-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Imtwx/cT6SB4ay0agHRVeLp9QBwQmh6RxdHHMDFNT/zOEQH8WjNZTMis76m7m76R e3mPg0+DOHzjJGzzr6ZxCA== 0000950131-98-001552.txt : 19980309 0000950131-98-001552.hdr.sgml : 19980309 ACCESSION NUMBER: 0000950131-98-001552 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980306 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED POWER INC CENTRAL INDEX KEY: 0000006955 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 390168610 STATE OF INCORPORATION: WI FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-47493 FILM NUMBER: 98559474 BUSINESS ADDRESS: STREET 1: P O BOX 325 CITY: MILWAUKEE STATE: WI ZIP: 53201 BUSINESS PHONE: 4147816600 MAIL ADDRESS: STREET 1: PO BOX 325 CITY: MILWAUKEE STATE: WI ZIP: 53201 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED POWER INDUSTRIES INC DATE OF NAME CHANGE: 19730123 S-3 1 FORM S-3 FOR APPLIED POWER As filed with the Securities and Exchange Commission on March 6,1998 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM S-3 REGISTRATION STATEMENT Under The Securities Act of 1933 __________________ APPLIED POWER INC. (Exact name of Registrant as specified in its charter) ________________ WISCONSIN 39-0168610 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 13000 West Silver Spring Drive Butler, Wisconsin 53007-1093 (414) 781-6600 (Address, including ZIP Code, and telephone number, including area code, of Registrant's principal executive offices) ROBERT C. ARZBAECHER Vice President and Chief Financial Officer Applied Power Inc. 13000 West Silver Spring Drive Butler, Wisconsin 53007-1093 (414) 781-6600 (Name, address, including ZIP Code, and telephone number, including area code, of agent for service) ________________ Copies to: BRUCE C. DAVIDSON GARY W. WOLF Quarles & Brady Cahill Gordon & Reindel 411 East Wisconsin Avenue 80 Pine Street Milwaukee, Wisconsin 53202 New York, New York 10005 (414) 277-5000 (212) 701-3600 ________________ Approximate date of commencement of proposed sale of the securities to the public: At such time or from time to time after the effective date of this Registration Statement as the Registrant shall determine in light of market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
============================================================================================ Proposed Proposed maximum Amount maximum aggregate Amount of Title of each class of to be offering price offering registration securities to be registered registered per unit price fee - -------------------------------------------------------------------------------------------- Debt Securities (1) (3) (3) $300,000,000 (4) $88,500 (5) Class A Common Stock, par value $.20 per share (2) ============================================================================================
(1) Subject to note (4) below, there are being registered hereunder an indeterminate principal amount of Debt Securities as may be sold, from time to time, by the Registrant. If any Debt Securities are issued at an original issue discount, then the offering price shall be in such greater principal amount as shall result in an aggregate initial offering price not to exceed U.S. $300,000,000, less the dollar amount of any securities previously issued hereunder. (2) Subject to note (4) below, there are being registered hereunder an indeterminate number of shares of Class A Common Stock as may be sold, from time to time, by the Registrant. (3) Not applicable pursuant to the Note following the Calculation of Registration Fee Table and General Instruction II.D. to Form S-3, which provide that only the maximum aggregate offering price for all classes of securities to be registered need be specified. (4) In no event will the aggregate initial offering price of all securities issued from time to time pursuant to this Registration Statement exceed U.S. $300,000,000. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder. (5) Calculated pursuant to Rule 457(o) at the statutory rate of .000295 of the maximum aggregate offering price. ________________ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 6, 1998 $300,000,000 APPLIED POWER INC. DEBT SECURITIES CLASS A COMMON STOCK Applied Power Inc. (the "Company") may offer from time to time (i) unsecured debt securities ("Debt Securities") consisting of debentures, notes and/or other evidences of unsecured indebtedness in one or more series or (ii) Class A Common Stock, par value $.20 per share ("Common Stock") (the Debt Securities and Common Stock are collectively referred to as "Securities"), or any combination of the foregoing, at an aggregate initial offering price not to exceed U.S. $300,000,000, at prices and on terms to be determined at or prior to the time of sale in light of market conditions at the time of sale. Specific terms of the particular Securities in respect of which this Prospectus is being delivered will be set forth in one or more accompanying Prospectus Supplements (each a "Prospectus Supplement"), together with the terms of the offering of the Securities and the initial price and the net proceeds to the Company from the sale thereof. The Prospectus Supplement will set forth with regard to the particular Securities, without limitation, the following: (i) in the case of Debt Securities, the specific designation, aggregate principal amount, ranking as senior debt or subordinated debt, authorized denomination, maturity, rate or method of calculation of interest and dates for payment thereof, any exchangeability, conversion, redemption, prepayment or sinking fund provisions, any covenants which may apply, and any other specific terms thereof, and (ii) in the case of Common Stock, the number of shares of Common Stock and the terms of the offering and sale thereof. The Company may sell Securities offered hereby to or through underwriters or dealers, and also may sell Securities directly to other purchasers or through agents. The Prospectus Supplement will also set forth the names of the underwriters, dealers and agents involved in the sale of the Securities offered hereby, the principal amounts, if any, to be purchased by the underwriters or agents and the compensation, if any, of such underwriters or agents and any applicable commissions or discounts. The net proceeds to the Company from the sale of the Securities offered hereby will also be set forth in the Prospectus Supplement. This Prospectus may not be used to consummate sales of Securities unless accompanied by a Prospectus Supplement. ------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------- The date of this Prospectus is , 1998. No person has been authorized to give any information or to make any representation not contained or incorporated by reference in this Prospectus or the accompanying Prospectus Supplement and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or any underwriter, dealer or agent. Neither the delivery of this Prospectus or the accompanying Prospectus Supplement nor any sale made hereunder or thereunder shall, under any circumstances, create an implication that the information contained herein or in the accompanying Prospectus Supplement is correct as of any date subsequent to the date hereof or thereof or that there has been no change in the affairs of the Company since the date hereof or thereof. Neither this Prospectus nor the accompanying Prospectus Supplement constitutes an offer to sell or a solicitation of an offer to buy Securities in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy or information statements and other information with the Securities and Exchange Commission (the "Commission"), all of which may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following Regional Offices of the Commission: Chicago Regional Office, Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained at the prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission maintains a site on the World Wide Web, and the reports, statements and other information filed by the Company with the Commission may be accessed electronically on the Web at http://www.sec.gov. Such material can also be inspected at the offices of the New York Stock Exchange (the "NYSE"), 20 Broad Street, New York, New York 10005, where the Common Stock is listed (symbol "APW"). This Prospectus constitutes part of a Registration Statement on Form S-3 filed by the Company with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus omits certain of the information contained in the Registration Statement in accordance with the rules and regulations of the Commission. Reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Company and the Securities. Statements contained herein concerning the provisions of any document are not necessarily complete and, in each instance, where a copy of such document has been filed as an exhibit to the Registration Statement or otherwise has been filed with the Commission, reference is made to the copy of the applicable document so filed. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents previously filed by the Company (Commission File No. 1-11288) with the Commission pursuant to the Exchange Act are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997; (b) The Company's Quarterly Report on Form 10-Q for the quarterly period ended November 30, 1997; (c) The Company's Current Report on Form 8-K dated October 3, 1997 and the Company's Amendment to Current Report on Form 8-K/A filed December 17, 1997; and (d) The Company's Current Report on Form 8-K dated November 4, 1997. In lieu of incorporating by reference the description of the Common Stock contained in the Company's Current Report on Form 8-K dated January 28, 1991, filed for the purpose of updating the description of the Common Stock contained in the Company's registration statement filed with respect thereto under the Exchange Act, such description is included in this Prospectus. See "Description of Capital Stock." -2- All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Securities made hereby shall be deemed to be incorporated by reference into this Prospectus from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, including any beneficial owner of Securities, upon the written or oral request of any such person, a copy of any and all of the documents that have been or may be incorporated by reference herein, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Such requests should be directed to Investor Relations, Applied Power Inc., 13000 West Silver Spring Drive, Butler, Wisconsin 53007 (telephone: (414) 781-6600). FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS This Prospectus and any Prospectus Supplement (including the documents incorporated herein or therein by reference) may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "project," "objective" and similar expressions are intended to identify forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause the Company's actual results to differ materially from those contemplated in the forward-looking statements include factors described under the caption "Risk Factors That May Affect Future Results" or similar cautionary captions in the documents incorporated herein by reference. THE COMPANY Applied Power Inc. (the "Company"), a Wisconsin corporation incorporated in 1910, is a diversified global company engaged in the business of providing tools, equipment, systems, and supply items to a variety of end-users and original equipment manufacturers ("OEMs") in the manufacturing, computer, semiconductor, telecommunication, datacom, construction, electrical, transportation, recreational vehicle, natural resources, aerospace, defense, and other industries. The Company's operations are divided into three segments: (i) Tools & Supplies -- Industrial and electrical tools and supplies sold primarily through distribution; (ii) Engineered Solutions -- Motion and vibration control products and systems customized and primarily sold to OEM customers; and (iii) Technical Environments and Enclosures ("TEE") -- Technical environment solutions for computer rooms, offices, laboratories and manufacturing, and enclosures for electronic equipment. Tools & Supplies Tools & Supplies is engaged in the design, manufacture, and distribution of tools and supplies to the construction, electrical wholesale, retail Do-It- Yourself, datacom, retail automotive, industrial, and production automation markets. These products are sold under a variety of brand names of which the two most well known are Enerpac and GB Electrical. Tools & Supplies furnishes over 10,000 products. The majority of products are manufactured or assembled, while select low volume products are sourced. Enerpac is a specialist in hydraulic high force tools for the construction and industrial markets, and also supplies quick mold change systems for the plastic injection molding industry, quick die change systems for the metal stamping industry, industrial products for the professional automotive repair market, -3- and workholding products for the machining industry. GB Electrical is a large volume manufacturer of wire connectors, conduit benders, plastic cable ties, and fish tapes for the electrical wiring industry. Engineered Solutions Engineered Solutions focuses on developing and marketing value-added, customized solutions for OEMs in the automotive, truck, off-highway equipment, medical, aerospace, recreational vehicle, semiconductor, defense, and industrial markets. Engineered Solutions markets under a variety of well known brand names such as APITECH/Power-Packer, Power Gear, MoxMed, and Barry Controls. Engineered Solutions' expertise is primarily in the areas of motion and vibration control. The business is particularly skilled in using electronics to create smart or active systems to control motion. Primary applications in the automotive industry include convertible top actuation systems and electric hydraulic valves used to control hydraulic systems on cars. In the truck industry, the business supplies cab-over-engine hydraulic tilt systems, cab suspension systems, engine mount systems, and other vibration isolation components. Medical applications include self-contained hydraulic actuators that are primarily used in conjunction with hospital beds as well as vibration isolation products for medical instrumentation. In aerospace, the segment is a leading supplier of engine vibration isolation systems to aircraft manufacturers as well as directly to airlines to support maintenance operations. In recreational vehicles, the Company supplies leveling and slide- out systems. In addition to these major markets, the segment's products are used in a wide variety of applications in other industries. Technical Environments and Enclosures TEE designs, manufactures, and sells furnishings and enclosures utilized in technology intensive business environments. The business is comprised of two product lines which are Wright Line (Technical Environments) and APW Enclosures. Wright Line applications include local area networks, multimedia production, electrical engineering and testing, electronic manufacturing, telecommunication centers, and R&D laboratories. In addition, Wright Line provides modular workstations used in the computerized office. APW Enclosures designs, manufactures, and sells metal and plastic enclosures to a wide variety of electronic OEMs in the computer, semiconductor, telecommunication, medical, and electronic industries. * * * * * The Company has had an active acquisition program and regularly reviews acquisition opportunities in the ordinary course of its business, some of which may be potentially material. Such opportunities may be under investigation, discussion, or negotiation at any particular time or from time to time. The Company's principal executive offices are located at 13000 West Silver Spring Drive, Butler, Wisconsin 53007, and its telephone number is (414) 781- 6600. RECENT DEVELOPMENTS Increase in Authorized Class A Common Stock. At the Annual Meeting of Shareholders held on January 9, 1998, the shareholders of the Company approved an increase in the number of authorized shares of Class A Common Stock from 40,000,000 to 80,000,000. 1998 Stock Split. On January 9, 1998, the Company's Board of Directors approved a two-for-one stock split in the form of a 100% share dividend, resulting in the issuance on February 3, 1998 of one additional share of Class A Common Stock for each share held by shareholders of record on January 22, 1998. USE OF PROCEEDS Except as otherwise described in the applicable Prospectus Supplement, the Company intends to use the net proceeds from the sale of the Securities to refinance, in part, existing indebtedness, to finance, in part, the cost of acquisitions, and/or for general corporate purposes. Funds not required immediately for such purposes may be invested temporarily in short-term marketable securities. -4- RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the three months ended November 30, 1997, and the years ended August 31, 1997, 1996, 1995, 1994 and 1993.
Years Ended August 31, ---------------------- Three Months Ended November 30, 1997 (1) 1997 1996 1995 1994 1993(2) ------------------ ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (3) 4.6 4.9 5.1 3.6 2.7 1.6 ___________________
(1) The Company has historically had a seasonality effect where the second half of the fiscal year is generally better than the first half. Therefore, the results for the first quarter ended November 30, 1997, are not necessarily indicative of full year results. (2) Net earnings from continuing operations in 1993 include a non-recurring restructuring charge of $7,721,000. Excluding this charge, the ratio of earnings to fixed charges would have been 2.0. (3) For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes, cumulative effect of change in accounting methods, discontinued operations, extraordinary items, and fixed charges. Fixed charges consist of interest on indebtedness, amortization of debt expenses and one-third of rent expense which is deemed representative of an interest factor. -5- DESCRIPTION OF DEBT SECURITIES The Debt Securities will be issued in one or more series under an Indenture (the "Indenture") between the Company and The First National Bank of Chicago, as Trustee, the form of which is filed as an exhibit to the Registration Statement. The Indenture will be subject to, and governed by, the Trust Indenture Act of 1939, as amended. The following summary of certain provisions of the Indenture does not purport to be complete and is qualified in its entirety by express reference to the Indenture and the Securities Resolution or the indenture supplemental thereto authorizing a series (copies of which have been or will be filed with the Commission). Capitalized terms used in this section without definition have the meanings given such terms in the Indenture. The particular terms of the Debt Securities offered by a Prospectus Supplement will be described in such Prospectus Supplement, along with any applicable modifications of or additions to the general terms of the Debt Securities as described herein and in the Indenture. Accordingly, for a description of the terms of any series of Debt Securities, reference must be made to both the Prospectus Supplement relating thereto and the description of the Debt Securities set forth in this Prospectus. General The Indenture does not limit the amount of Debt Securities that can be issued thereunder and provides that the Debt Securities may be issued from time to time in one or more series pursuant to the terms of one or more Securities Resolutions or supplemental indentures creating such series. As of the date of this Prospectus, there were no Debt Securities outstanding under the Indenture. The ranking of a series of Debt Securities with respect to all indebtedness of the Company will be established by the Securities Resolution or supplemental indenture creating such series. Although the Indenture provides for the possible issuance of Debt Securities in other forms or currencies, the only Debt Securities covered by this Prospectus will be Debt Securities denominated in U.S. dollars in registered form without coupons. Terms Reference is made to the Prospectus Supplement for the following terms, if applicable, of the Debt Securities offered thereby: (1) the designation, aggregate principal amount, currency or composite currency and denominations; (2) the price at which such Debt Securities will be issued and, if an index formula or other method is used, the method for determining amounts of principal or interest; (3) the maturity date and other dates, if any, on which principal will be payable; (4) the interest rate or rates, if any, or method of calculating the interest rate or rates; (5) the date or dates from which interest will accrue and on which interest will be payable, and the record dates for the payment of interest; (6) the manner of paying principal and interest; (7) the place or places where principal and interest will be payable; (8) the terms of any mandatory or optional redemption by the Company including any sinking fund; (9) the terms of any conversion or exchange right; (10) the terms of any redemption at the option of Holders; (11) any tax indemnity provisions; (12) if the Debt Securities provide that payments of principal or interest may be made in a currency other than that in which Debt Securities are denominated, the manner for determining such payments; (13) the portion of principal payable upon acceleration of a Discounted Debt Security (as defined below); (14) whether and upon what terms Debt Securities may be defeased; (15) whether any events of default or covenants in addition to or in lieu of those set forth in the Indenture apply; (16) provisions for electronic issuance of Debt Securities or for Debt Securities in uncertificated form; (17) the ranking of the Debt Securities; and (18) any other terms not inconsistent with the provisions of the Indenture, including any covenants or other terms that may be required or advisable under United States or other applicable laws or regulations, or advisable in connection with the marketing of the Debt Securities. (Section 2.01) Debt Securities of any series may be issued as registered Debt Securities, bearer Debt Securities or uncertificated Debt Securities, and in such denominations as specified in the terms of the series. (Section 2.01) In connection with its original issuance, no bearer Debt Security will be offered, sold or delivered to any location in the United States, and a bearer Debt Security in definitive form may be delivered in connection with its original issuance only upon presentation of a certificate in a form prescribed by the Company to comply with United States laws and regulations. (Section 2.04) -6- Registration of transfer of registered Debt Securities may be requested upon surrender thereof at any agency of the Company maintained for that purpose and upon fulfillment of all other requirements of the agent. (Sections 2.03 and 2.07) Securities may be issued under the Indenture as Discounted Debt Securities to be offered and sold at a substantial discount from the principal amount thereof. Special United States federal income tax and other considerations applicable thereto will be described in the Prospectus Supplement relating to such Discounted Debt Securities. "Discounted Debt Security" means a Security where the amount of principal due upon acceleration is less than the stated principal amount. (Sections 1.01 and 2.10) Certain Covenants Any restrictive covenants which may apply to a particular series of Debt Securities will be described in the Prospectus Supplement relating thereto. Ranking of Debt Securities Unless stated otherwise in a Prospectus Supplement, the Debt Securities will be unsecured and will rank equally and ratably with other unsecured and unsubordinated debt of the Company. The Debt Securities will not be secured by any properties or assets and will represent unsecured debt of the Company. The Indenture does not limit the ability of any of the Company's subsidiaries to issue debt, and the Debt Securities will be effectively subordinated to all existing and future indebtedness and other liabilities and commitments of the Company's subsidiaries. Successor Obligor The Indenture provides that, unless otherwise specified in the Securities Resolution establishing a series of Debt Securities, the Company shall not consolidate with or merge into, or transfer all or substantially all of its assets to, any person in any transaction in which the Company is not the survivor, unless: (1) the person is organized under the laws of the United States or a State thereof or is organized under the laws of a foreign jurisdiction and consents to the jurisdiction of the courts of the United States or a State thereof; (2) the person assumes by supplemental indenture all the obligations of the Company under the Indenture, the Debt Securities and any coupons; (3) all required approvals of any regulatory body having jurisdiction over the transaction shall have been obtained; and (4) immediately after the transaction no Default (as defined below) exists. The successor shall be substituted for the Company, and thereafter all obligations of the Company under the Indenture, the Debt Securities and any coupons shall terminate. (Section 5.01) Exchange of Debt Securities Registered Debt Securities may be exchanged for an equal aggregate principal amount of registered Debt Securities of the same series and date of maturity in such authorized denominations as may be requested upon surrender of the registered Debt Securities at an agency of the Company maintained for such purpose and upon fulfillment of all other requirements of such agent. (Section 2.07) Default and Remedies Unless the Securities Resolution establishing the series otherwise provides (in which event the Prospectus Supplement will so state), an "Event of Default" with respect to a series of Debt Securities will occur if: (1) the Company defaults in any payment of interest on any Debt Securities of such series when the same becomes due and payable and the Default continues for a period of 30 days; (2) the Company defaults in the payment of the principal and premium, if any, of any Debt Securities of the series when the same becomes due and payable at maturity or upon redemption, acceleration or otherwise; (3) the Company defaults in the payment or satisfaction of any sinking fund obligation with respect to any Debt Securities of a series as required by the Securities Resolution establishing such series; -7- (4) the Company defaults in the performance of any of its other agreements applicable to the series and the Default continues for 60 days after the notice specified below; (5) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian for it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian for the Company or for all or substantially all of its property, or (C) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 60 days; or (7) there occurs any other Event of Default provided for in such series. (Section 6.01) The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or a similar official under any Bankruptcy Law. (Section 6.01) "Default" means any event which is, or after notice or passage of time would be, an Event of Default. A Default under subparagraph (4) above is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the series notify the Company of the Default and the Company does not cure the Default within the time specified after receipt of the notice. (Section 6.01) If an Event of Default occurs and is continuing on a series, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the series by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Debt Securities of the series to be due and payable immediately. Discounted Debt Securities may provide that the amount of principal due upon acceleration is less than the stated principal amount. The Holders of a majority in principal amount of the series, by notice to the Trustee, may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default on the series have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. (Section 6.02) If an Event of Default occurs and is continuing on a series, the Trustee may pursue any available remedy to collect principal or interest then due on the series, to enforce the performance of any provision applicable to the series, or otherwise to protect the rights of the Trustee and Holders of the series. (Section 6.03) The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Debt Securities of the series. (Section 7.01) Subject to certain limitations, Holders of a majority in principal amount of the Debt Securities of the series may direct the Trustee in its exercise of any trust or power with respect to such series. (Section 6.05) Except in the case of Default in payment on a series, the Trustee may withhold from Holders of such series notice of any continuing Default if it determines that withholding the notice is in the interest of Holders of the series. (Section 7.04) The Company is required to furnish the Trustee annually a brief certificate as to the Company's compliance with all conditions and covenants under the Indenture. (Section 4.04) The Indenture does not have a cross-default provision. Thus, a default by the Company on any other debt, including any other series of Debt Securities, would not constitute an Event of Default. A Securities Resolution may provide for a cross-default provision, in which case the Prospectus Supplement will describe the terms thereof. -8- Amendments and Waivers The Indenture and the Debt Securities or any coupons of the series may be amended, and any default may be waived as follows: Unless the Securities Resolution otherwise provides (in which event the Prospectus Supplement will so state), the Company and the Trustee may amend the Debt Securities, the Indenture and any coupons with the written consent of the Holders of a majority in principal amount of the Debt Securities of all series affected voting as one class. (Section 10.02) Unless the Securities Resolution otherwise provides (in which event the Prospectus Supplement will so state), a Default on a particular series may be waived with the consent of the Holders of a majority in principal amount of the Debt Securities of the series. (Section 6.04) However, without the consent of each Debt Securityholder affected, no amendment or waiver may (1) reduce the amount of Debt Securities whose Holders must consent to an amendment or waiver, (2) reduce the interest on or change the time for payment of interest on any Debt Security, (3) change the fixed maturity of any Debt Security, (4) reduce the principal of any non-Discounted Debt Security or reduce the amount of the principal of any Discounted Debt Security that would be due on acceleration thereof, (5) change the currency in which the principal or interest on a Debt Security is payable, (6) make any change that materially adversely affects the right to convert or exchange any Debt Security, or (7) waive any Default in payment of interest on or principal of a Debt Security. (Sections 6.04 and 10.02) Without the consent of any Debt Securityholder, the Company and the Trustee may amend the Indenture, the Debt Securities or any coupons to cure any ambiguity, omission, defect, or inconsistency; to provide for assumption of Company obligations to Debt Securityholders in the event of a merger or consolidation requiring such assumption; to provide that specific provisions of the Indenture shall not apply to a series of Debt Securities not previously issued; to create a series and establish its terms; to provide for a separate Trustee for one or more series; or to make any change that does not materially adversely affect the rights of any Debt Securityholder. (Section 10.01) Legal Defeasance and Covenant Defeasance Debt Securities of a series may be defeased in accordance with their terms and, unless the Securities Resolution establishing the terms of the series otherwise provides, as set forth in the Indenture and described briefly below. The Company at any time may terminate as to a series all of its obligations (except for certain obligations, including obligations with respect to the defeasance trust and obligations to register the transfer or exchange of a Security, to replace destroyed, lost or stolen Debt Securities and coupons, and to maintain paying agencies in respect of the Debt Securities) with respect to the Debt Securities of the series and any related coupons and the Indenture ("legal defeasance"). The Company at any time may terminate as to a series its obligations, if any, with respect to the Debt Securities and coupons of the series under any restrictive covenants which may be applicable to a particular series ("covenant defeasance"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, a series may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, a series may not be accelerated by reference to any restrictive covenants which may be applicable to a particular series. (Section 8.01) To exercise either defeasance option as to a series, the Company must (i) irrevocably deposit in trust (the "defeasance trust") with the Trustee or another trustee money or U.S. Government Obligations, (ii) deliver a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. Government Obligations, without reinvestment, plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay the principal and interest when due on all Debt Securities of such series to maturity or redemption, as the case may be, and (iii) comply with certain other conditions. In particular, the Company must obtain an opinion of tax counsel that the defeasance will not result in recognition of any gain or loss to Holders for federal income tax purposes. "U.S. Government Obligations" means direct obligations of the United States or an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed by the United States, which, in either case, have the full faith and credit of the United States of America pledged for payment and which are not callable at the issuer's option, or certificates representing an ownership interest in such obligations. (Section 8.02) -9- Regarding the Trustee The First National Bank of Chicago will act as Trustee and Registrar for Debt Securities issued under the Indenture and, unless otherwise indicated in a Prospectus Supplement, the Trustee will also act as Transfer Agent and Paying Agent with respect to the Debt Securities. (Section 2.03) The Company may remove the Trustee with or without cause if the Company so notifies the Trustee three months in advance and if no Default occurs during the three-month period. (Section 7.07) The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its affiliates, and may otherwise deal with the Company or its affiliates, as if it were not Trustee. DESCRIPTION OF CAPITAL STOCK (The following summary does not purport to be a complete description of the applicable provisions of the Company's Restated Articles of Incorporation (the "Articles") and By-Laws, as amended, copies of which have been or will be filed with the Commission, or of applicable statutory or other law, and is qualified in its entirety by reference thereto.) The authorized capital stock of the Company as of February 27, 1998 consisted of 80,000,000 shares of Class A Common Stock, $.20 par value ("Class A Common"), of which 27,836,656 shares were issued and outstanding; 7,500,000 shares of Class B Common Stock, $.20 par value ("Class B Common"), none of which were issued and outstanding; and 800,000 shares of Cumulative Preferred Stock, $1.00 par value ("Preferred Stock"), none of which have been issued. Class A Common and Class B Common are collectively referred to herein as "Common Stock." Preferred Stock The Preferred Stock may be issued in one or more series providing for such dividend rates, voting, liquidation, redemption, and conversion rights, and such other terms and conditions as the Board of Directors may determine, without further approval by holders of Common Stock. If any shares of Class B Common were outstanding, any voting rights conferred on holders of Preferred Stock would be limited, with respect to the election of directors, to the power to vote together with holders of Class A Common in electing a "maximum minority" of the Board of Directors, as described under "Common Stock" below. If the Company issues any shares of Preferred Stock, the Company would be permitted to pay dividends or make other distributions upon the Common Stock (except for distributions payable in shares of Common Stock) only after paying or setting apart funds for payment of current dividends and any accrued but unpaid dividends upon the outstanding Preferred Stock, at the rate or rates designated for each series of outstanding Preferred Stock, and making provision for any mandatory sinking fund payments. In the event of voluntary or involuntary liquidation of the Company, the holders of any outstanding Preferred Stock would be entitled to receive all accrued dividends on the Preferred Stock and the liquidation amount specified for each series of Preferred Stock before any amount may be distributed to holders of the Common Stock. Common Stock The rights and preferences of shares of Class A and Class B Common are identical, except as to voting power with respect to the election of directors and conversion rights. On all matters other than the election of directors, the holders of Class A and Class B Common possess equal voting power of one vote per share, voting as a single class of stock (unless otherwise required by the Wisconsin Business Corporation Law--the "WBCL"). In the election of the Board of Directors, the holders of Class A Common, voting together as a single class with the holders of any Preferred Stock which has voting power, are entitled to elect a "maximum minority" of the number of directors to be elected. As a result of the "maximum minority" provision, the holders of the Class B Common, voting as a separate class, are entitled to elect the balance of the directors, constituting a "minimum majority" of the number of directors to be elected. If an even number of directors is to be elected, the holders of Class B Common will be entitled to elect two more directors than the holders of Class A Common and any Preferred Stock having voting power; if the number of directors to be elected is an odd number, the holders of Class B Common will be entitled to elect one more director than the holders of Class A Common and any Preferred Stock -10- having voting power. In the event there are no shares of Class B Common outstanding, holders of Class A Common, together with holders of any Preferred Stock having voting power, shall elect all of the directors to be elected. A director, once elected and duly qualified, may be removed only by the requisite affirmative vote of the holders of that class of stock by which such director was elected. Holders of both classes of Common Stock are equally entitled to such dividends as the Company's Board of Directors may declare out of funds legally available therefor. If the Company were to issue any of its authorized Preferred Stock, no dividends could be paid or set apart for payment on shares of Common Stock, unless paid in Common Stock, until dividends on all of the issued and outstanding shares of Preferred Stock had been paid or set apart for payment and provision had been made for any mandatory sinking fund payments. Certain covenants contained in the Company's debt agreements, or in the provisions of the Articles for the benefit of any Preferred Stock that may be hereafter issued, from time to time could have the direct or indirect effect of limiting the payment of dividends or other distributions on (including redemptions and purchases of) the Company's capital stock. Stock dividends on Class A Common may be paid only in shares of Class A Common and stock dividends on Class B Common may be paid only in shares of Class B Common. The Articles contain provisions which provided for the conversion of Class B Common into shares of Class A Common on a share-for-share basis at the option of the holder, and for the automatic conversion of all outstanding shares of Class B Common to Class A Common on a share-for-share basis when the number of outstanding shares of Class B Common was reduced below a certain threshold. All of the shares of Class B Common that had been outstanding were converted into Class A Common pursuant to these conversion provisions. Holders of Class A Common do not have any conversion rights. In the event of dissolution or liquidation of the Company, the holders of both classes of Common Stock are entitled to share ratably all assets of the Company remaining after payment of the Company's liabilities and satisfaction of the rights of any series of Preferred Stock which may be outstanding. There are no redemption or sinking fund provisions with respect to the Common Stock. When the Company has received the consideration for which the Board of Directors authorized the issuance of shares, the shares issued for that consideration are fully paid and nonassessable. Shareholders are subject to personal liability under Section 180.0622(2)(b) of the WBCL, as judicially interpreted, for debts owing to employees of the Company for services performed for the Company, but not exceeding six months' service in any one case. The Class A Common is listed on the NYSE. Firstar Trust Company, Milwaukee, Wisconsin, acts as the transfer agent for the Class A Common. General The Articles provide that the affirmative vote of two-thirds of all shares entitled to vote thereon is required in order to constitute shareholder approval of a merger, consolidation, or liquidation of the Company, sale or other disposition of all or substantially all of its assets, amendment of the Articles or the By-Laws, or removal of a director. Directors of the Company are currently elected to serve one-year terms. The Articles provide that the By-Laws (which may be amended by the Board of Directors or by the shareholders) may provide for the division of the Board of Directors into two or three classes, serving staggered two or three-year terms. Holders of capital stock of the Company do not have preemptive or other subscription rights to purchase or subscribe for unissued stock or other securities of the Company. Certain Statutory Provisions Under Section 180.1150(2) of the WBCL, the voting power of shares of a "resident domestic corporation," such as the Company (as long as it continues to meet the statutory definition), which are held by any person (including two or more persons acting in concert) in excess of 20% of the voting power in the election of directors shall be limited (in voting on any matter) to 10% of the full voting power of such excess shares, unless full voting rights have been restored at a special meeting of the shareholders called for that purpose. Shares held or acquired under certain circumstances -11- are excluded from the application of Section 180.1150(2), including (among others) shares acquired directly from the Company, shares acquired before April 22, 1986, and shares acquired in a merger or share exchange to which the Company is a party. Sections 180.1130 to 180.1134 of the WBCL provide generally that, in addition to the vote otherwise required by law or the articles of incorporation of a "resident domestic corporation," such as the Company (as long as it continues to meet the statutory definition), certain business combinations not meeting certain fair price standards specified in the statute must be approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by the outstanding voting shares of the corporation and (b) two-thirds of the votes entitled to be cast by the holders of voting shares other than voting shares beneficially owned by a "significant shareholder" or an affiliate or associate thereof who is a party to the transaction. The term "business combination" is defined to include, subject to certain exceptions, a merger or share exchange of the resident domestic corporation (or any subsidiary thereof) with, or the sale or other disposition of all or substantially all of the property and assets of the resident domestic corporation to, any significant shareholder or affiliate thereof. "Significant shareholder" is defined generally to mean a person that is the beneficial owner of 10% or more of the voting power of the outstanding voting shares of the resident domestic corporation. The statute also restricts the repurchase of shares and the sale of corporate assets by a resident domestic corporation in response to a take-over offer. Sections 180.1140 to 180.1144 of the WBCL prohibit certain "business combinations" between a "resident domestic corporation," such as the Company (as long as it continues to meet the statutory definition), and a person beneficially owning 10% or more of the voting power of the outstanding voting stock of such corporation (an "interested stockholder") within three years after the date such person became a 10% beneficial owner, unless the business combination or the acquisition of such stock has been approved before the stock acquisition date by the corporation's board of directors. Business combinations after the three-year period following the stock acquisition date are permitted only if (i) the board of directors approved the acquisition of the stock prior to the acquisition date, (ii) the business combination is approved by a majority of the outstanding voting stock not beneficially owned by the interested stockholder, or (iii) the consideration to be received by shareholders meets certain fair price requirements of the statute with respect to form and amount. Under the WBCL, as amended in 1997, a "resident domestic corporation" is defined to mean a Wisconsin corporation that has a class of voting stock that is registered or traded on a national securities exchange or that is registered under Section 12(g) of the Exchange Act and that, as of the relevant date, satisfies any of the following: (i) its principal offices are located in Wisconsin; (ii) it has significant business operations located in Wisconsin; (iii) more than 10% of the holders of record of its shares are residents of Wisconsin; or (iv) more than 10% of its shares are held of record by residents of Wisconsin. The Company is a "resident domestic corporation" for purposes of the above described provisions. A Wisconsin corporation that is otherwise subject to certain of such statutes may preclude their applicability by an election to that effect in its articles of incorporation. The Company's Articles do not contain any such election. These provisions of the WBCL, the ability to issue additional shares of Common Stock and Preferred Stock without further shareholder approval (except as required under NYSE corporate governance standards), and certain other provisions of the Company's Articles (discussed above) could have the effect, among others, of discouraging take-over proposals for the Company, delaying or preventing a change in control of the Company, or impeding a business combination between the Company and a major shareholder of the Company. BOOK-ENTRY The Depository Trust Company ("DTC") may act as securities depository for the Securities, in which case the applicable Prospectus Supplement will so provide. The Securities will be issued only as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One or more fully registered global certificates will be issued for the Securities representing the aggregate principal amount of the Debt Securities or the number of shares of Common Stock offered by the applicable Prospectus Supplement and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered -12- pursuant to the provisions of Section 17A of the 1934 Act, as amended. DTC holds securities that its participants (the "Direct Participants") deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants," and together with the Direct Participants, the "Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Purchases of the Securities within the DTC system must be made by or through Direct Participants which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (a "Beneficial Owner") will in turn be recorded on the Direct and Indirect Participants' respective records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Securities will be effected by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in Securities except in the event that use of the book-entry system for the Securities is discontinued. The deposit of the Securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other direct communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Securities of an issue are being redeemed, DTC's practice will determine by lot the amount of the interest of each Direct Participant in such series to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Securities. Under its usual procedures, DTC mails an omnibus proxy (an "Omnibus Proxy") to the Participants as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest on the Debt Securities and dividends on Common Stock, if applicable, will be paid to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street-name," and will be the responsibility of such Participant and not of DTC, the underwriters, or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest on the Debt Securities and dividends on Common Stock, if applicable, to DTC is the responsibility of the Company or the Trustee. Disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the Company. Under such circumstances and in the event that a successor securities depository is not obtained, certificates for the Securities are required to be printed and delivered. In addition, the -13- Company may decide to discontinue use of the system of book-entry transfers through DTC (or any successor securities depository). In that event, certificates for the Securities will be printed and delivered. The Company will not have any responsibility or obligation to Participants or to the persons for whom they act as nominees with respect to the accuracy of the records of DTC, its nominees or any Direct or Indirect Participant with respect to any ownership interest in the Securities, or with respect to payments or providing of notice to the Direct Participants, the Indirect Participants or the Beneficial Owners. So long as Cede & Co. is the registered owner of the Securities, as nominee of DTC, references herein to holders of the Securities shall mean Cede & Co. or DTC and shall not mean the Beneficial Owners of the Securities. The information in this section concerning DTC and DTC's book-entry system has been obtained from DTC. None of the Company, the Trustees or the underwriters take any responsibility for the accuracy or completeness thereof. PLAN OF DISTRIBUTION The Company may sell Securities to or through underwriters or dealers, and also may sell Securities directly to other purchasers or through agents. Each Prospectus Supplement will describe the method of distribution of the offered Securities. The distribution of the Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Securities, underwriters may receive compensation from the Company or from purchasers of Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the Prospectus Supplement. Underwriters and agents who participate in the distribution of Securities may be entitled under agreements which may be entered into by the Company to indemnification by the Company against, or contribution with respect to, certain liabilities, including liabilities under the Securities Act. If so indicated in the applicable Prospectus Supplement, the Company will authorize underwriters or other persons acting as the Company's agents to solicit offers by certain institutions to purchase offered Securities from the Company pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions, and others, but in all cases such institutions must be approved by the Company. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of the offered Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity of performance of such contracts. If so indicated in the applicable Prospectus Supplement, the Company will grant the underwriters an option to purchase additional shares of Common Stock solely to cover over-allotments, if any, in connection with a firm commitment underwriting of Common Stock. The option may be exercised in whole or in part at any time within 30 days after the date of such Prospectus Supplement. To the extent such option is exercised, the underwriters will be severally committed, subject to certain conditions, to purchase the additional shares of Common Stock in proportion to their respective commitments for the initial shares of Common Stock. -14- In connection with the offering of the Securities, underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Securities. Specifically, the underwriters may over-allot in connection with the offerings of the Securities, creating a syndicate short position. In addition, underwriters may bid for, and purchase, Securities in the open market to cover syndicate shorts or to stabilize the price of the Securities, as the case may be. Finally, the underwriting syndicate may reclaim selling concessions allowed for distributing the Securities in the offering of the Securities, as the case may be, if the syndicate repurchases previously distributed Securities, as the case may be, in syndicate covering transactions, syndicate transactions, or otherwise. Any of these activities may stabilize or maintain the market prices of the Securities above independent market levels. The underwriters are not required to engage in any of these activities, and may end any of them at any time. Unless otherwise indicated in the applicable Prospectus Supplement, the Debt Securities are not proposed to be listed on a securities exchange, and any underwriters will not be obligated to make a market in the Debt Securities. The Company cannot predict the activity or liquidity of any trading in the Debt Securities or give any assurance that a market for the Debt Securities will develop. The Common Stock offered hereby will be listed on the NYSE. CERTAIN LEGAL MATTERS The validity of the Securities to be sold pursuant to this Prospectus will be passed upon for the Company by Quarles & Brady, counsel to the Company. Anthony W. Asmuth, III, the Corporate Secretary of the Company, is a partner in Quarles & Brady. As of the date of this Prospectus, Mr. Asmuth owned 38,420 shares of the Company's Common Stock and served as trustee or co-trustee with sole or shared voting and dispositive powers over trusts that held an aggregate of 279,252 shares of Common Stock. Certain legal matters in connection with the Securities will be passed upon for the underwriters by Cahill Gordon & Reindel (a partnership including a professional corporation), New York, New York. EXPERTS The consolidated financial statements and the related financial statement schedule incorporated in this Prospectus by reference from the Company's Annual Report on Form 10-K for the year ended August 31, 1997 and the consolidated financial statements of Versa Technologies, Inc. incorporated by reference from the Company's report on Form 8-K dated October 3, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Future audited financial statements incorporated in this Prospectus by reference to future filings under the Exchange Act, as provided under "Incorporation Of Certain Documents By Reference" above, will be so incorporated in reliance on the related report or reports of the firm of independent accountants auditing such financial statements, given on such authority of such firm, if and to the extent such filings include the consent of such firm to the incorporation of such report or reports herein. Coopers & Lybrand L.L.P. has been engaged as the Company's independent public accountants for the fiscal year ending August 31, 1998. -15- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The estimated expenses in connection with the issuance and distribution of the Securities covered by this Registration Statement are as follows: SEC registration fee (actual)..................................... $ 88,500 Trustee's fee and expenses........................................ 15,000 Printing and engraving expenses................................... 90,000 Legal fees and expenses........................................... 125,000 Accounting fees and expenses...................................... 50,000 Rating agency fees................................................ 100,000 Miscellaneous..................................................... 10,000 -------- Total.......................................................... $478,500 ======== Item 15. Indemnification of Directors and Officers. The Registrant is incorporated under the Wisconsin Business Corporation Law ("WBCL"). Under Section 180.0851(1) of the WBCL, the Registrant is required to indemnify a director or officer, to the extent such person is successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if such person was a party because he or she was a director or officer of the Registrant. In all other cases, the Registrant is required by Section 180.0851(2) of the WBCL to indemnify a director or officer against liability incurred in a proceeding to which such person was a party because he or she was an officer or director of the Registrant, unless it is determined that he or she breached or failed to perform a duty owed to the Registrant and the breach or failure to perform constitutes: (i) a willful failure to deal fairly with the Registrant or its shareholders in connection with a matter in which the director or officer has a material conflict of interest; (ii) a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful; (iii) a transaction from which the director or officer derived an improper personal profit; or (iv) willful misconduct. Section 180.0858(1) of the WBCL provides that, subject to certain limitations, the mandatory indemnification provisions do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under the Registrant's articles of incorporation, bylaws, a written agreement or a resolution of the Board of Directors or shareholders. Section 180.0859 of the WBCL provides that it is the public policy of the State of Wisconsin to require or permit indemnification, allowance of expenses and insurance to the extent required or permitted under Sections 180.0850 to 180.0858 of the WBCL for any liability incurred in connection with a proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities. Section 180.0828 of the WBCL provides that, with certain exceptions, a director is not liable to a corporation, its shareholders, or any person asserting rights on behalf of the corporation or its shareholders, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director, unless the person asserting liability proves that the breach or failure to perform constitutes any of the four exceptions to mandatory indemnification under Section 180.0851(2) referred to above. II-1 Under Section 180.0833 of the WBCL, directors of the Registrant against whom claims are asserted with respect to the declaration of an improper dividend or other distribution to shareholders to which they assented are entitled to contribution from other directors who assented to such distribution and from shareholders who knowingly accepted the improper distribution, as provided therein. Article VIII of the Registrant's Bylaws contains provisions that generally parallel the indemnification provisions of the WBCL and cover certain procedural matters not dealt with in the WBCL. Directors and officers of the Registrant are also covered by directors' and officers' liability insurance under which they are insured (subject to certain exceptions and limitations specified in the policy) against expenses and liabilities arising out of proceedings to which they are parties by reason of being or having been directors or officers. Item 16. Exhibits. See Exhibit Index following the Signatures page in this Registration Statement, which Exhibit Index is incorporated herein by reference. Item 17. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the Registration Statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-2 (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Reference is made to the indemnification provisions described in Item 15 of this Registration Statement. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (i) The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Butler, State of Wisconsin, on March 6, 1998. APPLIED POWER INC. (Registrant) By: /s/ ROBERT C. ARZBAECHER ------------------------ Robert C. Arzbaecher Vice President and Chief Financial Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard G. Sim and Robert C. Arzbaecher, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any other regulatory authority, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.* Signature Title /s/ RICHARD G. SIM Chairman of the Board, President and - ------------------------ Chief Executive Officer; Director Richard G. Sim /s/ ROBERT C. ARZBAECHER Vice President and Chief Financial Officer - ------------------------ (Principal Financial Officer) Robert C. Arzbaecher /s/ RICHARD D. CARROLL Treasurer, Controller and - ------------------------ Principal Accounting Officer Richard D. Carroll /s/ H. RICHARD CROWTHER Director - ------------------------ H. Richard Crowther /s/ JACK L. HECKEL Director - ------------------------ Jack L. Heckel /s/ RICHARD A. KASHNOW Director - ------------------------ Richard A. Kashnow /s/ L. DENNIS KOZLOWSKI Director - ------------------------ L. Dennis Kozlowski /s/ JOHN J. McDONOUGH Director - ------------------------ John J. McDonough *Each of the above signatures is affixed as of March 6, 1998. APPLIED POWER INC (the "Registrant") (Commission File No. 1-11288) EXHIBIT INDEX TO FORM S-3 REGISTRATION STATEMENT The following exhibits are filed with or incorporated by reference in this Registration Statement:
Exhibit Description Incorporated Herein Filed By Reference To Herewith 1.1 Form of proposed Purchase Agreement for Debt Securities* 1.2 Form of proposed Purchase Agreement for Shares of Common Stock* 3.1 Restated Articles of Incorporation Exhibit 4.1 to the Registrant's Registration Statement on Form S-8 (File No. 333-46469) 3.2 Amended and Restated By-Laws (effective Exhibit 3.2 to the as of January 8, 1997) Registrant's Form 10-K for fiscal year ended August 31, 1997 ("1997 10-K") 4.1 Restated Articles of Incorporation See Exhibit 3.1 above 4.2 Agreement for Purchase and Sale, dated Exhibit 19.2(a)-(g) to the August 29, 1990, between Minnesota Registrant's Form 10-Q Mining and Manufacturing Company and for quarter ended Applied Power Inc., and seven related May 31, 1991 Leases, each dated April 29, 1991, between Bernard Garland and Sheldon Garland, d/b/a Garland Enterprises, as Landlord, and Applied Power Inc., as Tenant 4.3 Credit Agreement, dated as of October 3, Exhibit (b)(2) filed with 1997 among Applied Power Inc., Bank of Amendment No. 3 to the America National Trust and Savings Registrant's Tender Offer Association, as agent, and the other Statement on Schedule financial institutions party hereto 14D-1 dated October 6, 1997 (File No. 5-13342) 4.4 Multi-currency Credit Agreement, dated as Exhibit 4.6 to 1997 10-K of October 22, 1997 between Applied Power Inc. and Applied Power Finance, S.A., as borrowers, various financial institutions, as lenders, Bank of America National Trust and Savings Association, as agent, and BA Robertson Stephens, as arranger
EI-1
Exhibit Description Incorporated Herein Filed By Reference To Herewith - ------------------------------------------------------------------------------------------------------------ 4.5 Receivables Purchase Agreement dated as Exhibit 4.1 to the of November 20, 1997 among Applied Registrant's Quarterly Power Credit Corporation as Seller, Report on Form 10-Q for Applied Power Inc. individually and as quarter ended Servicer and Barton Capital Corporation as November 30, 1997 Purchaser and Societe Generale as Agent 4.6 Form of Indenture for Debt Securities X 5 Opinion of Quarles & Brady X 12 Statement of Computation of Ratio of X Earnings to Fixed Charges 23.1 Consent of Deloitte & Touche LLP X 23.2 Consent of Quarles & Brady Contained in Exhibit 5 24 Power of Attorney On Signatures page 25 Statement of Eligibility of Trustee on Form X T-1
- ------------- *To be filed by amendment or under cover of Form 8-K and incorporated herein by reference. EI-2 EX-4.6 2 FORM OF INDENTURE FOR DEBT SECURITIES EXHIBIT 4.6 ================================================================================ APPLIED POWER INC. DEBT SECURITIES ------------------- INDENTURE Dated as of , 1998 ------------------- The First National Bank of Chicago, Trustee ================================================================================ PARTIAL CROSS-REFERENCE TABLE
Indenture Section TIA Section 2.05.......................................... 317(b) 2.06.......................................... 312(a), 313(c) 2.11.......................................... 316(a) (last sentence) 4.04.......................................... 314(a)(4) 4.05.......................................... 314(a)(1) 6.03.......................................... 317(a)(1) 6.04.......................................... 316(a)(1)(B) 6.05.......................................... 316(a)(1)(A) 6.07.......................................... 317(a)(1) 7.01.......................................... 315(a), 315(d) 7.04.......................................... 315(b) 7.05.......................................... 313(a), 313(d) 7.07.......................................... 310(a), 310(b) 7.09.......................................... 310(a)(2) 8.02.......................................... 310(a), 310(b) 10.04......................................... 316(c) 11.01......................................... 318(a) 11.02......................................... 313(c) 11.03......................................... 314(c)(1), 314(c)(2) 11.04......................................... 314(e)
TABLE OF CONTENTS -----------------
Page ---- ARTICLE 1 -- DEFINITIONS SECTION 1.01. Definitions.............................................................. 1 SECTION 1.02. Other Definitions........................................................ 3 SECTION 1.03. Rules of Construction.................................................... 3 ARTICLE 2 -- THE SECURITIES SECTION 2.01. Issuable in Series....................................................... 4 SECTION 2.02. Execution and Authentication............................................. 6 SECTION 2.03. Registrar and Transfer, Paying and Conversion Agents and Other Agents.... 6 SECTION 2.04. Bearer Securities........................................................ 6 SECTION 2.05. Paying Agent to Hold Money in Trust...................................... 7 SECTION 2.06. Securityholder Lists..................................................... 7 SECTION 2.07. Transfer and Exchange.................................................... 8 SECTION 2.08. Replacement Securities................................................... 8 SECTION 2.09. Outstanding Securities................................................... 9 SECTION 2.10. Discounted Debt Securities............................................... 9 SECTION 2.11. Treasury Securities...................................................... 9 SECTION 2.12. Global Securities........................................................ 9 SECTION 2.13. Temporary Securities..................................................... 10 SECTION 2.14. Cancellation............................................................. 10 SECTION 2.15. Defaulted Interest....................................................... 10 ARTICLE 3 -- REDEMPTION SECTION 3.01. Notices to Trustee....................................................... 10 SECTION 3.02. Selection of Securities to Be Redeemed................................... 11 SECTION 3.03. Notice of Redemption..................................................... 11 SECTION 3.04. Effect of Notice of Redemption........................................... 12 SECTION 3.05. Payment of Redemption Price.............................................. 12 SECTION 3.06. Securities Redeemed in Part.............................................. 12 ARTICLE 4 -- COVENANTS SECTION 4.01. Payment of Securities.................................................... 13 SECTION 4.02. Overdue Interest......................................................... 13 SECTION 4.03. No Lien Created, etc..................................................... 13 SECTION 4.04. Compliance Certificate................................................... 13 SECTION 4.05. SEC Reports.............................................................. 13
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Page ---- ARTICLE 5 -- SUCCESSORS SECTION 5.01. When Company May Merge, etc.............................................. 14 ARTICLE 6 -- DEFAULTS AND REMEDIES SECTION 6.01. Events of Default........................................................ 14 SECTION 6.02. Acceleration............................................................. 15 SECTION 6.03. Other Remedies........................................................... 16 SECTION 6.04. Waiver of Past Defaults.................................................. 16 SECTION 6.05. Control by Majority...................................................... 16 SECTION 6.06. Limitation on Suits...................................................... 16 SECTION 6.07. Collection Suit by Trustee............................................... 17 SECTION 6.08. Priorities............................................................... 17 ARTICLE 7 -- TRUSTEE SECTION 7.01. Rights of Trustee........................................................ 17 SECTION 7.02. Individual Rights of Trustee............................................. 18 SECTION 7.03. Trustee's Disclaimer..................................................... 18 SECTION 7.04. Notice of Defaults....................................................... 18 SECTION 7.05. Reports by Trustee to Holders............................................ 19 SECTION 7.06. Compensation and Indemnity............................................... 19 SECTION 7.07. Replacement of Trustee................................................... 19 SECTION 7.08. Successor Trustee by Merger, etc......................................... 20 SECTION 7.09. Trustee's Capital and Surplus............................................ 20 ARTICLE 8 -- DISCHARGE OF INDENTURE SECTION 8.01. Defeasance............................................................... 21 SECTION 8.02. Conditions to Defeasance................................................. 21 SECTION 8.03. Application of Trust Money............................................... 22 SECTION 8.04. Repayment to Company..................................................... 22 ARTICLE 9 -- CONVERSION SECTION 9.01. Conversion Privilege..................................................... 22 SECTION 9.02. Conversion Procedure..................................................... 23 SECTION 9.03. Taxes on Conversion...................................................... 24 SECTION 9.04. Company Determination Final.............................................. 24 SECTION 9.05. Trustee's and Conversion Agent's Disclaimer.............................. 24 SECTION 9.06. Company to Provide Conversion Securities................................. 24 SECTION 9.07. Cash Settlement Option................................................... 24 SECTION 9.08. Adjustment in Conversion Rate for Change in Capital Stock................ 25 SECTION 9.09. Adjustment in Conversion Rate for Common Stock Issued Below Market Price. 26
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Page ---- SECTION 9.10. Adjustment for Other Distributions....................................... 27 SECTION 9.11. Voluntary Adjustment..................................................... 28 SECTION 9.12. When Adjustment May Be Deferred.......................................... 28 SECTION 9.13. When No Adjustment Required.............................................. 29 SECTION 9.14. Notice of Adjustment..................................................... 29 SECTION 9.15. Notice of Certain Transactions........................................... 29 SECTION 9.16. Reorganization of the Company............................................ 30 ARTICLE 10 -- AMENDMENTS SECTION 10.01. Without Consent of Holders............................................... 30 SECTION 10.02. With Consent of Holders.................................................. 30 SECTION 10.03. Compliance with Trust Indenture Act...................................... 31 SECTION 10.04. Effect of Consents....................................................... 31 SECTION 10.05. Notation on or Exchange of Securities.................................... 31 SECTION 10.06. Trustee Protected........................................................ 32 ARTICLE 11 -- MISCELLANEOUS SECTION 11.01. Trust Indenture Act...................................................... 32 SECTION 11.02. Notices.................................................................. 32 SECTION 11.03. Certificate and Opinion as to Conditions Precedent...................... 33 SECTION 11.04. Statements Required in Certificate or Opinion........................... 33 SECTION 11.05. Rules by Company and Agents.............................................. 34 SECTION 11.06. Legal Holidays........................................................... 34 SECTION 11.07. No Recourse Against Others............................................... 34 SECTION 11.08. Duplicate Originals...................................................... 34 SECTION 11.09. Governing Law............................................................ 34 SIGNATURES................................................................................ S-1 EXHIBIT A: A Form of Registered Security.................................................. A-1 EXHIBIT B: A Form of Bearer Security...................................................... B-1 Notes to Exhibits A and B EXHIBIT C: Assignment Form................................................................ C-1 EXHIBIT D: Conversion Notice.............................................................. D-1
-iii- INDENTURE dated as of , 1998 between APPLIED POWER INC., a corporation organized and existing under the laws of the State of Wisconsin (hereinafter called the "Company"), and THE FIRST NATIONAL BANK OF CHICAGO ("Trustee"). Each party agrees as follows for the benefit of the Holders of the Company's debt securities issued under this Indenture: ARTICLE 1 -- DEFINITIONS SECTION 1.01. Definitions. "Affiliate" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. "Agent" means any Registrar, Transfer Agent, Paying Agent, Conversion Agent or other Agent appointed by the Company. "Authorized Newspaper" means a newspaper that is: (1) printed in the English language or in an official language of the country of publication; (2) customarily published on each business day in the place of publication; and (3) of general circulation in the relevant place or in the financial community of such place. Whenever successive publications in an Authorized Newspaper are required, they may be made on the same or different business days and in the same or different Authorized Newspapers. "Bearer Security" means a Security payable to bearer. "Board" means the Board of Directors of the Company or any authorized committee of the Board. "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of any person and all warrants or options to acquire such capital stock. "Common Stock" means the Class A Common Stock, par value $.20 per share, of the Company. "Company" means the party named as such above until a successor replaces it and thereafter means the successor. "Conversion Rate" means such number or amount of shares of Common Stock or other equity or debt securities for which $1,000 aggregate principal amount of Securities of any series is convertible, -2- initially as stated in the Securities Resolution authorizing the series and as adjusted pursuant to the terms of this Indenture and the Securities Resolution. "coupon" means an interest coupon for a Bearer Security. "Default" means any event which is, or after notice or passage of time would be, an Event of Default (as defined below). "Discounted Debt Security" means a Security where the amount of principal due upon acceleration is less than the stated principal amount. "Holder" or "Securityholder" means the person in whose name a Registered Security is registered and the bearer of a Bearer Security or coupon. "Indenture" means this Indenture and any Securities Resolution as amended from time to time. "Lien" means any mortgage, pledge, security interest or other lien. "Officer" means the Chairman, any Vice-Chairman, the President, any Executive or Senior Vice President, any Vice-President, the Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee, and delivered to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "principal" of a debt security means the principal of the security plus the premium, if and when applicable, on the security. "Registered Security" means a Security registered as to principal and interest by the Registrar. "SEC" means the Securities and Exchange Commission. "Securities" means the debt securities issued under this Indenture. "Securities Resolution" means a resolution adopted by the Board or by a committee of Officers or an Officer pursuant to Board delegation authorizing a series or a supplemental indenture authorizing a series executed by an authorized Officer. "series" means a series of Securities or the Securities of the series. "Subsidiary" means a corporation a majority of whose Voting Stock is owned by the Company or a Subsidiary. -3- "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S) 77aaa- 77bbbb), as amended. "Trading Day" means each day on which the securities exchange or quotation system which is used to determine the Market Price is open for trading or quotation. "Trustee" means the party named as such above until a successor replaces it and thereafter means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "United States" means the United States of America, its territories and possessions and other areas subject to its jurisdiction. "Voting Stock" means capital stock having voting power under ordinary circumstances to elect directors. "Yield to Maturity" means the yield to maturity on a Security at the time of its issuance or at the most recent determination of interest on the Security. SECTION 1.02. Other Definitions.
Term Defined in Section "actual knowledge" 7.01 "Bankruptcy Law" 6.01 "Conditional Redemption" 3.04 "Conversion Agent" 2.03 "Conversion Date" 9.02 "Conversion Notice" 9.02 "Conversion Right" 9.01 "Custodian" 6.01 "Event of Default" 6.01 "Legal Holiday" 11.06 "Market Price" 9.07 "Paying Agent" 2.03 "Price Per Share" 9.09 "Registrar" 2.03 "Transfer Agent" 2.03 "Treasury Regulations" 2.04 "U.S. Government Obligations" 8.02
SECTION 1.03. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; -4- (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in the United States; (3) generally accepted accounting principles are those applicable from time to time; (4) all terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings assigned to them by such definitions; (5) "or" is not exclusive; and (6) words in the singular include the plural, and in the plural include the singular. ARTICLE 2 -- THE SECURITIES SECTION 2.01. Issuable in Series. The aggregate principal amount of Securities that may be issued under this Indenture is unlimited. The Securities may be issued from time to time in one or more series. Each series shall be created by a Securities Resolution that establishes the terms of the series, which may include the following: (1) the title of the series; (2) the aggregate principal amount of the series; (3) the interest rate or rates, if any, or method of calculating the interest rate or rates; (4) the date from which interest will accrue; (5) the record dates for interest payable on Registered Securities; (6) the dates when principal and interest are payable; (7) the manner of paying principal and interest; (8) the places where principal and interest are payable; (9) the Registrar, Transfer Agent and Paying Agent; (10) the terms of any mandatory or optional redemption by the Company including any sinking fund; (11) the terms of any redemption at the option of Holders; (12) the denominations in which Securities are issuable; -5- (13) whether Securities will be issuable as Registered Securities, Bearer Securities or uncertificated Securities; (14) whether and upon what terms Registered Securities, Bearer Securities and uncertificated Securities may be exchanged; (15) whether any Securities will be represented by a Security in global form; (16) the terms of any global Security; (17) the terms of any tax indemnity; (18) the currencies (including any composite currency) in which principal or interest may be paid; (19) if payments of principal or interest may be made in a currency other than that in which Securities are denominated, the manner for determining such payments; (20) if amounts of principal or interest may be determined by reference to an index, formula or other method, the manner for determining such amounts; (21) provisions for electronic issuance of Securities or for Securities in uncertificated form; (22) the portion of principal payable upon acceleration of a Discounted Debt Security; (23) whether any Events of Default or covenants in addition to or in lieu of those set forth in this Indenture apply; (24) whether and upon what terms Securities may be defeased; (25) the forms of the Securities or any coupon, which may be in the form of Exhibit A or B; (26) any terms that may be required by or advisable under U.S. or other applicable laws or regulations; (27) whether and upon what terms the Securities will be convertible into or exchangeable for Common Stock of the Company or other equity or debt securities, which may include the terms provided in Article 9; (28) the ranking of the Securities; and (29) any other terms not inconsistent with this Indenture. All Securities of one series need not be issued at the same time and, unless otherwise provided, a series may be reopened for issuances of additional Securities of such series. -6- The creation and issuance of a series and the authentication and delivery thereof are not subject to any conditions precedent. SECTION 2.02. Execution and Authentication. Two Officers shall sign the Securities by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. An Officer shall sign any coupons by facsimile signature. If an Officer whose signature is on a Security or its coupons no longer holds that office at the time the Security is authenticated or delivered, the Security and coupons shall nevertheless be valid. A Security and its coupons shall not be valid until the Security is authenticated by the manual or facsimile signature of the Registrar. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. Each Registered Security shall be dated the date of its authentication. Each Bearer Security shall be dated the date of its original issuance or as provided in the Securities Resolution. Securities may have notations, legends or endorsements required by law, stock exchange rule, agreement or usage. In the event Securities are issued in electronic or other uncertificated form, such Securities may be validly issued without the signatures or seal contemplated by this Section 2.02. SECTION 2.03. Registrar and Transfer, Paying and Conversion Agents and Other Agents. The Company shall maintain an office or agency where Securities may be authenticated ("Registrar"), where Securities may be presented for registration of transfer or for exchange ("Transfer Agent"), where Securities may be presented for payment ("Paying Agent") and where Securities may be presented for conversion ("Conversion Agent"). Whenever the Company must issue or deliver Securities pursuant to this Indenture, the Registrar shall authenticate the Securities at the Company's request. The Transfer Agent shall keep a register of the Securities and of their transfer and exchange. The Trustee shall be, and is hereby appointed as, Registrar. The Company may appoint more than one Transfer Agent, Paying Agent or Conversion Agent or other Agent for a series. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company does not appoint or maintain a Transfer Agent, Paying Agent or Conversion Agent for a series, the Trustee shall act as such. SECTION 2.04. Bearer Securities. U.S. laws and Treasury Regulations restrict sales or exchanges of and payments on Bearer Securities. Therefore, except as provided below: (1) Bearer Securities will be offered, sold or delivered only outside the United States and will be delivered in connection with their original issuance only upon presentation of a certificate in a form prescribed by the Company to comply with U.S. laws and regulations. -7- (2) Bearer Securities will not be issued in exchange for Registered Securities. (3) All payments of principal and interest (including original issue discount) on Bearer Securities will be made outside the United States by a Paying Agent located outside the United States unless the Company determines that: (A) such payments may not be made by such Paying Agent because the payments are illegal or prevented by exchange controls as described in Treasury Regulation (S) 1.163-5(c)(2)(v); and (B) making the payments in the United States would not have an adverse tax effect on the Company. If there is a change in the relevant provisions of U.S. laws or Treasury Regulations or the judicial or administrative interpretation thereof, a restriction set forth in paragraph (1), (2) or (3) above will not apply to a series if the Company determines that the relevant provisions no longer apply to the series or that failure to comply with the relevant provisions would not have an adverse tax effect on the Company or on Securityholders or cause the series to be treated as "registration-required" obligations under U.S. law. The Company shall notify the Trustee of any determinations by the Company under this Section. "Treasury Regulations" means regulations of the U.S. Treasury Department under the Internal Revenue Code of 1986, as amended. SECTION 2.05. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent for a series other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of the persons entitled thereto all money held by the Paying Agent for the payment of principal of or interest on the series, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money so held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money. If the Company or an Affiliate acts as Paying Agent for a series, it shall segregate and hold as a separate trust fund all money held by it as Paying Agent for the series. The Company may elect not to exchange or register the transfer of any Security for a period of 15 days before a selection of Securities to be redeemed. SECTION 2.06. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Transfer Agent, the Company shall furnish to the Trustee semiannually and at such other times as the Trustee may request a list in such -8- form and as of such date as the Trustee may reasonably require of the names and addresses of Holders of Registered Securities and Holders of Bearer Securities whose names are on the list referred to below. The Transfer Agent shall keep a list of the names and addresses of Holders of Bearer Securities who file a request to be included on such list. A request will remain in effect for two years but successive requests may be made. Whenever the Company or the Trustee is required to mail a notice to all Holders of Registered Securities of a series, it also shall mail the notice to Holders of Bearer Securities of the series whose names are on the list. Whenever the Company is required to publish a notice to all Holders of Bearer Securities of a series, it also shall mail the notice to such of them whose names are on the list. SECTION 2.07. Transfer and Exchange. Where Registered Securities of a series are presented to the Transfer Agent with a request to register a transfer or to exchange them for an equal principal amount of Registered Securities of other denominations of the same series, the Transfer Agent shall register the transfer or make the exchange if its requirements for such transactions are met. Where Bearer Securities of a series are presented to the Transfer Agent with a request to exchange them for an equal principal amount of Bearer Securities of other denominations of the same series, the Transfer Agent shall make the exchange if its requirements for such transactions are met. The Transfer Agent may require a Holder to pay a sum sufficient to cover any taxes imposed on a transfer or exchange. If a series provides for Registered and Bearer Securities and for their exchange, Bearer Securities may be exchanged for Registered Securities and Registered Securities may be exchanged for Bearer Securities as provided in the Securities or the Securities Resolution if the requirements of the Transfer Agent for such transactions are met and in the case of the exchange of registered securities for bearer securities if Section 2.04 permits the exchange. SECTION 2.08. Replacement Securities. If the Holder of a Security or coupon claims that it has been lost, destroyed or wrongfully taken, then, in the absence of notice to the Company or the Trustee that the Security or coupon has been acquired by a bona fide purchaser, the Company shall issue a replacement Security or coupon if the Company and the Trustee receive: (1) evidence satisfactory to them of the loss, destruction or taking; (2) an indemnity bond satisfactory to them; and (3) payment of a sum sufficient to cover their expenses and any taxes for replacing the Security or coupon. A replacement Security shall have coupons attached corresponding to those, if any, on the replaced Security. -9- Every replacement Security or coupon is an additional obligation of the Company. SECTION 2.09. Outstanding Securities. The Securities outstanding at any time are all the Securities authenticated by the Registrar except for those cancelled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. If a Security is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If Securities are considered paid under Section 4.01, they cease to be outstanding and interest on them ceases to accrue. A Security does not cease to be outstanding because the Company or an Affiliate holds the Security. SECTION 2.10. Discounted Debt Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, the principal amount of a Discounted Debt Security shall be the amount of principal that would be due as of the date of such determination if payment of the Security were accelerated on that date. SECTION 2.11. Treasury Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or an Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. SECTION 2.12. Global Securities. If the Securities Resolution so provides, the Company may issue some or all of the Securities of a series in temporary or permanent global form. A global Security may be in registered form, in bearer form with or without coupons or in uncertificated form. A global Security shall represent that amount of Securities of a series as specified in the global Security or as endorsed thereon from time to time. At the Company's request, the Registrar shall endorse a global Security to reflect the amount of any increase or decrease in the Securities represented thereby. The Company may issue a global Security only to a depository designated by the Company. A depository may transfer a global Security only as a whole to its nominee or to a successor depository. The Securities Resolution may establish, among other things, the manner of paying principal and interest on a global Security and whether and upon what terms a beneficial owner of an interest in a global Security may exchange such interest for definitive Securities. -10- The Company, an Affiliate, the Trustee and any Agent shall not be responsible for any acts or omissions of a depository, for any depository records of beneficial ownership interests or for any transactions between the depository and beneficial owners. SECTION 2.13. Temporary Securities. Until definitive Securities of a series are ready for delivery, the Company may use temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Temporary Securities may be in global form. Temporary Bearer Securities may have one or more coupons or no coupons. Without unreasonable delay, the Company shall deliver definitive Securities in exchange for temporary Securities. SECTION 2.14. Cancellation. The Company at any time may deliver Securities to the Registrar for cancellation. The Transfer Agent and the Paying Agent shall forward to the Registrar any Securities and coupons surrendered to them for payment, exchange or registration of transfer. The Registrar shall cancel all Securities or coupons surrendered for payment, registration of transfer, exchange or cancellation. The Registrar also will cancel all Bearer Securities and unmatured coupons unless the Company requests the Registrar to hold the same for redelivery. Any Bearer Securities so held shall be considered delivered for cancellation under Section 2.09. The Registrar shall destroy cancelled Securities and coupons unless the Company otherwise directs. Unless the Securities Resolution otherwise provides, the Company may not issue new Securities to replace Securities that the Company has paid or that the Company has delivered to the Registrar for cancellation. SECTION 2.15. Defaulted Interest. If the Company defaults in a payment of interest on Registered Securities, it need not pay the defaulted interest to Holders on the regular record date. The Company may fix a special record date for determining Holders entitled to receive defaulted interest, or the Company may pay defaulted interest in any other lawful manner. ARTICLE 3 -- REDEMPTION SECTION 3.01. Notices to Trustee. Securities of a series that are redeemable before maturity shall be redeemable in accordance with their terms and, unless the Securities Resolution otherwise provides, in accordance with this Article. In the case of a redemption by the Company, the Company shall notify the Trustee of the redemption date and the principal amount of Securities to be redeemed. The Company shall notify the Trustee at least 45 days before the redemption date unless a shorter notice is satisfactory to the Trustee. If the Company is required to redeem Securities, it may reduce the principal amount of Securities required to be redeemed to the extent that it is permitted a credit against such redemption requirement by -11- the terms of the Securities Resolution and notifies the Trustee of the amount of such credit and the basis for it. If the reduction is based on a credit for acquired or redeemed Securities that the Company has not previously delivered to the Registrar for cancellation, the Company shall deliver the Securities at the same time as the notice. SECTION 3.02. Selection of Securities to Be Redeemed. If less than all the Securities of a series are to be redeemed, the Trustee shall select the Securities to be redeemed by a method the Trustee considers fair and appropriate. The Trustee shall make the selection from Securities of the series outstanding not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities having denominations larger than the minimum denomination for the series. Securities and portions thereof selected for redemption shall be in amounts equal to the minimum denomination for the series or an integral multiple thereof. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. SECTION 3.03. Notice of Redemption. At least 30 but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Registered Securities whose Securities are to be redeemed. If Bearer Securities are to be redeemed, the Company shall publish a notice of redemption in an Authorized Newspaper as provided in the Securities. A notice shall identify the Securities of the series to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) that Securities called for redemption, together with all coupons, if any, maturing after the redemption date, must be surrendered to the Paying Agent to collect the redemption price; (5) that interest on Securities called for redemption ceases to accrue on and after the redemption date; (6) whether the redemption by the Company is mandatory or optional; and (7) whether the redemption is conditional as provided in Section 3.04, and if so, the terms of the conditions, and that, if the conditions are not satisfied or are not waived by the Company, the Securities will not be redeemed and such a failure to redeem will not constitute an Event of Default. A redemption notice given by publication need not identify Registered Securities to be redeemed. -12- At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense. SECTION 3.04. Effect of Notice of Redemption. Except as provided below, once notice of redemption is given, Securities called for redemption become due and payable on the redemption date at the redemption price stated in the notice. A notice of redemption may provide that it is subject to the occurrence of any event before the date fixed for such redemption as described in such notice ("Conditional Redemption"), and such notice of Conditional Redemption shall be of no effect unless all such conditions to the redemption have occurred on or before such date or have been waived by the Company in its sole discretion. SECTION 3.05. Payment of Redemption Price. On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date. When the Holder of a Security surrenders it for redemption in accordance with the redemption notice, the Company shall pay to the Holder on the redemption date the redemption price and accrued interest to such date, except that: (1) the Company will pay any such interest (except defaulted interest) to Holders on the record date of Registered Securities if the redemption date occurs on an interest payment date; and (2) the Company will pay any such interest to Holders of coupons that mature on or before the redemption date upon surrender of such coupons to the Paying Agent. Coupons maturing after the redemption date on a called Security are void absent a payment default on that date. Nevertheless, if a Holder surrenders for redemption a Bearer Security missing any such coupons, the Company may deduct the face amount of such coupons from the redemption price. If thereafter the Holder surrenders to the Paying Agent the missing coupons, the Company will return the amount so deducted. The Company may waive surrender of the missing coupons if it receives an indemnity bond satisfactory to the Company. SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall deliver to the Holder a new Security of the same series equal in principal amount to the unredeemed portion of the Security surrendered. -13- ARTICLE 4 -- COVENANTS SECTION 4.01. Payment of Securities. The Company shall pay the principal of and interest on a series in accordance with the terms of the Securities for the series, any related coupons, and this Indenture. Principal and interest on a series shall be considered paid on the date due if the Paying Agent for the series holds on that date money sufficient to pay all principal and interest then due on the series. SECTION 4.02. Overdue Interest. Unless the Securities Resolution otherwise provides, the Company shall pay interest on overdue principal of a Security of a series at the rate (or Yield to Maturity in the case of a Discounted Debt Security) borne by the series; the Company shall pay interest on overdue installments of interest at the same rate or Yield to Maturity to the extent lawful. SECTION 4.03. No Lien Created, etc. This Indenture and the Securities do not create a Lien, charge or encumbrance on any property of the Company or any Subsidiary. SECTION 4.04. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, a brief certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company, as to the signer's knowledge of the Company's compliance with all conditions and covenants under this Indenture (determined without regard to any period of grace or requirement of notice provided herein). Any other obligor on the Securities shall also deliver to the Trustee such a certificate as to its compliance with this Indenture within 120 days after the end of each of its fiscal years. The certificates need not comply with Section 11.04. SECTION 4.05. SEC Reports. The Company shall file with the Trustee, within 15 days after the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents, and other reports (or such portions of the foregoing as the SEC may prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Any other obligor on the Securities shall do likewise as to the above items which it is required to file with the SEC pursuant to those sections. -14- ARTICLE 5 -- SUCCESSORS SECTION 5.01. When Company May Merge, etc. Unless the Securities Resolution establishing a Series otherwise provides, the Company shall not consolidate with or merge into, or transfer all or substantially all of its assets to, any person in any transaction in which the Company is not the survivor unless: (1) the person is organized under the laws of the United States or a State thereof or is organized under the laws of a foreign jurisdiction and consents to the jurisdiction of the courts of the United States or a State thereof; (2) the person assumes by supplemental indenture all the obligations of the Company under this Indenture, the Securities and any coupons; (3) all required approvals of any regulatory body having jurisdiction over the transaction shall have been obtained; (4) immediately after the transaction no Default exists; and (5) the Company provides an Officers' Certificate and an Opinion of Counsel to the effect that all the provisions in this Section 5.01 have been complied with. The successor shall be substituted for the Company, and thereafter all obligations of the Company under this Indenture, the Securities and any coupons shall terminate. ARTICLE 6 -- DEFAULTS AND REMEDIES SECTION 6.01. Events of Default. Unless the Securities Resolution otherwise provides, an "Event of Default" on a series occurs if: (1) the Company defaults in any payment of interest on any Securities of the series when the same becomes due and payable and the Default continues for a period of 30 days; (2) the Company defaults in the payment of the principal and premium, if any, of any Securities of the series when the same becomes due and payable at maturity or upon redemption, acceleration or otherwise; (3) the Company defaults in the payment or satisfaction of any sinking fund obligation with respect to any Securities of the series as required by the Securities Resolution establishing such series; -15- (4) the Company defaults in the performance of any of its other agreements applicable to the series and the Default continues for 60 days after the notice specified below; (5) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian for it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian for the Company or for all or substantially all of its property, or (C) orders the liquidation of the Company; and the order or decree remains unstayed and in effect for 60 days; or (7) there occurs any other Event of Default provided for in the series. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or a similar official under any Bankruptcy Law. A Default under clause (4) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the series notify the Company of the Default and the Company does not cure the Default within the time specified after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." If Holders notify the Company of a Default, they shall notify the Trustee at the same time. The failure to redeem any Security subject to a Conditional Redemption is not an Event of Default if any event on which such redemption is so conditioned does not occur and is not waived before the scheduled redemption date. SECTION 6.02. Acceleration. If an Event of Default occurs and is continuing on a series, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the series by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Securities of the series to be due and payable imme- -16- diately. Discounted Debt Securities may provide that the amount of principal due upon acceleration is less than the stated principal amount. The Holders of a majority in principal amount of the series by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default on the series have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing on a series, the Trustee may pursue any available remedy to collect principal or interest then due on the series, to enforce the performance of any provision applicable to the series, or otherwise to protect the rights of the Trustee and Holders of the series. The Trustee may maintain a proceeding even if it does not possess any of the Securities or coupons or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. Waiver of Past Defaults. Unless the Securities Resolution otherwise provides, the Holders of a majority in principal amount of a series by notice to the Trustee may waive an existing Default on the series and its consequences except: (1) a Default in the payment of the principal of or interest on the series, or (2) a Default in respect of a provision that under Section 10.02 cannot be amended without the consent of each Securityholder affected. SECTION 6.05. Control by Majority. The Holders of a majority in principal amount of a series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred on the Trustee, with respect to the series. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or if the Trustee in good faith shall determine that the action or direction might involve the Trustee in personal liability. SECTION 6.06. Limitation on Suits. A Securityholder of a series may pursue a remedy with respect to the series only if: (1) the Holder gives to the Trustee notice of a continuing Event of Default on the series; (2) the Holders of at least 25% in principal amount of the series make a request to the Trustee to pursue the remedy; -17- (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the series do not give the Trustee a direction inconsistent with such request. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 6.07. Collection Suit by Trustee. If an Event of Default in payment of interest, principal or sinking fund specified in Section 6.01(1), (2) or (3) occurs and is continuing on a series, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid on the series. SECTION 6.08. Priorities. If the Trustee collects any money for a series pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.06; Second: to Securityholders of the series for amounts due and unpaid for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable for principal and interest, respectively; and Third: to the Company. The Trustee may fix a payment date for any payment to Securityholders. ARTICLE 7 -- TRUSTEE SECTION 7.01. Rights of Trustee. (1) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Certificate or Opinion. -18- (3) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (5) The Trustee may refuse to perform any duty or exercise any right or power which it reasonably believes may expose it to any loss, liability or expense unless it receives indemnity satisfactory to it against such loss, liability or expense. (6) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (7) The Trustee shall have no duty with respect to a Default unless a Trust Officer has actual knowledge of the Default. As used herein, the term "actual knowledge" means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto. (8) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized and within its powers. (9) Any Agent shall have the same rights and be protected to the same extent as if it were Trustee. (10) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. SECTION 7.02. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities or coupons and may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 7.03. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities or any coupons; it shall not be accountable for the Company's use of the proceeds from the Securities; it shall not be responsible for any statement in the Securities or any coupons; it shall not be responsible for any overissue; it shall not be responsible for determining whether the form and terms of any Securities or coupons were established in conformity with this Indenture; it shall not be responsible for determining whether any Securities were issued in accordance with this Indenture; and it shall not be responsible for the acts or omissions of any other Trustees appointed hereunder. SECTION 7.04. Notice of Defaults. If a Default occurs and is continuing on a series and if the Trustee has actual knowledge of such Default, the Trustee shall mail a notice of the Default within 90 days after it occurs to Holders of Regis- -19- tered Securities of the series. Except in the case of a Default in payment on a series, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of Holders of the series. The Trustee shall withhold notice of a Default described in Section 6.01(4) until at least 60 days after it occurs. SECTION 7.05. Reports by Trustee to Holders. Any report required by TIA (S) 313(a) to be mailed to Securityholders shall be mailed by the Trustee on or before May 15th of each year. A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which any Securities are listed. The Company shall notify the Trustee when any Securities are listed on a stock exchange. SECTION 7.06. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any loss or liability incurred by it. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or willful misconduct. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities and any coupons on all money or property held or collected by the Trustee, except that held in trust to pay principal or interest on particular securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(5) or (6) occurs, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section shall survive any termination or discharge of this Indenture (including without limitation any termination under any Bankruptcy Law) and the resignation or removal of the Trustee. SECTION 7.07. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. -20- The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee with the Company's consent. The Company may remove the Trustee if: (1) the Trustee fails to comply with TIA (S) 310(a) or (S) 310(b) or with Section 7.09; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a Custodian or other public officer takes charge of the Trustee or its property; (4) the Trustee becomes incapable of acting; or (5) an event of the kind described in Section 6.01(5) or (6) occurs with respect to the Trustee. The Company also may remove the Trustee with or without cause if the Company so notifies the Trustee three months in advance and if no Default occurs during the three-month period. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with TIA (S) 310(a) or (S) 310(b) or with Section 7.09, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of Registered Securities. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.06. SECTION 7.08. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.09. Trustee's Capital and Surplus. The Trustee at all times shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published report of financial condition. -21- ARTICLE 8 -- DISCHARGE OF INDENTURE SECTION 8.01. Defeasance. Securities of a series may be defeased in accordance with their terms and, unless the Securities Resolution otherwise provides, in accordance with this Article. The Company at any time may terminate as to a series all of its obligations under this Indenture, the Securities of the series and any related coupons ("legal defeasance option"). The Company at any time may terminate as to a series its obligations, if any, under any restrictive covenants which may be applicable to a particular series ("covenant defeasance option"). However, in the case of the legal defeasance option, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.06, 7.07 and 8.04 shall survive until the Securities of the series are no longer outstanding; thereafter the Company's obligations in Section 7.06 shall survive. The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, a series may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, a series may not be accelerated by reference to any restrictive covenants as to which the covenant defeasance option applicable to such series has been so exercised. The Trustee upon request shall acknowledge in writing the discharge of those obligations or restrictions that the Company terminates by defeasance. SECTION 8.02. Conditions to Defeasance. The Company may exercise as to a series its legal defeasance option or its covenant defeasance option if: (1) the Company irrevocably deposits in trust with the Trustee or another trustee money or U.S. Government Obligations; (2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. Government Obligations without reinvestment plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities of the series to maturity or redemption, as the case may be; (3) immediately after the deposit no Default exists; (4) the deposit does not constitute a default under any other agreement binding on the Company; (5) the deposit does not cause the Trustee to have a conflicting interest under TIA (S) 310(a) or (S) 310(b) as to another series; -22- (6) the Company delivers to the Trustee an Opinion of Counsel to the effect that Holders of the series will not recognize income, gain or loss for Federal income tax purposes as a result of the defeasance; (7) 91 days pass after the deposit is made and during the 91-day period no Default specified in Section 6.01(5) or (6) occurs that is continuing at the end of the period; and (8) the Company provides an Officers' Certificate and an Opinion of Counsel to the effect that all conditions precedent pursuant to this Section 8.02 have been satisfied. Before or after a deposit the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. "U.S. Government Obligations" means direct obligations of (i) the United States or (ii) an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed by the United States, which, in either case, have the full faith and credit of the United States pledged for payment and which are not callable at the issuer's option, or certificates representing an ownership interest in such obligations. SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.02. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on Securities of the defeased series. SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years. After payment to the Company, Securityholders entitled to the money must look to the Company for payment as unsecured general creditors unless an abandoned property law designates another person. ARTICLE 9 -- CONVERSION SECTION 9.01. Conversion Privilege. If the Securities Resolution establishing the terms of a series of securities so provides, Securities of any series may be convertible at the option of the holders into or for Common Stock or other equity or debt securities (a "Conversion Right"). The Securities Resolution may establish, among other things, the Conversion Rate, provisions for adjustments to the Conversion Rate and limitations upon exercise of the Conversion Right. -23- Unless the Securities Resolution otherwise provides, a Holder may convert a portion of a Security if the portion is $1,000 or an integral multiples thereof. Provisions of this Indenture that apply to the conversion of the aggregate principal amount of a Security also apply to conversion of a portion of it. The Securities Resolution providing for Securities with a Conversion Right may establish any terms in addition to, or other than (including terms inconsistent with), those set forth in this Article 9 with respect to the conversion of the Securities established thereby (other than those of Section 9.16). SECTION 9.02. Conversion Procedure. To convert a Security a Holder must satisfy all requirements in the Securities or the Securities Resolution and (i) complete and manually sign the conversion notice (the "Conversion Notice") provided for in the Securities Resolution or the Security (or complete and manually sign a facsimile thereof) and deliver such notice to the Conversion Agent or any other office or agency maintained for such purpose, (ii) surrender the Security to the Conversion Agent or at such other office or agency by physical delivery, (iii) if required, furnish appropriate endorsements and transfer documents, and (iv) if required, pay all transfer or similar taxes. The date on which such notice shall have been received by and the Security shall have been so surrendered to the Conversion Agent is the "Conversion Date." Such Conversion Notice shall be irrevocable and may not be withdrawn by a Holder for any reason. The Company will complete settlement of any conversion of Securities not later than the fifth business day following the Conversion Date in respect of the cash portion elected to be delivered in lieu of the securities into which the Security is convertible and not later than the seventh business day following the Conversion Date in respect of the portion to be settled in such securities. If any Security is converted between the record date for the payment of interest and the next succeeding interest payment date, such Security must be accompanied by funds equal to the interest payable on such succeeding interest payment date on the principal amount so converted (unless such Security shall have been called for redemption during such period, in which case no such payment shall be required). A Security converted on an interest payment date need not be accompanied by any payment, and the interest on the principal amount of the Security being converted will be paid on such interest payment date to the registered holder of such Security on the immediately preceding record date. Subject to the aforesaid right of the registered holder to receive interest, no payment or adjustment will be made on conversion for interest accrued on the converted Security or for interest, dividends or other distributions payable on any security issued on conversion. If a Holder converts more than one Security at the same time, the securities into which the Security is convertible issuable or cash payable upon the conversion shall be based on the total principal amount of the Securities converted. Upon surrender of a Security that is converted in part the Trustee shall authenticate for the Holder a new Security equal in principal amount to the unconverted portion of the Security surrendered; except that if a global Security is so surrendered the Trustee shall authenticate and, if applicable, deliver to the depository a new global Security in a denomination equal to and in exchange for the unconverted portion of the principal of the global Security so surrendered. If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that is not a Legal Holiday. -24- SECTION 9.03. Taxes on Conversion. If a Holder of a Security exercises a Conversion Right, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of the securities into which the Security is convertible upon the conversion. However, the Holder shall pay any such tax which is due because securities or other property are issued in a name other than the Holder's name. Nothing herein shall preclude any income tax or other withholding required by law or regulations. SECTION 9.04. Company Determination Final. Any determination that the Board of Directors makes pursuant to this Article 9 or consistent with terms provided for in any Securities Resolution is conclusive, absent manifest error. SECTION 9.05. Trustee's and Conversion Agent's Disclaimer. The Trustee (and each Conversion Agent other than the Company) has no duty to determine when or if an adjustment under this Article 9 or any Securities Resolution should be made, how it should be made or calculated or what it should be. The Trustee (and each Conversion Agent other than the Company) makes no representation as to the validity or value of any securities issued upon conversion of Securities. The Trustee (and each Conversion Agent other than the Company) shall not be responsible for the Company's failure to comply with this Article 9 or any provision of a Securities Resolution relating to a Conversion Right. SECTION 9.06. Company to Provide Conversion Securities. The Company shall reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury sufficient shares to permit the conversion of all of the Securities convertible into Common Stock. The Company shall arrange and make available for issuance upon conversion the full amount of any other securities into which the Securities are convertible to permit such conversion of the Securities. All shares of Common Stock or other equity securities of any person which may be issued upon conversion of the Securities shall be validly issued, fully paid and non-assessable, subject to the personal liability which may be imposed on shareholders by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law (or any successor provision), as judicially interpreted, for debts owing to employees for services performed. The Company will comply with all securities laws regulating the offer and delivery of securities upon conversion of Securities. SECTION 9.07. Cash Settlement Option. If the Securities Resolution so provides, the Company may elect to satisfy, in whole or in part, a Conversion Right of Securities convertible into Common Stock or other securities of any person by the delivery of cash. The amount of cash to be delivered shall be equal to the Market Price on the last Trading Day preceding the applicable Conversion Date of a share of Common Stock or other securities of any person into which the Securities are convertible multiplied by the number of shares of Common Stock or the number of shares or principal amount of other securities into which the Securities are convertible, respectively, in respect of which the Company elects to deliver cash. If the Company elects to satisfy, in whole or in part, a Conversion Right by the delivery of shares of Common Stock or other securities, no fractional shares or portion of other securities -25- will be delivered. Instead, the Company will pay cash based on the Market Price for such fractional share of Common Stock or portion of other securities. The "Market Price" of the Common Stock into which Securities or other equity securities into which the Securities are convertible may be converted pursuant to a Securities Resolution or this Article 9 on any Trading Day means the weighted average per share sale price for all sales of the Common Stock or other equity securities on such Trading Day (or, if the information necessary to calculate such weighted average per share sale price is not reported, the average of the high and low sale prices, or if no sales are reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices), as reported in the composite transactions for the New York Stock Exchange, or if the Common Stock or other equity securities into which the Securities are convertible are not listed or admitted to trading on such exchange, as reported in the composite transactions for the principal national or regional United States securities exchange on which the Common Stock or other equity securities into which the Securities are convertible are listed or admitted to trading or, if the Common Stock or other equity securities into which the Securities are convertible are not listed or admitted to trading on a United States national or regional securities exchange, as reported by NASDAQ or by the National Quotation Bureau Incorporated, or if not so reported, as determined in the manner set forth in the appropriate Securities Resolution. In the absence of such quotations, the Company shall be entitled to determine the Market Price on the basis of such quotations as it considers appropriate. The "Market Price" of any debt security into which Securities are convertible shall be determined as set forth in the applicable Securities Resolution. SECTION 9.08. Adjustment in Conversion Rate for Change in Capital Stock. If the Securities are convertible into Common Stock and the Company: (1) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock; (2) subdivides its outstanding shares of Common Stock into a greater number of shares; (3) combines its outstanding shares of Common Stock into a smaller number of shares; (4) pays a dividend or makes a distribution on its Common Stock in shares of its Capital Stock other than Common Stock; or (5) issues by reclassification of its Common Stock any shares of its Capital Stock, then the conversion privilege and the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder of a Security thereafter converted may receive the number of shares of Capital Stock of the Company (or, at the Company's option, an equivalent amount in cash) which he would have owned immediately following such action if he had converted the Security immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If the security into which the Securities are convertible is other than Common Stock of the Company, the conversion rate shall be subject to adjustment as set forth in the applicable Securities Resolution. -26- If after an adjustment a Holder of a Security may, upon conversion, receive shares of two or more classes of Capital Stock of the Company or other securities, the Board of Directors of the Company shall determine the allocation of the adjusted Conversion Rate between or among the classes of Capital Stock or other securities. After such allocation, the conversion privilege and the Conversion Rate of each class of Capital Stock or other securities shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Article or in such Securities Resolution. SECTION 9.09. Adjustment in Conversion Rate for Common Stock Issued Below Market Price. If the Securities are convertible into Common Stock, and the Company issues to all holders of Common Stock rights, options or warrants to subscribe for or purchase shares of Common Stock, or any securities convertible into or exchangeable for shares of Common Stock, or rights, options or warrants to subscribe for or purchase such convertible or exchangeable securities at a Price Per Share (as defined and determined according to the formula given below) lower than the current Market Price on the date of such issuance, the Conversion Rate shall be adjusted in accordance with the following formula: AC = CC . (O + N) ------- O . R - M where: AC = the adjusted Conversion Rate. CC = the then current Conversion Rate. O = the number of shares of Common Stock outstanding immediately prior to such issuance (which number shall include shares owned or held by or for the account of the Company). N = the "Number of Shares," which (i) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable for shares of Common Stock, is the maximum number of shares of Common Stock initially issuable upon exercise, conversion or exchange thereof; and (ii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable securities, is the maximum number of shares of Common Stock initially issuable upon the conversion or exchange of the convertible or exchangeable securities issuable upon the exercise of such rights, options or warrants. R = the proceeds received or receivable by the Company, which (i) in the case of rights, options or warrants to subscribe for or purchase shares of Common Stock or of securities convertible into or exchangeable for shares of Common Stock, is the aggregate amount received or receivable by the Company in consideration for the sale and issuance of such rights, options, warrants or convertible or exchangeable securities, plus the minimum aggregate amount of additional consideration, other than the convertible or exchangeable securities, payable to the Company upon exercise, conversion or exchange thereof; and (ii) in the case of rights, options or warrants to subscribe for or purchase convertible or exchangeable securities, is the aggregate amount received or receivable by the Company in consideration for the sale and issuance of such rights, options or warrants, plus the minimum aggregate consideration payable to the Company upon the exercise thereof, plus the minimum aggregate amount of additional consideration, other than the convertible or exchangeable securities, payable upon the conversion or exchange of the convertible or exchangeable securities; provided, that in each case the proceeds received or receiv- -27- able by the Company shall be deemed to be the amount of gross cash proceeds without deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services or any expenses incurred in connection therewith. M = the current Market Price per share of Common Stock on the date of issue of the rights, options or warrants to subscribe for or purchase shares of Common Stock or the securities convertible into or exchangeable for shares of Common Stock or the rights, options or warrants to subscribe for or purchase convertible or exchangeable securities. "Price Per Share" shall be defined and determined according to the following formula: P = R - N where: P = Price Per Share and R and N have the meanings assigned above. If the Company shall issue rights, options, warrants or convertible or exchangeable securities with respect to its Common Stock for a consideration consisting, in whole or in part, of property other than cash the amount of such consideration shall be determined in good faith by the Board of Directors whose determination shall be conclusive and evidenced by a resolution of the Board of Directors filed with the Trustee. The adjustment shall be made successively whenever any such additional rights, options, warrants or convertible or exchangeable securities with respect to its Common Stock are issued, and shall become effective immediately after the date of issue of such shares, rights, options, warrants or convertible or exchangeable securities. To the extent that such rights, options or warrants to acquire Common Stock expire unexercised or to the extent any convertible or exchangeable securities with respect to its Common Stock are redeemed by the Company or otherwise cease to be convertible or exchangeable into shares of Common Stock, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had the adjustment made upon the date of issuance of such rights, options, warrants or convertible or exchangeable securities been made upon the basis of the issuance of rights, options or warrants to subscribe for or purchase only the number of shares of Common Stock as to which such rights, options or warrants were actually exercised and the number of shares of Common Stock that were actually issued upon the conversion or exchange of the convertible or exchangeable securities. If the Securities are convertible into securities other than the Common Stock, any adjustment in the Conversion Rate required for the issuance or sale of the securities into which the Securities are convertible shall be made as set forth in the Securities Resolution. SECTION 9.10. Adjustment for Other Distributions. If the Securities are initially convertible into Common Stock and the Company distributes to all holders of its Common Stock any of its assets or debt securities or any rights or warrants to purchase assets or -28- debt securities of the Company, the Conversion Rate shall be adjusted in accordance with the following formula: AC = CC . (O . M) ------------- ((O . M) - F) where: AC = the adjusted Conversion Rate. CC = the then current Conversion Rate. O = the number of shares of Common Stock outstanding on the record date mentioned below (which number shall include shares owned or held by or for the account of the Company). M = the current Market Price per share of Common Stock on the record date mentioned below. F = the fair market value on the record date of the assets, securities, rights or warrants distributed. The Board of Directors of the Company shall determine the fair market value. The adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive the distribution. If the securities into which the Securities are convertible are other than Common Stock, any adjustments for such other distribution shall be made as set forth in the Securities Resolution. This Section does not apply to cash dividends or distributions or to reclassifications or distributions referred to in Section 9.08. Also, this Section does not apply to shares issued below Market Price referred to in Section 9.09. SECTION 9.11. Voluntary Adjustment. The Company at any time may increase the Conversion Rate, temporarily or otherwise, by any amount but in no event shall such Conversion Rate result in the issuance of Capital Stock at a price less than the par value of such Capital Stock at the time such increase is made. SECTION 9.12. When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require a change of at least 1% in the Conversion Rate. Any adjustments that are not made due to the immediately preceding sentence shall be carried forward and taken into account in any subsequent adjustment; provided, that any adjustment carried forward shall be deferred not in excess of three years, whereupon any adjustment to the Conversion Rate will be effected. All calculations under this Article 9 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. -29- SECTION 9.13. When No Adjustment Required. Except as set forth in Section 9.09, no adjustment in the Conversion Rate shall be made because the Company issues, in exchange for cash, property or services, shares of Common Stock, or any securities convertible into shares of Common Stock, or securities carrying the right to purchase shares of Common Stock or such convertible securities. No adjustment in the Conversion Rate need be made for rights to purchase or the sale of Common Stock pursuant to a Company plan providing for reinvestment of dividends or interest. No adjustment in the Conversion Rate need be made for a change in the par value of the Common Stock or other securities having a par value. No adjustment need be made for a transaction referred to in Section 9.08, 9.09 or 9.10 if Securityholders are to participate in the transaction on a basis and with notice that the Board determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock or other securities into which the Securities are convertible participate in the transaction. SECTION 9.14. Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders of Securities affected a notice of the adjustment. The Company shall file with the Trustee an Officers' Certificate or a certificate from the Company's independent public accountants stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct, absent manifest error. SECTION 9.15. Notice of Certain Transactions. If: (1) the Company proposes to take any action that would require an adjustment in the Conversion Rate, (2) the Company proposes to take any action that would require a supplemental indenture pursuant to Section 9.16, or (3) there is a proposed liquidation or dissolution of the Company or of the issuer of any other security into which the Securities are convertible, the Company shall mail to registered Holders of Securities of any affected series a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, transfer, lease, liquidation or dissolution. The Company shall mail the notice at least 15 days before such date. Failure to mail the notice or any defect in it shall not affect the validity of the transaction. -30- SECTION 9.16. Reorganization of the Company. If the Company is a party to a transaction subject to Section 5.01, the successor corporation (if other than the Company) shall enter into a supplemental indenture which shall provide that the Holder of a Security may convert it into the kind and amount of securities, cash or other assets which he would have owned immediately after the consolidation, merger or transfer if he had converted the Security immediately before the effective date of the transaction. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article. The successor company shall mail to Holders of Securities of any affected series a notice briefly describing the supplemental indenture. If this Section applies, Sections 9.08, 9.09 and 9.10 do not apply. ARTICLE 10 -- AMENDMENTS SECTION 10.01. Without Consent of Holders. The Company and the Trustee may amend this Indenture, the Securities or any coupons without the consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to comply with Article 5 or Section 9.16; (3) to provide that specific provisions of this Indenture shall not apply to a series not previously issued; (4) to create a series and establish its terms; (5) to provide for a separate Trustee for one or more series; or (6) to make any change that does not materially adversely affect the rights of any Securityholder. SECTION 10.02. With Consent of Holders. Unless the Securities Resolution otherwise provides, the Company and the Trustee may amend this Indenture, the Securities and any coupons with the written consent of the Holders of a majority in principal amount of the Securities of all series affected by the amendment voting as one class. However, without the consent of each Securityholder affected, an amendment under this Section may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the interest on or change the time for payment of interest on any Security; (3) change the fixed maturity of any Security; -31- (4) reduce the principal of any non-Discounted Debt Security or reduce the amount of principal of any Discounted Debt Security that would be due upon an acceleration thereof; (5) change the currency in which principal or interest on a Security is payable; (6) make any change that materially adversely affects the right to convert or exchange any Security; or (7) make any change in Section 6.04 or 10.02, except to increase the amount of Securities whose Holders must consent to an amendment or waiver or to provide that other provisions of this Indenture cannot be amended or waived without the consent of each Securityholder affected thereby. An amendment of a provision included solely for the benefit of one or more series does not affect Securityholders of any other series. Securityholders need not consent to the exact text of a proposed amendment or waiver; it is sufficient if they consent to the substance thereof. SECTION 10.03. Compliance with Trust Indenture Act. Every amendment pursuant to Section 10.01 or 10.02 shall be set forth in a supplemental indenture (except any amendment pursuant to Section 10.01(4), which may be set forth in a Securities Resolution) that complies with the TIA. If a provision of the TIA requires or permits a provision of this Indenture and the TIA provision is amended, then the Indenture provision shall be automatically amended to like effect. SECTION 10.04. Effect of Consents. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Securityholder entitled to consent to it. A consent to an amendment or waiver by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security that evidences the same debt as the consenting Holder's Security. Any Holder or subsequent Holder may revoke the consent as to his Security if the Trustee receives notice of the revocation before the amendment or waiver becomes effective. The Company may fix a record date for the determination of Holders of Registered Securities entitled to give a consent. The record date shall not be less than 10 nor more than 60 days prior to the first written solicitation of Securityholders. SECTION 10.05. Notation on or Exchange of Securities. The Company or the Trustee may place an appropriate notation about an amendment or waiver on any Security thereafter authenticated. The Company may issue in exchange for affected Securities new Securities that reflect the amendment or waiver. -32- SECTION 10.06. Trustee Protected. The Trustee need not sign any supplemental indenture that adversely affects its rights. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each stating that the execution of any amendment or supplement or waiver authorized pursuant to this Article is authorized or permitted by this Indenture, and that such amendment or supplement or waiver constitutes the legal, valid and binding obligation of the Company. ARTICLE 11 -- MISCELLANEOUS SECTION 11.01. Trust Indenture Act. The provisions of TIA (S)(S) 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not expressly set forth herein. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 11.02. Notices. Any notice by one party to another is duly given if in writing and delivered in person, sent by facsimile transmission confirmed by mail or mailed by first-class mail to the other's address shown below: Company: Applied Power Inc. 13000 West Silver Spring Drive Butler, Wisconsin 53007 Fax: (414) 783-9790 Attention: Chief Financial Officer Trustee: The First National Bank of Chicago One First National Plaza Chicago, Illinois 60670-0126 Fax: (312) 407-1708 Attention: Corporate Trust Division A party by notice to the other parties may designate additional or different addresses for subsequent notices. -33- Any notice mailed to a Securityholder shall be mailed to his address shown on the register kept by the Transfer Agent or on the list referred to in Section 2.06. Failure to mail a notice to a Securityholder or any defect in a notice mailed to a Securityholder shall not affect the sufficiency of the notice mailed to other Securityholders or the sufficiency of any published notice. If a notice is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time. If in the Company's opinion it is impractical to mail a notice required to be mailed or to publish a notice required to be published, the Company may give such substitute notice as the Trustee approves. Failure to publish a notice as required or any defect in it shall not affect the sufficiency of any mailed notice. All notices shall be in the English language, except that any published notice may be in an official language of the country of publication. A "notice" includes any communication required by this Indenture. SECTION 11.03. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall if so requested furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 11.04. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and -34- (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. SECTION 11.05. Rules by Company and Agents. The Company may make reasonable rules for action by or a meeting of Securityholders. An Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.06. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, unless the Securities Resolution establishing a series otherwise provides with respect to Securities of the series, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 11.07. No Recourse Against Others. All liability described in the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 11.08. Duplicate Originals. The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture. SECTION 11.09. Governing Law. The laws of the State of Wisconsin shall govern this Indenture, the Securities and any coupons, unless federal law governs. S-1 SIGNATURES Dated: , APPLIED POWER INC. By ----------------------------------------- Name: Title: Dated: , THE FIRST NATIONAL BANK OF CHICAGO By ----------------------------------------- Name: Title: EXHIBIT A A Form of Registered Security No. $ APPLIED POWER INC. [Title of Security] APPLIED POWER INC. promises to pay to or registered assigns the principal sum of Dollars on , Interest Payment Dates: Record Dates: Dated: THE FIRST NATIONAL BANK OF CHICAGO Transfer Agent and Paying Agent APPLIED POWER INC. By: -------------------------------------- [Title of Authorized Officer] By: -------------------------------------- [Assistant] Secretary (SEAL) Authenticated: THE FIRST NATIONAL BANK OF CHICAGO Registrar By: --------------------------------- Authorized Signature A-1 APPLIED POWER INC. [Title of Security] [Explanatory Notes follow Exhibit B] 1. Interest./1/ Applied Power Inc. ("Company"), a corporation organized and existing under the laws of the State of Wisconsin, promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest on and of each year commencing , . Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from , . Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment./2/ The Company will pay interest on the Securities to the persons who are registered holders of Securities at the close of business on the record date for the next interest payment date, except as otherwise provided in the Indenture. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may pay principal and interest by check payable in such money. It may mail an interest check to a holder's registered address. 3. Securities Agents./2A/ Initially, The First National Bank of Chicago, Attention: Corporate Trust Division, will act as Paying Agent, Transfer Agent and Registrar. The Company may change any Paying Agent or Transfer Agent without notice or provide for more than one such agent. The Company or any Affiliate may act in any such capacity. Subject to certain conditions, the Company may change the Trustee. 4. Indenture. The Company issued the securities of this series ("Securities") under an Indenture dated as of , 1998 ("Indenture") between the Company and The First National Bank of Chicago ("Trustee"). The terms of the Securities include those stated in the Indenture and in the Securities Resolution creating the Securities and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb). Securityholders are referred to the Indenture, the Securities Resolution and the Act for a statement of such terms. 5. Optional Redemption./3/ On or after , the Company may redeem all the Securities at any time or some of them from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date. If redeemed during the 12-month period beginning, A-2 Year Percentage Year Percentage and thereafter at 100%. 6. Mandatory Redemption./4/ The Company will redeem $ principal amount of Securities on and on each thereafter through at a redemption price of 100% of principal amount, plus accrued interest to the redemption date./5/ The Company may reduce the principal amount of Securities to be redeemed pursuant to this paragraph by subtracting 100% of the principal amount (excluding premium) of any Securities (i) that the Company has acquired or that the Company has redeemed other than pursuant to this paragraph and (ii) that the Company has delivered to the Registrar for cancellation. The Company may so subtract the same Security only once. 7. Additional Optional Redemption./6/ In addition to redemptions pursuant to the above paragraph(s), the Company may redeem not more than $ principal amount of Securities on and on each thereafter through at a redemption price of 100% of principal amount, plus accrued interest to the redemption date. 8. Notice of Redemption./7/ Notice of redemption will be mailed at least 30 but not more than 60 days before the redemption date to each holder of Securities to be redeemed at his registered address. A notice of redemption may provide that it is subject to the occurrence of any event before the date fixed for such redemption as described in such notice ("Conditional Redemption") and such notice of Conditional Redemption shall be of no effect unless all such conditions to the redemption have occurred before such date or have been waived by the Company. 9. Conversion./8/ A Holder of a Security may convert it into Common Stock of the Company or cash, or a combination thereof, at the Company's option, at any time before the close of business on ___________, or, if the Security is called for redemption, the Holder may convert it at any time before the close of business on the redemption date. The initial Conversion Rate is ____________ (or an equivalent amount in cash) per $1,000 principal amount of the Securities, subject to adjustment as provided in Article 9 of the Indenture./9/ The Company will deliver a check in lieu of any fractional share. On conversion no payment or adjustment for interest accrued on the Securities will be made nor for dividends on the Common Stock issued on conversion. If any Security is converted between the record date for the payment of interest and the next succeeding interest payment date, such Security must be accompanied by funds equal to the interest payable on such succeeding interest payment date on the principal amount so converted (unless such Security shall have been called for redemption, in which case no such payment shall be required). A Security converted on an interest payment date A-3 need not be accompanied by any payment, and the interest on the principal amount of the Security being converted will be paid on such interest payment date to the registered holder of such Security on the immediately preceding record date. To convert a Security a Holder must (1) complete and sign the conversion notice on the back of the Security, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar or Conversion Agent and (4) pay any transfer or similar tax if required. A Holder may convert a portion of a Security if the portion is $1,000 or an integral multiple of $1,000. 10. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000/10/ and whole multiples of $1,000. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Transfer Agent may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or the Indenture. The Transfer Agent need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 11. Persons Deemed Owners. The registered holder of a Security may be treated as its owner for all purposes. 12. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a majority in principal amount of the securities of all series affected by the amendment./11/ Subject to certain exceptions, a default on a series may be waived with the consent of the holders of a majority in principal amount of the series. Without the consent of any Securityholder, the Indenture or the Securities may be amended, among other things, to cure any ambiguity, omission, defect or inconsistency; to provide for assumption of Company obligations to Securityholders; or to make any change that does not materially adversely affect the rights of any Securityholder. 13. Restrictive Covenants./12/ The Securities are unsecured general obligations of the Company limited to $ principal amount. The Indenture does not limit other unsecured debt. 14. Successors. When a successor assumes all the obligations of the Company under the Securities and the Indenture, the Company will be released from those obligations. A-4 15. Defeasance Prior to Redemption or Maturity./13/ Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity. U.S. Government Obligations are securities backed by the full faith and credit of the United States of America or certificates representing an ownership interest in such Obligations. 16. Defaults and Remedies. An Event of Default/14/ includes: default for 30 days in payment of interest on the Securities; default in payment of principal on the Securities; default in payment or satisfaction of any sinking fund obligation; default by the Company for a specified period after notice to it in the performance of any of its other agreements applicable to the Securities; certain events of bankruptcy or insolvency; and any other Event of Default provided for in the series. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare the principal/15/ of all the Securities to be due and payable immediately. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 17. Trustee Dealings with Company. The First National Bank of Chicago, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 18. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. Authentication. This Security shall not be valid until authenticated by a manual signature of the Registrar. A-5 20. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to Minors Act) and U/T/M/A (=Uniform Transfers to Minors Act). A-6 EXHIBIT B A Form of Bearer Security No. $ APPLIED POWER INC. [Title of Security] APPLIED POWER INC. promises to pay to bearer the principal sum of Dollars on , Interest Payment Dates: Record Dates: Dated: THE FIRST NATIONAL BANK OF CHICAGO Transfer Agent and Paying Agent APPLIED POWER INC. By: : -------------------------- [Title of Authorized Officer] By: : -------------------------- [Assistant] Secretary (SEAL) Authenticated: THE FIRST NATIONAL BANK OF CHICAGO Registrar By: ------------------------------- Authorized Signature B-1 APPLIED POWER INC. [Title of Security] [Explanatory Notes follow Exhibit B] 1. Interest./1/ APPLIED POWER INC. ("Company"), a corporation organized and existing under the laws of the State of Wisconsin, promises to pay to bearer interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest on and of each year commencing , . Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from , . Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment./2/ Holders must surrender Securities and any coupons to a Paying Agent to collect principal and interest payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may pay principal and interest by check payable in such money. 3. Securities Agents./2A/ Initially, The First National Bank of Chicago, Attention: Corporate Trust Division, will act as Transfer Agent, Paying Agent and Registrar. The Company may change any Paying Agent or Transfer Agent without notice or provide for more than one such agent. The Company or any Affiliate may act in any such capacity. Subject to certain conditions, the Company may change the Trustee. 4. Indenture. The Company issued the securities of this series ("Securities") under an Indenture dated as of , 1998 ("Indenture") between the Company and The First National Bank of Chicago ("Trustee"). The terms of the Securities include those stated in the Indenture and the Securities Resolution and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb). Securityholders are referred to the Indenture, the Securities Resolution and the Act for a statement of such terms. 5. Optional Redemption./3/ On or after , the Company may redeem all the Securities at any time or some of them from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date. If redeemed during the 12-month period beginning, Year Percentage Year Percentage B-2 and thereafter 100%. 6. Mandatory Redemption./4/ The Company will redeem $ principal amount of Securities on and on each thereafter through at a redemption price of 100% of principal amount, plus accrued interest to the redemption date./5/ The Company may reduce the principal amount of Securities to be redeemed pursuant to this paragraph by subtracting 100% of the principal amount (excluding premium) of any Securities (i) that the Company has acquired or that the Company has redeemed other than pursuant to this paragraph and (ii) that the Company has delivered to the Registrar for cancellation. The Company may so subtract the same Security only once. 7. Additional Optional Redemption./6/ In addition to redemptions pursuant to the above paragraph(s), the Company may redeem not more than $ principal amount of Securities on and on each thereafter through at a redemption price of 100% of principal amount, plus accrued interest to the redemption date. 8. Notice of Redemption./7/ Notice of redemption will be published once in an Authorized Newspaper in the City of New York and if the Securities are listed on any stock exchange located outside the United States and such stock exchange so requires, in any other required city outside the United States at least 30 but not more than 60 days before the redemption date. Notice of redemption also will be mailed to holders who have filed their names and addresses with the Transfer Agent within the two preceding years. A holder of Securities may miss important notices if he fails to maintain his name and address with the Transfer Agent. A notice of redemption may provide that it is subject to the occurrence of any event before the date fixed for such redemption as described in such notice ("Conditional Redemption") and such notice of Conditional Redemption shall be of no effect unless all such conditions to the redemption have occurred before such date or have been waived by the Company. 9. Conversion./8/ A Holder of a Security may convert it into Common Stock of the Company or cash, or a combination thereof, at the Company's option, at any time before the close of business on ___________, or, if the Security is called for redemption, the Holder may convert it at any time before the close of business on the redemption date. The initial Conversion Rate is ____________ (or an equivalent amount in cash) per $1,000 principal amount of the Securities, subject to adjustment as provided in Article 9 of the Indenture./9/ The Company will deliver a check in lieu of any fractional share. On conversion no payment or adjustment for interest accrued on the Securities will be made nor for dividends on the Common Stock issued on conversion. If any Security is converted between the record date for the payment of interest and the next succeeding interest payment date, such Security must be accompanied by B-3 funds equal to the interest payable on such succeeding interest payment date on the principal amount so converted (unless such Security shall have been called for redemption, in which case no such payment shall be required). A Security converted on an interest payment date need not be accompanied by any payment, and the interest on the principal amount of the Security being converted will be paid on such interest payment date to the registered holder of such Security on the immediately preceding record date. To convert a Security a Holder must (1) complete and sign the conversion notice on the back of the Security, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar or Conversion Agent and (4) pay any transfer or similar tax if required. A Holder may convert a portion of a Security if the portion is $1,000 or an integral multiple of $1,000. 10. Denominations, Transfer, Exchange. The Securities are in bearer form with coupons in denominations of $5,000/10/ and whole multiples of $5,000. The Securities may be transferred by delivery and exchanged as provided in the Indenture. Upon an exchange, the Transfer Agent may require a holder, among other things, to furnish appropriate documents and to pay any taxes and fees required by law or the Indenture. The Transfer Agent need not exchange any Security or portion of a Security selected for redemption. Also, it need not exchange any Securities for a period of 15 days before a selection of Securities to be redeemed. 11. Persons Deemed Owners. The holder of a Security or coupon may be treated as its owner for all purposes. 12. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a majority in principal amount of the securities of all series affected by the amendment./11/ Subject to certain exceptions, a default on a series may be waived with the consent of the holders of a majority in principal amount of the series. Without the consent of any Securityholder, the Indenture or the Securities may be amended, among other things, to cure any ambiguity, omission, defect or inconsistency; to provide for assumption of Company obligations to Securityholders; or to make any change that does not materially adversely affect the rights of any Securityholder. 13. Restrictive Covenants./12/ The Securities are unsecured general obligations of the Company limited to $ principal amount. The Indenture does not limit other unsecured debt. B-4 14. Successors. When a successor assumes all the obligations of the Company under the Securities, any coupons and the Indenture, the Company will be released from those obligations. 15. Defeasance Prior to Redemption or Maturity./13/ Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities, any coupons and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity. U.S. Government Obligations are securities backed by the full faith and credit of the United States of America or certificates representing an ownership interest in such Obligations. 16. Defaults and Remedies. An Event of Default/14/ includes: default for 30 days in payment of interest on the Securities; default in payment of principal on the Securities; default in payment or satisfaction of any sinking fund obligation; default by the Company for a specified period after notice to it in the performance of any of its other agreements applicable to the Securities; certain events of bankruptcy or insolvency; and any other Event of Default provided for in the series. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare the principal/15/ of all the Securities to be due and payable immediately. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish annual compliance certificates to the Trustee. 17. Trustee Dealings with Company. The First National Bank of Chicago, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 18. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. B-5 19. Authentication. This Security shall not be valid until authenticated by a manual signature of the Registrar. 20. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to Minors Act) and U/T/M/A (=Uniform Transfers to Minors Act). B-6 ............... [$]............ Due............ APPLIED POWER INC. [Title of Security] Unless the Security attached to this coupon has been called for redemption, Applied Power Inc. ("Company") will pay to bearer, upon surrender, the amount shown hereon when due. This coupon may be surrendered for payment to any Paying Agent listed on the back of this coupon unless the Company has replaced such Agent. Payment may be made by check. This coupon represents months' interest. APPLIED POWER INC. By -------------------------------- [REVERSE OF COUPON] PAYING AGENTS B-7 NOTES TO EXHIBITS A AND B 1 If the Security is not to bear interest at a fixed rate per annum, insert a description of the manner in which the rate of interest is to be determined. If the Security is not to bear interest prior to maturity, so state. 2 If the method or currency of payment is different, insert a statement thereof. 2A As is done in Section 2.03 of the Indenture, the Trustee must be appointed Registrar under Section 182.23, Wis. Stats., in order for Officers' signatures on Securities and the corporate seal to be facsimiles. 3 If applicable. If the Security is to be subject to a nonrefunding restriction, insert a brief summary thereof. If the redemption is to be subject to a condition, insert a brief summary thereof. 4 Such provisions as are applicable, if any. 5 If the Security is a Discounted Debt Security, insert amount to be redeemed or method of calculating such amount. 6 If applicable. Also insert, if applicable, provisions for repayment of Securities at the option of the Securityholder. 7 If applicable. 8 If applicable. If convertible into securities other than Common Stock, insert appropriate summary. 9 If additional or different adjustment provisions apply so specify. 10 If applicable. Insert additional or different denominations and terms as appropriate. 11 If different terms apply, insert a brief summary thereof. 12 If applicable. If additional or different covenants apply, insert a brief summary thereof. 13 If applicable. If different defeasance terms apply, insert a brief summary thereof. 14 If additional or different Events of Default apply, insert a brief summary thereof. 15 If the Security is a Discounted Debt Security, set forth the amount due and payable upon an Event of Default. Note: U.S. tax law may require certain legends on Discounted Debt and Bearer Securities. EXHIBIT C ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to _________________________________________ :_______________________________________: (Insert assignee's soc. sec. or tax I.D. no.) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ____________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: _______________ Your Signature: __________________________ -------------------------- (Sign exactly as your name(s) appear(s) on the other side of this Security) Signature(s) guaranteed by: _________________________________________ (All signatures must be guaranteed by an "eligible guarantor institution " as defined by Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended) C-1 EXHIBIT D CONVERSION NOTICE To convert this Security, check the box: [ ] ---------- To convert only part of this Security, state the amount (must be in integral multiples of $1,000); $_____________________________ If you want the securities delivered upon conversion made out in another person's name, fill in the form below: (Insert other person's Social Security or Tax I.D. Number) ______________________________ ______________________________ ______________________________ ______________________________ (Print or type other person's name, address and zip code Date: ____________ Signature(s): ____________________________ __________________________________ (Sign exactly as your name(s) appear(s) on the other side of this Security) Signature(s) guaranteed by: ________________________________ (All signatures must be guaranteed by an "eligible guarantor institution" as defined by Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended) D-1 EX-5 3 OPINION OF QUARLES AND BRADY EXHIBIT 5 Quarles & Brady 411 East Wisconsin Avenue Milwaukee, WI 53202-4497 March 6, 1998 Applied Power Inc. 13000 West Silver Spring Drive Butler, WI 53007-1093 Ladies and Gentlemen: We are providing this opinion in connection with the Registration Statement of Applied Power Inc. (the "Company") on Form S-3 (the "Registration Statement") to be filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), with respect to the proposed offering on a delayed basis pursuant to Rule 415 under the Act, of (i) one or more series of the Company's unsecured debt securities (the "Debt Securities") and/or (ii) shares of the Company's Class A Common Stock, par value $.20 per share (the "Shares" and, together with the Debt Securities, the "Securities"), for an aggregate initial offering price not to exceed $300,000,000. We have examined (i) the Registration Statement; (ii) the Company's Restated Articles of Incorporation and Amended and Restated Bylaws, as amended to date; (iii) the proposed form of Indenture for Debt Securities (including, as exhibits, proposed forms of Registered Security and Bearer Security thereunder) from the Company to The First National Bank of Chicago, as Trustee (the "Indenture"), providing for the issuance of the Debt Securities from time to time in one or more series pursuant to the terms of one or more Securities Resolutions (as defined in the Indenture) or supplemental indentures creating such series; (iv) corporate proceedings of the Company relating to the Registration Statement, the Indenture and the transactions contemplated thereby; and (v) such other documents, and such matters of law, as we have deemed necessary in order to render this opinion. In connection with this opinion, we have assumed that (i) the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective under the Act; (ii) a Prospectus Supplement will have been prepared and filed with the Commission describing the terms of each particular issue of Securities offered and the terms of the offering thereof; (iii) all Securities will be issued and sold in compliance with applicable federal and state securities laws and Applied Power Inc. Page 2 March 6, 1998 in the manner stated in the Registration Statement and the applicable Prospectus Supplement; (iv) the Indenture will have been duly qualified under the Trust Indenture Act of 1939, as amended, and will have been duly authorized, executed and delivered by the Company and the Trustee; and (v) a definitive purchase, underwriting or similar agreement with respect to any Securities offered will have been duly authorized and validly executed and delivered by the Company and the other parties thereto. On the basis of and subject to the foregoing, we advise you that, in our opinion: 1. The Company is a corporation duly incorporated and validly existing under the laws of the State of Wisconsin. 2. With respect to each series of Debt Securities to be issued under the Indenture, when (a) the Board of Directors of the Company or any duly authorized committee thereof (the "Board") has taken all necessary further action to approve the issuance and terms of such Debt Securities, the terms of the offering thereof and related matters; (b) the Securities Resolution or supplemental indenture setting forth the terms of such series shall have been duly adopted, or duly executed and delivered by the Company and the Trustee, as the case may be; and (c) such Debt Securities have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture, the applicable Securities Resolution or supplemental indenture, and the applicable definitive purchase, underwriting or similar agreement approved by the Board upon payment of the consideration therefor provided for therein, such Debt Securities will be valid and binding obligations of the Company, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be entitled to the benefits of the Indenture relating to such series. 3. With respect to each offering of the Shares, when (a) the Board has taken all necessary further action to approve the issuance of such Shares, the terms of the offering thereof and related matters; and (b) such Shares have been duly issued in accordance with such authorization and the provisions of the applicable definitive purchase, underwriting or similar agreement approved by the Board upon payment of the consideration therefor provided for therein, such Shares will be validly issued, fully paid and nonassessable by the Company, subject to the personal liability which Applied Power Inc. Page 3 March 6, 1998 may be imposed on shareholders by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, as judicially interpreted, for debts owing to employees for services performed, but not exceeding six months service in any one case. Although Section 180.0622(2)(b) provides that such personal liability of shareholders shall be "to an amount equal to the par value of shares owned by them respectively, and to the consideration for which their shares without par value was issued," the Wisconsin Supreme Court, by a split decision without a written opinion, has affirmed a judgment holding shareholders of a corporation liable under the substantially identical predecessor statute in effect prior to January 1, 1991 (Section 180.40(6)) for unpaid employee wages to an amount equal to the consideration for which their par value shares were issued rather than the shares' lower stated par value. Local 257 of Hotel and Restaurant Employees and Bartenders International Union v. Wilson Street East Dinner Playhouse, Inc., 126 Wis. 2d 284, 375 N.W.2d 664 (1985) (affirming the 1983 decision of the Circuit Court for Dane County, Wisconsin, in Case No. 82-CV-0023). Anthony W. Asmuth III, a partner in our firm, is Corporate Secretary of the Company. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption "Certain Legal Matters" in the Prospectus constituting a part thereof. In giving our consent, we do not admit that we are "experts" within the meaning of Section 11 of the Act, or that we come within the category of persons whose consent is required by Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Quarles & Brady QUARLES & BRADY EX-12 4 COMPUTATION OF RATIO OF EARNINGS EXHIBIT 12 APPLIED POWER INC. Computation of Ratio of Earnings to Fixed Charges
Earnings to Fixed Charges (in thousands, except Ratio Data) ------------------------------------------------------------------------ Three months ended 11/30/97 (1) 1997 1996 1995 1994 1993(2) ------------------------------------------------------------------------ Net Earnings from continuing operations $12,186 $42,038 $33,729 $25,005 $16,896 $ 7,086 Add Income Tax Expense 6,562 20,705 15,438 11,868 8,402 2,504 Add Interest Expense (3) 4,147 12,003 8,456 10,291 11,362 12,469 Portion of Rent deemed interest factor (4) 1,054 4,057 3,544 3,655 3,755 4,043 ------------------------------------------------------------------------ Total Earnings Available for Fixed Charges $23,949 $78,803 $61,167 $50,819 $40,415 $26,102 ======================================================================== Fixed Charges: Interest Expense (3) $ 4,147 $12,003 $ 8,456 $10,291 $11,362 $12,469 Portion of Rent deemed interest factor (4) 1,054 4,057 3,544 3,655 3,755 4,043 ------------------------------------------------------------------------ Total Fixed Charges $ 5,201 $16,060 $12,000 $13,946 $15,117 $16,512 ======================================================================== Ratio of Earnings to Fixed Charges 4.6 4.9 5.1 3.6 2.7 1.6 ========================================================================
_______________ (1) The Company has historically had a seasonality effect where the second half of the fiscal year is generally better than the first half. Therefore, the results for the first quarter ended November 30, 1997, are not necessarily indicative of full year results. (2) Net Earnings from continuing operations in 1993 include a non-recurring restructuring charge of $7,721. Excluding this charge, the ratio of earnings to fixed charges would have been 2.0. (3) Interest Expense consists of interest on indebtedness and amortization of debt expense. (4) 33% of rental expense is deemed representative of the interest factor. EX-23.1 5 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Applied Power Inc. on Form S-3 of our report dated September 25, 1997, appearing in the Annual Report on Form 10-K of Applied Power Inc. for the year ended August 31, 1997. We also consent to the incorporation by reference in this Registration Statement of our report dated May 9, 1997 relating to Versa Technologies, Inc. appearing in the Current Report on Form 8-K of Applied Power Inc. dated October 3, 1997. DELOITTE & TOUCHE LLP Milwaukee, Wisconsin March 2, 1998 EX-25 6 STATEMENT OF ELIGIBILITY OF TRUSTEE ON FORM T1 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____ --------------------------------- THE FIRST NATIONAL BANK OF CHICAGO (Exact name of trustee as specified in its charter) A National Banking Association 36-0899825 (I.R.S. employer identification number) One First National Plaza, Chicago, Illinois 60670-0126 (Address of principal executive offices) (Zip Code) The First National Bank of Chicago One First National Plaza, Suite 0286 Chicago, Illinois 60670-0286 Attn: Lynn A. Goldstein, Law Department (312) 732-6919 (Name, address and telephone number of agent for service) ----------------------------------- APPLIED POWER INC. (Exact name of obligor as specified in its charter) Wisconsin 39-0168610 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 13000 West Silver Spring Drive Butler, Wisconsin 53007-1093 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 3rd day of March, 1998. The First National Bank of Chicago, Trustee By /S/ STEVEN M. WAGNER -------------------------------- Steven M. Wagner Vice President * Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of The First National Bank of Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of SunAmerica Inc. filed with the Securities and Exchange Commission on October 25, 1996 (Registration No. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between Applied Power Inc. and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, The First National Bank of Chicago By /S/ STEVEN M. WAGNER ------------------------------ Steven M. Wagner Vice President 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 --------- Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for September 30, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet
C400 Dollar Amounts in ------------ Thousands RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1)............ 0081 4,499,157 1.a. b. Interest-bearing balances(2)..................................... 0071 6,967,103 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A)....... 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)..... 1773 5,251,713 2.b. 3. Federal funds sold and securities purchased under agreements to resell.............................................................. 1350 5,561,976 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C)............................................................... RCFD 2122 24,171,565 4.a. b. LESS: Allowance for loan and lease losses........................ RCFD 3123 419,216 4.b. c. LESS: Allocated transfer risk reserve............................ RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c)...... 2125 23,752,349 4.d. 5. Trading assets (from Schedule RD-D)................................. 3545 6,238,805 5. 6. Premises and fixed assets (including capitalized leases)............ 2145 717,303 6. 7. Other real estate owned (from Schedule RC-M)........................ 2150 7,187 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)...................................... 2130 77,115 8. 9. Customers' liability to this bank on acceptances outstanding........ 2155 614,921 9. 10. Intangible assets (from Schedule RC-M).............................. 2143 277,105 10. 11. Other assets (from Schedule RC-F)................................... 2160 2,147,141 11. 12. Total assets (sum of items 1 through 11)............................ 2170 56,108,875 12.
- ------------------ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5 Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
Schedule RC-Continued Dollar Amounts in Thousands Bil Mil Thou ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1)............................................. RCON 2200 21,496,468 (1) Noninterest-bearing(1).............................................. RCON 6631 8,918,843 (2) Interest-bearing.................................................... RCON 6636 12,577,625 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)...................................... RCFN 2200 14,164,129 (1) Noninterest bearing................................................. RCFN 6631 352,399 (2) Interest-bearing.................................................... RCFN 6636 13,811,730 14. Federal funds purchased and securities sold under agreements to repurchase:............................................................. RCFD 2800 3,894,469 15. a. Demand notes issued to the U.S. Treasury................................ RCON 2840 68,268 b. Trading Liabilities (from Schedule RC-D)................................ RCFD 3548 5,247,232 16. Other borrowed money: a. With a remaining maturity of one year or less........................... RCFD 2332 2,608,057 b. With a remaining maturity of than one year through three years.......... A547 379,893 c. With a remaining maturity of more than three years..................... A548 323,042 17. Not applicable 18. Bank's liability on acceptance executed and outstanding.................... RCFD 2920 614,921 19. Subordinated notes and debentures (2)...................................... RCFD 3200 1,700,000 20. Other liabilities (from Schedule RC-G)..................................... RCFD 2930 1,222,121 21. Total liabilities (sum of items 13 through 20)............................. RCFD 2948 51,718,600 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.............................. RCFD 3838 0 24. Common stock............................................................... RCFD 3230 200,858 25. Surplus (exclude all surplus related to preferred stock)................... RCFD 3839 2,989,408 26. a. Undivided profits and capital reserves.................................. RCFD 3632 1,175,518 b. Net unrealized holding gains (losses) on available-for-sale securities.............................................................. RCFD 8434 26,750 27. Cumulative foreign currency translation adjustments........................ RCFD 3284 (2,259) 28. Total equity capital (sum of items 23 through 27).......................... RCFD 3210 4,390,275 29. Total liabilities and equity capital (sum of items 21 and 28).............. RCFD 3300 56,108,875
LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1)............................................. 13.a (1) Noninterest-bearing(1).............................................. 13.a.1 (2) Interest-bearing.................................................... 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)...................................... 13.b. (1) Noninterest bearing................................................. 13.b.1 (2) Interest-bearing.................................................... 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase:............................................................. 14 15. a. Demand notes issued to the U.S. Treasury................................ 15.a b. Trading Liabilities (from Schedule RC-D)................................ 15.b 16. Other borrowed money: a. With a remaining maturity of one year or less........................... 16.a b. With a remaining maturity of than one year through three years.......... 16.b c. With a remaining maturity of more than three years..................... 16.c 17. Not applicable 18. Bank's liability on acceptance executed and outstanding.................... 18 19. Subordinated notes and debentures (2)...................................... 19 20. Other liabilities (from Schedule RC-G)..................................... 20 21. Total liabilities (sum of items 13 through 20)............................. 21 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.............................. 23 24. Common stock............................................................... 24 25. Surplus (exclude all surplus related to preferred stock)................... 25 26. a. Undivided profits and capital reserves.................................. 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities.............................................................. 26.b. 27. Cumulative foreign currency translation adjustments........................ 27 28. Total equity capital (sum of items 23 through 27).......................... 28 29. Total liabilities and equity capital (sum of items 21 and 28).............. 29
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996...........................................RCFD 6724.............N/A M.1 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
- ------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. 6 -----END PRIVACY-ENHANCED MESSAGE-----