.2(b), shall apply), in no event shall: (A) the aggregate liability of all of the Sellers with respect to all Claims of indemnification by the Buyer exceed the aggregate amount of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00), (the "Cap Amount"), and (B) the liability of any Seller with respect to all Claims of indemnification exceed the product of the Cap Amount and the percentage set forth opposite such Seller's name on Schedule 1 attached hereto.
(b) With respect to any Claim based upon breaches of the warranties or representations contained in Paragraph 4.2.21 or a Deemed Environmental Breach, the following shall apply: (i) the Sellers shall be responsible for providing indemnification to the Buyer under this Article IX, subject to the Environmental Basket Amount, in an amount equal to fifty percent (50%) of the amount of the Buyer's Claims for breach of such warranty or representation or Deemed Environmental Breach until the aggregate liability of the Sellers for breach of such warranty or representation or Deemed Environmental Breach equals Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00), at which time the Sellers shall have no further liability for breach of such warranty or representation or Deemed Environmental Breach; and (ii) each Seller shall be responsible for an amount equal to the product of the liability of all Sellers under clause (i), above, and the percentage set forth opposite such Seller's name on Schedule 1 attached hereto.
(c) Subject to the limitations in Paragraphs 9.5.2(a) and 9.5.2(b), the liability of any Seller with respect to any individual Claim of indemnification shall in no event exceed an amount equal to the product of the amount of such Claim and the percentage set forth opposite such Seller's name on Schedule 1 attached hereto.
9.6. Sole Remedy; Termination. The sole remedy of the Buyer for any and all claims against the Sellers with respect to the transactions contemplated herein, whether under or as a result of this Agreement or otherwise, shall be the indemnity set forth in this Article IX, as limited by the provisions set forth in this Article IX. Any claim for indemnification not submitted in writing by the Buyer prior to the expiration of the applicable survival period of the warranty, representation or covenant on which such claim is based shall be deemed to have been waived and the Sellers shall have no further liability with respect thereto.
9.7. No Indemnification for Known Breaches of Representations and Warranties. Notwithstanding any of the provisions set forth in this Article IX, above, and except for the warranties and representations set forth in Paragraph 4.2.21 or 4.2.10(b)(v) of this Agreement, in the event that the Buyer had knowledge, on or before the Closing Date, of the facts giving rise to a claim hereunder, then the Sellers shall have no liability for any loss resulting from or arising out of such facts. In addition, Buyer shall deliver to Sellers, and attach to this Agreement at Closing, a statement of any facts known to Buyer at Closing and not disclosed by the Company as part of the Disclosure Schedule which could give rise to a claim under this Article IX but for the provisions of this Paragraph 9.7.
ARTICLE X
Termination
10.1. Termination. This Agreement may be terminated at any time prior to the Closing Date:
(a) by the mutual written consent of the Buyer and the Sellers;
(b) by the Buyer, or the Sellers;
(i) if any court or governmental body or agency thereof shall have enacted, promulgated or issued any statute, rule, regulation, ruling, writ or injunction, or taken any other action, restraining, enjoining or otherwise prohibiting the transactions contemplated hereby; or
(ii) if the Closing shall not have occurred on or before October 31, 1996; provided, however, that the right to terminate this Agreement pursuant to this Paragraph 10.1(b)(ii) shall not be available to any party whose breach of any representation or war- ranty or failure to perform or comply with any covenant or obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; or
(c) by the Buyer if the DOJ or FTC shall issue a "second request" to the Buyer, or the Sellers or the Company shall breach this Agreement; or
(d) by the Sellers if the DOJ or FTC shall issue a "second request" to the ultimate parent entity of the Company or the Buyer shall breach this Agreement; or
(e) by the Buyer pursuant to Article VII.
10.2. Effect of Termination. In the event of termination of this Agreement, this Agreement shall forthwith become null and void and there shall be no liability on the part of any party hereto, except for Paragraphs 11.1, 11.2 and 11.9 hereof and this Paragraph 10.2, which shall remain in full force and effect and which shall survive such termination, and provided that no such termination shall relieve any party hereto from liability for any breach by such party of this Agreement.
ARTICLE XI
Miscellaneous
11.1. Expenses. Except as may be otherwise specifically provided herein, the parties hereto shall pay their own legal fees and expenses incurred in connection with the negotiation and consummation of the transactions contemplated by this Agreement, provided that the Company shall pay all previously billed fees and expenses of Godfrey & Kahn, S.C. and Arthur Andersen, LLP related to this transaction, all verifiable unbilled fees and expenses of Godfrey & Kahn, S.C. in an amount not to exceed Six Hundred Thousand Dollars ($600,000.00) and all verifiable unbilled fees and expenses of Arthur Andersen, LLP not to exceed One Hundred Thousand Dollars ($100,000.00). The Sellers shall be severally responsible for any fees payable to Robert W. Baird & Co. Incorporated in connection with the transactions contemplated herein other than the retainer and expenses previously paid by the Company. The Buyer shall be responsible for any fees payable to any brokers, consultants, or other agents retained by the Buyer in connection with the transactions contemplated herein.
11.2. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered to be given and received in all respects when hand delivered, when sent one (1) business day after it is sent by prepaid express or courier delivery service, when sent by facsimile transmission actually received by the receiving equipment, or five (5) days after it is deposited in the United States mail, certified mail, postage prepaid, return receipt requested (or international equivalents thereof), in each case addressed as follows, or to such other address as shall be designated by notice duly given:

IF TO THE BUYER:    Oshkosh Truck Corporation
                    2307 Oregon Street
                    P.O. Box 2566
                    Oshkosh, WI  54903-2566
                    Attention:  R. Eugene Goodson
                    Chief Executive Officer
                    Facsimile:  (414) 233-9624

With a Copy To:     Foley & Lardner
                    777 East Wisconsin Avenue
                    Milwaukee, WI  53202-5367
                    Attention:  Benjamin F. Garmer, III
                    Facsimile:  (414) 297-4900

IF TO THE COMPANY:  Pierce Manufacturing Inc.
                    P.O. Box 2017
                    Appleton, WI  54913-2017
                    Attention:  Michael R. Reese,
                      President
                    Facsimile:  (414) 830-3058

With a Copy To:     Godfrey & Kahn, S.C.
                    100 West Lawrence Street
                    Appleton, WI  54913-2728
                    Attention:  Jeffrey D. Riester
                    Facsimile:  (414) 830-3530

IF TO THE SELLERS:  c/o Northwestern Mutual Life Insurance Company
                    720 East Wisconsin Avenue
                    Milwaukee, WI  53202-4797
                    Attention:  A. Kipp Koester,
                      Vice-President
                    Facsimile:  (414) 299-7124

With a Copy To:     Godfrey & Kahn, S.C.
                    780 North Water Street
                    Milwaukee, WI  53202
                    Attention:  Peter M. Sommerhauser
                    Facsimile:  (414) 273-5198	

11.3. Entire Agreement. This Agreement, the Disclosure Schedule, the exhibits attached hereto and the agreements executed and delivered simultaneously herewith constitute the entire agreement among the parties hereto relating to the subject matter hereof, and all prior agreements, correspondence, discussions and understandings of the parties (whether oral or written) are merged herein and superseded hereby, it being the intention of the parties hereto that this Agreement and the instruments and agreements contemplated hereby shall serve as the complete and exclusive statement of the terms of their agreement together. No amendment, waiver or modification hereto or hereunder shall be valid unless in writing signed by an authorized signatory of the party or parties to be affected thereby.
11.4. Assignment. This Agreement and the rights hereunder shall not be assignable or transferrable (i) by the Buyer without the prior written consent of the Sellers or (ii) by the Company or any of the Sellers without the prior written consent of the Buyer.
11.5. Binding Effect. This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns.
11.6. Paragraph Headings. The headings in this Agreement are for purposes of convenience and ease of reference only and shall not be construed to limit or otherwise affect the meaning of any part of this Agreement.
11.7. Severability. The parties agree that if any provision of this Agreement shall under any circumstances be deemed invalid or inoperative, this Agreement shall be construed with the invalid or inoperative provision deleted, and the rights and obligations of the parties shall be construed and enforced accordingly.
11.8. Applicable Law. This Agreement and all questions arising in connection herewith shall be governed by and construed in accordance with the internal laws of the State of Wisconsin without regard to the principles of conflicts of laws thereunder.
11.9. Counterparts. This Agreement may be executed in one or more original or facsimile counterparts, all of which shall be considered but one and the same agreement, and shall become effective when one or more such counterparts have been executed by each of the parties and delivered to the other parties.
11.10. Passage of Title. Legal title, equitable title and risk of loss with respect to the Subject Shares will not pass to the Buyer until the Subject Shares are transferred at the Closing, which transfer, once it has occurred, will be deemed effective as of 12:01 AM, Milwaukee, Wisconsin time, on the Closing Date for all purposes.
11.11. Use of Terms. In this Agreement, (a) the words "hereof," "herein," "hereto," "hereunder" and words of similar import mean and refer to this Agreement as a whole and not merely to the specific section, paragraph or clause in which the respective word appears, (b) words importing gender include the other genders and (c) any terms defined in this Agreement may, unless the context otherwise requires, be used in the singular or the plural depending on the reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month and year first above written.
THE COMPANY:
PIERCE MANUFACTURING INC.

By: Michael R. Reese, Its President
SELLERS:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By: ______________, Its______________
ROBERT W. BAIRD & CO. INCORPORATED

By: ______________, Its______________
THE MICHAEL R. REESE AND KATHLEEN A. REESE JOINT
REVOCABLE TRUST DATED SEPTEMBER 23, 1993
By: ________________________________
Michael R. Reese, Trustee
THE MICHAEL R. REESE IRREVOCABLE TRUST, DATED
SEPTEMBER 23, 1993, f/b/o JULIE S. REESE, Marshall & Ilsley Trust Company, Successor Trustee
By: ________________________________ Name: _______________________________ Title: ______________________________
ANDREW D. OGILVIE IRREVOCABLE CHARITABLE REMAINDER
UNITRUST, F&M Bank of Kaukauna, Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________

Peter N. Jansen

William H. Peters

Lloyd A. De Wald

James W. Staats

Gregory E. Potts

Jeffrey W. Strenger

Thomas R. Olson

Neil L. Ort
MARGARET BOLDT ANDERSON TRUST DATED OCTOBER 13, 1987

By: Margaret Boldt Anderson, Trustee

John W. Puth

Allison L. Puth

David W. Puth

Jonathan C. Puth
WINDFALLS UNLIMITED, LLC

By: Jeffrey D. Riester, Manager
BUYER:
OSHKOSH TRUCK CORPORATION

By: _______________, Its______________
THE MICHAEL R. REESE IRREVOCABLE TRUST, DATED
SEPTEMBER 23, 1993, f/b/o BRET T. REESE, Marshall & Ilsley Trust Company, Successor Trustee
By: ________________________________ Name: _______________________________ Title: ______________________________

David A. Ogilvie
BETH ALEXANDER LIMITED PARTNERSHIP DATED MAY 31,
 1996

By: David A. Ogilvie, General Partner
DAVID A. OGILVIE CHARITABLE REMAINDER UNITRUST, F&M
Bank of Kaukauna, Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________

Andrew D. Ogilvie
FAITH LIMITED PARTNERSHIP DATED MAY 31, 1996

By: Andrew D. Ogilvie, General Partner

FIRST AMENDMENT TO STOCK PURCHASE
AGREEMENT By and Among PIERCE MANUFACTURING INC.,
THE SHAREHOLDERS OF PIERCE MANUFACTURING INC.,
and OSHKOSH TRUCK CORPORATION
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the "First Amendment") is made and entered into as of this ___ day of September, 1996, by and between Pierce Manufacturing Inc., a Wisconsin corporation (the "Company"), Oshkosh Truck Corporation, a Wisconsin corporation ("Buyer") and the individuals, entities and trusts listed on the signature page hereof (the "Sellers").
WHEREAS, the parties entered into the Stock Purchase Agreement by and among Buyer, the Company and Sellers dated August 7, 1996 (the "Agreement");
WHEREAS, the Company has disclosed certain environmental matters described herein to Buyers subsequent to the signing of the Agreement; and
WHEREAS, as a condition to Closing, Buyer requires the escrow of a portion of the Purchase Price under the Agreement relating to these recently disclosed environmental matters and an increase in the environmental cap as provided by the modifications contained in this First Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants and conditions herein contained, the parties agree as follows:
1. The last sentence of Paragraph 1.2 shall be deleted, and be replaced as follows:
At the Closing, the Buyer shall pay the Purchase Price by wire transfer of immediately available funds as follows:
(a) One Million Dollars ($1,000,000) to the Escrow Agent as defined in and established pursuant to that certain Investigation, Remediation and Escrow Agreement by and among the Company, Buyer, the Sellers and Firstar Trust Company (the "Escrow Agreement") in the form of Exhibit 9.8 (attached to this First Amendment); and (b) the remainder of the Purchase Price to the Sellers in the amounts and per the wire transfer instructions set forth on Schedule 1 attached hereto.
2. Paragraph 3.2(d) shall be added to the Agreement to read in its entirety as follows:
(d) The Escrow Agreement dated the Closing Date duly executed by Buyer and Escrow Agent.
3. Paragraph 3.3(h) shall be added to the Agreement to read in its entirety as follows:
(h) The Escrow Agreement dated the Closing Date duly executed by the Sellers, Company and Escrow Agent.
4. Paragraph 9.5.2(b) shall be deleted from the Agreement and replaced to read in its entirety as follows:
(b) With respect to any Claim based upon breaches of the warranties or representations contained in Paragraph 4.2.21 or a Deemed Environmental Breach, the following shall apply: (i) the Sellers shall be responsible for providing indemnification to the Buyer under this Article IX, subject to the Environmental Basket Amount, in an amount equal to fifty percent (50%) of the amount of the Buyer's Claims for breach of such warranty or representation or Deemed Environmental Breach until the aggregate liability of the Sellers for breach of such warranty or representation or Deemed Environmental Breach equals Four Million Two Hundred Fifty Thousand Dollars ($4,250,000.00), at which time the Sellers shall have no further liability for breach of such warranty or representation or Deemed Environmental Breach; and (ii) each Seller shall be responsible for an amount equal to the product of the liability of all Sellers under clause (i), above, and the percentage set forth opposite such Seller's name on Schedule 1 attached hereto.
5. Paragraph 9.8 shall be added to the Agreement to read in its entirety as follows:
9.8 Limitations/Relation to Escrow Agreement. The limitations and procedures of this Article IX shall not apply to, nor in any way limit the rights of Buyer and Company to be reimbursed for Specific Environmental Claims (as defined in the Escrow Agreement). To the extent that the Buyer shall receive any disbursement of Escrow Funds under the Escrow Agreement, the amount of any such disbursement shall not be included in calculating the amount of any Buyer's Claim under Article IX of the Agreement. In addition, the Buyer shall have no right to receive any indemnification under Article IX of the Agreement, for any Special Environmental Claim (as defined in the Escrow Agreement) until such time as there are no remaining Escrow Funds thereunder.
6. Except as modified by this First Amendment, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, each party has caused this First Amendment to Stock Purchase Agreement to be executed as of the date first written above.
THE COMPANY:
PIERCE MANUFACTURING INC.
By:
William H. Peters, Vice President
and Treasurer
SELLERS:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: _______________, Its_________________
ROBERT W. BAIRD & CO. INCORPORATED
By: _______________, Its_________________
THE MICHAEL R. REESE AND KATHLEEN A. REESE JOINT REVOCABLE TRUST DATED SEPTEMBER 23, 1993
By:
Michael R. Reese, Trustee
THE MICHAEL R. REESE IRREVOCABLE TRUST,
DATED SEPTEMBER 23, 1993, f/b/o JULIE S.
 REESE, Marshall & Ilsley Trust Company,
Successor Trustee
By:
Name:
Title:
THE MICHAEL R. REESE IRREVOCABLE TRUST,
DATED SEPTEMBER 23, 1993, f/b/o BRET T.
 REESE, Marshall & Ilsley Trust Company,
Successor Trustee
By:
Name:
Title:
David A. Ogilvie
BETH ALEXANDER LIMITED PARTNERSHIP DATED MAY
 31, 1996
David A. Ogilvie, General Partner
Andrew D. Oglivie
FAITH LIMITED PARTNERSHIP DATED MAY 31, 1996
By:
Andrew D. Ogilvie, General Partner
DAVID A. OGLIVIE CHARITABLE REMAINDER
UNITRUST, F&M Bank of Kaukauna, Trustee
By:
Name:
Title:
ANDREW D. OGLIVIE IRREVOCABLE CHARITABLE
REMAINDER UNITRUST, F&M Bank of Kaukauna, Trustee
By:
Name:
Title:
Peter M. Jansen
William H. Peters
Lloyd A. DeWald
James W. Staats
Gregory E. Potts
Jeffrey W. Strenger
Thomas R. Olson
Neil L. Ort
MARGARET BOLDT ANDERSON TRUST DATED OCTOBER
 13, 1987
By: Margaret Boldt Anderson, Trustee
John W. Puth
Alison L. Puth
David W. Puth
Jonathan C. Puth
WINDFALLS UNLIMITED, LLC
By: Jeffrey D. Riester, Manager
THE BUYER:
OSHKOSH TRUCK CORPORATION
By: __________________, Its_______________

CREDIT AGREEMENT
Dated as of September 18, 1996
among
OSHKOSH TRUCK CORPORATION,
 as Borrower,
CERTAIN SUBSIDIARIES FROM
TIME TO TIME PARTIES HERETO,
 as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
FIRSTAR BANK MILWAUKEE, N.A.,
as Agent
and
BANK ONE, MILWAUKEE, NA,
NATIONSBANK, N.A.
 and
HARRIS TRUST AND SAVINGS BANK,
as Co-Agents

                             TABLE OF CONTENTS

                                                                      Page

SECTION 1  DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . .    1
     1.1  Definitions . . . . . . . . . . . . . . . . . . . . . . . .    1
     1.2  Other Definitional Provisions.  . . . . . . . . . . . . . .   26
     1.3  Accounting Terms and Determinations . . . . . . . . . . . .   26

SECTION 2  CREDIT FACILITIES  . . . . . . . . . . . . . . . . . . . .   27
     2.1  Revolving Loans.  . . . . . . . . . . . . . . . . . . . . .   27
     2.2  Term Loan . . . . . . . . . . . . . . . . . . . . . . . . .   29
     2.3  Letter of Credit Subfacility  . . . . . . . . . . . . . . .   30
     2.4  Swing Line Loans  . . . . . . . . . . . . . . . . . . . . .   34

SECTION 3  OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . .   36
     3.1  Default Rate  . . . . . . . . . . . . . . . . . . . . . . .   36
     3.2  Extension and Conversion  . . . . . . . . . . . . . . . . .   36
     3.3  Reductions in Commitments and Prepayments . . . . . . . . .   37
     3.4  Fees  . . . . . . . . . . . . . . . . . . . . . . . . . . .   38
     3.5  Capital Adequacy  . . . . . . . . . . . . . . . . . . . . .   39
     3.6  Inability To Determine Interest Rate  . . . . . . . . . . .   39
     3.7  Illegality  . . . . . . . . . . . . . . . . . . . . . . . .   40
     3.8  Requirements of Law . . . . . . . . . . . . . . . . . . . .   40
     3.9  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .   41
     3.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . .   43
     3.11 Pro Rata Treatment  . . . . . . . . . . . . . . . . . . . .   43
     3.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . .   44
     3.13 Place and Manner of Payments  . . . . . . . . . . . . . . .   45
     3.14 Indemnification: Nature of Issuing Lender's Duties  . . . .   46
     3.15 Cleanup Period  . . . . . . . . . . . . . . . . . . . . . .   48
     3.16 Transfers at Borrower's Request . . . . . . . . . . . . . .   48

SECTION 4  GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . .   48
     4.1  The Guaranty  . . . . . . . . . . . . . . . . . . . . . . .   48
     4.2  Obligations Unconditional . . . . . . . . . . . . . . . . .   49
     4.3  Reinstatement . . . . . . . . . . . . . . . . . . . . . . .   50
     4.4  Certain Additional Waivers  . . . . . . . . . . . . . . . .   50
     4.5  Remedies  . . . . . . . . . . . . . . . . . . . . . . . . .   50
     4.6  Continuing Guarantee  . . . . . . . . . . . . . . . . . . .   51

SECTION 5  CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . .   51
     5.1  Conditions to Closing Date  . . . . . . . . . . . . . . . .   51
     5.2  Conditions to All Extensions of Credit  . . . . . . . . . .   54

SECTION 6  REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . .   54
     6.1  Financial Statements  . . . . . . . . . . . . . . . . . . .   55
     6.2  Ownership of Properties; Liens and Encumbrances . . . . . .   55
     6.3  Corporate Existence; Compliance with Law  . . . . . . . . .   55
     6.4  Corporate Power; Authorization; Enforceable Obligations . .   56
     6.5  No Legal Bar; No Default  . . . . . . . . . . . . . . . . .   56
     6.6  No Material Litigation  . . . . . . . . . . . . . . . . . .   57
     6.7  Investment Company Act  . . . . . . . . . . . . . . . . . .   57
     6.8  Federal Regulations . . . . . . . . . . . . . . . . . . . .   57
     6.9  ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . .   57
     6.10 Environmental Matters . . . . . . . . . . . . . . . . . . .   58
     6.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . .   59
     6.12 Subsidiaries  . . . . . . . . . . . . . . . . . . . . . . .   59
     6.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
     6.14 Solvency  . . . . . . . . . . . . . . . . . . . . . . . . .   59
     6.16 Amendments to Schedule 6.12 . . . . . . . . . . . . . . . .   60

SECTION 7  AFFIRMATIVE COVENANTS  . . . . . . . . . . . . . . . . . .   60
     7.1  Annual Financial Statement  . . . . . . . . . . . . . . . .   60
     7.2  Interim Financial Statements  . . . . . . . . . . . . . . .   61
     7.3  Payment of Obligations  . . . . . . . . . . . . . . . . . .   62
     7.4  Conduct of Business and Maintenance of Existence  . . . . .   62
     7.5  Maintenance of Property; Insurance  . . . . . . . . . . . .   62
     7.6  Inspection of Property; Books and Records; Discussions  . .   62
     7.7  Notices . . . . . . . . . . . . . . . . . . . . . . . . . .   63
     7.8  Environmental Laws  . . . . . . . . . . . . . . . . . . . .   63
     7.9  Financial Covenants . . . . . . . . . . . . . . . . . . . .   64
     7.10 Capital Expenditures  . . . . . . . . . . . . . . . . . . .   65
     7.11 Additional Subsidiary Guarantors  . . . . . . . . . . . . .   65

SECTION 8  NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .   66
     8.1  Indebtedness  . . . . . . . . . . . . . . . . . . . . . . .   66
     8.2  Liens . . . . . . . . . . . . . . . . . . . . . . . . . . .   67
     8.3  Nature of Business  . . . . . . . . . . . . . . . . . . . .   67
     8.4  Consolidation, Merger, Sale or Purchase of Assets, etc  . .   68
     8.5  Advances Investments and Loans  . . . . . . . . . . . . . .   68
     8.6  Guarantee Obligations . . . . . . . . . . . . . . . . . . .   69
     8.7  Transactions with Affiliates  . . . . . . . . . . . . . . .   69
     8.8  Ownership of Subsidiaries . . . . . . . . . . . . . . . . .   69
     8.9  Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . .   69
     8.10 Prepayments of Indebtedness, etc  . . . . . . . . . . . . .   69
     8.11 Dividends . . . . . . . . . . . . . . . . . . . . . . . . .   70

SECTION 9  EVENTS OF DEFAULT  . . . . . . . . . . . . . . . . . . . .   70

SECTION 10  AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . .   74
     10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . .   74
     10.2 Delegation of Duties  . . . . . . . . . . . . . . . . . . .   74
     10.3 Exculpatory Provisions  . . . . . . . . . . . . . . . . . .   74
     10.4 Reliance on Communications  . . . . . . . . . . . . . . . .   75
     10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . .   76
     10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . .   76
     10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . .   76
     10.8 Agent in its Individual Capacity  . . . . . . . . . . . . .   77
     10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . .   77

SECTION 11  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .   78
     11.1  Amendments, Waivers and Release of Collateral  . . . . . .   78
     11.2  Notices  . . . . . . . . . . . . . . . . . . . . . . . . .   79
     11.3  No Waiver; Cumulative Remedies . . . . . . . . . . . . . .   80
     11.4  Survival of Representations and Warranties . . . . . . . .   80
     11.5  Payment of Expenses and Taxes  . . . . . . . . . . . . . .   80
     11.6  Successors and Assigns; Participations; Purchasing
          Lenders . . . . . . . . . . . . . . . . . . . . . . . . . .   81
     11.7  Set-off  . . . . . . . . . . . . . . . . . . . . . . . . .   84
     11.8  Confidentiality  . . . . . . . . . . . . . . . . . . . . .   85
     11.9  Table of Contents and Section Headings . . . . . . . . . .   86
     11.10  Counterparts  . . . . . . . . . . . . . . . . . . . . . .   86
     11.11  Severability  . . . . . . . . . . . . . . . . . . . . . .   86
     11.12  Integration . . . . . . . . . . . . . . . . . . . . . . .   86
     11.13  Governing Law . . . . . . . . . . . . . . . . . . . . . .   86
     11.14  Consent to Jurisdiction and Venue . . . . . . . . . . . .   86
     11.15  Acknowledgements  . . . . . . . . . . . . . . . . . . . .   87
     11.16  Waivers of Jury Trial . . . . . . . . . . . . . . . . . .   87
     11.17  Limitation of Liability . . . . . . . . . . . . . . . . .   87	

EXHIBITS

Exhibit 2.1(b)(i)   Notice of Borrowing
Exhibit 2.1(e)      Form of Revolving Note
Exhibit 2.2(d)      Form of Term Note
Exhibit 2.4(b)      Form of Swing Line Note
Exhibit 3.2         Form of Notice for Conversion/Extension of Revolving
                    Loan or Term Loan
Exhibit 5.1(d)      Form of Certificate of Financial Condition
Exhibit 5.1(g)      Officer's Certificate
Exhibit 5.1(l)      Form of Landlord Waiver
Exhibit 7.11        Joinder Agreement
Exhibit 11.6(c)     Commitment Transfer Supplement	

SCHEDULES

Schedule 1.1(a)     Existing Letters of Credit
Schedule 1.1(b)     Existing Investments
Schedule 1.1(c)     Transaction Costs
Schedule 2.1(a)     Schedule of Lenders and Commitments
Schedule 2.1(d)     Applicable Percentage
Schedule 6.6        Litigation
Schedule 6.10       Environmental Matters
Schedule 6.12       Subsidiaries of the Borrower
Schedule 8.1(b)     Permitted Indebtedness
Schedule 8.2        Permitted Liens
Schedule 11.2       Schedule of Lenders and Addresses	

CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 18, 1996 (the "Credit Agreement"), is by and among OSHKOSH TRUCK CORPORATION, a Wisconsin corporation (the "Borrower"), those Subsidiaries identified as a "Guarantor" on the signature pages hereto and such other Subsidiaries as may from time to time become a party hereto (the "Guarantors"), the several lenders identified on the signature pages hereto and such other lenders as may from time to time become a party hereto (the "Lenders"), FIRSTAR BANK MILWAUKEE, N.A., as agent for the Lenders (in such capacity, the "Agent") and BANK ONE, MILWAUKEE, NA, NATIONSBANK, N.A. and HARRIS TRUST AND SAVINGS BANK, as co-agents.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a $200,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facility available to the Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. As used in this Credit Agreement, the following terms shall have the meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a Guarantor after the Closing Date by execution of a Joinder Agreement in accordance with Section 7.11.
"Affiliate" means, with respect to any Person, any other Person
(i) directly or indirectly controlling or controlled by or under direct or indirect common control with such Person or (ii) directly or indirectly owning or holding five percent (5%) or more of the equity interest in such Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means Firstar Bank Milwaukee, N.A. as administrative agent in such capacity hereunder, and any successors and assigns in such capacity.
"Aggregate Revolving Committed Amount" means the aggregate amount of all of the Revolving Commitments in effect from time to time.
"Applicable Percentage" means, for any day, the rate per annum set forth opposite the applicable pricing level then in effect as shown on Schedule 2.1(d), it being understood that the Applicable Percentage for (i) Revolving Loans and the Letter of Credit Fee shall be the percentage set forth under the column "Applicable Percentage for Revolving Loans and Letter of Credit Fee," (ii) the Term Loan shall be the percentage set forth under the column "Applicable Percentage for Term Loan," and (iii) the Unused Facility Fee shall be the percentage set forth under the column "Applicable Percentage for Unused Facility Fee." The Applicable Percentage shall, in each case, be determined and adjusted quarterly by the Agent as soon as practicable (but in any event within 5 days) after delivery of the annual financial information required by Section 7.1 or the monthly financial information required by Section 7.2 (each an "Interest Determination Date") based on the information contained in such financial information, with the first such determination and adjustment hereunder to be made upon the Agent's receipt of financial information for the month ended December 31, 1996. Such Applicable Percentage shall be effective from an Interest Determination Date until the next such Interest Determination Date. The Agent shall determine the appropriate pricing level promptly upon its receipt of the foregoing financial information and promptly notify the Borrower and the Lenders of any change thereof. Such determinations by the Agent shall be conclusive absent manifest error. The initial Applicable Percentages shall be based on pricing level 6. The term "pricing level" shall be as referenced in Schedule 2.1(d).
"Borrowing Date" means in respect of any Loan, the date such Loan is made.
"Business" is defined in Section 6.10(b).
"Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in Wisconsin, Illinois or North Carolina are closed, except that, when used in connection with a rate determination, borrowing or payment in respect of a Eurodollar Loan, such day shall also be a day on which dealings between banks are carried on in U.S. dollar deposits in London, England and Nassau, Bahamas.
"Calculation Date" is defined in the definition of Interbank Offered Rate.
"Capital Expenditures" means all expenditures which in accordance with GAAP would be classified as capital expenditures, including, without limitation, Capital Lease Obligations.
"Capital Lease" means any lease of property, real or personal, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" means the capital lease obligations relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) U.S. dollar denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "Approved Lender"), in each case with maturities of not more than 364 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Lender (or by the parent company thereof) or any variable or fixed rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition, (d) repurchase agreements with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which the Borrower shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations, (e) obligations of any State of the United States or any political subdivision thereof, the interest with respect to which is exempt from federal income taxation under Section 103 of the Code, having a long term rating of at least Aa-3 or AA- by Moody's or S&P, respectively, (f) investments in municipal auction preferred stock (i) rated AAA or the equivalent thereof) or better by S&P or Aaa (or the equivalent thereof) or better by Moody's and (ii) with dividends that reset at least once every 365 days and (g) investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $100,000,000 and the portfolios of which are limited to investments of the character described in the foregoing subdivisions (a) through (f).
"Cleanup Period" means the sixty (60) consecutive day period in any fiscal year used by the Borrower to satisfy the cleanup requirement set forth in Section 3.15.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commitment" means the Revolving Commitment, the LOC Commitment and the Term Loan Commitment, individually or collectively, as appropriate.
"Commitment Fee" is defined in Section 3.4(c).
"Commitment Percentage" means the Revolving Commitment Percentage, the LOC Commitment Percentage and/or the Term Loan Commitment Percentage, as appropriate.
"Commitment Transfer Supplement" means a Commitment Transfer Supplement, substantially in the form of Exhibit 11.6(c).
"Commonly Controlled Entity" means an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated EBIT" means for any period, the aggregate of (i) the sum of Consolidated Net Income plus Consolidated Interest Expense plus all provisions for any federal, state or other income taxes for such period plus the noncash write-offs for such period of the Borrower's investments in and receivables from Autobus es de Mexico (MASA), Steeltech Manufacturing, Inc., Chasises Y Autopartes Oshmex S.A. de C.V. and the Borrower's former United States chassis division, but not to exceed in the aggregate $6,281,000 for all periods plus Transaction Costs plus losses incurred in such period, if any, in performing the Borrower's obligations under the U.S. Army component (if awarded to the Borrower) of that certain Medium Tactical Truck Remanufacturing Prototype Contract between the Borrower and the United States Department of Defense not to exceed in the aggregate $2,500,000 for all periods, plus reserves established by the Borrower with respect to a judgment entered against the Borrower in the Super Steel litigation described on Schedule 6.6, and
(ii) to the extent not included in (i), the sum of Consolidated Net Income plus Consolidated Interest Expense plus all provisions for any federal, state or other income taxes for Pierce and its Subsidiaries on a consolidated basis, determined in each case in accordance with GAAP applied on a consistent basis. Except as expressly provided otherwise, the applicable period shall be for the four consecutive quarters ending as of the date of determination.
"Consolidated EBITDA" means for any period, the aggregate of (i) the sum of Consolidated Net Income plus Consolidated Interest Expense plus all provisions for any federal, state or other income taxes for such period plus depreciation, amortization and other noncash charges for the Borrower and its Subsidiaries on a consolidated basis for such period (including, without limitation, the noncash write-offs for such period of the Borrower's investments in and receivables from Autobus es de Mexico (MASA), Steeltech Manufacturing, Inc., Chasises Y Autopartes Oshmex S.A. de C.V. and the Borrower's former United States chassis division, but not to exceed in the aggregate $6,281,000 for all periods), plus Transaction Costs, plus losses incurred in such period, if any, in performing the Borrower's obligations under the U.S. Army component (if awarded to the Borrower) of that certain Medium Tactical Truck Remanufacturing Prototype Contract between the Borrower and the United States Department of Defense not to exceed in the aggregate $2,500,000 for all periods, plus reserves established by the Borrower with respect to a judgment entered against the Borrower in the Super Steel litigation described on Schedule 6.6, and (ii) to the extent not included in (i), the sum of Consolidated Net Income plus Consolidated Interest Expense plus all provisions for any federal, state or other income taxes plus depreciation, amortization and other non-cash charges for Pierce and its Subsidiaries on a consolidated basis, determined in each case in accordance with GAAP applied on a consistent basis. Except as expressly provided otherwise, the applicable period shall be for the four consecutive quarters ending as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP applied on a consistent basis.
"Consolidated Funded Debt Ratio" means, as of the last day of any fiscal quarter, the ratio of Consolidated Funded Debt on such day to Consolidated EBITDA for the period of four consecutive fiscal quarters ending as of such day.
"Consolidated Interest Expense" means for any period, all interest expense, including the amortization of debt discount and premium and the interest component under Capital Leases for the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP applied on a consistent basis. The applicable period shall be for the four consecutive quarters ending as of the last date of such period, except that for the first three complete fiscal quarters to occur after the Closing Date, Consolidated Interest Expense shall be determined by annualizing the components thereof for the complete fiscal quarters occurring after the Closing Date such that Consolidated Interest Expense for the first complete fiscal quarter to occur after the Closing Date would be multiplied by four (4), the first two complete fiscal quarters would be multiplied by two (2) and the first three complete fiscal quarters would be multiplied by one and one-third (1-1/3).
"Consolidated Net Income" means for any period, the net income of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP applied on a consistent basis, but excluding for purposes of determining the Consolidated Funded Debt Ratio and the Interest Coverage Ratio any extraordinary gains or losses (including, without limitation, gains or losses on disposal of property, plant and equipment relating to discontinued operations), and any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses. The applicable period shall be for the four consecutive quarters ending as of the date of computation.
"Consolidated Net Worth" means total stockholders' equity of the Borrower and its Subsidiaries on a consolidated basis as determined in accordance with GAAP applied on a consistent basis.
"Consolidated Subsidiaries" means Subsidiaries whose financial statements are consolidated with those of the Borrower in accordance with GAAP.
"Consolidated Total Assets" means total assets of the Borrower and its Subsidiaries on a consolidated basis as determined in accordance with GAAP applied on a consistent basis.
"Continuing Director" is defined in Section 9(h).
"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.
"Credit Documents" means this Credit Agreement, the Notes, any Joinder Agreement, the Security Agreement, the General Intangibles Mortgage, any Letter of Credit Document, and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Credit Party Obligations" means, without duplication, all of the obligations of the Borrower and the other Credit Parties to the Lenders, the Agent and the Issuing Lender (including the obligations to pay principal of and interest on the Loans, to pay LOC Obligations, to pay all Fees, to provide cash collateral in respect of Letters of Credit, to pay certain expenses and the obligations arising in connection with various indemnities) whenever arising, under this Credit Agreement, the Notes or any other of the Credit Documents to which the Borrower or any other Credit Party is a party.
"Current Ratio" means the relationship, expressed as a numerical ratio, between:
(a) the amount of all assets which, under GAAP, would appear as current assets on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries, and
(b) the amount of all liabilities which, under GAAP, would appear as current liabilities on such balance sheet of the Borrower and its Consolidated Subsidiaries, (including all Indebtedness payable on demand or maturing whether by reason of specified maturity, fixed prepayments, sinking funds or accruals of any kind, or otherwise within 12 months or less from the date of the relevant statement), all Capital Lease Obligations due in 12 months or less and customers' advances and progress billings on contracts, but excluding the aggregate unpaid principal balance of the Notes.
"Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means at any time, any Lender that, at such time (a) has failed to make a Loan or advance required pursuant to the terms of this Credit Agreement, including the funding of a Participation Interest in accordance with the terms hereof, (b) has failed to pay to the Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement, or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" means dollars in lawful currency of the United States of America.
"Domestic Lending Office" means the office or branch of the Lender identified on Schedule 11.2, or such other office or branch as the Lender may identify by written notice to the Borrower and the Agent.
"Domestic Subsidiary" is defined in Section 7.11.
"Eligible Transferee" means and includes a commercial bank, financial institution or other "accredited investor" as defined in Regulation D of the Securities Act of 1933, (as amended).
"Environmental Laws" means any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority (or other Requirement of Law including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time be in effect during the term of this Credit Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.
"Eurodollar Lending Office" means the office or branch of the Lender identified on Schedule 11.2, or such other office or branch as the Lender may identify by written notice to the Borrower and the Agent.
"Eurodollar Loan" means any Loan bearing interest at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate

1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined, whether or not Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefit of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" is defined in Section 9.
"Existing Letters of Credit" means those Letters of Credit outstanding on the Closing Date and identified on Schedule 1.1(a).
"Extension of Credit" means as to any Lender, the making of a Loan by such Lender or the issuance of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate of interest per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (A) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day and (B) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Agent on such day on such transactions as determined by the Agent.
"Fee" means any fee payable pursuant to Section 3.4.
"Firstar" means Firstar Bank Milwaukee, N.A.
"Funded Debt" means, for any Person, (i) all Indebtedness of such Person for borrowed money (including, without limitation, indebtedness evidenced by promissory notes, bonds, debentures and similar instruments and further any portion of the purchase price for assets or acquisitions permitted hereunder which may be financed by the seller and Guarantee Obligations by such Person of Funded Debt of other Persons), (ii) all purchase money Indebtedness of such Person,
(iii) the principal portion of Capital Lease Obligations, (iv) all preferred stock issued by such Person and required by the terms thereto to be redeemed, or for which mandatory sinking fund payments are due, by a fixed date, and (v) the outstanding balance of the purchase price of uncollected accounts receivable of such Person subject at such time to a sale of receivables or other similar transaction, regardless of whether such transaction is effected without recourse to such Person or in a manner which would not be reflected on the balance sheet of such Person in accordance with GAAP. Funded Debt shall include payments in respect of Funded Debt which constitute current liabilities of the obligor under GAAP. For purposes hereof, Funded Debt shall not include any Indebtedness owing in respect of the Revolving Loans, Subordinated Debt or intercompany Indebtedness owing by a Credit Party to another Credit Party.
"GAAP" means generally accepted accounting principles in effect in the United States of America applied on a consistent basis.
"General Intangibles Mortgage" means that General Intangibles Mortgage and Security Agreement dated as of the Closing Date given by the Borrower and the Guarantors to the Agent, as amended, supplemented or otherwise modified from time to time.
"Government Acts" is defined in Section 3.14(a).
"Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation" means, as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
"Guarantor" means those Subsidiaries of the Borrower identified as a "Guarantor" on the signature pages hereto, and each Additional Credit Party which has executed a Joinder Agreement, together with their successors and permitted assigns.
"Guaranty" means the guaranty of the Guarantors set forth in
Section 4.
"Indebtedness" means, of any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services other than trade liabilities incurred in the ordinary course of business and not restructured thereafter for credit reasons, (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person under Capital Leases,
(d) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (f) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (g) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (h) all Guarantee Obligations of such Person, (i) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements, (j) the maximum amount of all letters of credit issued or bankers' acceptances created for the account of such Person and, without duplication, all drafts drawn thereunder to the extent not theretofore reimbursed, (k) all preferred stock issued by such Person and required by the terms thereto to be redeemed, or for which mandatory sinking fund payments are due, by a fixed date, (l) all other obligations which would be shown as a liability on the balance sheet of such Person, and (m) the outstanding balance of the purchase price of uncollected accounts receivable of such Person subject at such time to a sale of receivables or other similar transaction, regardless of whether such transaction is effected without recourse to such Person or in a manner which would not be reflected on the balance sheet of such Person in accordance with GAAP; but specifically excluding from the foregoing (x) trade payables, (y) obligations for advances by customers for the purchase of goods or services from the Borrower and its Subsidiaries, and
(z) other obligations, expenses and reserves (whether classified as long term or short term) arising or incurred in the ordinary course of business. For purposes hereof, Indebtedness shall include Indebtedness of any partnership in which such Person is a general partner (except for any such Indebtedness with respect to which the holder is limited to the assets of such partnership or joint venture).
"Indemnified Liabilities" is defined in Section 11.5.
"Insolvency" means with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interbank Offered Rate" means, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the per annum rate of interest determined by the Agent (each such determination to be conclusive and binding absent manifest error) to be the average (rounded up, if necessary, to the nearest one-sixteenth (1/16) of one percent) of the offered rates for deposits in U.S. dollars for the applicable Interest Period which appear on the Reuters Screen LIBOR Page (or such other page on which the appropriate information may be displayed), on the electronic communications terminals in the Agent's money center as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period (the "Calculation Date"), except as provided below. If fewer than two offered rates appear for the applicable Interest Period or if the appropriate screen is not accessible as of such time, the term "Interbank Offered Rate" shall mean the per annum rate of interest determined by the Agent (each such determination to be conclusive and binding absent manifest error) to be the average (rounded up, if necessary, to the nearest one-sixteenth (1/16) of one percent) as the effective rate at which deposits in immediately available funds in Dollars are being, have been, or would be offered or quoted by major banks to the Agent in the applicable interbank market for Eurodollar deposits at 11:00 a.m. (Milwaukee, Wisconsin) on the Business Day which is the second Business Day immediately preceding the first day of such Interest Period, for a term comparable to such Interest Period and in the amount of the requested Eurodollar Loan. If no such offers or quotes are generally available for such amount, then the provisions of
Section 3.6 shall apply.
"Interest Coverage Ratio" means for any period, the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Interest Payment Date" means (a) as to any Prime Rate Loan, the last day of each month and the Revolving Termination Date or the Term Termination Date, as applicable, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, and (c) as to any Eurodollar Loan having an Interest Period of more than three months, the day which is three months after the first day of such Interest Period and the last day of such Interest Period. Whenever any Interest Payment Date shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and Fees for the period of such extension), except that in the case of Eurodollar Loans, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day as provided in Section 3.13.
"Interest Period" means with respect to any Eurodollar Loan,
(i) initially, the period commencing on the Borrowing Date or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or, if available, four or six months thereafter, as selected by the Borrower in the notice of borrowing or notice of conversion given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or, if available, four or six months thereafter, as selected by the Borrower by irrevocable notice to the Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;
provided that the foregoing provisions are subject to the following:
(A) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(B) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month;
(C) if the Borrower shall fail to give notice as provided above, the Borrower shall be deemed to have selected a Prime Rate Loan to replace the affected Eurodollar Loan;
(D) with regards to Revolving Loans, any Interest Period that would otherwise extend beyond the Revolving Termination Date shall end on the Revolving Termination Date and with regard to the Term Loan, no Interest Period shall extend beyond any principal amortization payment date unless the portion of the Term Loan consisting of Prime Rate Loans together with the portion of the Term Loan consisting of Eurodollar Loans with Interest Periods expiring prior to or concurrently with the date such principal amortization payment is due, is at least equal to the amount of such principal amortization payment due on such date; and
(E) no more than 10 Eurodollar Loans may be in effect at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they shall begin on the same date and have the same duration, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurodollar Loan with a single Interest Period.
"Issuing Lender" means as to the Existing Letters of Credit, the Issuing Lenders identified on Schedule 1.1(a), and as to Letters of Credit issued after the Closing Date, one or more of the Lenders, as the Borrower may elect.
"Joinder Agreement" means a Joinder Agreement substantially in the form of Exhibit 7.11, executed and delivered by an Additional Credit Party in accordance with the provisions of Section 7.11.
"Lenders" means each of the Persons identified as a "Lender" on the signature pages hereto, and each Person which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns.
"Letter of Credit" means any Existing Letter of Credit and any letter of credit issued for the account of a Credit Party by an Issuing Lender as provided in Section 2.3, as such letter of credit may be amended, supplemented, extended or otherwise modified from time to time.
"Letter of Credit Fees" is defined in Section 3.4(b).
"Lien" means any mortgage, pledge, hypothecation, assignment, security interest, encumbrance, lien (statutory or otherwise), priority or charge of any kind including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction (or other similar recording or notice statute, and any lease in the nature thereof), except a filing for precautionary purposes made with respect to a true lease or other true bailment.
"Loan" means a Revolving Loan and/or the Term Loan and/or a Swing Line Loan, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue Letters of Credit and with respect to each Lender, the commitment of such Lender to purchase participation interests in the Letters of Credit up to such Lender's LOC Committed Amount as specified in Schedule 2.1(a) (subject to adjustment on account of assignment pursuant to the provisions of Section 11.6(c) hereof), as such amount may be reduced from time to time in accordance with the provisions hereof.
"LOC Commitment Percentage" means for each Lender, the percentage identified as its LOC Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.6(c).
"LOC Committed Amount" means, collectively, the aggregate amount of all of the LOC Commitments of the Lenders to issue and participate in Letters of Credit as referenced in Section 2.3(a) and, individually, the amount of each Lender's LOC Commitment as specified in Schedule 2.1(a) (subject to adjustment on account of assignment pursuant to the provisions of Section 11.6(c) hereof).
"LOC Documents" means with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate amount of all payments made, or drafts accepted for subsequent payments to be made, under Letters of Credit honored by the Issuing Lender but not theretofore reimbursed.
"Mandatory Borrowing" is defined in Section 2.3(e).
"Material Adverse Effect" means a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower or the other Credit Parties to perform their obligations, when such obligations are required to be performed, under this Credit Agreement or any of the other Credit Documents or (c) the validity or enforceability of this Credit Agreement, any of the Notes or any of the other Credit Documents or the rights or remedies of the Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern" means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means the gross cash proceeds including cash by way of deferred payment pursuant to a promissory note, receivable or otherwise, (but only as and when received) received from the sale, lease, conveyance, disposition or other transfer of assets, or from a Recovery Event or from the sale, issuance or placement of equity securities, Indebtedness for borrowed money or Subordinated Debt to or from a Person other than a Credit Party, net of (i) transaction costs payable to third parties, (ii) the estimated taxes payable with respect to such proceeds (including, without duplication, withholding taxes), (iii) Indebtedness (other than Indebtedness of the Lenders pursuant to the Credit Documents) which is secured by the assets which are the subject of such event to the extent such Indebtedness is paid with a portion of the proceeds therefrom, and (iv) any and all cash costs which may occur as a result of discontinuing operations, shut-downs or otherwise resulting from, the disposition of such assets.
"Non-Excluded Taxes" is defined in Section 3.9.
"Non-Guarantor Domestic Subsidiaries" is defined in Section 7.11.
"Note" or "Notes" means the Revolving Notes and/or the Term Notes and/or the Swing Line Note, collectively, separately or individually, as appropriate.
"Notice of Borrowing" means the written notice of borrowing as referenced and defined in Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of extension or conversion as referenced and defined in Section 3.2.
"Obligations" means collectively, Loans and LOC Obligations.
"Participant" and "Participants" are defined in Section 11.6.
"Participation Interest" means the purchase by a Lender of a participation interest in Letters of Credit as provided in Section 2.3.
"PBGC" means the Pension Benefit Guaranty Corporation established under ERISA, and any successor thereto.
"Permitted Guarantee Obligations" means (i) the Guaranty, (ii) Guarantee Obligations of the Borrower and its Subsidiaries in favor of suppliers and vendors of the Borrower and its Subsidiaries (which may include Steeltech Manufacturing, Inc.), to enable such suppliers and vendors to purchase goods or parts to be processed and sold to the Borrower and its Subsidiaries, provided, however, that the aggregate of the liability of the Borrower and its Subsidiaries under such Guarantee Obligations and advances of the Borrower and its Subsidiaries permitted by clause (iii) of the definition of Permitted Investments shall not exceed $15,000,000 outstanding at any one time (including any such advances which have been written off, compromised, forgiven or satisfied after the Closing Date without the payment in full thereof), (iii) Guarantee Obligations of the Borrower and its Subsidiaries relating to Indebtedness of the Borrower or a Domestic Subsidiary otherwise permitted under Section 8.1, (iv) Guarantee Obligations of the Borrower under that certain Steeltech Manufacturing, Inc./Lease Investment Partnership I Guaranty dated as of April 6, 1992, in the maximum amount of $1,700,000, (v) Guarantee Obligations of the Borrower and its Subsidiaries relating to obligations of their customers under third-party wholesale/retail finance arrangements, consistent with past practices of the Borrower and its Subsidiaries, and (vi) Guarantee Obligations of the Borrower and its Subsidiaries relating to performance bonds issued for their customers to facilitate sales of products of the Borrower and its Subsidiaries, consistent with past practices of the Borrower and its Subsidiaries.
"Permitted Investments" means (i) cash and Cash Equivalents,
(ii) receivables owing to the Borrower or any of its Subsidiaries for trade credit, in each case if created, acquired or made in the ordinary course of business, (iii) advances to vendors of the Borrower and its Subsidiaries (which may include Steeltech Manufacturing, Inc.), or suppliers to such vendors, to enable such vendors and suppliers to purchase goods or parts to be processed and sold to the Borrower and its Subsidiaries, provided, however, that the aggregate of such advances and the liability of the Borrower and its Subsidiaries under Guarantee Obligations of the Borrower and its Subsidiaries permitted by clause (ii) of the definition of Permitted Guarantee Obligations shall not exceed $15,000,000 outstanding at any one time, (iv) investments in and advances to a domestic Credit Party, (v) loans and advances to officers, directors, employees and Affiliates in an aggregate amount not to exceed $1,000,000 at any time outstanding, (vi) investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business, (vii) investments, acquisitions or transactions permitted under Section 8.4(b), (viii) with respect to any pension trust maintained for the benefit of any present or former employees of the Borrower or any Subsidiary, such loans, advances and/or investments as the trustee or administrator of the trust shall deem advisable pursuant to the terms of such trust, (ix) investments of a nature not contemplated by the foregoing clauses hereof that are outstanding as of the Closing Date and set forth on Schedule 1.1(b), and (x) additional loans, advances and/or investments of a nature not contemplated by the foregoing clauses hereof provided that such loans, advances and/or investments made pursuant to this clause (x) shall not exceed an aggregate amount of $5,000,000 outstanding at any one time and further provided that no such loans, advances and/or investments shall be used to acquire all or substantially all of the voting stock of any corporation the board of directors of which has not approved such acquisition. As used herein, "investment" means all investments, in cash or by delivery of property made, directly or indirectly in, to or from any Person, whether by acquisition of shares of capital stock, property, assets, indebtedness or other obligations or securities or by loan advance, capital contribution or otherwise.
"Permitted Liens" means
(i) Liens created by or otherwise existing, under or in connection with this Credit Agreement or the other Credit Documents in favor of the Agent for the benefit of the Lenders;
(ii) Liens in favor of a Lender hereunder as the provider of interest rate protection relating to the Loans hereunder, but only (A) to the extent such Liens secure obligations under such interest rate protection agreements permitted under Section 8.1, (B) to the extent such Liens are on the same collateral as to which the Agent for the benefit of the Lenders also has a Lien, (C) if such provider and the Agent for the benefit of the Lenders shall have agreed to share pari passu in the collateral subject to such Liens, up to a maximum aggregate amount of 5% of the proceeds of such collateral for such provider and all other providers hereunder, and thereafter all such providers' Liens shall be subordinate to the Liens in favor of the Agent for the benefit of the Lenders, and (D) if such provider shall have agreed, pursuant to an agreement reasonably satisfactory in form and substance to the provider, the Borrower and the Agent, to pay to the Agent, for the pro rata benefit of the Lenders, an amount equal to the amount of any payment made to such provider by or on behalf of a Credit Party after a default by reason of the amendment, conversion, buy-out or termination of such interest rate protection agreements;
(iii) purchase money Liens securing purchase money indebtedness (and refinancings thereof) and Capital Lease Obligations, to the extent permitted under Section 8.1(c);
(iv) Liens for taxes, assessments, charges or other governmental levies not yet due or as to which the period of grace, if any, related thereto has not expired or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP (or, in the case of Subsidiaries with significant operations outside of the United States of America, generally accepted accounting principles in effect from time to time in their respective jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids, trade contracts, (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(viii) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses; provided that such extension, renewal or replacement Lien shall be limited to all or a part of the property which secured the Lien so extended, renewed or replaced (plus improvements on such property);
(ix) easements, rights of way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not material in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any Subsidiary;
(x) Liens in existence on the date hereof listed on Schedule 8.2, securing Indebtedness permitted by Section 8.1(b), provided that no such Lien is spread to cover any additional property (other than proceeds of the collateral originally subject to such Lien in accordance with the instrument creating such Lien) after the Closing Date and that the amount of Indebtedness secured thereby is not increased;
(xi) Liens on the property or assets of a corporation which becomes a Subsidiary after the Closing Date securing Indebtedness permitted by Section 8.1(i), provided that (A) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof, and (B) no such Lien is spread to cover any additional property (other than proceeds of the collateral originally subject to such Lien in accordance with the instrument creating such Lien) after the Closing Date and that the amount of Indebtedness secured thereby is not increased;
(xii) Liens in the nature of licenses that arise in the ordinary course of business and consistent with past practice;
(xiii) Liens incurred in connection with Indebtedness permitted by Section 8.1(h), provided that no such Lien shall be spread to cover any additional property after the Closing Date and the amount of Indebtedness secured thereby shall not be increased;
(xiv) leases and subleases otherwise permitted hereunder granted to others not interfering in any material respect in the business of the Borrower or any Subsidiary; and
(xv) attachment or judgment Liens, where the attachment or judgment which gave rise to such Liens does not constitute an Event of Default hereunder.
"Permitted Sale-Leaseback Transaction" means a transaction pursuant to which a Credit Party sells an item of equipment to a financial institution and concurrently with such sale (i) leases such item of equipment back from such financial institution and (ii) subleases such item of equipment to a customer of the Credit Party pursuant to a sublease agreement under which such customer obtains an option to purchase such item of equipment at or before the end of such sublease.
"Person" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any Governmental Authority.
"Pierce" means Pierce Manufacturing Inc., a Wisconsin corporation.
"Plan" means at any particular time, any employee benefit plan which is covered by Title IV of ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means, for any day, the higher of (i) the per annum rate of interest established from time to time by the Agent at its principal office in Milwaukee, Wisconsin as its Prime Rate, or
(ii) the Federal Funds Rate plus 1%. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Business Day on which each change in the Prime Rate is announced by the Agent. The Prime Rate is a reference rate used by the Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor.
"Prime Rate Loan" means any Loan bearing interest at a rate determined by reference to the Prime Rate.
"Pro Forma Basis" means, with respect to any transaction, that such transaction shall be deemed to have occurred as of the first day of the four-fiscal quarter period ending as of the end of the fiscal quarter most recently ended prior to the date of such transaction with respect to which the Agent has received the financial information required under Section 7.1. As used herein, "transaction" means any merger, consolidation or acquisition as referenced in Section 8.4(b).
"Properties" is defined in subsection 6.10(a).
"Purchase Agreement" is defined in Section 5.1(c).
"Purchasing Lender" is defined in Section 11.6(c).
"Recovery Event" means the receipt by the Borrower or any of its Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets.
"Refunded Swing Line Loans" is defined in Section 2.4(c).
"Register" is defined in Section 11.6(d).
"Reorganization" means with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of such term as used in Section 4241 of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty-day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615.
"Required Lenders" means Lenders holding in the aggregate at least 66-2/3% of the sum of (i) all Obligations then outstanding at such time and (ii) the aggregate unused Commitments at such time (treating for purposes hereof in the case of LOC Obligations and the Issuing Lender, only the portion of the LOC Obligations of the Issuing Lender which is not subject to the Participation Interests of the other Lenders and, in the case of the Lenders other than the Issuing Lender, the Participation Interests of such Lenders in LOC Obligations hereunder as direct Obligations); provided, however, that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Lenders the Obligations (including Participation Interests) of such Defaulting Lender and such Defaulting Lender's Commitments, or after termination of the Commitments, the principal balance of the Obligations owing to such Defaulting Lender.
"Requirement of Law" means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or to which any of its material property is subject.
"Revolving Commitment" means with respect to each Lender, the commitment of such Lender to make Revolving Loans in an aggregate principal amount at any time outstanding up to such Lender's Revolving Committed Amount as specified in Schedule 2.1(a) (subject to adjustment on account of assignment pursuant to the provisions of
Section 11.6(c) hereof), as such amount may be reduced from time to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means for each Lender, the percentage identified as its Revolving Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.6(c).
"Revolving Commitment Period" means the period from and including the Closing Date to but not including the Revolving Termination Date.
"Revolving Committed Amount" means collectively, the aggregate amount of all of the Revolving Commitments as referenced in Section 2.1(a) and, individually, the amount of each Lender's Revolving Commitment as specified in Schedule 2.1(a) (subject to reduction pursuant to the provisions of Section 3.3(a) and to adjustment on account of assignment pursuant to the provisions of Section 11.6(c)).
"Revolving Loans" is defined in Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes of the Borrower in favor of each of the Lenders evidencing the Revolving Loans provided pursuant to Section 2.1(e), individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time.
"Revolving Termination Date" means September 30, 1999 or the earlier termination in full of the Revolving Commitments pursuant to this Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities.
"Security Agreement" means that Security Agreement dated as of the Closing Date given by the Borrower and the Guarantors to the Agent, as amended, supplemented or otherwise modified from time to time.
"Single Employer Plan" means any Plan which is not a Multi- Employer Plan.
"Solvent" means, with respect to any Credit Party as of a particular date, that on such date (i) such Credit Party is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (ii) such Credit Party does not intend to, and does not believe that it will, incur debts or liabilities beyond such Credit Party's ability to pay as such debts and liabilities mature in their ordinary course, (iii) such Credit Party is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Credit Party's property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Credit Party is engaged or is to engage, (vi) the fair value of the property of such Credit Party is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Credit Party and (v) the present fair saleable value of the assets of such Credit Party is not less than the amount that will be required to pay the probable liability of such Credit Party on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
"Specified Sales" means (i) the sale, transfer, lease or other disposition of inventory and materials in the ordinary course of business, (ii) the sale, transfer, lease or other disposition of machinery, parts, equipment and real estate no longer useful in the conduct of the business of the Borrower or any of its Subsidiaries, as appropriate, (iii) the sale, transfer, lease or other disposition of assets for cash, provided, however, that 100% of the proceeds of which shall be paid to the Agent as a prepayment of Revolving Loans or Term Loans under Section 3.3(c), as the Borrower shall direct, and provided further, that if any such prepayment shall be made with respect to Revolving Loans, the Revolving Committed Amount shall be automatically, immediately, and permanently reduced by an amount equal to the prepayment applied to the Revolving Loans under Section 3.3(a), and (iv) in addition to the transactions described in subsections (i), (ii) and (iii), any other sale, transfer, lease or other disposition of assets where the proceeds of such disposition do not exceed $3,000,000 during any fiscal year or $15,000,000 during the term of this Credit Agreement.
"Subordinated Debt" is defined in Section 8.10.
"Subsidiary" means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Credit Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Swing Line Loan" and "Swing Line Loans" are defined in Section 2.4(a).
"Swing Line Note" means the promissory note of the Borrower in favor of Firstar evidencing Swing Line Loans provided pursuant to
Section 2.4(a), as such promissory note may be amended, modified, supplemented, extended, renewed or replaced from time to time.
"Term Loan" is defined in Section 2.2(a).
"Term Loan Commitment" means with respect to each Lender, the commitment of such Lender to make its portion of the Term Loan as specified in Schedule 2.1(a) (and for purposes of making determinations of Required Lenders hereunder after the Closing Date, the principal amount outstanding on the Term Loan).
"Term Loan Commitment Percentage" means for each Lender, its Term Loan Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in accordance with the provisions of
Section 11.6(c).
"Term Loan Committed Amount" means collectively, the aggregate amount of all of the Term Loan Commitments as referenced in Section 2.2(a) and, individually, the amount of each Lender's Term Loan Commitment as specified in Schedule 2.1(a).
"Term Note" or "Term Notes" means the promissory notes of the Borrower in favor of each of the Lenders evidencing the Term Loan provided pursuant to Section 2.2(d), individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time.
"Term Termination Date" means September 30, 2003 or the earlier termination in full of the Term Loan Commitment.
"Threshold Requirement" is defined in Section 7.11.
"Transaction Costs" means the costs set forth on Schedule 1.1(c).
"Transfer Effective Date" is defined in the Commitment Transfer Supplement.
"Transferee" is defined in Section 11.6(f).
"Type" means, as to any Loan, its nature as a Prime Rate Loan or a Eurodollar Loan, as the case may be.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all capitalized definitional terms defined in this Credit Agreement shall have the defined meanings when used in the Notes or other Credit Documents or any certificate or other document made or delivered pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Credit Agreement shall refer to this Credit Agreement as a whole and not to any particular provision of this Credit Agreement, and Section, subsection, Schedule and Exhibit references are to this Credit Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(d) For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding".
1.3 Accounting Terms and Determinations. Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants or otherwise required by a change in GAAP) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans ("Revolving Loans") to the Borrower from time to time for the purposes hereinafter set forth; provided, however, that (i) with regard to each Lender individually, the sum of such Lender's share of outstanding Revolving Loans plus such Lender's LOC Commitment Percentage of LOC Obligations shall not exceed such Lender's Revolving Committed Amount, and
(ii) with regard to the Lenders collectively, the sum of the aggregate amount of outstanding Revolving Loans plus the aggregate amount of LOC Obligations plus the aggregate amount of outstanding Swing Line Loans shall not exceed FIFTY MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may be reduced from time to time as provided herein). Revolving Loans may consist of Prime Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof. Eurodollar Loans shall be made by each Lender at its Eurodollar Lending Office and Prime Rate Loans at its Domestic Lending Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing by written notice (or telephone notice promptly confirmed in writing which confirmation may be by fax) to the Agent not later than 10:30 A.M. (Milwaukee, Wisconsin time) on the Business Day of the requested borrowing in the case of Prime Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of Eurodollar Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, and (D) whether the borrowing shall be comprised of Prime Rate Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans are requested, the Interest Period(s) therefor. A form of Notice of Borrowing a ("Notice of Borrowing") is attached as Exhibit
2.1(b)(i). If the Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a Eurodollar Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (II) the type of Revolving Loan requested, then such notice shall be deemed to be a request for a Prime Rate Loan hereunder. The Agent shall give notice to each Lender (promptly upon receipt of each Notice of Borrowing, and in any event not later than 12:00 noon, Milwaukee, Wisconsin time, with respect to any Notice of Borrowing delivered to the Agent pursuant to this section) of the contents thereof and each such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing shall be: (A) if a Prime Rate Loan, in a minimum aggregate amount of $1,000,000 and integral multiples of $100,000 in excess thereof; and (B) if a Eurodollar Loan, in a minimum aggregate amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof (or, in either case, the remaining amount of the Revolving Commitment, if less).
(iii) Advances. Each Lender will make its Revolving Commitment Percentage of each Revolving Loan borrowing available to the Agent for the account of the Borrower at the office of the Agent specified in Schedule 11.2, or at such other office as the Agent may designate in writing, by 1:30 P.M. (Milwaukee, Wisconsin time) on the date specified in the applicable Notice of Borrowing in Dollars and in funds immediately available to the Agent. Such borrowing will then be made available to the Borrower by the Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Agent by the Lenders and in like funds as received by the Agent by the close of Agent's business on such date.
(c) Repayment. The principal amount of all Revolving Loans shall be due and payable in full on the Revolving Termination Date.
(d) Interest. Subject to the provisions of Section 3.1, Revolving Loans shall bear interest as follows:
(i) Prime Rate Loans. During such periods as Revolving Loans shall be comprised of Prime Rate Loans, each such Prime Rate Loan shall bear interest at a per annum rate equal to the Prime Rate;
(ii) Eurodollar Loans. During such periods as Revolving Loans shall be comprised of Eurodollar Loans, each such Eurodollar Loan shall bear interest at a per annum rate equal to the sum of the applicable Eurodollar Rate plus the Applicable Percentage as of the commencement of the Interest Period applicable thereto; and
(iii) Interest at Term Loan Rate. If the aggregate amount of outstanding Revolving Loans exceeds $10,000,000 during any Cleanup Period, the excess of such Revolving Loans over $10,000,000 shall bear interest at a rate per annum, during that part of the Cleanup Period that an excess exists, equal to the rate that would be applicable were such excess a Term Loan.
Interest on Revolving Loans shall be payable in arrears on each Interest Payment Date.
(e) Revolving Notes. The Revolving Loans shall be evidenced by a duly executed promissory note of the Borrower to each Lender in the original principal amount of each such Lender's Revolving Committed Amount in substantially the form of Exhibit 2.1(e).
2.2 Term Loan.
(a) Term Loan. Subject to and upon the terms and conditions hereof, each Lender severally agrees to make its Term Loan Commitment Percentage of a term loan (the "Term Loan") to the Borrower on the Closing Date in the aggregate principal amount of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) for the purposes hereinafter set forth. The Term Loan may consist of Prime Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may request. The Term Loan shall initially be comprised entirely of Prime Rate Loans. Amounts repaid on the Term Loan may not be reborrowed. Each Lender will make its Term Loan Commitment Percentage of each Term Loan advance available to the Agent on the Closing Date. Eurodollar Loans shall be made by each Lender at its Eurodollar Lending Office and Prime Rate Loans at its Domestic Lending Office. In the event the Borrower shall fail to borrow the entire Term Loan Committed Amount, the scheduled amortization payments required under Section 2.2(b) shall be reduced in inverse order of maturity by the amount of the difference.
(b) Repayment of Term Loan. The principal amount of the Term Loan shall be repaid in seven (7) consecutive annual installments as follows:

Payment Date                       Amount

September 25, 1997            $  15,000,000
September 25, 1998            $  15,000,000
September 25, 1999            $  15,000,000
September 25, 2000            $  15,000,000
September 25, 2001            $  15,000,000
September 25, 2002            $  15,000,000
September 25, 2003            $  60,000,000
                              -------------
                              $ 150,000,000
                              =============	

(c) Interest on the Term Loan. Subject to the provisions of
Section 3.1, the Term Loan shall bear interest as follows:
(i) Prime Rate Loans. During such periods as the Term Loan shall be comprised of Prime Rate Loans, each such Prime Rate Loan shall bear interest at a per annum rate equal to the Prime Rate; and
(ii) Eurodollar Loans. During such periods as the Term Loan shall be comprised of Eurodollar Loans, each such Eurodollar Loan shall bear interest at a per annum rate equal to the sum of the applicable Eurodollar Rate plus the Applicable Percentage.
Interest on the Term Loan shall be payable in arrears on each Interest Payment Date.
(d) Term Notes. The Term Loan shall be evidenced by a duly executed promissory note of the Borrower to each Lender in the original principal amount of each such Lender's Term Loan Committed Amount in substantially the form of Exhibit 2.2(d).
2.3 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and provided that no Default or Event of Default shall have occured and be continuing, and further subject to any other terms and conditions which the Issuing Lender may reasonably require, during the Revolving Commitment Period the Issuing Lender shall issue, and the Lenders shall participate in, Letters of Credit for the account of a Credit Party from time to time upon request in a form acceptable to the Issuing Lender; provided, however, that (i) the aggregate amount of LOC Obligations shall not at any time exceed FIFTY MILLION DOLLARS ($50,000,000) the ("LOC Committed Amount") and (ii) the sum of the aggregate amount of Revolving Loans plus the aggregate amount of LOC Obligations plus the aggregate amount of Swing Line Loans shall not at any time exceed the aggregate Revolving Committed Amount. No Letter of Credit as originally issued or as extended shall have an expiry date extending beyond the Revolving Termination Date, except that prior to the Revolving Termination Date a Letter of Credit may be issued or extended with an expiry date extending beyond the Revolving Termination Date if, and to the extent that the Borrower shall provide cash collateral to the Issuing Lender on the date of issuance or extension in an amount equal to the maximum amount available to be drawn under such Letter of Credit. Each Letter of Credit shall comply with the related LOC Documents. The issuance and expiry date of each Letter of Credit shall be a Business Day. In the case of a conflict in the terms of the LOC Documents and this Credit Agreement, the terms of this Credit Agreement shall control.
(b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted to the Issuing Lender and the Agent on such prior notice as the Issuing Lender and Borrower shall agree. The Issuing Lender will, at least quarterly and more frequently upon request, provide to the Agent (who shall promptly disseminate to the Lenders and the Borrower) a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of the prior report, and including therein, among other things, the account party, the beneficiary, the face amount, expiry date as well as any payments or expirations which may have occurred. The Issuing Lender will further provide to the Agent promptly upon request copies of the Letters of Credit. The Issuing Lender will provide to the Agent prompt notice of any changes in LOC Obligations issued by it, and more frequently upon request, a summary report of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender, with respect to the Existing Letters of Credit, hereby purchases a participation interest in such Existing Letters of Credit and with respect to Letters of Credit issued on or after the Closing Date, upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the Issuing Lender in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its LOC Commitment Percentage of the obligations under such Letter of Credit and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its LOC Commitment Percentage of the obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender's participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed as required hereunder or under any LOC Document, each such Lender shall pay to the Issuing Lender its LOC Commitment Percentage of such unreimbursed drawing in same day funds on the day of notification by the Issuing Lender of an unreimbursed drawing pursuant to the provisions of subsection (d) hereof. The obligation of each Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of Credit, the Issuing Lender will promptly notify the Borrower and the Agent. The Borrower shall reimburse the Issuing Lender on the first Business Day following notice of payment under any Letter of Credit (either with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds as provided herein or in the LOC Documents, together with interest on the amount of such payment at the Prime Rate from the date of payment until the date of reimbursement. Unless the Borrower shall notify the Issuing Lender and the Agent on the date Borrower receives notice of a payment of its intent to otherwise reimburse the Issuing Lender, the Borrower shall be deemed to have requested a Revolving Loan in the amount of the payment as provided in subsection (e) hereof, the proceeds of which will be used to satisfy the reimbursement obligations. The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person, including, without limitation, any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The Issuing Lender will promptly notify the other Lenders of the amount of any unreimbursed payment and each Lender shall promptly pay to the Agent for the account of the Issuing Lender in Dollars and in immediately available funds, the amount of such Lender's LOC Commitment Percentage of such unreimbursed drawing. Such payment shall be made on the day such notice is received by such Lender from the Issuing Lender if such notice is received at or before 2:00 P.M. (Milwaukee, Wisconsin time), otherwise such payment shall be made at or before 12:00 P.M. (Milwaukee, Wisconsin time) on the Business Day next succeeding the day such notice is received. If such Lender does not pay such amount to the Issuing Lender in full upon such request, such Lender shall, on demand, pay to the Agent for the account of the Issuing Lender interest on the unpaid amount during the period from the date of such payment until such Lender pays such amount to the Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of such request, the Federal Funds Rate and thereafter at a rate equal to the Prime Rate. Each Lender's obligation to make such payment to the Issuing Lender, and the right of the Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Credit Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the Obligations hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the Borrower shall be deemed to have requested a Revolving Loan to reimburse a drawing under a Letter of Credit, the Agent shall give notice to the Lenders that a Revolving Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised entirely of Prime Rate Loans (each such borrowing, a "Mandatory Borrowing") shall be immediately made (without giving effect to any termination of the Commitments pursuant to Section 9) pro rata based on each Lender's respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 9) and in the case of both clauses (i) and (ii) the proceeds thereof shall be paid directly to the Issuing Lender for application to the respective LOC Obligations. Each Lender hereby irrevocably agrees to make such Revolving Loans immediately upon any such request or deemed request on account of each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the same such date notwithstanding (i) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 5.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v) the date of such Mandatory Borrowing, or (vi) any reduction in the Revolving Committed Amount after any such Letter of Credit may have been drawn upon; provided, however, that in the event any such Mandatory Borrowing should be less than the minimum amount for borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii), the Borrower shall pay to the Agent for its own account an administrative fee of $500. In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower), then each such Lender hereby agrees that it shall forthwith fund (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) its Participation Interests in the outstanding LOC Obligations; provided, further, that in the event any Lender shall fail to fund its Participation Interest on the day the Mandatory Borrowing would otherwise have occurred, then the amount of such Lender's unfunded Participation Interest therein shall bear interest payable to the Issuing Lender upon demand, at the rate equal to, if paid within two (2) Business Days of any such request, the Federal Funds Rate, and thereafter at a rate equal to the Prime Rate.
(f) Modification, Extension. The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, solely for purposes of this Agreement, be treated in all respects the same as the issuance of a new Letter of Credit, but without duplication in computing the aggregate outstanding amount of LOC Obligations.
(g) Uniform Customs and Practices. The Issuing Lender shall have the Letters of Credit be subject to The Uniform Customs and Practice for Documentary Credits, as published as of the date of issue by the International Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated therein and deemed in all respects to be a part thereof, with such exceptions thereto as the beneficiary may request and the Issuing Lender may approve.
2.4 Swing Line Loans.
(a) Swing Line Loans. Subject to the terms and conditions hereof and provided that no Event of Default shall have occurred and be continuing, at its discretion Firstar may make swing line loans to the Borrower (individually, a "Swing Line Loan"; collectively the "Swing Line Loans") from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $2,000,000, provided, however, that (i) with regard to Firstar individually, the sum of Firstar's share of outstanding Revolving Loans plus Firstar's LOC Commitment Percentage of LOC Obligations shall not exceed Firstar's Revolving Committed Amount, and (ii) with regard to the Lenders collectively, the sum of the aggregate amount of outstanding Swing Line Loans plus Revolving Loans plus the aggregate amount of LOC Obligations shall not exceed FIFTY MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may be reduced from time to time as provided herein). Amounts borrowed under this Section 2.4 may be repaid and, through but excluding the Revolving Termination Date, reborrowed. All Swing Line Loans shall be made as Prime Rate Loans and shall not be entitled to be converted into Eurodollar Loans. The Borrower shall give Firstar irrevocable notice (which notice must be received by Firstar prior to 12:00 noon, Milwaukee time) on the date of the requested borrowing specifying the amount of the requested Swing Line Loan. The proceeds of any approved Swing Line Loan will be made available by Firstar to the Borrower at the office of Firstar by crediting the account of the Borrower at such office with such proceeds.
(b) Swing Line Note. The Swing Line Loans made to the Borrower shall be evidenced by a duly executed promissory note substantially in the form of Exhibit 2.4(b), payable to the order of Firstar and representing the obligation of the Borrower to pay the unpaid principal amount of the Swing Line Loans made to the Borrower, with interest thereon at a per annum rate equal to the Prime Rate. Firstar is hereby authorized to record the Borrowing Date, the amount of each Swing Line Loan made to the Borrower and the date and amount of each payment or prepayment of principal thereof, on the appropriate schedule annexed to and constituting a part of the Swing Line Note (or any continuation thereof) and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded. The Swing Line Note shall (a) be dated the Closing Date, (b) be stated to mature on the Revolving Termination Date and (c) bear interest for the period from the date thereof to the Revolving Termination Date on the unpaid principal amount thereof from time to time outstanding at a per annum rate equal to the Prime Rate payable in arrears on each Interest Payment Date.
(c) Repayment with Revolving Loans. Firstar may, at any time in its sole and absolute discretion after a Default or an Event of Default shall have occurred and be continuing, on behalf of the Borrower (which hereby irrevocably directs Firstar to act on its behalf) request prior to 10:30 A.M. (Milwaukee, Wisconsin time) each Lender, including Firstar, to make a Revolving Loan to the Borrower in an amount equal to such Lender's Revolving Commitment Percentage of the amount of the Swing Line Loans made to the Borrower outstanding on the date such notice is given (the "Refunded Swing Line Loans"). Unless any of the events described in Section 9(e) shall have occurred (in which event the procedures of Section 2.4(d) shall apply) each Lender shall make the proceeds of its Revolving Loan to the Borrower available to Firstar for the account of Firstar at the office of Firstar specified in Schedule 11.2, or at such other office of Firstar as Firstar may designate in writing, by 1:00 P.M. (Milwaukee, Wisconsin time) on the date such notice is given in funds immediately available to Firstar. The proceeds of such Revolving Loans shall be immediately applied to repay the Refunded Swing Line Loans of the Borrower. Each Revolving Loan made pursuant to this subsection 2.4(c) shall be a Prime Rate Loan.
(d) Participations. If prior to the making of a Revolving Loan to the Borrower pursuant to Section 2.4(c) one of the events described in Section 9(e) shall have occurred, each Lender will, on the date such Revolving Loan was to have been made, purchase an undivided participating interest in the Refunded Swing Line Loans in an amount equal to its Revolving Commitment Percentage of such Refunded Swing Line Loans. Each Lender will immediately transfer to Firstar, in immediately available funds, the amount of its participation and upon receipt thereof Firstar will deliver to such Lender a Swing Line Loan participation certificate dated the date of receipt of such funds and in such amount.
(e) Payments to Participants. Whenever, at any time after Firstar has received from any Lender such Lender's participating interest in a Refunded Swing Line Loan, Firstar receives any payment on account thereof, Firstar will distribute to such Lender its participating interest in such amount (appropriately adjusted in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by Firstar is required to be returned, such Lender will return to Firstar any portion thereof previously distributed by Firstar to it.
(f) Unconditional Participation Obligation. Each Lender's obligation to purchase participating interests pursuant to Section 2.4(d) shall not be affected by any circumstance (except for any circumstance resulting solely from the gross negligence or willful misconduct of Firstar), including, without limitation, (i) any set- off, counterclaim, recoupment, defense or other right which such Lender or the Borrower may have against Firstar, any Borrower or any other Person for any reason whatsoever; (ii) any adverse change in the condition (financial or otherwise) of the Borrower or the Subsidiary of the Borrower; (iii) any breach of this Agreement by any Borrower or any other Lender; or (iv) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate. Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents shall bear interest, payable on demand, at a per annum rate which is equal to the rate which would otherwise be applicable (or if no rate is applicable, whether in respect of interest, fees or other amounts, then the Prime Rate) plus 2%.
3.2 Extension and Conversion. The Borrower shall have the option, on any Business Day, to extend existing Loans into a subsequent permissible Interest Period or to convert Loans into Loans of another Type; provided, however, that (i) except as provided in Section 3.7, Eurodollar Loans may be converted into Prime Rate Loans only on the last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended, and Prime Rate Loans may be converted into Eurodollar Loans, only if no Default or Event of Default is in existence on the date of extension or conversion, (iii) Loans extended as, or converted into, Eurodollar Loans shall be subject to the terms of the definition of "Interest Period" set forth in Section 1.1 and shall be in such minimum amounts as provided in Section 2.l(b)(ii) and (iv) any request for extension or conversion of a Eurodollar Loan which shall fail to specify an Interest Period shall be deemed to be a request for an Interest Period of one month. Each such extension or conversion shall be effected by the Borrower by giving a Notice of Extension/Conversion in the form of Exhibit
3.2 (or telephone notice promptly confirmed in writing) to the Agent prior to 10:30 A.M. (Milwaukee, Wisconsin time) on the Business Day of, in the case of the conversion of a Eurodollar Loan into a Prime Rate Loan and on the third Business Day prior to, in the case of the extension of a Eurodollar Loan as, or conversion of a Prime Rate Loan into, a Eurodollar Loan, the date of the proposed extension or conversion, specifying the date of the proposed extension or conversion, the Loans to be so extended or converted, the Types of Loans into which such Loans are to be converted and, if appropriate, the applicable Interest Periods with respect thereto. Each request for extension or conversion shall constitute a representation and warranty by the Borrower of the matters specified in paragraphs (a) and (b), and in (c) or (d), of Section 5.2. In the event the Borrower fails to request extension or conversion of any Eurodollar Loan in accordance with this Section, or any such conversion or extension is not permitted or required by this Section, then such Loans shall be automatically converted into Prime Rate Loans at the end of their Interest Period. The Agent shall give each Lender notice as promptly as practicable of any such proposed extension or conversion affecting any Loan.
3.3 Reductions in Commitments and Prepayments.
(a) Voluntary Reduction in Revolving Commitment. The Borrower may from time to time permanently reduce the aggregate amount of the Revolving Commitments in whole or in part without premium or penalty except as provided in Section 3.10 upon three (3) Business Days' prior written notice to the Agent; provided that after giving effect to any such voluntary reduction the sum of Revolving Loans plus LOC Obligations plus Swing Line Loans then outstanding shall not exceed the Aggregate Revolving Committed Amount, as reduced. Except as otherwise specified herein, partial reductions in the aggregate Revolving Commitment shall in each case be in a minimum aggregate amount of $1,000,000 and integral multiples of $500,000 in excess thereof.
(b) Mandatory Prepayment on Revolving Loans. If at any time the sum of the aggregate amount of Revolving Loans plus LOC Obligations plus Swing Line Loans then outstanding shall exceed the Aggregate Revolving Committed Amount, as reduced from time to time, the Borrower shall immediately make payment on the Revolving Loans and then, if necessary, to a cash collateral account in respect of the LOC Obligations, in an amount sufficient to eliminate the deficiency. Any such payments shall be applied first to Prime Rate Loans and then to Eurodollar Loans in direct order of their Interest Period maturities.
(c) Voluntary Prepayments. Loans may be prepaid in whole or in part without premium or penalty except as provided in Section 3.10. Any partial prepayment shall be in a minimum aggregate principal amount of $1,000,000 and integral multiples of $500,000 in excess thereof. Except as otherwise specified herein, amounts prepaid on the Revolving Loans may be reborrowed in accordance with the provisions hereof. Amounts prepaid on the Term Loan in any one fiscal year of the Borrower shall be applied first to the annual payment of principal due on September 30 of such fiscal year pursuant to Section 2.2(b) and the remaining amount of such prepayment(s), if any, shall be applied in equal amounts to each of the remaining principal installments. Amounts prepaid on the Term Loan may not be reborrowed.
(d) Notice. Except as otherwise provided herein, the Borrower will provide notice to the Agent of any prepayment of the Term Loan by 10:30
A.M. (Milwaukee, Wisconsin time) on the day prior to the date of prepayment.
3.4 Fees.
(a) Unused Facility Fee. In consideration of the Revolving Commitments by the Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable benefit of the Lenders an unused facility fee (the "Unused Facility Fee") in an amount equal to the Applicable Percentage per annum on the average daily unused portion of the Revolving Commitments in effect from time to time; provided, however, that for purposes of computing the Unused Facility Fee, LOC Obligations and Swing Line Loans shall not be considered usage under the Revolving Committed Amount. The Unused Facility Fee shall be payable quarterly in arrears on the 15th day following the last day of each calendar quarter for such calendar quarter and on the Revolving Credit Termination Date.
(b) Letter of Credit Fee. In consideration of the issuance of Letters of Credit hereunder, the Borrower agrees to pay to the Agent for the ratable benefit of the Lenders a fee with respect to each Letter of Credit (the "Letter of Credit Fee") equal to the Applicable Percentage per annum on the average daily maximum amount available to be drawn under such Letter of Credit from the date of issuance to the date of expiration calculated for the term of availability thereof. The Letter of Credit Fee shall be payable quarterly in arrears with respect to each Letter of Credit on the last day of each calendar quarter and on the Revolving Termination Date and shall be in lieu of any other fees in connection with the issuance of Letters of Credit hereunder, except for such standard and customary fees, costs and expenses incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit as the Borrower and the Issuing Lender may mutually agree.
(c) Commitment Fee. In consideration of the Commitments by the Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable benefit of the Lenders a commitment fee the "Commitment Fee") in an amount equal to one-quarter of 1% of the Revolving Committed Amount and the Term Loan Committed Amount. The Commitment Fee shall be payable and fully earned on the Closing Date.
(d) Administrative Fees. The Borrower agrees to pay to the Agent, for its own account, the annual administrative fee, structuring fee and other fees collectively, (the "Agent's Fees") referred to in that certain Agent's fee letter dated September 16, 1996.
3.5 Capital Adequacy. If any Lender has reasonably determined that the adoption or effectiveness of any applicable law, rule or regulation regarding capital adequacy made after the date hereof, or any change therein made after the date hereof, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof made after the date hereof, or compliance by such Lender or its parent company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency made after the date hereof, has or would have the effect of reducing the rate of return on such Lender's or its parent company's capital or assets as a consequence of its commitments or obligations hereunder to a level below that which such Lender could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration the policies of such Lender and its parent company with respect to capital adequacy), then, within 10 Business Days after the Borrower's receipt of the certificate referred to in the next sentence, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender and its parent company for such reduction; provided that no such amounts shall be payable with respect to reduction in rate of return incurred more than three (3) months before such Lender demands compensation under this Section 3.5. A certificate as to the amount of such reduction in rate of return, the good faith basis therefor and setting forth in reasonable detail the calculations used by the applicable Lender to arrive at the amount or amounts claimed to be due, shall be submitted to the Borrower and the Agent. Each determination by a Lender of amounts owing under this Section shall be rebuttably presumptive evidence of the matters set forth therein. No demand for payment under this Section shall be made unless the Lender shall make comparable demands of other similarly situated borrowers. The provisions of this Section shall survive termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.
3.6 Inability To Determine Interest Rate. If prior to the first day of any Interest Period, the Agent shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (a) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Prime Rate Loans,
(b) any Loans that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Loans shall be converted to or continued as Prime Rate Loans and (c) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Prime Rate Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Prime Rate Loans to Eurodollar Loans.
3.7 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof occurring after the Closing Date shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender shall promptly give written notice of such circumstances to the Borrower and the Agent which notice shall be withdrawn whenever such circumstances no longer exist), (b) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert a Prime Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Loans, such Lender shall then have a commitment only to make a Prime Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.10.
3.8 Requirements of Law. If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof applicable to any Lender, or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority, in each case made subsequent to the Closing Date (or, if later, the date on which such Lender becomes a Lender):
(i) shall subject such Lender to any tax of any kind whatsoever on or in respect of any Letter of Credit, letter of credit application or any Eurodollar Loans made by it or its obligation to make Eurodollar Loans, or change the basis of taxation of payments to such Lender in respect thereof except for Non-Excluded Taxes covered by Section 3.9 (including Non-Excluded Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under
Section 3.9(b)) and changes in taxes measured by or imposed upon the overall net income, or franchise tax (imposed in lieu of such net income tax), of such Lender or its applicable lending office, branch, or any affiliate thereof); or
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar condition or requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder;
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Agent, in accordance herewith, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable, provided that, in any such case, the Borrower may elect to convert the Eurodollar Loans made by such Lender hereunder to Prime Rate Loans by giving the Agent at least one Business Day's notice of such election, in which case the Borrower shall promptly pay to such Lender, upon demand, without duplication, such amounts, if any, as may be required pursuant to Section 3.10. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall provide prompt notice thereof to the Borrower, through the Agent, certifying (a) that one of the events described in this
Section 3.8 has occurred and describing in reasonable detail the nature of such event, (b) as to the increased cost or reduced amount resulting from such event and (c) as to the additional amount demanded by such Lender and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any additional amounts payable pursuant to this subsection shall be submitted by such Lender, through the Agent, to the Borrower and shall be conclusive in the absence of manifest error. No demand for payment under this Section shall be made unless the Lender shall make comparable demands of other similarly situated borrowers. This covenant shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.
3.9 Taxes.
(a) Except as provided below in this subsection, all payments made by the Borrower under this Credit Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding taxes measured by or imposed upon the overall net income of any Lender or its applicable lending office, or any branch or affiliate thereof, and all franchise taxes, branch taxes, taxes on doing business or taxes on the overall capital or net worth of any Lender or its applicable lending office, or any branch or affiliate thereof, in each case imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under the laws of which such Lender, applicable lending office, branch or affiliate is organized or is located, or in which its principal executive office is located, or any nation within which such jurisdiction is located or any political subdivision thereof; or (ii) by reason of any connection between the jurisdiction imposing such tax and such Lender, applicable lending office, branch or affiliate other than a connection arising solely from such Lender having executed, delivered or performed its obligations, or received payment under or enforced, this Credit Agreement or any Notes. If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under any Notes, (A) the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Credit Agreement and any Notes, provided, however, that the Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this subsection whenever any Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as possible thereafter the Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) At least five Business Days prior to the first day on which interest or Fees are payable hereunder for the account of any Lender, each Lender that is not incorporated under the laws of the United States of America, or a state thereof, agrees that it will deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent two additional copies of such form (or a successor form) on or before the date that such form expires (currently, three successive calendar years for Form 1001 and one calendar year for Form 4224) or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent, in each case certifying that such Lender is entitled to receive payments under this Credit Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deductions or withholding of United States federal income tax.
3.10 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur (other than through such Lender's gross negligence or willful misconduct) as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Credit Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in accordance with the provisions of this Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Loans provided for herein over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market, provided, however, that the amount of such lost interest, if any, shall be discounted to a present value as of the date of the indemnification payment, using as the applicable discount rate(s) the rate(s) of per annum interest used by such Lender in making the computations pursuant to the foregoing clause (ii). This covenant shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder.
3.11 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal of any Loan, each payment of interest on the Loans, each payment of Fees (other than the Fee to the Agent pursuant to Section 3.4(d)), each reduction of the Revolving Committed Amount and each conversion or extension of any Loan, shall be allocated pro rata among the Lenders in accordance with the respective Commitment Percentages relating to such respective Loans and Participation Interests.
(b) Advances. Unless the Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its Commitment Percentage of such borrowing available to the Agent, the Agent may assume that such Lender is making such amount available to the Agent, and the Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Agent by such Lender within the time period specified therefor hereunder, such Lender shall pay to the Agent, on demand, such amount with interest thereon at a rate equal to the Federal Funds Rate for the period until such Lender makes such amount immediately available to the Agent. A certificate of the Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Agent by such Lender within two business Days of the date of the related borrowing, (i) the Agent shall notify the Borrower of the failure of such Lender to make such amount available to the Agent and the Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Prime Rate Loans hereunder, on demand, from the Borrower and (ii) then the Borrower may, without waiving any rights it may have against such Lender, (x) request the Lender serving as Agent to increase its Revolving Commitment Percentage and make such borrowing available, which request such Lender may in its sole discretion approve or deny, and
(y) if the Lender serving as Agent shall deny a request submitted to it pursuant to the foregoing clause (x), borrow a like amount on an unsecured basis from any commercial bank for a period ending on the date upon which such Lender does in fact make such borrowing available; provided, however, that at the time any such replacement borrowing is made and at all times while such amount is outstanding the Borrower would be permitted to borrow such amount pursuant to
Section 2.1 of this Credit Agreement.
3.12 Sharing of Payments. The Lenders agree among themselves that, in the event that any Lender shall obtain payment in respect of any Loan or any other obligation owing to such Lender under this Credit Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Credit Agreement, such Lender shall promptly purchase from the other Lenders a participation in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Credit Agreement. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender or the Agent shall fail to remit to the Agent or any other Lender an amount payable by such Lender or the Agent to the Agent or such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Agent or such other Lender at a rate per annum equal to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.12 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 3.12 to share in the benefits of any recovery on such secured claim.
3.13 Place and Manner of Payments. Except as otherwise specifically provided herein, all payments hereunder shall be made to the Agent in Dollars in immediately available funds, without offset, deduction, counterclaim or withholding of any kind, at its offices at the Agent's office specified in Schedule 11.2 not later than 1:00 P.M. (Milwaukee, Wisconsin time) on the date when due. Payments received after such time shall be deemed to have been received on the next succeeding Business Day. The Agent may, at the Borrower's request, debit the amount of any such payment which is not made by such time to Account No. 111501414 maintained by the Borrower with the Agent or any other account which may be maintained by the Borrower with the Agent and designated for such purpose by the Borrower. The Borrower shall, at the time it makes any payment under this Credit Agreement, specify to the Agent the Loans, Fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and in the event that it fails so to specify, or if such application would be inconsistent with the terms hereof, the Agent shall distribute such payment to the Lenders in such manner as the Agent may determine to be appropriate in respect of obligations owing by the Borrower hereunder, subject to the terms of Section 3.11). The Agent will distribute such payments to such Lenders, if any such payment is received prior to 1:00 p.m. (Milwaukee, Wisconsin time) on a Business Day in like funds as received prior to the end of such Business Day and otherwise the Agent will distribute such payment to such Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and Fees for the period of such extension), except that in the case of Eurodollar Loans, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. Except as expressly provided otherwise herein, all computations of interest and fees shall be made on the basis of actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing, but exclude the date of payment.
3.14 Indemnification: Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.3, the Borrower hereby agrees to protect, indemnify, pay and save each Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that the Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions, herein called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuing Lender shall not be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (vii) for any consequences arising from causes beyond the control of the Issuing Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put such Issuing Lender under any resulting liability to the Borrower. It is the intention of the parties that this Credit Agreement shall be construed and applied to protect and indemnify the Issuing Lender against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The Issuing Lender shall not, in any way, be liable for any failure by the Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Issuing Lender.
(d) Nothing in this Section 3.14 is intended to limit the reimbursement obligation of the Borrower contained in Section 2.3(d) hereof. The obligations of the Borrower under this Section 3.14 shall survive the termination of this Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Issuing Lender to enforce any right, power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 3.14, the Borrower shall have no obligation to indemnify any Issuing Lender in respect of any liability incurred by such Issuing Lender arising out of the gross negligence or willful misconduct of the Issuing Lender (including action not taken by an Issuing Lender) or to reimburse the Issuing Lender for payments made by such Issuing Lender on a Letter of Credit with respect to which the drafts and accompanying documents do not reasonably appear to comply with the terms of the Letter of Credit, as determined by a court of competent jurisdiction.
3.15 Cleanup Period. Notwithstanding any provision to the contrary contained herein, Borrower agrees that for at least sixty (60) consecutive days during each fiscal year ending on the dates specified below the aggregate amount of outstanding Revolving Loans, Swing Line Loans and Term Loans shall not exceed the amount specified for such fiscal year:

Fiscal Year Ending                Amount

September 27, 1997            $ 160,000,000
September 26, 1998            $ 145,000,000
September 25, 1999            $ 130,000,000	

3.16 Transfers at Borrower's Request. In the event that any Lender requests payment by the Borrower of any additional amounts pursuant to
Section 3.5, 3.7, 3.8 or 3.9, then, provided that no Default or Event of Default has occurred and is continuing at such time, the Borrower may, at its own expense (such expense to include any transfer fee payable to the Agent under Section 11.6(b)), and in its sole discretion require such Lender to transfer and assign in whole or in part, without recourse (in accordance with and subject to the terms and conditions of Section 11.6(b)), all or part of its interests, rights and obligations under this Credit Agreement to an Eligible Transferee which shall assume such assigned obligations; provided that (i) the other Lenders may, by written notice to the Agent, the Lenders and the Borrower, in their respective discretion, elect to assume such Lender's Revolving Commitment, LOC Commitment and Term Loan Commitment, pro rata based upon the respective Term Loan Commitment Percentages of the other Lenders so electing to assume such Lender's Commitments hereunder, (ii) such Eligible Transferee which is not a Lender shall be reasonably acceptable to the Required Lenders, (iii) such assignment shall not relieve the Borrower from its obligations to pay such additional amounts that may be due in accordance with Section 3.5, 3.7, 3.8 or 3.9, (iv) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority and (v) the Borrower or such Eligible Transferee shall have paid to the assigning Lender in immediately available funds the principal of and interest accrued to the date of such payment on the Loans made by it hereunder and all accrued Fees and other amounts owed to it hereunder.
SECTION 4
GUARANTY
4.1 The Guaranty. Each of the Credit Parties hereby jointly and severally guarantees to each Lender, the Agent and the Issuing Lender as hereinafter provided the prompt payment of the Credit Party Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Credit Parties hereby further agree that if any of the Credit Party Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Credit Parties will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Credit Party Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, the obligations of each Credit Party hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable provisions of any applicable state law.
4.2 Obligations Unconditional. The obligations of the Credit Parties under Section 4.1 hereof are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity or enforceability of any of the Credit Documents, or any other agreement or instrument referred to therein, or any substitution, release or exchange of any other guarantee of or security for any of the Credit Party Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 4.2 that the obligations of the Credit Parties hereunder shall be absolute and unconditional under any and all circumstances other than indefeasible payment in full. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of any Credit Party hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any Credit Party, the time for any performance of or compliance with any of the Credit Party Obligations shall be extended, or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the Credit Documents or any other agreement or instrument referred therein shall be done or omitted;
(iii) the maturity of any of the Credit Party Obligations shall be accelerated, or any of the Credit Party Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Credit Documents or any other agreement or instrument referred to therein shall be waived or any other guarantee of any of the Credit Party Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or Lenders as security for any of the Credit Party Obligations shall fail to attach or be perfected; or
(v) any of the Credit Party Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Credit Party) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Credit Party).
With respect to its obligations hereunder, each Credit Party hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Credit Documents or any other agreement or instrument referred to therein, or against any other Person under any other guarantee of, or security for, any of the Credit Party Obligations.
4.3 Reinstatement. The obligations of the Credit Parties under this
Section 4 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Credit Party Obligations is rescinded or must be otherwise restored by any holder of any of the Credit Party Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Credit Party agrees that it will indemnify each of the Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by the Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers. Without limiting the generality of the provisions of any other Section of this Section 4, each Credit Party further agrees that it shall have no right of recourse to security for the Credit Party Obligations. Each of the Credit Parties further agrees that it shall have no right of subrogation, reimbursement or indemnity, nor any right of recourse to security, if any, for the Credit Party Obligations until indefeasible payment in full of all such obligations shall have been made.
4.5 Remedies. The Credit Parties agree that, as between the Credit Parties, on the one hand, and the Agent, the Lenders and the Issuing Lender, on the other hand, the Credit Party Obligations may be declared to be forthwith due (and payable as provided in Section 9 hereof and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 9) for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing such Credit Party Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or such Credit Party Obligations being deemed to have become automatically due and payable), such Credit Party Obligations whether or not due and payable by any other Person) shall forthwith become due and payable by the Credit Parties for purposes of said Section 4.1.
4.6 Continuing Guarantee. The guarantee in this Section 4 is a continuing guarantee, and shall apply to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing Date. This Credit Agreement shall become effective upon the satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Agent shall have received (i) multiple counterparts of this Credit Agreement for each Lender, executed by a duly authorized officer of each party hereto, (ii) for the account of each Lender a Revolving Note and a Term Note, (iii) multiple counterparts of the Security Agreement for each Lender and UCC financing statements relating thereto executed by a duly authorized officer of each party thereto, and (iv) multiple counterparts of the General Intangibles Mortgage executed by a duly authorized officer of each party thereto, in each case conforming to the requirements of this Credit Agreement and executed by a duly authorized officer of the Borrower and the Guarantors.
(b) Liability and Casualty Insurance. Copies of insurance policies or certificates of insurance evidencing liability and casualty insurance meeting the requirements set forth herein and in the Security Agreement.
(c) Acquisition of Pierce Manufacturing Inc. A certified copy of the Stock Purchase Agreement for the acquisition of Pierce by the Borrower dated August 7, 1996 (the "Purchase Agreement") among the Borrower, Pierce and the shareholders of Pierce relating to the purchase by the Borrower of all of the issued and outstanding capital stock of Pierce, which Purchase Agreement shall be in form and substance reasonably satisfactory to the Agent and the Required Lenders, together with evidence that (i) consummation of the transactions contemplated therein has occurred, or will occur contemporaneous with the funding of the initial Extensions of Credit hereunder, substantially in accordance with the terms of the Purchase Agreement, (ii) the aggregate amount paid (including indebtedness assumed) in connection with the acquisition shall not exceed $165,000,000, (iii) the corporate structure of the Borrower and its Subsidiaries after giving effect to the acquisition shall not differ in any material respect from that contemplated in the Purchase Agreement, and (iv) all consents and approvals, if any, necessary in connection with consummation of such acquisition (including compliance with the Hart-Scott-Rodino Antitrust Improvements Act) shall have been obtained.
(d) Proforma Balance Sheet and Financial Information. A proforma balance sheet for the Borrower and its Subsidiaries estimated as of the Closing Date after giving effect to the transactions contemplated in the Purchase Agreement, reflecting estimated purchase accounting adjustments, prepared in good faith upon reasonable assumptions by the Borrower and indicating a Consolidated Net Worth of at least $120,000,000 and a Certificate of Financial Condition in the form of Exhibit 5.1(d) with appropriate insertions and attachments.
(e) Financial Information. Copies of audited consolidated financial statements for the Borrower and its Subsidiaries and for Pierce and its Subsidiaries for fiscal years 1993, 1994 and 1995; interim quarterly company-prepared consolidated financial statements for the Borrower and its Subsidiaries and for Pierce and its Subsidiaries for fiscal year 1996.
(f) Corporate Documents. Receipt by the Agent of the following:
(i) Articles of Incorporation. Copies of the articles of incorporation or charter documents of the Borrower and each of the other Credit Parties certified to be true and complete as of a recent date by the appropriate governmental authority of the state of its incorporation.
(ii) Resolutions. Copies of resolutions of the Board of Directors of the Borrower and each of the other Credit Parties approving and adopting the Credit Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary as of the Closing Date to be true and correct and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of the Borrower and each of the other Credit Parties certified by a secretary or assistant secretary as of the Closing Date to be true and correct and in force and effect as of such date.
(iv) Good Standing. Copies of certificates of good standing, existence or its equivalent with respect to the Borrower and each of the other Credit Parties certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation and each other state in which the failure to so qualify and be in good standing would have a material adverse effect on the business or operations of the Borrower or other Credit Party in such state.
(g) Officer's Certificate. The Agent shall have received, with a counterpart for each Lender, a certificate of a duly authorized officer of each of the Borrower and each of the other Credit Parties dated the Effective Date, substantially in the form of Exhibit 5.1(g) with appropriate insertions and attachments.
(h) Legal Opinion of Counsel. The Agent shall have received, with a copy for each Lender, an opinion of Foley & Lardner, counsel for the Borrower and the Guarantors, dated the Closing Date and addressed to the Agent and the Lenders, in form and substance satisfactory to the Agent and the Lenders.
(i) Fees. The Agent shall have received all Fees owing pursuant to Section 3.4.
(j) Subsection 5.2 Conditions. The conditions specified in subsections 5.2(a) and (b) shall be satisfied on the Closing Date as if Loans were to be made on such date.
(k) Environmental Reports. Copies of Phase I environmental assessment reports and other environmental documentation relating to properties owned by Pierce and its Subsidiaries, which reports and documentation shall be in form and substance reasonably satisfactory to the Agent and the Lenders.
(l) Landlord Waivers in the form of Exhibit 5.1(l), with appropriate insertions and attachments, in favor of the Agent for the benefit of the Lenders, from the following real property lessors of the Borrower and Pierce, as the case may be: Cadence Company, Airport Business Center III, The Fielding Company, Winnebago County Highway Dept., VTM & Associates, Donald J. and Donna Benson, and Mark G. Bachman.
(m) Additional Matters. All other documents and legal matters in connection with the transactions contemplated by this Credit Agreement shall be reasonably satisfactory in form and substance to the Agent and the Lenders.
5.2 Conditions to All Extensions of Credit. The obligation of each Lender to make any Extension of Credit hereunder (including the initial Loans to be made hereunder) is subject to the satisfaction of the following conditions precedent on the date of making such Extension of Credit:
(a) Representations and Warranties. Except as modified pursuant to Section 6.16, the representations and warranties made by the Borrower and the other Credit Parties herein, in the Security Agreement or which are contained in any certificate furnished at any time under or in connection herewith shall be true and correct on and as of the date of such Extension of Credit as if made on and as of such date.
(b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Extension of Credit to be made on such date unless such Default or Event of Default shall have been waived in accordance with this Credit Agreement.
(c) Additional Conditions to Revolving Loans. If such Loan is made pursuant to subsection 2.1, all conditions set forth in such subsection shall have been satisfied.
(d) Additional Conditions to Term Loan. If such Loan is made pursuant to subsection 2.2 all conditions set forth in such subsection shall have been satisfied.
(e) Additional Conditions to Letters of Credit. If such Extension of Credit is made pursuant to subsection 2.3 all conditions set forth in such subsection shall have been satisfied.
Each request for Extension of Credit and each acceptance by the Borrower of an Extension of Credit shall be deemed to constitute a representation and warranty by the Borrower as of the date of such Extension of Credit that the applicable conditions in paragraphs (a) and
(b), and in (c), (d) or (e) of this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make the Extensions of Credit herein provided for, each of the Credit Parties hereby represents and warrants to the Agent and to each Lender that:
6.1 Financial Statements. The Borrower has furnished to the Lenders
(a) the audited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of September 30, 1995, and related audited statements of income, shareholders' equity and cash flows for the year ended on that date, together with an unqualified opinion thereon by Ernst & Young, and (b) the unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 1996 and related statements of income, shareholders' equity and cash flows for the period ended on such date, prepared by the Borrower, and (c) (i) the audited consolidated balance sheet of Pierce and its Subsidiaries as of October 31, 1995, and related audited statements of income, shareholders' equity and cash flows for the year ended on that date, together with an unqualified opinion thereon by Arthur Andersen LLP; and (ii) the unaudited consolidated balance sheet of Pierce and its Subsidiaries as of July 31, 1996 and related statements of income, shareholders' equity and cash flows for the period ended on such date, prepared by Pierce. Such financial statements were prepared in accordance with GAAP consistently applied throughout the periods involved, are correct and complete and fairly present the consolidated financial condition of the Borrower and such Subsidiaries as of such dates and the results of their operations for the periods ended on such dates, subject, in the case of the unaudited interim statements, to the absence of footnotes, audit and normal year-end adjustments. Since June 30, 1996 there has been no development or event which has had a Material Adverse Effect, except the verdict and possible judgment entered against the Borrower in the Super Steel litigation described on Schedule 6.6.
6.2 Ownership of Properties; Liens and Encumbrances. Each of the Borrower and its Subsidiaries has good and marketable title to all property, real and personal, reflected on the most recent financial statement of the Borrower furnished to the Lenders, and all property purported to have been acquired since the date of such financial statement, except property sold or otherwise disposed of in the ordinary course of business subsequent to such date; and all such property is free of any Lien except Permitted Liens. All owned and leased buildings and equipment of the Borrower used in the Borrower's business are in good operating condition, repair and working order and, to the Borrower's knowledge, conform to all applicable laws, ordinances and regulations the violation of which would have a Material Adverse Effect. The Borrower possesses adequate trademarks, trade names, copyrights, patents, service marks and licenses, or rights thereto, for the present and planned future conduct of its business substantially as now conducted, without any known conflict with the rights of others which would result in a Material Adverse Effect.
6.3 Corporate Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (a) is duly organized, validly existing and in good standing (or similar concept under applicable law, including, without limitation, the concept of active status under the laws of the State of Wisconsin) under the laws of the jurisdiction of its organization, (b) has the corporate or partnership power and authority and the legal right to own and operate all its material property, to lease the material property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or partnership and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that the failure to so qualify or be in good standing would not, in the aggregate, have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. Each of the Borrower and the other Credit Parties has full power and authority and the legal right to make, deliver and perform the Credit Documents to which it is party and has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Credit Documents to which it is party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery or performance of any Credit Document by the Borrower or the other Credit Parties (other than those which have been obtained or in connection with the perfection of Liens in favor of the Agent and Lenders hereunder) or with the validity or enforceability of any Credit Document against the Borrower or the Guarantors (except such filings as are necessary in connection with the perfection of the Liens created by such Credit Documents). Each Credit Document to which it is a party has been duly executed and delivered on behalf of the Borrower or the other Credit Parties, as the case may be. Each Credit Document to which it is a party constitutes a legal, valid and binding obligation of the Borrower or the Guarantors, as the case may be, enforceable against the Borrower or the other Credit Parties, as the case may be, in accordance with its terms.
6.5 No Legal Bar; No Default. The execution, delivery and performance of the Credit Documents, the borrowings thereunder and the use of the proceeds of Extensions of Credit will not violate any Requirement of Law the violation of which would reasonably be expected to have a Material Adverse Effect or any Contractual Obligation of the Borrower or its Subsidiaries the violation of which would reasonably be expected to have a Material Adverse Effect (except those as to which waivers or consents have been obtained), and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any Requirement of Law or Contractual Obligation other than the Liens arising under or contemplated in connection with the Credit Documents. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which would reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
6.6 No Material Litigation. Except as set forth in Schedule 6.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best knowledge of the Borrower and the other Credit Parties, threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to the Credit Documents or any Loan or any of the transactions contemplated hereby, or (b) which, if adversely determined, would reasonably be expected to have a Material Adverse Effect.
6.7 Investment Company Act. Neither the Borrower nor any of the other Credit Parties is an "investment company", or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
6.8 Federal Regulations. No part of the proceeds of any Loan hereunder will be used directly or indirectly for any purpose which violates, or which would be inconsistent with, the provisions of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. The Borrower and its Subsidiaries taken as a group do not own "margin stock" except
(a) margin stock which is a Permitted Investment, and (b) capital stock of the Borrower held by the Borrower as treasury stock, but only to the extent otherwise permitted by this Agreement.
6.9 ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" within the meaning of Section 412 of the Code (or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code, except to the extent that any such occurrence or failure to comply would not reasonably be expected to have a Material Adverse Effect. No termination of a Single Employer Plan has occurred resulting in any liability that has remained underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period which would reasonably be expected to have a Material Adverse Effect. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by an amount which, as determined in accordance with GAAP, would reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Commonly Controlled Entity is currently subject to any liability for a complete or partial withdrawal from a Multiemployer Plan which would reasonably be expected to have a Material Adverse Effect. For purposes of this Section 6.9 only, the parties hereto agree that "Material Adverse Effect" shall include any event referred to in this Section 6.9 which would (or could be reasonably expected to) cause a reduction in Consolidated Net Worth of ten percent (10%) or more.
6.10 Environmental Matters. Except as set forth on Schedule 6.10 and except to the extent that all of the following, in the aggregate, would not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Borrower and the other Credit Parties, the facilities and properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Properties") do not contain any Materials of Environmental Concern in amounts or concentrations which (i) constitute a violation of, or (ii) could give rise to liability under, any Environmental Law.
(b) To the best knowledge of the Borrower and the other Credit Parties, the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Borrower or any of its Subsidiaries (the "Business").
(c) Neither the Borrower nor any of its Subsidiaries has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor do the Borrower nor the other Credit Parties have knowledge or reason to believe that any such notice will be received or is being threatened.
(d) To the best knowledge of the Borrower and the other Credit Parties, Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could give rise to liability under any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower and the other Credit Parties, threatened, under any Environmental Law to which the Borrower or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business.
(f) To the best knowledge of the Borrower and the other Credit Parties, there has been no unremediated release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Borrower or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws.
6.11 Use of Proceeds. Extensions of Credit hereunder may be used to
(i) finance a portion of the acquisition contemplated pursuant to the Purchase Agreement, (ii) pay fees and expenses incurred in connection with such acquisition, and (iii) provide for working capital and other general corporate purposes not prohibited by this Credit Agreement.
6.12 Subsidiaries. Set forth on Schedule 6.12 is a complete and accurate list of all Subsidiaries of the Borrower. The outstanding capital stock and other equity interests of all such Subsidiaries is validly issued, fully paid and nonassessable and is owned, free and clear of all Liens (other than those arising under or contemplated in connection with the Credit Documents).
6.13 Taxes. To the best knowledge of the Borrower and the other Credit Parties, each of the Borrower and its Subsidiaries has filed, or caused to be filed, all material tax returns (federal, state, local and foreign) required to be filed and paid all taxes shown thereon to be due (including interest and penalties) and has paid all other taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing or necessary to preserve any Liens in favor of the Lenders by them, except for such taxes (i) which are not yet delinquent or (ii) as are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP. The Borrower is not aware of any proposed material tax assessments against it or any of its Subsidiaries. The most recent completed audit of the Borrower's federal income tax returns was for the Borrower's income tax year ending September 30, 1988, and all taxes shown by such returns (together with any adjustments arising out of such audit, if any) have been paid. The most recent completed audit of Pierce's federal income tax returns was for Pierce's income tax year year ending October 31, 1993, and all taxes shown by such returns (together with any adjustments arising out of such audit, if any) have been paid.
6.14 Solvency. The Borrower and Pierce, individually, and the Borrower and its Subsidiaries, collectively, are and, after execution of this Credit Agreement and after giving effect to the Indebtedness and Guarantee Obligations incurred hereunder, will be Solvent.
6.15 Accuracy of Information. All information furnished by the Borrower to the Lenders is correct and complete in all material respects as of the date furnished and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make such information not misleading.
6.16 Amendments to Schedule 6.12. To the extent otherwise permitted by this Agreement, the Borrower may, from time to time, amend Schedule 6.12 by delivering (effective upon receipt) to the Agent and each Lender a copy of such amended Schedule 6.12 which shall (i) be dated the date of delivery, (ii) be certified by a duly authorized officer of the Borrower as true, complete and correct as of such date as delivered in replacement for the Schedule 6.12 previously in effect, and (iii) show in reasonable detail (by blacklining or other appropriate graphic means) the changes from the predecessor Schedule 6.12.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the Closing Date, and thereafter for so long as this Credit Agreement is in effect and until the Commitments have terminated, no Note or Letter of Credit remains outstanding and unpaid and the Obligations, together with interest, Fees and all other amounts owing to the Agent or any Lender hereunder, are paid in full, the Borrower shall, and in the case of subsections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.10 shall cause each of its Subsidiaries, to:
7.1 Annual Financial Statement. Furnish to the Agent within 90 days after the end of each fiscal year of the Borrower a copy for each Lender of a balance sheet of the Borrower as of the close of such fiscal year and related statements of income, retained earnings and cash flows for such year, setting forth in each case in comparative form corresponding figures from the preceding annual audit, prepared in accordance with GAAP applied on a consistent basis, audited by a nationally recognized firm of independent certified public accountants selected by the Borrower, and accompanied by an unqualified opinion thereon by such accountants to the effect that such financial statements present fairly, in all material respects, the financial position of the Borrower and all Consolidated Subsidiaries as of the end of such fiscal year, and the results of their operations and their cash flows for such fiscal year, in accordance with GAAP, and that such audit was conducted in accordance with generally accepted auditing practices. Each such annual statement shall be accompanied by a written statement from the accountants stating whether or not the Borrower is in compliance with the financial covenants contained in Sections 7.9 and 7.10 hereof and certifying that in making the examination necessary for their certification of such financial statement, they obtained no knowledge of any Default or Event of Default or, if such accountants shall have obtained knowledge of any Default or Event of Default, they shall disclose in such statement the Default or Event of Default. Each such annual statement shall be accompanied by a certificate of an authorized financial officer of the Borrower containing the calculations demonstrating the Borrower's compliance or noncompliance with the financial covenants contained in Sections 7.9 and 7.10 hereof. The Borrower will furnish to the Agent within 90 days after the end of each fiscal year of the Borrower a copy for each Lender of a statement of income, including statements of revenues and expenses for each of the Borrower's business segments and corporate charges. All such financial statements, and the financial statements referred to in Section 7.2 hereof, except as provided herein, shall be furnished in consolidated form for the Borrower and all Consolidated Subsidiaries which it may at the time have.
7.2 Interim Financial Statements.
(a) Furnish to the Agent within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, and within 30 days after the end of each month, a copy for each Lender of a balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of each such period and related statements of income (including a statement of revenues and expenses for each of the Borrower's business segments and corporate charges), shareholders' equity and cash flows for the period from the beginning of the fiscal year to the end of such quarter and month, prepared in the manner set forth in Section 7.1 hereof for the annual statements, certified to be accurate and complete by an authorized financial officer of the Borrower, subject to audit, footnotes and normal year-end adjustments, and accompanied by the certificate of such officer (i) to the effect that there exists no Default or Event of Default or, if any Default or Event of Default exists, specifying the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto, and (ii) containing the calculations demonstrating the Borrower's compliance or noncompliance with the financial covenants contained in Sections 7.9 and 7.10 hereof.
(b) Furnish to the Agent, (i) contemporaneously with the filing or mailing thereof, copies for each Lender of all material of a financial nature filed with the Securities Exchange Commission or sent to the shareholders of the Borrower, (ii) prior to the end of the first fiscal quarter of each fiscal year of the Borrower, budgets prepared by the Borrower for such fiscal year, and (iii) such other financial information as any Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, in accordance with industry practice (subject, where applicable, to specified grace periods) all its material obligations of whatever nature and any additional costs that are imposed as a result of any failure to so pay, discharge or otherwise satisfy such obligations (including, without limitation, obligations to pay taxes), except when the amount or validity of such obligations and costs is currently being contested in good faith by appropriate proceedings and reserves, if applicable, in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Except as otherwise permitted by Section 8.4, continue to engage in business of the same general type as now conducted by it on the date hereof and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business; comply with all Contractual Obligations and Requirements of Law applicable to it except to the extent that failure to comply therewith would not, in the aggregate, have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all material property useful and necessary in its business in good working order and condition (ordinary wear and tear excepted); maintain with financially sound and reputable insurance companies insurance on all its material property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Agent, upon written request, full information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its businesses and activities; and permit, during regular business hours and upon reasonable notice by the Agent, the Agent and, after the occurrence and during the continuance of a Default or an Event of Default, any of the Lenders to visit and inspect any of its properties and examine and make abstracts from any of its books and records (other than materials protected by the attorney-client privilege and materials which the Borrower may not disclose without violation of a confidentiality obligation binding upon it) at any reasonable time and as often as may reasonably be desired, and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants.
7.7 Notices. Give notice to the Agent (which shall promptly transmit such notice to each Lender) of:
(a) immediately (and in any event within two (2) Business Days) after the Borrower knows or has reason to know thereof, the occurrence of any Default or Event of Default;
(b) promptly, any default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or the Borrower which would reasonably be expected to have a Material Adverse Effect;
(c) promptly, any litigation, or any investigation or proceeding (including, without limitation, any environmental proceeding) known to the Borrower, affecting the Borrower or any of its Subsidiaries or the Borrower which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;
(d) as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; and
(e) promptly, any other development or event which would reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a responsible officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto.
7.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws except to the extent that, with respect to all of the above, failure to do so would not reasonably be expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings would not reasonably be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the Lenders, and their respective employees, agents, officers and directors, from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or the Properties, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorneys' fees and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of the party seeking indemnification therefor. The agreements in this paragraph shall survive repayment of the Notes and all other amounts payable hereunder.
7.9 Financial Covenants.
(a) Consolidated Funded Debt Ratio. There shall be maintained as of the end of each fiscal quarter to occur during the periods shown below a Consolidated Funded Debt Ratio of not greater than:

     Period

From the Closing Date through
     September 26, 1997                 4.00:1.0

September 27, 1997 through
     September 25, 1998                 3.25:1.0

September 26, 1998 through
     September 24, 1999                 3.00:1.0

September 25, 1999 though
     September 29, 2000                 2.50:1.0

September 30, 2000 through
     September 28, 2001                 2.25:1.0

September 29, 2001 through
     September 27, 2002                 2.00:1.0

September 28, 2002 and thereafter       1.75:1.0	

(b) Current Ratio. There shall be maintained at all times a Current Ratio of not less than 1.40 to 1.00.
(c) Interest Coverage Ratio. There shall be maintained as of the end of each fiscal quarter to occur during the periods shown below an Interest Coverage Ratio of at least:

     Period

From Closing Date through
     June 27, 1997                      1.50:1.0

June 28, 1997 through
     December 26, 1997                  1.75:1.0

December 27, 1997 through
     March 27, 1998                     2.00:1.0

March 28, 1998 through
     September 25, 1998                 2.25:1.0

September 26, 1998 through
     September 29, 2000                 2.50:1.0

September 30, 2000 and thereafter       3.00:1.0	

7.10 Capital Expenditures. The Borrower and the other Credit Parties shall not, as a group, make or incur Capital Expenditures of more than $15,000,000 in any fiscal year.
7.11 Additional Subsidiary Guarantors.
(a) If a Domestic Subsidiary of the Borrower which is not a Guarantor hereunder (a "Non-Guarantor Domestic Subsidiary") shall at any time constitute more than either
(i) one and one-half percent (1.5%) of Consolidated Total Assets, or
(ii) one and one-half percent (1.5%) of Consolidated EBITDA,
then the Borrower will promptly notify the Agent thereof, and promptly cause such Non-Guarantor Domestic Subsidiary to become a Guarantor hereunder by way of execution of a Joinder Agreement. The Guarantee Obligations of any such Additional Credit Party shall be secured by, among other things, the assets of such Additional Credit Party. As used herein, "Domestic Subsidiary" means a Subsidiary which is organized and existing under the laws of the United States or any state or commonwealth thereof.
(b) In addition to the requirements set forth in the foregoing clause (a), if the Non-Guarantor Domestic Subsidiaries shall, as a group, at any time constitute in the aggregate more than either
(i) five percent (5%) of Consolidated Total Assets, or
(ii) five percent (5%) of Consolidated EBITDA,
(collectively, the "Threshold Requirement"), then the Borrower will promptly notify the Agent thereof, and promptly cause one or more of the Non-Guarantor Domestic Subsidiaries to become a Guarantor hereunder by way of execution of a Joinder Agreement, such that immediately after the joinder of such Subsidiaries as Guarantors hereunder, the remaining Non- Guarantor Domestic Subsidiaries shall not, as a group, exceed the Threshold Requirement. The Guarantee Obligations of any such Additional Credit Party shall be secured by, among other things, the assets of such Additional Credit Party.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the Closing Date, and thereafter for so long as this Credit Agreement is in effect and until the Commitments have terminated, no Note or Letter of Credit remains outstanding and unpaid and the Obligations, together with interest, Fees and all other amounts owing to the Agent or any Lender hereunder, are paid in full, the Borrower shall, and shall cause each of its Subsidiaries and the Borrower, to:
8.1 Indebtedness. The Borrower will not, nor will it permit any Subsidiary to, contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and the other Credit Documents;
(b) Indebtedness existing as of the Closing Date and set out in Schedule 8.1(b) and renewals, refinancings or extensions thereof in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing or extension;
(c) Indebtedness incurred after the Closing Date consisting of Capital Leases or Indebtedness incurred to provide all or a portion of the purchase price or cost of construction of an asset provided that (i) such Indebtedness when incurred shall not exceed the purchase price or cost of construction of such asset; (ii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing; and (iii) the total aggregate principal amount of all such Indebtedness of the Borrower and its Subsidiaries, as a group, shall not exceed $5,000,000 at any time outstanding;
(d) Unsecured intercompany Indebtedness between a Credit Party and another Credit Party or between a Credit Party and another Subsidiary;
(e) Indebtedness and obligations relating to currency protection agreements and commodity purchase or option agreements entered into with a Lender in order to manage existing or anticipated interest rate, exchange rate or commodity price risks and not for speculative purposes;
(f) Subordinated Debt of the Borrower or other Credit Party the terms of subordination and other terms and provisions of which are acceptable to the Required Lenders in their reasonable discretion;
(g) Permitted Guarantee Obligations;
(h) Indebtedness incurred by a Credit Party in connection with a Permitted Sale-Leaseback Transaction, provided that the aggregate amount of such Indebtedness shall not exceed $2,000,000 at any time outstanding;
(i) Indebtedness permitted under Section 3.11;
(j) Indebtedness secured by Permitted Liens, except as otherwise limited by this Section; and
(j) other Indebtedness of the Borrower and its Subsidiaries, as a group, which does not exceed $2,500,000 in the aggregate at any time outstanding.
8.2 Liens. The Borrower will not, nor will it permit any Subsidiary to, contract, create, incur, assume or permit to exist any Lien with respect to any of its property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens.
8.3 Nature of Business. Except as otherwise permitted by Section 8.4, the Borrower will not, nor will it permit any Subsidiary to, alter the character of its business in any material respect from that conducted as of the Closing Date.
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease or otherwise dispose of any substantial part of its property or assets outside of the ordinary course of business or agree to do so at a future time except the following, without duplication, shall be expressly permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition of property or assets not in the ordinary course of business (other than Specified Sales), where and to the extent that such transaction is the result of a Recovery Event and the Net Proceeds therefrom are used to repair or replace damaged property or to purchase or otherwise acquire new assets or property provided that such purchase or acquisition is committed to within 120 days of receipt of the Net Proceeds from the Recovery Event and such purchase or acquisition is consummated within 180 days of such receipt; and
(iii) the sale, lease or transfer of property or assets by a Credit Party other than the Borrower to a domestic Credit Party.
As used herein, "substantial part" shall mean property and assets, the book value of which, when added to the book value of all other assets sold, leased or otherwise disposed of by the Borrower and its Subsidiaries (other than in the ordinary course of business), shall in any fiscal year exceed 5% of Consolidated Net Worth, in each case determined as of the end of the immediately preceding fiscal year; or
(b) purchase, lease or otherwise acquire (in a single transaction or a series of related transactions) all or any substantial part of the property or assets of any Person other than purchases or other acquisitions of inventory, leases, materials, property and equipment in the ordinary course of business, (except as otherwise limited or prohibited herein), or enter into any transaction of merger or consolidation, except for (i) investments or acquisitions permitted pursuant to Section 8.5, (ii) the merger or consolidation of the Borrower with or into another Credit Party, provided that in any such case the Borrower shall be the surviving entity, and (iii) the merger or consolidation of any wholly-owned Subsidiary with or into any other wholly-owned Subsidiary.
8.5 Advances Investments and Loans. The Borrower will not, nor will it permit any Subsidiary to, lend money or extend credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any Person except for Permitted Investments.
8.6 Guarantee Obligations. The Borrower will not, nor will it permit any Subsidiary to, contract, create, incur, assume or permit to exist any Guarantee Obligations, except Permitted Guarantee Obligations.
8.7 Transactions with Affiliates. Except as permitted in subsection
(iv) of the definition of Permitted Investments, the Borrower will not, nor will it permit any Subsidiary to, enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director, shareholder or Affiliate (other than a Credit Party) other than on terms and conditions substantially as favorable as would be obtainable in a comparable arm's-length transaction with a Person other than an officer, director, shareholder or Affiliate.
8.8 Ownership of Subsidiaries. The Borrower will not, nor will it permit any Subsidiary to, create, form or acquire a Subsidiary, unless any such Domestic Subsidiary shall become an Additional Credit Party, if required, in accordance with the provisions of Section 7.11.
8.9 Fiscal Year. The fiscal year of Pierce and its Subsidiaries shall be changed to conform to the Borrower's fiscal year. Except for the foregoing, the Borrower will not, nor will it permit any Subsidiary to, change its fiscal year, except with the prior written consent of the Required Lenders.
8.10 Prepayments of Indebtedness, etc. The Borrower will not, nor will it permit any Subsidiary to,
(a) after the issuance thereof, amend or modify, or permit the amendment or modification of, any of the terms of subordination or other terms or provisions relating to any Subordinated Debt;
(b) make (or give notice with respect thereto) any voluntary or optional payment or prepayment or redemption or acquisition for value including, without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due) or exchange of any Subordinated Debt permitted pursuant to Section 8.1; or
(c) make any prepayment, redemption, acquisition for value of (including, without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due) refund, refinance or exchange of any Subordinated Debt.
As used herein, "Subordinated Debt" means any indebtedness for borrowed money which by its terms is, or upon the happening of certain events may become, subordinated in right of payment to the Obligations hereunder and other amounts owing hereunder or in connection herewith.
8.11 Dividends. The Borrower will not, nor will it permit any non- wholly-owned Subsidiaries to, make any payment, distribution or dividend (other than a dividend or distribution payable solely in stock or equity interest of the Person making the dividend or distribution) on or any payment on account of the purchase, redemption or retirement of, or any other distribution on, any partnership interest, share of any class of stock or other ownership interest in such Person, in an amount in excess of: (i) from the Closing Date until the Obligations are paid in full, $5,000,000 plus (ii) during each fiscal year of the Borrower ending after the Closing Date, 40% of Consolidated Net Income; provided, that for purposes of this Section 8.11, the definition of Consolidated Net Income shall be deemed to include extraordinary gains and losses.
SECTION 9
EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal on any Note when due in accordance with the terms thereof or hereof; or the Borrower shall fail to reimburse the Issuing Lender for any LOC Obligations when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Note or any Fee or other amount payable hereunder when due in accordance with the terms thereof or hereof and such failure shall continue unremedied for five
(5) Business Days or any Guarantor shall fail to pay on the Guaranty in respect of any of the foregoing or in respect of any other Guarantee Obligations thereunder; or
(b) Any representation or warranty made or deemed made by the Borrower or other Credit Party herein, in the Security Agreement or in any of the other Credit Documents or which is contained in any certificate, document or financial or other statement furnished by the Borrower or other Credit Party at any time under or in connection with this Agreement shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made; or
(c) The Borrower shall (i) default in the due performance or observance of Section 7.1, 7.2, 7.9, 7.10, 8.4 or 8.10, or (ii) default in the observance or performance of any other term, covenant or agreement contained in this Agreement (other than as described in subsections 9(a), 9(b) or 9(c)(i) above), and such default shall continue unremedied for a period of 30 days or more after written notice thereof from the Agent or the Required Lenders; or
(d) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest on any Indebtedness (other than the Notes) in a principal amount outstanding of at least $1,000,000 in the aggregate for the Borrower and its Subsidiaries or in the payment of any matured Guarantee Obligation in a principal amount outstanding of at least $1,000,000 in the aggregate for the Borrower and its Subsidiaries beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created and such Indebtedness or Guarantee Obligation has matured by its terms or is accelerated or is overtly threatened to be accelerated (except any such matured Guarantee Obligations which the Borrower and its Subsidiaries are disputing in good faith and for which they have established adequate reserves); or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness in a principal amount outstanding of at least $1,000,000 in the aggregate for the Borrower and its Subsidiaries or Guarantee Obligation in a principal amount outstanding of at least $1,000,000 in the aggregate for the Borrower and its Subsidiaries or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries shall cause or overtly threaten to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; or
(e) (i) The Borrower or any other Credit Party shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any other Credit Party shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any other Credit Party any case, proceeding or other action of a nature referred to in clause
(i) above which (X) results in the entry of an order for relief or any such adjudication or appointment or (Y) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any other Credit Party any case, proceeding other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any other Credit Party shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any other Credit Party shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or
(f) One or more judgments or decrees shall be entered against the Borrower or any other Credit Party and such judgments or decrees shall not have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof and involve in the aggregate a liability (to the extent not paid when due or covered by insurance) of $1,000,000 or more; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower, any of its Subsidiaries or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, any Multiemployer Plan or (vi) any other similar event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or
(h) Either (i) a "person" or a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 other than members of management of the Borrower as of the Closing Date) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more than 50% of the then outstanding voting stock of the Borrower or (ii) a majority of the Board of Directors of the Borrower shall consist of individuals who are not Continuing Directors ("Continuing Director" means, as of any date of determination, (A) an individual who on the date two years prior to such determination date was a member of the Borrower's Board of Directors or (B) any new Director whose nomination for election by the Borrower's shareholders was approved by a vote of at least 75% of the Directors then still in office who either were Directors on the date two years prior to such determination date or whose nomination for election was previously so approved); or
(i) The Guaranty or any provision thereof shall cease to be in full force and effect or any Credit Party or any Person acting by or on behalf of any Credit Party shall deny or disaffirm any Credit Party's obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full force and effect or to give the Agent and/or the Lenders the security interests, liens, rights, powers and privileges reasonably purported to be created thereby;
then, and in any such event, (A) if such event is an Event of Default specified in paragraph (e) above, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon), and all other amounts under the Credit Documents (including, without limitation, the maximum amount of all contingent liabilities under Letters of Credit which amount shall be paid to the Agent and held as cash collateral therefor) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the written consent of the Required Lenders, the Agent may, or upon the written request of the Required Lenders, the Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the written consent of the Required Lenders the Agent may, or upon the written request of the Required Lenders, the Agent shall, by notice of default to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the Credit Documents to be due and payable forthwith and direct the Borrower to pay to the Agent cash collateral as security for the LOC Obligations for subsequent drawings under then outstanding Letters of Credit an amount equal to the maximum amount which may be drawn under Letters of Credit then outstanding, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section 9, presentment, demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment. Each Lender hereby designates and appoints Firstar Bank Milwaukee, N.A. as Agent hereunder of such Lender to act as specified herein and in the other Credit Documents, and each such Lender hereby authorizes the Agent as the agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Credit Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Credit Documents, or shall otherwise exist against the Agent. The provisions of this Section are solely for the benefit of the Agent and the Lenders and none of the Credit Parties shall have any rights as a third party beneficiary of the provisions hereof. In performing its functions and duties under this Credit Agreement and the other Credit Documents, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower or any other Credit Party. The title of Co-Agent is bestowed in recognition of the participation of Bank One, Milwaukee, NA, NationsBank, N.A. and Harris Trust and Savings Bank in this credit, and such title shall not impose or imply any duties or responsibilities hereunder of a fiduciary nature or otherwise, in their capacity as such.
10.2 Delegation of Duties. The Agent may execute any of its duties hereunder or under the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Credit Documents except for its or such Person's own gross negligence or willful misconduct, or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any of the Credit Parties contained herein or in any of the other Credit Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection herewith or in connection with the other Credit Documents, or enforceability or sufficiency herefor of any of the other Credit Documents, or for any failure of the Borrower to perform its obligations hereunder or thereunder. The Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Credit Agreement, or any of the other Credit Documents or for any representations, warranties, recitals or statements made herein or therein or made by the Borrower or any Credit Party in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Agent to the Lenders or by or on behalf of the Credit Parties to the Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Credit Parties.
10.4 Reliance on Communications. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Agent and any of the Lenders, independent accountants and other experts selected by the Agent with reasonable care). The Agent may deem and treat the Lenders as the owner of their respective interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent in accordance with Section 11.6(d). The Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Credit Documents unless it shall first receive such advice or concurrence of the Required Lenders, or all Lenders, as the case may be, as it deems appropriate. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Credit Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in Section 11.1, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns).
10.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder (other than the failure by the Borrower to pay any principal or interest on any Note when due in accordance with the terms thereof or hereof) unless the Agent has received notice from a Lender or a Credit Party referring to the Credit Document, stating that a Default or Event of Default exists, and specifying the particulars thereof. In the event that the Agent receives such a notice or the Borrower fails to pay any principal or interest on any Note when due, the Agent shall give prompt notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders, otherwise than an action that the Agent reasonably believes would be a violation of law or otherwise prohibited by the Credit Documents.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent or any affiliate thereof hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrower which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in- fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans and Participation Interests of the Lenders), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the termination of this Credit Agreement) be imposed on, incurred by or asserted against the Agent in its capacity as such in any way relating to or arising out of this Credit Agreement or the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Agent. If any indemnity furnished to the Agent for any purpose shall, in the reasonable opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished.
10.8 Agent in its Individual Capacity. The Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower or any other Credit Party as though the Agent were not Agent hereunder. With respect to its Loans and Participation Interests, the Agent shall have the same rights, obligations and powers under this Credit Agreement as any Lender and may exercise the same as though they were not Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may, at any time, resign upon 20 days' written notice to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent (which shall be a Lender) with the prior written consent of the Borrower, which consent shall not be unreasonably withheld. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the notice of resignation, as appropriate, then the retiring Agent shall select a successor Agent provided such successor is a Lender hereunder or a commercial bank organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as Agent, as appropriate, under this Credit Agreement and the other Credit Documents and the provisions of this Section 10.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Amendments, Waivers and Release of Collateral. Neither this Credit Agreement, nor any of the Notes, nor any of the other Credit Documents, nor any terms hereof or thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this subsection nor may collateral be released except as specifically provided herein or in the Security Agreement or in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Agent may, from time to time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding, amending or deleting any provisions of this Credit Agreement or the other Credit Documents or (b) waive, on such terms and conditions as the Required Lenders may specify in such instrument, any of the requirements of this Credit Agreement or the other Credit Documents or any Default or Event of Default and its consequences or (c) release collateral in accordance with the terms hereof or of the Security Agreement or on such other terms and conditions as the Required Lenders may agree; provided, however, that no such waiver and no such amendment, waiver, supplement, modification or release shall (i) reduce the amount or extend the scheduled date of maturity of any Loan or Note or any installment thereon, or reduce the stated rate of any interest or fee payable hereunder (other than interest at the increased post-default rate) or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Commitment, in each case without the written consent of each Lender directly affected thereby, or
(ii) amend, modify or waive any provision of this Section 11.1 or reduce the percentage specified in the definition of Required Lenders, or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Credit Agreement, in each case without the written consent of all the Lenders, or (iii) amend, modify or waive any provision of Section 10 without the written consent of the then Agent, (iv) release all or substantially all of the Guarantors or all or substantially all of the Collateral without the written consent of all of the Lenders, or
(v) amend Section 3.12 without the written consent of all Lenders. Any such waiver, any such amendment, supplement or modification and any such release shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Agent and all future holders of the Notes. In the case of any waiver, the Borrower, the Lenders and the Agent shall be restored to their former position and rights hereunder and under the outstanding Loans and Notes and other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.
11.2 Notices. Except as otherwise provided in Section 2, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (i) when delivered by hand, (ii) when transmitted via telecopy (or other facsimile device) on a Business Day between the hours of 8:30 A.M. and 5:00 P.M. (Milwaukee, Wisconsin time) or on the following Business Day (if sent after 5:00 P.M. Milwaukee, Wisconsin time) to the number set out herein, (iii) the day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service, or (iv) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case, addressed as follows in the case of the Borrower and the Agent, and as set forth on Schedule 11.2 in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes:
The Credit Parties: c/o Oshkosh Truck Corporation

                    2307 Oregon Street
                    P. O. Box 2566
                    Oshkosh, Wisconsin 54903-2566
                    Attn:  Chief Financial Officer
                              and General Counsel
                    Phone: (414) 235-9150
                    Fax:   (414) 233-9459

                    with a copy to:

                    Foley & Lardner
                    777 E. Wisconsin Avenue
                    Milwaukee, Wisconsin 53202
                    Attn:  Emory Ireland
                    Phone:  (414) 297-5624
                    Fax:    (414) 297-4900

The Agent:          Firstar Bank Milwaukee, N.A.
                    777 E. Wisconsin Avenue
                    Milwaukee, Wisconsin 53202
                    Attn: Stephen E. Carlton
                    Phone:  (414) 765-4244
                    Fax:    (414) 765-4430

                    with a copy to:

                    Quarles & Brady
                    411 E. Wisconsin Avenue
                    Milwaukee, Wisconsin 53202-4497
                    Attn: Andrew M. Barnes
                    Phone:  (414) 277-5105	

Fax: (414) 271-3552
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Credit Agreement and the Notes and the making of the Loans, provided that all such representations and warranties shall terminate on the date upon which the Commitments have been terminated and all amounts owing hereunder and under any Notes have been paid in full.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, the Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, together with the reasonable fees and disbursements of counsel to the Agent, (b) to pay out-of-pocket expenses, including attorneys' fees, incurred by a Lender in connection with the negotiation, preparation and execution of the Credit Documents, not to exceed $10,000 for each Lender, and reasonable expenses, including reasonable attorneys' fees, in connection with any future amendments or modifications hereto, (c) to pay or reimburse each Lender and the Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Credit Agreement and any other Credit Documents, including, without limitation, the reasonable fees and disbursements of counsel to the Agent and to the Lenders (including reasonable allocated costs of in- house legal counsel), (d) on demand, to pay, indemnify, and hold each Lender and the Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, the Credit Documents and any such other documents, and (e) to pay, indemnify, and hold each Lender and the Agent and their Affiliates, officers, directors, shareholders, employees and agents harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of the Credit Documents and any such other documents and the use, or proposed use, of proceeds of the Loans (all the foregoing, collectively, the "Indemnified Liabilities"); provided, however, that the Borrower shall not have any obligation hereunder to the Agent or any Lender with respect to Indemnified Liabilities arising from (i) the gross negligence or willful misconduct of the Agent or any such Lender,
(ii) legal proceedings commenced against or disputes among the Agent or any Lender by any other Lender or its participants or the Agent, or
(iii) the violation by the Agent or any such Lender of an express provision of the Credit Documents, if so determined by a final judgment of a court of competent jurisdiction. The agreements in this Section 11.5 shall survive repayment of the Loans, Notes and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) This Credit Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agent, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Credit Agreement or the other Credit Documents without the prior written consent of each Lender and no Lender may assign or transfer any of its rights or obligations under this Credit Agreement or the other Credit Documents without the prior written consent of the Borrower, except as otherwise permitted by this
Section 11.6.
(b) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participant" or "Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender, or any other interest of such Lender hereunder, provided, however, that at all times such Lender shall retain for its own account interests in Loans owing to such Lender in an aggregate outstanding principal amount which, when added to the aggregate outstanding principal amount of any interests in Loans sold by such Lender to Participants who are Affiliates of such Lender, equals not less than fifty percent (50%) of the aggregate principal amount of all such Lender's outstanding Loans. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under this Credit Agreement to the other parties to this Credit Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Credit Agreement, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Credit Agreement. No Lender shall transfer or grant any participation under which the Participant shall have rights to approve any amendment to or waiver of this Credit Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the scheduled maturity of any Loan or Note or any installment thereon in which such Participant is participating, or reduce the stated rate or extend the time of payment of interest or Fees thereon except in connection with a waiver of interest at the increased post-default rate) or reduce the principal amount thereof, or increase the amount of the Participant's participation over the amount thereof then in effect it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without consent of any Participant if the Participant's participation is not increased as a result thereof, (ii) release all or substantially all of the collateral, or (iii) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Credit Agreement. In the case of any such participation, the Participant shall not have any rights under this Credit Agreement or any of the other Credit Documents (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation, provided that each Participant shall be entitled to the benefits of Sections 3.6, 3.7, 3.8, 3.9 and 11.5 with respect to its participation in the Commitments and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell or assign to any Lender or any Affiliate thereof and with the consent of the Agent and, so long as no Event of Default has occurred and is continuing, the consent of the Borrower (which consent shall not be unreasonably withheld), to one or more additional banks or financial institutions ("Purchasing Lenders"), all or any part of its rights and obligations under this Credit Agreement and the Notes in minimum amounts of $10,000,000 (or, if less, the entire amount of such Lender's obligations) if the Purchasing Lender is not a Lender hereunder, or with no minimum amount if the Purchasing Lender is a Lender hereunder, pursuant to a Commitment Transfer Supplement, executed by such Purchasing Lender, such transferor Lender (and, in the case of a Purchasing Lender that is not then a Lender or an affiliate thereof so long as no Event of Default has occurred and is continuing, by the Borrower and the Agent), and delivered to the Agent for its acceptance and recording in the Register. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date specified in such Commitment Transfer Supplement, (x) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Credit Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Lender's rights and obligations under this Credit Agreement, such transferor Lender shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Credit Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Credit Agreement and the Notes. On or prior to the Transfer Effective Date specified in such Commitment Transfer Supplement, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the Note delivered to the Agent pursuant to such Commitment Transfer Supplement a new Note to the order of such Purchasing Lender in an amount equal to the Commitment assumed by it pursuant to such Commitment Transfer Supplement and, unless the transferor Lender has not retained a Commitment hereunder, a new Note to the order of the transferor Lender in an amount equal to the Commitment retained by it hereunder. Except for the expense of executing and delivering such new Note to the Agent pursuant to this Section, the Borrower shall not be obligated to pay any transfer fees, costs or expenses to the Agent or any Lender in connection with any such transfer. Such new Note shall be dated the Closing Date and shall otherwise be in the form of the Note replaced thereby. The Note surrendered by the transferor Lender shall be returned by the Agent to the Borrower marked "canceled."
(d) The Agent shall maintain at its address referred to in
Section 11.2 a copy of each Commitment Transfer supplement delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Credit Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by a transferor Lender and a Purchasing Lender and, in the case of a Purchasing Lender that is not then a Lender (or an affiliate thereof, by the Borrower and the Agent) together with payment to the Agent by the transferor Lender or the Purchasing Lender, (as agreed between them) of a registration and processing fee of $2,500 for each Purchasing Lender listed in such Commitment Transfer Supplement, and the Notes subject to such Commitment Transfer Supplement, the Agent shall (i) accept such Commitment Transfer Supplement, (ii) record the information contained therein in the Register and (iii) give prompt notice of such acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or Purchasing Lender each, (a "Transferee") and any permitted prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Credit Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Credit Agreement.
(g) At the time of each assignment pursuant to this Section 11.6 to a Person which is not already a Lender hereunder and which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Agent the appropriate Internal Revenue Service Forms (and, if applicable, a U.S. Tax Compliance Certificate) described in Section 3.9.
(h) Nothing herein shall prohibit any Lender from pledging or assigning any of its rights under this Credit Agreement (including, without limitation, any right to payment of principal and interest under any Note) to any Federal Reserve Bank in accordance with applicable laws.
11.7 Set-off. In addition to any rights and remedies of the Lenders provided by law (including, without limitation, other rights of set-off), each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon the occurrence and during the continuance of any Event of Default, to setoff and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any Affiliate, branch or agency thereof to or for the credit or the account of the Borrower, or any part thereof in such amounts as such Lender may elect, against and on account of the obligations and liabilities of the Borrower to such Lender hereunder and claims of every nature and description of such Lender against the Borrower, in any currency, whether arising hereunder, under the Notes or under any documents contemplated by or referred to herein or therein, as such Lender may elect, whether or not such Lender has made any demand for payment. The aforesaid right of set-off may be exercised by such Lender against the Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of the Borrower, or against anyone else claiming through or against the Borrower or any such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the occurrence of any Event of Default. Each Lender agrees promptly to notify the Borrower and the Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.
11.8 Confidentiality. The Agent and each Lender shall hold in confidence any material nonpublic information delivered or made available to them by the Borrower. Notwithstanding the foregoing, nothing herein shall prevent the Agent or any Lender from disclosing any information delivered or made available to it by the Borrower (a) to such Lender's Affiliates, the Agent or any Lender, (b) upon the order of any court or administrative agency, (c) upon the request or demand of any regulatory agency or authority, (d) which has been publicly disclosed other than as a result of a disclosure by the Agent or any Lender which is not permitted by this Agreement, (e) to the extent reasonably required in connection with any litigation to which the Agent, any Lender, or any of their respective affiliates may be a party, along with the Borrower, any Subsidiary or any of their respective Affiliates, (f) to the extent reasonably required in connection with the exercise of any right or remedy under this Agreement, (g) to such Agent's or Lender's legal counsel and financial consultants and independent auditors, and (h) to any Transferee or permitted prospective Transferee and such Transferee or permitted prospective Transferee agrees in writing to be bound by the duty of confidentiality under this Section to the same extent as if it were a Lender hereunder.
11.9 Table of Contents and Section Headings. The table of contents and the Section and subsection headings herein are intended for convenience only and shall be ignored in construing this Credit Agreement.
11.10 Counterparts. This Credit Agreement may be executed by one or more of the parties to this Credit Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Credit Agreement signed by all the parties shall be lodged with the Borrower and the Agent.
11.11 Severability. Any provision of this Credit Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
11.12 Integration. This Credit Agreement, the Notes and the other Credit Documents represent the agreement of the Borrower, the Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Agent, the Borrower or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the Notes.
11.13 Governing Law. This Credit Agreement and the Notes and the rights and obligations of the parties under this Credit Agreement and the Notes shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of Wisconsin without giving effect to its conflicts of law provisions.
11.14 Consent to Jurisdiction and Venue. All judicial proceedings brought against the Borrower or any other Credit Party with respect to this Credit Agreement, any Note or any of the other Credit Documents shall be brought in any state or federal court of competent jurisdiction in the State of Wisconsin, and, by execution and delivery of this Credit Agreement, the Borrower and each of the other Credit Parties accepts, for itself and in connection with its properties, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any final judgment rendered thereby in connection with this Credit Agreement from which no appeal has been taken or is available. The Borrower, each of the other Credit Parties, the Agent and the Lenders irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein shall limit the right of any Lender to bring proceedings against the Borrower and each of the other Credit Parties in the court of any other jurisdiction.
11.15 Acknowledgements. Each of the Credit Parties hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of each Credit Document;
(b) neither the Agent nor any Lender has any fiduciary relationship with or duty to the Credit Parties arising out of or in connection with this Credit Agreement and the relationship between Agent and Lenders, on one hand, and the Credit Parties, on the other hand, in connection herewith is solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Credit Parties and the Lenders.
11.16 Waivers of Jury Trial. THE CREDIT PARTIES, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.17 Limitation of Liability. THE CREDIT PARTIES, THE AGENT AND THE LENDERS HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER PARTY ANY EXEMPLARY OR PUNITIVE DAMAGES AND, IN THE CASE OF DAMAGES ARISING FROM THE ISSUANCE OR FAILURE TO ISSUE ANY LETTER OF CREDIT OR THE HONORING OR FAILURE TO HONOR ANY DRAFT PRESENTED UNDER ANY LETTER OF CREDIT, ANY CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Credit Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                     OSHKOSH TRUCK CORPORATION,
                              a Wisconsin corporation

                              By:________________________________
                              Title:_____________________________

GUARANTORS:                   PIERCE MANUFACTURING INC.,
                              a Wisconsin corporation

                              By:________________________________
                              Title:_____________________________

                              SUMMIT PERFORMANCE SYSTEMS, INC.,
                              a Wisconsin corporation

                              By:________________________________
                              Title:_____________________________

LENDERS:                      FIRSTAR BANK MILWAUKEE, N.A.,
                              in its capacity as Agent and as
                              a Lender

                              By:________________________________
                              Title:_____________________________

                              BANK ONE, MILWAUKEE, NA,
                              in its capacity as a Co-Agent and
                              as a Lender

                              By:________________________________
                              Title:_____________________________	

NATIONSBANK, N.A.,
 in its capacity as a Co-Agent and
as a Lender
By:________________________________
Title:_____________________________
HARRIS TRUST AND SAVINGS BANK,
 in its capacity as a Co-Agent and
as a Lender
By:________________________________
Title:_____________________________
BANK OF AMERICA ILLINOIS, as Lender
By:________________________________
Title:_____________________________
LASALLE NATIONAL BANK, as Lender
By:________________________________
Title:_____________________________
FIRST BANK (N.A.), as Lender
By:________________________________
Title:_____________________________
THE NORTHERN TRUST COMPANY, as Lender
By:________________________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Lender
By:________________________________
Title:_____________________________
COMERICA BANK, as Lender
By:________________________________
Title:_____________________________

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report dated December 8, 1996 on the financial statements of Pierce Manufacturing, Inc. and Subsidiaries included in this Form 8-K. It should be noted that we have not audited any financial statements of Pierce Manufacturing Inc. and Subsidiaries subsequent to October 31, 1995 or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 1, 1996