-----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, Qfb3S72jcWPV9ReL3JVbVO6B4/cWsT2Md2j9rnuuwz3fPGGeNPLlG/jbSo9uTW/g GjSBer9ujgZwBY5DLycFAQ== /in/edgar/work/0000950128-00-001190/0000950128-00-001190.txt : 20001009 0000950128-00-001190.hdr.sgml : 20001009 ACCESSION NUMBER: 0000950128-00-001190 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20001006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JLG INDUSTRIES INC CENTRAL INDEX KEY: 0000216275 STANDARD INDUSTRIAL CLASSIFICATION: [3531 ] IRS NUMBER: 251199382 STATE OF INCORPORATION: PA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12123 FILM NUMBER: 735890 BUSINESS ADDRESS: STREET 1: 1 JLG DR CITY: MCCONNELLSBURG STATE: PA ZIP: 17233 BUSINESS PHONE: 7174855161 10-K 1 j8416801e10-k.txt JLG INDUSTRIES INC. FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________ COMMISSION FILE NUMBER: 0-8454 ------------------------ JLG INDUSTRIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) PENNSYLVANIA 25-1199382 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1 JLG DRIVE, MCCONNELLSBURG, PA 17233-9533 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (717) 485-5161 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: CAPITAL STOCK ($.20 PAR VALUE) (TITLE OF CLASS) NEW YORK STOCK EXCHANGE (NAME OF EXCHANGE ON WHICH REGISTERED) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. __ At September 14, 2000, there were 43,663,058 shares of capital stock of the Registrant outstanding, and the aggregate market value of the voting stock held by nonaffiliates of the Registrant at that date was $584,432,635. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the 2000 Annual Meeting of Shareholders are incorporated by reference into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
ITEM PAGE - ---- ---- PART 1 1. BUSINESS................................................. 2 Machinery Products..................................... 2 Equipment Services..................................... 2 Marketing and Distribution............................. 3 Product Development.................................... 3 Competition............................................ 4 Material and Supply Arrangements....................... 4 Product Liability...................................... 4 Employees.............................................. 4 Foreign Operations..................................... 4 Executive Officers of the Registrant................... 5 2. PROPERTIES............................................... 5 3. LEGAL PROCEEDINGS........................................ 5 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...... 5 PART II 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS...................................... 6 6. SELECTED FINANCIAL DATA.................................. 7 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 8 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............. 11 Consolidated Balance Sheets............................ 11 Consolidated Statements of Income...................... 12 Consolidated Statements of Shareholders' Equity........ 13 Consolidated Statements of Cash Flows.................. 14 Notes to Consolidated Financial Statements............. 15 Report of Ernst & Young LLP, Independent Auditors...... 27 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...................... 28 PART III 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...... 28 11. EXECUTIVE COMPENSATION.................................. 28 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................. 28 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......... 28 PART IV 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K................................................ 29 Financial Statement Schedule........................... 29 Exhibits............................................... 29 SIGNATURES.................................................. 31
3 PART I ITEM 1--BUSINESS JLG Industries, Inc. is the world's leading producer of mobile aerial work platforms and a leading manufacturer of variable-reach material handlers and telescopic hydraulic excavators which are marketed under the JLG and Gradall trademarks. Sales are made principally to rental companies and distributors that rent and sell the Company's products to a diverse customer base, which includes users in the industrial, commercial, institutional and construction markets. The Company has organized its business into two segments consisting of Machinery and Equipment Services. MACHINERY PRODUCTS Aerial work platforms are designed to permit workers to position themselves, their tools and materials effectively and quickly in elevated work areas that otherwise might have to be reached by the erection of scaffolding, by the use of ladders, or through other devices. Aerial work platforms consist of boom, scissor and vertical mast lifts. These work platforms are mounted at the end of telescoping and/or articulating booms or on top of scissor-type or other vertical lifting mechanisms, which, in turn, are mounted on mobile chassis. The Company offers aerial work platforms powered by electric motors, gasoline, diesel, or propane engines. All of the Company's aerial work platforms are designed for stable operation in elevated positions. JLG boom lifts are especially useful for reaching over machinery and equipment that is mounted on floors and for reaching other elevated positions not effectively approached by other vertical lifting devices. The Company produces boom lift models of various sizes with platform heights of up to 150 feet. The boom may be rotated up to 360 degrees in either direction, raised or lowered from vertical to below horizontal, and extended while the work platform remains horizontal and stable. These machines can be maneuvered forward or backward and steered in any direction by the operator from the work platform, even while the boom is extended. Boom-type models have standard-sized work platforms, which vary in size up to 3 by 8 feet, and the rated lift capacities range from 500 to 1,000 pounds. JLG scissor lifts are designed to provide larger work areas, and generally to allow for heavier loads than boom lifts. Scissor lifts may be maneuvered in a manner similar to boom lifts, but the platforms may be extended only vertically, except for an available option that extends the deck horizontally up to 6 feet. Scissor lifts are available in various models, with maximum platform heights of up to 50 feet and various platform sizes up to 6 by 14 feet. The rated lift capacities range from 500 to 2,500 pounds. JLG self-propelled and push-around vertical mast lifts consist of a work platform attached to an aluminum mast that extends vertically, which, in turn, is mounted on either a push-around or self-propelled base. Available in various models, these machines in their retracted position can fit through standard door openings, yet reach platform heights of up to 41 feet when fully extended. The rated lift capacity is 350 pounds. Gradall rough-terrain, variable-reach material handlers are typically used by residential, non-residential and institutional building contractors for lifting, transporting and placing a wide variety of materials at their point of use or storage. The Company manufactures and markets rough-terrain, variable-reach material handlers with rated lift capacities ranging from 6,000 to 10,000 pounds and lifting heights of up to 55 feet. Gradall excavators are distinguished from other types of excavators by their telescoping, rotating booms. The boom's arm-like motion increases the machine's versatility, maximizing the potential of the machine to use a wide variety of attachments. Excavators are typically used by contractors and government agencies for ditching, sloping, finish grading, general maintenance and infrastructure projects. Specialized excavator models are used in mining and railroad maintenance applications. EQUIPMENT SERVICES The Company's Equipment Services operations focus on after-sales service and support activities, including replacement parts sales, equipment rentals, training, used equipment sales and used equipment reconditioning. 2 4 This business is a significant factor in overall customer satisfaction and a strong contributor to the equipment purchase decision. The Company distributes replacement parts to customers through a system of parts depots and supplier direct shipment programs. These parts depots provide the Company's customers with immediate access to all the parts required to support the Company's equipment. Sales of replacement parts have historically been less cyclical and typically generate higher margins than sales of new equipment. The Company has been expanding its reliance on e-commerce using Internet-based technology in an effort to develop ever-closer relationships with its customers. To further this end, the Company handles most of its warranty transactions and nearly half of its parts orders via the Internet. The Company's rental fleet is used to support customer demands for rent-to-purchase financing and long-term rental contracts. Equipment Services also re-markets customer trade-ins and repairs and rebuilds equipment. This operation has been certified as meeting ISO 9002 standards relating to customer service quality. The Company supports the sales, service, and rental programs of its customers with product advertising, co-operative promotional programs, major trade show participation, and training programs covering service, products and safety. The Company supplements domestic sales and service support to its international customers through its overseas facilities in Australia, Germany, Italy, Norway, Poland, South Africa, Spain, Sweden and the United Kingdom and joint ventures in Thailand and the Netherlands. To facilitate the sale of its products, the Company provides an array of financing and leasing services to its customers and end-users through its JLG Capital operation. These programs are diverse and provide customers with various financing options and are generally funded through third party financial institutions, with limited recourse to the Company. Financing has become an increasingly integral part of the Company's business. MARKETING AND DISTRIBUTION The Company's products are marketed internationally through independent rental companies and a network of independent distributors who rent and sell the Company's products and provide service support as well as other sales and service branches or organizations in which the Company holds equity positions. North American customers are located in all fifty states in the U.S., as well as in Canada and Mexico. International customers are located in Europe, the Asia/Pacific region, Australia, Japan and South America. The Company has branches or owns controlling interests in sales and service operations in South Africa, Italy, Spain, Sweden, Norway, Poland, the United kingdom and Australia and is a party to joint venture arrangements which serve as a distributor in Thailand and as a rental operation in the Netherlands. For 2000, sales to one customer amounted to 19% of sales and sales to a different customer amounted to 13% of sales. Sales to another customer amounted to 13% of sales for 1998. Certain of the Company's operations have been certified as meeting ISO-9001 and 9002 standards. The Company believes that certification is valuable because a number of customers require certification as a condition to doing business. PRODUCT DEVELOPMENT The Company invests significantly in product development and diversification, including improvement of existing products and modification of existing products for special applications. Product development expenditures totaled $15,751,000, $9,279,000 and $9,579,000 for the fiscal years 2000, 1999 and 1998, respectively. New and redesigned products introduced in the past two years accounted for approximately 35% of fiscal 2000 sales. The Company has various registered trademarks and patents relating to its products and business. While the Company considers them to be beneficial in the operation of its business, the Company is not dependent on any single patent or trademark or group of patents or trademarks. 3 5 COMPETITION The Company operates in the global construction and industrial equipment market. The Company's competitors range from some of the world's largest multi-national industrial equipment manufacturers to small single-product niche manufacturers. Within this global market segment, the Company faces competition principally from nine significant aerial work platform manufacturers and approximately 26 smaller manufacturers, 15 variable-reach material handler manufacturers and numerous other manufacturers of other products such as boom trucks, cherry pickers, mast climbers and various types of earth moving equipment that offer similar or overlapping functionality to the Company's products. The Company believes it is the world's leading manufacturer of boom lifts and scissor lifts and is one of the world's leading manufacturers of vertical mast lifts and variable-reach material handlers. The Company is currently a niche provider of excavators, but within the narrow category of highway-speed, wheeled, telescoping excavators, the Company believes that it is the world's leading supplier. The Company's Equipment Services operation principally competes with the above-mentioned manufacturers as well as certain of its customers particularly in the reconditioning and used equipment markets. Additionally, the Company faces competition for replacement parts from its suppliers and distributors who sell generic parts. MATERIAL AND SUPPLY ARRANGEMENTS The Company obtains raw materials, principally steel; other component parts, most notably engines, drive motors, tires, bearings and hydraulics; and supplies from third parties. The Company also outsources certain assemblies and fabricated parts. The Company relies on preferred vendors as a sole source for "just-in-time" delivery of many raw materials and manufactured components. The Company believes these arrangements have resulted in reduced investment requirements, greater access to technology developments and lower per-unit costs. Because the Company maintains limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers may adversely affect the Company's ability to satisfy its customers on a timely basis and thereby affect the Company's financial performance. PRODUCT LIABILITY Because the Company's products are used to elevate and move personnel and materials above the ground, use of the Company's products involves exposure to personal injury, as well as property damage, particularly if operated improperly or without proper maintenance. The Company's estimates with respect to claims are based on internal evaluations of the merits of individual claims and the reserves assigned by the Company's independent firm. The methods of making such estimates and establishing the resulting accrued liability are reviewed frequently, and any adjustments resulting therefrom are reflected in current earnings. Reserves are based on actual incidents and do not necessarily directly relate to sales activity. Based upon the Company's best estimate of anticipated losses, product liability costs approximated 0.6%, 0.8% and 1.0% of net sales, for the years ended July 31, 2000, 1999 and 1998, respectively. For additional information relative to product liability insurance coverage and cost, see the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. EMPLOYEES The Company had 3,770 and 3,960 persons employed as of July 31, 2000 and 1999, respectively. The Company believes its employee relations are good. Approximately 12% of the Company's employees are represented by a union under a contract which expires April 20, 2003. FOREIGN OPERATIONS The Company manufactures its products in the U.S. for sale throughout the world. Sales to customers outside the U.S. were 24%, 27% and 32% of total net sales for fiscal years 2000, 1999 and 1998, respectively. Sales to European customers were 17%, 19% and 18% of total net sales for fiscal years 2000, 1999 and 1998, 4 6 respectively. The decreases in the percentage from 1999 to 2000 were due principally to the weighting resulting from the Gradall acquisition. EXECUTIVE OFFICERS OF THE REGISTRANT
POSITIONS WITH THE COMPANY AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS NAME AGE (DATE OF INITIAL ELECTION) - ---- --- ------------------------------------------------------------ L. David Black 63 Chairman of the Board (2000); prior to 2000, President and Chief Executive Officer; prior to 1999, Chairman of the Board President and Chief Executive Officer. William M. Lasky 53 President and Chief Executive Officer (2000); prior to 2000, President and Chief Operating Officer; prior to 1999, President, Dana Corporation, Worldwide Filtration Products Group; prior to 1997, President, Dana Corporation, North America Filtration Group. Rao G. Bollimpalli 62 Senior Vice President -- Engineering (1990). Peter L. Bonafede, Jr. 50 Senior Vice President -- Manufacturing (1999); prior to 1999, President, Global Chemical Technologies; prior to 1998, Vice President and General Manager, Ingersoll-Rand Company, Blaw-Knox Division; prior to 1997, Plant Manager, Federal-Mogul Corporation. Charles H. Diller, Jr. 55 Executive Vice President (2000); prior to 2000, Executive Vice President and Chief Financial Officer. Craig E. Paylor 44 Senior Vice President-Sales and Market Development (1999); prior to 1999, Vice President Sales and Marketing. Barry L. Phillips 59 President and Chief Executive Officer, Gradall Industries, Inc. (1995). James H. Woodward, Jr. 47 Senior Vice President and Chief Financial Officer (2000); prior to 2000, Vice President, Director E-Business, Dana Corporation; prior to 2000, Vice President and Corporate Controller, Dana Corporation; prior to 1997, Vice President and Controller, Dana Corporation, North American Operations.
All executive officers listed above are elected to hold office for one year or until their successors are elected and qualified, and have been employed in the capacities noted for more than five years, except as indicated. No family relationship exists among the above-named executive officers. ITEM 2--PROPERTIES The Company owns and operates six facilities in Pennsylvania and Ohio containing manufacturing and office space, totaling 1.8 million square feet and situated on 285 acres of land. The Company's properties are considered to be in good operating condition, well-maintained and suitable for their present purposes. The Company's McConnellsburg and Bedford, Pennsylvania facilities are encumbered as security for long-term borrowings. The Company also leases seventeen small distribution, administration or service facilities throughout the world. ITEM 3--LEGAL PROCEEDINGS The Company makes provisions relating to probable product liability claims. For information relative to product liability claims, see the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 5 7 PART II ITEM 5-- MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS The Company's capital stock is traded on the New York Stock Exchange under the symbol JLG. The table below sets forth the high and low closing prices and average shares traded daily for the past two fiscal years.
AVERAGE SHARES PRICE PER SHARE TRADED DAILY ------------------------------------ ------------------ QUARTER ENDED 2000 1999 2000 1999 ------------- ---------------- ---------------- ------- ------- HIGH LOW HIGH LOW October 31........... $19.13 $12.63 $17.25 $13.88 101,175 137,119 January 31........... $17.00 $ 8.44 $18.50 $14.13 287,977 107,991 April 30............. $10.56 $ 6.75 $16.06 $11.50 228,787 127,766 July 31.............. $12.88 $ 8.94 $21.94 $16.06 141,606 143,008
The Company's quarterly cash dividend rate is currently $.01 per share, or $.04 on an annual basis. 6 8 ITEM 6--SELECTED FINANCIAL DATA ELEVEN-YEAR FINANCIAL SUMMARY
YEARS ENDED JULY 31 ---------------------------------------------------------------------------- 2000 1999 1998 1997 1996 1995 1994 ---------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA AND NUMBER OF EMPLOYEES) RESULTS OF OPERATIONS Net sales............ $1,056,168 $720,224 $530,859 $526,266 $413,407 $269,211 $176,443 Gross profit......... 231,086 166,953 128,157 130,005 108,716 65,953 42,154 Selling, administrative and product development expenses........... (109,434) (75,431) (55,388) (56,220) (44,038) (33,254) (27,147) Goodwill amortization....... (6,166) (750) Restructuring charge............. (1,689) (1,897) Income (loss) from operations......... 115,486 90,772 71,080 71,888 64,678 32,699 15,007 Interest expense..... (20,589) (1,772) (254) (362) (293) (376) (380) Other income (expense), net..... 1,146 2,016 (356) (288) 1,281 376 (24) Income (loss) before taxes.............. 96,043 91,016 70,470 71,238 65,666 32,699 14,603 Income tax (provision) benefit............ (35,536) (29,745) (23,960) (25,090) (23,558) (11,941) (5,067) Net income (loss).... 60,507 61,271 46,510 46,148 42,108 20,758 9,536 PER SHARE DATA Earnings per common share.............. $ 1.39 $ 1.40 $ 1.07 $ 1.06 $ .98 $ .49 $ .23 Earnings per common share - assuming dilution........... 1.37 1.36 1.05 1.04 .96 .48 .23 Cash dividends....... .035 .02 .02 .02 .015 .0092 .0083 PERFORMANCE MEASURES Return on sales...... 5.7% 8.5% 8.8% 8.8% 10.2% 7.7% 5.4% Return on average assets............. 8.5% 17.3% 17.9% 21.7% 28.5% 20.2% 12.1% Return on average shareholders' equity............. 20.8% 28.1% 26.2% 33.6% 47.9% 37.1% 23.8% FINANCIAL POSITION Working capital...... $ 165,923 $176,315 $122,672 $ 84,129 $ 71,807 $ 45,404 $ 32,380 Current assets as a percent of current liabilities........ 187% 226% 248% 218% 226% 216% 208% Property, plant and equipment, net..... 105,879 100,534 57,652 56,064 34,094 24,785 19,344 Total assets......... 653,587 625,817 307,339 248,374 182,628 119,708 91,634 Total debt........... 98,302 175,793 3,708 3,952 2,194 2,503 7,578 Shareholders' equity............. 324,051 271,283 207,768 160,927 113,208 68,430 45,706 Total debt as a percent of total capitalization, including securitization..... 23% 39% 2% 2% 2% 4% 14% Book value per share.............. 7.42 6.13 4.71 3.68 2.61 1.60 1.09 OTHER DATA Product development expenditures....... $ 15,751 $ 9,279 $ 9,579 $ 7,280 $ 6,925 $ 5,542 $ 4,373 Capital expenditures, net of retirements........ 22,251 24,838 13,577 29,757 16,668 8,618 7,762 Net (retirements) additions to rental fleet.............. (8,016) 4,645 5,377 4,199 9,873 1,548 1,455 Depreciation and amortization....... 25,970 19,530 15,750 10,389 6,505 3,875 2,801 Employees............ 3,770 3,960 2,664 2,686 2,705 2,222 1,620 YEARS ENDED JULY 31 ----------------------------------------- 1993 1992 1991 1990 -------- -------- -------- -------- (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA AND NUMBER OF EMPLOYEES) RESULTS OF OPERATIONS Net sales............ $123,034 $110,479 $ 94,439 $149,281 Gross profit......... 28,240 22,542 20,113 37,767 Selling, administrative and product development expenses........... (23,323) (22,024) (21,520) (21,834) Goodwill amortization....... Restructuring charge............. (4,922) (2,781) (1,015) Income (loss) from operations......... 4,917 (4,404) (4,188) 14,918 Interest expense..... (458) (1,218) (1,467) (2,344) Other income (expense), net..... 180 (149) (707) 858 Income (loss) before taxes.............. 4,639 (5,771) (6,362) 13,432 Income tax (provision) benefit............ (1,410) 2,733 3,122 (4,950) Net income (loss).... 3,229 (3,038) (3,240) 8,482 PER SHARE DATA Earnings per common share.............. $ .08 $ (.07) $ (.08) $ .20 Earnings per common share - assuming dilution........... .08 (.07) (.08) .20 Cash dividends....... .005 .0208 .0167 PERFORMANCE MEASURES Return on sales...... 2.6% (2.8%) (3.4%) 5.7% Return on average assets............. 4.6% (4.0%) (4.2%) 10.4% Return on average shareholders' equity............. 8.5% (7.9%) (7.7%) 21.8% FINANCIAL POSITION Working capital...... $ 26,689 $ 33,304 $ 36,468 $ 47,289 Current assets as a percent of current liabilities........ 217% 268% 266% 304% Property, plant and equipment, net..... 13,877 13,511 13,726 14,402 Total assets......... 72,518 73,785 74,861 86,741 Total debt........... 4,471 12,553 14,175 18,404 Shareholders' equity............. 38,939 37,186 38,596 44,109 Total debt as a percent of total capitalization, including securitization..... 10% 25% 27% 29% Book value per share.............. .89 .86 .90 1.05 OTHER DATA Product development expenditures....... $ 3,385 $ 3,628 $ 3,430 $ 3,520 Capital expenditures, net of retirements........ 3,570 1,364 1,637 4,615 Net (retirements) additions to rental fleet.............. 273 3,470 534 Depreciation and amortization....... 2,500 2,569 1,953 1,771 Employees............ 1,324 1,014 1,182 1,565
This summary should be read in conjunction with Management's Discussion and Analysis. All share and per share data have been adjusted for the two-for-one stock splits distributed in April and October 1995 and the three-for-one stock split distributed in July 1996. Amounts subsequent to 1998 reflect the acquisition of Gradall Industries, Inc. in June 1999. 7 9 ITEM 7-- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the year ended July 31, 2000, sales were a record $1.056 billion, up 47% from the $720 million reported for 1999. The acquisition of Gradall in June 1999 represented $177 million or 53% of the increase. Machinery sales were $931 million for 2000, an increase of $286 million, or 44%, from the $645 million for 1999. The increase included $158 million resulting from the acquisition of Gradall and gains across substantially all product classes and markets. Equipment Services sales for 2000 were $125 million, up $50 million or 67% compared to prior year. The increase in Equipment Services sales was attributable to sales of used equipment obtained primarily from trade-ins and sales resulting from a reduction in the Company's rental fleet as customers exercised purchase options converting rentals to sales. For the year ended July 31, 1999, sales were $720 million, an increase of 36% from $531 million for 1998. The acquisition of Gradall contributed $28 million to 1999 sales. Machinery sales were $645 million compared to $464 million for the prior year. Equipment Service sales were $75 million and $67 million for 1999 and 1998, respectively. The 36% top line growth for 1999 is principally attributable to steps the Company took to substantially expand its customer base, a continuing strong market for its products, the strong customer acceptance of new products and the contribution of Gradall. The Company's sales by product (in thousands) consisted of the following for the years ended July 31:
2000 1999 1998 ---------- -------- -------- Aerial work platforms....................... $ 790,352 $642,151 $485,171 Material handlers........................... 125,749 7,295 -- Excavators.................................. 60,144 18,367 -- Service parts, rentals, rebuilds and sales of rental fleet and used equipment........ 79,923 52,411 45,688 ---------- -------- -------- $1,056,168 $720,224 $530,859 ---------- -------- --------
International sales for 2000 were $250 million, up 29% from 1999. As a percentage of sales, international sales were 24%, 27% and 32% of total net sales for 2000, 1999 and 1998, respectively. The decrease in the percentage from 1999 to 2000 was due principally to the weighting resulting from the Gradall acquisition. Sales from new and redesigned products, defined as those introduced over a two-year period, represented 35%, 30% and 32% of sales in 2000, 1999 and 1998, respectively. Gross profit, as a percent of sales, decreased to 22% in 2000 from 23% in 1999. Gross profit was adversely affected by continuing pricing pressure, including the significant rise in the value of the U.S. dollar against foreign currencies, particularly the Euro, and the impact of additional price discounts associated with the acceptance of trade-ins to displace competitor products during the year. The gross profit margin was favorably affected by the success of the Company's aggressive cost reduction programs. Gross profit, as a percent of sales, decreased to 23% in 1999 from 24% in 1998. This reduction was affected by competitive and program-related pricing, costs of meeting higher production demand and start-up costs related to new product introductions. These higher costs were partially offset by ongoing cost reduction efforts. Selling, administrative and product development expenses as a percentage of sales were 10% for fiscal 2000 compared to 11% for 1999 and 10% for 1998. The $34 million increase in selling, administrative and product development costs compared to 1999 was principally a result of the acquisition of Gradall in June 1999 which totaled $17 million, increased sales and service activities, higher employee retirement expenses and increased bad debt provisions. For 1999, the increase in dollars is primarily the result of higher personnel and related costs associated with the Company's expanding customer base and the impact of the Gradall acquisition. For 2000, goodwill amortization was $6 million, primarily due to the Gradall acquisition. The increase in interest expense for 2000 was due to an increase in average borrowings to fund the Gradall acquisition and seasonal working capital investments. In 1999, miscellaneous income included higher investment income earned 8 10 on cash balances and lower currency conversion losses. For 1998, miscellaneous expense was primarily comprised of currency conversion losses of $2 million, partially offset by investment income. The effective income tax rates were 37%, 33% and 34% for 2000, 1999 and 1998, respectively. The increase in the 2000 effective tax rate was principally due to goodwill charges not being tax deductible. The rate for 1999 included an $1 million benefit to net income resulting from a change in accounting estimate, primarily attributable to additional tax incentives related to export sales for the 1998 year. FINANCIAL CONDITION Operating activities generated cash of $106 million 2000 compared to $35 million of cash generated 1999. The increase in cash flow from operations for 2000 was primarily due to proceeds received from the sale of a portion of the Company's accounts receivable and an increase in the days purchases outstanding. Partially offsetting these benefits was an increase in inventory due to higher sales activity, an increase in stocking locations in Europe and the Company's decision to maintain sufficient inventory to match its customers' seasonal demand. Working capital increased in 1999 primarily due to increased receivable and inventory levels as well as the effects of the Gradall acquisition. Investing activities used cash of $14 million in 2000 compared to cash used of $233 million in 1999. During 2000, the Company made a strategic decision to downsize its rental fleet resulting in a net reduction of $8 million compared to a $5 million increase in 1999. The cash usage in 1999 was principally due to the expenditure to acquire Gradall. Financing activities used cash of $84 million in fiscal 2000 compared to cash provided of $160 million in 1999. The cash usage in 2000 was primarily the result of debt reduction and a Company share repurchase. At July 31, 2000, the Company had remaining authorization to repurchase an additional 4.2 million shares of its capital stock. The cash provided in 1999 resulted principally from debt used to acquire Gradall. The Company will continue to have cash requirements to support seasonal working capital needs and capital expenditures, to pay interest and to repay debt. At July 31, 2000, the Company had unused credit lines totaling $277 million. In order to meet its future cash requirements, the Company intends to use internally generated funds and to borrow under its credit facilities. The Company believes that these resources will be sufficient to meet its cash requirements over the next 12 months. In addition to measuring its cash flow generation and usage based upon the operating, investing, and financing classifications included in the Consolidated Statements of Cash Flows, the Company also measures its free cash flow. Free cash flow, a measure commonly employed by the financial community, is defined by the Company as cash flow from operating activities less capital expenditures including equipment held for rental, plus proceeds from the disposal of assets and unrealized currency gains or losses. During 2000, the Company had free cash flow of $92 million compared to negative free cash flow of $198 million for the corresponding period in 1999. The 1999 use of cash was primarily due to the acquisition of Gradall. The Company's exposure to product liability claims is discussed in the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements of this report. Future results of operations, financial condition and liquidity may be affected to the extent that the Company's ultimate exposure with respect to product liability varies from current estimates. OUTLOOK This Outlook section and other parts of this Management's Discussion and Analysis contain forward-looking information and involve certain risks and uncertainties that could significantly impact expected results. Certain important factors that, in some cases have affected, and in the future could affect, the Company's results of operations and that could cause such future results of operations to differ are described in "Cautionary Statements Pursuant to the Securities Litigation Reform Act" which is an exhibit to this report. As an industry leader, the Company is positioned to capitalize on the challenging -- but opportunity-rich -- marketplace in fiscal 2001. The global equipment rental business is expected to continue its robust growth, 9 11 leading to additional economies of scale and broadened end-user awareness that should further expand the demand for the Company's products. Management expects to grow sales not only through market share gains, but also through pull-through marketing initiatives designed to increase demand for the Company's products. Demand for the Company's equipment is anticipated to remain strong in fiscal 2001. Domestic demand for excavators should benefit from anticipated increases in Federal highway spending. Similarly, management expects sales of material handlers to grow through greater penetration at the major rental companies, new product introductions and increased demand from end-users for the Company's brand. Additionally, the rapid growth of AWP usage in Europe is anticipated to continue into fiscal 2001, leading to continuing growth in the Company's overseas markets. The Company also expects to introduce a substantial number of new products in fiscal 2001. The Company also expects to continue to reduce costs and to increase cash flow as management continues to enhance Gradall's operations and improve its capacity utilization and manufacturing processes. MARKET RISK The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates, which could affect its future results of operations and financial condition. The Company manages its exposure to these risks principally through its regular operating and financing activities. While the Company is exposed to changes in interest rates as a result of its outstanding debt, the Company does not currently utilize any derivative financial instruments related to its interest rate exposure. Total short-term and long-term debt outstanding at July 31, 2000 was $98 million, consisting of $93 million in variable-rate borrowing and $5 million in fixed-rate borrowing. At this level of variable-rate borrowing, a hypothetical 10% increase in interest rates would decrease pre-tax current year earnings by approximately $700,000 at July 31, 2000. A hypothetical 10% change in interest rates would not result in a material change in the fair value of the Company's fixed-rate debt. The Company manufactures its products in the United States and sells these products in that market as well as international markets, principally Europe and Australia. As a result of the sales of its products in foreign markets, the Company's earnings are affected by fluctuations in the value of the U.S. dollar, as compared to foreign currencies resulting from transactions in foreign markets. At July 31, 2000, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which the Company's transactions are denominated would have the result of reducing gross profits for the year ended July 31, 2000 by approximately $18 million. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, such changes also affect the volume of sales or the foreign currency sales price as competitors' products become more or less attractive. The Company's sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices. 10 12 ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA JLG INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
JULY 31 ------------------- 2000 1999 ---- ---- ASSETS CURRENT ASSETS Cash...................................................... $ 25,456 $ 19,033 Accounts receivable, less allowance for doubtful accounts of $5,203 in 2000 and $2,985 in 1999................... 172,511 162,820 Inventories............................................... 147,991 125,571 Other current assets...................................... 10,594 8,563 -------- -------- Total Current Assets................................. 356,552 315,987 PROPERTY, PLANT AND EQUIPMENT Land and improvements..................................... 8,787 7,417 Buildings and improvements................................ 53,420 40,152 Machinery and equipment................................... 108,073 102,185 -------- -------- 170,280 149,754 Less allowance for depreciation........................... 64,401 49,220 -------- -------- 105,879 100,534 EQUIPMENT HELD FOR RENTAL, net of accumulated depreciation of $3,608 in 2000 and $7,692 in 1999...................... 12,153 23,068 GOODWILL, net of accumulated amortization of $6,916 in 2000 and $750 in 1999.......................................... 145,867 155,655 OTHER ASSETS................................................ 33,136 30,573 -------- -------- $653,587 $625,817 ======== ======== LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Short-term debt........................................... $ 9,184 $ 3,281 Accounts payable.......................................... 116,616 78,793 Accrued payroll and related taxes......................... 16,633 18,255 Income taxes.............................................. 6,873 8,097 Other current liabilities................................. 41,323 31,246 -------- -------- Total Current Liabilities............................ 190,629 139,672 LONG-TERM DEBT.............................................. 89,118 172,512 ACCRUED POSTRETIREMENT BENEFITS............................. 22,943 21,471 OTHER LONG-TERM LIABILITIES................................. 12,623 9,463 PROVISIONS FOR CONTINGENCIES................................ 14,223 11,416 SHAREHOLDERS' EQUITY Capital stock: Authorized shares: 100,000 at $.20 par value Issued and outstanding shares: 2000 -- 43,648 shares; 1999 -- 44,250 shares.................................. 8,729 8,850 Additional paid-in capital................................ 12,514 17,246 Retained earnings......................................... 308,966 250,006 Unearned compensation..................................... (1,474) (1,324) Accumulated other comprehensive income.................... (4,684) (3,495) -------- -------- Total Shareholders' Equity........................... 324,051 271,283 -------- -------- $653,587 $625,817 ======== ========
The accompanying notes are an integral part of these financial statements. 11 13 JLG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED JULY 31 -------------------------------- 2000 1999 1998 ---- ---- ---- NET SALES................................................... $1,056,168 $720,224 $530,859 Cost of sales............................................. 825,082 553,271 402,702 ---------- -------- -------- GROSS PROFIT................................................ 231,086 166,953 128,157 Selling, administrative and product development expenses............................................... 109,434 75,431 55,388 Goodwill amortization..................................... 6,166 750 -- Restructuring charges..................................... -- -- 1,689 ---------- -------- -------- INCOME FROM OPERATIONS...................................... 115,486 90,772 71,080 Other income (deductions): Interest expense....................................... (20,589) (1,772) (254) Miscellaneous, net..................................... 1,146 2,016 (356) ---------- -------- -------- INCOME BEFORE TAXES......................................... 96,043 91,016 70,470 Income tax provision...................................... 35,536 29,745 23,960 ---------- -------- -------- NET INCOME.................................................. $ 60,507 $ 61,271 $ 46,510 ========== ======== ======== EARNINGS PER COMMON SHARE................................... $ 1.39 $ 1.40 $ 1.07 ========== ======== ======== EARNINGS PER COMMON SHARE -- ASSUMING DILUTION.............. $ 1.37 $ 1.36 $ 1.05 ========== ======== ========
The accompanying notes are an integral part of these financial statements. 12 14 JLG INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (IN THOUSANDS EXCEPT PER SHARE DATA)
ACCUMULATED CAPITAL STOCK ADDITIONAL OTHER TOTAL ------------------ PAID-IN RETAINED UNEARNED COMPREHENSIVE SHAREHOLDERS' SHARES PAR VALUE CAPITAL EARNINGS COMPENSATION INCOME EQUITY ------ --------- ---------- -------- ------------ ------------- ------------- Balances at July 31, 1997..................... 43,726 $8,745 $11,391 $143,989 ($1,018) ($2,180) $160,927 ------ ------ ------- -------- ------- ------- -------- Comprehensive income: Net income for the year................... 46,510 Aggregate translation adjustment, net of deferred tax benefit of $200.............. (1,482) Total comprehensive income................... 45,028 Dividends paid: $.02 per share.................... (881) (881) Shares issued under employee and director stock plans.............. 370 74 4,235 (3,219) 1,090 Amortization of unearned compensation............. 1,604 1,604 ------ ------ ------- -------- ------- ------- -------- Balances at July 31, 1998..................... 44,096 8,819 15,626 189,618 (2,633) (3,662) 207,768 ------ ------ ------- -------- ------- ------- -------- Comprehensive income: Net income for the year................... 61,271 Aggregate translation adjustment, net of deferred tax benefit of $334.............. 167 Total comprehensive income................... 61,438 Dividends paid: $.02 per share.................... (883) (883) Shares issued under employee and director stock plans.............. 154 31 1,620 (259) 1,392 Amortization of unearned compensation............. 1,568 1,568 ------ ------ ------- -------- ------- ------- -------- Balances at July 31, 1999..................... 44,250 8,850 17,246 250,006 (1,324) (3,495) 271,283 ------ ------ ------- -------- ------- ------- -------- Comprehensive income: Net income for the year................... 60,507 Aggregate translation adjustment, net of deferred tax benefit of $334.............. (808) Minimum pension liability, net of deferred tax benefit of $262.............. (381) Total comprehensive income................... 59,318 Dividends paid: $.035 per share.................... (1,547) (1,547) Purchase and retirement of common stock............. (795) (159) (6,630) (6,789) Shares issued under employee stock plans..... 193 38 1,898 (1,616) 320 Amortization of unearned compensation............. 1,466 1,466 ------ ------ ------- -------- ------- ------- -------- Balances at July 31, 2000..................... 43,648 $8,729 $12,514 $308,966 ($1,474) ($4,684) $324,051 ====== ====== ======= ======== ======= ======= ========
The accompanying notes are an integral part of these statements. 13 15 JLG INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED JULY 31 -------------------------------- 2000 1999 1998 --------- --------- -------- OPERATIONS Net income................................................ $ 60,507 $ 61,271 $ 46,510 Adjustments to reconcile net income to cash flow from operating activities: Non-cash charges and credits: Depreciation and amortization..................... 25,970 19,530 15,750 Provision for self-insured losses................. 5,669 5,100 4,844 Deferred income taxes............................. (5,414) (2,880) 1,924 Other............................................. 2,337 540 228 Changes in selected working capital items: Accounts receivable............................... (11,954) (42,974) (24,674) Inventories....................................... (22,447) (25,284) 6,159 Other current assets.............................. 4,455 (1,158) (672) Accounts payable.................................. 37,825 17,521 92 Accrued expenses and other current liabilities.... 7,264 4,946 9,148 Changes in other assets and liabilities.............. 1,471 (1,862) (8,564) --------- --------- -------- Cash flow from operating activities....................... 105,683 34,750 50,745 INVESTMENTS Net purchases of property, plant and equipment............ (22,251) (24,838) (13,577) Net retirements (additions) to equipment held for rental................................................. 8,016 (4,645) (5,377) Purchase of Gradall Industries, Inc. net of cash received of $5,065.............................................. -- (203,192) -- --------- --------- -------- Cash flow from investing activities....................... (14,235) (232,675) (18,954) FINANCING Net increase in short-term borrowings..................... 5,865 2,656 -- Issuance of long-term debt................................ 355,087 206,500 -- Repayment of long-term debt............................... (438,443) (50,378) (244) Payment of dividends...................................... (1,547) (883) (881) Purchase of common stock.................................. (6,789) Exercise of stock options and issuance of restricted awards................................................. 1,544 2,164 2,173 --------- --------- -------- Cash flow from financing activities....................... (84,283) 160,059 1,048 CURRENCY ADJUSTMENTS Effect of exchange rate changes on cash................... (742) 106 (1,482) CASH Net change in cash and cash equivalents................... 6,423 (37,760) 31,357 Beginning balance......................................... 19,033 56,793 25,436 --------- --------- -------- Ending balance............................................ $ 25,456 $ 19,033 $ 56,793 ========= ========= ========
The accompanying notes are an integral part of these statements. 14 16 JLG INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS EXCEPT PER SHARE DATA AND UNLESS OTHERWISE INDICATED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND STATEMENT PRESENTATION: The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. RECLASSIFICATIONS: Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the presentation used for 2000. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes. Actual results may differ from those estimates. REVENUE RECOGNITION: Sales of machinery and service parts are generally unconditional sales that are recorded when product is shipped and invoiced to independently owned and operated distributors and customers. Provisions for warranty are estimated and accrued at the time of sale. Actual warranty costs do not materially differ from estimates. In addition, net sales include rental revenues earned on the lease of equipment held for rental. Rental revenues are recognized in the period earned over the lease term. CASH AND CASH EQUIVALENTS: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents and classifies such amounts as cash. INVENTORIES: Inventories are stated at the lower of cost or market. Cost is determined using the LIFO (last-in, first-out) method. Inventories consist of the following at July 31:
2000 1999 -------- -------- Finished goods.......................................... $ 97,858 $ 68,994 Raw materials and work in process....................... 52,775 61,105 -------- -------- 150,633 130,099 Less LIFO provision..................................... 2,642 4,528 -------- -------- $147,991 $125,571 ======== ========
PROPERTY, PLANT AND EQUIPMENT AND EQUIPMENT HELD FOR RENTAL: Property, plant and equipment and equipment held for rental are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method, based on useful lives of 15 years for land improvements, 10 to 20 years for buildings and improvements, three to 10 years for machinery and equipment, and three to seven years for equipment held for rental. Depreciation expense was $19,804, $18,780 and $15,750 for the fiscal years 2000, 1999 and 1998, respectively. 15 17 GOODWILL: Goodwill represents the difference between the total purchase price and the fair value of identifiable assets and liabilities acquired in business acquisitions. Goodwill is amortized on a straight-line basis over periods ranging from 10 to 25 years. Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates whether an impairment exists on the basis of undiscounted expected future cash flows from operations for the remaining amortization period. If an impairment exists, the asset is reduced by the estimated shortfall of discounted cash flows. INCOME TAXES: Deferred income tax assets and liabilities arise from differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. Deferred tax balances are determined by using the tax rate expected to be in effect when the taxes are paid or refunds received. PRODUCT DEVELOPMENT: The Company incurred product development and other engineering expenses of $15,751, $9,279 and $9,579 in 2000, 1999 and 1998, respectively, which were charged to expense as incurred. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade receivables. The Company had 14% of accounts receivable, including securitization, due from one customer at July 31, 2000. This concentration of credit risk is mitigated by a geographically diverse customer base and the Company's credit and collection process. The Company performs credit evaluations for all customers and secures transactions with letters of credit where it believes the risk warrants it. Write-offs for uncollected trade receivables have not been significant. ADVERTISING AND PROMOTION: All costs associated with advertising and promoting products are expensed in the year incurred. Advertising and promotion expense was $7,064, $5,742 and $2,928 in 2000, 1999, and 1998, respectively. FOREIGN CURRENCY TRANSLATION: The financial statements of the Company's Australian operation are measured in its local currency and then translated into U.S. dollars. All balance sheet accounts have been translated using the current rate of exchange at the balance sheet date. Results of operations have been translated using the average rates prevailing throughout the year. Translation gains or losses resulting from the changes in the exchange rates from year-to-year are accumulated in a separate component of shareholders' equity. The financial statements of the Company's European operation are prepared using the U.S. dollar as its functional currency. The transactions of this operation that are denominated in foreign currencies have been remeasured in U.S. dollars, and any resulting gain or loss is reported in income. The aggregate of foreign currency transaction losses included in the results of operations were $1,879, $398 and $1,611 in 2000, 1999 and 1998, respectively. RECENT ACCOUNTING PRONOUNCEMENTS: In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," which requires that an entity record all derivatives in the statement of financial position at their fair value. It also requires changes in the fair value of derivatives to be recorded each period in current earnings or other comprehensive income, depending on whether a derivative is 16 18 designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company is required to adopt this new accounting standard beginning August 1, 2000. The Company does not expect adoption of this statement to have a significant impact on its results of operations or financial position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. All registrants are expected to apply the accounting and disclosures described in SAB 101. The Company does not believe that its revenue recognition policy will be significantly affected by the adoption of SAB 101; however, additional implementation guidance is to be issued by the Securities and Exchange Commission. The Company will complete its evaluation of the adoption of SAB 101 once this information is released. The Company is required to adopt SAB 101 in the fourth quarter of fiscal 2001. BANK CREDIT LINES AND LONG-TERM DEBT The Company has a $20 million unsecured bank revolving line of credit with a term of one year, renewable annually, and at an interest rate of prime or a spread over LIBOR. The Company also has $2.5 million in loan facilities with a term of one year, renewable annually, and at a fixed weighted average interest rate of 5.7%. Outstanding amounts under these lines of credit were $8.5 million and $2.7 million at July 31, 2000 and 1999, respectively. The Company has two separate credit agreements with a group of financial institutions that provide for a unsecured revolving credit facility with an aggregate commitment of $350 million and with a remaining term of four years. Borrowings under the agreements bear interest equal to either LIBOR plus a margin ranging from 0.55% to 1.125%, depending on the Company's ratio of funded debt to EBITDA; or the greater of prime or federal funds rate plus 0.50%. The Company is required to pay an annual administrative fee of $35 and a facility fee ranging from 0.20% to 0.275%, depending on the Company's ratio of funded debt to EBITDA. The credit agreements contain customary affirmative and negative covenants including financial covenants requiring the maintenance of specified consolidated interest coverage, leverage ratios and a minimum net worth. Long-term debt was as follows at July 31:
2000 1999 ------- -------- Revolving credit facilities due 2004 with an average interest rate of 7.6% at July 31, 2000................. $87,000 $169,912 Other.................................................... 2,781 3,225 ------- -------- 89,781 173,137 Less current portion..................................... 663 625 ------- -------- $89,118 $172,512 ======= ========
Interest paid on all borrowings was $20,015, $811 and $251 in 2000, 1999 and 1998, respectively. The aggregate amounts of long-term debt outstanding at July 31, 2000 which will become due in 2001 through 2005 are: $663, $378, $324, $87,262 and $133, respectively. The fair value of the Company's long-term debt is estimated to approximate the carrying amount reported in the consolidated balance sheet based on current interest rates for similar types of borrowings. ACCOUNTS RECEIVABLE SECURITIZATION In July 2000, the Company entered into a three-year receivables purchase agreement with an independent issuer of receivables-backed commercial paper. Under the terms of the agreement, the Company agreed to sell to a special purpose, wholly-owned subsidiary of the Company, on an ongoing basis and without recourse, a designated pool of accounts receivable. This entity sells an undivided percentage ownership interest in all the receivables to a third-party. To maintain the balance in the pool of accounts receivable sold, the Company is 17 19 obligated to sell new receivables as existing receivables are collected. The agreement permits the sale of the undivided interest in accounts receivable through July 2003 of up to $65 million. At July 31, 2000, the undivided interest in the Company's pool of accounts receivable that had been sold to the purchasers aggregated $57 million, which was used to retire debt outstanding under the Company's revolving credit facilities. Sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated balance sheets and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. The ongoing costs of this program were charged to interest expense in the consolidated statements of income. The Company continues to service the receivables. EMPLOYEE RETIREMENT PLANS Substantially all employees of the Company participate in defined contribution or non-contributory defined benefit plans. Approximately 12% of the Company's employees are covered by union-sponsored, collectively bargained multi-employer pension plans and an union employment contract which expires April 2003. The expense related to funding the multi-employer plan was $475 and $48 in 2000 and 1999, respectively. The Company has discretionary, defined contribution retirement plans covering its eligible U.S. employees. The Company's policy is to fund the cost as accrued. Plan assets are invested in mutual funds and the Company's capital stock. The aggregate expense relating to these plans was $7,187, $6,565 and $5,332 in 2000, 1999 and 1998, respectively. The Company also has non-qualified defined benefit plans that provide senior management with supplemental retirement, medical, disability and death benefits. 18 20 The following table sets forth the defined benefit pension and postretirement plans' funded status and amounts recognized in the Company's consolidated financial statements:
PENSION BENEFITS POSTRETIREMENT BENEFITS -------------------- ------------------------ 2000 1999 2000 1999 --------- ------- ---------- ---------- Change in benefit obligation: Benefit obligation at beginning of year........... $ 18,474 $ 3,217 $ 21,471 $ 412 Acquisition................... -- 13,806 -- 20,798 Service cost.................. 1,773 300 750 113 Interest cost................. 1,504 348 1,542 227 Change in assumptions......... -- 867 (3,065) -- Change in participation....... 3,829 -- (59) 60 Actuarial (gain)/loss......... (728) -- 3,915 -- Benefits paid................. (2,322) (64) (1,098) (139) --------- ------- --------- --------- Benefit obligation at end of year........................ $ 22,530 $18,474 $ 23,456 $ 21,471 --------- ------- --------- --------- Change in plan assets: Fair value of plan assets at beginning of year........... $ 11,737 -- -- -- Acquisition................... -- 12,477 -- -- Actual return on plan assets...................... 176 (12) -- -- Contributions................. 1,553 64 1,098 139 Benefits paid................. (2,322) (792) (1,098) (139) --------- ------- --------- --------- Fair value of plan assets at end of year................. $ 11,144 $11,737 -- -- --------- ------- --------- --------- Funded status................. $ (11,386) $(5,964) $ (23,456) $ (21,471) Unrecognized net actuarial (gain)/loss................. 1,062 (2,014) 3,924 -- Unrecognized transition obligation.................. 123 155 176 -- Unrecognized prior service cost........................ 1,536 1,791 (3,030) -- --------- ------- --------- --------- Accrued benefit cost.......... $ (8,665) $(6,032) $ (22,386) $ (21,471) --------- ------- --------- --------- Amounts recognized in the consolidated balance sheet: Accrued benefit cost.......... $ (10,575) $(6,032) $ (22,571) $ (21,471) Intangible asset.............. 1,266 -- 176 -- Accumulated other comprehensive income........ 644 -- 9 -- --------- ------- --------- --------- Net amount recognized......... $ (8,665) $(6,032) $ (22,386) $ (21,471) --------- ------- --------- ---------
Components of pension and postretirement expense were as follows for the years ended July 31:
PENSION BENEFITS POSTRETIREMENT BENEFITS ---------------------- ------------------------ 2000 1999 1998 2000 1999 1998 ------ ---- ---- ------- ----- ----- Service cost................. $1,773 $300 $220 $ 750 $113 $22 Interest cost................ 1,504 348 199 1,542 227 25 Expected return.............. (962) (128) -- -- -- -- Amortization of prior service cost....................... -- 255 255 -- -- -- Amortization of transition obligation................. -- 32 32 (9) 28 26 Amortization of net (gain)/loss................ 288 (265) (295) -- -- -- ------ ---- ---- ------ ---- --- $2,603 $542 $411 $2,283 $368 $73 ====== ==== ==== ====== ==== ===
19 21 Weighted average actuarial assumptions as of July 31 were as follows:
PENSION BENEFITS POSTRETIREMENT BENEFITS -------------------- ----------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ----- ----- ----- Discount rate.................... 7.75% 7.5% 7% 7.75% 7.5% 7% Expected return on plan assets... 8.5% 8.5% 8% -- -- -- Rate of compensation increase.... 4.5% 4.5% 6% -- -- --
For measurement purposes, a 7.75% annual rate increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to decrease gradually to 5% by 2011 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the postretirement benefit reported as follows:
ONE PERCENTAGE POINT -------------------- INCREASE DECREASE -------- -------- Postretirement benefit obligation........................ $2,356 $1,534 Service and interest cost components..................... 575 116
SEGMENT INFORMATION The Company has organized its business into two segments consisting of manufactured products and services. The Machinery segment contains the design, manufacture and sale of new equipment, and the Equipment Services segment contains after-sales service and support, including parts sales, equipment rentals, used equipment sales and rebuilding used equipment. The Company evaluates performance and allocates resources based on operating profit before interest, miscellaneous income/expense and income taxes. Intersegment sales and transfers are not significant. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Business segment information consisted of the following for the years ended July 31:
2000 1999 1998 ---------- -------- -------- External sales: Machinery.............................. $ 931,048 $645,479 $463,638 Equipment Services..................... 125,120 74,745 67,221 ---------- -------- -------- $1,056,168 $720,224 $530,859 ---------- -------- -------- Segment profit (loss): Machinery.............................. $ 124,994 $101,417 $ 71,946 Equipment Services..................... 37,761 23,544 23,338 General corporate expenses............. (47,269) (34,189) (24,204) ---------- -------- -------- $ 115,486 $ 90,772 $ 71,080 ---------- -------- -------- Depreciation and amortization: Machinery.............................. $ 21,289 $ 10,820 $ 8,853 Equipment Services..................... 3,174 6,587 5,265 General corporate...................... 1,507 2,123 1,632 ---------- -------- -------- $ 25,970 $ 19,530 $ 15,750 ---------- -------- -------- Net expenditures for long-lived assets: Machinery.............................. $ 24,902 $ 22,223 $ 12,181 Equipment Services..................... (8,414) 4,611 5,549 General corporate...................... (2,253) 2,649 1,224 ---------- -------- -------- $ 14,235 $ 29,483 $ 18,954 ---------- -------- --------
20 22
2000 1999 1998 ---------- -------- -------- Assets: Machinery.............................. $ 579,710 $541,386 $187,178 Equipment Services..................... 33,798 41,340 43,337 General corporate...................... 40,079 43,091 76,824 ---------- -------- -------- $ 653,587 $625,817 $307,339 ---------- -------- --------
Sales to one customer amounted to 20% of Machinery sales in 2000. Sales to another customer accounted for 13% of Machinery sales and 15% of Equipment Services sales in 2000. Sales to a different customer amounted to 12% of Machinery sales in 1998. Sales to another customer accounted for 17% of Equipment Service sales in 2000. The Company's sales by product group consisted of the following for the years ended July 31:
2000 1999 1998 ---------- -------- -------- Aerial work platforms....................... $ 790,352 $642,151 $485,171 Material handlers........................... 125,749 7,295 -- Excavators.................................. 60,144 18,367 -- Service parts, rentals, rebuilds and sales of rental fleet and used equipment........ 79,923 52,411 45,688 ---------- -------- -------- $1,056,168 $720,224 $530,859 ========== ======== ========
The Company manufactures its products in the United States and sells these products globally, but principally in North America, Europe, Australia and South America. No single foreign country is significant to the consolidated operations. Sales by geographic area were as follows for the years ended July 31:
2000 1999 1998 ---------- -------- -------- United States............................... $ 805,955 $526,614 $362,144 Europe...................................... 178,230 137,808 93,554 Other....................................... 71,983 55,802 75,161 ---------- -------- -------- $1,056,168 $720,224 $530,859 ========== ======== ========
INCOME TAXES The income tax provision consisted of the following for the years ended July 31:
2000 1999 1998 ------- ------- ------- United States: Current........................................ $40,231 $32,625 $25,884 Deferred....................................... (5,414) (2,880) (1,924) ------- ------- ------- 34,817 29,745 23,960 ------- ------- ------- Other countries: Current........................................ 719 -- -- ------- ------- ------- $35,536 $29,745 $23,960 ------- ------- -------
21 23 The Company made income tax payments of $33,971, $29,505 and $16,790 in 2000, 1999, and 1998, respectively. The difference between the U.S. federal statutory income tax rate and the Company's effective tax rate is as follows for the years ended July 31:
2000 1999 1998 ---- ---- ---- Statutory U.S. federal income tax rate..................... 35% 35% 35% Effect of export profits taxed at lower rates.............. (2) (3) (2) Non-deductibility of goodwill.............................. 2 -- -- Other...................................................... 2 1 1 -- -- -- Effective tax rate......................................... 37% 33% 34% == == ==
Components of deferred tax assets and liabilities were as follows at July 31:
2000 1999 ------- ------- Future income tax benefits: Employee benefits....................................... $16,178 $15,485 Contingent liabilities provisions....................... 9,263 8,679 Other................................................... 3,910 2,903 ------- ------- 29,351 27,067 ------- ------- Deferred tax liabilities for depreciation and asset basis differences................................. 7,589 10,719 ------- ------- Net deferred tax assets................................... $21,762 $16,348 ======= =======
The current and long-term deferred tax asset amounts are included in other current assets and other asset balances on the consolidated balance sheets. STOCK BASED INCENTIVE PLANS The Company's stock incentive plan has reserved 4,641 shares of capital stock that may be awarded to key employees in the form of options to purchase capital stock or restricted shares. The option price and vesting terms of options and restricted shares are set by the Company's Board of Directors. For all options currently outstanding, the option price is the fair market value of the shares on their date of grant. The Company's stock option plan for directors provides for an annual grant to each outside director of a single option to purchase six thousand shares of capital stock, providing the Company earned a net profit, before extraordinary items, for the prior fiscal year. The option exercise price shall be equal to the shares' fair market value on their date of grant. An aggregate of 1,849 shares of capital stock is reserved to be issued under the plan. 22 24 Outstanding options and transactions involving the plans are summarized as follows:
2000 1999 1998 -------------------------- -------------------------- -------------------------- WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE EXERCISE EXERCISE EXERCISE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE ------- ---------------- ------- ---------------- ------- ---------------- Outstanding options at the beginning of the year... 2,164 $10.81 1,795 $ 7.51 1,466 $ 4.88 Options granted........... 1,092 11.11 522 20.78 479 14.59 Options canceled.......... (50) 15.29 (10) 17.46 (40) 8.66 Options exercised......... (101) 2.35 (143) 5.21 (110) 3.00 ----- ------ ----- ------ ----- ------ Outstanding options at the end of the year......... 3,105 $11.12 2,164 $10.81 1,795 $ 7.51 ===== ====== ===== ====== ===== ====== Exercisable options at the end of the year......... 1,561 $ 8.73 1,366 $ 6.18 1,281 $ 4.63 ===== ====== ===== ====== ===== ======
Information with respect to stock options outstanding at July 31, 2000 is as follows:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ----------------------------------------------- ----------------------------- WEIGHTED WEIGHTED WEIGHTED RANGE OF NUMBER AVERAGE AVERAGE NUMBER AVERAGE EXERCISE PRICES OUTSTANDING REMAINING LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE --------------- ----------- -------------- -------------- ----------- -------------- $1.12 to $1.59 360 3 $1.15 360 $1.15 2.93 to 3.30 288 4 3.01 288 3.01 5.64 to 10.53 1,145 9 9.66 269 6.83 11.41 to 14.75 579 8 13.15 300 13.18 17.31 to 17.69 270 8 17.62 204 17.60 18.09 to 21.94 463 9 21.18 140 21.09
The Company has elected to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock options. Under this opinion, the Company does not recognize compensation expense arising from such grants because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant. Pro forma information regarding net income and earnings per share has been determined as if the Company had accounted for its employee stock options under the fair value method. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:
2000 1999 1998 ----- ----- ----- Volatility factor...................................... .524 .475 .478 Expected life in years................................. 3.9 2.8 3.0 Dividend yield......................................... .40% .10% .15% Interest rate.......................................... 6.12% 5.38% 5.73% Weighted-average fair market value at date of grant.... $5.06 $3.96 $5.12
For purposes of pro forma disclosures, the estimated fair value of the options is amortized over the options' vesting period. The Company's pro forma information follows for the years ended July 31:
2000 1999 1998 ------- ------- ------- Net income....................................... $58,398 $60,142 $46,021 Earnings per common share........................ 1.33 1.37 1.05 Earnings per common share -- assuming dilution... 1.33 1.34 1.03
23 25 BASIC AND DILUTED EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the years ended July 31:
2000 1999 1998 ------- ------- ------- Net income....................................... $60,507 $61,271 $46,510 ======= ======= ======= Denominator for basic earnings per share -- weighted average shares............... 43,687 43,846 43,666 Effect of dilutive securities -- employee stock options and unvested restricted shares......... 382 1,116 765 ------- ------- ------- Denominator for diluted earning per share -- weighted average shares adjusted for dilutive securities..................................... 44,069 44,962 44,431 ======= ======= ======= Earnings per common share........................ $ 1.39 $ 1.40 $ 1.07 ======= ======= ======= Earnings per common share -- assuming dilution... $ 1.37 $ 1.36 $ 1.05 ======= ======= =======
During fiscal 2000, options to purchase 1.3 million shares of capital stock at a range of $11.41 to $21.94 were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the capital shares. SHAREHOLDER RIGHTS PLAN Effective May 24, 2000, the Board of Directors of the Company declared a distribution of one Right for each outstanding share of capital stock to shareholders of record at the close of business on June 15, 2000. Each Right entitles the registered holder to purchase from the Company one-tenth of a share of Company capital stock at a purchase price of $40 per whole share of Company capital stock. The Rights will expire on May 24, 2010 unless redeemed earlier by the Company or exchanged for capital stock. Separate certificates for Rights will not be distributed, nor will the Rights be exercisable unless a person or group (an "Acquiring Person") acquires 15% or more, or announces an offer that could result in acquiring 15% or more of the Company's capital shares unless such acquisition or offer is pursuant to a Permitted Offer approved by a majority of directors who are not officers of the Company or affiliates of the Acquiring Person. Following an acquisition of 15% or more of the Company's capital shares (a "Stock Acquisition"), each Rightholder, except the 15% or more stockholder, has the right to receive, upon exercise, capital shares valued at twice the then applicable exercise price of the Right (or, under certain circumstances, cash, property or other Company securities.) Similarly, unless certain conditions are met, if the Company engages in a merger or other business combination following a Stock Acquisition where it does not survive or survives a change or exchange of its capital shares or if 50% or more of its assets, earning power or cash flow is sold or transferred, the Rights become exercisable for shares of the acquirer's stock having a value of twice the exercise price (or, under certain circumstances, cash or property.) The Rights are not exercisable, however, until the Company's right of redemption described below has expired. At any time until 10 business days following public announcement that a 15% or greater position has been acquired in the Company's stock, a majority of the Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.001 per Right, payable, at the election of such majority of the Board of Directors in cash or shares of Company capital stock. Immediately upon the action of a majority of the Board of Directors ordering the redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price. 24 26 REPURCHASE OF CAPITAL STOCK During the year ended July 31, 2000, the Company repurchased 795 shares of its capital stock at an aggregate cost of $6.8 million. At July 31, 2000, the Company had remaining authorization to repurchase an additional 4.2 million shares of its capital stock. COMMITMENTS AND CONTINGENCIES The Company is a party to personal injury and property damage litigation arising out of incidents involving the use of its products. The Company's insurance program for 2000 was comprised of a self-insured retention of $7 million for domestic claims, insurance coverage of $2 million for international claims and catastrophic coverage for domestic and international claims of $75 million in excess of the retention and primary coverage. The Company contracts with an independent firm to provide claims handling and adjustment services. The Company's estimates with respect to claims are based on internal evaluations of the merits of individual claims and the reserves assigned by the Company's independent firm. The methods of making such estimates and establishing the resulting accrued liability are reviewed frequently, and any adjustments resulting therefrom are reflected in current earnings. Claims are paid over varying periods, which generally do not exceed five years. Accrued liabilities for future claims are not discounted. With respect to all product liability claims of which the Company is aware, accrued liabilities of $16.1 million and $14.1 million were established at July 31, 2000 and 1999, respectively. While the Company's ultimate liability may exceed or be less than the amounts accrued, the Company believes that it is unlikely that it would experience losses that are materially in excess of such reserve amounts. As of July 31, 2000 and 1999, there were no insurance recoverables or offset implications and there were no claims by the Company being contested by insurers. RESTRUCTURING COSTS During the calendar year 1997, the Company downsized and rationalized its operations. This resulted in restructuring charges for severance and termination benefits, costs associated with closing a smaller, less productive manufacturing facility and other asset impairments were $1,689 in 1998. UNAUDITED QUARTERLY FINANCIAL INFORMATION Unaudited financial information was as follows for the fiscal quarters within the years ended July 31:
EARNINGS PER EARNINGS PER COMMON SHARE - NET COMMON ASSUMING NET SALES GROSS PROFIT INCOME SHARE DILUTION ---------- ------------ ------- ------------ -------------- 2000 October 31................. $ 217,995 $ 52,573 $13,248 $ .30 $ .29 January 31................. 206,868 38,595 3,085 .07 .07 April 30................... 291,564 63,960 18,128 .41 .40 July 31.................... 339,741 75,958 26,046 .61 .61 ---------- -------- ------- ----- ----- $1,056,168 $231,086 $60,507 $1.39 $1.37 ========== ======== ======= ===== ===== 1999 October 31................. $ 128,655 $ 29,725 $10,253 $ .23 $ .23 January 31................. 138,235 31,508 11,327 .26 .25 April 30................... 196,747 44,111 17,299 .40 .39 July 31.................... 256,587 61,609 22,392 .51 .49 ---------- -------- ------- ----- ----- $ 720,224 $166,953 $61,271 $1.40 $1.36 ========== ======== ======= ===== =====
25 27 REPORT OF MANAGEMENT The consolidated financial statements of JLG Industries, Inc. in this report were prepared by its management, which is responsible for their content. In management's opinion, the financial statements reflect amounts based upon its best estimates and informed judgments and present fairly the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles. The Company maintains a system of internal accounting controls and procedures which are intended, consistent with justifiable cost, to provide reasonable assurance that transactions are executed as authorized, that they are properly recorded to produce reliable financial records, and that accountability for assets is maintained. The accounting controls and procedures are supported by careful selection and training of personnel, examination by an internal auditor and continuing management commitment to the integrity of the internal control system. The financial statements have been audited by Ernst & Young LLP, independent auditors. The independent auditors have evaluated the Company's internal controls and performed tests of procedures and accounting records in connection with the issuance of their reports on the fairness of the financial statements. The Board of Directors has appointed an Audit Committee composed entirely of directors who are not employees of the Company. The Audit Committee meets with representatives of management, the internal auditor and independent auditors both separately and jointly. Its functions include recommending the selection of independent auditors; conferring with the independent auditors and reviewing the scope and fees of the annual audit and the results thereof; reviewing the Company's annual report to shareholders and annual filings with the Securities and Exchange Commission; reviewing the adequacy of the Company's internal audit function, as well as the accounting and financial controls and procedures; and approving the nature and scope of nonaudit services performed by the independent auditors. William M. Lasky James H. Woodward, Jr. President and Senior Vice President and Chief Executive Officer Chief Financial Officer
October 5, 2000 26 28 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To The Board of Directors and Shareholders JLG Industries, Inc. McConnellsburg, Pennsylvania We have audited the accompanying consolidated balance sheets of JLG Industries, Inc. as of July 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended July 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of JLG Industries, Inc. at July 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 2000, in conformity with accounting principles generally accepted in the United States. Baltimore, Maryland September 6, 2000 27 29 ITEM 9-- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item 10 relating to identification of directors is set forth under the caption "Election of Directors" in the Company's Proxy Statement and is incorporated herein by reference. Identification of officers is presented in Item 1 of this report under the caption "Executive Officers of the Registrant." ITEM 11--EXECUTIVE COMPENSATION The information required by this Item 11 relating to executive compensation is set forth under the captions "Board of Directors" and "Executive Compensation" in the Company's Proxy Statement and is incorporated herein by reference. ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item 12 relating to security ownership of certain beneficial owners and management is set forth under the caption "Voting Securities and Principal Holders" in the Company's Proxy Statement and is incorporated herein by reference. ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item 13 is set forth under the caption "Certain Relationships and Related Transactions" in the Company's Proxy Statement and is incorporated herein by reference. 28 30 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The consolidated financial statements of the registrant and its subsidiaries are set forth in Item 8 of Part II of this report. (2) Financial Statement Schedules The schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. (3) Exhibits
EXHIBIT NUMBER EXHIBIT - ------- ------- 3.1 Articles of Incorporation of JLG Industries, Inc., which appears as Exhibit 3 to the Company's Form 10-Q (File No. 0-8454 -- filed December 13, 1996), is hereby incorporated by reference. 3.2 By-laws of JLG Industries, Inc. which appears as Exhibit 3.1 to the Company's 10-Q (File No. 0-8454 -- filed December 14, 1999), is hereby incorporated by reference. 4.1 First Union Credit Agreement dated June 18, 1999 between JLG Industries, Inc. and First Union National Bank, which appears as Exhibit 10.2 to the Company's Form 8-K/A (File No. 0-8454 -- filed August 31, 1999), is hereby incorporated by reference. 4.2 Amendment number one and consent and waiver under First Union Credit Agreement dated June 18, 1999 between JLG Industries, Inc. and First Union National Bank. 4.3 Amendment number two and consent and waiver under First Union Credit Agreement dated June 18, 1999 between JLG Industries, Inc. and First Union National Bank. 4.4 Working Capital Agreement dated December 16, 1999 between JLG Industries, Inc. and First Union National Bank which appears as Exhibit 4.1 to the Company's Form 10-Q (File No. 0-8454 -- filed February 23, 2000), is hereby incorporated by reference. 4.5 Amendment number one and consent and waiver under Working Capital Agreement dated December 16, 1999 between JLG Industries, Inc. and First Union National Bank. 4.6 Receivables Purchasing Agreement among Fulton Funding Corporation, JLG Industries, Inc., Market Street Funding Corporation and PNC Bank, National Association dated June 30, 2000. 4.7 Rights Agreement, dated as of May 24, 2000, between JLG Industries, Inc. and American Stock Transfer and Trust Company which appears as Exhibit 1 to the Company's Form 8-A12B (File No. 0-8454 -- filed May 21, 2000), is hereby incorporated by reference. 4.8 Agreement to disclose upon request. 10.1 JLG Industries, Inc. Directors' Deferred Compensation Plan amended and restated as of August 1, 1998 which appears as Exhibit 10.2 to the Company's 10-K (File No. 0-8454 -- filed October 13, 1998, is hereby incorporated by reference. 10.2 JLG Industries, Inc. Stock Incentive Plan amended and restated as of September 1, 1999, which appears as Appendix B to the Company's Proxy Statement (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference.. 10.3 JLG Industries, Inc. Directors Stock Option Plan amended and restated as of August 1, 1998, which appears as Exhibit 10.6 to the Company's Form 10-K (File No. 0-8454 -- filed October 13, 1998), is hereby incorporated by reference.. 10.4 JLG Industries, Inc. Supplemental Executive Retirement Plan effective February 16, 2000, which appears as Exhibit 10.8 to the Company's Form 10-Q (File No. 0-8454 -- filed June 5, 2000), is hereby incorporated by reference.
29 31
EXHIBIT NUMBER EXHIBIT - ------- ------- 10.5 JLG Industries, Inc. Executive Retiree Medical Benefits Plan effective June 1, 1995, which appears as Exhibit 10.9 to the Company's Form 10-K (File No. 0-8454 -- filed October 6, 1997), is hereby incorporated by reference. 10.6 JLG Industries, Inc. Executive Severance Plan effective February 16, 2000, which appears as Exhibit 10.10 to the Company's Form 10-Q (File No. 0-8454 -- filed June 5, 2000), is hereby incorporated by reference. 10.7 JLG Industries, Inc. Executive Deferred Compensation Plan amended and restated as of August 1, 1998 which appears as Exhibit 10.11 to the Company's 10-K (File No. 0-8454 -- filed October 13, 1998), is hereby incorporated by reference. 10.8 Amended and Restated Employment Agreement dated May 10, 1999 between Gradall Industries, Inc. and Barry L. Phillips which appears as Exhibit 10.9 to the Company's 10-K (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference. 10.9 Deferred Compensation Agreement between The Gradall Company and Barry L. Phillips which appears as Exhibit 10.10 to the Company's 10-K (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference. 10.10 The Gradall Company Amended and Restated Supplemental Executive Retirement Plan effective March 1, 1988 which appears as Exhibit 10.11 to the Company's 10-K (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference. 10.11 The Gradall Company Benefit Restoration Plan which appears as Exhibit 10.12 to the Company's 10-K (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference. 10.12 Split-Dollar Life Insurance Agreement dated as of August 30, 1995 between The Gradall Company and Barry L. Phillips which appears as Exhibit 10.13 to the Company's 10-K (File No. 0-8454 -- filed October 12, 1999), is hereby incorporated by reference. 10.13 Employment Agreement dated November 1, 1999 between JLG Industries, Inc. and William M. Lasky, which appears as Exhibit 10.2 to the Company's Form 10-Q (File No. 0-8454 -- filed December 14, 1999), is hereby incorporated by reference. 10.14 Employment Agreement dated July 18, 2000 between JLG Industries, Inc. and James H. Woodward, Jr. 21 Subsidiaries of the registrant 23 Consent of independent auditors 27 Financial Data Schedule 99 Cautionary Statements Pursuant to the Securities Litigation Reform Act of 1995
(b) Reports on Form 8-K The Company was not required to file Form 8-K pursuant to requirements of such form for any of the three months ended July 31, 2000. 30 32 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on September 21, 2000. JLG INDUSTRIES, INC. (REGISTRANT) /s/ WILLIAM M. LASKY -------------------------------------- William M. Lasky President and Chief Executive Officer and Director PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED AS OF SEPTEMBER 21, 2000.
SIGNATURE TITLE - --------- ----- /s/ L. DAVID BLACK Chairman of the Board - --------------------------------------------- L. David Black /s/ CHARLES H. DILLER, JR. Executive Vice President and Director - --------------------------------------------- Charles H. Diller, Jr. /s/ GEORGE R. KEMPTON Director - --------------------------------------------- George R. Kempton /s/ JAMES A. MEZERA Director - --------------------------------------------- James A. Mezera /s/ CHARLES O. WOOD, III Director - --------------------------------------------- Charles O. Wood, III /s/ JAMES H. WOODWARD, JR. Senior Vice President and Chief Financial - --------------------------------------------- Officer James H. Woodward, Jr.
31 EX-4.2 2 j8416801ex4-2.txt AMENDMENT NO.1 TO CREDIT AGREEMENT 1 EXHIBIT 4.2 AMENDMENT NO. 1 TO CREDIT AGREEMENT THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment No. 1") is made the 16th day of December, 1999, by and among JLG INDUSTRIES, INC., a Pennsylvania corporation ("JLG"), and certain of its subsidiaries listed on Schedule 1 to the Credit Agreement (as defined below) (each, together with JLG, individually a "Borrower" and individually and collectively, the "Borrowers"); the Lenders listed on Schedule 2 to the Credit Agreement; First Union National Bank, as administrative agent ("Administrative Agent"); BankOne, Michigan, as syndication agent ("Syndication Agent") and The Chase Manhattan Bank, as documentation agent ("Documentation Agent"). BACKGROUND Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent entered into a Credit Agreement dated June 18, 1999 (as amended hereby and as may be further amended from time to time, the "Credit Agreement") in order for the Borrowers to, among other things, (i) acquire 100% of the stock of Gradall Industries, Inc., (ii) refinance certain existing indebtedness and (iii) provide for additional working capital. In connection with the Borrowers entering into a Working Capital Facility (as defined below), Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent have agreed to make certain amendments to the Credit Agreement as set forth herein, subject to the terms and conditions hereof. In consideration of the foregoing and the premises and the agreements hereinafter set forth, and intending to be legally bound hereby, effective as of the Amendment No. 1 Effective Date, the parties hereto agree as follows: 1. Definitions a. General Rule. Unless otherwise defined herein, terms used herein which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. b. Additional Definitions. The following definitions are hereby added to Section 1.1 of the Credit Agreement to read in their entirety as follows: "Amendment No. 1" means the Amendment No. 1 to Credit Agreement by and among Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent, dated December 16, 1999. 1 2 "Amendment No. 1 Effective Date" means the date on which the conditions set forth in Paragraph 8 of Amendment No. 1 have been satisfied. "Working Capital Facility" means the revolving credit facility in the maximum principal amount of $100,000,000 evidenced by the Working Capital Credit Agreement dated of even date with Amendment No.1 by and among Borrowers, the lenders listed on Schedule 2 thereto, Administrative Agent, Syndication Agent and Documentation Agent, as amended from time to time. c. Amended Definitions. The following definitions found in Section 1.1 of the Credit Agreement are hereby amended and restated to read in their entirety as follows: "Overdraft Facility" means the agreement evidencing the indebtedness of JLG, Fulton International, Inc., JLG Equipment Services, Inc. and JLG Manufacturing, LLC in order to provide for banking overdraft protection and other working capital needs, which agreement shall contain covenants and events of default no more restrictive than those contained herein. "Responsible Officer" means any of the following: the chief executive officer, chief financial officer, director of treasury services or general counsel of JLG or any other officer of JLG designated in writing by any of the foregoing officers and reasonably acceptable to Administrative Agent. 2. Amendments to Section 7.1(a) (Quarterly Financial Statements) and Section 7.2 (Officer's Compliance Certificate). Sections 7.1(a) and 7.2 of the Credit Agreement are hereby amended to insert the words "or director of treasury services" immediately after the words "chief financial officer." 3. Amendments to Lead-in Paragraphs of Articles VII, VIII, IX and X. The references in the lead-in paragraph of Articles VII (Financial Information and Notices), VIII (Affirmative Covenants), IX (Financial Covenants) and X (Negative Covenants) of the Credit Agreement, are each hereby amended to reference Section 13.13 of the Credit Agreement rather than Section 13.11 of the Credit Agreement. 4. Amendment to Section 8.9 (Compliance with Agreements). Section 8.9 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: Section 8.9 Compliance with Agreements. Comply in all material respects with each term, condition and provision of any Material Contract; provided, that a Borrower or a Subsidiary may contest any such 2 3 Material Contract in good faith through applicable proceedings so long as adequate reserves are maintained in accordance with GAAP; and provided, further, that a Borrower or Subsidiary may renegotiate the terms or permit the termination of any such Material Contract. 5. Additional Section 8.19 (Subsequent Credit Terms). The following Section 8.19 is hereby added to the Credit Agreement to read in its entirety as follows: Section 8.19. Subsequent Credit Terms. (a) Notify Administrative Agent in writing not less than five (5) Business Days prior to its entering into any amendment or modification of the Working Capital Facility, pursuant to which any Borrower or Subsidiary agrees to covenants which are more restrictive to such Borrower or Subsidiary than those contained in Articles VII, VIII, IX and X hereof. Upon entering into any such amendment or modification, the corresponding covenants, terms and conditions of this Agreement are and shall be deemed to be automatically and immediately amended to conform with and to include the applicable covenants, terms and/or conditions of such other agreement; provided, however, that the foregoing shall not be applicable to or be deemed to affect any provision of this Agreement to the extent that any amendment or modification is less restrictive than the corresponding provisions of this Agreement. (b) Each Borrower hereby agrees promptly to execute and deliver any and all such documents and instruments and to take all such further actions as Agent may, in its sole reasonable discretion, deem necessary or appropriate to effectuate the provisions of this Section 8.19. 6. Amendment to Section 10.1 (Limitations on Debt). Section 10.1 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: Section 10.1 Limitations on Debt. Create, incur, assume or suffer to exist any Debt except: (a) the Obligations; (b) Debt incurred in connection with the Working Capital Facility; 3 4 (c) unsecured Debt not exceeding, at any time, $50,000,000 in aggregate principal amount, on a pari passu basis with the Obligations, which agreement(s) evidencing such Debt shall not contain covenants or events of default more restrictive than those contained herein; (d) Debt incurred in connection with a Hedging Agreement with a counterparty and upon terms and conditions (including without limitation interest rate terms and conditions) reasonably satisfactory to the Administrative Agent; (e) Subordinated Debt; (f) Debt existing on the Closing Date and not otherwise permitted under this Section 10.1, as set forth on Schedule 6.1(t) and the renewal and refinancing (but not the increase of the aggregate principal amount thereof) thereof; (g) Debt of Subsidiaries that are not Borrowers, and guarantees of such Debt by one or more Borrowers, provided that such Debt shall not exceed, in the aggregate for all such Subsidiaries, Five Million Dollars ($5,000,000); (h) so long as the aggregate principal amount outstanding at any time does not collectively exceed twenty percent (20%) of Net Worth: (i) Debt of the Borrowers and their Subsidiaries incurred in connection with Capitalized Leases; (ii) purchase money Debt of the Borrowers and their Subsidiaries; and (iii) indebtedness of the Borrowers and their Subsidiaries incurred in connection with Operating Leases, the amount of which Operating Leases shall be determined by their respective Operating Lease Values; (i) the PIDA Debt, in an aggregate principal amount not to exceed $3,615,198 on any date of determination; (j) Debt by and among the Borrowers and the Subsidiaries; provided however that Debt of Borrowers to all non-Borrower Subsidiaries shall not exceed twenty percent (20%) of Net Worth of JLG and its Subsidiaries on a consolidated basis (as set forth on the most recently delivered financial statements by Borrowers to the Lenders) at any time outstanding; and 4 5 (k) Guaranty Obligations of Debt permitted under clauses (a) through (j), but not clause (e), of this Section 10.1 and under Section 10.2; provided, that no agreement or instrument with respect to Debt permitted to be incurred by this Section shall restrict, limit or otherwise encumber (by covenant or otherwise) the ability of any Subsidiary of any Borrower to make any payment to any Borrower or any of their Subsidiaries (in the form of dividends, intercompany advances or otherwise) for the purpose of enabling the Borrowers to pay the Obligations. 7. Representations and Warranties. Borrowers hereby represent and warrant to Lenders as follows: a. Representations. The representations and warranties set forth in Article VI of the Credit Agreement are true and correct in all material respects as of the Amendment No. 1 Effective Date, except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date; there is no Event of Default or Default under the Credit Agreement, as amended hereby; and since July 31, 1999 there has been no material adverse change in the properties, business, operations, prospects or condition (financial or otherwise) of JLG or its Subsidiaries, on a Consolidated basis that could reasonably be expected to have a Material Adverse Effect. b. Power and Authority. Each Borrower has the power and authority under the laws of its state of incorporation or formation and under its respective articles or certificates of incorporation and bylaws or articles of organization and operating agreement to enter into and perform this Amendment No. 1 and the other documents and agreements required hereunder (collectively, the "Amendment Documents"); all necessary actions (corporate or otherwise) for the execution and performance by each Borrower of the Amendment Documents have been taken; and each of the Amendment Documents and the Credit Agreement, as amended, constitute the valid and binding obligations of Borrowers, enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. c. No Violations of Law or Agreements. The execution and performance of the Amendment Documents by Borrowers will not: (i) violate any provisions of any law or regulation, federal, state or local, or the articles or certificates of incorporation or bylaws or articles of organization or operating agreement of any Borrower or (ii) result in any breach or violation of, or constitute a default or require the obtaining of any consent under, any material agreement or instrument by which any Borrower or its property may be bound. 5 6 8. Conditions to Effectiveness of Amendment. This Amendment No. 1 shall be effective upon the date of Administrative Agent's receipt of the following documents, each in form and substance reasonably satisfactory to Administrative Agent: a. Amendment No. 1. This Amendment No. 1 duly executed by Borrowers, Required Lenders and Administrative Agent. b. Working Capital Facility. An executed copy of the agreement evidencing the Working Capital Facility. c. Overdraft Facility. An amendment to the documentation evidencing the Overdraft Facility, in form and substance acceptable to Administrative Agent. d. Other Documents. Such additional documents as Lenders may reasonably request. 9. Affirmations. Borrowers hereby: (i) affirm all the provisions of the Credit Agreement, as amended by this Amendment No. 1, and (ii) agree that the terms and conditions of the Credit Agreement shall continue in full force and effect as supplemented and amended hereby. 10. Acknowledgment of Merger. Borrowers, Lenders and Administrative Agent hereby acknowledge that JLG Acquisition Corp., a Borrower signatory to the Credit Agreement, has merged into and is survived by Gradall Industries, Inc., which is also a Borrower signatory to the Credit Agreement. Gradall Industries, Inc. is liable for the obligations of JLG Acquisition Corp. under the Credit Agreement. 11. Miscellaneous. a. Borrowers agree to pay or reimburse Administrative Agent for all reasonable fees and expenses (including without limitation reasonable fees and expenses of counsel) incurred by Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 1. b. This Amendment No. 1 shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflicts of law or choice of law principles. c. This Amendment No. 1 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. d. Except as expressly set forth herein, the execution, delivery and performance of this Amendment No. 1 shall not operate as a waiver 6 7 of any right, power or remedy of Administrative Agent or Lenders under the Credit Agreement and the agreements and documents executed in connection therewith or constitute a waiver of any provision thereof. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 the day and year first above written. Attest: JLG INDUSTRIES, INC. - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President & Chief Financial Officer Attest: FULTON INTERNATIONAL, INC. - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Secretary Title: President Attest: JLG EQUIPMENT SERVICES, INC. - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Secretary & Treasurer Attest: JLG MANUFACTURING, LLC - ------ By: JLG INDUSTRIES, INC., Authorized Member By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President & Chief Financial Officer 7 8 [EXECUTIONS CONTINUED] Attest: GRADALL INDUSTRIES, INC. - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL COMPANY - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL ORRVILLE COMPANY - ------ By:_______________________________ By:______________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President LENDERS FIRST UNION NATIONAL BANK, individually and in its capacity as Administrative Agent hereunder By:______________________________ Name: Title: BANK ONE, MICHIGAN, individually and in its capacity as Syndication Agent hereunder By:______________________________ Name: Title: 8 9 [EXECUTIONS CONTINUED] THE CHASE MANHATTAN BANK, individually and in its capacity as Documentation Agent hereunder By:______________________________ Name: Title: BANCO ESPIRITO SANTO, S.A., NASSAU BRANCH By:______________________________ Name: Title: ALLFIRST BANK, f/k/a The First National Bank of Maryland By:______________________________ Name: Title: PNC BANK, NATIONAL ASSOCIATION By:______________________________ Name: Title: HARRIS TRUST AND SAVINGS BANK By:______________________________ Name: Title: 9 10 [EXECUTIONS CONTINUED] NATIONAL CITY BANK OF PENNSYLVANIA By:______________________________ Name: Title: COMERICA BANK By:______________________________ Name: Title: MELLON BANK, N.A. By:______________________________ Name: Title: SUNTRUST BANK, ATLANTA By:______________________________ Name: Title: WACHOVIA BANK, N.A. By:______________________________ Name: Title: 10 11 [EXECUTIONS CONTINUED] BANK HAPOALIM B.M. By:______________________________ Name: Title: BANKBOSTON, N.A. By:______________________________ Name: Title: FLEET NATIONAL BANK By:______________________________ Name: Title: THE BANK OF NEW YORK By:______________________________ Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By:______________________________ Name: Title: CREDIT LYONNAIS NEW YORK BRANCH By:______________________________ Name: Title: 11 12 [EXECUTIONS CONTINUED] ERSTE BANK By:______________________________ Name: Title: MICHIGAN NATIONAL BANK By:______________________________ Name: Title: 12 EX-4.3 3 j8416801ex4-3.txt AMEND. NO.2 TO AND CONSENT AND WAIVER UNDER C.A. 1 EXHIBIT 4.3 AMENDMENT NO. 2 TO AND CONSENT AND WAIVER UNDER CREDIT AGREEMENT THIS AMENDMENT NO. 2 TO AND CONSENT AND WAIVER UNDER CREDIT AGREEMENT (this "Amendment No. 2") is made the 30th day of June, 2000, by and among JLG INDUSTRIES, INC., a Pennsylvania corporation ("JLG"), and certain of its subsidiaries listed on Schedule 1 to the Credit Agreement (as defined below) (each, together with JLG, individually a "Borrower" and individually and collectively, the "Borrowers"); the Lenders listed on Schedule 2 to the Credit Agreement; First Union National Bank, as administrative agent ("Administrative Agent"); BankOne, Michigan, as syndication agent ("Syndication Agent") and The Chase Manhattan Bank, as documentation agent ("Documentation Agent"). BACKGROUND Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent entered into a Credit Agreement dated June 18, 1999, as amended by Amendment No. 1 to Credit Agreement dated December 16, 1999 (as amended, as so amended hereby and as may be further amended from time to time, the "Credit Agreement") in order for the Borrowers to, among other things: (i) acquire 100% of the stock of Gradall Industries, Inc., (ii) refinance certain existing indebtedness, and (iii) provide for additional working capital. Borrowers have informed Administrative Agent of their desire to make borrowings in foreign currencies and to enter into certain sale/leaseback and securitization of accounts receivable transactions. Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent have agreed to make certain amendments to the Credit Agreement and grant certain consents under the Credit Agreement, each as set forth herein and subject to the terms and conditions hereof. In consideration of the foregoing and the premises and the agreements hereinafter set forth, and intending to be legally bound hereby, effective as of the Amendment No. 2 Effective Date, the parties hereto agree as follows: 1. Definitions 1. General Rule. Unless otherwise defined herein, terms used herein which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. 2. Additional Definitions. The following definitions are hereby added to Section 1.1 of the Credit Agreement to read in their entirety as follows: 1 2 "Alternate Currency" shall have the meaning set forth in Paragraph 2.9 hereof. "Alternate Currency Loan" means a Revolving Credit Loan denominated in an Alternate Currency. "Alternate Lending Office" means as to each Lender, such office, branch, affiliate or correspondent of such Lender as such Lender may from time to time designate by notice to Borrowers and the Administrative Agent as such Lender's office for making or receiving payments of Alternate Currency Loans. "Amendment No. 2" means the Amendment No. 2 to Credit Agreement by and among Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent, dated June 30, 2000. "Amendment No. 2 Effective Date" means the date on which the conditions set forth in Paragraph 15 of Amendment No. 2 have been satisfied. "Collections" has the meaning set forth on Exhibit E attached hereto. "Contractual Currency" shall have the meaning set forth in Section 2.9(c) hereof. "Conversion Date" shall have the meaning set forth in Section 2.9(c) hereof. "Currency Calculation Date" means (a) each date of delivery of a Notice of Borrowing in accordance with Section 2.3 hereof and (b) each other date on which the Administrative Agent shall, in its discretion, calculate the Dollar Equivalent of the Alternate Currency Loan other than on a Currency Calculation Date as set forth in clause (a) of this definition. "Dollar Equivalent" of any amount expressed in an Alternate Currency means the equivalent amount of Dollars as of the most recent date on which Administrative Agent in its reasonable judgment determines to make a foreign exchange calculation, after giving effect to a conversion of such amount of such Alternate Currency to Dollars at the buy spot rate quoted for wholesale transactions by Administrative Agent at approximately 11:00 a.m. Philadelphia time on such Currency Calculation Date in accordance with its normal practice. 2 3 "Equipment Sale/Leaseback" means a lease arrangement whereby a Borrower(s) sell certain manufacturing or other equipment to a lessor and lease back such equipment from the lessor. "Liquidation Currency" shall have the meaning set forth in Section 2.9(d) hereof. "MLA Cost" means, with respect to any Alternate Currency Loan made by a Lender, the cost imputed to such Lender of compliance with the Mandatory Liquid Assets requirements of the Bank of England during the Interest Period applicable to such Alternate Currency Loan, expressed as a rate per annum and determined in accordance with the formula set forth on Schedule 3 hereto. "Purchaser" means a conduit entity that purchases Receivables, Related Security and Related Assets from a Borrower, Borrowers or a Securitization Subsidiary in connection with a Securitization. "Receivable" has the meaning set forth on Exhibit B attached hereto. "Received Currency" shall have the meaning set forth in Section 2.9(c) hereof. "Redenominate" means the conversion of each Alternate Currency Loan from one Alternate Currency into Dollars. "Related Assets" has the meaning set forth on Exhibit D attached hereto. "Related Security" has the meaning set forth on Exhibit C attached hereto. "Rental Fleet Sale/Leaseback" means a lease arrangement whereby Borrower(s) sell a pool of rental equipment to a lessor and lease back such equipment from the lessor. "Securitization" means a financing arrangement, a component of which is a liquidity facility under which no Borrower is a borrower or guarantor, whereby a Borrower or Borrowers sell portions of its/their accounts receivable to a Securitization Subsidiary, in each case without recourse, but subject to certain representations, warranties, covenants and indemnity obligations, which will in turn sell such receivables to a Purchaser, in each case without recourse, but subject to certain representations, warranties, covenants and indemnity obligations. 3 4 "Securitization Subsidiary" means a bankruptcy-remote direct Subsidiary of JLG formed in connection with a Securitization. 3. Amended Definitions. 1. The definition of "Debt" found in Section 1.1 of the Credit Agreement is hereby amended so that the word "and" prior to subsection (h) is deleted, and the following subsection (i) is inserted prior to the period at the end of such definition: ", and (i) any amount paid by a Purchaser to a Securitization Subsidiary in connection with a Securitization" 2. The following definition found in Section 1.1 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: "LIBOR" means the rate of interest per annum determined on the basis of the rate for deposits in Dollars or applicable Alternate Currency deposits, as the case may be, in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period which appears for Dollar deposits on the Dow Jones Markets page 3750 at approximately 11:00 a.m. (London time), and for Alternate Currency deposits on Dow Jones Markets page 3750 at approximately 11:00 a.m. (London time), two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest one-hundredth of one percent (1/100%)). If, for any reason, such rate does not appear on Dow Jones Markets page 3750, then LIBOR shall be determined by the Administrative Agent to be the arithmetic average (rounded upward, if necessary, to the nearest one-hundredth of one percent (1/100%)) of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of the applicable Loan. 3. The definition of "LIBOR Rate" found in Section 1.1 of the Credit Agreement is hereby amended so that the following phrase is added immediately before the colon at the end of the second line of such definition: 4 5 ", and as may be further adjusted for MLA Costs" 2. New Schedule 3. Schedule 3 entitled "Calculation of MLA Costs" is hereby added to the Credit Agreement as set forth in its entirety as Exhibit A hereto. 3. New Section 2.9 (Alternate Currency Options). The following new Section 2.9 is hereby added to the Credit Agreement to read in its entirety as follows: 2.9 Alternate Currency Options a. (i) All Revolving Credit Loans shall be made in Dollars or, at Borrowers' request, in any other freely convertible, transferable foreign currency available to all Lenders (each an "Alternate Currency"); provided, however, that the aggregate outstanding amount of the Revolving Credit Loans made in Alternate Currencies shall not exceed at any time the Dollar Equivalent of One Hundred Million Dollars ($100,000,000). Each Lender's Commitment Percentage of each Alternate Currency Loan shall be determined by reference to its Dollar Equivalent on the date each such Alternate Currency Loan is made. As to any Alternate Currency Loan, each Lender may elect to fulfill its commitment to make such Alternate Currency Loan by causing an Alternate Lending Office to make such Alternate Currency Loan; provided, however, that no such election shall be made if as a result thereof any Borrower would be required to pay United States withholding taxes or any additional amounts. (ii) Each Alternate Currency Loan shall be a LIBOR Rate Loan; provided, however, that JLG, on behalf of the Borrowers, shall give a Notice of Borrowing to the Administrative Agent under Section 2.3(a)(ii) on the fourth (4th) Business Day before each Alternate Currency Loan. b. If, after the date of this Agreement, any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Lenders with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for Lenders to make or maintain or fund Loans in the applicable Alternate Currency, Administrative Agent shall notify Borrowers. Upon 5 6 receipt of such notice, the applicable Alternate Currency Loan shall be repaid and/or converted to an available Alternate Currency or Dollars on either: (i) the last day of the then current Interest Period for the affected Alternate Currency Loan, if Lenders may lawfully continue to maintain a Loan at such Alternate Currency to such day, or (ii) immediately, if Lenders may not lawfully continue to so maintain such Alternate Currency Loan. c. All payments hereunder shall be made in Dollars or an Alternate Currency, as the case may be, based on the currency in which a Loan is made. Such requirement is of the essence hereof. If payment is not made in the currency due under this Agreement (the "Contractual Currency") or if any court or tribunal shall render a judgment or order for the payment of amounts due hereunder or under the Notes and such judgment is expressed in a currency other than the Contractual Currency, the Borrowers shall indemnify and hold the Lenders harmless against any deficiency incurred by the Lenders with respect to the amount received by the Lenders to the extent the rate of exchange at which the Contractual Currency is convertible into the currency actually received or the currency in which the judgment is expressed (the "Received Currency") is not the reciprocal of the rate of exchange at which Administrative Agent would be able to purchase the Contractual Currency with the Received Currency, in each case on the Business Day following receipt of the Received Currency in accordance with normal banking procedures. If the court or tribunal has fixed the date on which the rate of exchange is determined for the conversion of the judgment currency into the Contractual Currency (the "Conversion Date") and if there is a change in the rate of exchange prevailing between the Conversion Date and the date of receipt by the Lenders, then the Borrowers will, notwithstanding such judgment or order, pay such additional amount (if any) as may be necessary to ensure that the amount paid in the Received Currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount then due to the Lenders from the Borrowers hereunder in the Contractual Currency. d. If any Borrower shall wind up, liquidate, dissolve or become a debtor in bankruptcy while there remains outstanding: (i) any amounts owing to the Lenders hereunder or under the Notes, (ii) any damages owing to the Lenders in respect of a breach of any of 6 7 the terms hereof, or (iii) any judgment or order rendered in respect of such amounts or damages, the Borrowers shall indemnify and hold the Lenders harmless against any deficiency with respect to the Contractual Currency in the amounts received by the Lenders arising or resulting from any variation as between: (i) the rate of exchange at which the Contractual Currency is converted into another currency (the "Liquidation Currency") for purposes of such winding-up, liquidation, dissolution or bankruptcy with regard to the amount in the Contractual Currency due or contingently due hereunder or under the Notes or under any judgment or order to which the relevant obligations hereunder or under the Notes shall have been merged and (ii) the rate of exchange at which Administrative Agent could, in accordance with normal banking procedures, be able to purchase the Contractual Currency with the Liquidation Currency at the earlier of (A) the date of payment of such amounts or damages and (B) the final date or dates for the filing of proofs of a claim in a winding-up, liquidation, dissolution or bankruptcy. As used in the preceding sentence, the "final date" or dates for the filing of proofs of a claim in a winding-up, liquidation, dissolution or bankruptcy shall be the date fixed by the liquidator under the applicable law as being the last practicable date as of which the liabilities of the applicable Borrower may be ascertained for such winding-up, liquidation, dissolution or bankruptcy before payment by the liquidator or other appropriate person in respect thereof. e. The Borrowers agree to indemnify the Lenders against any loss or expense which the Lenders may sustain or incur in liquidating or employing deposits from third parties acquired to effect, fund or maintain any Alternate Currency Loan or any part thereof as a consequence of (i) the Borrowers' failure to make a payment on other than the due date of such Alternate Currency Loan, or (ii) the Borrowers' failure to borrow under, convert to or renew under the applicable Alternate Currency on a binding effective date of such borrowing, conversion or renewal. Administrative Agent's determination of an amount payable under this paragraph (e) shall, in the absence of error, be conclusive and shall be payable on demand. f. Administrative Agent may from time to time in its discretion calculate the Dollar Equivalent of 7 8 an Alternate Currency Loan. In the event that the aggregate Dollar Equivalent of the outstanding principal amount of the Alternate Currency Loans at any time exceeds One Hundred Million Dollars ($100,000,000), the Administrative Agent shall promptly give notice of such fact to Borrowers and Lenders, and Borrowers shall be required to make a payment to Administrative Agent to reduce the outstanding principal amount of the outstanding Alternate Currency Loans so that the Dollar Equivalent thereof equals not more than One Hundred Million Dollars ($100,000,000). Such payment shall be made within three (3) Business Days following the date of receipt of such notice given by Administrative Agent. 4. New Section 2.10 (European Economic and Monetary Union). A new Section 2.10 is hereby added to the Credit Agreement to read in its entirety as follows: 2.10. European Economic and Monetary Union. (a) Definitions. In this Section 2.10 and in each other provision of this Agreement to which reference is made to this Section expressly or implicitly, the following terms have the meanings given to them in this Section 2.10: "EMU" means economic and monetary union as contemplated in the Treaty on European Union; "EMU Legislation" means legislative measures of the European Council for the introduction of change over to or operation of a single or unified European currency, as amended from time to time; "euro" means the single currency to which participating member states are converting; "euro unit" means the currency unit of the euro; "national currency unit" means the unit of currency (other than a euro unit) of a participating member state; "participating member state" means each state so described in any EMU Legislation; and "Treaty on European Union" means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came 8 9 into force on November 1, 1993), as amended from time to time. (b) Effectiveness of Provisions. The provisions of subsections (c) to (k) below (inclusive) shall be effective upon the execution of this Agreement, provided, that if and to the extent that any such provision relates to any state (or the currency of such state) that is not a participating member state upon the execution of this Agreement, such provision shall become effective in relation to such state (and the currency of such state) at and from the date on which such state becomes a participating member state. (c) Redenomination and Alternate Currencies. Each obligation of any party under this Agreement which has been denominated in the national currency unit of a non-member state which becomes a participating member state after the date of any Alternate Currency Loan made in the national currency unit of such state shall be Redenominated into the euro unit at the exchange rate set in accordance with EMU Legislation, provided, that if and to the extent that any EMU Legislation provides that an amount denominated either in the euro or in the national currency unit of a participating member state and payable within that participating member state by crediting an account of a creditor can be paid by a debtor either in the euro unit or in the national currency unit, each party to this Agreement shall be entitled to pay or repay any such amount either in the euro unit or in such national currency unit; provided, however, any amount paid in a national currency unit shall be paid at the fixed exchange rate in order to yield the required amount in euros. (d) Loans. Any Loan in the currency of a participating member state shall be made in the euro unit, provided that any loan may, if so requested by Borrowers, be made in the national currency unit (based upon fixed exchange rate) of any participating member state so long as such national currency unit continues to be available as legal tender, is freely convertible and is not subject to exchange controls. (e) Business Days. With respect to any amount denominated or to be denominated in the euro or a national currency unit, any reference to a "Business Day" shall be construed as a reference to a day (other than a Saturday or Sunday) on which banks are 9 10 generally open for business in New York City and prime banks in London generally provide quotations for deposits denominated in the euro and such national currency unit. (f) Payment to the Lenders. Sections of this Agreement which provide for payment or repayment in a national currency unit shall be construed so that, in relation to the payment of any amount of euro units or national currency units, such amount shall be made available to the Lenders, in immediately available, freely transferable, cleared funds to such account with each bank (in such principal financial center) as each Lender may from time to time nominate for this purpose in accordance with this Agreement. (g) Payments by the Lenders Generally. With respect to the payment of any amount denominated in the euro or in a national currency unit, the Lenders shall not be liable to the Borrowers in any way whatsoever for any delay, or the consequences of any delay, in the crediting to any account of any amount required by this Agreement to be paid by a Lender if such Lender has made reasonable efforts to effect all relevant steps to achieve, on the date required by this Agreement, the payment of such amount in immediately available, freely transferable, cleared funds (in the euro unit or, as the case may be, in a national currency unit) to the account with the bank in the principal financial center in the participating member state which the Borrowers shall have specified for such purpose. In this paragraph, "all relevant steps" means all such steps as may be prescribed from time to time by the regulations or operating procedures of such clearing or settlement system as such Lender may from time to time select for the purpose of clearing or settling payment of the euro. (h) Basis of Accrual. If the basis of accrual of interest or fees expressed in this Agreement with respect to the currency of any state that becomes a participating member state shall, in a Lender's reasonable judgment, be inconsistent with any convention or practice in the London Interbank Market for the basis of accrual of interest or fees in respect of the euro, or if interest rate quotes for a national currency are no longer provided, such convention or practice shall replace such expressed basis effective as of and from the date on which such state becomes a participating member state; provided, that if any Alternate Currency Loan in the currency of 10 11 such state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Loan, at the end of the then current Interest Period. (i) Rounding and Other Consequential Changes. Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU Legislation and without prejudice to the respective liabilities for indebtedness of the Borrowers to the Lenders and of the Lenders to the Borrowers under or pursuant to this Agreement, (i) each reference in this Agreement to a minimum amount (or an integral multiple thereof) in a national currency unit to be paid to or by a Lender shall be replaced by a reference to such reasonably comparable and convenient amount (or an integral multiple thereof) in the euro unit as such Lender may from time to time specify; and (ii) except as expressly provided in this Agreement, each provision of this Agreement, including, without limitation, the right to combine currencies to effect a setoff, shall be subject to such reasonable changes of interpretation as Lenders may from time to time specify to be necessary or appropriate to reflect the introduction of or changeover to the euro in participating member states. (j) Exchange Indemnification and Increased Costs. The Borrowers shall from time to time, upon demand from the Lenders, pay to the Lenders the amount of any loss or cost or increased cost incurred by, or of any reduction in any amount payable to or in the effective return of its capital to, or of interest or other return, including principal foregone by any Lender or its holding company as a result of the introduction of, changeover to or operation of the euro in any participating member state or Borrowers' election to borrow in a national currency and repay in the euro or to borrow in the euro and repay in a national currency other than any such cost or reduction or amount foregone reflected in the associated interest rate. 11 12 (k) Further Assurances. Borrowers agree, at the request of the Administrative Agent or a Lender, at the time of or at any time following the implementation of any EMU Legislation, to enter into an agreement amending this Agreement in order to reflect the implementation of the EMU Legislation and to place the parties hereto in the position they would have been in had such EMU Legislation not been implemented. 5. Amended Section 4.1(d) (Interest). Section 4.1(d) of the Credit Agreement is hereby amended and restated to read in its entirety as follows: (d) Default Rate. Subject to Section 11.3, at the discretion of the Administrative Agent and Required Lenders, upon the occurrence and during the continuance of an Event of Default: (i) the Borrowers shall no longer have the option to request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans (including without limitation all Alternate Currency Loans) shall bear interest at a rate per annum two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans, as applicable, until the end of the applicable Interest Period, and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans, (iii) all outstanding Base Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest shall continue to accrue on the Notes after the filing by or against the Borrowers of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign, and (iv) on the last day of the applicable Interest Period, all outstanding Alternate Currency Loans shall be Redenominated into Dollars. 6. Amended Section 4.4 (Manner of Payment). Section 4.4 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: Section 4.4. Manner of Payment. (a) Except for Alternate Currency Loans, each payment by the Borrowers on account of the principal of or interest on the Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement or any Note shall be made not later than 1:00 p.m. (Philadelphia time) on the date 12 13 specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office for the account of the Lenders (other than as set forth below) pro rata in accordance with their respective Commitment Percentages (except as specified below), in Dollars, in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever. (b) Alternate Currency Loans shall be paid at the Administrative Agent's Alternate Lending Office no later than 11:00 a.m. (London time) and otherwise as set forth above. (c) Any payment received on such date after the time set for payment, as applicable, shall be deemed to have been made on the next succeeding Business Day. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro rata share of such payment in accordance with such Lender's Commitment Percentage (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lender's fees, Lenders' facility fee or L/C Participants' commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agent's fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 4.8, 4.9, 4.10, 4.11 or 13.2 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 4.1(b)(ii) if any payment under this Agreement or any Note shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. 7. Amended Section 10.1(e) (Limitations on Debt). Section 10.1(e) of the Credit Agreement is hereby amended so that the reference to "Five Million Dollars ($5,000,000)" is replaced by "Ten Million Dollars ($10,000,000)". 8. Amended Section 10.3(f) (Limitations on Liens). Section 10.3(f) of the Credit Agreement is hereby amended and restated in its entirety as set forth below: 13 14 (f) Liens securing Debt permitted under Section 10.1(h); provided that (i) such Liens shall be created substantially simultaneously with the acquisition of the related asset, (ii) such Liens do not at any time encumber any property other than the property financed by such Debt, (iii) the amount of Debt secured thereby is not increased, and (iv) the principal amount of Debt secured by any such Lien shall at no time exceed one hundred percent (100%) of the original purchase price of such property at the time it was acquired. 9. Amended Section 10.6(d) (Limitations on Sales of Assets). Section 10.6(d) of the Credit Agreement is hereby amended and restated in its entirety as set forth below: (d) either: (i) the sale or discount without recourse of accounts receivable which arose in the ordinary course of business or (ii) the sale of Receivables, Related Security and Related Assets in connection with Securitizations, in each case as defined in and to the extent permitted by any consent or waiver by the Required Lenders relating thereto; provided, however, that the aggregate face amount of outstanding accounts receivable sold or discounted under clause (i) above, plus Debt outstanding in connection with Securitizations permitted under clause (ii) above, shall not exceed in the aggregate at any time One Hundred Million Dollars ($100,000,000); provided further, however, that for purposes of clause (i) above (but not clause (ii)), "outstanding" means those sold or discounted accounts receivable which are by their terms not due; 10. Additional Section 11.1(q) (Sale/Leaseback or Securitization Cross-Default). The following new Section 11.1(q) is hereby added to the Credit Agreement to read in its entirety as follows: (q) Sale/Leaseback or Securitization Cross-Default. Any Borrower or any Subsidiary shall (i) default in the payment of any Debt in connection with an Equipment Sale/Leaseback, Rental Fleet Sale/Leaseback or Securitization transaction beyond the period of grace if any, provided in the instrument or agreement under which such Debt was created or (ii) default in the observance or performance of any other agreement or condition relating to any Debt in connection with an Equipment Sale/Leaseback, Rental Fleet Sale/Leaseback or Securitization transaction or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall 14 15 occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Debt to become due prior to its stated maturity (any applicable grace period having expired). 11. Consents and Waivers in connection with Sale/Leaseback Transactions. Borrowers have entered into and/or have informed Administrative Agent of their intent to enter into two types of sale/leaseback transactions. The first type is a lease arrangement whereby the Borrowers sell certain manufacturing and other equipment of the Borrowers to a lessor and lease back such equipment (an "Equipment Sale/Leaseback); the second type is a lease arrangement where the Borrowers will sell a pool of rental equipment to a lessor and lease back such equipment (a "Rental Fleet Sale/Leaseback"). The following consents and waivers are intended to permit Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions as and to the extent, and subject to the conditions, set forth below: 1. Section 10.1 (Limitations on Debt). Section 10.1 of the Credit Agreement prohibits the Borrowers from incurring additional Debt except to the extent set forth in the exceptions described therein. Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions violate or may violate Section 10.1 of the Credit Agreement. Lenders hereby consent to the Borrowers' incurrence of Debt in connection with Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions; provided, however, that: (i) in connection with an Equipment Sale/Leaseback, the transaction is limited to the equipment placed in service not more than six months prior to the effective date of such Equipment Sale/Leaseback; (ii) the amount of Debt outstanding in connection with Equipment Sale/Leaseback transactions (including without limitation the January 28, 2000 transaction between JLG and SunTrust Leasing Corporation for the sale and leaseback of the Torrid Powder Finishing System located at JLG's paint facility at Shippensburg, Pennsylvania) shall be applied to reduce the 20% of Net Worth basket set forth in Section 10.1(h) of the Credit Agreement; and (iii) the amount of Debt outstanding in connection with Rental Fleet Sale/Leaseback transactions, either singly or in the aggregate, shall not exceed 15% of Net Worth of JLG and its Subsidiaries on a consolidated basis (as set forth on the most recently delivered financial statements by Borrowers to the Lenders), and such amount of Debt : (A) shall be equivalent to the sale price to the lessor of such equipment sold, less any lease amortization, in accordance with GAAP and (B) shall not be applied to reduce the 20% of Net Worth basket set forth in Section 10.1(h) of the Credit Agreement. 2. Section 10.3 (Limitations on Liens). Section 10.3 of the Credit Agreement prohibits Borrowers from incurring Liens on any of their assets except to the extent set forth in the exceptions described therein. Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions violate or may violate Section 10.3 of the Credit Agreement because the lessor would have an effective lien on :(i) the Borrowers' assets transferred to the lessor as part of the Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transaction, and (ii) in connection with a Rental Fleet Sale/Leaseback transaction, the lessor would also have a lien on 15 16 the Borrowers' accounts, proceeds of accounts, lease agreements and lease payments related to such assets (collectively, the "Transferred Assets"). Lenders hereby consent to Borrowers' incurrence of Liens on their Transferred Assets in connection with either Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions. 3. Section 10.6 (Limitations on Sale of Assets). Section 10.6 of the Credit Agreement prohibits Borrowers and their Subsidiaries from conveying, selling, leasing, transferring or otherwise disposing of any of their property business or assets except to the extent set forth in the exceptions described therein, and therefore prohibits Borrowers from transferring ownership of their assets to a lessor under either an Equipment Sale/Leaseback or the Rental Fleet Sale/Leaseback. Lenders hereby consent to Borrowers' sale of Transferred Assets to a lessor in connection with Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions otherwise permitted herein. 4. Section 10.11 (Restrictive Agreements). Section 10.11 of the Credit Agreement prohibits the Borrowers and their Subsidiaries from entering into any agreement evidencing indebtedness which contains any negative pledge on assets or covenants more restrictive than those in the Credit Agreement. The Borrowers' execution of the documentation in connection with Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions may, due to the inclusion of a negative pledge relating to the Transferred Assets, subject to the applicable transaction, violate Section 10.11 of the Credit Agreement. Lenders hereby consent to any Borrower's grant of a negative pledge on Transferred Assets to a lessor in connection with Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions. 12. Consents and Waivers in connection with Securitization Transactions. Borrowers have informed Administrative Agent of their desire to enter into Securitization transactions. In each Securitization, one or more of the Borrowers will sell portions of its/their Receivables, Related Security and Related Assets to Securitization Subsidiaries, which will in turn sell such receivables to a Purchaser. A liquidity facility, under which no Borrower is a borrower or guarantor, will be a component of each such Securitization. JLG will provide Administrative Agent with: (i) one week's prior written notice of any Securitization and (ii) within one week after the closing of any Securitization, an opinion of counsel to Borrowers stating that such transaction has closed and that the documentation for such Securitization does not breach the terms of the Credit Agreement. The transaction evidenced by: (i) the Purchase and Sale Agreement dated as of June 30, 2000 between JLG, The Gradall Company, The Gradall Orville Company and a Securitization Subsidiary, (ii) the Receivables Purchase Agreement dated as of June 30, 2000 among a Securitization Subsidiary, as the Seller, JLG, as the Servicer, Market Street Funding Corporation, as the Issuer and PNC Bank, National Association, as the Administrator and (iii) the liquidity facility in connection therewith (collectively, the "PNC Securitization"), which documents (other than the liquidity facility, as to which Borrowers represent and warrant herein that they are not a party) have been reviewed by counsel to Administrative Agent, constitutes a Securitization hereunder. The following consents and 16 17 waivers are intended to permit the PNC Securitization referred to above and subsequent Securitizations as and to the extent, and subject to the conditions, set forth below: 1. Securitization Subsidiary. Section 8.12 of the Credit Agreement (Additional Subsidiaries) requires that any new Subsidiary of a Borrower must, inter alia, be joined as a Borrower under the Credit Agreement. Lenders hereby waive the requirement that a Securitization Subsidiary join the Credit Agreement as a Borrower. In addition, Lenders hereby waive a Securitization Subsidiary's compliance with the negative covenants found in Article 10 of the Credit Agreement, other than in Section 10.1 of the Credit Agreement. 2. Section 10.1 (Limitations on Debt). Section 10.1 of the Credit Agreement prohibits Borrowers from incurring additional Debt except to the extent set forth in the exceptions described therein. A Securitization may contravene Section 10.1 of the Credit Agreement, because in connection with the sale of Receivables, Related Security and Related Assets to a Purchaser, a Securitization Subsidiary may incur Debt to a Purchaser for payments of the accounts receivable from such accounts. Lenders hereby consent to Debt not exceeding One Hundred Million Dollars ($100,000,000) outstanding at any time related to: (i) Securitizations and (ii) other sales or discounts without recourse of accounts receivable permitted by Section 10.6(d) of the Credit Agreement, either singly or in the aggregate (provided, however, that with respect to sales or discounts without recourse of accounts receivable referenced in clause (ii) above, "outstanding" means those sold or discounted accounts receivable which are by their terms not due). 3. Section 10.3 (Limitations on Liens). Section 10.3 of the Credit Agreement prohibits Borrowers from incurring Liens on any of their assets except to the extent set forth in the exceptions described therein. A Securitization may contravene Section 10.3 of the Credit Agreement because in connection with the sale of the Receivables, Related Security and Related Assets, a Purchaser will file UCC-1 financing statements against the Borrower that sells such Receivables, Related Security and Related Assets. Lenders hereby consent to Purchasers filing UCC-1 financing statements against Borrowers in connection with a Securitization, so long as such UCC-1s cover only those Receivables, Related Security and Related Assets sold to a Purchaser in connection with such Securitization. 4. Section 10.6 (Limitations on Sale of Assets). Section 10.6 of the Credit Agreement prohibits Borrowers and their Subsidiaries from conveying, selling, leasing, transferring or otherwise disposing of any of their property business or assets except to the extent set forth in the exceptions described therein, and therefore prohibits Borrowers from selling their accounts receivable to a Securitization Subsidiary in connection with a Securitization. Lenders hereby consent to Borrowers' sale of its/their Receivables, Related Security and Related Assets to a Securitization Subsidiary in connection with a Securitization. 5. Section 10.11 (Restrictive Agreements). Section 10.11 prohibits the Borrowers and their Subsidiaries from entering into any agreement evidencing indebtedness 17 18 which contains any negative pledge on assets or covenants more restrictive than those in the Credit Agreement. The Borrowers' execution of the documentation in connection with a Securitization may, due to the inclusion of a negative pledge relating to the Receivables, Related Security, Related Assets and Collections, subject to the applicable transaction, violate Section 10.11 of the Credit Agreement. Lenders hereby consent to Borrowers' grant of a negative pledge to a Purchaser on the Receivables, Related Security, Related Assets and Collections sold to such Purchaser in connection with a Securitization. 13. Representations and Warranties. Borrowers hereby represent and warrant to Lenders as follows: 1. Representations. The representations and warranties set forth in Article VI of the Credit Agreement are true and correct in all material respects as of the Amendment No. 2 Effective Date, except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date; there is no Event of Default or Default under the Credit Agreement, as amended hereby; and since July 31, 1999 there has been no material adverse change in the properties, business, operations, prospects or condition (financial or otherwise) of JLG or its Subsidiaries on a Consolidated basis that could reasonably be expected to have a Material Adverse Effect. 2. Power and Authority. Each Borrower has the power and authority under the laws of its state of incorporation or formation and under its respective articles or certificates of incorporation and bylaws or articles of organization and operating agreement to enter into and perform this Amendment No. 2 and the other documents and agreements required hereunder (collectively, the "Amendment Documents"); all necessary actions (corporate or otherwise) for the execution and performance by each Borrower of the Amendment Documents have been taken; and each of the Amendment Documents and the Credit Agreement, as amended, constitute the valid and binding obligations of Borrowers, enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. 3. No Violations of Law or Agreements. The execution and performance of the Amendment Documents by Borrowers will not: (i) violate any provisions of any law or regulation, federal, state or local, or the articles or certificates of incorporation or bylaws or articles of organization or operating agreement of any Borrower or (ii) result in any breach or violation of, or constitute a default or require the obtaining of any consent under, any material agreement or instrument by which any Borrower or its property may be bound. 4. Liquidity Facility. No Borrower is a borrower under or a guarantor for the liquidity facility to be established in connection with the PNC Securitization transaction described in Paragraph 12 above. 18 19 14. Amendment Fee. Borrowers hereby covenant and agree to pay to each Lender who has executed this Amendment No. 2 a fee of five basis points on such Lender's Commitment Percentage under the Credit Agreement. 15. Conditions to Effectiveness of Amendment. This Amendment No. 2 shall be effective upon the date of Administrative Agent's receipt of the following documents, each in form and substance reasonably satisfactory to Administrative Agent: 1. Amendment No. 2. This Amendment No. 2 duly executed by Borrowers, Required Lenders and Administrative Agent; provided, however, that Paragraphs 2, 3, 4, 5, 6 and the other provisions hereof relating to Alternate Currency Loans shall be effective only upon execution of this Amendment No. 2 by Borrowers, all Lenders and Administrative Agent. 2. Working Capital Facility. An amendment to the documentation of the Working Capital Facility, in form and substance acceptable to Administrative Agent. 3. Overdraft Facility. An amendment to the documentation evidencing the Overdraft Facility, in form and substance acceptable to Administrative Agent. 4. Amendment Fee. Payment to Administrative Agent, for the benefit of each Lender, of the fees set forth in Paragraph 14 hereof. 5. Opinion of Counsel. An opinion of counsel to Borrowers, in form and substance satisfactory to Administrative Agent. 6. Good Standing Certificates. A good standing certificate from the secretary of state of the state of formation of each Borrower as of a recent date. 7. Secretary Certificate. A certificate of the secretary of each Borrower certifying that the resolutions authorizing such Borrower's execution of this Amendment No. 2 are in full force and effect. 8. Other Documents. Such additional documents as Lenders may reasonably request. 16. Affirmations. Borrowers hereby: (i) affirm all the provisions of the Credit Agreement, as amended by this Amendment No. 2, and (ii) agree that the terms and conditions of the Credit Agreement shall continue in full force and effect as supplemented and amended hereby. 17. Miscellaneous. 19 20 1. Borrowers agree to pay or reimburse Administrative Agent for all reasonable fees and expenses (including without limitation reasonable fees and expenses of counsel) incurred by Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 2. 2. This Amendment No. 2 shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflicts of law or choice of law principles. 3. This Amendment No. 2 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. 20 21 4. Except as expressly set forth herein, the execution, delivery and performance of this Amendment No. 2 shall not operate as a waiver of any right, power or remedy of Administrative Agent or Lenders under the Credit Agreement and the agreements and documents executed in connection therewith or constitute a waiver of any provision thereof. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2 the day and year first above written. Attest: JLG INDUSTRIES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President and Chief Financial Officer Attest: FULTON INTERNATIONAL, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Secretary Title: President Attest: JLG EQUIPMENT SERVICES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Secretary and Treasurer Attest: JLG MANUFACTURING, LLC - ------ By: JLG INDUSTRIES, INC., Authorized Member By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President and Chief Financial Officer 21 22 [EXECUTIONS CONTINUED] Attest: GRADALL INDUSTRIES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL COMPANY - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL ORRVILLE COMPANY - ------- By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President LENDERS FIRST UNION NATIONAL BANK, individually and in its capacity as Administrative Agent hereunder By: _________________________ Name: Title: BANK ONE, MICHIGAN, individually and in its capacity as Syndication Agent hereunder By: _________________________ Name: Title: 22 23 [EXECUTIONS CONTINUED] THE CHASE MANHATTAN BANK, individually and in its capacity as Documentation Agent hereunder By: _________________________ Name: Title: BANCO ESPIRITO SANTO, S.A., NASSAU BRANCH By: _________________________ Name: Title: ALLFIRST BANK, f/k/a The First National Bank of Maryland By: _________________________ Name: Title: PNC BANK, NATIONAL ASSOCIATION By: _________________________ Name: Title: HARRIS TRUST AND SAVINGS BANK By: _________________________ Name: Title: 23 24 [EXECUTIONS CONTINUED] NATIONAL CITY BANK OF PENNSYLVANIA By: _________________________ Name: Title: COMERICA BANK By: _________________________ Name: Title: MELLON BANK, N.A. By: _________________________ Name: Title: SUNTRUST BANK, ATLANTA By: _________________________ Name: Title: WACHOVIA BANK, N.A. By: _________________________ Name: Title: 24 25 [EXECUTIONS CONTINUED] BANK HAPOALIM B.M. By: _________________________ Name: Title: BANKBOSTON, N.A. By: _________________________ Name: Title: FLEET NATIONAL BANK By: _________________________ Name: Title: THE BANK OF NEW YORK By: _________________________ Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: _________________________ Name: Title: 25 26 [EXECUTIONS CONTINUED] CREDIT LYONNAIS NEW YORK BRANCH By: _________________________ Name: Title: ERSTE BANK By: _________________________ Name: Title: MICHIGAN NATIONAL BANK By: _________________________ Name: Title: 26 27 EXHIBIT A SCHEDULE 3 CALCULATION OF MLA COSTS (a) The MLA Cost for any Alternate Currency Loan made by any Lender is calculated in accordance with the following formula: BY + L(Y-X) + S(Y-Z) % per annum = MLA Cost ------------------------------------------- 100 - (B+S) where on the day of application of the formula: B is the percentage of such Lender's eligible liabilities which the Bank of England requires such Lender to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements; Y is the interest rate applicable to such Alternate Currency Loan; L is the percentage of eligible liabilities which the Bank of England requires such Lender to maintain as secured money with members of the London Discount Market Association and/or as secured call money with certain money brokers and gilt-edged primary market makers; X is the rate at which secured Pounds Sterling deposits in the relevant amount may be placed by such Lender with members of the London Discount Market Association and/or as secured call money with certain money brokers and gilt-edged primary market makers at or about 11:00 a.m. on that day for the relevant period; S is the percentage of such Lender's eligible liabilities which the Bank of England requires such Lender to place as a special deposit; and Z is the interest rate per annum allowed by the Bank of England on special deposits. (b) For the purposes of this Schedule 3: (i) "eligible liabilities" and "special deposits" have the meanings given to them at the time of application of the formula by the Bank of England. 27 28 EXHIBIT B RECEIVABLE Receivable means any indebtedness and other obligations owed to a Securitization Subsidiary or any Borrower by, or any right of a Securitization Subsidiary or any Borrower to payment from or on behalf of, a person obligated to make payments pursuant to the Contract (as defined in Exhibit C) relating to such Receivable (the "Obligor"), whether constituting an account, chattel paper, instrument or general intangible, arising from the sale of goods or rendering of services by a Borrower, and includes the obligation to pay any finance charges, fees and other charges with respect thereto. Indebtedness and any other obligations arising from any one transaction, including indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction. 28 29 EXHIBIT C RELATED SECURITY Related Security means, with respect to any Receivable: (a) all of a Securitization Subsidiary's and the respective Borrower's interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods), relating to any sale giving rise to such Receivable. (b) all instruments and chattel paper that may evidence such Receivable, (c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto, and (d) all of the Securitization Subsidiary's and the respective Borrower's rights, interests and claims under any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which a Receivable arises or that evidence such Receivable or under which an Obligor (as defined in Exhibit B) becomes or is obligated to make payment in respect of such Receivable (the "Contracts") and all guaranties, indemnities, insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise. 29 30 EXHIBIT D RELATED ASSETS "Related Assets" means, with respect to any Receivable: (a) all monies due or to become due to a Borrower with respect to any Receivable or Related Security; (b) all books and records of a Borrower related to any Receivable or Related Security; and (c) all collections and other proceeds and products of any of the foregoing or any Receivable or Related Security (as defined in the applicable UCC), including, without limitation, (i) all funds received by any Borrower or Securitization Subsidiary from or on behalf of the Obligors (as defined in Exhibit B), in payment of any amounts owed (including, without limitation, invoice price, finance charges, interest and all other charges) in respect of Receivables; (ii) all amounts (including any insurance proceeds) to be applied by a Borrower or Securitization Subsidiary to any amount owed in respect of any Receivable, and (iii) all net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligors or any other parties directly or indirectly liable for payment of such Receivables, in respect of Receivables, all net proceeds. 30 31 EXHIBIT E COLLECTIONS "Collections" means, with respect to any Receivable: (a) all funds that are received by a Borrower or a Securitization Subsidiary in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor (as defined in Exhibit B) or any other person directly or indirectly liable for the payment of such Receivable and available to be applied thereon), (b) all Collections deemed to have been received as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, discount or other adjustment made by the Securitization Subsidiary or any affiliate of a Securitization Subsidiary and an Obligor, and (c) all other proceeds of such Receivable. 31 EX-4.5 4 j8416801ex4-5.txt AMEND. NO.1 TO AND CONSENT AND WAIVER UNDER C.A. 1 EXHIBIT 4.5 AMENDMENT NO. 1 TO AND CONSENT AND WAIVER UNDER CREDIT AGREEMENT THIS AMENDMENT NO. 1 TO AND CONSENT AND WAIVER UNDER CREDIT AGREEMENT (this "Amendment No. 1") is made the 30th day of June, 2000, by and among JLG INDUSTRIES, INC., a Pennsylvania corporation ("JLG"), and certain of its subsidiaries listed on Schedule 1 to the Credit Agreement (as defined below) (each, together with JLG, individually a "Borrower" and individually and collectively, the "Borrowers"); the Lenders listed on Schedule 2 to the Credit Agreement; First Union National Bank, as administrative agent ("Administrative Agent"); BankOne, Michigan, as syndication agent ("Syndication Agent") and The Chase Manhattan Bank, as documentation agent ("Documentation Agent"). BACKGROUND Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent entered into a Credit Agreement dated December 16, 1999 (as so amended hereby and as may be further amended from time to time, the "Credit Agreement") for use by the Borrowers to support working capital and general corporate purposes. Borrowers have informed Administrative Agent of their desire to enter into certain sale/leaseback and securitization of accounts receivable transactions. Borrowers, Lenders, Administrative Agent, Syndication Agent and Documentation Agent have agreed to make certain amendments to the Credit Agreement and grant certain consents under the Credit Agreement, each as set forth herein and subject to the terms and conditions hereof. In consideration of the foregoing and the premises and the agreements hereinafter set forth, and intending to be legally bound hereby, effective as of the Amendment No. 1 Effective Date, the parties hereto agree as follows: 18. Definitions 1. General Rule. Unless otherwise defined herein, terms used herein which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. 2. Additional Definitions. The following definitions are hereby added to Section 1.1 of the Credit Agreement to read in their entirety as follows: "Amendment No. 1" means the Amendment No. 1 to Credit Agreement by and among Borrowers, Lenders, Administrative 1 2 Agent, Syndication Agent and Documentation Agent, dated June 30, 2000. "Amendment No. 1 Effective Date" means the date on which the conditions set forth in Paragraph 9 of Amendment No. 1 have been satisfied. "Collections" has the meaning set forth on Exhibit D attached hereto. "Equipment Sale/Leaseback" means a lease arrangement whereby a Borrower(s) sell certain manufacturing or other equipment to a lessor and lease back such equipment from the lessor. "Purchaser" means a conduit entity that purchases Receivables, Related Security and Related Assets from a Borrower, Borrowers or a Securitization Subsidiary in connection with a Securitization. "Receivable" has the meaning set forth on Exhibit A attached hereto. "Related Assets" has the meaning set forth on Exhibit C attached hereto. "Related Security" has the meaning set forth on Exhibit B attached hereto. "Rental Fleet Sale/Leaseback" means a lease arrangement whereby Borrower(s) sell a pool of rental equipment to a lessor and lease back such equipment from the lessor. "Securitization" means a financing arrangement, a component of which is a liquidity facility under which no Borrower is a borrower or guarantor, whereby a Borrower or Borrowers sell portions of its/their accounts receivable to a Securitization Subsidiary, in each case without recourse, but subject to certain representation, warranties, covenants and indemnity obligations, which will in turn sell such receivables to a Purchaser, in each case without recourse, but subject to certain representations, warranties, covenants and indemnity obligations. "Securitization Subsidiary" means a bankruptcy-remote direct Subsidiary of JLG formed in connection with a Securitization. 3. Amended Definition. The definition of "Debt" found in Section 2 3 1.1 of the Credit Agreement is hereby amended so that the word "and" prior to subsection (h) is deleted, and the following subsection (i) is inserted prior to the period at the end of such definition: ", and (i) any amount paid by a Purchaser to a Securitization Subsidiary in connection with a Securitization" 19. Amended Section 9.1(g) (Limitations on Debt). Section 9.1(g) of the Credit Agreement is hereby amended so that the reference to "Five Million Dollars ($5,000,000)" is replaced by "Ten Million Dollars ($10,000,000)". 20. Amended Section 9.6(d) (Limitations on Sales of Assets). Section 9.6(d) of the Credit Agreement is hereby amended and restated in its entirety as set forth below: (d) either: (i) the sale or discount without recourse of accounts receivable which arose in the ordinary course of business or (ii) the sale of Receivables, Related Security and Related Assets in connection with Securitizations, in each case as defined in and to the extent permitted by any consent or waiver by the Required Lenders relating thereto; provided, however, that the aggregate face amount of outstanding accounts receivable sold or discounted under clause (i) above, plus Debt outstanding in connection with Securitizations permitted under clause (ii) above, shall not exceed in the aggregate at any time One Hundred Million Dollars ($100,000,000); provided further, however, that for purposes of clause (i) above (but not clause (ii)), "outstanding" means those sold or discounted accounts receivable which are by their terms not due; 21. Additional Section 10.1(q) (Sale/Leaseback or Securitization Cross-Default). The following new Section 10.1(q) is hereby added to the Credit Agreement to read in its entirety as follows: (q) Sale/Leaseback or Securitization Cross-Default. Any Borrower or any Subsidiary shall (i) default in the payment of any Debt in connection with an Equipment Sale/Leaseback, Rental Fleet Sale/Leaseback or Securitization transaction beyond the period of grace if any, provided in the instrument or agreement under which such Debt was created or (ii) default in the observance or performance of any other agreement or condition relating to any Debt in connection with an Equipment Sale/Leaseback, Rental Fleet Sale/Leaseback or Securitization transaction or 3 4 contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Debt to become due prior to its stated maturity (any applicable grace period having expired). 22. Consents and Waivers in connection with Sale/Leaseback Transactions. Borrowers have entered into and/or have informed Administrative Agent of their intent to enter into two types of sale/leaseback transactions. The first type is a lease arrangement whereby the Borrowers sell certain manufacturing and other equipment of the Borrowers to a lessor and lease back such equipment (an "Equipment Sale/Leaseback); the second type is a lease arrangement where the Borrowers will sell a pool of rental equipment to a lessor and lease back such equipment (a "Rental Fleet Sale/Leaseback"). The following consents and waivers are intended to permit Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions as and to the extent, and subject to the conditions, set forth below: 1. Section 9.1 (Limitations on Debt). Section 9.1 of the Credit Agreement prohibits the Borrowers from incurring additional Debt except to the extent set forth in the exceptions described therein. Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions violate or may violate Section 9.1 of the Credit Agreement. Lenders hereby consent to the Borrowers' incurrence of Debt in connection with Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions; provided, however, that: (i) in connection with an Equipment Sale/Leaseback, the transaction is limited to the equipment placed in service not more than six months prior to the effective date of such Equipment Sale/Leaseback; (ii) the amount of Debt outstanding in connection with Equipment Sale/Leaseback transactions (including without limitation the January 28, 2000 transaction between JLG and SunTrust Leasing Corporation for the sale and leaseback of the Torrid Powder Finishing System located at JLG's paint facility at Shippensburg, Pennsylvania) shall be applied to reduce the 20% of Net Worth basket set forth in Section 9.1(h) of the Credit Agreement; and (iii) the amount of Debt outstanding in connection with Rental Fleet Sale/Leaseback transactions, either singly or in the aggregate, shall not exceed 15% of Net Worth of JLG and its Subsidiaries on a consolidated basis (as set forth on the most recently delivered financial statements by Borrowers to the Lenders), and such amount of Debt : (A) shall be equivalent to the sale price to the lessor of such equipment sold, less any lease amortization, in accordance with GAAP and (B) shall not be applied to reduce the 20% of Net Worth basket set forth in Section 9.1(h) of the Credit Agreement. 2. Section 9.3 (Limitations on Liens). Section 9.3 of the Credit Agreement prohibits Borrowers from incurring Liens on any of their assets except to the extent set forth in the exceptions described therein. Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions violate or may violate Section 9.3 of the Credit Agreement because 4 5 the lessor would have an effective lien on: (i) the Borrowers' assets transferred to the lessor as part of the Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transaction, and (ii) in connection with a Rental Fleet Sale/Leaseback transaction, the lessor would also have a lien on the Borrowers' accounts, proceeds of accounts, lease agreements and lease payments related to such assets (collectively, the "Transferred Assets"). Lenders hereby consent to Borrowers' incurrence of Liens on their Transferred Assets in connection with either Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions. 3. Section 9.6 (Limitations on Sale of Assets). Section 9.6 of the Credit Agreement prohibits Borrowers and their Subsidiaries from conveying, selling, leasing, transferring or otherwise disposing of any of their property business or assets except to the extent set forth in the exceptions described therein, and therefore prohibits Borrowers from transferring ownership of their assets to a lessor under either an Equipment Sale/Leaseback or the Rental Fleet Sale/Leaseback. Lenders hereby consent to Borrowers' sale of Transferred Assets to a lessor in connection with Equipment Sale/Leaseback and Rental Fleet Sale/Leaseback transactions otherwise permitted herein. 4. Section 9.11 (Restrictive Agreements). Section 9.11 of the Credit Agreement prohibits the Borrowers and their Subsidiaries from entering into any agreement evidencing indebtedness which contains any negative pledge on assets or covenants more restrictive than those in the Credit Agreement. The Borrowers' execution of the documentation in connection with Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions may, due to the inclusion of a negative pledge relating to the Transferred Assets, subject to the applicable transaction, violate Section 9.11 of the Credit Agreement. Lenders hereby consent to any Borrower's grant of a negative pledge on Transferred Assets to a lessor in connection with Equipment Sale/Leaseback or Rental Fleet Sale/Leaseback transactions. 23. Consents and Waivers in connection with Securitization Transactions. Borrowers have informed Administrative Agent of their desire to enter into Securitization transactions. In each Securitization, one or more of the Borrowers will sell portions of its/their Receivables, Related Security and Related Assets to Securitization Subsidiaries, which will in turn sell such receivables to a Purchaser. A liquidity facility, under which no Borrower is a borrower or guarantor, will be a component of each such Securitization. JLG will provide Administrative Agent with: (i) one week's prior written notice of any Securitization and (ii) within one week after the closing of any Securitization, an opinion of counsel to Borrowers stating that such transaction has closed and that the documentation for such Securitization does not breach the terms of the Credit Agreement. The transaction evidenced by: (i) the Purchase and Sale Agreement dated as of June 30, 2000 between JLG, The Gradall Company, The Gradall Orville Company and a Securitization Subsidiary, (ii) the Receivables Purchase Agreement dated as of June 30, 2000 among a Securitization Subsidiary, as the Seller, JLG, as the Servicer, Market Street Funding Corporation, as the Issuer and PNC Bank, National Association, as the Administrator and (iii) the liquidity facility in connection therewith (collectively, the "PNC Securitization"), which documents (other than the liquidity facility, as to which Borrowers 5 6 represent and warrant herein that they are not a party) have been reviewed by counsel to Administrative Agent, constitutes a Securitization hereunder. The following consents and waivers are intended to permit the PNC Securitization referred to above and subsequent Securitizations as and to the extent, and subject to the conditions, set forth below: 1. Securitization Subsidiary. Section 7.12 of the Credit Agreement (Additional Subsidiaries) requires that any new Subsidiary of a Borrower must, inter alia, be joined as a Borrower under the Credit Agreement. Lenders hereby waive the requirement that a Securitization Subsidiary join the Credit Agreement as a Borrower. In addition, Lenders hereby waive a Securitization Subsidiary's compliance with the negative covenants found in Article 9 of the Credit Agreement, other than in Section 9.1 of the Credit Agreement. 2. Section 9.1 (Limitations on Debt). Section 9.1 of the Credit Agreement prohibits Borrowers from incurring additional Debt except to the extent set forth in the exceptions described therein. A Securitization may contravene Section 9.1 of the Credit Agreement, because in connection with the sale of Receivables, Related Security and Related Assets to a Purchaser, a Securitization Subsidiary may incur Debt to a Purchaser for payments of the accounts receivable from such accounts. Lenders hereby consent to Debt not exceeding One Hundred Million Dollars ($100,000,000) outstanding at any time related to: (i) Securitizations and (ii) other sales or discounts without recourse of accounts receivable permitted by Section 9.6(d) of the Credit Agreement, either singly or in the aggregate (provided, however, that with respect to sales or discounts without recourse of accounts receivable referenced in clause (ii) above, "outstanding" means those sold or discounted accounts receivable which are by their terms not due). 3. Section 9.3 (Limitations on Liens). Section 9.3 of the Credit Agreement prohibits Borrowers from incurring Liens on any of their assets except to the extent set forth in the exceptions described therein. A Securitization may contravene Section 9.3 of the Credit Agreement because in connection with the sale of the Receivables, Related Security and Related Assets, a Purchaser will file UCC-1 financing statements against the Borrower that sells such Receivables, Related Security and Related Assets. Lenders hereby consent to Purchasers filing UCC-1 financing statements against Borrowers in connection with a Securitization, so long as such UCC-1s cover only those Receivables, Related Security and Related Assets sold to a Purchaser in connection with such Securitization. 4. Section 9.6 (Limitations on Sale of Assets). Section 9.6 of the Credit Agreement prohibits Borrowers and their Subsidiaries from conveying, selling, leasing, transferring or otherwise disposing of any of their property business or assets except to the extent set forth in the exceptions described therein, and therefore prohibits Borrowers from selling their accounts receivable to a Securitization Subsidiary in connection with a Securitization. Lenders hereby consent to Borrowers' sale of its/their Receivables, Related Security and Related Assets to a Securitization Subsidiary in connection with a Securitization. 6 7 5. Section 9.11 (Restrictive Agreements). Section 9.11 prohibits the Borrowers and their Subsidiaries from entering into any agreement evidencing indebtedness which contains any negative pledge on assets or covenants more restrictive than those in the Credit Agreement. The Borrowers' execution of the documentation in connection with a Securitization may, due to the inclusion of a negative pledge relating to the Receivables, Related Security, Related Assets and Collections, subject to the applicable transaction, violate Section 9.11 of the Credit Agreement. Lenders hereby consent to Borrowers' grant of a negative pledge to a Purchaser on the Receivables, Related Security, Related Assets and Collections sold to such Purchaser in connection with a Securitization. 24. Representations and Warranties. Borrowers hereby represent and warrant to Lenders as follows: 1. Representations. The representations and warranties set forth in Article VI of the Credit Agreement are true and correct in all material respects as of the Amendment No. 1 Effective Date, except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date; there is no Event of Default or Default under the Credit Agreement, as amended hereby; and since July 31, 1999 there has been no material adverse change in the properties, business, operations, prospects or condition (financial or otherwise) of JLG or its Subsidiaries on a Consolidated basis that could reasonably be expected to have a Material Adverse Effect. 2. Power and Authority. Each Borrower has the power and authority under the laws of its state of incorporation or formation and under its respective articles or certificates of incorporation and bylaws or articles of organization and operating agreement to enter into and perform this Amendment No. 1 and the other documents and agreements required hereunder (collectively, the "Amendment Documents"); all necessary actions (corporate or otherwise) for the execution and performance by each Borrower of the Amendment Documents have been taken; and each of the Amendment Documents and the Credit Agreement, as amended, constitute the valid and binding obligations of Borrowers, enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. 3. No Violations of Law or Agreements. The execution and performance of the Amendment Documents by Borrowers will not: (i) violate any provisions of any law or regulation, federal, state or local, or the articles or certificates of incorporation or bylaws or articles of organization or operating agreement of any Borrower or (ii) result in any breach or violation of, or constitute a default or require the obtaining of any consent under, any material agreement or instrument by which any Borrower or its property may be bound. 4. Liquidity Facility. No Borrower is a borrower under or a guarantor 7 8 for the liquidity facility to be established in connection with the PNC Securitization transaction described in Paragraph 12 above. 1. 25. Amendment Fee. Borrowers hereby covenant and agree to pay to each Lender who has executed this Amendment No. 1 a fee of five basis points on such Lender's Commitment Percentage under the Credit Agreement. 26. Conditions to Effectiveness of Amendment. This Amendment No. 1 shall be effective upon the date of Administrative Agent's receipt of the following documents, each in form and substance reasonably satisfactory to Administrative Agent: 1. Amendment No. 1. This Amendment No. 1 duly executed by Borrowers, Required Lenders and Administrative Agent. 2. Existing Facility. An amendment to the documentation of the Existing Facility, in form and substance acceptable to Administrative Agent. 3. Overdraft Facility. An amendment to the documentation evidencing the Overdraft Facility, in form and substance acceptable to Administrative Agent. 4. Amendment Fee. Payment to Administrative Agent, for the benefit of each Lender, of the fees set forth in Paragraph 9 hereof. 5. Opinion of Counsel. An opinion of counsel to Borrowers, in form and substance satisfactory to Administrative Agent. 6. Good Standing Certificates. A good standing certificate from the secretary of state of the state of formation of each Borrower as of a recent date. 7. Secretary Certificate. A certificate of the secretary of each Borrower certifying that the resolutions authorizing such Borrower's execution of this Amendment No. 1 are in full force and effect. 8. Other Documents. Such additional documents as Lenders may reasonably request. 27. Affirmations. Borrowers hereby: (i) affirm all the provisions of the Credit Agreement, as amended by this Amendment No. 1, and (ii) agree that the terms and conditions of the Credit Agreement shall continue in full force and effect as supplemented and amended hereby. 28. Miscellaneous. 8 9 1. Borrowers agree to pay or reimburse Administrative Agent for all reasonable fees and expenses (including without limitation reasonable fees and expenses of counsel) incurred by Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 1. 2. This Amendment No. 1 shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflicts of law or choice of law principles. 3. This Amendment No. 1 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. 9 10 4. Except as expressly set forth herein, the execution, delivery and performance of this Amendment No. 1 shall not operate as a waiver of any right, power or remedy of Administrative Agent or Lenders under the Credit Agreement and the agreements and documents executed in connection therewith or constitute a waiver of any provision thereof. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 the day and year first above written. Attest: JLG INDUSTRIES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President and Chief Financial Officer Attest: FULTON INTERNATIONAL, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Secretary Title: President Attest: JLG EQUIPMENT SERVICES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Secretary and Treasurer Attest: JLG MANUFACTURING, LLC - ------ By: JLG INDUSTRIES, INC., Authorized Member By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Executive Vice President and Chief Financial Officer 10 11 [EXECUTIONS CONTINUED] Attest: GRADALL INDUSTRIES, INC. - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL COMPANY - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President Attest: THE GRADALL ORRVILLE COMPANY - ------ By: _____________________________ By: _____________________________ Name: Thomas D. Singer Name: Charles H. Diller, Jr. Title: Assistant Secretary Title: Vice President LENDERS FIRST UNION NATIONAL BANK, individually and in its capacity as Administrative Agent hereunder By: _____________________________ Name: Title: BANK ONE, MICHIGAN, individually and in its capacity as Syndication Agent hereunder By: _____________________________ Name: Title: 11 12 [EXECUTIONS CONTINUED] THE CHASE MANHATTAN BANK, individually and in its capacity as Documentation Agent hereunder By: _____________________________ Name: Title: ALLFIRST BANK, f/k/a The First National Bank of Maryland By: _____________________________ Name: Title: PNC BANK, NATIONAL ASSOCIATION By: _____________________________ Name: Title: HARRIS TRUST AND SAVINGS BANK By: _____________________________ Name: Title: NATIONAL CITY BANK OF PENNSYLVANIA By: _____________________________ Name: Title: COMERICA BANK By: _____________________________ Name: Title: 12 13 [EXECUTIONS CONTINUED] MELLON BANK, N.A. By: _____________________________ Name: Title: SUNTRUST BANK, ATLANTA By: _____________________________ Name: Title: WACHOVIA BANK, N.A. By: _____________________________ Name: Title: BANK HAPOALIM B.M. By: _____________________________ Name: Title: BANKBOSTON, N.A. By: _____________________________ Name: Title: FLEET NATIONAL BANK By: _____________________________ Name: Title: 13 14 [EXECUTIONS CONTINUED] THE BANK OF NEW YORK By: _____________________________ Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: _____________________________ Name: Title: CREDIT LYONNAIS NEW YORK BRANCH By: _____________________________ Name: Title: ERSTE BANK By: _____________________________ Name: Title: MICHIGAN NATIONAL BANK By: _____________________________ Name: Title: 14 15 EXHIBIT A RECEIVABLE Receivable means any indebtedness and other obligations owed to a Securitization Subsidiary or any Borrower by, or any right of a Securitization Subsidiary or any Borrower to payment from or on behalf of, a person obligated to make payments pursuant to the Contract (as defined in Exhibit B) relating to such Receivable (the "Obligor"), whether constituting an account, chattel paper, instrument or general intangible, arising from the sale of goods or the rendering of services by a Borrower, and includes the obligation to pay any finance charges, fees and other charges with respect thereto. Indebtedness and any other obligations arising from any one transaction, including indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction. 15 16 EXHIBIT B RELATED SECURITY Related Security means, with respect to any Receivable: (a) all of a Securitization Subsidiary's and the respective Borrower's interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods), relating to any sale giving rise to such Receivable. (b) all instruments and chattel paper that may evidence such Receivable, (c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto, and (d) all of the Securitization Subsidiary's and the respective Borrower's rights, interests and claims under any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which a Receivable arises or that evidence such Receivable or under which an Obligor (as defined in Exhibit A) becomes or is obligated to make payment in respect of such Receivable (the "Contracts") and all guaranties, indemnities, insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise. 16 17 EXHIBIT C RELATED ASSETS "Related Assets" means, with respect to any Receivable: (a) all monies due or to become due to a Borrower with respect to any Receivable or Related Security; (b) all books and records of a Borrower related to any Receivable or Related Security; and (c) all collections and other proceeds and products of any of the foregoing or any Receivable or Related Security (as defined in the applicable UCC), including, without limitation, (i) all funds received by any Borrower or Securitization Subsidiary from or on behalf of the Obligors (as defined in Exhibit A), in payment of any amounts owed (including, without limitation, invoice price, finance charges, interest and all other charges) in respect of Receivables; (ii) all amounts (including any insurance proceeds) to be applied by a Borrower or Securitization Subsidiary to any amount owed in respect of any Receivable, and (iii) all net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligors or any other parties directly or indirectly liable for payment of such Receivables, in respect of Receivables, all net proceeds. 17 18 EXHIBIT D COLLECTIONS "Collections" means, with respect to any Receivable: (a) all funds that are received by a Borrower or a Securitization Subsidiary in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor (as defined in Exhibit A) or any other person directly or indirectly liable for the payment of such Receivable and available to be applied thereon), (b) all Collections deemed to have been received as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, discount or other adjustment made by the Securitization Subsidiary or any affiliate of a Securitization Subsidiary and an Obligor, and (c) all other proceeds of such Receivable. 18 EX-4.6 5 j8416801ex4-6.txt RECEIVABLES PURCHASE AGREEMENT 1 Exhibit 4.6 =============================================================================== RECEIVABLES PURCHASE AGREEMENT DATED AS OF JUNE 30, 2000 AMONG FULTON FUNDING CORPORATION, AS THE SELLER JLG INDUSTRIES, INC., AS THE SERVICER MARKET STREET FUNDING CORPORATION, AS THE ISSUER AND PNC BANK, NATIONAL ASSOCIATION, AS THE ADMINISTRATOR =============================================================================== Receivables Purchase Agreement 2 TABLE OF CONTENTS Page ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES SECTION 1.1 Purchase Facility . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2 Making Purchases . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.3 Purchased Interest Computation . . . . . . . . . . . . . . . 2 SECTION 1.4 Settlement Procedures . . . . . . . . . . . . . . . . . . . 3 SECTION 1.5 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 1.6 Payments and Computations, Etc. . . . . . . . . . . . . . . 6 SECTION 1.7 Increased Costs . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 1.8 Requirements of Law . . . . . . . . . . . . . . . . . . . . 7 SECTION 1.9 Inability to Determine Euro-Rate . . . . . . . . . . . . . . 8 ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS SECTION 2.1 Representations and Warranties; Covenants . . . . . . . . . 9 SECTION 2.2 Termination Events . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE III INDEMNIFICATION SECTION 3.1 Indemnities by the Seller . . . . . . . . . . . . . . . . . 9 SECTION 3.2 Indemnities by the Servicer . . . . . . . . . . . . . . . . 11 ARTICLE IV ADMINISTRATION AND COLLECTIONS SECTION 4.1 Appointment of the Servicer . . . . . . . . . . . . . . . . 11 SECTION 4.2 Duties of the Servicer . . . . . . . . . . . . . . . . . . 12 SECTION 4.3 Lock-Box Arrangements . . . . . . . . . . . . . . . . . . . 13 SECTION 4.4 Enforcement Rights . . . . . . . . . . . . . . . . . . . . 13 SECTION 4.5 Responsibilities of the Seller . . . . . . . . . . . . . . . 14 SECTION 4.6 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . 15 i Receivables Purchase Agreement 3 ARTICLE V MISCELLANEOUS SECTION 5.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 5.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 5.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 5.4 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . 16 SECTION 5.5 No Proceedings; Limitation on Payments . . . . . . . . . . . 17 SECTION 5.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 5.7 GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . . . 17 SECTION 5.8 Execution in Counterparts . . . . . . . . . . . . . . . . . 18 SECTION 5.9 Survival of Termination . . . . . . . . . . . . . . . . . . 18 SECTION 5.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 18 SECTION 5.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 5.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.13 Issuer's Liabilities . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.14 Administrative Errors . . . . . . . . . . . . . . . . . . . 19 EXHIBIT I Definitions EXHIBIT II Conditions of Purchases EXHIBIT III Representations and Warranties EXHIBIT IV Covenants EXHIBIT V Termination Events SCHEDULE I Credit and Collection Policy SCHEDULE II Lock-box Banks and Lock-box Accounts SCHEDULE III Trade Names SCHEDULE IV Accounting Months ANNEX A Form of Information Package ANNEX B Form of Purchase Notice ANNEX C Form of Paydown Notice ii Receivables Purchase Agreement 4 THIS RECEIVABLES PURCHASE AGREEMENT, dated as of June 30, 2000, among FULTON FUNDING CORPORATION, a Delaware corporation, as the seller (the "Seller"), JLG INDUSTRIES, INC., a Pennsylvania corporation ("JLG"), as initial servicer (in such capacity, together with its successors and permitted assigns in such capacity, the "Servicer"), MARKET STREET FUNDING CORPORATION, a Delaware corporation (together with its successors and permitted assigns, the "Issuer"), and PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), as administrator (in such capacity, together with its successors and assigns in such capacity, the "Administrator"). DEFINITIONS Unless otherwise indicated herein, capitalized terms used in this Agreement are defined in Exhibit I to this Agreement. All references herein to months are to calendar months unless otherwise expressly indicated. BACKGROUND: The Seller desires to sell, transfer and assign an undivided variable percentage interest in a pool of receivables, and the Issuer desires to acquire such undivided variable percentage interest, as such percentage interest shall be adjusted from time to time based upon, in part, reinvestment payments that are made by the Issuer. NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows: ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES SECTION 1.1 Purchase Facility. (a) On the terms and conditions hereinafter set forth, the Issuer hereby agrees to purchase, and make reinvestments of, undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date. Under no circumstances shall the Issuer make any such purchase or reinvestment if, after giving effect to such purchase or reinvestment, the aggregate outstanding Capital of the Purchased Interest would exceed the Purchase Limit. (b) The Seller may, upon at least 30 days' written notice to the Administrator, terminate the purchase facility provided in this Section in whole or, upon at least 30 days' written notice to the Administrator, from time to time, irrevocably reduce in part the unused portion of the Purchase Limit; provided that each partial reduction shall be in the amount of at least $5,000,000, or an integral multiple 5 of $1,000,000 in excess thereof, and that, unless terminated in whole, the Purchase Limit shall in no event be reduced below $20,000,000. SECTION 1.2 Making Purchases. (a) Each purchase (but not reinvestment) of undivided percentage ownership interests with regard to the Purchased Interest hereunder shall be made upon the Seller's irrevocable written notice in the form of Annex A delivered to the Administrator in accordance with Section 5.2 (which notice must be received by the Administrator before 11:00 a.m., New York City time) at least two Business Days before the requested purchase date, which notice shall specify: (A) the amount requested to be paid to the Seller (such amount, which shall not be less than $1,000,000 and shall be in integral multiples of $100,000, being the Capital relating to the undivided percentage ownership interest then being purchased), (B) the date of such purchase (which shall be a Business Day), and (C) the pro forma calculation of the Purchased Interest after giving effect to the increase in Capital. (b) On the date of each purchase (but not reinvestment) of undivided percentage ownership interests with regard to the Purchased Interest hereunder, the Issuer shall, upon satisfaction of the applicable conditions set forth in Exhibit II, make available to the Seller in same day funds, at PNC Bank, account number 5604147997, ABA # 031100089, an amount equal to the Capital relating to the undivided percentage ownership interest then being purchased. (c) Effective on the date of each purchase pursuant to this Section and each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns to the Issuer an undivided percentage ownership interest in: (i) each Pool Receivable then existing, (ii) all Related Security with respect to such Pool Receivables, and (iii) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security. (d) To secure all of the Seller's obligations (monetary or otherwise) under this Agreement and the other Transaction Documents to which it is a party, whether now or hereafter existing or arising, due or to become due, direct or indirect, absolute or contingent, the Seller hereby grants to the Issuer a security interest in all of the Seller's right, title and interest (including any undivided interest of the Seller) in, to and under all of the following, whether now or hereafter owned, existing or arising: (i) all Pool Receivables, (ii) all Related Security with respect to such Pool Receivables, (iii) all Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Box Accounts and amounts on deposit therein, (v) all books and records of each Receivable, and all Transaction Documents to which the Seller is a party, together with all rights (but not obligations) of the Seller, (vi) all proceeds of, and all amounts received or receivable under any or all of, the foregoing (collectively, the "Pool Assets"). The Issuer shall have, with respect to the Pool Assets, and in addition to all the other rights and remedies available to the Issuer, all the rights and remedies of a secured party under any applicable UCC. 2 Receivables Purchase Agreement 6 SECTION 1.3 Purchased Interest Computation. The Purchased Interest shall be initially computed on the date of the initial purchase hereunder. Thereafter, until the Facility Termination Date, the Purchased Interest shall be automatically recomputed (or deemed to be recomputed) on each Business Day other than a Termination Day. The Purchased Interest as computed (or deemed recomputed) as of the day before the Facility Termination Date shall thereafter remain constant. The Purchased Interest shall become zero when the Capital thereof and Discount thereon shall have been paid in full, all the amounts owed by the Seller and the Servicer hereunder to the Issuer, the Administrator and any other Indemnified Party or Affected Person are paid in full, and the Servicer shall have received the accrued Servicing Fee thereon. SECTION 1.4 Settlement Procedures. (a) The collection of the Pool Receivables shall be administered by the Servicer in accordance with this Agreement. The Seller shall provide to the Servicer on a timely basis all information needed for such administration, including notice of the occurrence of any Termination Day and current computations of the Purchased Interest. (b) The Servicer shall, on each day on which Collections of Pool Receivables are received (or deemed received) by the Seller or the Servicer: (i) set aside and hold in trust (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator if, at the time of such request, there exists an Unmatured Termination Event or a Termination Event or if the failure to so segregate reasonably could be expected to cause a Material Adverse Effect) for the Issuer, out of the Issuer's Share of such Collections, first, an amount equal to the Discount accrued through such day for each Portion of Capital and not previously set aside, second, an amount equal to the fees set forth in the Fee Letter accrued and unpaid through such day, and third, to the extent funds are available therefor, an amount equal to the Issuer's Share of the Servicing Fee accrued through such day and not previously set aside; (ii) subject to Section 1.4(f), if such day is not a Termination Day, remit to the Seller, on behalf of the Issuer, the remainder of the Issuer's Share of such Collections. Such remainder shall be automatically reinvested in Pool Receivables, and in the Related Security, Collections and other proceeds with respect thereto; provided, however, that if the Purchased Interest would exceed 100%, then the Servicer shall not reinvest, but shall set aside and hold in trust for the Issuer (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator if, at the time of such request, there exists an Unmatured Termination Event or a Termination Event or if the failure to so segregate reasonably could be expected to cause a Material Adverse Effect) a portion of such Collections that, together with the other Collections set aside pursuant to this paragraph, shall equal the amount necessary to reduce the Purchased Interest to 100%; 3 Receivables Purchase Agreement 7 (iii) if such day is a Termination Day, set aside, segregate and hold in trust (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) for the Issuer the entire remainder of the Issuer's Share of the Collections; provided, that if amounts are set aside and held in trust on any Termination Day of the type described in clause (a) of the definition of "Termination Day" and, thereafter, the conditions set forth in Section 2 of Exhibit II are satisfied or waived by the Administrator, such previously set-aside amounts shall be reinvested in accordance with clause (ii) on the day of such subsequent satisfaction or waiver of conditions; and (iv) release to the Seller (subject to Section 1.4(f)) for its own account any Collections in excess of: (x) amounts required to be reinvested in accordance with clause (ii) or the proviso to clause (iii) plus (y) the amounts that are required to be set aside pursuant to clause (i), the proviso to clause (ii) and clause (iii) plus (z) the Seller's Share of the Servicing Fee accrued and unpaid through such day and all reasonable and appropriate out-of-pocket costs and expenses of the Servicer for servicing, collecting and administering the Pool Receivables. (c) The Servicer shall deposit into the Administration Account (or such other account designated by the Administrator), on each Monthly Settlement Date, Collections held for the Issuer pursuant to clause (b)(i) or (f) plus the amount of Collections then held for the Issuer pursuant to clauses (b)(ii) and (iii) of Section 1.4; provided that if JLG or an Affiliate thereof is the Servicer, such day is not a Termination Day and the Administrator has not notified JLG (or such Affiliate) that such right is revoked, JLG (or such Affiliate) may retain the portion of the Collections set aside pursuant to clause (b)(i) that represents the Issuer's Share of the Servicing Fee. On the last day of each Settlement Period, the Administrator will notify the Servicer by facsimile of the amount of Discount accrued with respect to each Portion of Capital during such Settlement Period or portion thereof. (d) Upon receipt of funds deposited into the Administration Account pursuant to clause (c), the Administrator shall cause such funds to be distributed as follows: (i) if such distribution occurs on a day that is not a Termination Day and the Purchased Interest does not exceed 100%, first to the Issuer in payment in full of all accrued Discount and fees (other than Servicing Fees) with respect to each Portion of Capital, and second, if the Servicer has set aside amounts in respect of the Servicing Fee pursuant to clause (b)(i) and has not retained such amounts pursuant to clause (c), to the Servicer (payable in arrears on each Monthly Settlement Date) in payment in full of the Issuer's Share of accrued Servicing Fees so set aside, and (ii) if such distribution occurs on a Termination Day or on a day when the Purchased Interest exceeds 100%, first to the Issuer in payment in full of all accrued Discount with respect to each Portion of Capital, second to the Issuer in payment in full of Capital (or, if such day is not 4 Receivables Purchase Agreement 8 a Termination Day, the amount necessary to reduce the Purchased Interest to 100%), third, to the Servicer in payment in full of all accrued Servicing Fees, and fourth, if the Capital and accrued Discount with respect to each Portion of Capital have been reduced to zero, and all accrued Servicing Fees payable to the Servicer have been paid in full, to the Issuer, the Administrator and any other Indemnified Party or Affected Person in payment in full of any other amounts owed thereto by the Seller hereunder. After the Capital, Discount, fees payable pursuant to the Fee Letter and Servicing Fees with respect to the Purchased Interest, and any other amounts payable by the Seller and the Servicer to the Issuer, the Administrator or any other Indemnified Party or Affected Person hereunder, have been paid in full, all additional Collections with respect to the Purchased Interest shall be paid to the Seller for its own account. (e) For the purposes of this Section 1.4: (i) if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, discount or other adjustment made by the Seller or any Affiliate of the Seller, or any setoff or dispute between the Seller or any Affiliate of the Seller and an Obligor, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment; (ii) if on any day any of the representations or warranties in Section 1(g) or (n) of Exhibit III is not true with respect to any Pool Receivable, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in full; (iii) except as provided in clause (i) or (ii), or as otherwise required by applicable law or the relevant Contract, all Collections received from an Obligor of any Receivable shall be applied to the Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates in writing its payment for application to specific Receivables; and (iv) if and to the extent the Administrator or the Issuer shall be required for any reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed not to have been so received by the Administrator or the Issuer but rather to have been retained by the Seller and, accordingly, the Administrator or the Issuer, as the case may be, shall have a claim against the Seller for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof. 5 Receivables Purchase Agreement 9 (f) If at any time the Seller shall wish to cause the reduction of Capital or a portion thereof (but not to commence the liquidation, or reduction to zero, of the entire Capital of the Purchased Interest), the Seller may do so as follows: (i) the Seller shall give the Administrator and the Servicer written notice in the form of Annex B at least two Business Days' prior to the date of such reduction for any reduction of Capital less than or equal to $25,000,000 and (B) at least five Business Days' prior to the date of such reduction for any reduction of Capital greater than $25,000,000; and (ii) on the proposed date of such reduction, (A) the Seller shall remit to the Administration Account cash and instructions to apply such cash to the reduction of such Capital and Discount to accrue (until such cash can be used to pay Notes) with respect to such Capital, and to pay all costs related to such Capital reduction or, at the election of the Seller, (B) on the proposed date of commencement of such reduction and on each day thereafter, the Servicer shall cause Collections with respect to such Portion of Capital not to be reinvested until the amount thereof not so reinvested shall equal the desired amount of reduction and the Servicer shall hold such Collections in trust for the Purchasers, for payment to the Administrator on the last day of the current Settlement Period relating to such Portion of Capital (as specified by the Seller), and the applicable Portion of Capital shall be deemed reduced in the amount to be paid to the Agent only when in fact finally so paid; provided that the amount of any such reduction shall be not less than $1,000,000 and shall be an integral multiple of $100,000, and the entire Capital of the Purchased Interest after giving effect to such reduction shall be not less than $20,000,000 and shall be in an integral multiple of $100,000. SECTION 1.5 Fees. The Seller shall pay to the Administrator certain fees in the amounts and on the dates set forth in a letter, dated the date hereof, among JLG, the Seller and the Administrator (as such letter agreement may be amended, supplemented or otherwise modified from time to time, the "Fee Letter"). SECTION 1.6 Payments and Computations, Etc. (a) All amounts to be paid or deposited by the Seller or the Servicer hereunder shall be made without reduction for offset or counterclaim and shall be paid or deposited no later than 1:00 p.m. (New York City time) on the day when due in same day funds to the Administration Account. All amounts received after noon (New York City time) will be deemed to have been received on the next Business Day. (b) The Seller or the Servicer, as the case may be, shall, to the extent permitted by law, pay interest on any amount not paid or deposited by the Seller or the Servicer, as the case may be, when due hereunder, at an interest rate equal to 2.0% per annum above the Base Rate, payable on demand. 6 Receivables Purchase Agreement 10 (c) All computations of interest under clause (b) and all computations of Discount, fees and other amounts hereunder shall be made on the basis of a year of 360 (or 365 or 366, as applicable, with respect to Discount or other amounts calculated by reference to the Base Rate) days for the actual number of days elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next Business Day and such extension of time shall be included in the computation of such payment or deposit. SECTION 1.7 Increased Costs. (a) If the Administrator, the Issuer, any Purchaser, any other Program Support Provider or any of their respective Affiliates (each an "Affected Person") reasonably determines that the existence of or compliance with: (i) any law or regulation or any change therein or in the interpretation or application thereof, in each case adopted, issued or occurring after the date hereof, or (ii) any request, guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or occurring after the date of this Agreement, affects the amount of capital required or expected to be maintained by such Affected Person, and such Affected Person determines that the amount of such capital is increased by or based upon the existence of any commitment to make purchases of (or otherwise to maintain the investment in) Pool Receivables related to this Agreement or any related liquidity facility, credit enhancement facility and other commitments of the same type, then, upon demand by such Affected Person (with a copy to the Administrator), the Seller shall promptly pay to the Administrator, for the account of such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person in the light of such circumstances, to the extent that such Affected Person reasonably determines such increase in capital to be allocable to the existence of any of such commitments. A certificate as to such amounts submitted to the Seller and the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to either: (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Affected Person of agreeing to purchase or purchasing, or maintaining the ownership of, the Purchased Interest in respect of which Discount is computed by reference to the Euro-Rate, then, upon demand by such Affected Person, the Seller shall promptly pay to such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person for such increased costs. A certificate as to such amounts submitted to the Seller and the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent manifest error. (c) If such increased costs affect the related Affected Person's portfolio of financing transactions, such Affected Person shall use reasonable averaging and attribution methods to allocate such increased costs to the transactions contemplated by this Agreement. 7 Receivables Purchase Agreement 11 SECTION 1.8 Requirements of Law. If any Affected Person reasonably determines that the existence of or compliance with: (a) any law or regulation or any change therein or in the interpretation or application thereof, in each case adopted, issued or occurring after the date hereof, or (b) any request, guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or occurring after the date of this Agreement: (i) does or shall subject such Affected Person to any tax of any kind whatsoever with respect to this Agreement, any increase in the Purchased Interest or in the amount of Capital relating thereto, or does or shall change the basis of taxation of payments to such Affected Person on account of Collections, Discount or any other amounts payable hereunder (excluding taxes imposed on the overall pre-tax net income of such Affected Person, and franchise taxes imposed on such Affected Person, by the jurisdiction under the laws of which such Affected Person is organized or a political subdivision thereof), (ii) does or shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, purchases, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Affected Person that are not otherwise included in the determination of the Euro-Rate or the Base Rate hereunder, or (iii) does or shall impose on such Affected Person any other expense or liability, and the result of any of the foregoing is: (A) to increase the cost to such Affected Person of acting as Administrator, or of agreeing to purchase or purchasing or maintaining the ownership of undivided percentage ownership interests with regard to the Purchased Interest (or interests therein) or any Portion of Capital, or (B) to reduce any amount receivable hereunder (whether directly or indirectly), then, in any such case, upon demand by such Affected Person, the Seller shall promptly pay to such Affected Person additional amounts necessary to compensate such Affected Person for such additional cost or reduced amount receivable. All such amounts shall be payable as incurred. A certificate from such Affected Person to the Seller and the Administrator certifying, in reasonably specific detail, the basis for, calculation of, and amount of such additional costs or reduced amount receivable shall be conclusive and binding for all purposes, absent manifest error; provided, however, that no Affected Person shall be required to disclose any confidential or tax planning information in any such certificate. SECTION 1.9 Inability to Determine Euro-Rate. (a) If the Administrator determines before the first day of any Settlement Period (which determination shall be final and conclusive) that, by reason of circumstances affecting the interbank eurodollar market generally, deposits in dollars (in the relevant amounts for such Settlement Period) are not being offered to banks in the interbank eurodollar market for such Settlement Period, or adequate means do not exist for ascertaining the Euro-Rate for such Settlement Period, then the Administrator shall give notice thereof to the Seller. Thereafter, until the Administrator 8 Receivables Purchase Agreement 12 notifies the Seller that the circumstances giving rise to such suspension no longer exist, (a) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate and (b) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro-Rate shall, on the last day of the then current Settlement Period, be converted to the Alternate Rate determined by reference to the Base Rate. (b) If, on or before the first day of any Settlement Period, the Administrator shall have been notified by any Purchaser that, such Purchaser has determined (which determination shall be final and conclusive) that, any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Purchaser with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for such Purchaser to fund or maintain any Portion of Capital at the Alternate Rate and based upon the Euro-Rate, the Administrator shall notify the Seller thereof. Upon receipt of such notice, until the Administrator notifies the Seller that the circumstances giving rise to such determination no longer apply, (a) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate and (b) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro- Rate shall be converted to the Alternate Rate determined by reference to the Base Rate either (i) on the last day of the then current Settlement Period if such Purchaser may lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate to such day, or (ii) immediately, if such Purchaser may not lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate to such day. ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS SECTION 2.1 Representations and Warranties; Covenants. Each of the Seller, JLG and the Servicer hereby makes the representations and warranties, and hereby agrees to perform and observe the covenants, applicable to it set forth in Exhibits III and IV respectively. SECTION 2.2 Termination Events. If any of the Termination Events set forth in Exhibit V shall occur, the Administrator may, by notice to the Seller, declare the Facility Termination Date to have occurred (in which case the Facility Termination Date shall be deemed to have occurred); provided that automatically upon the occurrence of any event (without any requirement for the passage of time or the giving of notice) described in paragraph (f) of Exhibit V, the Facility Termination Date shall occur. Upon any such declaration, occurrence or deemed occurrence of the Facility Termination Date, the Issuer and the Administrator shall have, in addition to the rights and remedies that they may have under this 9 Receivables Purchase Agreement 13 Agreement, all other rights and remedies provided after default under the New York UCC and under other applicable law, which rights and remedies shall be cumulative. ARTICLE III INDEMNIFICATION SECTION 3.1 Indemnities by the Seller. Without limiting any other rights that the Administrator, the Issuer, any Program Support Provider or any of their respective Affiliates, employees, officers, directors, agents, counsel, successors, transferees or assigns (each, an "Indemnified Party") may have hereunder or under applicable law, the Seller hereby agrees to indemnify each Indemnified Party from and against any and all claims, damages, expenses, costs, losses and liabilities (including Attorney Costs) (all of the foregoing being collectively referred to as "Indemnified Amounts") arising out of or resulting from this Agreement (whether directly or indirectly), the use of proceeds of purchases or reinvestments, the ownership of the Purchased Interest, or any interest therein, or in respect of any Receivable, Related Security or Contract, excluding, however: (a) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Indemnified Party or its officers, directors, agents or counsel, (b) recourse (except as otherwise specifically provided in this Agreement) for Receivables, or (c) any overall net income taxes or franchise taxes imposed on such Indemnified Party by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof. Without limiting or being limited by the foregoing, and subject to the exclusions set forth in the preceding sentence, the Seller shall pay on demand (which demand shall be accompanied by documentation of the Indemnified Amounts, in reasonable detail) to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party from and against any and all Indemnified Amounts relating to or resulting from any of the following: (a) the failure of any Receivable included in the calculation of the Net Receivables Pool Balance as an Eligible Receivable to be an Eligible Receivable, the failure of any information contained in an Information Package to be true and correct, or the failure of any other information provided to the Issuer or the Administrator with respect to Receivables or this Agreement to be true and correct, (b) the failure of any representation, warranty or statement made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement to have been true and correct as of the date made or deemed made in all respects when made, (c) the failure by the Seller to comply with any applicable law, rule or regulation with respect to any Pool Receivable or the related Contract, or the failure of any Pool Receivable or the related Contract to conform to any such applicable law, rule or regulation, (d) the failure to vest in the Issuer a valid and enforceable: (A) perfected undivided percentage ownership interest, to the extent of the Purchased Interest, in the Receivables in, or purporting 10 Receivables Purchase Agreement 14 to be in, the Receivables Pool and the other Pool Assets, or (B) first priority perfected security interest in the Pool Assets, in each case, free and clear of any Adverse Claim, (e) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivables in, or purporting to be in, the Receivables Pool and the other Pool Assets, whether at the time of any purchase or reinvestment or at any subsequent time, (f) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool (including a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the goods or services related to such Receivable or the furnishing or failure to furnish such goods or services or relating to collection activities with respect to such Receivable (if such collection activities were performed by the Seller or any of its Affiliates acting as Servicer or by any agent or independent contractor retained by the Seller or any of its Affiliates), (g) any failure of the Seller (or any of its Affiliates acting as the Servicer) to perform its duties or obligations in accordance with the provisions hereof or under the Contracts, (h) any products liability or other claim, investigation, litigation or proceeding arising out of or in connection with merchandise, insurance or services that are the subject of any Contract, (i) the commingling of Collections at any time with other funds, (j) the use of proceeds of purchases or reinvestments, or (k) any reduction in Capital as a result of the distribution of Collections pursuant to Section 1.4(d), if all or a portion of such distributions shall thereafter be rescinded or otherwise must be returned for any reason. SECTION 3.2 Indemnities by the Servicer. Without limiting any other rights that the Administrator, the Issuer or any other Indemnified Party may have hereunder or under applicable law, the Servicer hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts arising out of or resulting from (whether directly or indirectly): (a) the failure of any information contained in an Information Package to be true and correct, or the failure of any other information provided to the Issuer or the Administrator by, or on behalf of, the Servicer to be true and correct, (b) the failure of any representation, warranty or statement made or deemed made by the Servicer (or any of its officers) under or in connection with this Agreement to have been true and correct as of the date made or deemed made in all respects when made, (c) the failure by the Servicer to comply with any applicable law, rule or 11 Receivables Purchase Agreement 15 regulation with respect to any Pool Receivable or the related Contract, (d) any dispute, claim, offset or defense of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool resulting from or related to the collection activities with respect to such Receivable, or (e) any failure of the Servicer to perform its duties or obligations in accordance with the provisions hereof. ARTICLE IV ADMINISTRATION AND COLLECTIONS SECTION 4.1 Appointment of the Servicer. (a) The servicing, administering and collection of the Pool Receivables shall be conducted by the Person so designated from time to time as the Servicer in accordance with this Section. Until the Administrator gives notice to JLG (in accordance with this Section) of the designation of a new Servicer, JLG is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of a Termination Event (but not prior thereto), the Administrator may designate as Servicer any Person (including itself) to succeed JLG or any successor Servicer, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof. (b) Upon the designation of a successor Servicer as set forth in clause (a), JLG agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrator determines will facilitate the transition of the performance of such activities to the new Servicer, and JLG shall cooperate with and assist such new Servicer. Such cooperation shall include access to and transfer of related records and use by the new Servicer of all licenses, hardware or software necessary or desirable to collect the Pool Receivables and the Related Security. (c) JLG acknowledges that, in making their decision to execute and deliver this Agreement, the Administrator and the Issuer have relied on JLG' agreement to act as Servicer hereunder. Accordingly, JLG agrees that it will not voluntarily resign as Servicer. (d) The Servicer may delegate its duties and obligations hereunder to any subservicer (each a "Sub-Servicer"); provided, that, in each such delegation: (i) such Sub-Servicer shall agree in writing to perform the duties and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer shall remain primarily liable for the performance of the duties and obligations so delegated, (iii) the Seller, the Administrator and the Issuer shall have the right to look solely to the Servicer for performance, and (iv) the terms of any agreement with any Sub-Servicer shall provide that the Administrator may terminate such agreement upon the termination of the Servicer hereunder by giving notice of its desire to terminate such agreement to the Servicer (and the Servicer shall provide appropriate notice to each such Sub-Servicer); provided, however, that if any such delegation is to any Person other than an Originator, the Administrator shall have consented in writing in advance to such delegation (such consent not to be unreasonably withheld or delayed). 12 Receivables Purchase Agreement 16 SECTION 4.2 Duties of the Servicer. (a) The Servicer shall take or cause to be taken all such action as may be necessary or advisable to administer and collect each Pool Receivable from time to time, all in accordance with this Agreement and all applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policies. The Servicer shall set aside, for the accounts of the Seller and the Issuer, the amount of the Collections to which each is entitled in accordance with Article I. The Servicer may, in accordance with the applicable Credit and Collection Policies, extend the maturity of any Pool Receivable (but not beyond 30 days) and extend the maturity or adjust the Outstanding Balance of any Defaulted Receivable as the Servicer may determine to be appropriate to maximize Collections thereof; provided, however, that: (i) such extension or adjustment shall not alter the status of such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or limit the rights of the Issuer or the Administrator under this Agreement and (ii) if a Termination Event has occurred and JLG or an Affiliate thereof is serving as the Servicer, JLG or such Affiliate may make such extension or adjustment only upon the prior approval of the Administrator. The Seller shall deliver to the Servicer and the Servicer shall hold for the benefit of the Seller and the Administrator (individually and for the benefit of the Issuer), in accordance with their respective interests, all records and documents (including computer tapes or disks) with respect to each Pool Receivable. Notwithstanding anything to the contrary contained herein, the Administrator may direct the Servicer (whether the Servicer is JLG or any other Person) to commence or settle any legal action to enforce collection of any Pool Receivable or to foreclose upon or repossess any Related Security, provided that no such direction may be given unless a Termination Event or an Unmatured Termination Event has occurred and is continuing. (b) The Servicer shall, as soon as practicable following actual receipt of collected funds, turn over to the Seller the collections of any indebtedness that is not a Pool Receivable, less, if JLG or an Affiliate thereof is not the Servicer, all reasonable and appropriate out-of-pocket costs and expenses of such Servicer of servicing, collecting and administering such collections. The Servicer, if other than JLG or an Affiliate thereof, shall, as soon as practicable upon demand, deliver to the Seller all records in its possession that evidence or relate to any indebtedness that is not a Pool Receivable, and copies of records in its possession that evidence or relate to any indebtedness that is a Pool Receivable. (c) The Servicer's obligations hereunder shall terminate on the later of: (i) the Facility Termination Date and (ii) the date on which all amounts required to be paid to the Issuer, the Administrator and any other Indemnified Party or Affected Person hereunder shall have been paid in full. After such termination, if JLG or an Affiliate thereof was not the Servicer on the date of such termination, the Servicer shall promptly deliver to the Seller all books, records and related materials that the Seller previously provided to the Servicer, or that have been obtained by the Servicer, in connection with this Agreement. SECTION 4.3 Lock-Box Arrangements. Within 60 days of the initial purchase hereunder, the Seller shall enter into Lock-Box Agreements with all of the Lock-Box Banks and deliver original 13 Receivables Purchase Agreement 17 counterparts thereof to the Administrator. Upon the occurrence of a Termination Event, the Administrator may at any time thereafter give notice to each Lock-Box Bank that the Administrator is exercising its rights under the Lock-Box Agreements to do any or all of the following: (a) to have the exclusive ownership and control of the Lock-Box Accounts transferred to the Administrator and to exercise exclusive dominion and control over the funds deposited therein, (b) to have the proceeds that are sent to the respective Lock-Box Accounts redirected pursuant to the Administrator's instructions rather than deposited in the applicable Lock-Box Account, and (c) to take any or all other actions permitted under the applicable Lock-Box Agreement. The Seller hereby agrees that if the Administrator at any time takes any action set forth in the preceding sentence, the Administrator shall have exclusive control of the proceeds (including Collections) of all Pool Receivables and the Seller hereby further agrees to take any other action that the Administrator may reasonably request to transfer such control. Any proceeds of Pool Receivables received by the Seller or the Servicer thereafter shall be sent immediately to the Administrator. The parties hereto hereby acknowledge that if at any time the Administrator takes control of any Lock-Box Account, the Administrator shall not have any rights to the funds therein in excess of the unpaid amounts due to the Administrator, the Issuer or any other Person hereunder, and the Administrator shall promptly distribute or cause to be distributed such funds in accordance with Section 4.2(b) and Article I (in each case as if such funds were held by the Servicer thereunder). The Seller hereby agrees to take all actions necessary to ensure that all Lock-Box Accounts are in its name no later than 90 days following the Closing Date. SECTION 4.4 Enforcement Rights. (a) At any time following the occurrence of a Termination Event: (i) the Administrator may direct the Obligors that payment of all amounts payable under any Pool Receivable is to be made directly to the Administrator or its designee, (ii) the Administrator may instruct the Seller or the Servicer to give notice of the Issuer's interest in Pool Receivables to each Obligor, which notice shall direct that payments be made directly to the Administrator or its designee, and the Seller or the Servicer, as the case may be, shall give such notice at the expense of the Seller or the Servicer, as the case may be; provided that if the Seller or the Servicer, as the case may be, fails to so notify each Obligor, the Administrator (at the Seller's or the Servicer's, as the case may be, expense) may so notify the Obligors, and (iii) the Administrator may request the Servicer to, and upon such request the Servicer shall: (A) assemble all of the records necessary or desirable to collect the Pool Receivables and the Related Security, and transfer or license to a successor Servicer the use of all software necessary or desirable to collect the Pool Receivables and the Related Security, and make the same available to the Administrator or its designee at a place selected by the Administrator, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner acceptable to the Administrator and, promptly upon receipt, remit all such 14 Receivables Purchase Agreement 18 cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrator or its designee. (b) The Seller hereby authorizes the Administrator, and irrevocably appoints the Administrator as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Seller, which appointment is coupled with an interest, to take any and all steps in the name of the Seller and on behalf of the Seller necessary or desirable, in the determination of the Administrator, to collect any and all amounts or portions thereof due under any and all Pool Assets, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Pool Assets. The Administrator hereby agrees that it shall not exercise such power or authority unless a Termination Event or an Unmatured Termination Event has occurred and is continuing. Notwithstanding anything to the contrary contained in this subsection, none of the powers conferred upon such attorney-in- fact pursuant to the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever. SECTION 4.5 Responsibilities of the Seller. (a) Anything herein to the contrary notwithstanding, the Seller shall: (i) perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if interests in such Pool Receivables had not been transferred hereunder, and the exercise by the Administrator or the Issuer of their respective rights hereunder shall not relieve the Seller from such obligations, and (ii) pay when due any taxes, including any sales taxes payable in connection with the Pool Receivables and their creation and satisfaction. The Administrator and the Issuer shall not have any obligation or liability with respect to any Pool Asset, nor shall either of them be obligated to perform any of the obligations of the Seller, JLG or an Originator thereunder. (b) JLG hereby irrevocably agrees that if at any time it shall cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of the Servicer and, in such capacity, JLG shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that JLG conducted such data- processing functions while it acted as the Servicer. SECTION 4.6 Servicing Fee. (a) Subject to clause (b), the Servicer shall be paid a fee equal to 0.50% per annum (the "Servicing Fee Rate") of the daily average aggregate Outstanding Balance of the Pool Receivables. The Issuer's Share of such fee shall be paid through the distributions contemplated by Section 1.4(d), and the Seller's Share of such fee shall be paid by the Seller on each Monthly Settlement Date. (b) If the Servicer ceases to be JLG or an Affiliate thereof, the servicing fee shall be the greater of: (i) the amount calculated pursuant to clause (a), and (ii) an alternative amount specified by the 15 Receivables Purchase Agreement 19 successor Servicer not to exceed 110% of the aggregate reasonable costs and expenses incurred by such successor Servicer in connection with the performance of its obligations as Servicer. ARTICLE V MISCELLANEOUS SECTION 5.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Transaction Document, or consent to any departure by the Seller or the Servicer therefrom, shall be effective unless in a writing signed by the Administrator, and, in the case of any amendment, by the other parties thereto; and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Issuer or the Administrator to exercise, and no delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. SECTION 5.2 Notices, Etc. All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include facsimile communication) and be sent or delivered to each party hereto at its address set forth under its name on the signature pages hereof or at such other address as shall be designated by such party in a written notice to the other parties hereto. Notices and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by first class mail), and notices and communications sent by other means shall be effective when received. SECTION 5.3 Assignability. (a) This Agreement and the Issuer's rights and obligations herein (including ownership of the Purchased Interest or an interest therein) shall be assignable, in whole or in part, by the Issuer and its successors and assigns with the prior written consent of the Seller; provided, however, that such consent shall not be unreasonably withheld; and provided further, that no such consent shall be required if the assignment is made to PNC, any Affiliate of PNC (other than a director or officer of PNC), any Purchaser or other Program Support Provider or any Person that is: (i) in the business of issuing Notes and (ii) controlled or administered by PNC or any Affiliate of PNC (other than a director or officer of PNC). Each assignor may, in connection with the assignment, disclose to the applicable assignee (that shall have agreed to be bound by Section 5.6) any information relating to the Servicer, the Seller or the Pool Receivables furnished to such assignor by or on behalf of the Servicer, the Seller, the Issuer or the Administrator. The Administrator shall give prior written notice of any assignment of the Issuer's rights and obligations (including ownership of the Purchased Interest to any Person other than a Program Support Provider). (b) The Issuer may at any time grant to one or more banks or other institutions (each a "Purchaser") party to the Liquidity Agreement, or to any other Program Support Provider, participating interests in the Purchased Interest. In the event of any such grant by the Issuer of a participating interest to a Purchaser or other Program Support Provider, the Issuer shall remain responsible for the performance 16 Receivables Purchase Agreement 20 of its obligations hereunder. The Seller agrees that each Purchaser or other Program Support Provider shall be entitled to the benefits of Sections 1.7 and 1.8. (c) This Agreement and the rights and obligations of the Administrator hereunder shall be assignable, in whole or in part, by the Administrator and its successors and assigns; provided, that unless: (i) such assignment is to an Affiliate of PNC, (ii) it becomes unlawful for PNC to serve as the Administrator or (iii) a Termination Event exists, the Seller has consented to such assignment, which consent shall not be unreasonably withheld or delayed. (d) Except as provided in Section 4.1(d), none of the Seller, JLG or the Servicer may assign its rights or delegate its obligations hereunder or any interest herein without the prior written consent of the Administrator, which consent shall not be unreasonably withheld. (e) Without limiting any other rights that may be available under applicable law, the rights of the Issuer may be enforced through it or by its agents. SECTION 5.4 Costs, Expenses and Taxes. (a) In addition to the rights of indemnification granted under Section 3.1, the Seller agrees to pay on demand (which demand shall be accompanied by documentation thereof in reasonable detail) all reasonable costs and expenses in connection with the preparation, execution, delivery and administration (including periodic internal audits by the Administrator of Pool Receivables) of this Agreement, the other Transaction Documents and the other documents and agreements to be delivered hereunder (and all reasonable costs and expenses in connection with any amendment, waiver or modification of any thereof), including: (i) Attorney Costs for the Administrator, the Issuer and their respective Affiliates and agents with respect thereto and with respect to advising the Administrator, the Issuer and their respective Affiliates and agents as to their rights and remedies under this Agreement and the other Transaction Documents, and (ii) all reasonable costs and expenses (including Attorney Costs), if any, of the Administrator, the Issuer and their respective Affiliates and successors and permitted assigns in connection with the enforcement of this Agreement and the other Transaction Documents; provided, however, that the Seller shall not be responsible for such preparation, execution, delivery and administration costs and expenses (including the Attorney Costs) of the parties who become "Purchasers" under the Liquidity Agreement if the Purchase Limit does not exceed $65,000,000. (b) In addition, the Seller shall pay on demand any and all stamp and other taxes and fees payable in connection with the execution, delivery, filing and recording of this Agreement or the other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party harmless from and against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 5.5 No Proceedings; Limitation on Payments. Each of the Seller, JLG, the Servicer, the Administrator, each assignee of the Purchased Interest or any interest therein, and each Person that 17 Receivables Purchase Agreement 21 enters into a commitment to purchase the Purchased Interest or interests therein, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, the Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by the Issuer is paid in full. The provision of this Section 5.5 shall survive any termination of this Agreement. SECTION 5.6 Confidentiality. Unless otherwise required by applicable law or the terms of any material credit agreement to which the Seller is a party, each of the Seller and the Servicer agrees to maintain the confidentiality of this Agreement and the other Transaction Documents (and all drafts thereof) in communications with third parties and otherwise; provided, that this Agreement may be disclosed to: (a) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Administrator, and (b) the Seller's legal counsel and auditors if they agree to hold it confidential. Unless otherwise required by applicable law, each of the Administrator and the Issuer agrees to maintain the confidentiality of non-public financial information regarding JLG and its Subsidiaries and Affiliates; provided, that such information may be disclosed to: (i) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to JLG, (ii) legal counsel and auditors of the Issuer or the Administrator if they agree to hold it confidential, (iii) the rating agencies rating the Notes to the extent such information relates to the Receivables Pool or the transactions contemplated by this Agreement, or if not so related, upon obtaining the prior consent of JLG (such consent not to be unreasonably withheld), (iv) any Program Support Provider or potential Program Support Provider (if they agree to hold it confidential) to the extent such information relates to the Receivables Pool or the transactions contemplated by this Agreement, or if not so related, upon obtaining the prior consent of JLG (such consent not to be unreasonably withheld), (v) any placement agent placing the Notes and (vi) any regulatory authorities having jurisdiction over PNC, the Issuer, any Program Support Provider or any Purchaser. SECTION 5.7 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR 18 Receivables Purchase Agreement 22 ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW. SECTION 5.8 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same agreement. SECTION 5.9 Survival of Termination. The provisions of Sections 1.7, 1.8, 3.1, 3.2, 5.4, 5.5, 5.6, 5.7, 5.10 and 5.13 shall survive any termination of this Agreement. SECTION 5.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. SECTION 5.11 Entire Agreement. This Agreement and the other Transaction Documents embody the entire agreement and understanding between the parties hereto, and supersede all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof, except for any prior arrangements made with respect to the payment by the Issuer of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Seller, the Servicer and the Administrator. 19 Receivables Purchase Agreement 23 SECTION 5.12 Headings. The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for convenience of reference only and shall not affect the interpretation hereof or thereof. SECTION 5.13 Issuer's Liabilities. The obligations of the Issuer under the Transaction Documents are solely the corporate obligations of the Issuer. No recourse shall be had for any obligation or claim arising out of or based upon any Transaction Document against any stockholder, employee, officer, director or incorporator of the Issuer; provided, however, that this Section shall not relieve any such Person of any liability it might otherwise have for its own gross negligence or willful misconduct. SECTION 5.14 Administrative Errors. The parties hereto acknowledge that administrative errors or mistakes may be made by the Servicer or any Originator in the performance of its duties hereunder or under the Sale Agreement or other Transaction Documents. Notwithstanding any other provision of any Transaction Document, no such administrative error or mistake shall constitute any Termination Event or Unmatured Termination Event if such error or mistake shall not have a Material Adverse Effect and shall be corrected on or prior to the later of (i) 2 Business Days after Servicer has notice thereof, or (ii) the next Monthly Settlement Date after Servicer has notice thereof. [Remainder of Page Intentionally Left Blank] 20 Receivables Purchase Agreement 24 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. FULTON FUNDING CORPORATION, as the Seller By: ----------------------------------- Name: Title: Address: One JLG Drive McConnellsburg, PA 17233 Attention: Thomas D. Singer Telephone: (717) 485-5161 Facsimile: (717) 485-6462 JLG INDUSTRIES, INC., as the Servicer By: ----------------------------------- Name: Title: Address: One JLG Drive McConnellsburg, PA 17233 Attention: Thomas D. Singer Telephone: (717) 485-5161 Facsimile: (717) 485-6462 S-1 Receivables Purchase Agreement 25 MARKET STREET FUNDING CORPORATION, as the Issuer By: ----------------------------------- Name: Title: Address: c/o AMACAR Group, LLC 6525 Morrison Boulevard, Suite 318 Charlotte, North Carolina 28211 Attention: Douglas K. Johnson Telephone: (704) 365-0569 Facsimile: (704) 365-1362 With a copy to: PNC Bank, National Association Address: One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Telephone: (412) 762-6440 Facsimile: (412) 762-9184 PNC BANK, NATIONAL ASSOCIATION, as Administrator By: ----------------------------------- Name: Title: Address: One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Telephone: (412) 762-6440 Facsimile: (412) 762-9184 S-2 Receivables Purchase Agreement 26 Exhibit I DEFINITIONS As used in the Agreement (including its Exhibits, Schedules and Annexes), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the Agreement. "Accounting Month" means an accounting month of JLG as set forth in Schedule IV to the Agreement. "Administration Account" means the account (account number 1002422076) of the Administrator maintained at the office of PNC at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222- 2707, or such other account as may be so designated in writing by the Administrator to the Servicer. "Administrator" has the meaning set forth in the preamble to the Agreement. "Adverse Claim" means a lien, security interest or other charge or encumbrance, or any other type of preferential arrangement; it being understood that any thereof in favor of, or assigned to, the Issuer or the Administrator (for the benefit of the Issuer) shall not constitute an Adverse Claim. "Affected Person" has the meaning set forth in Section 1.7 of the Agreement. "Affiliate" means, as to any Person: (a) any Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person, or (b) who is a director or officer: (i) of such Person or (ii) of any Person described in clause (a), except that, with respect to the Issuer, Affiliate shall mean the holder(s) of its capital stock. For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x) to vote 25% or more of the securities having ordinary voting power for the election of directors or managers of such Person, or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise. "Agreement" has the meaning set forth in the preamble to the Agreement. "Alternate Rate" for any Settlement Period for any Portion of Capital of the Purchased Interest means an interest rate per annum equal to: (a) 1.25% per annum above the Euro-Rate for such Settlement Period, or, in the sole discretion of the Administrator, (b) the Base Rate for such Settlement Period; provided, however, that the "Alternate Rate" for any day while a Termination Event exists shall be an interest rate equal to 2.00% per annum above the Base Rate in effect on such day. Exhibit I-1 Receivables Purchase Agreement 27 "Attorney Costs" means and includes all reasonable fees and disbursements of any law firm or other external counsel. "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.), as amended from time to time. "Base Rate" means, for any day, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of: (a) the rate of interest in effect for such day as publicly announced from time to time by PNC in Pittsburgh, Pennsylvania as its "prime rate." Such "prime rate" is set by PNC based upon various factors, including PNC's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and (b) 0.50% per annum above the latest Federal Funds Rate. "BBA" means the British Bankers' Association. "Benefit Plan" means any employee benefit pension plan as defined in Section 3(2) of ERISA in respect of which the Seller, any Originator, JLG or any ERISA Affiliate is, or at any time during the immediately preceding six years was, an "employer" as defined in Section 3(5) of ERISA. "Business Day" means any day (other than a Saturday or Sunday) on which: (a) banks are not authorized or required to close in New York City, New York or Pittsburgh, Pennsylvania, and (b) if this definition of "Business Day" is utilized in connection with the Euro-Rate, dealings are carried out in the London interbank market. "Capital" means the amount paid to the Seller in respect of the Purchased Interest by the Issuer pursuant to the Agreement, as the same may be reduced from time to time by Collections distributed and applied on account of such Capital pursuant to Section 1.4(d) of the Agreement; provided, that if such Capital shall have been reduced by any distribution, and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made. "Change in Control" means that JLG ceases to own, directly or indirectly, 100% of the capital stock of the Seller free and clear of all Adverse Claims. "Closing Date" means June 30, 2000. Exhibit I-2 Receivables Purchase Agreement 28 "Collections" means, with respect to any Pool Receivable: (a) all funds that are received by an Originator, JLG, Seller or the Servicer in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all Collections deemed to have been received pursuant to Section 1.4(e) of the Agreement and (c) all other proceeds of such Pool Receivable. "Company Note" has the meaning set forth in Section 3.1 of the Purchase and Sale Agreement. "Concentration Percentage" means: (a) for any Group A Obligor, 24%, (b) for any Group B Obligor, 24%, (c) for any Group C Obligor, 12% and (d) for any Group D Obligor, 6%. "Concentration Reserve" means, at any time: (a) the aggregate Capital at such time multiplied by (b)(i) the Concentration Reserve Percentage, divided by (ii) 100%, minus the Concentration Reserve Percentage. "Concentration Reserve Percentage" means, at any time, the largest of: (a) the sum of four largest Group D Obligor Percentages, (b) the sum of the two largest Group C Obligor Percentages, (c) the largest Group B Obligor Percentage or (d) the largest Group A Obligor Percentage. "Contract" means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable. "Contributed Value", with respect to any Receivable contributed by JLG pursuant to Section 1.6 of the Sale Agreement, the Outstanding Balance of such Receivable. "CP Rate" for any Settlement Period for any Portion of Capital means a rate calculated by the Administrator equal to: (a) the rate (or if more than one rate, the weighted average of the rates) at which Notes of the Issuer on each day during such period have been outstanding; provided, that if such rate(s) is a discount rate(s), then the CP Rate shall be the rate (or if more than one rate, the weighted average of the rates) resulting from converting such discount rate(s) to an interest-bearing equivalent rate plus (b) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Notes, expressed as a percentage of the face amount of such Notes and converted to an interest- bearing equivalent rate per annum. Notwithstanding the foregoing, the "CP Rate" for any day while a Termination Event exists shall be an interest rate equal to 2% above the Base Rate in effect on such day. Exhibit I-3 Receivables Purchase Agreement 29 "Credit and Collection Policy" means, as the context may require, those receivables credit and collection policies and practices of the Originators in effect on the date of the Agreement and described in Schedule I to the Agreement, as modified in compliance with the Agreement. "Cut-off Date" has the meaning set forth in the Sale Agreement. "Days' Sales Outstanding" means, for any Accounting Month, an amount computed as of the last day of such Accounting Month equal to: (a) the average of the Outstanding Balance of all Pool Receivables as of the last day of each of the three most recent Accounting Months ended on the last day of such Accounting Month divided by (b)(i) the aggregate new Receivables generated by the Originators during the three Accounting Months ended on or before the last day of such Accounting Month divided by (ii) 90. "Debt" means: (a) indebtedness for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, (d) obligations as lessee under leases that shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (e) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (d). "Default Ratio" means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Accounting Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted Receivables during such Accounting Month, by (b) the aggregate new Receivables generated by the Originators during the month that is four Accounting Months before such month. "Defaulted Receivable" means a Receivable: (a) as to which any payment, or part thereof, remains unpaid for more than 90 days from the original due date for such payment, or (b) without duplication (i) as to which an Event of Bankruptcy shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto, or (ii) that has been written off the Seller's books as uncollectible. "Delinquency Ratio" means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Accounting Month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day. Exhibit I-4 Receivables Purchase Agreement 30 "Delinquent Receivable" means a Receivable as to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such payment. "Dilution Ratio" means the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Accounting Month by dividing: (a) the aggregate amount of payments made or owed by the Seller pursuant to Section 1.4(e)(i) of the Agreement during such Accounting Month by (b) the aggregate new Receivables generated by the Originators during the Accounting Month that is one month prior to such Accounting Month. "Dilution Reserve" means, on any day, an amount equal to: (a) the Capital at the close of business of the Servicer on such date multiplied by (b) (i) the Dilution Reserve Percentage on such date, divided by (ii) 100% minus the Dilution Reserve Percentage on such date. "Dilution Reserve Percentage" means on any date, the greater of: (a) 6%; or (b) [(SF x ED) x ((DS - ED) + DS/ED)] x DHR; where: SF (Stress Factor) = 2.0 ED (Expected Dilution) = the average Dilution Ratio for the most recent 12 consecutive Accounting Months; DS (Dilution Spike) = the highest Dilution Ratio for any month during the most recent 12 consecutive Accounting Months; DHR (Dilution Horizon Ratio) = the aggregate new Receivables generated during the two most recent Accounting Months divided by the aggregate Outstanding Balance of all Eligible Receivables as of such date.. "Discount" means: (a) for the Portion of Capital for any Settlement Period to the extent the Issuer will be funding such Portion of Capital during such Settlement Period through the issuance of Notes: Exhibit I-5 Receivables Purchase Agreement 31 CPR x C x ED/360 (b) for the Portion of Capital for any Settlement Period to the extent the Issuer will not be funding such Portion of Capital during such Settlement Period through the issuance of Notes: AR x C x ED/Year + TF where: AR = the Alternate Rate for the Portion of Capital for such Settlement Period, C = the Portion of Capital during such Settlement Period, CPR = the CP Rate for the Portion of Capital for such Settlement Period, ED = the actual number of days during such Settlement Period, Year = if such Portion of Capital is funded based upon: (i) the Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days, as applicable, and TF = the Termination Fee, if any, for the Portion of Capital for such Settlement Period; provided, that no provision of the Agreement shall require the payment or permit the collection of Discount in excess of the maximum permitted by applicable law; and provided further, that Discount for the Portion of Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason. "Eligible Obligor" means any Obligor that is (i) a United States or Canadian resident, (ii) not a government or a governmental subdivision, affiliate or agency, (iii) not Sunbelt Rentals, Inc., and (iv) not an Affiliate of JLG. "Eligible Receivable" means, at any time, a Pool Receivable: (a) the Obligor of which is an Eligible Obligor; (b) that is denominated and payable only in U.S. dollars in the United States; (c) that does not have a stated maturity which is more than 30 days after the original invoice date of such Receivable; provided that a Receivable with a stated maturity beyond 30 days but Exhibit I-6 Receivables Purchase Agreement 32 less than 180 days will be deemed to satisfy this clause (c) if the aggregate Outstanding Balance of such Receivable, when added to the Outstanding Balance of all other Receivables with stated maturities of beyond 30 days but less than 180 days, do not exceed 35 % of the Outstanding Balance of all Eligible Receivables (determined without giving effect to this proviso); provided, further, that, notwithstanding anything provided in the first proviso, any Receivable with a stated maturity beyond 30 days but less than 180 days will be deemed to be an Eligible Receivable if and when the remaining term to the stated maturity of such Receivable is 30 days or less. (d) that arises under a duly authorized Contract for the sale and delivery of goods or services in the ordinary course of the respective Originator's business; (e) that arises under a duly authorized Contract that is in full force and effect and that is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms; (f) that conforms in all material respects with all applicable laws, rulings and regulations in effect; (g) that is not the subject of any asserted dispute, offset, hold back defense, Adverse Claim or other claim, or to consent of the Obligor in respect of any assignment of such Receivable; (h) that satisfies all material requirements of the applicable Credit and Collection Policy; (i) that has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 4.2 of the Agreement; (j) in which the Seller owns good and marketable title, free and clear of any Adverse Claims, and that is freely assignable by the Seller (including without any consent of the related Obligor); (k) for which the Issuer shall have a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, and a valid and enforceable first priority perfected security interest therein and in the Related Security and Collections with respect thereto, in each case free and clear of any Adverse Claim; (l) that constitutes an account as defined in the UCC, and that is not evidenced by instruments or chattel paper; (m) that is neither a Defaulted Receivable nor a Delinquent Receivable; Exhibit I-7 Receivables Purchase Agreement 33 (n) for which neither the Originator thereof, the Seller nor the Servicer has established any offset arrangements with the related Obligor; (o) for which Defaulted Receivables of the related Obligor do not exceed 25% of the Outstanding Balance of all such Obligor's Receivables; and (p) that represents amounts earned and payable by the Obligor that are not subject to the performance of additional services by the Originator thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "ERISA Affiliate" means: (a) any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Seller, the Originators or JLG, (b) a trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Seller, the Originators or JLG, or (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Seller, the Originators, any corporation described in clause (a) or any trade or business described in clause (b). "Euro-Rate" means with respect to any Settlement Period the interest rate per annum determined by the Administrator by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Administrator in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank market offered rates for U.S. dollars quoted by the British Bankers' Association ("BBA") as set forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate successor or, if British Bankers' Association or its successor ceases to provide display page 3750 (or such other display page on the Dow Jones Markets Service system as may replace display page 3750) at or about 11:00 a.m. (London time) on the Business Day which is two (2) Business Days prior to the fist day of such Settlement Period for an amount comparable to the Portion of Capital to be funded at the Alternate Rate and based upon the Euro-Rate during such Settlement Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula: Average of London interbank offered rates quoted by BBA as shown on Dow Jones Markets Service display page 3750 or appropriate successor Euro-Rate = ------------------------------------------------ 1.00 - Euro-Rate Reserve Percentage Exhibit I-8 Receivables Purchase Agreement 34 where "Euro-Rate Reserve Percentage" means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities"). The Euro-Rate shall be adjusted with respect to any Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The Administrator shall give prompt notice to the Seller of the Euro- Rate as determined or adjusted in accordance herewith (which determination shall be conclusive absent manifest error). "Event of Bankruptcy" means (a) any case, action or proceeding before any court or other governmental authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors of a Person composition, marshaling of assets for creditors of a Person, or other similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each of cases (a) and (b) undertaken under U.S. Federal, state or foreign law, including the U.S. Bankruptcy Code. "Excess Concentration" means the sum of the amounts by which the Outstanding Balance of Eligible Receivables of each Obligor then in the Receivables Pool exceeds an amount equal to: (a) the Concentration Percentage for such Obligor multiplied by (b) the Outstanding Balance of all Eligible Receivables then in the Receivables Pool. "Excess Canadian Concentration" means the amount, if any, by which the Outstanding Balance of all Receivables owed by Canadian Obligors exceeds the lower of: (i) 20% of the aggregate Outstanding Balance of all Eligible Receivable and (ii) $12,000,000. "Facility Termination Date" means the earliest to occur of: (a) the Scheduled Maturity Date, (b) the date determined pursuant to Section 2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant to Section 1.1(b) of the Agreement, (d) the date that the commitments of the Purchasers terminate under the Liquidity Agreement, and (e) the Seller shall fail to cause the amendment or modification of any Transaction Document or related opinion as required by Moody's or Standard and Poor's, and such failure shall continue for 30 days after such amendment is initial requested.. "Federal Funds Rate" means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)." If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds Exhibit I-9 Receivables Purchase Agreement 35 Effective Rate." If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Administrator of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrator. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions. "Fee Letter" has the meaning set forth in Section 1.5 of the Agreement. "Fiscal Quarter", with respect to each of the Seller and JLG, means any period of three consecutive calendar months in any Fiscal Year, ending on October 31, January 31, April 31 and July 31, respectively. "Fiscal Year", with respect to each of the Seller and JLG, means any period of twelve consecutive calendar months ending on July 31. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, and any Person owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Group A Obligor" means any Obligor with a short-term rating of at least "A-1" by Standard & Poor's and "P-1" by Moody's; or if such Obligor does not have a short-term rating, a rating of "A+" or better by Standard & Poor's and "A1"or better by Moody's on its long-term senior unsecured and uncredit-enhanced debt securities. "Group A Obligor Percentage" means, at any time, for each Group A Obligor, the percentage equivalent of: (a) the aggregate Outstanding Balance of the Eligible Receivables of such Group A Obligor less any Excess Concentrations of such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible Receivables at such time. "Group B Obligor" means an Obligor, not a Group A Obligor, with a short-term rating of at least "A-2" by Standard & Poor's and "P-2" by Moody's, or if such Obligor does not have a short-term rating, a rating of "BBB+" to "A" by Standard & Poor's and "Baa1" to "A2" by Moody's on its long-term senior unsecured and uncredit-enhanced debt securities. "Group B Obligor Percentage" means, at any time, for each Group B Obligor, the percentage equivalent of: (a) the aggregate Outstanding Balance of the Eligible Receivables of such Group B Obligor Exhibit I-10 Receivables Purchase Agreement 36 less any Excess Concentrations of such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible Receivables at such time. "Group C Obligor" means an Obligor, not a Group A Obligor or a Group B Obligor, with a short- term rating of at least "A-3" by Standard & Poor's or "P-3" by Moody's, or if such Obligor does not have a short-term rating, "BBB-" to "BBB" by Standard & Poor's and "Baa3" to "Baa2" by Moody's on its long-term senior unsecured and uncredit-enhanced debt securities. "Group C Obligor Percentage" means, at any time, for each Group C Obligor, the percentage equivalent of: (a) the aggregate Outstanding Balance of the Eligible Receivables of such Group C Obligor less any Excess Concentrations of such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible Receivables at such time. "Group D Obligor" means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor. "Group D Obligor Percentage" means, at any time, for each Group D Obligor: (a) the aggregate Outstanding Balance of the Eligible Receivables of such Group D Obligor less any Excess Concentrations of such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible Receivables at such time. "Indemnified Amounts" has the meaning set forth in Section 3.1 of the Agreement. "Indemnified Party" has the meaning set forth in Section 3.1 of the Agreement. "Independent Director" has the meaning set forth in paragraph 3(c) of Annex D to the Agreement. "Information Package" means a report, in substantially the form of Annex A to the Agreement, furnished to the Administrator pursuant to the Agreement. "Insolvency Proceeding" means: (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the Internal Revenue Code also refer to any successor sections. Exhibit I-11 Receivables Purchase Agreement 37 "Issuer" has the meaning set forth in the preamble to the Agreement. "Issuer's Share" of any amount means such amount multiplied by the Purchased Interest at the time of determination. "JLG" means JLG Industries, Inc., a Pennsylvania corporation. "LIBOR" means the rate of interest per annum determined by the Administrator to be the arithmetic mean (rounded upward to the nearest 1/16th of 1%) of the rates of interest per annum notified to the Administrator by each Reference Bank as the rate of interest at which dollar deposits in the approximate amount of the Portion of Capital to be funded at the Euro-Rate during such Settlement Period would be offered by major banks in the London interbank market to such Reference Bank at its request at or about 11:00 a.m. (London time) on the second Business Day before the commencement of such Settlement Period. "Liquidity Agent" means PNC in its capacity as the Liquidity Agent pursuant to the Liquidity Agreement. "Liquidity Agreement" means the Liquidity Asset Purchase Agreement, dated as of even date herewith, between the purchasers from time to time party thereto, the Issuer and PNC, as Administrator and Liquidity Agent, as the same may be further amended, supplemented or otherwise modified from time to time. "Lock-Box Account" means an account maintained at a bank or other financial institution for the purpose of receiving Collections. "Lock-Box Agreement" means an agreement, in form and substance satisfactory to the Administrator, among the Seller, the Servicer, the Purchaser and a Lock-Box Bank. "Lock-Box Bank" means any of the banks or other financial institutions holding one or more Lock- Box Accounts. "Loss Reserve" means, on any date, an amount equal to: (a) the Capital at the close of business of the Servicer on such date multiplied by (b)(i) the Loss Reserve Percentage on such date divided by (ii) the result of 100% minus the Loss Reserve Percentage on such date. "Loss Reserve Percentage" means, on any date, the greater of: (a) 18%; and Exhibit I-12 Receivables Purchase Agreement 38 (b) [(LR x LHR x SF) x PTP] + [(LR x LHX x SF) x PTPX]; where: LR (Loss Ratio) = the highest average of the Default Ratios for any three consecutive Accounting Months during the twelve most recent Accounting Months; LHR (Loss Horizon) = the aggregate new Receivables generated during the four most recent Accounting Months divided by the aggregate Outstanding Balance of Eligible Receivables as of such date; LHX (Loss Horizon Extended Term) = the aggregate new Receivables generated during the nine most recent Accounting Months divided by the aggregate Outstanding Balance of Eligible Receivables as of such date; and PTP (Payment Term Percentage) = the aggregate Outstanding Balance of Eligible Receivables with stated maturity 30 days or less from the respective original invoice date, divided by the aggregate Outstanding Balance of all Eligible Receivables. PTPX (Payment Terms Percentage Extended) = the aggregate Outstanding Balance of Eligible Receivables with the stated maturity beyond 30 days from the respective original invoice date, divided by the aggregate Outstanding Balance of all Eligible Receivables SF (Stress Factor) = 2.0. "Material Adverse Effect" means any event or circumstance the occurrence or existence of which will have a material adverse effect on: (a) the assets, operations, business or financial condition of the Seller, the Originators (on a consolidated basis) or the Servicer, Exhibit I-13 Receivables Purchase Agreement 39 (b) the ability of the Seller, any Originator or the Servicer to perform its obligations under the Agreement or any other Transaction Document to which it is a party, (c) the validity or enforceability of any other Transaction Document, or the validity, enforceability or collectibility of a material portion of the Pool Receivables, or (d) the status, perfection, enforceability or priority of the Issuer's or the Seller's interest in a material portion of the Pool Assets. "Monthly Settlement Date" means the Fifteenth day of each calendar month (or the next succeeding Business Day if such day is not a Business Day), beginning July 15, 2000. "Moody's" means Moody's Investors Service, Inc. "Net Receivables Pool Balance" means, at any time: (a) the Outstanding Balance of Eligible Receivables then in the Receivables Pool minus (b) the Excess Concentration minus (c) the Excess Canadian Concentration. "Notes" means short-term promissory notes issued, or to be issued, by the Issuer to fund its investments in accounts receivable or other financial assets. "Obligor" means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable. "Obligor Percentage" means any of the Group A Obligor Percentage, the Group B Obligor Percentage, the Group C Obligor Percentage or the Group D Obligor Percentage. "Originator" has the meaning set forth in the Sale Agreement. "Originator Assignment Certificate" means each assignment, in substantially the form of Exhibit C to the Sale Agreement, evidencing Seller's ownership of the Receivables generated by the respective Originator, as the same may be amended, supplemented, amended and restated, or otherwise modified from time to time in accordance with the Sale Agreement. "Outstanding Balance" of any Receivable at any time means the then outstanding principal balance thereof. "Payment Date" has the meaning set forth in Section 2.2 of the Sale Agreement. Exhibit I-14 Receivables Purchase Agreement 40 "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "PNC" has the meaning set forth in the preamble to the Agreement. "Pool Assets" has the meaning set forth in Section 1.2(d) of the Agreement. "Pool Receivable" means a Receivable in the Receivables Pool. "Portion of Capital" means any separate portion of Capital being funded or maintained by the Issuer (or its successors or permitted assigns) by reference to a particular interest rate basis. In addition, at any time when the Capital of the Purchased Interest is not divided into two or more such portions, "Portion of Capital" means 100% of the Capital. "Program Support Agreement" means and includes the Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for: (a) the issuance of one or more letters of credit for the account of the Issuer, (b) the issuance of one or more surety bonds for which the Issuer is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by the Issuer to any Program Support Provider of the Purchased Interest (or portions thereof) and/or (d) the making of loans and/or other extensions of credit to the Issuer in connection with the Issuer's Receivables-securitization program contemplated in the Agreement, together with any letter of credit, surety bond or other instrument issued thereunder (but excluding any discretionary advance facility provided by the Administrator). "Program Support Provider" means and includes any Purchaser and any other Person (other than any customer of the Issuer) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, the Issuer pursuant to any Program Support Agreement. "Purchase and Sale Indemnified Amounts" has the meaning set forth in Section 9.1 of the Sale Agreement. "Purchase and Sale Indemnified Party" has the meaning set forth in Section 9.1 of the Sale Agreement. "Purchase and Sale Termination Date" has the meaning set forth in Section 1.4 of the Sale Agreement. "Purchase and Sale Termination Event" has the meaning set forth in Section 8.1 of the Sale Agreement. Exhibit I-15 Receivables Purchase Agreement 41 "Purchase Facility" has the meaning set forth in Section 1.1 of the Sale Agreement. "Purchase Limit" means $65,000,000, as such amount may be reduced pursuant to Section 1.1(b) of the Agreement. "Purchase Price" has the meaning set forth in Section 2.2 of the Sale Agreement. "Purchase Report" has the meaning set forth in Section 2.1 of the Sale Agreement. "Purchased Interest" means, at any time, the undivided percentage ownership interest in: (a) each and every Pool Receivable now existing or hereafter arising, (b) all Related Security with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security. Such undivided percentage interest shall be computed as: Capital + Total Reserves ---------------------------- Net Receivables Pool Balance The Purchased Interest shall be determined from time to time pursuant to Section 1.3 of the Agreement. "Purchaser" has the meaning set forth in Section 5.3(b) of the Agreement. "Receivable" means any indebtedness and other obligations owed to the Seller or any Originator by, or any right of the Seller or any Originator to payment from or on behalf of, an Eligible Obligor, whether constituting an account, chattel paper, instrument or general intangible, arising from the sale of goods by an Originator to an Eligible Obligor, and includes the obligation to pay any finance charges, fees and other charges with respect thereto. Indebtedness and other obligations arising from any one transaction, including indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction. Notwithstanding anything provided above, any indebtedness and other obligation owed to any Originator will not constitute a "Receivable" hereunder if such indebtedness or obligation has a stated maturity beyond 180 days and is evidenced by an instrument. "Receivables Pool" means, at any time, all of the then outstanding Receivables purchased or disposed of by the Seller pursuant to the Sale Agreement prior to the Facility Termination Date. "Reference Bank" means PNC. "Related Rights" has the meaning set forth in Section 1.1 of the Sale Agreement. Exhibit I-16 Receivables Purchase Agreement 42 "Related Security" means, with respect to any Receivable: (a) all of the Seller's and the respective Originator's interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods) relating to any sale giving rise to such Receivable, (b) all instruments and chattel paper that may evidence such Receivable, (c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto, and (d) all of the Seller's and the respective Originator's rights, interests and claims under the Contracts and all guaranties, indemnities, insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise. "Sale Agreement" means the Purchase and Sale Agreement, dated as of even date herewith, between the Seller and the Originators as such agreement may be amended, amended and restated, supplemented or otherwise modified from time to time. "Scheduled Maturity Date" means June 27, 2003. "Seller" has the meaning set forth in the preamble to the Agreement. "Seller's Share" of any amount means the greater of: (a) $0 and (b) such amount minus the Issuer's Share. "Servicer" has the meaning set forth in the preamble to the Agreement. "Servicing Fee" shall mean the fee referred to in Section 4.6 of the Agreement. "Settlement Period" means: (a) before the Facility Termination Date: (i) initially the period commencing on the date of the initial purchase pursuant to Section 1.2 of the Agreement (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Monthly Settlement Date, and (ii) thereafter, each period commencing on such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement Date, and (b) on and after the Facility Termination Date: such period (including a period of one day) as shall be selected from time to time by the Exhibit I-17 Receivables Purchase Agreement 43 Administrator or, in the absence of any such selection, each period of 30 days from the last day of the preceding Settlement Period. "Solvent" means, with respect to any Person at any time, a condition under which: (a) the fair value and present fair saleable value of such Person's total assets is, on the date of determination, greater than such Person's total liabilities (including contingent and unliquidated liabilities) at such time; (b) the fair value and present fair saleable value of such Person's assets is greater than the amount that will be required to pay such Person's probable liability on its existing debts as they become absolute and matured ("debts," for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent); (c) such Person is and shall continue to be able to pay all of its liabilities as such liabilities mature; and (d) such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business. For purposes of this definition: (i) the amount of a Person's contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability; (ii) the "fair value" of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value; (iii) the "regular market value" of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to Purchase such asset under ordinary selling conditions; and (iv) the "present fair saleable value" of an asset means the amount which can be obtained if such asset is sold with reasonable promptness in an arm's-length transaction in an existing and not theoretical market. "Standard & Poor's" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. Exhibit I-18 Receivables Purchase Agreement 44 "Subsidiary" means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person. "Termination Day" means: (a) each day on which the conditions set forth in Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day that occurs on or after the Facility Termination Date. "Termination Event" has the meaning specified in Exhibit V to the Agreement. "Termination Fee" means, for any Settlement Period during which a Termination Day occurs, the amount, if any, by which: (a) the additional Discount (calculated without taking into account any Termination Fee or any shortened duration of such Settlement Period pursuant to the definition thereof) that would have accrued during such Settlement Period on the reductions of Capital relating to such Settlement Period had such reductions not been made, exceeds (b) the income, if any, received by the Issuer from investing the proceeds of such reductions of Capital, as determined by the Administrator, which determination shall be binding and conclusive for all purposes, absent manifest error. "Total Reserves" means, at any time the sum of : (a) the Yield Reserve, plus (b) the greater of (i) the sum of (A) the Loss Reserve plus (B) the Dilution Reserve, and (ii) the Concentration Reserve. "Transaction Documents" means the Agreement, the Lock-Box Agreements, the Fee Letter, the Sale Agreement and all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered under or in connection with the Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with the Agreement. "UCC" means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction. "Unmatured Purchase and Sale Termination Event" means any event which, with the giving of notice or lapse of time, or both, would become a Purchase and Sale Termination Event. "Unmatured Termination Event" means an event that, with the giving of notice or lapse of time, or both, would constitute a Termination Event. Exhibit I-19 Receivables Purchase Agreement 45 "Yield Reserve" means, on any date, an amount equal to: (a) the Capital at the close of business of the Servicer on such date multiplied by (b)(i) the Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield Reserve Percentage on such date. "Yield Reserve Percentage" means, at any time: (BR + SFR) x 1.5 x TR ------------ 12 where: BR = the Base Rate in effect at such time, SFR = the Servicing Fee Rate; and TR = the aggregate Outstanding Balance of Eligible Receivables as of such time, divided by the average new Receivables made during the most recent three Accounting Months. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. Unless the context otherwise requires, "or" means "and/or," and "including" (and with correlative meaning "include" and "includes") means including without limiting the generality of any description preceding such term. Exhibit I-20 Receivables Purchase Agreement 46 Exhibit II CONDITIONS OF PURCHASES 1. Conditions Precedent to Initial Purchase. The Initial Purchase under this Agreement is subject to the following conditions precedent that the Administrator shall have received on or before the date of such purchase, each in form and substance (including the date thereof) satisfactory to the Administrator: (a) A counterpart of the Agreement and the other Transaction Documents executed by the parties thereto. (b) Certified copies of: (i) the resolutions of the Board of Directors of each of the Seller, the Originators and JLG authorizing the execution, delivery and performance by the Seller, the Originators and JLG, as the case may be, of the Agreement and the other Transaction Documents to which it is a party; (ii) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Agreement and the other Transaction Documents and (iii) the certificate of incorporation and by-laws of the Seller and of JLG. (c) A certificate of the Secretary or Assistant Secretary of the Seller, the Originators and JLG certifying the names and true signatures of its officers who are authorized to sign the Agreement and the other Transaction Documents. Until the Administrator receives a subsequent incumbency certificate from the Seller, an Originator or JLG, as the case may be, the Administrator shall be entitled to rely on the last such certificate delivered to it by the Seller, such Originator or JLG, as the case may be. (d) Acknowledgment copies, or time stamped receipt copies, of proper financing statements, duly filed on or before the date of such initial purchase under the UCC of all jurisdictions that the Administrator may deem necessary or desirable in order to perfect the interests of the Seller, JLG and the Issuer contemplated by the Agreement and the Sale Agreement. (e) Acknowledgment copies, or time-stamped receipt copies, of proper financing statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by the Originators, JLG or the Seller. (f) Completed UCC search reports, dated on or shortly before the date of the initial purchase hereunder, listing the financing statements filed in all applicable jurisdictions referred to in subsection (e) above that name the appropriate Originator or the Seller as debtor, together with copies of such other financing statements, and similar search reports with respect to judgment liens, federal tax liens Exhibit II-1 Receivables Purchase Agreement 47 and liens of the Pension Benefit Guaranty Corporation in such jurisdictions, as the Administrator may request, showing no Adverse Claims on any Pool Assets. (g) Favorable opinions, in form and substance reasonably satisfactory to the Administrator, of: (i) Covington & Burling, counsel for the Seller, the Originators, and the Servicer, and (ii) Thomas D. Singer, General Counsel and Assistant Secretary of JLG. (h) Satisfactory results of a review and audit (performed by representatives of the Administrator) of the Servicer's collection, operating and reporting systems, the Credit and Collection Policy of the Originators, historical receivables data and accounts, including satisfactory results of a review of the Servicer's operating location(s) and satisfactory review and approval of the Eligible Receivables in existence on the date of the initial purchase under the Agreement. (i) A pro forma Information Package representing the performance of the Receivables Pool for the Accounting Month before closing. (j) Evidence of payment by the Seller of all accrued and unpaid fees (including those contemplated by the Fee Letter), costs and expenses to the extent then due and payable on the date thereof, including any such costs, fees and expenses arising under or referenced in Section 5.4 of the Agreement and the Fee Letter. (k) The Fee Letter duly executed by the Seller and the Servicer. (l) Good standing certificates with respect to each of the Seller, the Originators and the Servicer issued by the Secretary of State (or similar official) of the state of each such Person's organization or formation and principal place of business. (m) The Liquidity Agreement and all other Transaction Documents duly executed by the parties thereto. (n) A computer file containing all information with respect to the Receivables as the Administrator or the Issuer may reasonably request. (o) Such other approvals, opinions or documents as the Administrator or the Issuer may reasonably request. (p) JLG has made capital contributions to the Seller. Exhibit II-2 Receivables Purchase Agreement 48 2. Conditions Precedent to All Purchases and Reinvestments. Each purchase (except as to clause (a), including the initial purchase) and each reinvestment shall be subject to the further conditions precedent that: (a) in the case of each purchase, the Servicer shall have delivered to the Administrator on or before such purchase, in form and substance satisfactory to the Administrator, a completed pro forma Information Package to reflect the level of Capital and related reserves after such subsequent purchase; and (b) on the date of such purchase or reinvestment the following statements shall be true (and acceptance of the proceeds of such purchase or reinvestment shall be deemed a representation and warranty by the Seller that such statements are then true): (i) the representations and warranties contained in Exhibit III to the Agreement are true and correct in all material respects on and as of the date of such purchase or reinvestment as though made on and as of such date; and (ii) no event has occurred and is continuing, or would result from such purchase or reinvestment, that constitutes a Termination Event or an Unmatured Termination Event. Exhibit II-3 Receivables Purchase Agreement 49 Exhibit III REPRESENTATIONS AND WARRANTIES 1. Representations and Warranties of the Seller. The Seller represents and warrants as follows: (a) The Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign corporation in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect. (b) The execution, delivery and performance by the Seller of the Agreement and the other Transaction Documents to which it is a party, including its use of the proceeds of purchases and reinvestments: (i) are within its corporate powers; (ii) have been duly authorized by all necessary corporate action; (iii) do not contravene or result in a default under or conflict with: (A) its charter or by-laws, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties. The Agreement and the other Transaction Documents to which it is a party have been duly executed and delivered by the Seller. (c) No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required for its due execution, delivery and performance by the Seller of the Agreement or any other Transaction Document to which it is a party, other than the Uniform Commercial Code filings referred to in Exhibit II to the Agreement, all of which shall have been filed on or before the date of the first purchase hereunder. (d) Each of the Agreement and the other Transaction Documents to which the Seller is a party constitutes its legal, valid and binding obligation enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) There is no pending or, to Seller's best knowledge, threatened action or proceeding affecting Seller or any of its properties before any Governmental Authority or arbitrator. Exhibit III-1 Receivables Purchase Agreement 50 (f) No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 in violation of Regulations T, U or X of the Federal Reserve Board. (g) The Seller is the legal and beneficial owner of the Pool Receivables and Related Security, free and clear of any Adverse Claim. Upon each purchase or reinvestment, the Issuer shall acquire a valid and enforceable perfected undivided percentage ownership or security interest, to the extent of the Purchased Interest, in each Pool Receivable then existing or thereafter arising and in the Related Security, Collections and other proceeds with respect thereto, free and clear of any Adverse Claim. The Agreement creates a security interest in favor of the Issuer in the Pool Assets, and the Issuer has a first priority perfected security interest in the Pool Assets, free and clear of any Adverse Claims. No effective financing statement or other instrument similar in effect covering any Pool Asset is on file in any recording office, except those filed in favor of the Seller pursuant to the Sale Agreement and the Issuer relating to the Agreement. (h) Each Information Package (if prepared by the Seller or one of its Affiliates, or to the extent that information contained therein is supplied by the Seller or an Affiliate), information, exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by or on behalf of the Seller to the Administrator in connection with the Agreement or any other Transaction Document to which it is a party is or will be complete and accurate in all material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished, (i) The Seller's principal place of business and chief executive office (as such terms are used in the UCC) and the office where it keeps its records concerning the Receivables are located at the address referred to in Sections 1(b) and 2(b) of Exhibit IV to the Agreement. (j) The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule II to the Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Administrator in accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box Agreements. (k) The Seller is not in violation of any order of any court, arbitrator or Governmental Authority. (l) Neither the Seller nor any of its Affiliates has any direct or indirect ownership or other financial interest in the Issuer. (m) No proceeds of any purchase or reinvestment will be used for any purpose that violates any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board. Exhibit III-2 Receivables Purchase Agreement 51 (n) Each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable. (o) No event has occurred and is continuing, or would result from a purchase in respect of, or reinvestment in respect of, the Purchased Interest or from the application of the proceeds therefrom, that constitutes a Termination Event or an Unmatured Termination Event. (p) The Seller has accounted for each sale of undivided percentage ownership interests in Receivables in its books and financial statements as sales, consistent with generally accepted accounting principles. (q) The Seller has complied in all material respects with the Credit and Collection Policies of the Originators with regard to each Receivable originated by the Originators. (r) The Seller has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it. (s) The Seller's complete corporate name is set forth in the preamble to the Agreement, and it does not use and has not during the last six years used any other corporate name, trade name, doing- business name or fictitious name, except as set forth on Schedule III to the Agreement and except for names first used after the date of the Agreement and set forth in a notice delivered to the Administrator pursuant to Section 1(l)(iv) of Exhibit IV to the Agreement. (t) The Seller is not an "investment company," or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. In addition, the Seller is not a "holding company," a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 2. Representations and Warranties of JLG (including in its capacity as the Servicer). JLG, individually and in its capacity as the Servicer, represents and warrants as follows: (a) JLG is a corporation duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, and is duly qualified to do business and is in good standing as a foreign corporation in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect. (b) The execution, delivery and performance by JLG of the Agreement and the other Transaction Documents to which it is a party, including the Servicer's use of the proceeds of purchases and reinvestments: (i) are within its powers as a corporation; (ii) have been duly authorized by all necessary Exhibit III-3 Receivables Purchase Agreement 52 corporate action; (iii) do not contravene or result in a default under or conflict with: (A) its articles of incorporation or bylaws, (B) any law, rule or regulation applicable to it, (C) any material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties. The Agreement and the other Transaction Documents to which JLG is a party have been duly executed and delivered by JLG. (c) No authorization, approval or other action by, and no notice to or filing with any Governmental Authority or other Person, is required for the due execution, delivery and performance by JLG of the Agreement or any other Transaction Document to which it is a party. (d) Each of the Agreement and the other Transaction Documents to which JLG is a party constitutes the legal, valid and binding obligation of JLG enforceable against JLG in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) The balance sheets of JLG and its consolidated Subsidiaries as at July 31, 1999 and the related statements of income and retained earnings for the fiscal year then ended, copies of which have been furnished to the Administrator, fairly present the financial condition of JLG and its consolidated Subsidiaries as at such date and the results of the operations of JLG and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied, and since July 31, 1999 there has been no event or circumstances which have had a Material Adverse Effect. (f) Except as disclosed in the most recent audited financial statements of JLG furnished to the Administrator, there is no pending or, to its best knowledge, threatened action or proceeding affecting it or any of its Subsidiaries before any Governmental Authority or arbitrator that could have a Material Adverse Effect. (g) No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 in violation of Regulation T, U or X of the Federal Reserve Board. (h) Each Information Package (if prepared by JLG or one of its Affiliates, or to the extent that information contained therein is supplied by JLG or an Affiliate), information, exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by or on behalf of the Servicer to the Administrator in connection with the Agreement is or will be complete and accurate in all Exhibit III-4 Receivables Purchase Agreement 53 material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished. (i) The principal place of business and chief executive office (as such terms are used in the UCC) of JLG and the office where it keeps its records concerning the Receivables are located at the address referred to in Section 2(b) of Exhibit IV to the Agreement. (j) JLG is not in violation of any order of any court, arbitrator or Governmental Authority, which could have a Material Adverse Effect. (k) Neither JLG nor any of its Affiliates has any direct or indirect ownership or other financial interest in the Issuer. (l) The Servicer has complied in all material respects with the Credit and Collection Policy of the Originators with regard to each Receivable originated by the Originators. (m) JLG has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it. (n) JLG is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. In addition, JLG is not a "holding company," a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. Exhibit III-5 Receivables Purchase Agreement 54 EXHIBIT IV COVENANTS 1. Covenants of the Seller. Until the latest of the Facility Termination Date, the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding or the date all other amounts owed by the Seller under the Agreement to the Issuer, the Administrator and any other Indemnified Party or Affected Person shall be paid in full: (a) Compliance with Laws, Etc. The Seller shall comply in all material respects with all applicable laws, rules, regulations and orders, and preserve and maintain its corporate existence, rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules and regulations or the failure so to preserve and maintain such rights, franchises, qualifications and privileges would not have a Material Adverse Effect. (b) Offices, Records and Books of Account, Etc. The Seller: (i) shall keep its principal place of business and chief executive office (as such terms or similar terms are used in the UCC) and the office where it keeps its records concerning the Receivables at the address of the Seller set forth under its name on the signature page to the Agreement or, pursuant to clause (l)(iv) below, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Issuer in the Receivables and related items (including the Pool Assets) have been taken and completed and (ii) shall provide the Administrator with at least 30 days' written notice before making any change in the Seller's name or making any other change in the Seller's identity or corporate structure (including a Change in Control) that could render any UCC financing statement filed in connection with this Agreement "seriously misleading" as such term (or similar term) is used in the UCC; each notice to the Administrator pursuant to this sentence shall set forth the applicable change and the effective date thereof. The Seller also will maintain and implement (or cause the Servicer to maintain and implement) administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable). Notwithstanding the above, in no event shall the Seller have or maintain, or be a partner in any partnership that has or maintains, its jurisdiction of organization, principal place of business or principal assets in any of the states of Colorado, Kansas, New Mexico, Oklahoma, Utah or Wyoming. (c) Performance and Compliance with Contracts and Credit and Collection Policy. The Seller shall (and shall cause the Servicer to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the applicable Credit and Collection Policies with regard to each Receivable and the related Contract. Exhibit IV-1 Receivables Purchase Agreement 55 (d) Ownership Interest, Etc. The Seller shall (and shall cause the Servicer to), at its expense, take all action necessary or desirable to establish and maintain a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a first priority perfected security interest in the Pool Assets, in each case free and clear of any Adverse Claim, in favor of the Issuer, including taking such action to perfect, protect or more fully evidence the interest of the Issuer as the Issuer, through the Administrator, may reasonably request. (e) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon or with respect to, any or all of its right, title or interest in, to or under any Pool Assets (including the Seller's undivided interest in any Receivable, Related Security or Collections, or upon or with respect to any account to which any Collections of any Receivables are sent), or assign any right to receive income in respect of any items contemplated by this paragraph. (f) Extension or Amendment of Receivables. Except as provided in the Agreement, the Seller shall not, and shall not permit the Servicer to, extend the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract). (g) Change in Business or Credit and Collection Policy. The Seller shall not make (or permit the Originators to make) any change in the character of its business or in any Credit and Collection Policy that would have a Material Adverse Effect with respect to the Receivables. (h) Audits. The Seller shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives: (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in the possession or under the control of the Seller (or the Originators) relating to Receivables and the Related Security, including the related Contracts, and (ii) to visit the offices and properties of the Seller and the Originators for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or the Seller's, JLG' or the Originators' performance under the Transaction Documents or under the Contracts with any of the officers, employees, agents or contractors of the Seller, JLG or any Originator having knowledge of such matters. (i) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors. Except as otherwise expressly provided herein, the Seller shall not, and shall not permit the Servicer or the Originators to, add or terminate any bank as a Lock-Box Bank or any account as a Lock- Box Account from those listed in Schedule III to the Agreement, or make any change in its instructions to Exhibit IV-2 Receivables Purchase Agreement 56 Obligors regarding payments to be made to the Seller, the Originators, the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented (which consent shall not be unreasonably withheld or delayed) thereto in writing and the Administrator shall have received copies of all agreements and documents (including Lock-Box Agreements) that it may reasonably request in connection therewith. (j) Deposits to Lock-Box Accounts. The Seller shall (or shall cause the Servicer to): (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock-Box Account on a daily basis), and (ii) deposit, or cause to be deposited, any Collections received by it, the Servicer or any Originator into Lock-Box Accounts not later than two Business Days after receipt thereof, provided that the Seller may deposit or permit to be deposited the Collections into its bank account in an aggregate amount not exceeding $30,000 (which amount will held by the Seller (or any Person on behalf of the Seller, including the Servicer) in trust for the Purchaser); provided, further, that notwithstanding anything provided in the previous proviso, if there shall exist a Termination Event or an Unmatured Termination Event, the Seller shall, or shall cause the Servicer to, deposit all Collections into the Lock-Box Account on the day such Collections are received. Each Lock- Box Account shall at all times be subject to a Lock-Box Agreement. The Seller will not (and will not permit the Servicer to) deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections. (k) Marking of Records. At its expense, the Seller shall: (i) mark (or cause the Servicer to mark) its master data processing records relating to Pool Receivables and related Contracts, including with a legend evidencing that the undivided percentage ownership interests with regard to the Purchased Interest related to such Receivables and related Contracts have been sold in accordance with the Agreement, and (ii) cause each Originator so to mark its master data processing records pursuant to the Sale Agreement. (l) Reporting Requirements. The Seller will provide to the Administrator (in multiple copies, if requested by the Administrator) the following: (i) as soon as available and in any event within 90 days after the end of each fiscal year of the Seller, a copy of the annual report for such year for the Seller, containing unaudited financial statements for such year certified as to accuracy by the chief financial officer or treasurer of the Seller; (ii) as soon as possible and in any event within five days after the occurrence of each Termination Event or Unmatured Termination Event, a statement of the chief financial officer of the Seller setting forth details of such Termination Event or Unmatured Termination Event and the action that the Seller has taken and proposes to take with respect thereto; Exhibit IV-3 Receivables Purchase Agreement 57 (iii) promptly after the filing or receiving thereof, copies of all reports and notices that the Seller or any Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or that the Seller or any Affiliate receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which the Seller or any of its Affiliates is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that could, in the aggregate, result in the imposition of material liability on the Seller and/or any such Affiliate; (iv) at least thirty days before any change in the Seller's name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof; (v) promptly after the Seller obtains knowledge thereof, notice of any: (A) material litigation, investigation or proceeding that may exist at any time between the Seller and any Person or (B) material litigation or proceeding relating to any Transaction Document; (vi) promptly after the occurrence thereof, notice of a material adverse change in the business, operations, property or financial or other condition of the Seller, the Servicer or any Originator; and (vii) such other information respecting the Receivables or the condition or operations, financial or otherwise, of the Seller or any of its Affiliates as the Administrator may from time to time reasonably request. (m) Certain Agreements. Without the prior written consent of the Administrator, the Seller will not (and will not permit the Originators to) amend, modify, waive, revoke or terminate any Transaction Document to which it is a party or any provision of Seller's certificate of incorporation or by-laws. (n) Restricted Payments. (i) Except pursuant to clause (ii) below, the Seller will not: (A) purchase or redeem any shares of its capital stock, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as "Restricted Payments"). (ii) Subject to the limitations set forth in clause (iii) below, the Seller may make Restricted Payments so long as such Restricted Payments are made only in one or more of the following ways: (A) the Seller may make cash payments (including prepayments) on the Company Notes in accordance with its terms, and (B) if no amounts are then outstanding under the Company Notes, the Seller may declare and pay dividends. Exhibit IV-4 Receivables Purchase Agreement 58 (iii) The Seller may make Restricted Payments only out of the funds it receives pursuant to Sections 1.4(b)(ii) and (iv) of the Agreement or out of capital surplus (with prior reasonable consent of the Administrator). Furthermore, the Seller shall not pay, make or declare: (A) any dividend if, after giving effect thereto, the Seller's tangible net worth would be less than $6,000,000, (B) any Restricted Payment (including any dividend) if, after giving effect thereto, any Termination Event or Unmatured Termination Event shall have occurred and be continuing. (o) Other Business. The Seller will not: (i) engage in any business other than the transactions contemplated by the Transaction Documents; (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers' acceptances) other than pursuant to this Agreement or the Company Note; or (iii) form any Subsidiary or make any investments in any other Person; provided, however, that the Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day operations of the Seller (such as expenses for stationery, audits, maintenance of legal status, etc.). (p) Use of Seller's Share of Collections. The Seller shall apply the Seller's Share of Collections to make payments in the following order of priority: (i) the payment of its expenses (including all obligations payable to the Issuer and the Administrator under the Agreement and under the Fee Letter); (ii) the payment of accrued and unpaid interest on the Company Note; and (iii) other legal and valid corporate purposes. (q) Tangible Net Worth. The Seller will not permit its tangible net worth, at any time, to be less than $6,000,000. 2. Covenants of the Servicer and JLG. Until the latest of the Facility Termination Date, the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding or the date all other amounts owed by the Seller under the Agreement to the Issuer, the Administrator and any other Indemnified Party or Affected Person shall be paid in full: (a) Compliance with Laws, Etc. The Servicer and, to the extent that it ceases to be the Servicer, JLG shall comply (and shall cause the Originators to comply) in all material respects with all applicable laws, rules, regulations and orders, and preserve and maintain its corporate existence, rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules and regulations or the failure so to preserve and maintain such existence, rights, franchises, qualifications and privileges would not have a Material Adverse Effect. (b) Offices, Records and Books of Account, Etc. The Servicer and, to the extent that it ceases to be the Servicer, JLG, shall keep (and shall cause each Originator to keep) its principal place of business and chief executive office (as such terms or similar terms are used in the applicable UCC) and the office where it keeps its records concerning the Receivables at the address of the Servicer set forth under its name on the signature page to the Agreement or, upon at least 30 days' prior written notice of a Exhibit IV-5 Receivables Purchase Agreement 59 proposed change to the Administrator, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Issuer in the Receivables and related items (including the Pool Assets) have been taken and completed. The Servicer and, to the extent that it ceases to be the Servicer, JLG, also will (and will cause each Originator to) maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable). (c) Performance and Compliance with Contracts and Credit and Collection Policy. The Servicer and, to the extent that it ceases to be the Servicer, JLG, shall (and shall cause each Originator to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract. (d) Extension or Amendment of Receivables. Except as provided in the Agreement, the Servicer and, to the extent that it ceases to be the Servicer, JLG, shall not extend (and shall not permit the Originators to extend), the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract. (e) Change in Business or Credit and Collection Policy. The Servicer and, to the extent that it ceases to be the Servicer, JLG, shall not make (and shall not permit the Originators to make) any change in the character of its business or Credit and Collection Policy, that would have a Material Adverse Effect. (f) Audits. The Servicer and, to the extent that it ceases to be the Servicer, JLG, shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives: (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in its possession or under its control relating to Receivables and the Related Security, including the related Contracts; and (ii) to visit its offices and properties for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or its performance hereunder or under the Contracts with any of its officers, employees, agents or contractors having knowledge of such matters. (g) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors. Unless as otherwise expressly provided herein, the Servicer and, to the extent that it ceases to be the Servicer, JLG, shall not (and shall not permit the Originators to) add or terminate any bank as a Exhibit IV-6 Receivables Purchase Agreement 60 Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule III to the Agreement, or make any change in its instructions to Obligors regarding payments to be made to the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented thereto in writing (which consent shall not be unreasonably withheld or delayed) and the Administrator shall have received copies of all agreements and documents (including Lock-Box Agreements) that it may reasonably request in connection therewith. (h) Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock- Box Account on a daily basis); and (ii) deposit, or cause to be deposited, any Collections received by it into Lock-Box Accounts not later than one Business Day after receipt thereof. Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement. (i) Marking of Records. At its expense, the Servicer shall mark its master data processing records relating to Pool Receivables and related Contracts, including with a legend evidencing that the undivided percentage ownership interests with regard to the Purchased Interest related to such Receivables and related Contracts have been sold in accordance with the Agreement. (j) Reporting Requirements. JLG shall provide to the Administrator (in multiple copies, if requested by the Administrator) the following: (i) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Seller, unaudited Balance Sheets of the Seller as of the end of such Fiscal Quarter and statements of income, retained earnings and cash flow of the Seller for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by the chief financial officer of the Seller; (ii) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of JLG, unaudited balance sheets of JLG and its consolidated Subsidiaries as of the end of such Fiscal Quarter and statements of income, retained earnings and cash flow of JLG and its consolidated Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by the chief financial officer of JLG; (iii) as soon as available and in any event within 90 days after the end of each Fiscal Year of JLG, a copy of the annual report for such Fiscal Year of JLG and its consolidated Subsidiaries, containing financial statements for such Fiscal Year audited by independent certified public accountants of nationally recognized standing; Exhibit IV-7 Receivables Purchase Agreement 61 (iv) as to the Servicer only, as soon as available and in any event not later than two Business Days prior to the Monthly Settlement Date, an Information Package as of the most recently completed Accounting Month or, if in the opinion of the Administrator reasonable grounds for insecurity exist with respect to the collectibility of the Pool Receivables or with respect to the Seller or Servicer's performance or ability to perform its obligations under the Agreement, within six Business Days of a request by the Administrator, an Information Package for such periods as is specified by the Administrator (but in no event more frequently than weekly); (v) as soon as possible and in any event within five days after becoming aware of the occurrence of each Termination Event or Unmatured Termination Event, a statement of the chief financial officer of JLG setting forth details of such Termination Event or Unmatured Termination Event and the action that such Person has taken and proposes to take with respect thereto; (vi) promptly after the sending or filing thereof, copies of all reports that JLG sends to any of its security holders, and copies of all reports and registration statements that JLG or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; provided that any filings with the Securities and Exchange Commission that have been granted "confidential" treatment shall be provided promptly after such filings have become publicly available; (vii) promptly after the filing or receiving thereof, copies of all reports and notices that JLG or any of its Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or that such Person or any of its Affiliates receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which such Person or any of its Affiliate is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that could, in the aggregate, result in the imposition of material liability on JLG and/or any such Affiliate; (viii) at least thirty days before any change in JLG' or any Originator's name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof; (ix) promptly after JLG obtains knowledge thereof, notice of any: (A) litigation, investigation or proceeding that may exist at any time between JLG or any of its Subsidiaries and any Governmental Authority that, if not cured or if adversely determined, as the case may be, would have a Material Adverse Effect; (B) litigation or proceeding, actual or threatened, that is reasonably likely to have a Material Adverse Effect; or (C) litigation or proceeding relating to any Transaction Document; Exhibit IV-8 Receivables Purchase Agreement 62 (x) promptly after the occurrence thereof, notice of any adverse change in the business, operations, property or financial or other condition of JLG or any of its Subsidiaries that is reasonably likely to have Material Adverse Effect; and (xi) such other information respecting the Receivables or the condition or operations, financial or otherwise, of JLG or any of its Affiliates as the Administrator may from time to time reasonably request. 3. Separate Existence. Each of the Seller and JLG hereby acknowledges that the Purchasers, the Issuer and the Administrator are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Seller's identity as a legal entity separate from JLG and its Affiliates. Therefore, from and after the date hereof, each of the Seller and JLG shall take all steps specifically required by the Agreement or reasonably required to continue the Seller's identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of JLG and any other Person, and is not a division of JLG, its Affiliates or any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the other covenants set forth herein, each of the Seller and JLG shall take such actions as shall be required in order that: (a) The Seller will be a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to: (i) purchasing or otherwise acquiring from the Originators (or their Affiliates), owning, holding, granting security interests or selling interests in Pool Assets (or other receivables originated by the Originators or their Affiliates, and certain related assets), (ii) entering into agreements for the selling and servicing of the Receivables Pool (or other receivables pools originated by the Originators or their Affiliates), and (iii) conducting such other activities as it deems necessary or appropriate to carry out its primary activities; (b) The Seller shall not engage in any business or activity, or incur any indebtedness or liability, other than as expressly permitted by the Transaction Documents; (c) Not less than one member of the Seller's Board of Directors (the "Independent Director") shall be an individual who is not a direct, indirect or beneficial stockholder, officer, director, employee, affiliate, associate or supplier of JLG or any of its Affiliates (other than the Seller). The certificate of incorporation of the Seller shall provide that: (i) the Seller's Board of Directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless the Independent Director shall approve the taking of such action in writing before the taking of such action, and (ii) such provision cannot be amended without the prior written consent of the Independent Director; (d) The Independent Director shall not at any time serve as a trustee in bankruptcy for the Seller, JLG or any Affiliate thereof; Exhibit IV-9 Receivables Purchase Agreement 63 (e) Any employee, consultant or agent of the Seller will be compensated from the Seller's funds for services provided to the Seller. The Seller will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee, and a manager, which manager will be fully compensated from the Seller's funds; (f) The Seller will contract with the Servicer to perform for the Seller all operations required on a daily basis to service the Receivables Pool. The Seller will pay the Servicer the Servicing Fee pursuant hereto. The Seller will not incur any material indirect or overhead expenses for items shared with JLG (or any other Affiliate thereof) that are not reflected in the Servicing Fee. To the extent, if any, that the Seller (or any Affiliate thereof) shares items of expenses not reflected in the Servicing Fee or the manager's fee, such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered; it being understood that JLG shall pay all expenses relating to the preparation, negotiation, execution and delivery of the Transaction Documents, including legal, agency and other fees; (g) The Seller's operating expenses will not be paid by JLG or any other Affiliate thereof; (h) All of the Seller's business correspondence and other communications shall be conducted in the Seller's own name and on its own separate stationery; (i) The Seller's books and records will be maintained separately from those of JLG and any other Affiliate thereof; (j) All financial statements of JLG or any Affiliate thereof that are consolidated to include Seller will contain detailed notes clearly stating that: (i) a special purpose corporation exists as a Subsidiary of JLG, and (ii) each Originator has sold receivables and other related assets to such special purpose Subsidiary that, in turn, has sold undivided interests therein to certain financial institutions and other entities; (k) The Seller's assets will be maintained in a manner that facilitates their identification and segregation from those of JLG or any Affiliate thereof; (l) The Seller will strictly observe corporate formalities in its dealings with JLG or any Affiliate thereof, and funds or other assets of the Seller will not be commingled with those of JLG or any Affiliate thereof except as permitted by the Agreement in connection with servicing the Pool Exhibit IV-10 Receivables Purchase Agreement 64 Receivables. The Seller shall not maintain joint bank accounts or other depository accounts to which JLG or any Affiliate thereof has independent access. The Seller is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of JLG or any Subsidiary or other Affiliate of JLG. The Seller will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Seller and such Affiliate; and (m) The Seller will maintain arm's-length relationships with JLG (and any Affiliate thereof). Any Person that renders or otherwise furnishes services to the Seller will be compensated by the Seller at market rates for such services it renders or otherwise furnishes to the Seller. Neither the Seller nor JLG will be or will hold itself out to be responsible for the debts of the other or the decisions or actions respecting the daily business and affairs of the other. The Seller and JLG will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity. (n) JLG shall not pay the salaries of Seller's employees, if any. Exhibit IV-11 Receivables Purchase Agreement 65 Exhibit V TERMINATION EVENTS Each of the following shall be a "Termination Event": (a) (i) the Seller, JLG, any Originator or the Servicer (if JLG or any of its Affiliates) shall fail to perform or observe any term, covenant or agreement under the Agreement or any other Transaction Document and, except as otherwise provided herein, such failure shall continue for 10 days after knowledge or notice thereof, (ii) the Seller or the Servicer shall fail to make when due any payment or deposit to be made by it under the Agreement and such failure shall continue unremedied for one Business Day or (iii) JLG shall resign as Servicer, and no successor Servicer reasonably satisfactory to the Administrator shall have been appointed; (b) JLG (or any Affiliate thereof) shall fail to transfer to any successor Servicer when required any rights pursuant to the Agreement that JLG (or such Affiliate) then has as Servicer; (c) any representation or warranty made or deemed made by the Seller, JLG or Originator (or any of their respective officers) under or in connection with the Agreement or any other Transaction Document, or any information or report delivered by the Seller, JLG or Originator or the Servicer pursuant to the Agreement or any other Transaction Document, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered, and shall remain incorrect or untrue for 10 days after notice to the Seller or the Servicer of such inaccuracy; (d) the Seller or the Servicer shall fail to deliver the Information Package pursuant to the Agreement, and such failure shall remain unremedied for two days; (e) the Agreement or any purchase or reinvestment pursuant to the Agreement shall for any reason: (i) cease to create, or the Purchased Interest shall for any reason cease to be, a valid and enforceable perfected undivided percentage ownership or security interest to the extent of the Purchased Interest in each Pool Receivable, the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool Assets, or the interest of the Issuer with respect to such Pool Assets shall cease to be, a valid and enforceable first priority perfected security interest, free and clear of any Adverse Claim, (f) the Seller, JLG or Originator shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Seller, JLG or Originator seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, Exhibit V-1 Receivables Purchase Agreement 66 insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Seller, JLG or Originator shall take any corporate action to authorize any of the actions set forth above in this paragraph; (g) (i) at any time: (A) the Default Ratio shall exceed 7.5% or (B) the Delinquency Ratio shall exceed 11.5%; (ii) for any three consecutive Accounting Months: (A) the average Default Ratio shall exceed 6.5%, (B) the average Delinquency Ratio shall exceed 8.5% or (C) the Dilution Ratio shall exceed 4.5%; or (iii) at any time, the aggregate outstanding Capital shall exceed the Purchase Limit and such excess remain continued for five consecutive days. (h) a Change in Control shall occur, (i) at any time (i) the sum of (A) the Capital plus (B) the Total Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus (B) the Issuer's Share of the amount of Collections then on deposit in the Lock-Box Accounts (other than amounts set aside therein representing Discount and fees), and such circumstance shall not have been cured within two Business Days, (j) (i) JLG or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any of its Debt that is outstanding in a principal amount of at least $10,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (and shall have not been waived); or (ii) any other event shall occur or condition shall exist under any agreement, mortgage, indenture or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement, mortgage, indenture or instrument (and shall have not been waived), if, in either case: (a) the effect of such non-payment, event or condition is to give the applicable debtholders the right (whether acted upon or not) to accelerate the maturity of such Debt, or (b) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each case before the stated maturity thereof; (k) either: (i) a contribution failure shall occur with respect to any Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA, (ii) the Internal Revenue Service shall file a notice of lien asserting a claim or claims of $100,000 or more in the aggregate pursuant to the Internal Revenue Code with regard to any of the assets of Seller, Originator, JLG or any ERISA Affiliate and such lien shall have Exhibit V-2 Receivables Purchase Agreement 67 been filed and not released within 10 days, or (iii) the Pension Benefit Guaranty Corporation shall, or shall indicate its intention in writing to the Seller, Originator, JLG or any ERISA Affiliate to, either file a notice of lien asserting a claim pursuant to ERISA with regard to any assets of the Seller, Originator, JLG or any ERISA Affiliate or terminate any Benefit Plan that has unfunded benefit liabilities, or any steps shall have been taken to terminate any Benefit Plan subject to Title IV of ERISA so as to result in any liability in excess of $1,000,000 and such lien shall have been filed and not released within 10 days. Exhibit V-3 Receivables Purchase Agreement 68 Schedule I CREDIT AND COLLECTION POLICY Receivables Purchase Agreement 69 Schedule II LOCK-BOX BANKS AND LOCK-BOX POLICY Lockbox Policy: All domestic invoices issued on behalf of JLG Industries, Inc. are designated for payment to Allfirst Bank as outlined below. All invoices issued on behalf of The Gradall Company and The Gradall Orrville Company are designated for payment to Bank One Corporation outlined below. Lockbox Banks: Allfirst Bank P.O. Box 64451 110 S. Paca Street Baltimore, MD 21201 The Gradall Company Bank One Corporation, N.A. P.O. Box 710954 Columbus, OH 43271-0954 The Gradall Orrville Company Bank One Corporation, N.A. P.O. Box 710966 Columbus, OH 43271-0966 Receivables Purchase Agreement 70 Schedule III TRADE NAMES JLG Industries (Europe) Division JLG Industries (Australia) Division JLG Financial Services Receivables Purchase Agreement 71 Schedule IV ACCOUNTING MONTHS Receivables Purchase Agreement 72 Annex A FORM OF INFORMATION PACKAGE Receivables Purchase Agreement 73 Annex B FORM OF PURCHASE NOTICE _____________, [2000] PNC Bank, National Association One PNC Plaza, 3rd Floor 249 Fifth Avenue Pittsburgh, PA 15222-2707 Ladies and Gentlemen: Reference is hereby made to the Receivables Purchase Agreement, dated as of June ____, 2000 (as heretofore amended or supplemented, the "Receivables Purchase Agreement"), among Fulton Funding Corporation, ("Seller"), JLG, as Servicer, Market Street Funding Corporation ("Issuer") and PNC Bank National Association, (the "Administrator"). Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement. This letter constitutes a Purchase Notice pursuant to Section 1.2(a) of the Receivables Purchase Agreement. Seller desires to sell an undivided variable interest in a pool of receivables on _________, 2000, for a purchase price of $_______________. Subsequent to this Purchase, the aggregate outstanding Capital will be $___________. Seller hereby represents and warrants as of the date hereof, and as of the date of Purchase, as follows: (i) the representations and warranties contained in Exhibit III of the Receivables Purchase Agreement are correct in all material respects on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates; (ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase; (iii) after giving effect to the purchase proposed hereby, the aggregate outstanding Capital of the Purchased Interest will not exceed 100% and the Capital will not exceed the Purchase Limit; and (iv) the Facility Termination Date shall not have occurred. Annex B - 1 Receivables Purchase Agreement 74 IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be executed by its duly authorized officer as of the date first above written. FULTON FUNDING CORPORATION By: ____________________________________ Name: Title: Annex B - 2 Receivables Purchase Agreement 75 Annex C FORM OF PAYDOWN NOTICE PNC Bank, National Association 249 Fifth Avenue Pittsburgh, Pennsylvania 15222-2707 Attention: John Smathers Ladies and Gentlemen: Reference is hereby made to the Receivables Purchase Agreement, dated as of June , 2000 (as amended, supplemented or otherwise modified, the "Receivables Purchase Agreement"), among Fulton Funding Corporation, as Seller, JLG Industries, Inc., as Servicer, Market Street Funding Corporation, as Issuer and PNC Bank, National Association, as Administrator. Capitalized terms used in this paydown notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement. This letter constitutes a paydown notice pursuant to Section 1.4(f)(i) of the Receivables Purchase Agreement. The Seller desires to reduce the Capital on (1) by the application of $ in cash to pay Capital and Discount to accrue (until such cash can be used to pay commercial paper notes) with respect to such Capital, together with all costs related to such reduction of Capital. - ---------------------------- (1) Notice must be given at least two Business Days' prior to the requested paydown date, in the case of reductions of $75,000,000 or less. Receivables Purchase Agreement 76 IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be executed by its duly authorized officer as of the date first above written. FULTON FUNDING CORPORATION By: ___________________________________ Name: Title: S-1 Receivables Purchase Agreement EX-4.8 6 j8416801ex4-8.txt AGREEMENT TO DISCLOSE UPON REQUEST 1 EXHIBIT 4.8 AGREEMENT TO DISCLOSE UPON REQUEST JLG Industries, Inc. (the "Company") hereby agrees that, with respect to any agreement relating to long-term debt of the Company that has not been filed as an exhibit to the Company's reports filed pursuant to the Securities Exchange Act of 1934 because such filing is not required pursuant to the provisions of S-K Item 601 (b) (4) (iii) (A), the Company will furnish a copy of any such agreement to the Securities and Exchange Commission upon request. JLG INDUSTRIES, INC. (Registrant) /s/ James H. Woodward, Jr. ------------------------------------- James H. Woodward, Jr., Senior Vice President and Chief Financial Officer 1 EX-10.14 7 j8416801ex10-14.txt OFFER OF EMPLOYMENT TO JAMES F. WOODWARD 1 EXHIBIT 10.14 July 18, 2000 PERSONAL & CONFIDENTIAL James H. Woodward 67 Foxgate Circle West Bowling Green, OH 43402 Dear Jim: We are pleased to confirm to you our offer of employment with JLG Industries, Inc. (the "Company") according to the terms set forth in this letter: Title: Senior Vice President and Chief Financial Officer. Commencement Date: September 1, 2000 (the "Commencement Date"). Base Salary: $280,000 per annum, payable semi-monthly. Signing Bonus: You will receive a signing bonus of $115,000 payable on the Commencement Date and on the Commencement Date you will receive 15,000 Restricted Shares granted pursuant to the Company's Stock Incentive Plan (the "Stock Plan") and evidenced by a separate Restricted Share Agreement. The Restricted Shares will vest in three equal installments on the third, fourth and fifth anniversaries of the Commencement Date. Incentive Plan: You will participate in the Company's Annual Management Incentive Plan (the "MIP"). The MIP is designed to offer "performance based compensation" in compliance with Internal Revenue Code Section 162(m). Accordingly, your participation will be evidenced by a separate award letter pursuant to the terms of the MIP. The final amount awarded each year will be determined by the Company's Compensation Committee typically based upon a percentage of your base salary, multiplied by factors determined by reference to the level of achievement of your personal performance objective(s), and the applicable Company performance modifier for the year, with the resulting amount subject to reduction based on other subjective criteria at the discretion of the Committee. 1 2 For fiscal 2001, your award, before exercise of the Committee's discretion, will range from $0 to $405,000 based upon 60% times your prorated (11 months) base salary for the year, multiplied by a percentage of up to 150% based upon achievement of your personal performance objective(s) and by a percentage ranging up to 175% for "distinguished" Company performance based on a matrix of fully diluted earnings per share and free cash flow outcomes for fiscal 2001. Stock Options: On the Commencement Date, you will receive stock options to purchase 43,500 shares of Common Stock of the Company. Subject to your continued employment with the Company, they will vest in three equal installments on the third, fourth and fifth anniversaries of the Commencement Date. The options will be granted pursuant to the Stock Plan and will be evidenced a stock option agreement entered into pursuant to the Stock Plan. The exercise price of the options will be the mean average of the high and low prices at which the Company's shares are traded on the New York Stock Exchange ("NYSE") on the trading day immediately preceding the Commencement Date. Unexercised options, including any unvested options, will cease to be exercisable on the tenth anniversary of the Commencement Date. Change in Control: All options and Restricted Shares will vest and become fully exercisable immediately upon a "Change in Control" as defined in the Stock Plan. Other Benefit Plans: You will be eligible for the standard retirement and other benefit programs provided for officers of the Company. Without limiting the generality of the foregoing, these benefits include: (i) participation in the Company's 401(k) plan which currently provides for Company matching of 50% of the first 5% of Eligible Compensation contributed to the plan and a discretionary profit sharing contribution by the Company which typically has been approximately 5% of Eligible Compensation not in excess of the Social Security wage base plus 10% of Eligible Compensation in excess of the Social Security wage base, (ii) participation in the Company's Supplemental Executive Retirement Plan ("SERP") which, for Senior Vice Presidents at full vesting after five years of service currently provides a retirement benefit of 55% of the average highest two-year salary plus MIP award reduced principally by (a) all defined benefit or cash balance plan amounts received from JLG contributions or from other employers, (b) all other defined contribution balances received from JLG contributions or other employers, and (c) 50% of 2 3 social security benefits (SERP benefits vest 25% per year commencing with the second anniversary of the Commencement Date until fully vested), (iii) participation in the Company's Executive Deferred Compensation Plan which permits participants to elect to defer receipt of a portion of salary and MIP award and to direct the investment of deferred amounts among the investment options available under the Company's 401(k) plan, (iv) participation in the Company's medical insurance plan and supplemental executive medical benefit program, (v) term life insurance which currently provides a death benefit equal to two times annual base salary, and (vi) four weeks of paid vacation per year (not including public or Company holidays). In addition, the Company will reimburse you for the reasonable, annual cost of tax preparation and, to facilitate appropriate business entertainment, during the term of your employment, the Company will pay reasonable membership initiation fees and annual dues for your admission as a member of a country club located within a 50 mile radius of the Company's headquarters. Transition Benefits: In accordance with the Company's relocation policy, the Company will reimburse you for all reasonable and necessary expenses that you incur in connection with your relocation within 12 months following the Commencement Date from your current principal residence to a new principal residence within a 50 mile radius of the Company's headquarters, including associated commuting expense and temporary living arrangements prior to relocation of your principal residence. Separation: Your employment will be "at will". Either you or the Company may terminate your employment at any time for any reason. Promptly upon termination of your employment, you will return to the Company all documents, papers, materials and other property of the Company relating to its affairs or containing proprietary information of the Company that are then in your possession or under your control. Pursuant to a separate agreement, you shall be entitled to severance benefits under the Company's Executive Severance Plan, as and to the extent your employment is terminated during the first 2 years of employment, which currently provides for any "Dismissed" participant a "Severance Benefit" equal to an "Applicable Percentage" of then current base salary plus MIP awards for the 12 months preceding the termination date. In the case of termination due to a "Change in Control" the MIP award is deemed to be the then current year "target" award. Your "Applicable Percentage" will be 100%. 3 4 Confidentiality: You agree not to disclose to anyone (except to the extent reasonably necessary for you to perform your duties) any confidential or proprietary materials, documents, records or other confidential or proprietary information concerning the business or affairs of the Company or any affiliates thereof which you may have acquired in the course of or as an incident to your employment with the Company or any affiliates thereof. You represent and warrant that there are no contractual impediments which restrict your acceptance of this employment and that you will not bring to your employment or use in connection with such employment any confidential or proprietary information that you used or had access to by reason of any previous employment that is the property of any previous employer. Non-Compete: During the term of your employment with the Company and for a period of two years thereafter, you will not, without the prior written consent of the Board of Directors of the Company, directly or indirectly engage in or assist any activity which is competitive with the business of the Company (other than on behalf of the Company) including, without limitation, whether such engagement or assistance is an officer, director, employee, partner or investor (other than as a holder of less than 5% of the outstanding capital stock of a publicly traded corporation), anywhere in the world that the Company has been engaged. For a period of two years after the termination of your employment, you will not solicit for employment any employees of the Company. You agree that if the scope of these obligations are determined to exceed that which may be enforceable under applicable law, the scope of these obligations shall be reformed to provide for enforcement to the maximum extent permitted under applicable law. Intellectual Property Rights: You agree that any developments by way of invention, design, copyright, trademark or other matters which may be developed or perfected by you during the term of your employment, and which relate to the business of the Company, shall be the property of the Company without any interest therein by you, and you will, at the request and expense of the Company, apply for and prosecute letters patent thereon in the United States or in foreign countries if the Company so requests, and will assign and transfer the same to the Company together with any letters patent, copyrights, trademarks and applications therefor; provided, however, that that foregoing shall not 4 5 apply to an invention that you develop entirely on your own time without using the Company's equipment, supplies, facilities or trade secret information. Assignment; Successors: This letter agreement is personal in its nature and none of the parties hereto shall, without the consent of others, assign or transfer this letter agreement or any rights or obligations hereunder, provided that, in the event of the merger, consolidation, transfer, or sale of all or substantially all of the assets of the Company with or to any other individual or entity, this letter agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder, and all references herein to the "Company" shall refer to such successor. The Company will require that any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to assume expressly and agree to perform this letter agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This letter agreement is governed by and is to be construed and enforced in connection with the laws of the Commonwealth of Pennsylvania and any action commenced hereunder must be brought in a court located in the such Commonwealth. The obligations of the Company set forth in this letter agreement are subject to approval of this letter agreement by the Company's Board of Directors. This letter agreement, including the various separate agreements referred to herein, embodies our entire understanding and supersedes all prior understandings, whether oral or written, relating to this offer. This letter agreement cannot be amended or otherwise modified except by a writing signed by you and the Company. We look forward to welcoming you to the Company. Sincerely yours, JLG INDUSTRIES, INC. L. David Black Chairman of the Board and Chief Executive Officer Employment Offer Accepted:_____________________________ Employment Date:_______________________________________ 5 EX-21 8 j8416801ex21.txt SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Percent of Voting Securities Jurisdiction of Owned by Subsidiary Incorporation the Company - ---------- ------------- ----------- Fulton Funding Corporation Delaware 100% Fulton Industries, Inc. Pennsylvania 100% Fulton International Foreign Sales Corporation Barbados 100% Fulton International, Inc. Delaware 100% Fulton Maquinaria S.L. Spain 100% Gradall Industries, Inc. Delaware 100% JLG Industries (Propriety) Limited South Africa 100% JLG Deutschland GmbH Germany 100% JLG Equipment Services, Inc. Pennsylvania 100% JLG Europe BV Netherlands 100% JLG Industries, GmbH Germany 100% JLG Industries (Italia) S.r.L. Italy 100% JLG Manufacturing, LLC Pennsylvania 100% JLG Industries (Norge) AS Norway 100% JLG Industries (United Kingdom) Ltd. United Kingdom 100% JLG Polaska Poland 100% JLG Properties Australia Pty Limited Australia 100% JLG Sverige AB Sweden 100% The Gradall Company Ohio 100% The Gradall Orrville Company Ohio 100% Skandivaniska Industrimaskiner AB Sweden 100% Svensk Bygglift AB Sweden 100% The financial statements of the above listed subsidiaries are included in the Company's Consolidated Financial Statements incorporated herein by reference. 1 EX-23 9 j8416801ex23.txt CONSENT OF ERNST & YOUNG 1 Exhibit 23 The Board of Directors JLG Industries, Inc. McConnellsburg, PA 17233 We consent to the incorporation by reference in the Registration Statements on Form S-8, No. 33-60366, No. 33-61333; and No. 33-75746 of our report dated September 6, 2000, relating to the audited consolidated financial statements of JLG Industries, Inc. included in the Annual Report (Form 10-K) for the year ended July 31, 2000. /s/ Ernst & Young LLP Baltimore, Maryland October 2, 2000 1 EX-27 10 j8416801ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 12-MOS JUL-31-2000 AUG-01-1999 JUL-31-2000 25,456 0 177,714 5,203 147,991 356,552 170,280 64,401 653,587 190,628 0 0 0 8,729 315,322 653,587 1,056,168 1,056,168 825,082 940,682 (1,146) 0 20,589 96,043 35,536 60,507 0 0 0 60,507 1.39 1.37
EX-99 11 j8416801ex99.txt CAUTIONARY STATEMENTS 1 Exhibit 99 CAUTIONARY STATEMENTS PURSUANT TO THE SECURITIES LITIGATION REFORM ACT OF 1995 The Company wishes to inform its investors of the following important factors that in some cases have affected, and in the future could affect, the Company's results of operations and that could cause such future results of operations to differ materially from those expressed in any forward looking statements made by or on behalf of the Company. Disclosure of these factors is intended to permit the Company to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Many of these factors have been discussed in prior SEC filings by the Company. Though the Company has attempted to list comprehensively these important cautionary factors, the Company wishes to caution investors that other factors may in the future prove to be important in affecting the Company's results of operations. Demand Variability - Demand for new equipment manufactured by the Company tends to be cyclical, responding historically to varying levels of construction and industrial activity, principally in the United States and, to a lesser extent, in other industrialized nations. Other factors affecting demand include the availability and cost of financing for equipment purchases, the market availability of used equipment and alternatives to purchases such as equipment leases directly from the Company. Company management regularly monitors these and other factors that affect demand for the Company's equipment. However, predicting levels of demand beyond a short term is necessarily imprecise and demand may at times change dramatically. Consolidating Customers Base; Rental Companies - The principal customers for the Company's new equipment are independent equipment rental companies that rent the Company's products and provide service support to equipment users. In recent years, growth in sales to equipment rental companies has outpaced growth in direct sales to end-users, resulting in equipment rental companies comprising a larger share of total sales. At the same time, there has been substantial consolidation in ownership among rental companies, resulting in a more limited number of major customers comprising a substantial portion of total sales. A change in purchasing decisions or ordering patterns by any of these major customers could materially affect overall demand for the Company's products and the Company's financial performance. More generally, during recessionary conditions, demand for equipment by equipment rental companies typically declines more sharply than demand for equipment purchased by end-users. The Company believes it is a preferred supplier to certain equipment rental companies whose continued business depends upon a package of products and services including financing, e-commerce ordering, just-in-time delivery, enhanced warranties, used equipment trade-ins and other customer services and after market support. Competition; Continued Innovation - The Company faces substantial competition in the market for its products. Product line expansion by existing competitors and potential entry by new competitors also may affect the Company's market position. Throughout its history, the Company has devoted substantial resources to product development and has generally succeeded in being a market leader in introducing new products or incorporating new features and functions into existing products. Successful product innovation by competitors that reach the market prior to comparable innovation by the Company or that are amenable to patent protection may adversely affect the Company's financial performance. Product Liability - Use of the Company's products involves risks of personal injury and property damage and liability exposure for the Company. The Company insures against this liability through a combination of a self-insurance retention and catastrophic insurance coverage in excess of the retention. The Company monitors all incidents of which it becomes aware involving the use of its products that result in personal injury or property damage and establishes accrued liability reserves on its financial statements based on liability estimates with respect to claims arising from such incidents. Future or unreported incidents involving personal injury or property damage or unanticipated variances between actual liabilities for known incidents and Company estimates may adversely affect the Company's financial performance. 1 2 Manufacturing Capacity; Production Levels - Given the variability of demand, the Company must periodically expand and contract its manufacturing facilities. Capital investment to acquire additional manufacturing facilities involves significant risks. Excess manufacturing capacity adversely affects profitability because higher fixed costs are spread over a lower sales volume. Insufficient capacity adversely affects profitability as long lead-times required to fill customer orders may impair the Company's ability to compete for new business and subcontracting costs incurred to increase capacity affect profitability. To ensure product availability, the Company sometimes manages inventory levels and its supply chain by maintaining relatively constant production levels. This practice could increase inventories and associated carrying costs which could adversely affect the Company's financial performance. Availability of Product Components - The Company obtains raw materials and certain manufactured components from third-party suppliers. To reduce material costs and inventories, the Company relies on supplier partnership arrangements with preferred vendors as a sole source for "just-in-time" delivery of many raw materials and manufactured components. Because the Company maintains limited raw material inventories, even brief unanticipated delays in delivery by suppliers, including those due to capacity constraints, labor disputes, impaired financial condition of suppliers, weather emergencies or other natural disasters, may adversely affect the Company's ability to satisfy its customers on a timely basis and thereby affect the Company's financial performance. Foreign Sales; Currency Risks - A growing component of the Company's business has been export sales to Europe, Australia, Latin America, Africa and Asia. Maintenance and continued growth of this segment of the Company's business may be affected by changes in trade, monetary and fiscal policies, laws and regulations of the United States and other trading nations and by foreign currency exchange rate fluctuations and the ability or inability of the Company to hedge against exchange rate risks. Mergers and Acquisitions - The Company intends to pursue strategic acquisitions as a means of increasing sales and earnings and promoting shareholder value. Acquisitions generally may involve a number of risks that may affect the Company's financial performance including increased leverage, diversion of management resources, possible shareholder dilution, assumption of liabilities of acquired businesses and corporate culture conflicts. In addition, specific acquisitions may involve other risks unique to the acquired business. Finally, there is no assurance that the Company will be able to conclude satisfactory agreements to acquire any businesses as a means to increase sales and earnings. Unanticipated Litigation - The Company occasionally has faced unanticipated intellectual property and shareholder litigation which has involved significant unbudgeted expenditures. The costs and other effects of any future, unanticipated legal or administrative proceedings may be significant. Dependence Upon Key Personnel; Management Recruitment - The Company believes that it has developed a strong management team, which intends to continue the Company's growth and profitability. However, the loss or unavailability of certain key management personnel and the inability to attract, assimilate or retain additional highly qualified employees in the future could adversely affect the Company's business and prospects. 2 -----END PRIVACY-ENHANCED MESSAGE-----