<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
OMNIQUIP INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3531 43-1721419
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
369 WEST WESTERN AVENUE
PORT WASHINGTON, WISCONSIN 53074
(414) 284-5571
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
P. ENOCH STIFF
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OMNIQUIP INTERNATIONAL, INC.
369 WEST WESTERN AVENUE
PORT WASHINGTON, WISCONSIN 53074
(414) 284-5571
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
MATTHEW G. MALONEY, ESQ. JOHN J. SABL, ESQ.
REBECCA L. WRIGHT, ESQ. Sidley & Austin
Dickstein Shapiro Morin & Oshinsky LLP One First National Plaza
2101 L Street, N.W. Chicago, Illinois 60603
Washington, D.C. 20037 (312) 853-7000
(202) 785-9700
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.01 par value............................................................ $115,000,000 $34,849
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(o).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT CONTAINS TWO FORMS OF PROSPECTUS: ONE TO BE USED
IN CONNECTION WITH A UNITED STATES OFFERING (THE "U.S. PROSPECTUS") AND ONE TO
BE USED IN CONNECTION WITH A CONCURRENT INTERNATIONAL OFFERING (THE
"INTERNATIONAL PROSPECTUS"). THE U.S. PROSPECTUS AND THE INTERNATIONAL
PROSPECTUS ARE IDENTICAL EXCEPT THAT THEY CONTAIN DIFFERENT FRONT COVER PAGES.
THE FORM OF U.S. PROSPECTUS IS INCLUDED HEREIN AND THE FRONT COVER PAGE OF THE
INTERNATIONAL PROSPECTUS WHICH IS LABELLED "ALTERNATE PAGE FOR INTERNATIONAL
PROSPECTUS" FOLLOWS THE FRONT COVER PAGE FOR THE U.S. PROSPECTUS.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED OCTOBER , 1996
SHARES
OMNIQUIP INTERNATIONAL, INC.
COMMON STOCK
-----------------
OF THE SHARES OF COMMON STOCK BEING OFFERED, SHARES ARE BEING OFFERED
INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS AND
SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES
AND CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." ALL
OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC
MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS
CURRENTLY ANTICIPATED THAT THE INITIAL PUBLIC OFFERING
PRICE PER SHARE WILL BE BETWEEN $ AND
$ . SEE "UNDERWRITERS" FOR A DISCUSSION OF
FACTORS CONSIDERED IN DETERMINING THE
INITIAL PUBLIC
OFFERING PRICE.
------------------------
APPLICATION HAS BEEN MADE FOR APPROVAL OF THE COMMON STOCK FOR QUOTATION ON THE
NASDAQ NATIONAL MARKET
UPON COMPLETION OF THIS OFFERING UNDER THE SYMBOL "OMQP."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY (2)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
PER SHARE.............................. $ $ $
TOTAL (3).............................. $ $ $
</TABLE>
- ---------
(1) THE COMPANY AND ITS MAJORITY STOCKHOLDER HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .
(3) THE COMPANY'S MAJORITY STOCKHOLDER HAS GRANTED TO THE U.S. UNDERWRITERS AN
OPTION, EXERCISABLE FOR 30 DAYS FROM THE DATE HEREOF, TO PURCHASE AN
AGGREGATE OF ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO PUBLIC
LESS UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING
OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN
FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND
PROCEEDS TO THE MAJORITY STOCKHOLDER WILL BE $ , $ AND $ ,
RESPECTIVELY. SEE "UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SIDLEY & AUSTIN, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY
OF THE SHARES WILL BE MADE ON OR ABOUT , 1996 AT THE OFFICES OF
MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
IMMEDIATELY AVAILABLE FUNDS.
-------------------
MORGAN STANLEY & CO.
INCORPORATED
CS FIRST BOSTON
SCHRODER WERTHEIM & CO.
ROBERT W. BAIRD & CO. INCORPORATED
, 1996
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED OCTOBER , 1996
SHARES
OMNIQUIP INTERNATIONAL, INC.
COMMON STOCK
-----------------
OF THE SHARES OF COMMON STOCK BEING OFFERED, SHARES ARE BEING OFFERED
INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS AND SHARES ARE BEING OFFERED INITIALLY IN THE UNITED
STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE "UNDERWRITERS." ALL
OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC
MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS
CURRENTLY ANTICIPATED THAT THE INITIAL PUBLIC OFFERING
PRICE PER SHARE WILL BE BETWEEN $ AND
$ . SEE "UNDERWRITERS" FOR A DISCUSSION OF
THE FACTORS CONSIDERED IN DETERMINING
THE INITIAL PUBLIC
OFFERING PRICE.
------------------------
APPLICATION HAS BEEN MADE FOR APPROVAL OF THE COMMON STOCK FOR QUOTATION ON THE
NASDAQ NATIONAL MARKET
UPON COMPLETION OF THIS OFFERING UNDER THE SYMBOL "OMQP."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
PER SHARE.............................. $ $ $
TOTAL(3)............................... $ $ $
</TABLE>
- ---------
(1) THE COMPANY AND ITS MAJORITY STOCKHOLDER HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .
(3) THE COMPANY'S MAJORITY STOCKHOLDER HAS GRANTED TO THE U.S. UNDERWRITERS AN
OPTION, EXERCISABLE FOR 30 DAYS FROM THE DATE HEREOF TO PURCHASE AN
AGGREGATE OF ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO PUBLIC
LESS UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING
OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN
FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND
PROCEEDS TO THE MAJORITY STOCKHOLDER WILL BE $ , $ AND $ ,
RESPECTIVELY. SEE "UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SIDLEY & AUSTIN, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY
OF THE SHARES WILL BE MADE ON OR ABOUT , 1996 AT THE OFFICES OF
MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
IMMEDIATELY AVAILABLE FUNDS.
-------------------
MORGAN STANLEY & CO.
INTERNATIONAL
CS FIRST BOSTON
SCHRODERS
ROBERT W. BAIRD & CO. INCORPORATED
, 1996
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------
For investors outside of the United States: No action has been or will be
taken in any jurisdiction by the Company or any Underwriter that would permit a
public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the offering of the Common Stock and the
distribution of this Prospectus.
------------------------
In this Prospectus references to "dollar" and "$" are to United States
dollars, and the term "United States" or "U.S." means the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 11
Dividend Policy................................ 11
Capitalization................................. 12
Dilution....................................... 13
Selected Consolidated Financial Data........... 14
Management's Discussion and Analysis of Results
of Operations and Financial Condition........ 16
Pro Forma Financial Information................ 23
Management's Discussion and Analysis of Pro
Forma Results of Operations and Financial
Condition.................................... 28
<CAPTION>
PAGE
-----
<S> <C>
Business....................................... 34
Management..................................... 45
Security Ownership of Certain Beneficial Owners
and Management............................... 51
Certain Transactions........................... 52
Description of Capital Stock................... 56
Shares Eligible for Future Sale................ 58
Certain U.S. Federal Tax Considerations for
Non-U.S. Holders of Common Stock............. 60
Underwriters................................... 63
Legal Matters.................................. 66
Experts........................................ 66
Additional Information......................... 66
Index to Financial Statements.................. F-1
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING IN
THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
------------------------
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS. THE COMPANY OWNS THE TRADEMARKS SKY TRAK-REGISTERED TRADEMARK-, SCAT
TRAK-REGISTERED TRADEMARK-, TRAK INTERNATIONAL-REGISTERED TRADEMARK-,
LULL-REGISTERED TRADEMARK-, DYNA LUGGER-REGISTERED TRADEMARK- AND MILLENNIA-TM-.
OTHER TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR
RESPECTIVE HOLDERS. UNLESS OTHERWISE INDICATED, OR UNLESS THE CONTEXT OTHERWISE
REQUIRES, THE "COMPANY" OR "OMNIQUIP" AS USED IN THIS PROSPECTUS REFERS TO
OMNIQUIP INTERNATIONAL, INC., ITS PREDECESSORS AND SUBSIDIARIES, "INVESTMENTS
L.P." REFERS TO HARBOUR GROUP INVESTMENTS III, L.P., AND "UNIQUIP L.P." REFERS
TO UNIQUIP-HGI ASSOCIATES, L.P. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN
THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT
EXERCISED.
THE COMPANY
The Company is the largest North American manufacturer of telescopic
material handlers, and also manufactures a growing line of skid steer loaders,
as well as a limited range of other material handling equipment. Omniquip's
highly versatile products are used in a wide variety of applications by
commercial and residential building contractors, as well as other construction,
military, industrial, municipal and agricultural end-users. The Company's
telescopic material handlers are marketed under the well recognized and highly
regarded SKY TRAK and LULL brand names. Based upon industry reports, the Company
believes that its North American market share of 1995 shipments of telescopic
material handlers was approximately 40%.
Telescopic material handlers are especially useful in rough terrain
environments and congested job sites, where their maneuverability and ability to
raise, extend and lower payloads provide significant advantages over more
traditional material handling equipment, such as cranes, straight-mast forklifts
and elevators. The Company's telescopic material handlers have a maximum lift
capacity of 5,000 pounds to 10,000 pounds and can position payloads from 28 feet
to 54 feet above the ground or 15 feet to 39 feet in front of the machine's
chassis. The versatility of these units allows users to lower overall costs by
substituting a single telescopic material handler for one or more other types of
material handling equipment, as well as for certain labor intensive material
handling tasks. The Company believes it manufactures the broadest product line
of telescopic material handlers in North America. Shipments of commercial
telescopic material handlers marketed under the SKY TRAK and LULL brand names
increased from approximately 950 units in 1990 to approximately 2,250 units in
1995. In addition, Omniquip has been the principal supplier since 1988 of
telescopic material handlers to the U.S. military, having delivered over 2,800
such units for use in loading and unloading containers and palletized loads for
ships, aircraft and trucks as well as for munitions handling and reloading
multiple rocket launchers. In 1995, the Company was awarded a contract to supply
the Army and related agencies with a new generation of telescopic material
handlers to support the logistics requirements of the Rapid Deployment Forces.
The Army has estimated that its requirements under the contract could range up
to a maximum of 1,200 vehicles, or a maximum contract value of $120 million.
Shipments under the contract are expected to begin in fiscal year 1997. The
Company believes that this contract will enhance its ability to pursue sales to
other branches of the United States armed forces and foreign military agencies.
See "Risk Factors--ATLAS Contract."
The Company has experienced significant growth in sales of its skid steer
loaders, principally marketed under the SCAT TRAK brand name, with shipments of
approximately 120 units in 1990, increasing to shipments of approximately 1,250
units in 1995. Skid steer loaders are compact and versatile machines used to
dig, lift and handle bulk materials such as dirt, construction materials, waste,
farm produce and snow. The compact size, maneuverability and ease of transport
make skid steer loaders well-suited for a wide variety of applications. The
Company's skid steer loaders can lift and position maximum payloads of 1,300
pounds to 1,750 pounds to a maximum lift height of 112 inches to 121 inches.
3
<PAGE>
The Company competes principally in selected segments of the material
handling and construction equipment markets which utilize engines of less than
130 horsepower. The Company believes that these segments have typically
experienced a higher level of growth in recent years than general construction
equipment markets. North American shipments of construction and allied equipment
grew from $30.7 billion in 1990 to $38.9 billion in 1995, representing a nominal
compound annual growth rate of 4.8%. According to industry estimates, shipments
of telescopic material handlers in North America grew from approximately 2,400
units in 1990 to approximately 5,500 units in 1995, representing a real compound
annual growth rate of 18.0%, and sales of skid steer loaders in North America
grew from approximately 27,000 units in 1990 to approximately 40,000 units in
1995, representing a real compound annual growth rate of 8.2%. The Company
believes higher growth rates for telescopic material handlers and skid steer
loaders are attributable to a number of factors, including the following: high
product versatility, increased productivity provided by these products,
significant growth in demand for equipment rentals, and growth in demand for
these products for non-construction applications.
The Company's strategy is to grow within segments of the material handling
and construction equipment markets which typically are not dominated by
full-line construction equipment manufacturers, which are growing faster than
the construction industry generally, and which typically utilize local
independent dealers for distribution rather than regional distributorships
primarily dedicated to products made by a single manufacturer. The Company
intends to achieve its business strategy by providing superior products,
pursuing a multiple brand distribution strategy, acquiring complementary
businesses, achieving cost savings from the integration of acquired operations,
and leveraging its position as a leading North American manufacturer to expand
its penetration of global markets.
The Company was formed in 1995 by Investments L.P. in connection with the
acquisition of TRAK International, Inc. ("TRAK"), a manufacturer of telescopic
material handlers and skid steer loaders. TRAK was the first company to
introduce the arc boom forklift, the precursor to the telescopic material
handler, in 1956. In August 1996, the Company acquired the business and
substantially all of the assets of Lull Industries, Inc. ("Lull"), a
manufacturer of telescopic material handlers, with a small product line of skid
steer loaders, articulated forklifts and tenders, masonry tenders and motorized
wheelbarrows. Lull's business was founded in 1956.
The Company's principal executive offices are located at 369 West Western
Avenue, Port Washington, Wisconsin 53074, and its telephone number is (414)
284-5571.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered............ shares
U.S. offering................. shares
International offering........ shares
Common Stock to be outstanding
after the Offering............ shares
Use of proceeds................. To repay substantially all outstanding indebtedness and
for general corporate purposes. See "Use of Proceeds."
Proposed Nasdaq Symbol.......... OMQP
Dividend Policy................. The Company expects to pay a quarterly cash dividend of
$0.01 per share. See "Dividend Policy."
</TABLE>
4
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following summary historical consolidated and unaudited pro forma
consolidated financial data were derived from the historical consolidated
financial statements of the Company or TRAK, as the predecessor to the Company,
and the pro forma financial information of the Company, included elsewhere
herein. The information contained in this table should be read in conjunction
with "Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Results of Operations and Financial Condition," "Pro
Forma Financial Information," "Management's Discussion and Analysis of Pro Forma
Results of Operations and Financial Condition," and the financial statements
included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY PREDECESSOR(1) COMPANY COMPANY
------------------------------- -------------- -------------- ------- ------------------------------
FISCAL YEARS PRO FORMA(2)
ENDED NINE MONTHS ENDED ------------------------------
SEPT. 30, OCT. 1, 1994 AUG. 17, 1995 JUNE 30, FISCAL YEAR NINE MONTHS
---------------- THROUGH THROUGH ------------------------ ENDED ENDED
1993 1994 AUG. 16, 1995 SEPT. 30, 1995 1995 1996 SEPT. 30, 1995 JUNE 30, 1996
------- ------- ------------- -------------- -------------- ------- -------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............. $50,068 $60,973 $75,401 $12,723 $64,964 $81,514 $154,690 $151,770
Cost of sales......... 39,183 47,208 57,707 9,787 49,782 60,379 120,532 116,529
------- ------- ------------- ------- ------- ------- -------------- -------------
Gross profit.......... 10,885 13,765 17,694 2,936 15,182 21,135 34,158 35,241
Selling, general and
administrative
expenses............ 8,290 9,502 10,903 1,670 9,168 11,339 19,770 18,506
Boom warranty
charge.............. -- -- -- -- -- -- -- 2,881(3)
------- ------- ------------- ------- ------- ------- -------------- -------------
Operating income...... 2,595 4,263 6,791 1,266 6,014 9,796 14,388 13,854
Interest expense...... 1,140 1,363 1,379 353 1,100 1,932 -- --
Other finance
charges............. 570 699 1,121 269 1,000 1,491 1,900 1,027
------- ------- ------------- ------- ------- ------- -------------- -------------
Income before income
taxes............... 885 2,201 4,291 644 3,914 6,373 12,488 12,827
Provision for income
taxes............... 368 876 1,762 262 1,566 2,485 5,031 4,990
------- ------- ------------- ------- ------- ------- -------------- -------------
Income before
extraordinary credit
and change in
accounting
principles.......... 517 1,325 2,529 382 2,348 3,888 7,457 7,837
Cumulative effect of
change in accounting
principles.......... 199(4) -- (241)(5) -- (241)(5) -- -- --
------- ------- ------------- ------- ------- ------- -------------- -------------
Net income............ $ 716 $ 1,325 $ 2,288 $ 382 $ 2,107 $3,888 $ 7,457 $ 7,837
------- ------- ------------- ------- ------- ------- -------------- -------------
------- ------- ------------- ------- ------- ------- -------------- -------------
Earnings per
share(6)............ $ .04 $ .39
</TABLE>
<TABLE>
<CAPTION>
COMPANY
------------------------------
JUNE 30, 1996
------------------------------
ACTUAL PRO FORMA(2)
-------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital..................................................................... $ 10,189 $ 18,878
Total assets........................................................................ 49,144 133,679
Short-term debt..................................................................... 837 --
Long-term debt...................................................................... 19,402 --
Stockholders' equity................................................................ 10,271 101,421
</TABLE>
- ------------------------
(1) The Company was organized in August 1995 for the purpose of acquiring TRAK,
the predecessor company.
(2) Amounts give effect to the pro forma transactions described under "Pro Forma
Financial Information," including the footnotes thereto.
(3) In the quarter ended December 31, 1995, Lull determined that a specific
warranty obligation had been incurred on certain boom units manufactured and
recorded a pre-tax charge to operations of $2,881.
(4) In October 1992, TRAK adopted Statement of Financial Accounting Standards,
No. 109, "Accounting for Income Taxes" (SFAS 109). The cumulative effect of
adopting SFAS 109 was to record a net tax benefit of $199.
(5) In October 1994, TRAK adopted Statement of Financial Accounting Standards,
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $241, net of income tax benefits.
(6) Given the historical organization and capital structure of TRAK, as
predecessor to the Company, earnings per share information is not considered
meaningful for the predecessor.
5
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS.
ABSENCE OF CONSOLIDATED OPERATING HISTORY; RECENT ACQUISITION
The Company was formed in August 1995 in connection with the acquisition of
TRAK. Subsequently, the Company acquired the business and substantially all of
the assets of Lull in August 1996. There can be no assurance that the Company
will be successful in integrating the operations of Lull, that such integration
will not divert management resources or cause temporary disruptions in the
management of the business or that the Company will realize the contemplated
manufacturing, purchasing and other efficiencies from such integration. In
addition, there can be no assurance that the Company will not experience
unanticipated liabilities or other problems arising subsequent to the completion
of this acquisition, or that this acquisition and any subsequent integration
will not otherwise have an adverse effect on the Company. See "Business."
CYCLICALITY
The markets for the Company's products have historically been cyclical.
Because the Company's products are used primarily in the construction industry,
its sales, and therefore its results of operations, are significantly dependent
upon the general state of the economy, regional economic conditions, interest
rates and other factors affecting residential and commercial building
activities. During periods of expansion in construction activity, the Company
generally has benefited from increased demand for construction equipment.
Conversely, during recessionary times, the Company has been adversely affected
by declines in demand for such products, due not only to decreased sales but
also to increased losses under the Company's various guarantees pursuant to
dealer floor-plan and rental fleet financing arrangements. In addition, sales to
the equipment rental industry may be more cyclical than sales of construction
equipment generally. While the Company believes that increased sales of its
products to military, agricultural and industrial end-users may mitigate to some
extent the effects of cyclicality in the construction industry, there can be no
assurance that growth in the markets for the Company's products will occur or
that such growth will result in increased demand for the Company's products. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," "Management's Discussion and Analysis of Pro Forma Results of
Operations and Financial Condition" and "Business."
ATLAS CONTRACT
In 1995, the Company was awarded a four year, fixed-price contract by the
United States Army, United States Army Reserve and National Guard (collectively,
the "Army") for the supply of the Army's requirements for the All-Terrain
Lifter, Army System ("ATLAS"), the next generation of the military version of
the Company's commercial telescopic material handler. The contract covers the
Army's requirements for ATLAS vehicles over the four year period ending May
1999. Such requirements have been estimated by the Army to range up to a maximum
of 1,200 vehicles, or a maximum contract value of $120 million, but such
estimates are not binding and actual purchase orders received from the Army
under the contract may be significantly less than the maximum estimated amounts.
The Army has the contract option to purchase up to an additional 300 units above
the 1,200 unit maximum. The Company has completed testing five prototype
vehicles and has received from the Army initial orders for 223 vehicles, none of
which can be shipped until the Army satisfactorily completes further testing of
a random sample of units. There can be no assurance that the Army will be
satisfied with either the prototypes or initial units manufactured, that
modifications required, if any, as a result of Army testing will not result in a
material increase in the cost to the Company to produce such units, that the
Army will place orders for any specified number of units, that the Army, if it
purchases units under the contract, will purchase additional units after
6
<PAGE>
the expiration of the contract, that the U.S. Congress will appropriate
necessary funds to permit the purchase of desired units or that the Army will
not take other actions, including termination of the contract, which could have
a material adverse effect on the Company. In addition, there can be no assurance
that any sales made by the Company under the contract will be profitable. See
"Business."
ACQUISITION STRATEGY
The Company expects to continue a strategy of identifying and acquiring
companies with complementary products or services which could be expected to
enhance the Company's operations and profitability. There can be no assurance
that the Company will continue to identify suitable new acquisition candidates,
obtain financing necessary to complete such acquisitions or acquire businesses
on satisfactory terms or that any business acquired by the Company will be
integrated successfully into the Company's operations or prove to be profitable.
The Company could incur substantial indebtedness in connection with its
acquisition strategy.
PRODUCT RECALL
From time to time, the Company discovers defects in product design for
existing products which require it to take steps to correct or retrofit, at the
Company's expense, previously sold products. Currently, the Company is in the
process of correcting a defect in its LULL brand of telescopic material
handlers. The Company estimates that as of August 15, 1996, there were
approximately 725 units in the field which required corrective action and that
as of August 15, 1996 it would take approximately one year to retrofit
outstanding units at an aggregate cost to the Company of approximately $2.0
million. In 1995, prior to the acquisition by the Company, Lull established
reserves of approximately $2.9 million, on a pre-tax basis, for the cost of
retrofitting such telescopic material handlers. The Company also has established
a reserve of approximately $0.8 million as of June 30, 1996, on a pre-tax basis,
relating to corrective warranty work being undertaken with respect to two models
of skid steer loaders. There can be no assurance, however, that the ultimate
cost of correcting these defects will not exceed the amount of the previously-
established reserves, that the defects will not adversely affect the Company's
reputation or result in a decline in sales of the Company's products or that
action required to be taken to correct these defects will not result in
additional temporary disruptions in the Company's business. See "Management's
Discussion and Analysis of Pro Forma Results of Operations and Financial
Condition--Seasonality and Pro Forma Quarterly Results" and "Business--Product
Liability and Product Recall."
DEALER FINANCE ARRANGEMENTS
The Company assists its dealers in floor plan and rental fleet financing
arrangements. In connection therewith, the Company has undertaken certain
guarantee and repurchase obligations, generally subject to certain limitations.
Although the Company has not incurred any material losses pursuant to these
arrangements in recent years, there can be no assurance that the Company will
not incur such losses in the future. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition-- Capital Resources and
Liquidity" and "Business--Marketing and Distribution--Financing."
DEPENDENCE ON CERTAIN SUPPLIERS
Certain of the components included in the Company's products are obtained
from a single supplier or a limited number of suppliers. Disruption or
termination of supplier relationships could have an adverse effect on the
Company's operations. The Company believes that alternative sources could be
obtained, if necessary, but the inability to obtain sufficient quantities of the
components or the need to develop alternative sources, if and as required in the
future, could result in delays or reductions in product shipments, or higher
purchasing costs, which in turn could have an adverse effect on the Company's
results of operations and customer relationships. See "Business--Manufacturing
and Raw Materials."
7
<PAGE>
PRODUCT LIABILITY
From time to time, the Company is the subject of product liability claims
relative to the Company's products, which, if successful, could have a material
adverse impact on the Company. Although the Company maintains liability
insurance coverage that it believes to be adequate, there can be no assurance
that the Company will be able to maintain such coverage or obtain alternate
coverage in the future at a reasonable cost, or that such coverage will be
sufficient to satisfy future claims, if any. See "Business-- Product Liability
and Product Recall."
TECHNOLOGICAL CHANGE
Certain of the Company's products are subject to changing technology which
could place the Company at a competitive disadvantage relative to alternative
products introduced by competitors. There can be no assurance that the Company
will be able to achieve the technological advances or introduce new products
that may be necessary to remain competitive.
COMPETITION
The markets for the Company's products are highly competitive and relatively
fragmented, with a large number of competitors. Many of the Company's
competitors are larger than the Company and have greater financial, marketing
and technical resources. In addition, the Company may encounter competition from
new market entrants. There can be no assurance that competitors will not take
actions, including developing new products, which could adversely affect the
Company's sales and operating results.
DEPENDENCE ON KEY PERSONNEL
The success of the Company's business is dependent upon the management and
leadership skills of P. Enoch Stiff, the Company's President and Chief Executive
Officer, and other members of the Company's senior management team. The Company
does not have employment agreements with, or "key man" life insurance on, Mr.
Stiff and other key executive officers. The loss of the services of Mr. Stiff or
other senior executives could have a material adverse effect on the Company's
business and results of operations. In addition, the future success of the
Company will depend, among other factors, on the Company's ability to continue
to attract and retain qualified personnel. See "Management."
DEPENDENCE ON PRINCIPAL FACILITIES
The Company's operations are conducted principally at two facilities.
Although the Company has not experienced any material disruption of operations
at its key facilities, in the event that operations at any of such facilities
were disrupted as a result of equipment failures, natural disasters, work
stoppages or other reasons, the Company's business and results of operations
could be adversely affected. The Company maintains property damage insurance
which it believes to be adequate to provide for reconstruction of its facilities
and equipment, as well as business interruption insurance to mitigate losses
resulting from any production shutdown caused by an insured loss. However, no
assurance can be given that such insurance will be adequate to cover losses that
may occur.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local environmental
laws and regulations which require compliance with increasingly stringent and
costly requirements. Pursuant to these laws and regulations, the Company may
also be required from time to time to remediate environmental contamination
associated with releases of hazardous substances. Although the costs of
compliance with these requirements have not been material to date, there can be
no assurance that the costs of future compliance will not be material. In
addition, although the Company ordinarily conducts "Phase I" environmental
testing in connection with acquisitions of acquired businesses and additional
testing if
8
<PAGE>
deemed appropriate under the circumstances in order to minimize the risks of
encountering material environmental problems resulting from such acquisitions,
there can be no assurance that the Company will not discover material
unanticipated environmental problems requiring significant expenditures for
corrective action or remediation following the completion of an acquisition. See
"Business-- Environmental and Safety Regulations."
CONTROL BY PRINCIPAL STOCKHOLDERS
Following the completion of the Offering, Uniquip L.P. and Investments L.P.
will own an aggregate % (or approximately % if the Underwriters exercise
in full the over-allotment option granted by Investments L.P.) of the
outstanding Common Stock. Uniquip L.P. and Investments L.P. are under the common
control of Sam Fox. As a result of their stock ownership, Uniquip L.P. and
Investments L.P., as a practical matter, are likely to be able to elect all the
directors of the Company and to control the Company's affairs. Affiliates of
Uniquip L.P. and Investments L.P. provide certain services to the Company which
may give rise to potential conflicts of interest. See "Security Ownership of
Certain Beneficial Owners and Management" and "Certain Transactions."
SHARES ELIGIBLE FOR FUTURE SALE
Immediately upon consummation of the Offering, the Company will have
outstanding shares of Common Stock, ( if the Underwriters
exercise in full their over-allotment option) of which will have been sold in
the Offering and will be freely transferable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), except for any of those shares of Common Stock owned at any time by an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act, which sales will be subject to the volume limitations and certain other
restrictions set forth in Rule 144. Commencing in August 1997, approximately
shares of Common Stock held by the Company's existing stockholders will
become eligible for sale in the public market subject to volume and other
restrictions pursuant to Rule 144. An additional shares of Common Stock
will become eligible for sale in the public market pursuant to Rule 144
commencing in . Uniquip L.P. and Investments L.P., as well as certain of
their transferees, will have certain rights to demand registration of Common
Stock owned by them and will have the right, subject to certain restrictions and
limitations, to participate in future registered sales of Common Stock by the
Company. The sale of any substantial number of shares of Common Stock following
the Offering could have a material adverse impact on the market price of the
Common Stock. See "Certain Transactions--Agreements with Existing Stockholders"
and "Shares Eligible for Future Sale."
DILUTION
Purchasers of the Common Stock offered hereby will suffer an immediate and
substantial dilution of the net tangible book value per share of the Common
Stock from the initial public offering price. See "Dilution."
DETERMINATION OF OFFERING PRICE AND ABSENCE OF PUBLIC MARKET
Prior to the Offering, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be determined
by negotiation between the Company and the representatives of the Underwriters
based upon factors described under the caption "Underwriting." Recently the
stock market has experienced and is likely to experience in the future
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance of
the Company. In addition, the Company believes that factors such as quarterly
fluctuations in the financial results of the Company or its competitors and
general conditions in the industry, the overall economy and the financial
markets could cause the price of the Common Stock to
9
<PAGE>
fluctuate substantially. There can be no assurance that an active trading market
in the Company's Common Stock will develop subsequent to the Offering or, if
developed, that it will be sustained.
ANTI-TAKEOVER PROVISIONS
Certain provisions in the Company's Restated Certificate of Incorporation
and By-Laws could have the effect of making more difficult or discouraging an
acquisition of the Company deemed undesirable by its Board of Directors. These
include: (i) a classified Board of Directors, (ii) the existence of authorized
but unissued Common Stock and (iii) the existence of authorized but unissued
preferred stock, which could be issued by the Company's Board of Directors
without stockholder approval, containing such terms as the Board of Directors
may approve. In addition, certain provisions of Delaware law applicable to the
Company, including Section 203 of the Delaware General Corporation Law, could
have the effect of delaying, deferring or preventing a change of control of the
Company.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including in
particular, the integration of acquisitions into the Company's existing
operations. Such statements are subject to various risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors, including those identified under "Risk Factors" and elsewhere
in this Prospectus.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from its sale of shares of
Common Stock in the Offering (after deduction of estimated underwriting
discounts and commissions and expenses payable by the Company in connection with
the Offering) are estimated to be approximately $92.5 million and are expected
to be used to repay substantially all of the Company's outstanding indebtedness.
This indebtedness, including accrued interest, was incurred to finance the
acquisitions of TRAK and Lull. The indebtedness to be repaid includes: (i)
approximately $69.2 million in original principal amount of term and revolving
loans payable to senior bank lenders which bear interest at floating rates that,
as of September 15, 1996, equaled a weighted-average effective rate of 10.0% per
annum, and have a final maturity date of August 16, 2003; (ii) $5.0 million in
principal amount of subordinated notes payable to an institutional lender which
bear interest at a rate of 15.0% per annum payable quarterly and have a maturity
date of February 28, 2004; and (iii) $2.0 million in principal amount of junior
subordinated notes payable to Investments L.P., and $14.0 million in principal
amount of junior subordinated notes payable to a commercial bank lender and
guaranteed by Investments L.P., all of which bear interest at a rate of 15.0%
per annum payable at maturity on February 28, 2004. The Company will incur a
prepayment fee estimated to equal approximately $1.0 million upon the repayment
of its $5.0 million in principal amount of its subordinated notes. The balance
of the net proceeds from the Offering, if any, will be used for general
corporate purposes. In conjunction with the repayment of substantially all of
the Company's outstanding indebtedness, the Company also expects to restructure
its revolving credit facility with one or more bank lenders to meet the
Company's ongoing working capital and other liquidity needs and to finance
further growth, including growth through acquisitions.
In the event the Underwriters exercise the over-allotment option granted to
them by Investments L.P., the Company will not receive any of the proceeds from
the sale of such shares.
DIVIDEND POLICY
The terms of the Company's existing credit facilities prohibit the payment
of dividends. After the Offering, the Company anticipates substantially all
indebtedness outstanding under the credit facilities will be repaid. See "Use of
Proceeds." In anticipation of, and conditioned upon, the Offering, the Company
expects to obtain waivers or otherwise renegotiate the terms of its revolving
credit facility to permit the payment of dividends, including the initial
quarterly dividend described below. Subject to the revised terms of the
revolving credit facility and approval by its Board of Directors, the Company
intends to commence paying dividends after the Offering. It is expected that an
initial quarterly dividend of $0.01 per share will be paid. All dividend
payments are subject to the terms of the Company's credit facilities and to the
Company's earnings, financial condition and capital requirements at the time of
declaration and will be paid only if, as and to the extent declared by the
Company's Board of Directors.
11
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company at June 30, 1996, on a pro forma basis to give effect to the acquisition
of Lull, including the financing thereof, as if such acquisition had been
effected on June 30, 1996, and pro forma as adjusted to reflect the issuance and
sale of shares of Common Stock by the Company in the Offering (after
deduction of the estimated underwriting discounts and commissions and expenses
of the Offering and the application of the net proceeds therefrom to the
repayment of indebtedness). See "Use of Proceeds," "Selected Consolidated
Financial Data" and "Pro Forma Financial Information."
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------- PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT SHARE DATA)
Short-term debt:
Term loans.............................................................. $ 837 $ 837 $ --
--------- ----------- -----------
Total short-term debt............................................... $ 837 $ 837 $ --
--------- ----------- -----------
--------- ----------- -----------
Long-term debt (net of current portion):
Term loans.............................................................. $ 5,258 $ 60,000 $ --
Revolving credit facility............................................... 7,144 8,402 --
Other subordinated notes payable........................................ 5,000 19,000
Subordinated notes payable to Investments L.P........................... 2,000 2,000 --
--------- ----------- -----------
Total long-term debt................................................ 19,402 89,402
--------- ----------- -----------
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 1,500,000 shares; issued
and outstanding: none................................................. -- -- --
Common stock, $.01 par value; authorized: 100,000,000 shares; issued and
outstanding: 10,000,000 shares ( as adjusted).................... 100 100 100
Additional paid-in capital.............................................. 6,253 6,253 98,753
Stockholder notes receivable............................................ (352) (352) (352)
Retained earnings....................................................... 4,270 4,270 2,920(1)
--------- ----------- -----------
Total stockholders' equity.......................................... 10,271 10,271 101,421
--------- ----------- -----------
Total capitalization.............................................. $ 29,673 $ 99,673 $ 101,421
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
- ------------------------
(1) Reduction in retained earnings represents effect of an extraordinary charge
to income for the writeoff of deferred finance charges and for prepayment
penalties incurred in connection with the repayment of debt, net of related
tax benefits, of $1,350.
12
<PAGE>
DILUTION
Per share amounts set forth below are calculated on the basis of
shares of Common Stock outstanding as of June 30, 1996. The pro forma net
tangible book deficit of the Company at June 30, 1996 was $( million), or
$( ) per share. Without taking into account any changes in net tangible
book value after , other than to give effect to (i) the sale of
shares of Common Stock to be sold by the Company in the Offering at an
assumed public offering price of $ per share (reduced for underwriting
discounts and commissions and estimated expenses of the Offering to be paid by
the Company) and (ii) the application of the net proceeds therefrom, the pro
forma net tangible book value of the Company as of would have been
$ million, or $ per share. This represents an immediate increase
in net tangible book value of per share to the existing stockholders and
an immediate dilution in net tangible book value to investors in the Offering of
$ per share. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....... $
Pro forma net tangible book deficit per share before
the Offering(1)................................... $ ()
Increase in net tangible book value per share
attributable to price paid by investors in the
Offering..........................................
---------
Pro forma net tangible book value per share after the
Offering............................................
---------
Dilution in net tangible book value per share to
investors in the Offering(2)........................ $
---------
---------
</TABLE>
- ------------------------
(1) Pro forma net tangible book value (deficit) per share is determined by
dividing the pro forma net tangible book value of the Company by the number
of outstanding shares of Common Stock. Pro forma net tangible book value is
determined by deducting from total assets, goodwill, patents, trademarks and
other intangibles (net of amortization) and total liabilities.
(2) Dilution is determined by subtracting net tangible book value per share
after giving effect to the Offering from the initial public offering price
paid by investors in the Offering.
The following table summarizes on a pro forma basis as of June 30, 1996
(based on the assumptions set forth above regarding the Offering), the number of
shares of Common Stock purchased from the Company, the total consideration paid
to the Company (equal, in the case of the existing stockholders, to the original
consideration for the shares of Common Stock held by them plus additional
contributions made by them in respect of the Common Stock), and the average
price per share paid by the existing stockholders and by the investors
purchasing shares of Common Stock in the Offering (based on an assumed initial
public offering price of $ per share). See "Security Ownership of
Certain Beneficial Owners and Management" and "Certain Transactions -- Related
Party Transactions."
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................... 10,000,000 100.0% $ 6,353,000 100.0% $ 0.64
New investors(1)....................................
------------ ----- ------------ ----- -----
Total.........................................
------------ ----- ------------ ----- -----
------------ ----- ------------ ----- -----
</TABLE>
- ------------------------
(1) Investments L.P. has granted to the Underwriters an option to purchase up to
shares to cover over-allotments, if any. If such option is exercised
in full, such sales by Investments L.P. will reduce the number of shares
held by existing stockholders to , or approximately % of the total
number of shares of Common Stock to be outstanding after the Offering and
will increase the number of shares to be held by new investors to , or
approximately % of the total number of shares of Common Stock to be
outstanding after the Offering. See "Security Ownership of Certain
Beneficial Owners and Management."
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for the fiscal
years ended September 30, 1993 and 1994, respectively, the period October 1,
1994 through August 16, 1995, the period August 17, 1995 through September 30,
1995 and the nine months ended June 30, 1996 are derived from the consolidated
financial statements of the Company or TRAK, as the predecessor to the Company,
included herein which have been audited by Price Waterhouse LLP, independent
accountants. The data for the fiscal years ended September 30, 1991 and
September 30, 1992 are derived from the audited financial statements of TRAK
which are not included herein. The consolidated financial data for the nine
months ended June 30, 1995 have been derived from unaudited consolidated
financial statements of TRAK, which, in the opinion of the Company's management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations. The operating results of the Company for the nine months ended June
30, 1996 are not necessarily indicative of the operating results that may be
expected for the full year. The data set forth below should be read in
conjunction with the reports of the independent accountants, the Consolidated
Financial Statements and related Notes to the Consolidated Financial Statements
of the Company and TRAK, and "Management's Discussion and Analysis of Results of
Operations and Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
------------------------------------------------- --------------
FISCAL YEARS ENDED
SEPT. 30, OCT. 1, 1994 AUG. 17, 1995
---------------------------------- THROUGH THROUGH
1991 1992 1993 1994 AUG. 16, 1995 SEPT. 30, 1995
------- ------- ------- ------- ------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................... $72,950 $66,575 $50,068 $60,973 $75,401 $12,723
Cost of sales........................... 58,914 54,150 39,183 47,208 57,707 9,787
------- ------- ------- ------- ------------- -------
Gross profit............................ 14,036 12,425 10,885 13,765 17,694 2,936
Selling, general and administrative
expenses.............................. 10,096 8,819 8,290 9,502 10,903 1,670
------- ------- ------- ------- ------------- -------
Operating income........................ 3,940 3,606 2,595 4,263 6,791 1,266
Interest expense........................ 2,527 1,368 1,140 1,363 1,379 353
Other finance charges................... 795 972 570 699 1,121 269
------- ------- ------- ------- ------------- -------
Income before income taxes.............. 618 1,266 885 2,201 4,291 644
Provision for income taxes.............. 292 633 368 876 1,762 262
------- ------- ------- ------- ------------- -------
Income before extraordinary credit and
change in accounting principles....... 326 633 517 1,325 2,529 382
Extraordinary credit, net(2)............ 292 573 -- -- -- --
Cumulative effect of change in
accounting principles................. -- -- 199(3) -- (241)(4) --
------- ------- ------- ------- ------------- -------
Net income.............................. $ 618 $ 1,206 $ 716 $ 1,325 $ 2,288 $ 382
------- ------- ------- ------- ------------- -------
------- ------- ------- ------- ------------- -------
Earnings per share(5)(6)................ $ .04
<CAPTION>
PREDECESSOR(1) COMPANY
-------------- -------
NINE MONTHS ENDED
JUNE 30,
------------------------
1995 1996
-------------- -------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................... $64,964 $81,514
Cost of sales........................... 49,782 60,379
------- -------
Gross profit............................ 15,182 21,135
Selling, general and administrative
expenses.............................. 9,168 11,339
------- -------
Operating income........................ 6,014 9,796
Interest expense........................ 1,100 1,932
Other finance charges................... 1,000 1,491
------- -------
Income before income taxes.............. 3,914 6,373
Provision for income taxes.............. 1,566 2,485
------- -------
Income before extraordinary credit and
change in accounting principles....... 2,348 3,888
Extraordinary credit, net(2)............ -- --
Cumulative effect of change in
accounting principles................. (241)(4) --
------- -------
Net income.............................. $ 2,107 $3,888
------- -------
------- -------
Earnings per share(5)(6)................ $ .39
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------
SEPT. 30,
----------------------------------
1991 1992 1993 1994(7)
------- ------- ------- -------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Working capital (deficit)......................... $ (253) $ 484 $ 1,111 $ 260
Total assets...................................... 26,915 22,852 24,706 28,651
Short-term debt................................... 10,253 5,125 8,608 9,436
Long-term debt.................................... 5,522 4,644 4,721 2,966
Mandatorily redeemable preferred stock............ -- -- 3,000 3,262
Stockholders' equity (deficit).................... (380) 564 1,019 1,783
<CAPTION>
COMPANY
--------------------
SEPT. 30, JUNE 30,
1995(7) 1996
--------- --------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)......................... $10,699 $10,189
Total assets...................................... 48,332 49,144
Short-term debt................................... 540 837
Long-term debt.................................... 23,781 19,402
Mandatorily redeemable preferred stock............ -- --
Stockholders' equity (deficit).................... 6,383 10,271
</TABLE>
- ---------------------
(1) The Company was organized in August 1995 for the purpose of acquiring TRAK,
the predecessor company.
(2) Amount reflects benefits relating to net operating loss carryforwards
utilized for financial reporting purposes.
(3) In October 1992, TRAK adopted Statement of Financial Accounting Standards,
No. 109, "Accounting for Income Taxes" (SFAS 109). The cumulative effect of
adopting SFAS 109 was to record a net tax benefit of $199.
(4) In October 1994, TRAK adopted Statement of Financial Accounting Standards,
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $241, net of income tax benefits.
(5) Earnings per share is based on weighted-average shares outstanding of
10,000,000.
(6) Given the historical organization and capital structure of TRAK, as
predecessor to the Company, earnings per share information is not considered
meaningful for the predecessor.
(7) The changes in the balances as of September 30, 1995 versus September 30,
1994 primarily reflect the acquisition of TRAK by the Company on August 16,
1995 and the related financing thereof.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The Company was formed for the purpose of acquiring TRAK in August 1995.
Subsequent thereto, the Company completed the acquisition of the business of
Lull in August 1996. Set forth below is certain information with respect to the
TRAK and Lull acquisitions:
<TABLE>
<CAPTION>
DATE OF
ACQUISITION ACQUISITION BUSINESS YEAR FOUNDED
- --------------------------------------- ----------------- --------------------------------------- ---------------
<S> <C> <C> <C>
TRAK................................... August 1995 Manufacturer of telescopic material 1954
handlers and skid steer loaders
Lull................................... August 1996 Manufacturer of telescopic material 1956
handlers
</TABLE>
The Company is accounting for each of these acquisitions under the purchase
method of accounting, with the purchase price allocated to the estimated fair
market value of the assets acquired and the liabilities assumed. The excess of
the purchase price over the estimated fair value of the net assets acquired is
being allocated to goodwill, resulting in approximately $65.5 million of
goodwill on a pro forma basis at June 30, 1996. The amortization of such
goodwill over 40 years will result in an annual noncash charge to future
operations of approximately $1.6 million. The basis of presentation relating to
the following discussion of the statements of operations of the Company and of
TRAK ("Predecessor") does not reflect such increased amortization expense, as
the full-year effect of the acquisition of TRAK and the acquisition of Lull are
not reflected therein. See "Management's Discussion and Analysis of Pro Forma
Results of Operations and Financial Condition" for further discussion.
The Company operates in a single industry segment. The Company's principal
products consist of material handling and construction equipment utilizing
engines of less than 130 horsepower. In addition to specific factors affecting
the Company's results of operations as discussed below, certain factors
typically recur from period to period. For example, cost of sales is driven to a
large extent by the cost of purchased components and raw materials, which
typically comprise 80% of the total cost of sales. Other factors affecting cost
of sales are production volume and the resultant leveraging of fixed overhead,
as well as productivity of the labor force. In addition, selling, general and
administrative ("SG&A") expenses include costs related to developing, marketing
and selling the Company's products, as well as infrastructure costs for
management and systems. While certain SG&A costs vary with the level of net
sales, many are relatively fixed over fairly wide ranges of unit volume. It is
the Company's strategy to invest in infrastructure costs, in many cases in
advance of increased sales.
The Company sells its products to independent equipment dealers for sale and
rental and to national rental centers for rental. The Company offers its
independent equipment dealers conventional floor-plan and rental fleet financing
to assist in the purchase of its products. Under such financing arrangements,
dealers borrow money from independent lenders on a secured basis for up to five
years. The Company assists with such financing by providing the independent
lenders additional guarantees or other financial support with respect to the
obligations of its dealers. In conjunction with these floor-plan arrangements,
the Company also provides certain financing benefits to its dealers to support
both retail and rental purchases. Such costs are accounted for as other finance
charges and approximated $1.5 million for the Company for the nine months ended
June 30, 1996 and $1.6 million for the Company and its Predecessor on a combined
basis for the twelve months ended September 30, 1995. See "--Capital Resources
and Liquidity."
16
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
net sales represented by certain items reflected in the Company's or its
Predecessor's statement of operations:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------------------------------- -------------
PERIOD FROM PERIOD FROM PREDECESSOR COMPANY
FISCAL YEAR FISCAL YEAR 10/1/94 8/17/95 --------------- ---------------
ENDED ENDED THROUGH THROUGH NINE MONTHS NINE MONTHS
9/30/93 9/30/94 8/16/95 9/30/95 ENDED 6/30/95 ENDED 6/30/96
----------- ----------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................. 78.3 77.4 76.5 76.9 76.7 74.1
----- ----- ----- ----- ----- -----
Gross profit.............................. 21.7 22.6 23.5 23.1 23.3 25.9
Selling, general and administrative
expenses................................. 16.6 15.6 14.5 13.1 14.1 13.9
----- ----- ----- ----- ----- -----
Operating income.......................... 5.1 7.0 9.0 10.0 9.2 12.0
Interest expense.......................... 2.3 2.3 1.8 2.8 1.7 2.4
Other finance charges..................... 1.1 1.1 1.5 2.1 1.5 1.8
----- ----- ----- ----- ----- -----
Income before income taxes................ 1.7 3.6 5.7 5.1 6.0 7.8
Provision for income taxes................ 0.7 1.4 2.3 2.1 2.4 3.0
----- ----- ----- ----- ----- -----
Income from continuing operations......... 1.0% 2.2% 3.4% 3.0% 3.6% 4.8%
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
</TABLE>
NINE MONTHS ENDED JUNE 30, 1996 (NEW BASIS) COMPARED TO NINE MONTHS ENDED JUNE
30, 1995
(PREDECESSOR BASIS)
Net sales for the nine months ended June 30, 1996 were $81.5 million, an
increase of $16.5 million, or 25.5%, over net sales of $65.0 million for the
nine months ended June 30, 1995. Sales of telescopic material handlers for the
nine months ended June 30, 1996 were $59.2 million, an increase of $14.6
million, or 32.7%, over the nine months ended June 30, 1995. Sales of skid steer
loaders for the nine months ended June 30, 1996 were $13.7 million, an increase
of $0.6 million, or 4.7%, over the nine months ended June 30, 1995. Sales of
parts and attachments for the nine months ended June 30, 1996 were $8.6 million,
an increase of $1.3 million, or 18.3%, over the nine months ended June 30, 1995.
The improvement in sales of telescopic material handlers reflected continued
strong market demand for such products. Of the 32.7% increase in net sales of
telescopic material handlers, 25.1 percentage points were attributable to an
increase in the number of units sold and the remainder was primarily
attributable to a shift in product mix towards larger size units and price
increases. The Company believes the increased demand for telescopic material
handlers is attributable to the expansion of rental fleets, the substitution of
telescopic material handlers for other construction and material handling
equipment and relatively strong conditions in the construction equipment
industry. The increase in sales of skid steer loaders reflects a shift in
product mix towards larger size units and a price increase effective in early
1996. Skid steer loader sales for the nine month period ended June 30, 1996 were
adversely affected by a temporary reduction in the rate of production and
shipments during early calendar 1996 while the Company incorporated corrective
product modifications and upgrades to its skid steer product line. Parts sales
continued to increase in support of the increased population of the Company's
units operating in the field, and sales of attachments increased primarily as a
result of new equipment sales.
Gross profit for the nine months ended June 30, 1996 was $21.1 million, an
increase of $5.9 million, or 39.2%, over gross profit of $15.2 million for the
nine months ended June 30, 1995. The increase in gross profit primarily
reflected the increase in net sales discussed above. The gross margin increased
to 25.9% for the nine months ended June 30, 1996 from 23.3% for the nine months
ended June 30, 1995. The increase in gross margin reflects the favorable change
in product mix toward higher-margin telescopic
17
<PAGE>
material handlers, improved production efficiencies (in part due to expanded use
of robotics and a new paint system), as well as economies associated with higher
production volumes. Also contributing to the gross margin improvement were
purchasing programs that achieved price reductions for certain components and
materials.
SG&A expenses for the nine months ended June 30, 1996 were $11.3 million, an
increase of $2.2 million, or 23.7%, over SG&A expenses of $9.2 million for the
nine months ended June 30, 1995. The increase in SG&A expenses for the nine
months ended June 30, 1996 reflected expenses associated with higher net sales
in 1996, approximately $0.5 million in management fees paid to an affiliate of
the Company's majority stockholder, increased product development expenditures
primarily related to telescopic material handlers, systems consulting fees and
amortization of goodwill in 1996 as a result of the application of purchase
accounting beginning in August 1995 in connection with the acquisition of TRAK.
SG&A expenses as a percentage of net sales decreased to 13.9% for the nine
months ended June 30, 1996 from 14.1% for the nine months ended June 30, 1995.
The decrease in the SG&A percentage continued to reflect the relatively fixed
nature of certain SG&A expenses as well as the Company's efforts to control
general and administrative costs.
Operating income for the nine months ended June 30, 1996 was $9.8 million,
an increase of $3.8 million, or 62.9%, over operating income of $6.0 million for
the nine months ended June 30, 1995. Operating margins increased to 12.0% for
the nine months ended June 30, 1996 from 9.2% for the nine months ended June 30,
1995. The improvements in operating income and margins reflected the factors
described above.
Interest expense for the nine months ended June 30, 1996 was $1.9 million,
an increase of $0.8 million, or 75.6%, over interest expense of $1.1 million for
the nine months ended June 30, 1995. Interest expense as a percentage of net
sales increased to 2.4% for the nine months ended June 30, 1996 from 1.7% for
the nine months ended June 30, 1995. The increase in interest expense primarily
reflected the effects of debt incurred to finance the August 1995 acquisition of
TRAK and higher weighted-average interest rates in 1996.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for the nine months ended June 30, 1996 were $1.5 million, an
increase of $0.5 million, or 49.1%, over other finance charges of $1.0 million
for the nine months ended June 30, 1995. Other finance charges as a percentage
of net sales increased to 1.8% from 1.5%. The increase in other finance charges
primarily resulted from the greater utilization of the floor plan financing
program due to the increases in net sales as well as greater usage by dealers.
Provision for income taxes for the nine months ended June 30, 1996 was $2.5
million compared to $1.6 million for the nine months ended June 30, 1995. The
increase primarily reflected the increase in income before provision for income
taxes of $2.5 million between these periods. The Company's effective tax rate
was 39.0% for the nine months ended June 30, 1996 and 40.0% for the nine months
ended June 30, 1995.
Income from continuing operations for the nine months ended June 30, 1996
was $3.9 million, an increase of $1.5 million, or 65.6% over income from
continuing operations of $2.3 million for the comparable period in the preceding
year as a result of the factors described above.
In October 1994, the Predecessor adopted SFAS 106, the cumulative effect of
which on net income was a charge of $0.4 million, less applicable income tax
benefits of $0.2 million.
PERIOD FROM AUGUST 17, 1995 THROUGH SEPTEMBER 30, 1995 (NEW BASIS)
Due to the relatively brief period involved, comprehensive comparative data
has not been presented or discussed below with respect to the period from August
17, 1995 through September 30, 1995 (the period from the date of acquisition of
TRAK and the application of purchase accounting through the date of the
Company's fiscal year end). However, see "Management's Discussion and Analysis
of Pro Forma
18
<PAGE>
Results of Operations and Financial Condition" for a discussion of pro forma
comparative data including this period.
Net sales for the period from August 17, 1995 through September 30, 1995
(the "September 1995 Stub Period") were $12.7 million. Gross margin of 23.1% was
relatively consistent with gross margin for the period from October 1, 1994
through August 16, 1995. SG&A expenses as a percentage of net sales decreased to
13.1% as the Company continued to realize the benefits of its efforts to monitor
and control general and administrative costs. Other finance charges as a
percentage of net sales were 2.1%, reflecting the growth in the Company's
business and the dealer-related finance charges incurred by the Company. The
Company's effective tax rate for the September 1995 Stub Period was 40.7%.
PERIOD OCTOBER 1, 1994 THROUGH AUGUST 16, 1995 COMPARED TO FISCAL YEAR ENDED
SEPTEMBER 30, 1994
(PREDECESSOR BASIS)
Net sales for the ten and one-half month period from October 1, 1994 through
August 16, 1995 ("Stub Period 1995") were $75.4 million, an increase of $14.4
million, or 23.7%, over net sales of $61.0 million for the full fiscal year
ended September 30, 1994, primarily as a result of increased unit sales. Demand
for both telescopic material handlers and skid steer loaders was strong
throughout Stub Period 1995. Sales of telescopic material handlers in Stub
Period 1995 were $51.9 million, an increase of $6.6 million, or 14.5%, over the
fiscal year ended September 30, 1994 due primarily to continued strong market
conditions. Sales of skid steer loaders in Stub Period 1995 were $15.0 million,
an increase of $4.3 million, or 40.2%, over the fiscal year ended September 30,
1994 reflecting primarily the continued expansion of the distributor base. Sales
of parts and attachments in Stub Period 1995 were $8.5 million, an increase of
$3.6 million, or 71.4%, over the fiscal year ended September 30, 1994.
Attachments sales increased primarily due to the introduction of new attachment
products for telescopic material handlers and skid steer loaders and due to the
strong growth in sales of skid steer loaders which typically have higher
associated sales of attachments. Parts sales increased due to the increased
population of the Company's units operating in the field.
Gross profit for Stub Period 1995 was $17.7 million, an increase of $3.9
million, or 28.5%, over gross profit of $13.8 million for the fiscal year ended
September 30, 1994. This increase primarily reflected the increases in net sales
described above. The gross margin increased to 23.5% in Stub Period 1995 from
22.6% in the fiscal year ended September 30, 1994, primarily reflecting
manufacturing efficiencies and productivity gains as well as the continuing
increases in sales volume.
SG&A expenses for Stub Period 1995 were $10.9 million, an increase of $1.4
million, or 14.7%, over SG&A expenses of $9.5 million for the fiscal year ended
September 30, 1994. This increase primarily reflected expenses associated with
increased sales as well as costs associated with upgrading information systems.
SG&A expenses as a percentage of net sales decreased to 14.5% in Stub Period
1995 from 15.6% in the fiscal year ended September 30, 1994. The decrease in
this percentage reflected ongoing efforts to control general and administrative
costs as the business expanded.
Operating income for Stub Period 1995 was $6.8 million, an increase of $2.5
million, or 59.3%, over operating income of $4.3 million for the fiscal year
ended September 30, 1994. Operating margins increased to 9.0% in Stub Period
1995 from 7.0% in the fiscal year ended September 30, 1994. These improvements
reflected the factors described above.
Interest expense for Stub Period 1995 was $1.4 million, unchanged from the
fiscal year ended September 30, 1994. Interest expense as a percentage of net
sales decreased to 1.8% in Stub Period 1995 from 2.3% in the fiscal year ended
September 30, 1994.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for Stub Period 1995 were $1.1 million, an increase of $0.4
million, or 60.4%, over other finance charges of $0.7 million for the fiscal
year ended September 30, 1994. Other finance charges as a percentage of net
sales increased to 1.5% in Stub Period 1995 from 1.1% in the fiscal year ended
September 30, 1994. The
19
<PAGE>
increase in other finance charges primarily resulted from the greater
utilization of the floor plan financing program due to the increases in sales as
well as greater usage by dealers.
Provision for income taxes for Stub Period 1995 was $1.8 million, an
increase of $0.9 million, or 101.1%, over $0.9 million in the fiscal year ended
September 30, 1994. The increase in the provision for income taxes primarily
resulted from the increase in income before provision for taxes of $2.1 million
in Stub Period 1995 compared to the fiscal year ended September 30, 1994. The
effective income tax rate for Stub Period 1995 was 41.1% versus 39.8% for the
fiscal year ended September 30, 1994.
Income from continuing operations for Stub Period 1995 was $2.5 million, an
increase of $1.2 million, or 90.9%, over income from continuing operations of
$1.3 million for the fiscal year ended September 30, 1994. Income from
continuing operations as a percentage of net sales increased to 3.4% in Stub
Period 1995 compared to 2.2% in the fiscal year ended September 30, 1994. The
increase in income from continuing operations primarily reflected the factors
discussed above.
In October 1994, the Predecessor adopted SFAS 106, the cumulative effect of
which on net income was a charge of $0.4 million, less applicable income tax
benefits of $0.2 million.
FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1993 (PREDECESSOR BASIS)
Net sales for the fiscal year ended September 30, 1994 were $61.0 million,
an increase of $10.9 million, or 21.8%, over net sales of $50.1 million for the
fiscal year ended September 30, 1993. Net sales of telescopic material handlers
in the fiscal year ended September 30, 1994 were $45.3 million, an increase of
$4.9 million, or 12.2%, over the fiscal year ended September 30, 1993.
Commercial telescopic material handler sales increased by $22.1 million, or 95%,
over the same period. Net sales of skid steer loaders in the fiscal year ended
September 30, 1994 were $10.7 million, an increase of $4.8 million, or 80.7%,
over the prior year. The increases were partially offset by a reduction in
military telescopic material handler sales due to completion of shipments made
under a military contract. Net sales of parts and attachments increased $1.2
million, or 32.4%, over the prior year. The increase in net sales of telescopic
material handlers and skid steer loaders reflected increased demand and the
Company's efforts to expand and upgrade its distributor network. The increase in
net sales of skid steer loaders was also favorably impacted by the successful
introduction of two new models late in the fiscal year ended September 30, 1993.
Gross profit for the fiscal year ended September 30, 1994 was $13.8 million,
an increase of $2.9 million, or 26.5%, over gross profit of $10.9 million for
the fiscal year ended September 30, 1993. The increase in gross profit primarily
reflected the increase in net sales discussed above. The gross margin increased
to 22.6% in the fiscal year ended September 30, 1994 from 21.7% in the fiscal
year ended September 30, 1993. The gross margin improvement in the fiscal year
ended September 30, 1994 primarily reflected the change in telescopic material
handler mix. This improvement was partially offset by increased sales of lower
margin skid steer loaders. Margins in the fiscal year ended September 30, 1994
also reflected manufacturing efficiencies resulting from the introduction of
robotic welding and improved plant layout.
SG&A expenses for the fiscal year ended September 30, 1994 were $9.5
million, an increase of $1.2 million, or 14.6%, over SG&A expenses of $8.3
million for the fiscal year ended September 30, 1993. The increase primarily
resulted from expenses associated with the increases in net sales in the fiscal
year ended September 30, 1994. SG&A expenses as a percentage of net sales
decreased to 15.6% in the fiscal year ended September 30, 1994 from 16.6% in the
fiscal year ended September 30, 1993. The decrease in the SG&A percentage
reflected the successful results of the Predecessor's efforts to control general
and administrative costs in a period of rapid sales growth.
Operating income for the fiscal year ended September 30, 1994 was $4.3
million, an increase of $1.7 million, or 64.3%, over operating income of $2.6
million for the fiscal year ended September 30, 1993. Operating margins
increased to 7.0% in the fiscal year ended September 30, 1994 from 5.1% in the
fiscal
20
<PAGE>
year ended September 30, 1993. The improvements in operating income and
operating margins reflect the factors described above.
Interest expense for the fiscal year ended September 30, 1994 was $1.4
million, an increase of $0.2 million, or 19.6%, over interest expense of $1.1
million for the fiscal year ended September 30, 1993. Interest expense as a
percentage of net sales remained relatively unchanged at 2.3%. The increase in
aggregate interest expense reflected the full year effects of higher borrowings
in the fiscal year ended September 30, 1993 to finance the expansion of the
business and slightly higher interest rates in the fiscal year ended September
30, 1994 versus the fiscal year ended September 30, 1993.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for the fiscal year ended September 30, 1994 were $0.7 million,
an increase of $0.1 million, or 22.6%, over other finance charges of $0.6
million for the fiscal year ended September 30, 1993. Other finance charges as a
percentage of net sales remained unchanged at 1.1%. The increase in other
finance charges primarily resulted from the expansion of the floor-plan
financing program and the related increase in dealer-related finance charges.
Provision for income taxes for the fiscal year ended September 30, 1994 was
$0.9 million compared to $0.4 million for the fiscal year ended September 30,
1993. The increase primarily reflected the increase in income before provision
for income taxes of $1.3 million from the fiscal year ended September 30, 1993
to the fiscal year ended September 30, 1994. The Company's effective tax rate
decreased to 39.8% in the fiscal year ended September 30, 1994 from 41.6% in the
fiscal year ended September 30, 1993, which reflects slightly lower state taxes
in the fiscal year ended September 30, 1994.
Income from continuing operations for the fiscal year ended September 30,
1994 was $1.3 million, an increase of $0.8 million, or 156.3%, over income from
continuing operations of $0.5 million for the fiscal year ended September 30,
1993 as a result of the factors described above.
Effective October 1, 1992, the Predecessor adopted SFAS 109, for which the
cumulative benefit of adoption (approximately $0.2 million) was reported as a
component of net income in the fiscal year ended September 30, 1993.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by operating activities of the Company was $5.3 million
for the nine months ended June 30, 1996. Working capital increased by $0.9
million in that period. Cash provided by operating activities of the Company for
the nine months ended June 30, 1996 was used primarily to finance capital
expenditures of $1.1 million and $4.1 million of net payments on existing
indebtedness.
Net cash provided by operating activities of the Company was $0.3 million
for the September 1995 Stub Period. Working capital increased by $0.2 million in
that period. Cash provided by operating activities of the Company for the
September 1995 Stub Period was used to finance capital expenditures of $0.2
million and net payments of $0.1 million on existing indebtedness.
Net cash provided by operating activities of the Predecessor was $0.5
million for Stub Period 1995. Working capital increased by $2.4 million in Stub
Period 1995. Capital expenditures and other investments of $3.4 million and
preferred stock dividends of $0.2 million in Stub Period 1995 were primarily
financed with cash flows from operations and $3.1 million of additional
borrowings during that period.
Net cash provided by operating activities of the Predecessor was $3.0
million for the fiscal year ended September 30, 1994. Working capital decreased
by approximately $0.2 million in that period. Cash provided by operating
activities for the fiscal year ended September 30, 1994 was used primarily to
finance capital expenditures and other investments of $1.6 million, repay
existing indebtedness of $0.9 million and pay preferred stock dividends of $0.4
million.
21
<PAGE>
Net cash used in operating activities of the Predecessor was $2.7 million
for the fiscal year ended September 30, 1993. Working capital increased by $3.7
million in that period pursuant to the expansion of the business. Net additional
borrowings by the Predecessor of $3.6 million in the fiscal year ended September
30, 1993 were utilized to fund cash used in operating activities, capital
expenditures of $0.7 million and preferred stock dividends of $0.1 million.
The aggregate cash merger consideration (purchase price) paid by the Company
for TRAK totaled $30.4 million, including assumed liabilities of $17.8 million.
The acquisition was financed through a $6.0 million equity contribution by
Investments L.P. and management, a $2.0 million junior subordinated note payable
to Investments L.P., a $5.0 million subordinated note payable to an
institutional lender and $17.4 million under credit agreements with certain
financial institutions. The purchase price will increase, by up to $2.0 million
plus interest, based upon the volume of orders received by the Company under
contracts with the Army. All debt outstanding, preferred stock, stock warrants
and stock options of the Predecessor at August 16, 1995 were extinguished in
connection with the merger transaction.
At June 30, 1996, the Company had $19.4 million of long-term debt
outstanding, comprised of $7.1 million under a revolving line of credit
scheduled to expire in 2001, $5.3 million of installment notes payable in
monthly installments through August 2001, and $7.0 million of subordinated and
junior subordinated notes due in August 2003. Borrowings under the revolving
line of credit were based on a percentage of eligible receivables and
inventories. Total unused availability under the revolving line of credit was
$5.2 million at June 30, 1996.
The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under floor plan and
rental fleet arrangements. The Company either provides a back-up guarantee of a
dealer's credit or an undertaking to repurchase equipment at a discounted price
at specified times or under specified circumstances. The aggregate outstanding
loan balance under these agreements was $48.2 million at June 30, 1996. The
Company's actual exposure under these financing arrangements is significantly
less than the nominal amount outstanding. Aggregate losses under substantially
all of the Company's guarantee obligations to third party lenders with respect
to its TRAK dealers in each of calendar years 1996 and 1997 are limited to the
greater of $1.5 million and 5% of the loan balance at the previous calendar year
end (approximately $2.0 million for 1996).
Based on its ability to generate funds from operations and the availability
of funds under its existing and anticipated facilities with financial
institutions, the Company believes that it will have sufficient funds available
to meet its currently anticipated operating and capital expenditure requirements
for its existing operations.
See also "Management's Discussion and Analysis of Pro Forma Results of
Operations and Financial Condition."
BACKLOG
The Company's backlog as of June 30, 1996 was $46.9 million. It is expected
that approximately 60% of the June 30, 1996 backlog will be shipped before
September 30, 1996.
EFFECTS OF INFLATION
Inflation has not had a material effect on the Company's business or results
of operations.
NEW ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") which addresses accounting for stock option, purchase
and award plans. SFAS 123 specifies that companies utilize either the "fair
value based method" or the "intrinsic value based method" for valuing stock
options granted. For purposes of valuing any grants for any such plans adopted
in the future, the Company would expect to utilize the "intrinsic value based
method." The Company does not expect that the adoption of SFAS 123 will have a
material effect on the Company's financial position or results of operations.
22
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following pro forma unaudited consolidated statements of operations of
Omniquip for the year ended September 30, 1995 and for the nine months ended
June 30, 1996, respectively, were prepared to illustrate the estimated effects
of (i) the acquisition of TRAK (as described further below) and the financing
thereof, (ii) the acquisition of the business of Lull (as described further
below) and the financing thereof and (iii) the Offering contemplated hereby
(assuming the over-allotment option is not exercised) and the application of the
estimated net proceeds to the Company therefrom to prepay outstanding
indebtedness (collectively, the "Pro Forma Transactions"), as if the Pro Forma
Transactions had occurred at the beginning of each respective period. The
following pro forma unaudited consolidated balance sheet of Omniquip at June 30,
1996 was prepared to illustrate the estimated effects of the Pro Forma
Transactions, except for the acquisition of TRAK, which occurred on August 16,
1995, as if the Pro Forma Transactions had occurred on June 30, 1996.
On August 16, 1995, the Company completed the acquisition of the stock of
TRAK in a transaction accounted for under the purchase method of accounting. The
aggregate purchase price approximated $30.4 million, including assumed
liabilities of $17.8 million. The purchase price will be increased, up to a
maximum of $2.0 million, together with interest, based upon the volume of orders
received from the Army under contracts for the delivery of telescopic material
handlers for a period of five years from August 17, 1995. The acquisition was
financed through a $6.0 million equity contribution from management and
Investments L.P., a $2.0 million junior subordinated note payable to Investments
L.P., a $5.0 million subordinated note payable to an institutional lender and
approximately $17.4 million under credit agreements with certain financial
institutions.
On August 15, 1996, the Company completed the acquisition of substantially
all of the assets of Lull in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $70.0 million,
plus assumed liabilities of approximately $11.5 million, and was financed
primarily with borrowings under the Company's restructured credit agreements
with certain financial institutions, including $14.0 million of subordinated
debt guaranteed by Investments L.P.
The purchase prices for TRAK and Lull were assigned to the assets acquired
and liabilities assumed based on their estimated fair values at the respective
acquisition dates. Based on such allocations, the aggregate purchase prices
exceeded the estimated fair value of the net assets acquired (goodwill) by
approximately $65.5 million, which is being amortized over 40 years and will
result in an annual amortization charge of $1.6 million.
The pro forma unaudited consolidated statements of operations and the pro
forma unaudited consolidated balance sheet do not purport to represent (i) the
actual results of operations or financial condition of the Company, had the Pro
Forma Transactions occurred on the dates assumed, or (ii) the results of
operations or financial position to be expected in the future. They do not
reflect any estimate of cost savings or other efficiencies that may be achieved
from the integration of TRAK and Lull. Management believes that the assumptions
used in preparing the pro forma unaudited consolidated statements of operations
and the pro forma unaudited consolidated balance sheet provide a reasonable
basis for presenting all of the significant effects of the Pro Forma
Transactions, that the pro forma adjustments give appropriate effect to those
assumptions, and that the pro forma adjustments are properly applied in the pro
forma unaudited consolidated statements of operations and the pro forma
unaudited consolidated balance sheet.
The pro forma unaudited consolidated statements of operations and the pro
forma unaudited consolidated balance sheet and accompanying notes should be read
in conjunction with the historical financial statements of the Company, TRAK and
Lull, including the notes thereto, and the other financial information
pertaining to the Company, TRAK and Lull, including the information set forth
under "Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Results of Operations and Financial Condition," and
"Management's Discussion and Analysis of Pro Forma Results of Operations and
Financial Condition," included elsewhere herein.
23
<PAGE>
PRO FORMA INCOME STATEMENT
NINE MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OMNIQUIP/
OMNIQUIP LULL(1) LULL PRO FORMA LULL OFFERING PRO FORMA
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- ----------- -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................... $81,514 $70,256 $ $151,770 $ $151,770
Cost of sales............................... 60,379 56,150 116,529 116,529
----------- ----------- ------------ -----------
Gross profit................................ 21,135 14,106 35,241 35,241
Selling, general and administrative
expenses.................................. 11,339 6,248 419(3) 18,006 500(7) 18,506
Boom warranty charge(4)..................... -- 2,881 2,881 2,881
----------- ----------- ------- ------------ ----------- -----------
Operating income............................ 9,796 4,977 (419) 14,354 (500) 13,854
Interest expense............................ 1,932 360 5,724(5) 8,016 (8,016)(7) --
Other finance charges....................... 1,491 (464) 1,027 1,027
----------- ----------- ------- ------------ ----------- -----------
Income before income taxes.................. 6,373 5,081 (6,143) 5,311 7,516 12,827
Provision for income taxes.................. 2,485 -- (425)(6) 2,060 2,930(6) 4,990
----------- ----------- ------- ------------ ----------- -----------
Income from continuing operations........... $ 3,888 $ 5,081 $(5,718) $ 3,251 $ 4,586 $ 7,837
----------- ----------- ------- ------------ ----------- -----------
----------- ----------- ------- ------------ ----------- -----------
Earnings per share.......................... $ .39(2) $ .33(2) $
</TABLE>
- ------------------------------
(1) The Lull data is comprised of unaudited financial information for the nine
months ended June 30, 1996.
(2) Earnings per share is based on weighted-average shares of 10,000,000.
(3) Operating expenses for the nine months ended June 30, 1996 have been
adjusted for the following:
<TABLE>
<S> <C>
Amortization of goodwill (over a 40-year period)........................... $ 1,050
Elimination of non-recurring stock compensation expense relating to a
discontinued plan of the predecessor..................................... (551)
Elimination of seller transaction costs.................................... (80)
---------
$ 419
---------
---------
</TABLE>
(4) In the quarter ended December 31, 1995, Lull determined that a specified
warranty obligation had been incurred on certain boom units manufactured and
recorded a pre-tax charge of $2,881.
(5) Interest expense for the nine months ended June 30, 1996 has been adjusted
for the following:
<TABLE>
<S> <C>
Interest (weighted-average interest rate of 11.3%) on acquisition debt of
$70,000.................................................................. $ 5,938
Additional interest on existing Omniquip debt due to restructured credit
facilities............................................................... 116
Historical interest expense on debt not assumed............................ (330)
---------
$ 5,724
---------
---------
</TABLE>
(6) Amounts reflect the estimated income tax effects of pro forma adjustments
and the effect of reflecting a previously non-taxable Subchapter
S-corporation (Lull) as taxable in the period.
(7) Reductions in interest expense reflect the application of the net proceeds
from the Offering to repay substantially all of the outstanding debt of the
Company. The increase in selling, general and administrative expenses
reflects the Company's estimate of the additional costs associated with
being a public company. Adjustments do not reflect the effects of the
writeoff of deferred finance charges or prepayment penalties incurred
related to the debt to be repaid with the net proceeds of the Offering. Such
effects, net of related tax benefits, of approximately $1,350 will be
presented as an extraordinary item in the statement of income in the period
in which the debt repayment occurs.
24
<PAGE>
PRO FORMA INCOME STATEMENT
YEAR ENDED SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
LULL OMNIQUIP/
OMNIQUIP LULL PRO FORMA LULL OFFERING PRO FORMA
PRO FORMA(1) AS REPORTED(3) ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------ -------------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales.................................. $88,124 $66,566 $ $154,690 $ $154,690
Cost of sales.............................. 67,494 53,038 120,532 120,532
------------ ------- ----------- ------------ ----------- -----------
Gross profit............................... 20,630 13,528 34,158 34,158
Selling, general and administrative
expenses................................. 12,583 5,573 964(4) 19,120 650(7) 19,770
------------ ------- ----------- ------------ ----------- -----------
Operating income........................... 8,047 7,955 (964) 15,038 (650) 14,388
Interest expense........................... 2,719 299 7,448(5) 10,466 (10,466)(7) --
Other finance charges...................... 1,390 510 1,900 1,900
------------ ------- ----------- ------------ ----------- -----------
Income before income taxes................. 3,938 7,146 (8,412) 2,672 9,816 12,488
Provision for income taxes................. 1,708 -- (507)(6) 1,201 3,830(6) 5,031
------------ ------- ----------- ------------ ----------- -----------
Income from continuing operations.......... $ 2,230 $ 7,146 $(7,905) $ 1,471 $ 5,986 $ 7,457
------------ ------- ----------- ------------ ----------- -----------
------------ ------- ----------- ------------ ----------- -----------
Earnings per share......................... $ .22(2) $ .15(2)
</TABLE>
- ------------------------------
(1) The Omniquip pro forma data for the fiscal year ended September 30, 1995 is
comprised of financial information for TRAK (Predecessor) for the period
October 1, 1994 through August 16, 1995, and for the Company for the period
August 17, 1995 through September 30, 1995 as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY PRO FORMA OMNIQUIP
10/1/94-8/16/95 8/17/95-9/30/95 ADJUSTMENTS PRO FORMA
--------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales............................... $75,401 $12,723 $ $88,124
Cost of sales........................... 57,707 9,787 67,494
------- ------- ----------- ---------
Gross profit............................ 17,694 2,936 20,630
Selling, general and administrative
expenses.............................. 10,903 1,670 10(a) 12,583
------- ------- ----------- ---------
Operating income........................ 6,791 1,266 (10) 8,047
Interest expense........................ (1,379) (353) (987)(b) (2,719)
Other finance charges................... (1,121) (269) (1,390)
------- ------- ----------- ---------
Income before income taxes.............. 4,291 644 (997) 3,938
Provision for income taxes.............. 1,762 262 (316)(c) 1,708
------- ------- ----------- ---------
Income from continuing operations....... $ 2,529 $ 382 $ (681) $ 2,230
------- ------- ----------- ---------
------- ------- ----------- ---------
</TABLE>
----------------------------------
(a) Selling, general and administrative expenses for the fiscal year ended
September 30, 1995 have been adjusted for additional amortization of
goodwill (over a 40-year period).
(b) Interest expense has been adjusted to reflect $987 of interest on the
incremental debt of the Company related to the financing of the TRAK
purchase price.
(c) Amount reflects estimated income tax effect of pro forma adjustments.
(2) Earnings per share is based on weighted-average shares of 10,000,000.
(3) The Lull data is comprised of unaudited financial information for the twelve
months ended September 30, 1995.
(4) Selling, general and administrative expenses for the fiscal year ended
September 30, 1995 have been adjusted for the following:
<TABLE>
<S> <C>
Amortization of goodwill (over a 40-year period)...................................... $ 1,400
Elimination of nonrecurring stock compensation expense relating to a discontinued plan
of the predecessor.................................................................. (436)
---------
$ 964
---------
---------
</TABLE>
25
<PAGE>
(5) Interest expense for the fiscal year ended September 30, 1995 has been
adjusted for the following:
<TABLE>
<S> <C>
Interest (weighted-average interest rate of 10.9%) on acquisition debt of $70,000..... $ 7,658
Additional interest on existing Omniquip debt due to restructured credit facilities... 155
Historical interest expense on debt not assumed....................................... (365)
---------
$ 7,448
---------
---------
</TABLE>
(6) Amounts reflect estimated income tax effect of pro forma adjustments and the
effect of reflecting a previously (nontaxable) Subchapter S-corporation
(Lull) as taxable in the period.
(7) Reductions in interest expense reflect the application of the net proceeds
from the Offering to repay substantially all of the outstanding debt of the
Company. The increase in selling, general and administrative expenses
reflects the Company's estimate of the additional costs associated with
being a public company. Adjustments do not reflect the effects of the
writeoff of deferred finance charges or prepayment penalties incurred
related to the debt to be repaid with the net proceeds of the Offering. Such
effects, net of related tax benefits, of approximately $1,350 will be
presented as an extraordinary item in the statement of income in the period
in which the debt repayment occurs.
26
<PAGE>
PRO FORMA BALANCE SHEET
JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
LULL OMNIQUIP/
OMNIQUIP LULL PRO FORMA LULL OFFERING
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA ADJUSTMENTS
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash............................................ $ 1 $ 365 $ (365)(1) $ 1 $ 1,311(7)
Receivables..................................... 12,478 7,301 19,779
Inventories..................................... 13,274 11,964 25,238
Prepaid expenses................................ 2,740 188 (188)(1) 2,740 900(7)
----------- ----------- ----------- ------------ -----------
Total current assets.............................. 28,493 19,818 (553) 47,758 2,211
Fixed assets, net................................. 9,495 6,933 16,428
Goodwill, net..................................... 9,525 -- 56,019(2) 65,544
Other assets...................................... 1,631 520 887(3) 3,038 (1,300)(7)
----------- ----------- ----------- ------------ -----------
Total assets...................................... $49,144 $27,271 $56,353 $132,768 $ 911
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
Current Liabilities:
Current portion of debt......................... $ 837 $ 1,105 $(1,105)(4) $ 837 $ (837)(7)
Accounts payable................................ 10,273 6,366 16,639
Accrued expenses................................ 7,194 6,687 571(5) 14,452
----------- ----------- ----------- ------------ -----------
Total current liabilities......................... 18,304 14,158 (534) 31,928 (837)
Long-term debt.................................... 19,402 3,862 66,138(4) 89,402 (89,402)(7)
Deferred income taxes............................. 436 -- 436
Other long-term liabilities....................... 731 -- 731
Stockholders' equity.............................. 10,271 9,251 (9,251)(6) 10,271 91,150(7)
----------- ----------- ----------- ------------ -----------
Total liabilities and equity...................... $49,144 $27,271 $56,353 $132,768 $ 911
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
<CAPTION>
OMNIQUIP
PRO FORMA
AS ADJUSTED
-----------
<S> <C>
Current Assets:
Cash............................................ $ 1,312
Receivables..................................... 19,779
Inventories..................................... 25,238
Prepaid expenses................................ 3,640
-----------
Total current assets.............................. 49,969
Fixed assets, net................................. 16,428
Goodwill, net..................................... 65,544
Other assets...................................... 1,738
-----------
Total assets...................................... $133,679
-----------
-----------
Current Liabilities:
Current portion of debt......................... $ --
Accounts payable................................ 16,639
Accrued expenses................................ 14,452
-----------
Total current liabilities......................... 31,091
Long-term debt.................................... --
Deferred income taxes............................. 436
Other long-term liabilities....................... 731
Stockholders' equity.............................. 101,421
-----------
Total liabilities and equity...................... $133,679
-----------
-----------
</TABLE>
- ------------------------------
(1) Amounts reflect the assets which were retained by the seller and which were
not purchased by Omniquip.
(2) Amount reflects the excess of purchase price over fair market value of the
net assets acquired. The goodwill amount will be amortized over a 40-year
period.
(3) Amount represents the net increase in deferred financing fees related to the
acquisition financing.
(4) Debt amounts were adjusted to reflect the debt financing of the Lull
acquisition and related acquisition costs less the historical debt amounts
which were not assumed in the transaction.
(5) Accrued expenses were increased to reflect expected costs associated with
the post-acquisition restructuring of Lull operations of $1,500, primarily
related to the cost of rationalization of acquired facilities and the
elimination of the stock compensation accrual of $929 relating to a
discontinued plan of the predecessor.
(6) Amount reflects the elimination of the historical, pre-acquisition equity
balances of Lull.
(7) Reflects the application of net proceeds from the Offering to repay
substantially all of the outstanding debt of the Company, with the remainder
to be used for general corporate purposes. The reduction in other assets and
the increase in prepaid expenses reflect the writeoff of deferred finance
charges and the incurrence of a prepayment penalty, net of related tax
benefits, of approximately $1,350 related to the debt to be repaid.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF PRO FORMA RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
As discussed below, the Company was formed for the purpose of acquiring TRAK
in August 1995. Subsequent thereto, the Company completed the acquisition of the
business of Lull in August 1996. Due to the effects of the acquisitions and the
related application of purchase accounting, historical consolidated financial
data of the Company, TRAK, its Predecessor, and Lull for periods through June
30, 1996 are not comparable. As a result, the following discussion of pro forma
results of operations and financial condition is presented.
On August 16, 1995, the Company completed the acquisition of the issued and
outstanding stock of TRAK in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $30.4 million,
including assumed liabilities of $17.8 million. The purchase price will be
adjusted, up to a maximum of $2.0 million, together with interest, for orders
received from the Army under contracts for the delivery of telescopic material
handlers for a period of five years from August 17, 1995. The acquisition was
financed through a $6.0 million equity contribution from management and
Investments L.P., a $2.0 million junior subordinated note payable to Investments
L.P., a $5.0 million subordinated note payable to an institutional lender and
approximately $17.4 million under credit agreements with certain financial
institutions.
On August 15, 1996, the Company completed the acquisition of substantially
all of the assets of Lull in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $70.0 million,
plus assumed liabilities of approximately $11.5 million, and was financed
primarily with borrowings under the Company's restructured credit agreements
with certain financial institutions, including $14.0 million of subordinated
debt guaranteed by Investments L.P.
The purchase prices for TRAK and Lull were assigned to the assets acquired
and liabilities assumed based on their estimated fair values at the respective
acquisition dates. Based on such allocations, the aggregate purchase prices
exceeded the estimated fair value of the net assets acquired (goodwill) by
approximately $65.5 million, which is being amortized over 40 years and will
result in an annual amortization charge of $1.6 million.
The derivation of certain of the pro forma financial information discussed
below is described in the preceding section, "Pro Forma Financial Information."
For purposes of the following discussion, the pro forma unaudited consolidated
statements of operations of Omniquip for the years ended September 30, 1995 and
1994, respectively, and for the nine months ended June 30, 1996 and 1995,
respectively, were prepared to illustrate the estimated effects of the
acquisitions of TRAK and Lull and the financing thereof as if the acquisitions
had occurred at the beginning of each respective period.
The pro forma unaudited consolidated statement of operations data and the
pro forma unaudited consolidated balance sheet data do not purport to represent
(i) the actual results of operations or financial condition of the Company had
the TRAK and Lull acquisitions occurred on the dates assumed, or (ii) the
results of operations or financial position to be expected in the future. They
do not reflect any estimate of cost savings or other efficiencies that may be
achieved from the integration of TRAK and Lull. The following discussion of
results of operations does not reflect the effects of the Offering or the
application of the net proceeds therefrom.
This section should be read in conjunction with the historical financial
statements of the Company, TRAK and Lull, including the notes thereto, and the
other financial information pertaining to the Company, TRAK and Lull, including
the information set forth under "Capitalization," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and "Pro Forma Financial Information," included
elsewhere herein.
28
<PAGE>
PRO FORMA RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain components
of the Company's pro forma income statement, before giving effect to the
Offering and the application of the net proceeds therefrom, and the percentage
of net sales represented by such components:
<TABLE>
<CAPTION>
NINE
FISCAL YEAR FISCAL YEAR NINE MONTHS MONTHS
ENDED ENDED ENDED ENDED
9/30/94 9/30/95 6/30/95 6/30/96
-------------------- --------------------- --------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ % $ % $ % $
--------- --------- ---------- --------- ---------- --------- ----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................................... $ 94,512 100.0 $ 154,690 100.0 $ 112,481 100.0 $ 151,770
Cost of sales............................... 74,444 78.8 120,532 77.9 87,619 77.9 116,529
--------- --------- ---------- --------- ---------- --------- ----------
Gross profit................................ 20,068 21.2 34,158 22.1 24,862 22.1 35,241
Selling, general and administrative
expenses.................................. 13,116 13.9 19,120 12.4 13,835 12.3 18,006
Boom warranty charge........................ -- -- -- -- -- -- 2,881
--------- --------- ---------- --------- ---------- --------- ----------
Operating income............................ $ 6,952 7.3 $ 15,038 9.7 $ 11,027 9.8 $ 14,354
--------- --------- ---------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ---------- --------- ----------
<CAPTION>
<S> <C>
%
---------
<S> <C>
Net sales................................... 100.0
Cost of sales............................... 76.8
---------
Gross profit................................ 23.2
Selling, general and administrative
expenses.................................. 11.9
Boom warranty charge........................ 1.9
---------
Operating income............................ 9.4
---------
---------
</TABLE>
The above table presents an abbreviated pro forma income statement of the
Company for the noted periods through the "Operating income" line item. A full
income statement, including the effects of interest expense, other finance
charges and income taxes, has not been presented due to the following factors:
(i) since both companies have experienced substantial, rapid growth in recent
years, application of the pro forma effects of the debt financing of the
respective purchase prices paid for TRAK and Lull to the periods ended September
30, 1994, June 30, 1995 and September 30, 1995, respectively, when the companies
were substantially smaller, would result in a disproportionately greater amount
of pro forma interest expense (i.e., if the Company had acquired TRAK and Lull
in these prior periods, the purchase price and related amount of debt financing
would presumably have been substantially lower); and (ii) upon consummation of
the Offering, the proceeds therefrom are expected to be used to repay
substantially all outstanding debt of the Company.
PRO FORMA NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO PRO FORMA NINE MONTHS
ENDED
JUNE 30, 1995
Pro forma net sales for the nine months ended June 30, 1996 were $151.8
million, an increase of $39.3 million, or 34.9%, over pro forma net sales of
$112.5 million for the nine months ended June 30, 1995. Pro forma net sales of
telescopic material handlers for the nine months ended June 30, 1996 were $120.7
million, an increase of $33.5 million, or 38.5%, over the nine months ended June
30, 1995. Pro forma net sales of skid steer loaders for the nine months ended
June 30, 1996 were $13.7 million, an increase of $0.6 million, or 4.7%, over the
nine months ended June 30, 1995. Pro forma net sales of parts and attachments
for the nine months ended June 30, 1996 were $17.4 million, an increase of $5.1
million, or 41.9%, over the nine months ended June 30, 1995. The improvement in
pro forma net sales of telescopic material handlers reflected continued strong
market demand for such products. Of the 38.5% increase in pro forma net sales of
telescopic material handlers, 33.2 percentage points were attributable to an
increase in the number of units sold and the remainder was primarily
attributable to a shift in product mix towards larger size units and to price
increases. The Company believes the increased demand for telescopic material
handlers is attributable to the expansion of rental fleets, the substitution of
telescopic material handlers for other construction equipment and relatively
strong conditions in the construction equipment industry. The increase in sales
of skid steer loaders reflects a shift in product mix towards larger size units
and a price increase effective early in calendar 1996. Skid steer loader sales
for the nine months ended June 30, 1996 were adversely impacted by a temporary
reduction in the rate of production and shipments in early calendar 1996 to
incorporate corrective product modifications and upgrades. Pro forma net sales
of parts
29
<PAGE>
continued to increase in support of the rapidly expanding numbers of units
operating in the field and new products introduced by Lull, and pro forma net
sales of attachments increased primarily as a result of new equipment sales.
Pro forma gross profit for the nine months ended June 30, 1996 was $35.2
million, an increase of $10.4 million, or 41.7%, over pro forma gross profit of
$24.9 million for the nine months ended June 30, 1995. The increase in pro forma
gross profit primarily reflected the increase in net sales discussed above. Pro
forma gross margin increased to 23.2% for the nine months ended June 30, 1996,
from 22.1% for the nine months ended June 30, 1995. The increase in pro forma
gross margin reflects the favorable change in product mix toward higher margin
telescopic material handlers, improved production efficiencies (in part due to
expanded use of robotics and a new paint system at the Port Washington,
Wisconsin facility), as well as economies associated with higher production
volumes. Also contributing to the pro forma gross margin improvement were
purchasing programs implemented by Omniquip that achieved price reductions for
certain components and materials.
Pro forma SG&A expenses for the nine months ended June 30, 1996 were $18.0
million, an increase of $4.2 million, or 30.1%, over pro forma SG&A expenses of
$13.8 million for the nine months ended June 30, 1995. This increase primarily
resulted from expenses associated with the increase in pro forma net sales in
1996. Pro forma SG&A expenses as a percentage of pro forma net sales decreased
to 11.9% for the nine months ended June 30, 1996 from 12.3% for the nine months
ended June 30, 1995. The decrease in the pro forma SG&A percentage continued to
reflect the relatively fixed nature of certain components of SG&A expenses as
well as the companies' efforts to control general and administrative costs.
In the quarter ended December 31, 1995, Lull determined that it would be
required to incur costs under specific warranty obligations for certain of its
manufactured boom units. As a result, Lull recorded a nonrecurring charge to
operations of $2.9 million with respect to estimated warranty costs expected to
be incurred for such boom units. At June 30, 1996, the remaining reserve
approximated $2.3 million.
Pro forma operating income for the nine months ended June 30, 1996 was $14.4
million, an increase of $3.3 million, or 30.2%, over pro forma operating income
of $11.0 million for the nine months ended June 30, 1995. Excluding the boom
warranty charge described above, pro forma operating income was $17.2 million,
an increase of $6.2 million, or 56.3%, over 1995. Pro forma operating margins,
excluding boom warranty costs, increased to 11.4% for the nine months ended June
30, 1996 from 9.8% for the nine months ended June 30, 1995. The improvements in
pro forma operating income and margins reflected the factors described above.
PRO FORMA FISCAL YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO PRO FORMA FISCAL YEAR
ENDED SEPTEMBER 30, 1994
Pro forma net sales for the fiscal year ended September 30, 1995 were $154.7
million, an increase of $60.2 million, or 63.7%, over pro forma net sales of
$94.5 million for the fiscal year ended September 30, 1994. Pro forma net sales
of telescopic material handlers in the fiscal year ended September 30, 1995 were
$121.5 million, an increase of $46.4 million, or 61.8%, over the fiscal year
ended September 30, 1994. Pro forma net sales of skid steer loaders in the
fiscal year ended September 30, 1995 were $17.2 million, an increase of $6.5
million, or 60.5%, over the prior year. The remaining $7.3 million increase in
pro forma net sales related to parts and attachments, which continue to reflect
the positive effects of a greater number of units operating in the field. The
increase in the pro forma net sales of telescopic material handlers is comprised
almost entirely of an increase in units sold, which reflected increased demand
and the addition of new dealers to the distribution network. Lull resumed
full-time operations effective January 1, 1994 after purchasing the assets of a
predecessor business out of bankruptcy in November 1993, and after the
completion of a plant and equipment reorganization in November and December
1993. As a result, pro forma net sales for the fiscal year ended September 30,
1994 included only nine months of Lull
30
<PAGE>
net sales. The increase in pro forma sales of skid steer loaders also reflected
increases in units sold due to increased demand and the continued expansion of
the distributor base.
Pro forma gross profit for the fiscal year ended September 30, 1995 was
$34.2 million, an increase of $14.1 million, or 70.2%, over pro forma gross
profit of $20.1 million for the fiscal year ended September 30, 1994. The
increase in pro forma gross profit primarily reflected the increase in pro forma
net sales discussed above. The pro forma gross margin increased to 22.1% in the
fiscal year ended September 30, 1995 from 21.2% in the fiscal year ended
September 30, 1994, which primarily reflected manufacturing efficiencies and
productivity gains as well as continuing increases in sales volume. Pro forma
gross margins in the fiscal year ended September 30, 1994 were also somewhat
adversely impacted by certain start-up related inefficiencies at Lull as it
resumed full-time operations on January 1, 1994.
Pro forma SG&A expenses for the fiscal year ended September 30, 1995 were
$19.1 million, an increase of $6.0 million, or 45.8%, over pro forma SG&A
expenses of $13.1 million for the fiscal year ended September 30, 1994. The
increase primarily resulted from expenses associated with increases in pro forma
net sales in the fiscal year ended September 30, 1995. Pro forma SG&A expenses
as a percentage of pro forma net sales decreased to 12.4% in the fiscal year
ended September 30, 1995 from 13.9% in the fiscal year ended September 30, 1994.
The decrease in the pro forma SG&A percentage reflected the successful results
of the companies' efforts to control general and administrative costs as the
businesses expanded. The pro forma SG&A percentage for the fiscal year ended
September 30, 1994 was also adversely impacted by certain start-up related
inefficiencies at Lull as it resumed full-time operations on January 1, 1994.
Pro forma operating income for the fiscal year ended September 30, 1995 was
$15.0 million, an increase of $8.1 million, or 116.3%, over pro forma operating
income of $7.0 million for the fiscal year ended September 30, 1994. Pro forma
operating margins increased to 9.7% in the fiscal year ended September 30, 1995
from 7.3% in the fiscal year ended September 30, 1994. The improvements in pro
forma operating income and operating margins reflect the factors described
above.
SEASONALITY AND PRO FORMA QUARTERLY RESULTS
The following table sets forth for the periods indicated the components of
the Company's quarterly pro forma statement of results:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 9/30/95 NINE MONTHS ENDED 6/30/96
----------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GROSS GROSS
NET SALES PROFIT OPERATING INCOME NET SALES PROFIT OPERATING INCOME
---------- ----------- ---------------- ---------- ----------- ----------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
First quarter.................... $ 30,118 $ 6,150 $ 1,837 $ 43,968 $ 9,985 $ 1,281
Second quarter................... 39,221 8,792 4,266 53,425 12,647 6,780
Third quarter.................... 43,142 9,920 4,924 54,377 12,609 6,293
Fourth quarter................... 42,209 9,296 4,011
---------- ----------- ------- ---------- ----------- -------
$ 154,690 $ 34,158 $ 15,038 $ 151,770 $ 35,241 $ 14,354
---------- ----------- ------- ---------- ----------- -------
---------- ----------- ------- ---------- ----------- -------
</TABLE>
The Company's quarterly net sales are affected to some extent by the
seasonality of construction activities in North America, which tend to be
influenced by climate conditions. The second and third fiscal quarters (January
through June) are generally the strongest periods for material handling and
construction equipment sales, while the first and fourth fiscal quarters
typically experience weaker demand for the Company's products. The effects of
this seasonality on the Company's net sales have been mitigated in recent
quarters by the overall growth in sales volume.
Operating income in the first quarter of fiscal 1996 was adversely affected
by a $2.9 million pre-tax charge to operations for the previously noted boom
warranty matter. In addition, net sales of the LULL brand of telescopic material
handlers declined 7.4% from the second quarter to the third quarter of fiscal
31
<PAGE>
1996 primarily as a result of disruptions caused by efforts relating to boom
warranty work. See "Risk Factors--Product Recall" and "Business--Product
Liability and Product Recall."
PRO FORMA CAPITAL RESOURCES AND LIQUIDITY
As described above, the Company, TRAK and Lull have experienced significant
growth in the past few years in both net sales and operating income. On a pro
forma basis, net sales and operating income have increased from $94.5 million
and $7.0 million, respectively, for the fiscal year ended September 30, 1994 to
$151.8 million and $17.2 million (excluding the nonrecurring boom warranty
charge incurred by Lull), respectively, for the nine months ended June 30, 1996.
Correspondingly, pro forma operating cash flows have increased throughout the
period, a substantial portion of which were utilized to finance the businesses'
expansion, particularly with respect to increases in inventories and accounts
receivable, and capital expenditures. On a pro forma basis, capital expenditures
were $2.8 million, $4.7 million and $4.0 million for the nine months ended June
30, 1996 and for the fiscal years ended September 30, 1995 and 1994,
respectively. Capital expenditures for the Company or TRAK in these periods have
included plant expansion for skid steer loader manufacturing, computer systems,
a new paint line and welding robotics. Capital expenditures for Lull in these
periods have included expenditures associated with the expansion of assembly
capacity and purchase of related machinery in 1995 and acquisition of Lull's
primary manufacturing facility in St. Paul, Minnesota and related machinery in
1994.
In conjunction with the acquisition of the business of Lull in August 1996,
the Company refinanced and increased its credit facilities with lending
institutions. After the refinancing, the outstanding long-term debt of the
Company included approximately $8.4 million under a revolving credit facility,
$60.0 million of term notes and $21.0 million of subordinated debt, of which
$2.0 million is held directly by Investments L.P. Investments L.P. has also
guaranteed (and agreed subsequently to purchase) an additional $14.0 million of
such subordinated debt now held by third parties. The Company has approximately
$16.5 million of available credit under the revolving credit facility at August
16, 1996. The revolving credit facility and term notes are due in August 2003.
The subordinated debt is due in February 2004.
As noted previously, the net proceeds of the Offering are expected to be
utilized to repay substantially all outstanding debt of the Company and for
general corporate purposes. At that time, the Company intends to refinance its
credit facilities. Such refinanced facilities are expected to include a
revolving credit line of up to $25.0 million, based on eligible receivables and
inventories, and an acquisition-related line of credit. At the time of repayment
of the Company's debt, the Company expects to incur an extraordinary charge of
approximately $1.4 million, net of tax benefits, related to the writeoff of
deferred finance charges and for prepayment penalties incurred.
Included in accrued liabilities on the pro forma balance sheet at June 30,
1996 is approximately $2.3 million related to the previously described boom
warranty obligations of Lull, which are expected to be substantially completed
prior to September 30, 1997.
The purchase price for TRAK may increase up to a maximum of $2.0 million,
together with interest, based upon orders for telescopic material handlers
received from the Army under the ATLAS program for a period of five years from
August 1995. In September 1996, the Company received initial orders for 223
units under the ATLAS program. As a result, the former owners of TRAK will be
paid an initial installment of the additional purchase price equal to
approximately $0.4 million, which is expected to be financed under the Company's
existing credit facilities. The maximum $2.0 million additional purchase price,
together with interest, will be payable if orders for 600 ATLAS units are
received from the Army. Additional purchase price paid will be recorded as
goodwill in the Company's financial statements; no such amounts have been
recorded through June 30, 1996.
The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under floor plan and
rental fleet arrangements. The Company either provides a back-up guarantee of a
dealer's credit or an undertaking to repurchase equipment at a
32
<PAGE>
discounted price at specified times or under specified circumstances. The
aggregate outstanding loan balance under these agreements on a pro forma
consolidated basis was $61.8 million at June 30, 1996. The Company's actual
exposure under these financing arrangements is significantly less than the
nominal amount oustanding. Aggregate losses under substantially all of the
Company's guarantee obligations to third party lenders with respect to its TRAK
dealers in each of calendar years 1996 and 1997 are limited to the greater of
$1.5 million and 5% of the loan balance at the previous calendar year end
(approximately $2.0 million for 1996). With respect to Lull's dealers, who
accounted for approximately $13.6 million of the combined $61.8 million in
dealer financing outstanding at June 30, 1996, the Company's guarantee
obligations are limited to circumstances where the independent lender is unable
to enforce its liens against financed equipment or where a dealer defaults on
its final, balloon installment payment (typically due 48 months from shipment).
Based on its ability to generate funds from operations and the availability
of funds under its existing facilities with financial institutions, the Company
believes that it will have sufficient funds available to meet its currently
anticipated operating and capital expenditure requirements for its existing
operations.
33
<PAGE>
BUSINESS
GENERAL
The Company is the largest North American manufacturer of telescopic
material handlers, and also manufactures a growing line of skid steer loaders,
as well as a limited range of other material handling equipment. Omniquip's
highly versatile products are used in a wide variety of applications by
commercial and residential building contractors, as well as other construction,
military, industrial, municipal and agricultural end-users. The Company's
telescopic material handlers are marketed under the well recognized and highly
regarded SKY TRAK and LULL brand names. Based upon industry reports, the Company
believes that its North American market share of 1995 shipments of telescopic
material handlers was approximately 40%.
Telescopic material handlers are especially useful in rough terrain
environments and congested job sites, where their maneuverability and ability to
raise, extend and lower payloads provide significant advantages over more
traditional material handling equipment, such as cranes, straight-mast forklifts
and elevators. The Company's telescopic material handlers have a maximum lift
capacity of 5,000 pounds to 10,000 pounds and can position payloads from 28 feet
to 54 feet above the ground or 15 feet to 39 feet in front of the machine's
chassis. The versatility of these units allows users to lower overall costs by
substituting a single telescopic material handler for one or more other types of
material handling equipment, as well as for certain labor intensive material
handling tasks. The Company believes it manufactures the broadest product line
of telescopic material handlers in North America. Shipments of commercial
telescopic material handlers marketed under the SKY TRAK and LULL brand names
increased from approximately 950 units in 1990 to approximately 2,250 units in
1995. In addition, Omniquip has been the principal supplier since 1988 of
telescopic material handlers to the U.S. military, having delivered over 2,800
such units for use in loading and unloading containers and palletized loads for
ships, aircraft and trucks as well as for munitions handling and reloading
multiple rocket launchers. In 1995, the Company was awarded a contract to supply
the Army with a new generation of telescopic material handlers to support the
logistics requirements of the Rapid Deployment Forces. The Army has estimated
that its requirements under the contract could range up to a maximum of 1,200
ATLAS vehicles, or a maximum contract value of $120 million. Shipments under the
contract are expected to begin in fiscal year 1997. The Company believes that
this contract will enhance its ability to pursue sales to other branches of the
United States armed forces and to foreign military agencies. See "Risk
Factors--ATLAS Contract."
The Company has experienced significant growth in sales of skid steer
loaders, principally marketed under the SCAT TRAK brand name, with shipments of
approximately 120 units in 1990, increasing to shipments of approximately 1,250
units in 1995. Skid steer loaders are compact and versatile machines used to
dig, lift and handle bulk materials such as dirt, construction materials, waste,
farm produce and snow. The compact size, maneuverability and ease of transport
make skid steer loaders well-suited for a wide variety of applications. The
Company's skid steer loaders can lift and position maximum payloads of 1,300
pounds to 1,750 pounds to a maximum lift height of 112 inches to 121 inches.
Omniquip sells and distributes its products commercially through
approximately 175 independent equipment dealers and approximately 75 rental
companies, including national rental fleets, located in the United States and
Canada. Internationally, Omniquip markets and distributes its products through a
variety of arrangements with dealers and distributors in 24 countries. To
facilitate the sale of its products, Omniquip offers its independent equipment
dealers floor plan and rental fleet financing assistance in connection with the
purchase of the Company's products. Such assistance consists of limited, back-up
financing guarantees and repurchase agreements which benefit dealers by
providing them the opportunity to obtain attractive financing terms on the
Company's products, which in turn allows dealers to stock more units for sale or
rental.
34
<PAGE>
INDUSTRY OVERVIEW
Omniquip competes principally in selected segments of the material handling
and construction equipment markets which utilize engines of less than 130
horsepower. With limited exceptions, competitors with significant market shares
in these segments typically are not large full-line construction equipment
manufacturers.
North American shipments of construction and allied equipment grew from
$30.7 billion in 1990 to $38.9 billion in 1995, representing a nominal compound
annual growth rate of 4.8%. According to industry estimates, shipments of
telescopic material handlers in North America grew from approximately 2,400
units in 1990 to approximately 5,500 units in 1995, representing a real compound
annual growth rate of 18.0%, and sales of skid steer loaders in North America
grew from approximately 27,000 units in 1990 to approximately 40,000 units in
1995, representing a real compound annual growth rate of 8.2%. The Company
believes higher growth rates for telescopic material handlers and skid steer
loaders are attributable to a number of factors, including the following:
PRODUCT VERSATILITY. Telescopic material handlers are more versatile
than other material handling equipment such as cranes, straight mast
forklifts and elevators. Telescopic material handlers can unload, carry and
place materials up to five stories high in rough terrain work environments,
eliminating the need for multiple pieces of more specialized equipment and
reducing the labor required to handle materials at the work-site. In
addition, using one or more of the approximately 40 Company-approved
attachments, Omniquip's telescopic material handlers can be used in numerous
applications. Attachments include forks and carriages, grapples, buckets,
augers, concrete hoppers and truss booms. The numerous applications provided
by such attachments used in conjunction with the Company's telescopic
material handlers allow customers to decrease aggregate equipment costs and
increase utilization of their material handling equipment. Similarly, the
compact size, maneuverability, user-friendly controls, large number of
available attachments, ease of transport and labor and time saving
capability of skid steer loaders make them useful for a wide variety of
applications. Unlike larger construction equipment, skid steer loaders can
be used at small work-sites and easily transported.
INCREASED PRODUCTIVITY. Telescopic material handlers and skid steer
loaders enable users to increase labor productivity and improve asset
utilization, compared to other methods using alternative equipment or direct
labor. Productivity enhancements include a reduction in the number of
indirect personnel required for material handling support to load, transport
and place building materials and to operate certain other types of
construction equipment. In addition, telescopic material handlers provide
significant support on construction sites for labor-saving advanced material
handling techniques, such as efficient movement of palletized loads and use
of pre-fabricated building components. The versatility and variety of
attachments available for telescopic material handlers results in higher
utilization of the equipment and permits end users to increase inventory
turnover at job sites more rapidly by taking loads directly off delivery
trucks and placing them where they will be used.
GROWTH OF EQUIPMENT RENTALS. The equipment rental industry serves a
wide variety of industrial, manufacturing, construction and governmental
markets. The equipment rental industry, including rental centers, national
rental fleets and independent dealers who offer material handling equipment
for either sale or rental, has grown significantly. A survey conducted for
an industry trade association estimates that construction equipment rental
revenues were approximately $7.5 billion in 1990 and increased to
approximately $12.9 billion in 1993. The author of the survey further
estimates that such revenues increased to $15.0 billion in 1995. Increased
availability of rental construction equipment has substantially broadened
the group of potential end-users for the Company's products. Equipment
rentals provide end-users having limited needs or resources with the ability
to conveniently and economically rent material handling equipment, as well
as necessary attachments. Rental companies
35
<PAGE>
can fulfill significant, but temporary, needs of large end-users,
supplementing capacity during peak activity periods. Additionally, rental
companies can rent a single telescopic material handler or skid steer loader
to small contractors for short-term projects.
GROWTH OF NON-CONSTRUCTION APPLICATIONS. Historically, the primary
market for telescopic material handlers has been the construction market
while the principal markets for skid steer loaders have been the
construction and agricultural markets. In recent years, however,
applications for both product lines have emerged in other markets. For
example, since 1988, telescopic material handlers have been used by the Army
for munitions handling and, more recently, general logistics purposes.
Telescopic material handlers have also experienced increasing acceptance in
the industrial and agricultural markets where they are used, among other
applications, to transport and position bulk materials. The versatility of
skid steer loaders, which has long resulted in a wide variety of specific
applications in the construction and agricultural markets, has increasingly
given rise to a range of applications in the municipal, landscape and
industrial markets. Examples of these applications include transport of
recycling materials, snow removal and lifting and transporting raw materials
and inventory.
BUSINESS STRATEGY
The Company's strategy is to grow primarily within selected segments of the
material handling and construction equipment markets (i) which utilize engines
of less than 130 horsepower, (ii) which are not typically dominated by full-line
construction equipment manufacturers, (iii) which are growing faster than the
construction equipment industry generally, and (iv) which typically utilize
local independent dealers for distribution rather than regional distributorships
primarily dedicated to products made by a single manufacturer.
Key elements of the Company's business strategy include:
- PROVIDING SUPERIOR PRODUCTS. The Company focuses on developing innovative,
high performance products with low life-cycle cost. By introducing unique
product features and enhancements, the Company believes that it increases
demand for the Company's products. Examples include the pioneering
introduction in 1994 of a SKY TRAK model capable of lifting and
positioning materials up to five stories above ground, the proprietary
sliding telescopic booms developed by Lull which permit higher precision,
horizontal maneuvering of materials at various lift heights, and the tilt-
forward cab design of SCAT TRAK skid steer loaders which simplifies
maintenance. In addition, the Company is introducing a new telescopic boom
product line designed to be used for expanded applications in North
America and to be competitive with products currently used in
international markets. These innovations, along with the Company's focus
on product quality and low life-cycle cost, are important to the
acceptance of the Company's products.
- PURSUING A MULTIPLE BRAND DISTRIBUTION STRATEGY. The Company intends to
pursue a multiple brand strategy, maintaining essentially distinct
nationwide distribution channels for its brand name products. This
strategy provides more complete geographic coverage of the market place
and gives the Company the ability to selectively expand the number of
dealers carrying its products. At the same time this strategy affords the
Company the opportunity to realize economies of scale in providing parts
supply, attachments, dealer finance, component purchasing and
manufacturing. Omniquip's multiple brand distribution strategy is designed
to appeal to customers' differing price, performance and support needs.
- ACQUIRING COMPLEMENTARY BUSINESSES. A key component of the Company's
growth strategy is the identification and completion of complementary
acquisitions. The Company's acquisition of Lull in August 1996 reflects
the Company's strategy of acquiring businesses which utilize complementary
distribution channels or which manufacture and market products which
complement the products currently manufactured and sold by the Company.
The Company has identified numerous potential
36
<PAGE>
acquisition candidates in the relatively fragmented material handling and
general construction equipment industry.
- ACHIEVING COST SAVINGS FROM THE INTEGRATION OF ACQUIRED OPERATIONS. The
Company believes that substantial cost savings can result from the
integration of acquired operations. For example, the Company anticipates
that it can increase purchasing efficiencies for components and materials,
eliminate duplicative overhead costs, streamline production processes and
achieve other economies of scale in areas such as parts supply, product
design and development and dealer finance.
- LEVERAGING ITS POSITION AS A LEADING NORTH AMERICAN MANUFACTURER TO EXPAND
ITS PENETRATION OF GLOBAL MARKETS. While the Company is the largest North
American manufacturer of telescopic material handlers, its sales of such
products outside North America are relatively modest. The Company is in
the process of "globalizing" its products to increase their appeal in
international markets. For example, its new Millennia line of telescopic
material handlers, a prototype of which is currently in testing,
incorporates improved tool handling capabilities, noise suppression
systems and ergonomics. In addition, the Company intends to improve its
distribution networks outside North America in order to increase the
availability of its products in selected markets in Europe, Latin America
and the Far East.
PRODUCTS
The Company designs, manufactures and markets telescopic material handlers
as its principal product line, as well as a growing line of skid steer loaders.
In addition, the Company manufactures and distributes a variety of other
material handling equipment and attachments and offers parts and service with
respect to the products it sells.
PRO FORMA NET SALES BY PRODUCT CATEGORY(1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
ENDED SEPT. 30, ENDED JUNE 30,
--------------------- ----------------------
1994 1995 1995 1996
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Telescopic material handlers....................................... $ 75,072 $ 121,464 $ 87,148 $ 120,683
Skid steer loaders................................................. 10,699 17,174 13,062 13,677(3)
Other(2)........................................................... 8,741 16,052 12,271 17,410
--------- ---------- ---------- ----------
Total.......................................................... $ 94,512 $ 154,690 $ 112,481 $ 151,770
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
- ------------------------
(1) The information in the foregoing table reflects the pro forma net sales by
product category of TRAK and Lull for the applicable periods as if the
acquisitions of these companies had occurred on October 1, 1993. See "Pro
Forma Financial Information."
(2) Includes parts and service and other miscellaneous equipment lines and
attachments.
(3) Skid steer loader sales during this period were adversely affected by a
temporary reduction in the rate of production and shipments during early
calendar year 1996 while the Company incorporated corrective product
modifications and upgrades into its skid steer product line.
TELESCOPIC MATERIAL HANDLERS
Telescopic material handlers are rough terrain vehicles used to transport,
lift and position materials between ground locations, between vehicles and to
elevations up to five stories in height. This equipment is typically utilized in
North America by residential and non-residential building contractors to handle
a wide range of building materials and components, including bricks, concrete
blocks, open-wall panels, roof trusses, lumber, drywall sheets, structural steel
and roofing materials. In addition, by using one or more of the approximately 40
Company-approved attachments, the Company's telescopic material handlers can
37
<PAGE>
also be used in nontraditional, specialized applications, such as steel building
construction or pole and post hole drilling. Available attachments include forks
and carriages, grapples, buckets, augers, concrete hoppers and truss booms.
End-users for the Company's telescopic material handlers currently include the
construction, military, agricultural, landscaping and industrial markets.
The Company currently manufactures 15 models of telescopic material handlers
marketed under the SKY TRAK and LULL brand names. These models have rated load
capacities of 5,000, 6,000, 8,000 and 10,000 pounds and possess the capacity to
place loads 28, 36, 37, 42 and 54 feet above the ground (and up to 62 feet above
the ground with an optional mast extension). Suggested list prices for these
products range from approximately $60,000 to approximately $115,000 per unit.
Four additional product offerings for use in the logging and pipe handling
industries are marketed under the DYNA LUGGER brand name, which have rated load
capacities up to 30,000 pounds and list prices of up to $275,000.
Each of the Company's two brands of telescopic handlers has unique
characteristics, which have contributed to strong competitive positions in the
market. The success of the SKY TRAK brand has been built on a reputation for
strong product performance and design innovation, with emphasis on design
simplicity and serviceability. The LULL brand has a long tradition associated
with its patented transfer carriage technology, which facilitates the precision
placement of palletized loads. LULL brand products enjoy a premium reputation
for their ease of operation, durability, and high resale value. The Company
believes the combination of its well-known SKY TRAK and LULL brand names, its
ability to offer the industry's broadest product line, and its dual-brand
distribution strategy, provide Omniquip with competitive advantages in the
telescopic material handler market.
Since 1988, Omniquip has been the primary supplier of telescopic material
handlers to the U.S. military. Such products are used by the U.S. military for a
variety of logistics requirements, including loading certain types of rocket
launchers, loading and unloading military equipment, and for a variety of other
military materials handling tasks. The U.S. military exclusively used the
Company's telescopic material handlers in Operation Desert Storm. In May 1995,
the Company was awarded a fixed-price government contract to serve as sole
supplier to the Army of the ATLAS, the latest generation of the military version
of the Company's rough terrain telescopic material handler. ATLAS is designed as
an integral component of the Army's logistics support strategy for its Rapid
Deployment Forces. The contract provides for the supply of the Army's
requirements over a period of four years. The Army has estimated that its
requirements for ATLAS vehicles over this period could range up to a maximum of
1,200 units, although the Army is not obligated to purchase any specified number
of ATLAS vehicles. The contract also affords the Army an option to order an
additional 300 units above the 1,200 unit maximum. The Company has completed
testing five prototype vehicles and has received from the Army initial orders
for 223 vehicles, none of which can be shipped until the Army satisfactorily
completes further testing of a random sample of units. The Company believes that
the award of the ATLAS contract also will provide additional opportunities to
market the ATLAS product directly and through the Army to other branches of the
United States armed forces and to foreign military agencies. See "Risk
Factors--ATLAS Contract."
SKID STEER LOADERS
Skid steer loaders are compact and versatile material handling machines used
to dig, lift and transport bulk materials such as dirt, construction materials,
waste, farm produce and snow. Unlike tractors, the left and right side wheels on
skid steer loaders turn independently, thus giving rise to their name and unique
steering mechanism, which provides a small turning radius. The versatility of
skid steer loaders is enhanced by the wide range of available attachments which
permit their use in a range of specialized applications. Approximately 50
Company-approved attachments are currently available, including buckets, forks,
hydraulic breakers, augers, trenchers, brooms, backhoes and cold planers. The
Company's skid steer loaders are commonly used by construction, agricultural,
industrial, landscaping and municipal end-users.
38
<PAGE>
The Company currently manufactures a line of five skid steer loaders
marketed under the brand name SCAT TRAK. The SCAT TRAK product line is offered
in various models with rated load capacities ranging from 1,300 pounds to 1,750
pounds. Suggested list prices for these products range from approximately
$18,000 to $26,000 per unit. The Company's production plans include the
introduction of a new line of skid steer loaders with greater rated load
capacities.
The SCAT TRAK models have been designed to offer competitive performance
advantages, such as superior axle torque and breakout force, and on specialized
models, a high flow hydraulic system for powering larger capacity attachments.
In addition, the tilt-forward cab feature provides superior serviceability. The
Company believes that product advantages such as these, as well as a reputation
for continuing innovation, combined with a growing distribution network and
attractive financing programs have enabled SCAT TRAK to grow substantially in
recent years.
OTHER
The Company manufactures and markets a limited range of masonry tenders and
buggies and articulated forklifts and loaders, all of which are used primarily
in the masonry industry, and markets a limited line of straight-mast forklifts.
The Company also provides product service support to its distribution networks,
and produces and sells through its distributors a wide range of service parts to
maintain the operational performance of its end products throughout their useful
lives. The sale of service parts provides an important source of revenue and
profitability, as such sales are historically less sensitive to industry cycles
and typically generate higher gross margins than sales of original equipment.
The Company seeks to provide a high level of parts availability and timely
shipments of orders to maintain the production availability of its products on
customer job sites.
MARKETING AND DISTRIBUTION
The Company sells its products to independent equipment dealers for retail
sale and rental and to equipment rental companies, including independent rental
centers and national rental fleets, for rental. The Company intends to pursue a
multiple brand strategy, maintaining distinct nationwide distribution channels
for its principal brand name products. This strategy provides more complete
geographic coverage of the marketplace and greater flexibility in expanding the
Company's dealer network, while affording the Company the opportunity to realize
economies of scale in providing parts supply, service, attachments, dealer
finance, component purchasing and manufacturing. Both SKY TRAK and LULL brand
telescopic material handlers are marketed to a mix of independent retail
dealers, rental centers and national rental fleets, with SKY TRAK more heavily
oriented towards independent retail dealers and LULL more heavily focused on
rental centers and national accounts. The Company's SCAT TRAK brand of skid
steer loaders is sold primarily to regional rental centers and independent
retail dealers.
Traditionally, independent dealers have focused their efforts on resale of
products to end users. In recent years, however, many independent dealers have
built their own rental fleets to augment their sales activities. Rental centers
are equipment rental dealers who focus exclusively on renting units on a daily,
weekly or monthly basis to customers whose needs do not require purchase and
full-time utilization of units, and national rental fleets are large equipment
rental companies which, through company-owned stores or franchises, carry out
rental activities nationwide.
The Company employs a sales force of approximately 25 field sales managers
and representatives. The Company supports the sales, service and rental
activities of its dealers with product advertising, sales literature, product
training and major trade show participation. Omniquip seeks to promote end-user
acceptance and continued satisfactory performance of its products worldwide. The
Company pursues this goal in cooperation with a network of distributors who,
when properly trained and equipped, provide for the maintenance and repair of
all Omniquip products for end-users. The Company promotes a high level of
customer support through programs which closely monitor the performance of its
products with rental
39
<PAGE>
fleets and with end-users. This level of product support is maintained by a
variety of programs and procedures, including: a toll-free technical assistance
program; on-site service representative visits; factory training programs;
organization of product assessment teams facilitated by the service department;
and continuing interaction among distributors, end-users and major vendors for
failure analysis of products both in and out of warranty. Service support is
provided by Omniquip distributors.
International sales represented approximately 6.2% and 5.6% of pro forma
consolidated net sales for the twelve months ended September 30, 1994 and 1995,
respectively. All of the Company's products are marketed internationally to
independent retail dealers, except that, in the case of Europe, the SCAT TRAK
product line is marketed exclusively through a private label arrangement with
Fermec Holdings Limited, and the LULL brand of telescopic material handlers is
marketed internationally primarily through an exclusive distribution agreement
with a single United States exporter.
FINANCING
The Company offers its independent dealers conventional floor plan financing
and rental fleet financing to assist in the purchase of its products. Under
these financing arrangements, dealers borrow money from independent lenders on a
secured basis for up to five years. Where dealer financing is provided directly
by independent lenders, the Company assists the financing by providing the
independent lenders either a back-up guarantee of a dealer's credit or an
undertaking to repurchase used equipment at a discounted price to market at
specified times or under specified circumstances.
At June 30, 1996, approximately $61.8 million of Company-assisted floor plan
and rental fleet financing arrangements were outstanding on a pro forma
consolidated basis. The Company's actual exposure under these financing
arrangements is significantly less than the nominal amount outstanding. With
respect to TRAK's dealers, who accounted for approximately $48.2 million of the
combined $61.8 million in dealer financing outstanding at June 30, 1996,
substantially all of the Company's guarantee obligations for each of calendar
years 1996 and 1997, as well as losses incurred in connection with repurchase
obligations described below, are limited to the greater of $1.5 million and 5%
of the portfolio outstanding at the previous calendar year end (approximately
$2.0 million for 1996). During calendar year 1995 such guarantee obligations
were limited to 25% of the portfolio outstanding at December 31, 1994. To the
extent that independent lenders providing financing for TRAK's dealers do not
have (or do not exercise) direct recourse against the Company under back-up
guarantees, the Company is committed to perform its repurchase undertaking to
re-acquire equipment sold to a defaulting dealer at a purchase price equal to
amounts due the independent lender. The Company's actual exposure under these
repurchase arrangements is reduced by underlying equipment values as well as
careful portfolio management, by both the Company and its lenders. At the
present time, an active resale market exists for such equipment. With respect to
Lull's dealers, who accounted for approximately $13.6 million of the combined
$61.8 million in dealer financing outstanding at June 30, 1996, the Company's
guarantee obligations are limited to circumstances where the independent lender
is unable to enforce its lien against financed equipment (for example, if a
dealer has fraudulently sold the equipment out of trust to a bona fide purchaser
for value) or where a dealer defaults on its final, balloon installment payment
(typically due 48 months from shipment). At June 30, 1996, past due principal
and interest as a percentage of the total portfolio on a pro forma consolidated
basis was less than one tenth of one percent. The Company's worst loss
experience in recent years occurred in 1991 when TRAK sustained expenses of
approximately $1.0 million as a result of its floor plan financing guarantees.
Most of this loss occurred as the result of dealer fraud, and the Company has
taken steps designed to mitigate future losses through better documentation and
collection techniques.
40
<PAGE>
FACILITIES
The Company's headquarters are located in Port Washington, Wisconsin, and
the Company maintains manufacturing facilities in North Dakota and Minnesota.
Set forth below is certain information with respect to the Company's
manufacturing facilities.
<TABLE>
<CAPTION>
SQUARE OWNED/
LOCATION FOOTAGE LEASED ACTIVITIES AND PRODUCTS
- ------------------------------------- ------------- --------- ---------------------------------------------------
<S> <C> <C> <C>
(APPROXIMATE)
Port Washington, Wisconsin........... 150,000 Owned Telescopic material handlers, skid steer loaders,
research and development
St. Paul, Minnesota.................. 100,000 Owned Telescopic material handlers, research and
development
Oakes, North Dakota.................. 30,000 Leased Masonry tenders and buggies, articulated forklifts
and loaders, telescopic material handler component
parts
</TABLE>
The initial term under the lease agreement for the Company's manufacturing
facility in Oakes, North Dakota expires on April 1, 2000 (the "Initial Term").
Upon expiration of the Initial Term, the Company has the option to purchase the
facility or to extend the lease for an additional 30 months (the "Extended
Term"). If the Company chooses to extend the lease term, lease payments during
the Extended Term will be applied to the purchase of the facility. In the event
of the expiration, cancellation or termination of the lease for the Oakes, North
Dakota property, the Company anticipates no significant difficulty in connection
with leasing alternate space at reasonable rates. The Company believes that its
production facilities and planned expansions will be adequate to meet
anticipated manufacturing volumes, including production of ATLAS telescopic
material handlers, during the fiscal year ending September 30, 1997.
MANUFACTURING AND RAW MATERIALS
The Company fabricates, welds, machines and assembles the chassis,
telescopic booms, attachments and many component parts for its telescopic
material handlers and skid steer loaders. During the past three years, the
Company has made significant capital investments in its Port Washington,
Wisconsin facility to implement robotic welding and a five-station wash,
automatic prime and finish coat paint system and to complete a 25,000 sq. ft.
plant addition. In its St. Paul, Minnesota facility, the Company has invested in
machining centers and numerically controlled plasma punching capability. These
investments, along with numerous projects to improve production flow and
material handling, have provided the foundation for continuing productivity
improvements.
In 1995, the Company completed registration under ISO 9001 of its Port
Washington, Wisconsin quality systems, becoming the first telescopic material
handler manufacturer and the second skid steer loader manufacturer in North
America to achieve this recognition. The Company expects to implement similar
quality system standards in the recently acquired St. Paul, Minnesota and Oakes,
North Dakota facilities.
The Company intends to pursue opportunities to reduce costs of purchased
components through consolidation of vendor sources, improvements in
manufacturing methods and integration of operations. The Company also believes
that opportunities exist to achieve manufacturing economies in the production of
telescopic material handlers by combining the production of certain key
components.
The principal raw materials and components used in the manufacturing of the
Company's products are steel, engines, transmissions, axles, hydraulic systems,
wheels and tires and cabs. The Company procures its raw materials and components
from multiple vendors, although in the case of particular models it typically
purchases certain components from a single vendor. Although alternative
suppliers are available for all raw materials and components, the Company could
experience delays in obtaining
41
<PAGE>
components meeting the requisite specifications from alternative suppliers in
the event a principal supplier was unable to supply a particular component. In
the case of the ATLAS product supplied to the Army, the governing contract
specifies precisely the source of key component parts utilized in the
manufacture of the ATLAS product. In the event of unavailability of any of these
key components, the Company could be precluded from completing production of
ATLAS products in a timely fashion unless the Army agreed to substitution of an
alternative component. The Company seeks to manage the risk of unavailability of
key components and raw materials by dealing only with substantial, financially
responsible vendors and managing closely its material requirements as well as it
vendor relationships. To date, the Company has not experienced a material delay
in obtaining a satisfactory supply of key components from vendors.
PRODUCT DEVELOPMENT AND ENGINEERING
The Company maintains an active program of product development and
engineering activities designed to upgrade existing product lines and develop
new products. The Company employs approximately 30 employees with experience in
the design of products. For the twelve months ended September 30, 1995, and the
nine months ended June 30, 1996, the Company spent approximately $1.3 million
and $1.7 million, respectively, on product development and engineering
activities. Since 1987, the Company has invested in the computer systems and
training of its engineering staff to support the increasing use of
computer-aided design. To decrease product development time, reduce product
development cost, and improve the quality of its new products, the Company has
further invested to implement finite element analysis capability,
three-dimensional solid design, and concurrent engineering. The Company's
product development and engineering efforts during future periods are expected
to emphasize continued product line expansion, design modifications to expand
the worldwide acceptance of its products, and the expanded sourcing of
attachments to improve access to more end-user markets.
WARRANTY AND SERVICE
Omniquip products are warranted for design, workmanship and material
quality. Warranty lengths vary depending on competitive standards within
individual markets. In general, warranties tend to be for one year and cover all
parts and labor for non-maintenance repairs, provided the repair was not
necessitated by operator abuse. Optional extended warranties, for one to two
years beyond the base period, are available for purchase. Warranty work is
performed only by authorized Omniquip distributors. Distributors submit claims
for warranty reimbursement to the Company and are credited for the cost of
repairs so long as the repairs meet Omniquip's prescribed standards. Warranty
expense is accrued at the time of sale based on historical experience.
TRADEMARKS AND PATENTS
The Company owns and maintains U.S. trademark registrations for all of its
principal trademarks. Registrations for these trademarks are owned and
maintained in other countries where a significant volume of its products are
sold and registration is considered necessary to protect the Company's
proprietary rights.
The Company applies for and maintains patents in the United States and
elsewhere where the Company believes such patents are necessary to maintain the
Company's interest in its inventions. Currently, the Company possesses patents
on two-stage and three-stage telescopic booms which expire in 1997 and 2007,
respectively. The Company believes these patents provide it with a competitive
advantage in selected markets, but does not believe that the expiration of
either of these patents would have a material adverse effect upon its business
or ability to compete.
42
<PAGE>
COMPETITION
The markets for the Company's products are highly competitive. The principal
competitive factors include distribution, price, design features, performance,
product reliability and the availability of financing.
In the market for telescopic material handlers, the Company is the largest
North American manufacturer, with an estimated share of 1995 shipments of
telescopic material handlers of approximately 40%, and its principal competitors
include Gradall Industries, Inc. and JCB International Co., Ltd. Other
competitors in the North American market include Gehl Company, Pettibone
Corporation, Traverse Lift, Ingersoll-Rand Company, Manitou S.A. and Caterpillar
Inc. Competitors in this market outside the United States include JCB
International Co., Ltd., Manitou S.A., Merlo S.p.A., the Matbro division of
Powerscreen International PLC, Sanderson, FDI/Sambron and Caterpillar Inc. The
Company's principal competitors in the global skid steer loader market include
Ingersoll-Rand Company, which is believed by the Company to have a market share
in excess of 40%, Case Corporation and New Holland, a wholly-owned subsidiary of
Fiat S.p.A., all of which the Company believes maintain a larger market share
than the Company.
Many of the Company's competitors are larger than the Company and possess
significantly greater financial, marketing and technical resources. There can be
no assurance that the Company will not experience significant competition in the
future from large global construction equipment manufacturers and other
competitors or that existing competitors will not take actions which could
adversely affect the Company's operating results.
ENVIRONMENTAL AND SAFETY REGULATION
Omniquip is subject to federal, state and local environmental laws and
regulations that impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage and disposal of
toxic and hazardous wastes. The Company is also subject to the federal
Occupational Safety and Health Act and similar state statutes. The Company
believes it is in material compliance with all applicable environmental laws and
regulations. The Company does not expect any material impact on future recurring
operating costs of compliance with currently enacted environmental regulations.
Under federal, state and local laws, including the federal Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA"), a current
owner or operator of real property may be held liable for the costs of cleaning
up certain hazardous materials on the property. Similarly, persons who have
arranged for the disposal of hazardous materials on properties owned by third
parties may be held liable for cleanup costs for such properties. In each case,
liability may be imposed without regard to whether the person knew of or took
reasonable acts to prevent the contamination. Liability under such laws is often
joint and several, that is, any single liable person may be required to bear the
entire costs of the environmental cleanup. That person, however, may usually
seek contribution from other responsible persons, if there are any; and it is
typical for groups of responsible parties to apportion liability among
themselves.
The Company regularly conducts an environmental assessment consistent with
recognized standards of due diligence on properties and businesses which it
acquires. To date, these assessments have not identified contamination in
respect of acquired properties that would be reasonably likely to result in a
material adverse effect on the Company's business, results of operations or
financial condition. As a general rule, the Company intends to use such
assessments as part of the evaluation of proposed acquisitions. However, there
can be no assurance that environmental assessments have identified, or will in
the future identify, all material liabilities relating to the Company's
properties and businesses, that any indemnification agreements that can be
negotiated will cover all potential liabilities, or that changes in
43
<PAGE>
cleanup requirements or subsequent events at the Company's properties or at
off-site locations will not result in significant costs to the Company.
PRODUCT LIABILITY AND PRODUCT RECALL
Product liability claims are asserted against the Company from time to time
for various injuries alleged to have resulted from defects in the manufacture
and/or design of the Company's products. At September 16, 1996, there were four
such claims pending. The Company does not believe that the resolution of such
claims, either individually or in the aggregate, will have a material adverse
effect on the Company's results of operations or financial condition. Product
liability claims are covered by the Company's comprehensive general liability
insurance policies, subject to certain deductible amounts. The Company has
established reserves for such deductible amounts, which it believes to be
adequate based on its previous claims experience. However, there can be no
assurance that resolution of product liability claims in the future will not
have a material adverse effect on the Company.
From time to time, the Company discovers defects in product design for
existing products which require it to take steps to correct or retrofit, at the
Company's expense, previously sold products. Currently, the Company is in the
process of correcting a defect in its LULL brand of telescopic material
handlers. The Company estimates that as of August 15, 1996 there were
approximately 725 units in the field which required corrective action and that
as of August 15, 1996 it would take approximately one year to retrofit
outstanding units at an aggregate cost of approximately $2.0 million. In 1995,
prior to the acquisition by the Company, Lull established reserves of
approximately $2.9 million, on a pre-tax basis, for the cost of retrofitting
such telescopic material handlers. The Company also has established a reserve of
approximately $0.8 million as of June 30, 1996, on a pre-tax basis, relating to
corrective warranty work being undertaken with respect to two models of skid
steer loaders. There can be no assurance, however, that the ultimate cost of
correcting these defects will not exceed the amount of the
previously-established reserve.
EMPLOYEES
At September 1, 1996, the Company employed approximately 685 persons.
Approximately 250 employees at the Company's Port Washington, Wisconsin facility
are covered under a collective bargaining agreement with the International
Association of Machinists and Aerospace Workers, which expires in 1998.
Substantially all of the Company's employees at its St. Paul, Minnesota facility
are employed pursuant to a lease arrangement with CBM Industries, Inc., d/b/a RJ
Associates. Under the terms of such agreement, the Company is obligated to hire
employees directly if the Company terminates the arrangement so long as the
Company is conducting the operations in which the employees are engaged. The
Company does not anticipate any material disruption in its business in the event
of a termination of this agreement. The Company has not experienced any work
stoppage during the past five years and considers its relations with employees
to be good.
LEGAL PROCEEDINGS
From time to time, the Company is the subject of legal proceedings,
including proceedings other than product liability claims involving employee
matters and similar claims. There are no such claims currently pending which the
Company believes to be material. The Company maintains comprehensive general
liability insurance which it believes to be adequate for the continued operation
of its business.
44
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about each of the persons
who serve as the Company's directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
P. Enoch Stiff............................ 49 Director, President and Chief Executive Officer
Philip G. Franklin........................ 44 Vice President--Finance and Chief Financial Officer
James H. Hook............................. 51 Vice President--Business Services
Curtis J. Laetz........................... 52 Vice President--Marketing and Development
Donald E. Nickelson....................... 63 Director and Chairman of the Board
Peter S. Finley........................... 41 Director
Jeffrey L. Fox............................ 36 Director
Samuel A. Hamacher........................ 44 Director
Paul W. Jones............................. 48 Director Nominee*
Jerry E. Ritter........................... 61 Director Nominee*
Joseph F. Shaughnessy..................... 60 Director Nominee*
Robert L. Virgil.......................... 62 Director Nominee*
</TABLE>
- ------------------------
* These individuals have consented to become directors of the Company upon
consummation of the Offering.
Mr. Stiff has been the President and Chief Executive Officer of the Company
since September 1996 and the President and Chief Executive Officer of TRAK since
August 1989. He previously served as the Chief Operating Officer of TRAK from
November 1987 to August 1989. Prior to joining TRAK, Mr. Stiff served from 1985
to 1987 as Vice President and General Counsel of Atwood & Morrill Co., Inc. (a
manufacturer of specialty valves for the utility industry) and as a division
counsel with AMCA International (predecessor to United Dominion Industries,
Inc., a diversified manufacturer) from 1983 to 1985.
Mr. Franklin has been the Vice President--Finance and Chief Financial
Officer of the Company since August 1996 and of TRAK since July 1996. Prior to
joining the Company, Mr. Franklin served as Chief Financial Officer for Monarch
Marking Systems, Inc. (a manufacturer of bar code printers) from 1994 to 1996
and as Vice President--Finance for Hill Refrigeration, Inc. (a manufacturer of
refrigerated display cases) from 1990 to 1994. From 1979 to 1990, he served in
various financial and general management positions with FMC Corporation (a
diversified manufacturer).
Mr. Hook has been the Vice President--Business Services of the Company since
September 1996 and of TRAK since July 1996 and previously served as Vice
President--Finance and Chief Financial Officer of TRAK from September 1992 to
July 1996. Mr. Hook previously served as Senior Vice President-- Operations for
Case Credit Corporation from 1988 to 1992 and as Senior Vice President of First
Interstate Bancorp from 1982 to 1988.
Mr. Laetz has been the Vice President--Marketing and Development of the
Company since September 1996 and has held a similar position with TRAK since
1990. Prior to joining TRAK, Mr. Laetz served as Vice President--Corporate
Planning for A.O. Smith Corp. (a manufacturer of automotive frames, water
heaters and electric motors) from 1988 to 1989 and as President of Dynapac Mfg.
Co. (a compaction equipment manufacturer) from 1986 to 1987. He also previously
served as Senior Vice President--Business Development for VME N.V. (a
manufacturer of wheel loaders, off-highway trucks and excavators) from 1985 to
1986.
45
<PAGE>
Mr. Nickelson has been the Vice Chairman of Harbour Group Industries, Inc.
("Harbour Group") in St. Louis, Missouri (an affiliate of Investments L.P.)
since 1991. From 1988 to 1990, he served as President of Paine Webber Group (an
investment banking and brokerage firm). Mr. Nickelson currently serves as a
trustee of Corporate Property Associates 10 and Corporate Property Associates
11, two public real estate investment trusts located in New York, New York, and
Mainstay Mutual Funds, as a director of DT Industries, Inc., Allied Healthcare
Products, Inc., Sedgwick James of New York and Sugen Inc. and as a director and
Chairman of the Board of Greenfield Industries, Inc. Mr. Nickelson was elected a
director of the Company in September 1996.
Mr. Finley has been Senior Vice President--Corporate Development of Harbour
Group since 1990. From 1985 to 1990, he served as Vice President of Harbour
Group. In addition, Mr. Finley holds various officer positions with operating
companies owned by affiliates of Harbour Group. Mr. Finley currently serves as a
director of Greenfield Industries, Inc. Mr. Finley was elected a director of the
Company in August 1995.
Mr. Fox has been Group President of Harbour Group, Ltd. (an affiliate of
Harbour Group which provides operations management services to manufacturing
affiliates of Harbour Group), since 1995. Mr. Fox previously served as President
of Engineered Polymers Corporation (a manufacturer of plastic material handling
products) from 1992 to 1995 and as President of Size Control Company (a
manufacturer of precision gauges) from 1989 to 1992, both of which were
affiliates of Harbour Group. Mr. Fox was elected a director of the Company in
September 1996.
Mr. Hamacher has been the Executive Vice President of Harbour Group, in
charge of corporate development since January 1992. From January 1988 to January
1992, he was the Vice President--Finance of Harbour Group Ltd. Mr. Hamacher
currently serves as a director of DT Industries, Inc. and Allied Healthcare
Products, Inc. Mr. Hamacher was elected a director of the Company in August
1995.
Mr. Jones has been the President of Greenfield Industries, Inc. since
November 1989 and its Chief Executive Officer since May 1993. He has served as a
director of Greenfield Industries, Inc. since 1993. From 1988 to 1989, he served
as General Manager--Manufacturing for General Electric Transportation Systems.
Prior to that time, Mr. Jones was the General Manager of General Electric
Drives, Motor and Generator Operations.
Mr. Shaughnessy has been President, Chief Executive Officer and Chairman of
the Board of BSI Constructors Inc., a general contractor and construction
manager, since 1989, a company which he co-founded in 1972 and for which he
served as President from 1974 to 1989. Mr. Shaughnessy is a member of the
advisory board of Boatmen's Bank, Central Region, in St. Louis, Mo.
Mr. Ritter has been a consultant to Anheuser-Busch Companies, Inc. and
Chairman of the Board of Clark Enterprises, Inc., the general partner of the
Kiel Center and the St. Louis Blues Hockey Club, since July 1996. From March
1990 to June 1996, he served as Vice President and Chief Financial and
Administrative Officer for Anheuser-Busch Companies, Inc. Mr. Ritter currently
serves as a director of Boatmen's Bancorp., Earthgrains Co. (a producer of
packaged bakery products) and Brown Group, Inc. (a shoe manufacturer).
Mr. Virgil has been a principal of Edward Jones & Co., a retail investment
firm, since September 1993. He previously served as a professor of accounting at
the John M. Olin School of Business, Washington University, St. Louis, Missouri
from 1964 to September 1993 and was dean of the School of Business from 1978 to
1993 and Executive Vice Chancellor of University Relations from 1992 to 1993. He
is currently a member of the Board of Directors of CPI Corporation (a provider
of photographic services) and General American Life Insurance Company (a mutual
insurance company).
The Board of Directors is divided into three classes serving staggered terms
as follows: Class I, comprised of three persons and serving for a term expiring
at the 1997 Annual Meeting of Stockholders; Class II, comprised of three persons
and serving for a term expiring at the 1998 Annual Meeting of
46
<PAGE>
Stockholders; and Class III, comprised of three persons and serving for a term
expiring at the 1999 Annual Meeting of Stockholders. Mr. Stiff and Mr. Nickelson
have been elected as Class I directors, Mr. Finley and Mr. Fox have been elected
as Class II directors, and Mr. Hamacher has been elected as a Class III
director. Following the expiration of the initial term, directors will serve for
three year terms. The executive officers serve at the pleasure of the Board of
Directors of the Company.
After the Offering, the Company anticipates that it will form and maintain
an Executive Committee, an Audit Committee, a Compensation and Options Committee
and a Nominating Committee.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the twelve months ended September 30, 1995
to the Company's chief executive officer and other executive officers whose
total salary and bonus exceeded $100,000 for the twelve months ended September
30, 1995 (the "Named Executive Officers"). None of the Company's other executive
officers had total salary and bonus in excess of $100,000 during the year ended
September 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) COMPENSATION(4)
- ----------------------------------------------- --------- ---------- --------- ----------------- ----------------
P. Enoch Stiff
President and Chief Executive Officer........ 1995 $ 163,653 $ 67,928 $ 2,151 $ 36,720
Curtis J. Laetz
Vice President--Marketing and Development.... 1995 99,107 28,787 3,378 13,703
James H. Hook
Vice President--Business Services............ 1995 98,387 27,416 3,334 13,770
</TABLE>
- ------------------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
retirement income savings plan.
(2) Includes amounts deferred under a deferred compensation plan which permitted
the senior management and directors to defer 25% of their annual bonus for a
period of three years. This arrangement was terminated in fiscal 1996.
(3) Reflects amounts contributed by the Company under the Company's retirement
income savings plan.
(4) Reflects amounts accrued under the Company's deferred compensation plan
described in footnote 2 above.
LONG-TERM INCENTIVE PLAN. In 1996, the Company established the 1996
Long-Term Incentive Plan (the "Long-Term Incentive Plan") pursuant to which
equity incentives covering up to 1,600,000 shares of Common Stock may be awarded
to key officers and employees of the Company. The Long-Term Incentive Plan is
intended to promote the interests of the Company and its stockholders by
attracting and retaining exceptional executive personnel and other key employees
of the Company and its subsidiaries, motivating such employees by means of stock
options and performance-related incentives to achieve long-range performance
goals, and enabling such employees to participate in the long-term growth and
financial success of the Company. The Long-Term Inventive Plan will be
administered by the Board of Directors prior to the Offering and thereafter by a
committee (the "Incentive Plan Committee") of the Board of Directors consisting
solely of two or more directors who are "non-employee directors" as defined in
47
<PAGE>
Rule 16b-3 under the Exchange Act and "outside directors" as defined in Section
162(m) of the Internal Revenue Code of 1986 (the "Code").
The Long-Term Incentive Plan provides for the granting of four types of
awards on a stand alone, combination, or tandem basis, including incentive stock
options, nonqualified stock options, restricted shares and performance stock
awards. The Long-Term Incentive Plan provides for the award of up to a total of
1,600,000 shares of Common Stock, provided that the total number of shares with
respect to which awards are granted in any one year may not exceed 100,000
shares to any individual employee and 400,000 shares in the aggregate, and the
total number of shares with respect to which grants of restricted and
performance stock awards are made in any year shall not exceed 50,000 shares to
any individual employee and 100,000 shares in the aggregate (subject, in each
case, to adjustment in the event of a stock split, stock dividend, combination
or exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation, recapitalization, or other
such change). As of the date hereof, approximately employees are expected
to be eligible to participate in the Long-Term Incentive Plan. No payments or
contributions are required to be made by the employees who participate in the
Long-Term Incentive Plan other than the payment of any purchase price upon the
exercise of a stock option.
A stock option award grants the right to buy a specified number of shares of
Common Stock at a fixed exercise price during a specified time, and subject to
such other terms and conditions, all as the Incentive Plan Committee may
determine; provided that the exercise price of any stock option shall not be
less than 100% of the fair market value of the Common Stock on the date of grant
of the award. An incentive stock option award granted pursuant to the Long-Term
Incentive Plan is an award in the form of a stock option which complies with the
requirements of Section 422 of the Code or any successor provision as it may be
amended from time to time. All other stock option awards granted under the
Long-Term Incentive Plan are nonqualified stock options. The exercise price of
all stock option awards under the Long-Term Incentive Plan is payable, at the
Incentive Plan Committee's discretion, in cash, in shares of already owned
Common Stock of the Company, in any combination of cash and shares, or any other
method deemed appropriate by the Incentive Plan Committee. Each option grant may
be exercised in whole, at any time, or in part, from time to time, after the
grant becomes exercisable.
A grant of restricted shares pursuant to the Long-Term Incentive Plan is a
transfer of shares of Common Stock, subject to such restrictions, if any, on
transfer or other incidents of ownership, for such periods of time as the
Incentive Plan Committee may determine. The certificates representing the
restricted shares will be held by the Company as escrow agent until the end of
the applicable period of restriction, during which time the shares may not be
sold, transferred, gifted, bequeathed, pledged, assigned or otherwise alienated
or hypothecated, voluntarily or involuntarily, except as otherwise provided in
the Long-Term Incentive Plan. However, during the period of restriction, the
recipient of restricted shares will be entitled to vote the restricted shares
and to retain cash dividends paid thereon.
A performance stock award is a right granted to an employee to receive
restricted shares that are not issued to the employee until after the
satisfaction of the performance goals during a performance period. A performance
stock award is earned by the employee over a time period determined by the
Incentive Plan Committee on the basis of performance goals established by the
Incentive Plan Committee at the time of grant. Performance goals established by
the Incentive Plan Committee may be based on one or more of the following
criteria: earnings or earnings growth; earnings per share; return on equity,
assets, capital employed or investment; revenues or revenue growth; gross
profit; gross margin; operating profit; operating margin; operating cash flow;
stock price appreciation and total shareholder return. If the performance goals
set by the Incentive Plan Committee are not met, no restricted shares will be
issued pursuant to the performance stock award. To be entitled to receive a
performance stock award, an employee must remain in the employment of the
Company or its subsidiaries through the end of the performance period, but the
Incentive Plan Committee may provide for exceptions to this requirement as it
deems equitable in its sole discretion.
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<PAGE>
In the event of a change of control of the Company, the following may, in
the sole discretion of the Incentive Plan Committee, occur with respect to the
employee awards outstanding: (i) automatic lapse of all restrictions and
acceleration of any time periods relating to the exercise or vesting of stock
options and restricted shares so that awards may be immediately exercised or
vested; and automatic satisfaction of performance goals on a pro rata basis with
respect to the number of restricted shares issuable pursuant to a performance
stock award so that such pro rata or other portion of such restricted shares may
be immediately vested; (ii) upon exercise of a stock option during the 60-day
period after the date of a change of control, the participant exercising the
stock option may, in lieu of the receipt of Common Stock, elect by written
notice to the Company to receive a cash amount equal to the excess of the
aggregate value of the shares of Common Stock covered by the stock option, over
the aggregate exercise price of the stock option; (iii) following a change of
control, if a participant's employment terminates for any reason other than
retirement or death, any stock options held by the participant may be exercised
until the earlier of three months after the termination of employment or the
expiration date of such stock option; and (iv) all awards become non-cancelable.
Except as otherwise provided in the Long-Term Incentive Plan, the Board may
at any time terminate, and, from time to time, amend or modify the Long-Term
Incentive Plan. Any such action of the Board may be taken without the approval
of the Company's stockholders, but only to the extent that such stockholder
approval is not required by applicable law or regulation. Furthermore, no
amendment, modification, or termination of the Long-Term Incentive Plan shall
adversely affect any awards already granted to a participant without his or her
consent. No amendment or modification of the Long-Term Incentive Plan may change
any performance goal, or increase the benefits payable for the achievement of a
performance goal, once established for a performance stock award.
Pursuant to the Long-Term Incentive Plan, Messrs. Stiff, Franklin, Hook and
Laetz have been granted non-qualified options to purchase , ,
and shares of Common Stock, respectively, at the initial public offering
price. Options to purchase an aggregate additional shares have also been
granted to other officers and key employees at the initial public offering
price. Options granted to employees on the date of the Company's initial public
offering may not be exercised for a period of two years from the date of grant
and thereafter become exercisable on a cumulative basis in 25% increments
beginning on the second anniversary of the date of grant and concluding on the
fifth anniversary of the date of grant.
Except as set forth above, no awards have been granted under the Long-Term
Incentive Plan as of the date of this Prospectus, and no outstanding options are
presently exercisable.
EXECUTIVE STOCK OPTION PLAN. In 1996, the Company adopted the 1996
Executive Stock Option Plan, a description of which is contained in this
Prospectus under the caption "Certain Transactions--Agreements with Existing
Stockholders."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Offering, the Company has not had a compensation committee and,
since the acquisition of TRAK, executive compensation has been determined by the
entire Board of Directors, which until September 30, 1996 consisted of Samuel A.
Hamacher, James C. Janning and Peter S. Finley. Prior to the acquisition of
TRAK, executive compensation was determined by TRAK's then-constituted Board of
Directors. Prior to the Offering, Messrs. Hamacher, Janning and Finley also
served as Executive Vice President, President and Vice President, respectively,
of the Company. Messrs. Hamacher, Janning and Finley have not been compensated
for their positions as directors or officers. Following the Offering, the
Company anticipates forming a Compensation and Options Committee, which is not
expected to include any executive officers of the Company.
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<PAGE>
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
an annual fee of $10,000 and additional fees of $750 for attendance at each
meeting of the full Board of Directors and $500 for attendance at each meeting
of a committee of the Board of Directors. Directors are also entitled to
reimbursement for their expenses incurred in attending meetings.
DIRECTORS STOCK OPTION PLAN. The Company maintains a 1996 Directors
Non-Qualified Stock Option Plan (the "Directors Stock Option Plan") which
provides for the granting of options to the Company's directors who are not
employees of the Company, for up to an aggregate 250,000 shares of Common Stock.
The Directors Stock Option Plan by its express terms provides for the grant
of options thereunder to each eligible director serving on the date of the
Company's initial public offering with respect to 10,000 shares of Common Stock,
and an additional option to the Chairman of the Board of Directors (provided he
is an eligible director) with respect to 5,000 shares of Common Stock, in each
case at the initial public offering price. In addition, the Directors Stock
Option Plan provides for the grant of options to each person first becoming an
eligible director subsequent to the date of the Company's initial public
offering with respect to 10,000 shares of Common Stock and the grant of an
additional option to each person first becoming Chairman of the Board subsequent
to such date (provided such person is an eligible director) with respect to
5,000 shares of Common Stock.
Options granted or to be granted under the Directors Stock Option Plan may
not be exercised for a period of two years from the date of grant and thereafter
become exercisable on a cumulative basis in 25% increments beginning on the
second anniversary of the date of grant and concluding on the fifth anniversary
of the date of grant. All options granted under the Directors Stock Option Plan
expire ten years from the date of grant.
Options granted or to be granted under the Directors Stock Option Plan are
nontransferable, and the exercise price must be equal to the fair market value
of the Common Stock on the date of grant as determined by the Directors Stock
Option Committee. Upon exercise, the exercise price must be paid in full in cash
or such other consideration as the Directors Stock Option Committee may permit.
Pursuant to the Directors Stock Option Plan, Messrs. Nickelson, Fox, Finley
and Hamacher will be granted options to purchase 15,000 shares, 10,000 shares,
10,000 shares and 10,000 shares of Common Stock, respectively, at the initial
public offering price and Messrs. Jones, Virgil, Shaughnessy and Ritter each
will be granted options to purchase 10,000 shares of Common Stock at the fair
market value per share on the date each is elected a director. Except as set
forth above, no options have been granted under the Directors Stock Option Plan,
and no outstanding options are presently exercisable.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Restated Certificate of Incorporation limits the liability of
directors for monetary damages, and the Company's By-Laws provide for the
indemnification of the Company's directors and officers, to the full extent
permitted by the Delaware General Corporation Law. See "Description of Capital
Stock--Certain Certificate of Incorporation and By-Law Provisions."
50
<PAGE>
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 1996 and as adjusted to
reflect the Offering, certain information concerning the beneficial ownership of
Common Stock by (a) each stockholder who is known by the Company to own
beneficially in excess of 5% of the outstanding Common Stock, (b) each director
and director nominee of the Company, (c) each of the Named Executive Officers,
and (d) all directors and executive officers as a group. See "Underwriters."
Except as otherwise indicated, all persons listed below have sole voting and
investment power with respect to their shares of Common Stock. The Common Stock
constitutes the only class of equity securities outstanding. See "Description of
Capital Stock."
<TABLE>
<CAPTION>
OWNERSHIP PRIOR TO OWNERSHIP AFTER
THE OFFERING THE OFFERING
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
SHARES OF SHARES OF
NAME OF BENEFICIAL OWNER COMMON STOCK PERCENT COMMON STOCK PERCENT
- --------------------------------------------------------------- -------------- ----------- -------------- -----------
Investments L.P.(1)............................................ 8,200,000 82.0% 8,200,000
Uniquip L.P.(2)................................................ 1,000,000 10.0 1,000,000
P. Enoch Stiff................................................. 500,000 5.0 500,000
James H. Hook.................................................. 75,000 * 75,000 *
Curtis J. Laetz................................................ 75,000 * 75,000 *
Donald E. Nickelson(3)......................................... -- -- -- --
Peter S. Finley(3)............................................. -- -- -- --
Jeffrey L. Fox(3).............................................. -- -- -- --
Samuel A. Hamacher(3).......................................... -- -- -- --
Paul W. Jones.................................................. -- -- -- --
Jerry E. Ritter................................................ -- -- -- --
Joseph F. Shaughnessy.......................................... -- -- -- --
Robert L. Virgil............................................... -- -- -- --
-------------- --- -------------- ---
Total.......................................................... 9,850,000 98.5% 9,850,000
-------------- --- -------------- ---
-------------- --- -------------- ---
All directors and executive officers as a group (8
persons)(3).................................................. 650,000 6.5% 650,000
-------------- --- -------------- ---
-------------- --- -------------- ---
</TABLE>
- ------------------------
* Less than 1.0%.
(1) Assumes no exercise of the over-allotment option. If the over-allotment
option is exercised in full, the total shares of Common Stock to be sold by
Investments L.P. would be shares, and its ownership after the Offering
would be shares of Common Stock, or % of the outstanding Common Stock.
Investments L.P. is a Delaware limited partnership whose address is 7701
Forsyth Boulevard, St. Louis, Missouri 63105. Its general partner is Harbour
Group Management III Co., L.P., a Delaware limited partnership whose general
partner is Harbour Management III Co., a Delaware corporation controlled by
Sam Fox. Investments L.P. was organized to make subordinated debt and equity
investments in certain operating companies controlled by Harbour Group
Industries, Inc. and its affiliates. Its limited partners consist mainly of
institutional investors.
(2) Uniquip L.P. is a Delaware limited partnership whose address is 7701 Forsyth
Boulevard, St. Louis, Missouri 63105. Its general partner is Harbour Group
Industries, Inc., a Delaware corporation controlled by Sam Fox.
(3) Excludes shares owned by Uniquip L.P. and Investments L.P. Each of these
individuals is an officer and/or director of affiliates of Uniquip L.P.
and/or Investments L.P. and each such person disclaims beneficial ownership
of shares beneficially owned by Uniquip L.P. and Investments L.P.
51
<PAGE>
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
On August 16, 1995, Investments L.P., Uniquip L.P. and P. Enoch Stiff
purchased 8,200,000 shares, 1,000,000 shares and 300,000 shares, respectively,
of the Company's Common Stock for approximately $0.64 per share payable
$5,209,411.76 in cash, $600,000 in cash and $35,294.12 by a promissory note and
$190,588.24 in cash, respectively. On September 20, 1995, Mr. Stiff purchased an
additional 200,000 shares of the Company's Common Stock for approximately $0.64
per share payable $200 in cash and $127,059 by a promissory note. On September
20, 1995, James H. Hook, Curtis J. Laetz and two other officers of the Company
each purchased 75,000 shares of the Company's Common Stock for approximately
$0.64 per share payable $75 in cash and $47,647 by a promissory note.
Investments L.P. and Uniquip L.P., the beneficial owners of approximately %
of the Common Stock outstanding after the Offering, are under the common control
of Sam Fox. See "Security Ownership of Certain Beneficial Owners and
Management."
In connection with the acquisitions of TRAK and Lull, the Company incurred
junior subordinated indebtedness evidenced by subordinated notes (the
"Subordinated Notes") in the principal amounts of $2,000,000 and $14,000,000,
respectively. Investments L.P. holds the Subordinated Note in the principal
amount of $2,000,000 and has guaranteed the Company's obligations under the
Subordinated Note in the principal amount of $14,000,000 (the "Second
Subordinated Note"). Further, Investments L.P. has unconditionally agreed with
the existing holder of the Second Subordinated Note to purchase such obligation,
for a purchase price equal to the outstanding principal balance and all accrued
interest, on the earlier to occur of February 16, 1997 or the completion of the
Offering or other distribution of the Company's equity securities. Each of the
Subordinated Notes bears interest at the rate of 15.0% per annum and matures on
February 28, 2004. Each of the Subordinated Notes is payable only at maturity
and is subordinated to all senior debt of the Company and is subject to the
terms and provisions of a Subordinated Note Agreement (the "Subordinated Note
Agreements") between the Company and the holder of the Subordinated Note. The
Subordinated Note Agreements permit the prepayment of all or a portion of the
amounts outstanding thereunder. The Company expects to repay, without penalty or
premium, the entire balance of indebtedness outstanding under the Subordinated
Notes from the net proceeds received by the Company from its sale of shares of
Common Stock in the Offering. See "Use of Proceeds."
The Company engages Harbour Group Ltd. ("HGL") and Harbour Group, affiliates
of Investments L.P. and Uniquip L.P., to provide certain management consulting
services to the Company for which payments totaling $106,000 and $460,000 were
made by the Company to HGL for the twelve months ended September 30, 1995, and
the nine months ended June 30, 1996, respectively. In connection with the
acquisition of TRAK, the Company paid fees to Harbour Group and affiliates of
approximately $400,000 in the aggregate for investment banking, corporate
development and other services. The Company has entered into a Consulting and
Advisory Services Agreement (the "HGL Services Agreement") with HGL, pursuant to
which HGL will continue to provide management consulting services to the Company
for a one year term following the Offering, which term will automatically renew
from year to year until terminated by the Company or HGL upon 30 days' notice.
Under the HGL Services Agreement, the Company will compensate HGL for management
consulting services at HGL's approximate costs incurred in performing such
services. The Company has also entered into a Consulting and Advisory Services
Agreement (the "HGI Services Agreement") with Harbour Group, an affiliate of
HGL, pursuant to which Harbour Group will continue to provide corporate
development services, previously provided by Harbour Group, to the Company for a
one year term following the Offering, which term will automatically renew from
year to year until terminated by the Company or Harbour Group upon 30 day's
notice. Under the HGI Services Agreement, the Company will compensate Harbour
Group for corporate development services by paying an annual fee equal to the
greater of $100,000 or Harbour Group's approximate costs incurred in performing
such services, plus a transaction fee equal to an amount which ranges from two
and
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<PAGE>
one half percent of the first $1.0 million of the purchase price to one half of
one percent of the portion of the Purchase Price in excess of $4.0 million for
each completed acquisition or disposition by the Company during the term of the
HGI Services Agreement, subject to a minimum fee per transaction of $125,000.
The Company is included in an insurance program maintained by HGL providing
workers compensation and employer's liability, general liability and automobile
liability and physical damage insurance coverage for all companies controlled by
Harbour Group or its affiliates. The insurance program includes a retrospective
rating plan and automatic premium adjustment plan, which provide for
calculations of the premiums for the insurance program based on the application
of rating formulae to actual incurred losses and reserves for future losses
which require adjustment of the premiums retrospectively. The Company has
entered into an Insurance Agreement with HGL pursuant to which it has agreed to
reimburse HGL, and HGL has agreed to reimburse the Company, for their respective
pro rata shares of any retrospective premium adjustment. The terms of the
Insurance Agreement provide that the Company will no longer be eligible for
inclusion in the Harbour Group insurance plan if affiliates of HGL own less than
50% of the outstanding Common Stock. Accordingly, the Company anticipates
entering into alternative insurance arrangements which will be effective
immediately following the Offering.
The Company believes that each of the related party transactions described
herein was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
AGREEMENTS WITH EXISTING STOCKHOLDERS
As described above, Mr. Stiff, on August 16, 1995, acquired 300,000 shares
of Common Stock for $190,588.24 in cash, a price determined by the Board of
Directors of the Company. In connection with the purchase of such shares of
Common Stock, Mr. Stiff entered into an Investment Agreement with Investments
L.P. and the Company (the "Investment Agreement") providing for, among other
things, restrictions on transfer of such shares, registration rights with
respect to such shares, the grant of an option to Investments L.P. to purchase
such shares in certain circumstances, a right of first refusal for Investments
L.P. in the event of certain offers to purchase such shares, "tag-along" and
"drag-along" rights in the event of certain sales of the Common Stock by
Investments, L.P., a right to acquire additional securities of the Company in
order for Mr. Stiff to maintain his percentage of equity interest in the Company
under certain circumstances and a right to make additional investments in the
Company in accordance with his pro rata share of the issued Common Stock in
certain circumstances. In connection with the Investment Agreement, Mr. Stiff
entered into a Participation Agreement with Investments L.P., pursuant to which
Mr. Stiff purchased a 3% interest in $2.0 million in principal amount of junior
subordinated notes issued by TRAK and made payable to Investments L.P.
Also as described above, Mr. Stiff, together with Messrs. Hook, Laetz and
two other officers of the Company on September 20, 1995, acquired Common Stock
at prices determined by the Board of Directors of the Company, and the purchase
price therefor was paid partly in cash and partly by delivery of promissory
notes payable to the Company. The payment obligations of the stockholders under
their respective promissory notes are secured by all or some portion of the
purchased shares pursuant to stock pledge agreements entered into by each
stockholder and the Company. Such notes have a ten-year maturity, bear interest
at a fixed rate of interest of 6.56% per annum and are payable interest only
annually, with one principal payment at maturity. In connection with such
promissory notes, the Company agreed to pay annual bonuses to such stockholders
in amounts equal to the annual interest payments on the notes plus all federal
and state income taxes applicable to such payments. In connection with the
purchase of his shares of the Common Stock, each such stockholder entered into
an agreement with the Company (the "Stockholder Agreements") providing for,
among other things, restrictions on transfer of such shares of the Common Stock
owned by such stockholder, registration rights with respect to such shares, the
repurchase of such shares upon termination of the stockholder's employment at a
price based on a predetermined formula, a right of first refusal for the Company
in the event of certain offers to
53
<PAGE>
purchase such shares, a right to acquire additional securities of the Company in
order to maintain the stockholder's percentage of equity interest in the Company
in certain circumstances and "tag-along" and "drag-along" rights in the event of
certain sales of the Common Stock by Investments L.P. The Stockholder Agreements
also contain provisions concerning noncompetition and confidentiality applicable
to such stockholders and provisions for payments to such stockholders, under
certain circumstances, following the termination of their employment with the
Company.
The following directors and executive officers have promissory notes in
excess of $60,000 outstanding to the Company:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST
STOCKHOLDER POSITION OUTSTANDING RATE DUE DATE
- ------------------------------- ------------------------------- ----------- ---------------------- -----------
<S> <C> <C> <C> <C>
P. Enoch Stiff Director, President and Chief $ 126,589 September 20, 2005 6.56%
Executive Officer
</TABLE>
The Company has also adopted the 1996 Executive Stock Option Plan (the "1996
Plan") pursuant to which options will be granted to Mr. Stiff, Mr. Hook and Mr.
Laetz to acquire 200,000, 75,000 and 75,000 shares, respectively, of the
Company's Common Stock, and to the other management stockholders to acquire an
aggregate 150,000 shares of the Company's Common Stock by tendering existing
Common Stock in payment therefor. The exercise price of all options will be the
current market price on the date of exercise and all options may be exercised
only by exchanging shares of previously owned Common Stock. The 1996 Plan was
created solely for the purpose of alleviating certain adverse securities laws
consequences to the plan participants. The grant and exercise of options under
the 1996 Plan will not result in any increase in the beneficial ownership of
Common Stock by the plan participants from the number of shares owned
immediately after the Offering. Under the terms of the 1996 Plan, the options
are exercisable immediately after the Offering and the shares of Common Stock
issued thereunder will become freely transferable, subject to the restrictions
of the Stockholder Agreements, on the last day of the sixth full month following
the Offering, provided a pro rata portion of the indebtedness originally
incurred to purchase the shares surrendered upon exercise of the options is
repaid. In connection with the issuance of options under the 1996 Plan, the
Company has agreed to amend certain of the promissory notes issued in connection
with purchases of Common Stock to permit partial prepayments. The provisions of
the Stockholder Agreements, which are subject to modification or waiver by the
Company, generally permit the sale of 25% of such shares one year after the
Offering, 50% of such shares two years after the Offering, 75% of such shares
three years after the Offering, and all of such shares four years after the
Offering. Such options expire on the tenth anniversary of the Offering.
The Company anticipates filing a registration statement on Form S-8
immediately after the Offering for the purpose of registering the Company's
shares issuable upon exercise of options granted under the 1996 Plan.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement among the Company and
Investments L.P. and Uniquip L.P. (the "Registration Rights Agreement"),
Investments L.P. and Uniquip L.P. and such of their respective permitted
transferees as may be deemed to be affiliates of the Company have rights to
demand registration under the Securities Act of its or their shares of the
Company's Common Stock. In addition, in the event the Company proposes to
register any of its securities under the Securities Act, such persons (or their
permitted transferees) will have rights, subject to certain exceptions and
limitations, to have the shares of the Company's capital stock then owned by
them included in such registration statement. The Company has agreed that, in
the event of any registration of securities owned by such persons (or a
permitted transferee) in accordance with the provisions thereof, it will
indemnify such person, and certain related persons, against liabilities incurred
in connection with such registration, including liabilities arising under
54
<PAGE>
the Securities Act. Pursuant thereto, the Company and Investments, L.P. have
entered into an Indemnification Agreement providing for indemnification against
certain potential liabilities arising in connection with the Offering, including
liabilities under the Securities Act.
In addition, as described above under "Certain Transactions--Agreements with
Existing Stockholders," other existing stockholders also have registration
rights, subject to certain exceptions and limitations, to have shares of the
Company's capital stock owned by them to be included in registration statements
filed by the Company under the Securities Act.
The registration rights described above are subject to certain limitations
intended to prevent undue interference with the Company's ability to distribute
securities, including the provision that demand registration rights may not be
exercised within 90 days after the effective date of the Company's most recent
registration statement. Such registration rights are also subject to agreements
between the Company, Investments L.P., Uniquip L.P. and certain other persons
providing that no sales of the Company's Common Stock may be made by such
entities or persons for a period of 180 days following the Offering without the
prior written consent of the Underwriters.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Restated Certificate of Incorporation of the Company (the "Certificate")
authorizes 1,500,000 shares of Preferred Stock, $.01 par value, of which no
shares are outstanding and 100,000,000 shares of Common Stock, $.01 par value,
of which 10,000,000 shares are currently outstanding and 2,350,000 shares are
reserved for issuance pursuant to the Company's stock option plans. Following
the Offering, shares will be outstanding.
COMMON STOCK
Subject to the rights, if any, of holders of Preferred Stock, holders of
Common Stock are entitled to receive dividends out of funds legally available
therefor when, as and if declared by the Board of Directors of the Company and
to receive pro rata the net assets of the Company legally available for
distribution upon liquidation or dissolution.
Holders of Common Stock are entitled to one vote for each share of Common
Stock held on each matter submitted to a vote of stockholders, including the
election of directors. Holders of Common Stock are not entitled to cumulative
voting, which means that the holders of more than 50% of the outstanding Common
Stock can elect all of the directors if they choose to do so. All shares of
outstanding Common Stock of the Company are, and the shares to be issued by the
Company pursuant to this Prospectus will be, fully paid and nonassessable.
Prior to the Offering, there are seven holders of record of the Common
Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized to fix the number of
shares and determine the designation of any series of the authorized shares of
the Company's Preferred Stock and to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any unissued series of
Preferred Stock. As of the date of this Prospectus, the Company has not issued
any Preferred Stock.
CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS
The Certificate provides that the Company's directors are not liable to the
Company or its stockholders for monetary damages for breach of their fiduciary
duties, except under certain circumstances, including breach of the director's
duty of loyalty, acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law or any transaction from which the
director derived improper personal benefit. The inclusion of this provision in
the Certificate may have the effect of reducing the likelihood of derivative
litigation against directors and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care.
The Certificate provides for the Board of Directors to be divided into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
Classification of the Board of Directors expands the time required to change the
composition of a majority of directors. This provision, in addition to the
existence of authorized but unissued capital stock, may have the effect, either
alone or in combination with each other, of discouraging an acquisition of the
Company even if such an acquisition is desired by certain stockholders of the
Company.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Upon consummation of the Offering, there will be shares of Common
Stock and 1,500,000 shares of Preferred Stock available for future issuance
without stockholder approval. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
56
<PAGE>
additional capital or to facilitate corporate acquisitions. The Company does not
currently have any plans to issue additional shares of capital stock, other than
shares of Common Stock which may be issued upon the exercise of options. See
"Management" and "Certain Transactions."
One of the effects of the existence of unissued and unreserved Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors of the
Company to issue shares to persons friendly to current management which could
render more difficult or discourage an attempt to obtain control of the Company
by means of a merger, tender offer, proxy contest or otherwise, and thereby
protect the continuity of the Company's management. The Board of Directors of
the Company can issue Preferred Stock with rights which could adversely affect
the voting power or other rights of holders of Common Stock.
DELAWARE TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law, as amended ("Section
203") provides that, subject to certain exceptions specified therein, an
"interested stockholder" of a Delaware corporation shall not engage in any
business combination, including mergers or consolidations or acquisitions of
additional shares of the corporation with the corporation for a three-year
period following the date that such stockholder becomes an "interested
stockholder" unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder," (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares), or (iii) on or subsequent to such date,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the "interested stockholder." Except as otherwise specified in
Section 203, an "interested stockholder" is defined to include (x) any person
that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person.
These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company. The Company's stockholders, by adopting an
amendment to its Certificate or By-laws, may elect not to be governed by Section
203, effective twelve months after adoption. Neither the Certificate nor the
By-laws presently exclude the Company from the restrictions imposed by Section
203.
REGISTRAR AND TRANSFER AGENT
Boatmen's Trust Company is the Registrar and Transfer Agent for the
Company's Common Stock.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately upon consummation of the Offering, the Company will have
outstanding shares of Common Stock, of which will have been sold in
the Offering by the Company and will be freely transferable without restriction
or further registration under the Securities Act, except for any of those shares
of Common Stock owned at any time by an "affiliate" of the Company within the
meaning of Rule 144 under the Securities Act (which sales will be subject to the
volume limitations and certain other restrictions described below). Of the
remaining shares, of the shares held by Investments L.P. are subject
to the over-allotment option.
The remaining shares which are not sold pursuant to the over-allotment
option are deemed "restricted" securities under Rule 144 in that they were
originally issued and sold by the Company in private transactions in reliance
upon exemptions from the registration requirements of the Securities Act. It is
anticipated that commencing August 16, 1997, all shares owned by
Investments L.P. and Uniquip L.P. (or shares if the over-allotment option
is exercised in full) will become eligible for sale in the public market subject
to the volume and other restrictions of Rule 144 described below. See "Certain
Transactions--Registration Rights."
Immediately after the Offering, 500,000 shares owned by certain management
stockholders may be exchanged for a like number of shares pursuant to the
Company's 1996 Plan, and if so exchanged may thereafter be sold pursuant to Rule
144, subject to the volume and other restrictions thereof, commencing six months
after the date on which options under the 1996 Plan have been exercised,
provided a pro rata portion of the indebtedness originally incurred to purchase
the shares surrendered upon exercise of options is repaid and subject to the
provisions of the applicable Stockholder Agreements. The provisions of the
Stockholder Agreements, which are subject to modification or waiver by the
Company, generally permit the sale of 25% of such shares one year after the
Offering, 50% of such shares two years after the Offering, 75% of such shares
three years after the Offering, and all of such shares four years after the
Offering. Any such shares not exchanged by the management stockholders pursuant
to the 1996 Plan, will be "restricted" securities within the meaning of Rule 144
and may be resold thereunder, subject to the terms of the applicable Stockholder
Agreement, and subject to the volume and other restrictions of Rule 144,
commencing on the second anniversary of the date on which the indebtedness
incurred to purchase such shares is repaid. An additional 300,000 shares of
Common Stock owned by Mr. Stiff will be "restricted" securities within the
meaning of Rule 144 and may be resold thereunder, subject to the volume and
other restrictions thereof, commencing August 16, 1997. Under the terms of the
Investment Agreement, which is subject to modification or waiver by the Company
and Investments L.P., Mr. Stiff is generally permitted to sell 25% of such
shares six months after the Offering, 50% of such shares one year after the
Offering, 75% of such shares eighteen months after the Offering, and all of such
shares two years after the Offering.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned "restricted" securities
for at least two years is entitled to sell in "brokers" transactions or directly
to market makers, within any three-month period, a number of those shares that
does not exceed the greater of 1% of the shares of the Common Stock then
outstanding or the average weekly trading volume of the Common Stock on any
national securities exchange and/or the over-the-counter market during the four
calendar weeks immediately preceding the filing of the notice required by Rule
144 or, if no such notice is required, during the four calendar weeks preceding
the date of receipt by a broker of the order to execute the transaction or the
date of execution of such transaction directly with a market maker. Sales under
Rule 144 are also subject to other requirements, including the Company's
obligation to file all required periodic reports on a timely basis.
Restricted shares of Common Stock may be sold pursuant to Rule 144 subject
to the limitations described in the preceding paragraph. Restricted shares of
Common Stock held for at least three years and not then held by affiliates of
the Company, or persons who were affiliates at any time within three months
58
<PAGE>
prior thereto, may be sold without regard to the volume limitations or method of
sale restrictions under Rule 144. The foregoing summary of Rule 144 is not
intended to be a complete description thereof.
Following the Offering, each of Investments L.P. and Uniquip L.P. may
distribute all of their shares to their partners. In the event of such a
distribution, commencing August 16, 1997 all such shares will be eligible for
sale by the recipients thereof pursuant to Rule 144, subject to the volume and
other restrictions thereof.
The Company intends to file a registration statement on Form S-8 under the
Securities Act to register all shares of Common Stock issuable under the 1996
Plan. The registration statement is expected to be filed as soon as practicable
after the date of the Offering and is expected to become effective immediately
upon filing. Subject to the terms of the 1996 Plan, the applicable Stockholder
Agreements and Rule 144 volume limitations applicable to affiliates, shares
covered by the registration statement will be eligible for sale in the public
market. See "Certain Transactions--Agreements with Existing Stockholders."
Certain of the Company's existing stockholders and their permitted
transferees also are entitled to demand registration of shares by the Company.
See "Certain Transactions--Registration Rights."
The Company and its existing stockholders have agreed not to offer, sell,
contract to sell or otherwise dispose of shares of common stock for a period of
180 days after the date hereof without the prior written consent of the
representatives of the Underwriters.
Prior to the Offering, there has been no public market for the Common Stock
and no prediction can be made as to the effect, if any, that future sales, or
availability of shares for future sale will have on the market price prevailing
from time to time. Sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices. The Company has applied for approval for listing of the Common Stock on
the Nasdaq National Market under the symbol "OMQP."
59
<PAGE>
CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to "Non-United States Holders." Subject to the discussion below
under "Estate Tax," a "Non-United States Holder" is any beneficial owner of
Common Stock that, for United States federal income tax purposes is a
non-resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust as such terms are defined in the Internal Revenue Code
of 1986, as amended (the "Code"). This discussion is based on the Code,
existing, proposed and temporary regulations promulgated thereunder, and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change either retroactively or prospectively. This discussion
does not address all aspects of United States federal income and estate taxation
that may be relevant to Non-United States Holders in light of their particular
circumstances and does not address any tax consequences arising under the laws
of any state, local or foreign taxing jurisdiction or the application of a
particular tax treaty. Prospective investors are urged to consult their tax
advisors regarding the United States federal, state and local income and other
tax consequences, and the non-United States tax consequences, of owning and
disposing of Common Stock.
Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, could affect the United States
taxation of dividends on Common Stock paid to a Non-United States Holder. The
Proposed Regulations are generally proposed to be effective with respect to
dividends paid after December 31, 1997, subject to certain transition rules. It
cannot be predicted at this time whether the Proposed Regulations will be
adopted as proposed or what modifications, if any, may be made to them. The
discussion below is not intended to include a complete discussion of the
provisions of the Proposed Regulations, and prospective investors are urged to
consult their tax advisors with respect to the effect the Proposed Regulations
may have if adopted.
DIVIDENDS
Subject to the discussion below, any dividend paid to a Non-United States
Holder generally will be subject to United States withholding tax either at a
rate of 30% of the gross amount of the dividend or such lower rate as may be
specified by an applicable tax treaty. For purposes of determining whether tax
is to be withheld at a 30% rate or at a reduced rate as specified by an
applicable tax treaty, under current United States Treasury Regulations the
Company ordinarily will presume that dividends paid to a holder with an address
in a foreign country are paid to a resident of such country absent knowledge
that such presumption is not warranted. Under such Regulations, dividends paid
to a holder with an address within the United States generally will be presumed
to be paid to a holder who is not a Non-United States Holder and will not be
subject to the 30% withholding tax, unless the Company has actual knowledge that
the holder is a Non-United States Holder.
The Proposed Regulations would provide for certain presumptions (which
differ from those described above) upon which the Company may generally rely to
determine whether, in the absence of certain documentation, a holder should be
treated as a Non-United States Holder for purposes of the 30% withholding tax
described above. The presumptions would not apply for purposes of granting a
reduced rate of withholding under a treaty. Under the Proposed Regulations, to
obtain a reduced rate of withholding under a treaty a Non-United States Holder
would generally be required to provide an Internal Revenue Service Form W-8
certifying such Non-United States Holder's entitlement to benefits under a
treaty. The Proposed Regulations also would provide special rules to determine
whether, for purposes of determining the applicability of a tax treaty and for
purposes of the 30% withholding tax described above, dividends paid to a
Non-United States Holder that is an entity should be treated as paid to the
entity or those holding an interest in that entity.
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<PAGE>
Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder are exempt from withholding tax. However, such effectively
connected dividends are subject to regular United States income tax in the same
manner as if the Non-United States Holder were a United States person for
federal income tax purposes. A Non-United States Holder may claim exemption from
withholding under the effectively connected income exception by filing Internal
Revenue Service Form 4224 (Exemption From Withholding of Tax on Income
Effectively Connected With the Conduct of a Trade or Business in the United
States) each year with the Company or its paying agent prior to the payment of
the dividends for such year. The Proposed Regulations would replace Form 4224
with Form W-8. Effectively connected dividends received by a corporate
Non-United States Holder may be subject to an additional "branch profits tax" at
a rate of 30% (or such lower rate as may be specified by an applicable tax
treaty) of such corporate Non-United States Holder's effectively connected
earnings and profits, subject to certain adjustments.
A Non-United States Holder eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
United States Internal Revenue Service ("IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain realized upon the sale or other
disposition of Common Stock unless (i) such gain is effectively connected with a
United States trade or business of the Non-United States Holder; (ii) the Non-
United States Holder is an individual who holds the Common Stock as a capital
asset, is present in the United States for a period or periods aggregating 183
days or more during the taxable year in which such sale or disposition occurs,
and certain other conditions are met; or (iii) the Company is or has been a
"United States real property holding corporation" for federal income tax
purposes at any time within the shorter of the five-year period preceding such
disposition or such holder's holding period and certain other conditions are
met. The Company has determined that it is not and has never been, and the
Company does not believe that it will become, a "United States real property
holding corporation" for federal income tax purposes. Non-United States Holders
should consult applicable tax treaties, which might result in United States
federal income tax treatment on the sale or other disposition of Common Stock
different than as described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Unless the Company has actual knowledge that a holder is a Non-United States
Holder, dividends paid to a holder at an address within the United States may be
subject to backup withholding at a rate of 31% if the holder is not an "exempt
recipient" as defined in Treasury Regulations (which includes corporations) and
fails to provide a correct taxpayer identification number and other information
to the Company. Backup withholding will generally not apply to dividends paid to
holders at an address outside the United States (unless the Company has
knowledge that the holder is a United States person).
Proceeds from the disposition of Common Stock by a Non-United States Holder
effected by or through a United States office of a broker will be subject to
information reporting and to backup withholding at a rate of 31% of the gross
proceeds unless such Non-United States Holder certifies under penalties of
perjury as to, among other things, its name, address and status as a Non-United
States Holder or otherwise establishes an exemption. Generally, United States
information reporting and backup withholding will not apply to a payment of
disposition proceeds if the transaction is effected outside the
61
<PAGE>
United States by or through a non-United States office of a broker. However, if
such broker is, for United States federal income tax purposes, a United States
person, a "controlled foreign corporation," or a foreign person which derives
50% or more of its gross income for certain periods from the conduct of a United
States trade or business, information reporting (but not backup withholding)
will apply unless (i) such broker has documentary evidence in its files that the
holder is a Non-United States Holder and certain other conditions are met, or
(ii) the holder otherwise establishes an exemption.
The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions and other rules under which Non-United States Holders may
be subject to backup withholding in the absence of required certifications and
would modify the definition of an "exempt recipient" in the case of a
corporation.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of United States
income taxes, a refund may be obtained, provided the required documents are
filed with the IRS.
ESTATE TAX
An individual Non-United States Holder who is treated as the owner of Common
Stock at the time of such individual's death or has made certain lifetime
transfers of an interest in Common Stock will be required to include the value
of such Common Stock in such individual's gross estate for United States federal
estate tax purposes and may be subject to United States federal estate tax,
unless an applicable tax treaty provides otherwise. For United States federal
estate tax purposes, a "Non-United States Holder" is an individual who is
neither a citizen nor a domiciliary of the United States. Whether an individual
is considered a "domiciliary" of the United States for estate tax purposes is
generally determined on the basis of all of the facts and circumstances.
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<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the U.S. Underwriters named below, for whom
Morgan Stanley & Co. Incorporated, CS First Boston Corporation, Schroder
Wertheim & Co. Incorporated and Robert W. Baird & Co. Incorporated are serving
as U.S. Representatives, have severally agreed to purchase, and the Company has
agreed to sell, and the International Underwriters named below, for whom Morgan
Stanley & Co. International Limited, CS First Boston Limited, J. Henry Schroder
& Co. Limited and Robert W. Baird & Co. Incorporated are serving as
International Representatives (collectively with the U.S. Representatives, the
"Representatives"), have severally agreed to purchase, and the Company has
agreed to sell, the respective number of shares set forth opposite the names of
such Underwriters below.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ----------------------------------------------------------------------------------- -----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated..............................................
CS First Boston Corporation....................................................
Schroder Wertheim & Co. Incorporated...........................................
Robert W. Baird & Co. Incorporated.............................................
-----------
Subtotal.....................................................................
-----------
International Underwriters:
Morgan Stanley & Co. International Limited.....................................
CS First Boston Limited........................................................
J. Henry Schroder & Co. Limited................................................
Robert W. Baird & Co. Incorporated.............................................
-----------
Subtotal.....................................................................
-----------
Total........................................................................
-----------
-----------
</TABLE>
The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters." The Underwriting Agreement provides that the
obligations of the several Underwriters to pay for and accept delivery of the
shares of Common Stock offered hereby are subject to the approval of certain
legal matters by counsel and to certain other conditions, including the
conditions that no stop order suspending the effectiveness of the Registration
Statement is in effect and no proceedings for such purpose are pending before or
threatened by the Securities and Exchange Commission and that there has been no
material adverse change or any development involving a prospective material
adverse change in the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, from that set forth in such
Registration Statement. The Underwriters are obligated to take and pay for all
of the shares of Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any are taken.
Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any U.S. Shares (as defined below) for the account of
anyone other than a United States or Canadian Person (as defined below) and (ii)
it has not offered or sold, and will not offer or sell, directly or indirectly,
any U.S. Shares or distribute this Prospectus outside the United States or
Canada or to anyone other than a United States or Canadian Person. Pursuant to
the Agreement Between U.S. and International Underwriters, each International
Underwriter has represented and agreed that, with certain exceptions: (i) it is
not purchasing any International Shares (as defined below) for the account of
any United States or Canadian Person and (ii) it has not offered or sold, and
will not offer or sell, directly or indirectly, any International Shares or
distribute this Prospectus within the United States or Canada or to any United
States or Canadian Person. The foregoing limitations do not apply to
stabilization transactions or to certain other transactions
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<PAGE>
specified in the Agreement Between U.S. and International Underwriters. As used
herein, "United States or Canadian Person" means any national or resident of the
United States or Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under the laws of the United States or Canada or
of any political subdivision thereof (other than a branch located outside the
United States or Canada of any United States or Canadian Person) and includes
any United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
U.S. Underwriters and the International Underwriters are referred to herein as
the "U.S. Shares" and the "International Shares," respectively.
Pursuant to the Agreement Between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of any
number of shares of Common Stock to be purchased pursuant to the Underwriting
Agreement as may be mutually agreed. The per share price and currency settlement
of any shares of Common Stock so sold shall be the price range set forth on the
cover page hereof, in United States dollars, less an amount not greater than the
per share amount of the concession to dealers set forth below.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or province or
territory thereof and has represented that any offer or sale of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send to any dealer who purchases
from it any shares of Common Stock a notice stating in substance, by purchasing
such Common Stock, such dealer represents and agrees that it has not offered or
sold, and will not offer or sell, directly or indirectly, any of such Common
Stock in Canada or to, or for the benefit of, any resident of any province or
territory of Canada in contravention of the securities laws thereof and that any
offer of shares of Common Stock in Canada will be made only pursuant to an
exemption from the requirement to file a prospectus in the province or territory
of Canada in which such offer or sale is made, and that such dealer will deliver
to any other dealer to whom it sells any of such Common Stock a notice to the
foregoing effect.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that: (i) it has not
offered or sold and will not offer or sell any shares of Common Stock to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the shares of Common Stock offered hereby
in, from or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the shares of Common
Stock if that person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, in Japan or to or for
the account of any resident thereof, any shares of Common Stock acquired in
connection with the Offering, except for offers or sales of Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of such shares of Common Stock a notice stating in substance that
such dealer may not offer or sell any of such shares, directly or indirectly, in
Japan or to or for the account of any resident
64
<PAGE>
thereof, except pursuant to any exemption from the registration requirements of
the Securities and Exchange Law of Japan, and that such dealer will send to any
other dealer to whom it sells any of such shares a notice to the foregoing
effect.
The Underwriters propose to offer part of the shares of Common Stock offered
hereby directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ per share under the public offering price.
The Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share to other Underwriters or to certain other dealers.
After the initial offering of the shares of Common Stock, the offering price and
other selling terms may from time to time be varied by the Representatives.
Pursuant to the Underwriting Agreement, Investments L.P. has granted to the
U.S. Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an additional shares of Common Stock at the
public offering price set forth on the cover page hereof, less underwriting
discounts and commissions. The U.S. Underwriters may exercise such option to
purchase solely for the purpose of covering over-allotments, if any, incurred in
the sale of the shares of Common Stock offered hereby. To the extent such option
is exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered hereby to the
U.S. Underwriters.
The Representatives have informed the Company that they do not intend sales
to any accounts over which they have discretionary authority to exceed five
percent of the total number of shares of Common Stock offered hereby.
The Company and Investments L.P., on the one hand, and the Underwriters, on
the other hand, have agreed to indemnify each other against certain liabilities,
including liabilities arising under the Securities Act. In addition, the Company
and Investments L.P. have agreed to indemnify each other against certain
liabilities, including liabilities arising under the Securities Act.
The Company and all of the current stockholders of the Company have agreed
that they will not, without the prior written consent of Morgan Stanley & Co.
Incorporated, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, for a period of 180 days after
the date of this Prospectus, except under certain circumstances.
At the request of the Company, the Underwriters have reserved up to
shares of Common Stock offered hereby for sale at the public offering
price to certain directors, officers and employees of the Company, its
affiliates, and certain persons doing business with the Company. The number of
shares of Common Stock available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares
not so purchased will be offered by the Underwriters to the general public on
the same basis as the other shares offered hereby. All purchasers of the shares
of Common Stock reserved pursuant to this paragraph who are also directors or
senior officers of the Company will be required to enter into agreements
identical to those described in the immediately preceding paragraph restricting
the transferability of such shares for a period of 180 days after the date of
this Prospectus.
Certain of the Underwriters and their affiliates have from time to time
performed, and continue to perform, various investment banking and commercial
banking services for the Company or Harbour Group and their affiliates on a
fee-for-services basis.
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<PAGE>
PRICING OF THE OFFERING
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price was determined by negotiation between the
Company and the Representatives. Among the factors considered in determining the
initial public offering price were the earnings and certain other financial and
operating information of the Company in recent periods, the future prospects of
the Company and its industry in general, the general condition of the securities
market at the time of the Offering, and the market prices of securities and
certain financial and operating information of companies engaged in activities
similar to those of the Company.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Common Stock offered hereby have been passed upon for the Company by Dickstein
Shapiro Morin & Oshinsky LLP, Washington, D.C. Dickstein Shapiro Morin &
Oshinsky LLP has in the past represented, and continues to represent, Uniquip
L.P., Investments L.P. and their respective affiliates with respect to various
matters unrelated to the Company as well as in connection with their ownership
of capital stock of the Company. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Sidley & Austin, Chicago,
Illinois.
EXPERTS
The consolidated financial statements of the Company as of September 30,
1995 and June 30, 1996 and for the periods August 17, 1995 through September 30,
1995 and for the nine months ended June 30, 1996; the financial statements of
TRAK, as predecessor of the Company, for the fiscal year ended September 30,
1993, as of and for the fiscal year ended September 30, 1994 and as of August
16, 1995 and for the period October 1, 1994 through August 16, 1995; and the
financial statements of Lull as of and for the years ended December 31, 1994 and
1995 and as of and for the six months ended June 30, 1996 included in the
Prospectus have been so included in reliance on the reports of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement," which term shall include all amendments, exhibits and schedules
thereto), pursuant to the Securities Act and the rules and regulations
promulgated thereunder, with respect to the Common Stock offered hereby. The
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted from the Prospectus in accordance with the rules and
regulations of the Commission, and to which reference is hereby made.
After consummation of this Offering, the Company will be subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and, in accordance therewith, will be required
to file proxy statements, reports and other information with the Commission. The
Registration Statement, as well as any such report, proxy statement and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a web site
(http:\\www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
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<PAGE>
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
The Company intends to furnish stockholders with annual reports containing
audited consolidated financial information and will furnish unaudited financial
information for the first three quarters of each fiscal year.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
OMNIQUIP INTERNATIONAL, INC.
Report of Independent Accountants....................................................................... F-2
Consolidated Balance Sheet as of June 30, 1996 and September 30, 1995................................... F-3
Consolidated Statement of Income for the period from August 17, 1995 (inception) to September 30, 1995 F-4
and for the period from October 1, 1995 to June 30, 1996..............................................
Consolidated Statement of Changes in Stockholders' Equity for the period from August 17, 1995 F-5
(inception) to September 30, 1995 and for the period from October 1, 1995 to June 30, 1996............
Consolidated Statement of Cash Flows for the period from August 17, 1995 (inception) to September 30, F-6
1995 and for the period from October 1, 1995 to June 30, 1996.........................................
Notes to Consolidated Financial Statements.............................................................. F-7
TRAK INTERNATIONAL, INC.
Report of Independent Accountants....................................................................... F-20
Balance Sheet as of September 30, 1994.................................................................. F-21
Statement of Income for the period from October 1, 1994 to June 30, 1995 (unaudited), for the period F-22
from October 1, 1994 to August 16, 1995 and for the fiscal years ended September 30, 1994 and 1993....
Statement of Changes in Stockholders' Equity for the period from October 1, 1994 to August 16, 1995 and F-23
for the fiscal years ended September 30, 1994 and 1993................................................
Statement of Cash Flows for the period from October 1, 1994 to June 30, 1995 (unaudited), for the period F-24
from October 1, 1994 to August 16, 1995 and for the fiscal years ended September 30, 1994 and 1993....
Notes to Financial Statements........................................................................... F-25
LULL INDUSTRIES, INC.
Report of Independent Accountants....................................................................... F-37
Balance Sheet as of June 30, 1996, December 31, 1995 and December 31, 1994.............................. F-38
Statement of Income for the six months ended June 30, 1996 and 1995 (unaudited) and for the fiscal years F-39
ended December 31, 1995 and 1994......................................................................
Statement of Changes in Stockholders' Equity for the six months ended June 30, 1996 and for the fiscal F-40
years ended December 31, 1995 and 1994................................................................
Statement of Cash Flows for the six months ended June 30, 1996 and 1995 (unaudited) and for the fiscal F-41
years ended December 31, 1995 and 1994................................................................
Notes to Financial Statements........................................................................... F-42
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Omniquip International, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Omniquip International, Inc. and its wholly-owned subsidiary at September 30,
1995 and June 30, 1996, and the results of their operations and their cash flows
for the periods August 17, 1995 (date of inception) through September 30, 1995
and October 1, 1995 through June 30, 1996 in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
St. Louis, Missouri
August 23, 1996, except
as to Note 15, which is as
of September 30, 1996
F-2
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA)
ASSETS
Current assets:
Cash.................................................................................. $ 1 $ 1
Accounts receivable, net.............................................................. 12,842 12,478
Inventories........................................................................... 12,680 13,274
Prepaid expenses and other current assets............................................. 2,284 2,740
------------- ---------
Total current assets.............................................................. 27,807 28,493
Property, plant and equipment, net...................................................... 9,211 9,495
Goodwill................................................................................ 9,596 9,525
Other assets, net....................................................................... 1,718 1,631
------------- ---------
$ 48,332 $ 49,144
------------- ---------
------------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................................................... $ 540 $ 837
Accounts payable...................................................................... 11,105 10,273
Accrued liabilities................................................................... 5,463 7,194
------------- ---------
Total current liabilities......................................................... 17,108 18,304
------------- ---------
Long-term debt.......................................................................... 16,781 12,402
------------- ---------
Long-term debt-related parties.......................................................... 7,000 7,000
------------- ---------
Other noncurrent liabilities, net....................................................... 617 731
------------- ---------
Deferred income taxes................................................................... 443 436
------------- ---------
Commitments and contingencies
(Notes 1, 4, 9 and 11)
Stockholders' equity:
Preferred stock, $.01 par value, 1,500,000 shares authorized; no shares issued and
outstanding.........................................................................
Common stock, $.01 par value, 100,000,000 shares authorized; 10,000,000 shares issued
and outstanding..................................................................... 100 100
Additional paid-in capital............................................................ 6,253 6,253
Notes receivable from stockholders.................................................... (352) (352)
Retained earnings..................................................................... 382 4,270
------------- ---------
Total stockholders' equity........................................................ 6,383 10,271
------------- ---------
$ 48,332 $ 49,144
------------- ---------
------------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM AUGUST 17, FROM OCTOBER
1995 (DATE OF 1,
INCEPTION) 1995 TO
TO SEPTEMBER 30, 1995 JUNE 30, 1996
--------------------- --------------
<S> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
Net sales................................................................. $ 12,723 $ 81,514
Cost of sales............................................................. 9,787 60,379
------- -------
Gross profit.............................................................. 2,936 21,135
Selling, general and administrative expenses.............................. 1,670 11,339
------- -------
Operating income.......................................................... 1,266 9,796
------- -------
Other expenses:
Interest on indebtedness................................................ 226 1,144
Interest on indebtedness--related parties............................... 127 788
Other finance charges................................................... 240 1,479
Other, net.............................................................. 29 12
------- -------
622 3,423
------- -------
Income before provision for income taxes.................................. 644 6,373
Provision for income taxes................................................ 262 2,485
------- -------
Net income................................................................ $ 382 $ 3,888
------- -------
------- -------
Earnings per share........................................................ $ 0.04 $ 0.39
------- -------
------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM AUGUST 17, 1995 (DATE OF INCEPTION) TO SEPTEMBER 30, 1995
AND FOR THE PERIOD FROM OCTOBER 1, 1995 TO JUNE 30, 1996
<TABLE>
<CAPTION>
NOTES
ADDITIONAL RECEIVABLE
COMMON PAID-IN FROM RETAINED
STOCK CAPITAL STOCKHOLDERS EARNINGS TOTAL
----------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance, August 17, 1995................................ $ 100 $ 6,253 ($ 352) $ -- $ 6,001
Net income.............................................. -- -- -- 382 382
----- ----------- ----- ----------- ---------
Balance, September 30, 1995............................. 100 6,253 (352) 382 6,383
Net income.............................................. -- -- -- 3,888 3,888
----- ----------- ----- ----------- ---------
Balance, June 30, 1996.................................. $ 100 $ 6,253 ($ 352) $ 4,270 $ 10,271
----- ----------- ----- ----------- ---------
----- ----------- ----- ----------- ---------
</TABLE>
See accompanying Notes to Consoldiated Finanical Statements.
F-5
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM AUGUST 17, 1995 FROM OCTOBER 1,
(DATE OF INCEPTION) 1995 TO
TO SEPTEMBER 30, 1995 JUNE 30, 1996
--------------------- ---------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Cash flows from operating activities:
Net income............................................................... $ 382 $ 3,888
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation........................................................... 80 785
Amortization........................................................... 45 291
Deferred income tax provision (benefit)................................ 42 (656)
(Increase) decrease in current assets:
Accounts receivable, net............................................. (1,063) 364
Inventories.......................................................... 949 (594)
Prepaid expenses and other current assets............................ 90 193
Increase (decrease) in current liabilities:
Accounts payable..................................................... (162) (832)
Other current liabilities............................................ (42) 1,731
Other.................................................................. (16) 114
------ ------
Net cash provided by operating activities.................................. 305 5,284
------ ------
Cash flows from investing activities:
Capital expenditures, net................................................ (188) (1,069)
Other.................................................................... -- (133)
------ ------
Net cash used in investing activities...................................... (188) (1,202)
------ ------
Cash flows from financing activities:
Net payments on revolver................................................. (117) (3,677)
Payments on long-term debt............................................... -- (405)
------ ------
Net cash used in financing activities...................................... (117) (4,082)
------ ------
Net change in cash......................................................... -- --
Cash at beginning of period................................................ 1 1
------ ------
Cash at end of period...................................................... $ 1 $ 1
------ ------
------ ------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest on indebtedness................................................. $ 278 $ 1,997
------ ------
------ ------
Income taxes............................................................. $ -- $ 2,241
------ ------
------ ------
</TABLE>
See accompanying Notes to Consolidated Statements.
F-6
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. MERGER
Omniquip International, Inc. (Omniquip), a Delaware corporation, is an 92%
owned investee company of Harbour Group Investments III, L.P. (HGI III L.P.) and
an affiliate. At June 30, 1996, Omniquip owned 100% of the outstanding common
stock of its subsidiary, TRAK International, Inc. (the Company), and had no
other investments or operations. See Note 12 regarding the August 1996
acquisition of Lull Industries, Inc. (Lull).
On August 16, 1995, Omniquip acquired the issued and outstanding stock of
the Company. The transaction was accounted for under the purchase method of
accounting.
The aggregate merger consideration (purchase price) paid by Omniquip totaled
approximately $30,400, including assumed liabilities of $17,800. The acquisition
was financed through a $6,000 equity contribution by HGI III L.P., a $2,000
subordinated note payable to HGI III L.P., a $5,000 senior subordinated note
payable to an insurance company, and approximately $17,400 under credit
agreements with certain financial institutions.
All preacquisition debt outstanding, preferred stock, stock warrants, and
stock options at August 16, 1995 were settled or paid in connection with the
merger transaction.
The purchase price was assigned to the net assets acquired based on their
estimated fair market value at the acquisition date. Based upon the allocation,
the purchase price exceeded the estimated value of net assets acquired by
approximately $9,600. Such excess purchase price (goodwill) is being amortized
over forty years.
The purchase price under the acquisition agreement will be increased, up to
a maximum of $2,000, together with interest, for orders received from the U.S.
Army under contracts for the delivery of rough terrain fork lifts (the ATLAS
Program) for a period of five years from August 17, 1995. Amounts paid to the
Company's former owners will be reflected as additional goodwill. As of June 30,
1996, no ATLAS Program sales orders have been received, other than for the
original five prototypes, and, accordingly, no additional purchase price has
been reflected in the accompanying financial statements.
The purchase price was allocated as follows:
<TABLE>
<S> <C>
Accounts receivable, net........................................... $ 11,800
Inventories........................................................ 13,600
Prepaid expenses and other current assets.......................... 2,400
Property, plant and equipment...................................... 9,100
Other assets....................................................... 1,700
Goodwill........................................................... 9,600
Accounts payable................................................... (11,300)
Accrued liabilities................................................ (5,500)
Other liabilities.................................................. (600)
Deferred income taxes.............................................. (400)
---------
$ 30,400
---------
---------
</TABLE>
The accompanying financial statements of Omniquip reflect the effects of the
acquisition of the Company by Omniquip and the related financing under the
purchase method of accounting.
F-7
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by Omniquip require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from those estimates. The significant accounting policies followed by Omniquip
are described below and are in conformity with generally accepted accounting
principles.
BUSINESS
The Company is principally engaged in the manufacture and sale of telescopic
material handlers and skid steer loaders to commercial customers and the U.S.
Government.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Omniquip and
its wholly-owned subsidiary. All significant intercompany transactions and
balances have been eliminated.
U.S. ARMY CONTRACT
The Company was awarded a contract to serve as the sole supplier of ATLAS, a
telescopic material handler, for the U.S. Army and related entities. The Company
expects shipments under the contract to commence in fiscal 1997. As discussed in
Note 1, the purchase price for TRAK will be adjusted for orders received under
the contract for a period of five years from August 17, 1995.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. Overdrafts on the Company's disbursement accounts totaling
approximately $1,788 and $1,498 at September 30, 1995 and June 30, 1996,
respectively, are included in accounts payable.
RELATIONSHIPS WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete or unsalable inventories are
reflected at their estimated realizable values.
Inventories relating to the U.S. Army contract are stated at actual
production costs, including manufacturing overhead and direct engineering and
tooling costs. The contract costs reimbursed by the
F-8
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
U.S. Army are considered progress payments and have been offset against
inventories. Title to all inventories related to the U.S. Army contract for
which progress payments have been received vests with the U.S. Army. General and
administrative expenses allocated to the U.S. Army contract for the period from
October 1, 1995 through June 30, 1996 were $96.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment was recorded at estimated fair market value
under the purchase method of accounting as of the acquisition date for the
Company as described in Note 1. Additions to property, plant and equipment
subsequent to the acquisition date are recorded at cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets which range from 3 to 29 years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
GOODWILL
Goodwill resulting from the merger described in Note 1 is stated at cost and
is being amortized on a straight-line basis over 40 years beginning August 17,
1995. Accumulated amortization totaled $27 and $182 at September 30, 1995 and
June 30, 1996, respectively. The Company assesses the carrying value of goodwill
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable based on an analysis of future expected
cash flows from the underlying operations of the Company. Management believes
that there has been no impairment at June 30, 1996.
OTHER NONCURRENT ASSETS
Other noncurrent assets include two 50% equity investments in dealers of the
Company's products. In accordance with Accounting Principles Board Opinion (APB)
No. 18, "The Equity Method of Accounting for Investments in Common Stock," the
carrying amount of the investments is adjusted to recognize the Company's share
of the earnings and losses of the investee. In the determination of the
Company's share of earnings or losses, all significant intercompany profit in
inventory on hand at these unconsolidated subsidiaries is eliminated. The
carrying value of these equity investments totaled approximately $393 at
September 30, 1995 and June 30, 1996, respectively. Equity earnings were
immaterial for the period from August 17, 1995 to September 30, 1995 and for the
period from October 1, 1995 to June 30, 1996, respectively. The Company is
currently finalizing an agreement to sell its investment in one of these dealers
and expects to fully realize the recorded carrying value.
Expenses associated with the issuance of debt instruments are capitalized by
the Company and amortized over the respective terms of the debt instruments. Net
deferred financing costs included in other assets at September 30, 1995 and June
30, 1996 were $413 and $361, respectively.
F-9
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Such costs incurred
in the development of new products or significant improvements to existing
products totaled approximately $72 for the period from August 17, 1995 through
September 30, 1995 and $1,027 for the period from October 1, 1995 through June
30, 1996.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. The Company also provides for specific warranty obligations as
necessary and appropriate.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes," requiring the use of the liability method of accounting for income
taxes. The current or deferred tax consequences of a transaction are measured by
applying the provisions of enacted tax laws to determine the amount of taxes
payable currently or in future years. Deferred income taxes are provided for
temporary differences between the income tax bases of assets and liabilities,
and their carrying amounts for financial reporting purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
FISCAL YEAR
Omniquip's fiscal year end is September 30.
EARNINGS PER SHARE INFORMATION
Earnings per share is computed by dividing net income available to
stockholders by the weighted average number of common shares outstanding during
the period. For the periods presented, the weighted average number of shares
outstanding was 10,000,000.
F-10
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
UNSUBORDINATED DEBT:
REVOLVING LINE OF CREDIT--principal due August 15, 2001; interest due monthly at the
bank's prime rate plus .50%, or LIBOR plus 2.50%, in some cases; secured by
substantially all assets of the Company............................................... $ 10,821 $ 7,144
INSTALLMENT NOTES PAYABLE--principal plus interest due in monthly installments at the
bank's prime rate plus .50% or LIBOR plus 2.50%, in some cases; secured by
substantially all assets of the Company............................................... 6,500 6,095
SUBORDINATED DEBT:
NOTE PAYABLE TO AN INSURANCE COMPANY--principal due in installments commencing August
31, 2001, with the final payment due August 31, 2003; interest due at 15% per annum... 5,000 5,000
NOTE PAYABLE TO HGI III, L.P.--principal payment due in a lump sum payment on August 31,
2003; interest due semi-annually at 15% per annum..................................... 2,000 2,000
------------- ---------
24,321 20,239
LESS--Current portion of long-term debt................................................. 540 837
------------- ---------
$ 23,781 $ 19,402
------------- ---------
------------- ---------
</TABLE>
On August 17, 1995 the Company entered into new Loan and Security Agreements
with certain financial institutions which provide for a revolving line of credit
facility and two installment notes. The new revolving line of credit facility
provides for borrowings of up to the lesser of $20,000 or a borrowing base
formula defined as, 85% of eligible receivables plus the lesser of (a) $9,000,
or (b) 70% of qualified finished goods inventory plus 50% of qualified raw
materials, components and service parts inventory as defined in the agreement
plus 50% of work-in-process not to exceed $500. Borrowings under this line of
credit are due August 15, 2001 and initially bear interest at the bank's prime
rate plus .50%. The Company may elect to convert up to 40% of its total
outstanding unsubordinated debt to LIBOR rate loans, which then bear interest at
LIBOR plus 2.50%. Amounts outstanding under this revolving line of credit
facility totaled $10,821 and $7,144 at September 30, 1995 and June 30, 1996,
respectively. In addition, the Company had $187 and $344 in outstanding letters
of credit at September 30, 1995 and June 30, 1996, respectively, under this
revolving line of credit facility. At June 30, 1996, the Company had unused
borrowing capacity of $5,213 under this facility.
Borrowings under one installment note payable under the Loan and Security
Agreements are due in monthly installments ranging from $45 to $120, which
payments commenced in October 1995 with a final payment in August 2001. The
installment notes initially bear interest at the bank's prime rate plus .50% but
may be converted to LIBOR rate loans bearing interest at LIBOR plus 2.50%. The
amount of the LIBOR loans outstanding is limited to 40% of the total outstanding
unsubordinated debt. The second installment note provides for $3,500 available
for asset acquisitions. There were no borrowings under this note at September
30, 1995 or June 30, 1996.
F-11
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. FINANCING (CONTINUED)
On August 16, 1995 the Company entered into an agreement for sale of a
$5,000 senior subordinated note payable to an insurance company and due August
31, 2003. Principal payments are due in varying amounts, commencing August 31,
2001. Interest, at a rate of 15%, is due quarterly.
The Company entered into an agreement in conjunction with the merger (see
Note 1) for the issuance of a $2,000 note payable to HGI III L.P. The HGI III
L.P. note payable is subordinated to both the Loan and Security Agreements with
certain financial institutions and the note payable to an insurance company.
Interest expense on the above-noted subordinated debt payable to related
parties approximated $127 and $788 for the periods ended September 30, 1995 and
June 30, 1996, respectively.
The Company's borrowing agreements contain restrictions and requirements,
including limitations on dividends, lease rentals, capital expenditures and
investments, new indebtedness, achievement of certain earnings levels, and
maintenance of a minimum tangible net worth and specified working capital
amounts, among others. At June 30, 1996, the Company was in compliance with such
covenants or had obtained waivers with respect thereto.
The Company has entered into two interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt. At June 30, 1996,
the interest rate swap agreements had a total notional principal amount of
$10,000. These agreements fix the Company's interest rate on $4,000 and $6,000
of its unsubordinated debt at 8.71% and 6.00%, respectively. These agreements
mature at October 10, 1998.
Maturities of long-term debt for the period through September 30, 1996 and
for subsequent fiscal years are as follows:
<TABLE>
<S> <C>
July 1--September 30, 1996......................................... $ 135
1997............................................................... 936
1998............................................................... 1,080
1999............................................................... 1,260
2000............................................................... 1,440
2001............................................................... 8,888
Thereafter......................................................... 6,500
---------
$ 20,239
---------
---------
</TABLE>
As described in Note 12, Omniquip completed the acquisition of Lull in
August 1996. The purchase price was financed with additional bank borrowings.
See Note 12 for further discussion.
4. LEASE COMMITMENTS
The Company leases certain of its equipment and automobiles under
noncancelable lease agreements. These leases have been accounted for as
operating leases.
F-12
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
4. LEASE COMMITMENTS (CONTINUED)
Minimum lease payments under long-term operating leases in effect at June
30, 1996 for the period through September 30, 1996 and for subsequent fiscal
years are as follows:
<TABLE>
<S> <C>
July 1-September 30, 1996............................................ $ 115
1997................................................................. 349
1998................................................................. 164
1999................................................................. 84
2000................................................................. 5
---------
Total minimum lease payments......................................... $ 717
---------
---------
</TABLE>
Rent expense under all operating leases for the periods ended September 30,
1995 and June 30, 1996 was approximately $52 and $373, respectively.
5. INCOME TAXES
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM AUGUST 17, FOR THE PERIOD
1995 (DATE OF FROM OCTOBER 1,
INCEPTION) 1995 TO
TO SEPTEMBER 30, 1995 JUNE 30, 1996
----------------------- ---------------
<S> <C> <C>
Current:
Federal............................................. $ 184 $ 2,520
State............................................... 36 474
----- ------
Total current................................... 220 2,994
----- ------
Deferred:
Federal............................................. 35 (429)
State............................................... 7 (80)
----- ------
Total deferred.................................. 42 (509)
----- ------
Provision for income taxes............................ $ 262 $ 2,485
----- ------
----- ------
</TABLE>
F-13
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
5. INCOME TAXES (CONTINUED)
Deferred taxes are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
Deferred tax assets:
Accruals and other reserves....................................... $ 1,663 $ 2,478
Inventories....................................................... 488 372
Other............................................................. 78 68
------------- ---------
Gross deferred tax assets..................................... 2,229 2,918
------------- ---------
Deferred tax liabilities:
Property, plant and equipment..................................... (805) (833)
Other............................................................. (198) (203)
------------- ---------
Gross deferred tax liabilities................................ (1,003) (1,036)
------------- ---------
Net deferred tax asset.............................................. $ 1,226 $ 1,882
------------- ---------
------------- ---------
Current deferred tax asset.......................................... $ 1,669 $ 2,318
Long-term deferred tax liability.................................... (443) (436)
------------- ---------
Net deferred tax asset.............................................. $ 1,226 $ 1,882
------------- ---------
------------- ---------
</TABLE>
The income tax provision differs from the amount of expense determined by
applying the applicable U.S. statutory federal income tax rate to pre-tax
results as a result of the following differences for the periods ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
--------------- -----------
<S> <C> <C>
Statutory rate....................................................... $ 219 $ 2,167
Non-temporary differences:
State tax provision, net........................................... 24 313
Other.............................................................. 19 5
----- -----------
Total provision...................................................... $ 262 $ 2,485
----- -----------
----- -----------
</TABLE>
6. RETIREMENT PLANS AND RELATED MATTERS
The Company offers all full-time non-union employees who have completed six
months of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. The Company also offers all union employees who have completed 30
days of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. For the periods ended September 30, 1995 and June 30, 1996,
Company contributions totaled $154 and $219, respectively.
The Company offers an incentive program to all salaried employees based upon
a formula related to the operating results of the Company and an incentive
program to union employees based upon a formula related to productivity
improvements. Certain participants in the salaried program are allowed to defer
a portion of their award. At September 30, 1995 and June 30, 1996, the Company
had accrued $839 and
F-14
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
6. RETIREMENT PLANS AND RELATED MATTERS (CONTINUED)
$843, respectively for the incentive program, of which $209 and $308,
respectively, is a long-term deferred liability. For the periods ended September
30, 1995 and June 30, 1996, expenses related to these plans were $67 and $647,
respectively.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (FAS 123) which addresses accounting for stock option, purchase
and award plans. FAS 123 specifies that companies utilize either the "fair value
based method" or the "intrinsic value based method" for valuing stock options
granted. At June 30, 1996, the Company had not implemented any stock option,
purchase or award plans. However, for any such plans adopted in the future, the
Company would expect to utilize the "intrinsic value based method" for valuing
stock options granted.
7. POSTRETIREMENT BENEFITS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (OPEB or SFAS 106). This standard requires recognition of the cost of
providing postretirement benefits during an employee's period of service.
The Company provides health care and life insurance benefits for certain
employees who retired prior to November 13, 1987 (less than 100 retirees at June
30, 1996). Management plans to fund the premiums as incurred, net of
reimbursements received by plan participants. At September 30, 1995 and June 30,
1996, respectively, the Company had a $408 and $423 accrued postretirement
benefit obligation, which is included in "other noncurrent liabilities, net" in
the accompanying financial statements. There are no plan assets. For measurement
purposes, a 10.5% and 9.5% annual rate of increase in health care premiums was
assumed for 1995 and 1996, respectively; this rate was assumed to decrease 1%
per year to 5.5% in 2000 and remain at that level thereafter. The weighted
average discount rate used to determine the accumulated postretirement benefit
obligation was 7.5% and 8.0% at September 30, 1995 and June 30, 1996,
respectively. The obligation was calculated utilizing the 1983 group annuity
mortality tables.
The annual periodic postretirement benefit cost for the plan years beginning
July 1, 1995 and July 1, 1996 approximates $29 and $23, respectively.
8. RELATED PARTIES
Harbour Group, Ltd., an affiliate of HGI III L.P., charges the Company for
services of Harbour Group personnel engaged in line or staff functions relating
specifically to the operations of the Company; such charges are to be paid by
the Company based on actual, direct costs for such services. Charges of $460 and
$60 were recorded by the Company during the periods ended June 30, 1996 and
September 30, 1995, respectively.
Omniquip has paid fees totaling $446 to affiliates of HGI III L.P. in
consideration of services provided in identifying, negotiating and consummating
the acquisition of the Company (as described in Note 1); such amount has been
capitalized as acquisition costs and is included in goodwill.
F-15
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
8. RELATED PARTIES (CONTINUED)
Certain members of management have purchased shares of Omniquip's stock at
prices determined by the Board of Directors. The purchase price of the shares
has been financed by recourse promissory notes payable to Omniquip with the
shares pledged as security.
The insurance company which holds $5,000 of the Company's senior
subordinated debt is a limited partner of HGI III L.P.
9. CUSTOMER FINANCING ARRANGEMENTS
The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under a floor plan
arrangement. The Company is obligated to repurchase the outstanding loan balance
of a dealer in the event of default by the dealer which is not cured by such
dealer within a 90 day period. A security interest in the equipment financed is
maintained by the finance companies. Aggregate outstanding loan balances under
these agreements at September 30, 1995 and June 30, 1996 approximated $39,466
and $48,183, respectively. Aggregate losses under one of the arrangements for
calendar year 1995 are limited to 25% of the outstanding loan balance at
December 31, 1994. The outstanding loan balance at December 31, 1994 under this
arrangement approximated $24,841. Aggregate losses under the same arrangement
for calendar year 1996 are limited to 25% of the outstanding loan balance at
December 31, 1995. The outstanding loan balance at December 31, 1995 under this
arrangement approximated $40,659. Subsequent to June 30, 1996, the Company has
negotiated a reduction in the maximum amount of losses per annum that the
Company is obligated to assume on the loans under this arrangement to the
greater of $1,500 or 5% of the balance at the previous calendar year end.
The Company maintains a reserve for potential repurchases of loans in
default under the floor plan arrangements described above. This reserve is
included in other current liabilities and totaled approximately $391 and $558 at
September 30, 1995 and June 30, 1996, respectively. Historically, losses under
the repurchase provisions of the floor plan arrangements have not been material
and have been within management's expectations. The related provision charged to
operations totaled approximately $31 and $187 for the periods ended September
30, 1995 and June 30, 1996, respectively.
In conjunction with these floor plan arrangements, the Company incurs
dealer-related financing charges at varying rates for a maximum period of six
months. The financing charges incurred by the Company for the periods ended
September 30, 1995 and June 30, 1996 for all outstanding customer financing
arrangements totaled $240 and $1,479, respectively.
10. CONCENTRATIONS OF CREDIT
The Company principally sells its products through a distribution network.
The Company performs ongoing credit evaluations of its distributors. The Company
maintains reserves for potential credit losses and historically such losses have
been within management's expectations. At September 30, 1995 and June 30, 1996,
the Company's five largest distributors represented approximately 29% and 22%,
respectively, of trade receivables. In addition, sales to such distributors for
the periods ended September 30, 1995 and June 30, 1996 approximated 30% and 22%,
respectively, of the Company's net sales.
F-16
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
11. CONTINGENCIES
The Company is included in various litigation consisting almost entirely of
product and general liability claims arising in the normal course of business.
The Company maintains insurance policies relative to product and general
liability claims and has provided reserves for the estimated cost of the
self-insured retention; accordingly, these actions, when ultimately concluded,
are not expected to have a material adverse effect on the financial position or
results of operations of the Company.
12. ACQUISITION OF LULL
Omniquip completed the acquisition of Lull, a manufacturer of telescopic
material handlers, in August 1996 for a purchase price of approximately $70,000
subject to certain adjustments, plus assumed liabilities totaling approximately
$11,500. The acquisition will be accounted for as a purchase, and was financed
with additional borrowings under the amended credit facilities with lending
institutions, including $14,000 of subordinated debt guaranteed by HGI III, L.P.
The purchase price will be allocated to the assets acquired and liabilities
assumed, based on their estimated fair values at the date of acquisition, with
the excess of purchase price over the estimated fair value of net assets
acquired to be recorded as goodwill.
The following table sets forth the pro forma information for Omniquip as if
the acquisition of Lull had occurred on October 1, 1995. This information is
unaudited and does not purport to represent actual net sales or net income had
the acquisition actually occurred on October 1, 1995.
<TABLE>
<CAPTION>
PRO FORMA INFORMATION
(UNAUDITED)
NINE MONTHS ENDED
JUNE 30, 1996
-------------------------------
<S> <C>
Net sales................................................... $ 151,770
Net income.................................................. 3,251
</TABLE>
F-17
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
13. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
ACCOUNTS RECEIVABLE:
Trade receivables..................................................................... $ 12,854 $ 12,526
Less allowance for doubtful accounts.................................................. (173) (156)
Other receivables..................................................................... 161 108
------------- ---------
$ 12,842 $ 12,478
------------- ---------
------------- ---------
INVENTORIES:
Finished goods........................................................................ $ 3,844 $ 2,522
Work in process....................................................................... 2,175 2,421
Raw materials......................................................................... 6,661 7,935
Unbilled government contract costs.................................................... -- 396
------------- ---------
$ 12,680 $ 13,274
------------- ---------
------------- ---------
PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Deferred income taxes................................................................. $ 1,669 $ 2,318
Other................................................................................. 615 422
------------- ---------
$ 2,284 $ 2,740
------------- ---------
------------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Machinery and equipment............................................................... $ 4,248 $ 5,318
Buildings and building improvements................................................... 4,133 4,133
Land and land improvements............................................................ 396 396
Construction in progress.............................................................. 513 512
------------- ---------
Total property, plant and equipment, at cost.......................................... 9,290 10,359
Less: accumulated depreciation........................................................ (79) (864)
------------- ---------
$ 9,211 $ 9,495
------------- ---------
------------- ---------
ACCRUED LIABILITIES:
Accrued employee compensation and benefits, including taxes........................... $ 1,180 $ 1,530
Accrued warranty...................................................................... 1,279 2,000
Accrued incentive compensation........................................................ 630 469
Product liability reserves............................................................ 564 772
Accrued income taxes.................................................................. 250 1,025
Other................................................................................. 1,560 1,398
------------- ---------
$ 5,463 $ 7,194
------------- ---------
------------- ---------
</TABLE>
F-18
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the period from October 1, 1995 to
June 30, 1996 appears below:
<TABLE>
<CAPTION>
GROSS
NET SALES PROFIT NET INCOME
----------- ----------- -----------
<S> <C> <C> <C>
First quarter............................................................... $ 23,487 $ 6,156 $ 963
Second quarter.............................................................. 27,578 7,234 1,352
Third quarter............................................................... 30,449 7,745 1,573
----------- ----------- -----------
$ 81,514 $ 21,135 $ 3,888
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
15. SUBSEQUENT EVENTS
On September 30, 1996, Omniquip's Board of Directors authorized Omniquip to
split its shares of common stock at a rate of 10 to 1, thereby increasing issued
and outstanding shares from 1,000,000 to 10,000,000. All shares and per share
amounts in the accompanying consolidated financial statements and notes have
been adjusted to give retroactive effect to the stock split.
In September 1996, Omniquip established the 1996 Long-Term Incentive Plan
pursuant to which equity incentives covering up to 1,600,000 shares may be
awarded to key officers and employees, and a Directors Stock Option Plan which
provides for the granting of options to the Omniquip directors who are not
employees, for up to an aggregate 250,000 shares of common stock.
In September 1996, Omniquip also established the Executive Stock Option Plan
pursuant to which options will be granted to certain executives and other
management stockholders to acquire an aggregate 500,000 shares of Omniquip
common stock. The exercise price of such options will be the current market
price on the date of exercise and all options may be exercised only by
exchanging shares of previously owned common stock.
F-19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Omniquip International, Inc.
In our opinion, the accompanying balance sheet and the related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of TRAK International, Inc. at
September 30, 1994 and August 16, 1995 and the results of its operations and its
cash flows for the fiscal years ended September 30, 1993 and September 30, 1994,
respectively, and for the period October 1, 1994 to August 16, 1995, in
conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As explained in Note 2, the Company changed its method of accounting for
income taxes in the fiscal year ended September 30, 1993. As explained in Note
9, the Company changed its method of accounting for postretirement benefits
other than pensions in the period ended August 16, 1995.
As explained in Note 1, on August 16, 1995, Omniquip International, Inc.
acquired the issued and outstanding common stock of TRAK International, Inc.
Price Waterhouse LLP
St. Louis, Missouri
July 15, 1996
F-20
<PAGE>
TRAK INTERNATIONAL, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS,
EXCEPT PER SHARE
DATA)
ASSETS
Current assets:
Cash...................................................................................... $ 17
Accounts receivable, net.................................................................. 10,360
Inventories............................................................................... 8,704
Prepaid expenses and other current assets................................................. 1,343
-------
Total current assets.................................................................... 20,424
Property, plant and equipment, net.......................................................... 6,197
Other assets, net........................................................................... 2,030
-------
$ 28,651
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................................................... $ 7,986
Current portion of long-term debt--related parties........................................ 1,450
Accounts payable.......................................................................... 8,109
Accrued liabilities....................................................................... 2,619
-------
Total current liabilities............................................................... 20,164
Long-term debt.............................................................................. 1,616
Long-term debt--related parties............................................................. 1,350
Retiree healthcare obligation............................................................... --
Accrued incentive compensation.............................................................. 37
Deferred income taxes....................................................................... 439
-------
Total liabilities....................................................................... 23,606
-------
Commitments and contingencies (Notes 4, 11 and 13)
Class B mandatorily redeemable preferred stock, $1,000 par value, 3,000 shares authorized;
3,000 shares issued and outstanding....................................................... 3,262
-------
Stockholders' equity:
Class A preferred stock, $500 par value, 2,000 shares authorized; 1,408 shares issued and
outstanding............................................................................. 704
Class C preferred stock, $1,000 par value, 5,000 shares authorized; 1,110 shares issued
and outstanding......................................................................... 1,110
Common stock, $1 par value, 20,000 shares authorized; 5,450 shares issued and
outstanding............................................................................. 6
Additional paid-in capital................................................................ 50
Retained earnings......................................................................... 346
Less treasury stock at cost, 1,595 shares................................................. (433)
-------
Total stockholders' equity.............................................................. 1,783
-------
$ 28,651
-------
-------
</TABLE>
See accompanying Notes to Financial Statements.
F-21
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE FISCAL YEAR PERIOD FROM PERIOD FROM
ENDED OCTOBER 1, OCTOBER 1,
SEPTEMBER 30, 1994 TO 1994 TO
-------------------- AUGUST 16, JUNE 30,
1993 1994 1995 1995
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales........................................................ $ 50,068 $ 60,973 $ 75,401 $ 64,964
Cost of sales.................................................... 39,183 47,208 57,707 49,782
--------- --------- ----------- -----------
Gross profit..................................................... 10,885 13,765 17,694 15,182
Selling, general and administrative expenses..................... 8,290 9,502 10,903 9,168
--------- --------- ----------- -----------
Operating income................................................. 2,595 4,263 6,791 6,014
--------- --------- ----------- -----------
Other (income) expenses:
Interest on indebtedness....................................... 733 994 1,121 871
Interest on indebtedness-related parties....................... 407 369 258 229
Other finance charges.......................................... 535 864 1,320 1,000
Other, net..................................................... 35 (165) (199) --
--------- --------- ----------- -----------
1,710 2,062 2,500 2,100
--------- --------- ----------- -----------
Income before provision for income taxes and cumulative effect of
change in accounting principle................................. 885 2,201 4,291 3,914
Provision for income taxes....................................... 368 876 1,762 1,566
--------- --------- ----------- -----------
Income before cumulative effect of change in accounting
principle...................................................... 517 1,325 2,529 2,348
Cumulative effect of change in accounting principles, net of
income tax benefit of $0 in 1993 (Note 2) and $167 (Note 9) in
1995, respectively............................................. 199 -- (241) (241)
--------- --------- ----------- -----------
Net income....................................................... $ 716 $ 1,325 $ 2,288 $ 2,107
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
See accompanying Notes to Financial Statements
F-22
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR FISCAL YEARS ENDED SEPTEMBER 30, 1993 AND SEPTEMBER 30, 1994 AND
FOR THE PERIOD FROM OCTOBER 1, 1994 TO AUGUST 16, 1995
<TABLE>
<CAPTION>
(ACCUMULATED
CLASS A CLASS C ADDITIONAL DEFICIT)/
PREFERRED PREFERRED COMMON PAID-IN RETAINED TREASURY
STOCK STOCK STOCK CAPITAL EARNINGS STOCK TOTAL
--------- --------- ------ ---------- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance, September 30, 1992....................... $704 $1,110 $6 $ 50 $ (940) $(365) $ 565
Nonmonetary exchange for Class A preferred stock
(Note 8)........................................ (15) (15)
Dividends on Class B and Class C preferred
stock........................................... (246) (246)
Net income........................................ -- -- -- -- 716 -- 716
--------- --------- ------ ---------- ------ -------- ------
Balance, September 30, 1993....................... 704 1,110 6 50 (470) (380) 1,020
Nonmonetary exchange for Class A preferred stock
(Note 8)........................................ (50) (50)
Repurchase of Class A preferred stock (Note 8).... (3) (3)
Dividends on Class B and Class C preferred
stock........................................... (247) (247)
Accretion to Class B preferred stock.............. (262) (262)
Net income........................................ -- -- -- -- 1,325 -- 1,325
--------- --------- ------ ---------- ------ -------- ------
Balance, September 30, 1994....................... 704 1,110 6 50 346 (433) 1,783
Dividends on Class B and Class C preferred
stock........................................... (191) (191)
Redemption of convertible notes
(Notes 3 and 8)................................. 1 997 998
Accretion to Class B preferred stock.............. (530) (530)
Net income........................................ -- -- -- -- 2,288 -- 2,288
--------- --------- ------ ---------- ------ -------- ------
Balance, August 16, 1995.......................... $704 $1,110 $7 $1,047 $1,913 $(433) $4,348
--------- --------- ------ ---------- ------ -------- ------
--------- --------- ------ ---------- ------ -------- ------
</TABLE>
See accompanying Notes to Financial Statements.
F-23
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE FISCAL YEAR PERIOD FROM PERIOD FROM
ENDED OCTOBER 1, OCTOBER 1,
SEPTEMBER 30, 1994 TO 1994 TO
-------------------- AUGUST 16, JUNE 30,
1993 1994 1995 1995
--------- --------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.......................................................... $ 716 $ 1,325 $ 2,288 $ 2,107
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
Depreciation...................................................... 619 666 726 621
Amortization...................................................... 302 230 226 194
Deferred income tax provision..................................... 111 139 (835) (887)
Accrued incentive compensation.................................... 37 166
Retiree healthcare obligation..................................... 408 408
Other............................................................. (230) (98) (63) (110)
(Increase) decrease in current assets:
Accounts receivable, net........................................ 721 (4,283) (1,419) (4,464)
Inventories..................................................... (2,354) 881 (5,348) (4,025)
Prepaid expenses and other current assets....................... 134 (140) (294) (20)
Increase (decrease) in current liabilities:
Accounts payable................................................ (1,919) 3,116 3,158 3,879
Accrued liabilities............................................. (240) 615 1,520 2,255
(Increase) decrease in notes receivable........................... (511) 509 (125) --
--------- --------- ------ ------
Net cash (used in) provided by operating activities................... (2,651) 2,997 534 (42)
--------- --------- ------ ------
Cash flows from investing activities:
Capital expenditures, net........................................... (672) (1,400) (3,030) (2,725)
Investment in other assets.......................................... (105) (251) (437) (239)
--------- --------- ------ ------
Net cash used in investing activities................................. (777) (1,651) (3,467) (2,964)
--------- --------- ------ ------
Cash flows from financing activities:
Net proceeds from revolving line of credit.......................... 3,142 28 2,819 2,795
Proceeds from issuance of long-term debt............................ 2,422 450 3,200 3,200
Payments on long-term debt.......................................... (2,003) (1,405) (2,911) (2,814)
Payment of preferred stock dividends................................ (140) (415) (191) (191)
--------- --------- ------ ------
Net cash provided by (used in) financing activities................... 3,421 (1,342) 2,917 2,990
--------- --------- ------ ------
Net increase (decrease) in cash....................................... (7) 4 (16) (16)
Cash at beginning of period........................................... 20 13 17 17
--------- --------- ------ ------
Cash at end of period................................................. $ 13 $ 17 $ 1 $ 1
--------- --------- ------ ------
--------- --------- ------ ------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest on indebtedness.......................................... $ 1,454 $ 1,019 $ 1,487
--------- --------- ------
Income taxes...................................................... $ 767 $ 531 $ 2,864
--------- --------- ------
Supplemental schedule of noncash investing and financing activities:
Redemption of convertible notes (Notes 3 and 8)..................... $ -- $ -- $ 998
--------- --------- ------
Receipt of Class A preferred stock in exchange for accounts
receivable (Note 8)............................................... $ 15 $ 53 $ --
--------- --------- ------
</TABLE>
See accompanying Notes to Financial Statements.
F-24
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. MERGER
On August 16, 1995, Omniquip International, Inc. (Omniquip), a Delaware
corporation and a 92% owned investee company of Harbour Group Investments III,
L.P. (HGI III L.P.), acquired the issued and outstanding stock of TRAK
International, Inc. (the Company).
The aggregate consideration (purchase price) paid by Omniquip for the
Company totaled approximately $30,400, including assumed liabilities of $17,800.
The acquisition was financed through a $6,000 equity contribution by HGI III
L.P., a $2,000 subordinated note payable to HGI III L.P., a $5,000 senior
subordinated note payable to an insurance company and approximately $17,400
under credit agreements with certain financial institutions. All preacquisition
debt outstanding, preferred stock, stock warrants and stock options of the
Company at August 16, 1995 were settled or paid in connection with the
acquisition. The acquisition agreement also provides for contingent
consideration to be paid to the former common stockholders of the Company by
Omniquip should certain future requirements be met.
The accompanying financial statements of the Company have been prepared on a
preacquisition basis of accounting and do not reflect the effects of the
acquisition by Omniquip or the related financing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by the Company require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from these estimates. The significant accounting policies followed by the
Company are described below and are in conformity with generally accepted
accounting principles:
BUSINESS
The Company is principally engaged in the manufacture and sale of telescopic
material handlers and skid steer loaders to commercial customers and the U.S.
Army.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. Overdrafts on the Company's disbursement accounts totaling
approximately $1,108 at September 30, 1994 are included in accounts payable.
RELATIONSHIP WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
F-25
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete or unsalable inventories are
reflected at their estimated realizable values.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated using
the straight-line method over the estimated useful lives of the assets which
range from 3 to 29 years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
OTHER NONCURRENT ASSETS
Other noncurrent assets include net notes receivable outstanding due from
related parties of $397 at September 30, 1994. These notes bear interest at
rates ranging from approximately 7.5% to 8.0%.
Other noncurrent assets include two 50% equity investments in dealers of the
Company's products. In accordance with Accounting Principles Board Opinion (APB)
No. 18, "The Equity Method of Accounting for Investments in Common Stock," the
carrying amount of the investments is adjusted to recognize the Company's share
of the earnings or losses of the investee. In the determination of the Company's
share of earnings or losses, all significant intercompany profit in inventory on
hand at these unconsolidated subsidiaries is eliminated. The carrying value of
the equity investments totaled $711 at September 30, 1994. Equity earnings from
these investments totaled $79, $148 and $0 for the periods ended September 30,
1993, September 30, 1994 and August 16, 1995, respectively. Such equity earnings
are presented in other non-operating income in the accompanying financial
statements.
Other noncurrent assets also include intangible assets, primarily consisting
of tradename and drawings, which are stated at cost of $922 at September 30,
1994 and which are being amortized on a straight-line basis over varying lives
from five to twenty-five years.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Such costs incurred
in the development of new products or significant improvements to existing
products totaled approximately $154, $364 and $416 for the periods ended
September 30, 1993, September 30, 1994 and August 16, 1995, respectively.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. The Company also provides for specific warranty obligations as
necessary and appropriate.
F-26
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Effective October 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." The
adoption of SFAS 109 changed the Company's method of accounting for income taxes
from the deferred method (APB No. 11) to an asset and liability approach. The
asset and liability approach requires that deferred income taxes be provided for
temporary differences between the income tax bases of assets and liabilities,
and their carrying amounts for financial reporting purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
REPORTING PERIODS
The Company's fiscal year ends on September 30 of each year. Fiscal year
1995 represents the period from October 1, 1994 through August 16, 1995 (the
date immediately preceding the merger described in Note 1).
EARNINGS PER SHARE INFORMATION
Given the historical organization and capital structure of the Company,
earnings per share information is not considered meaningful or relevant and has
not been presented in the accompanying financial statements or the notes
thereto.
UNAUDITED INFORMATION
The accompanying income statement and cash flow data for the period October
1, 1994 to June 30, 1995 and the quarterly income statement data (Note 15) are
unaudited. However, in the opinion of management, such information has been
prepared on a basis consistent with the audited financial statements and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations presented. The
quarterly results are not necessarily indicative of results for any future
period.
F-27
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
3. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
-------------
<S> <C>
UNSUBORDINATED DEBT:
REVOLVING LINE OF CREDIT--demand note, interest due monthly at the bank's prime
rate plus 1.15%- 2.15% based on components of the borrowing base (8.75% to
9.75% per annum at September 30, 1994), secured by certain accounts
receivable and inventories................................................... $ 7,335
INSTALLMENT NOTES PAYABLE--principal in the aggregate of $54, plus interest,
due in monthly installments as defined in the notes; secured by certain
machinery, equipment, and real estate........................................ 2,267
SUBORDINATED DEBT:
CONVERTIBLE NOTE PAYABLE--principal due August 9, 1995; interest due quarterly
at 15% per annum; converted to common stock on August 9, 1995................ 250
CONVERTIBLE NOTE PAYABLE--principal due August 9, 1995; interest due quarterly
at 15% per annum; converted to common stock on August 9, 1995................ 750
NOTE PAYABLE--remainder due in 4 equal annual installments commencing November,
1994, interest due quarterly at 9% per annum................................. 1,200
NOTE PAYABLE--remainder due in 4 equal annual installments commencing June,
1995, due quarterly at 11 3/8% per annum..................................... 600
-------------
12,402
Less--Current portion of long-term debt........................................ 9,436
-------------
$ 2,966
-------------
-------------
</TABLE>
The Company maintained a Loan and Security Agreement with a bank which
provided for a revolving line of credit facility and installment notes. The
revolving line of credit facility provided for borrowings of up to the lesser of
$12,000 or a borrowing base formula defined as, 85% of eligible receivables plus
the lesser of (a) $5,500, or (b) 70% of qualified finished goods inventory plus
50% of qualified raw materials, components and service parts inventory as
defined in the agreement. Borrowings under this line of credit were evidenced by
demand instruments and bore interest at the bank's prime rate plus 1.15% except
for advances based upon amounts due from customers with installment payment or
consignment like terms, which bore interest at the bank's prime rate plus 2.15%
(no such advances were outstanding at September 30, 1994). Amounts outstanding
thereunder totaled $7,335 at September 30, 1994. The Company had $187 in
outstanding letters of credit at September 30, 1994.
Effective April 4, 1995, the Company entered into three amended and restated
installment notes payable in the amounts of $1,400, $1,530, and $270 which
replaced the existing installment notes. With respect to the $1,530 note
described above, $600 of such note will not be funded until certain requirements
have been met related to the Company's expansion at its facility in Port
Washington, Wisconsin. The amended and restated notes bore interest at the
bank's prime rate plus 1.15% and were due in equal
F-28
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
3. FINANCING (CONTINUED)
monthly principal payments of $93, $64, and $11, respectively, which commenced
May 1, 1995. Effective July 10, 1995, the Company entered into a fourth
installment note payable in the amount of $574 under the Loan and Security
Agreement. This note also bore interest at the bank's prime rate plus 1.15% and
was due in equal monthly principal payments of $10, which commenced August 1,
1995.
The Company's borrowing agreements contained restrictions and requirements,
including limitations on capital expenditures, new indebtedness, achievement of
certain earning levels, maintenance of working capital amounts, and limitations
on dividend payments, among others.
Under the terms of the convertible notes payable agreements, such debt
effectively was converted to common stock of the Company prior to August 16,
1995. See Note 8 for further discussion. All remaining outstanding debt was
repaid on August 16, 1995 as a part of the acquisition described in Note 1 with
the proceeds of new borrowings.
Maturities of long-term debt for each of the fiscal years subsequent to
September 30, 1994 under terms in existence at September 30, 1994 (as noted
above, all outstanding debt was repaid on August 16, 1995 in connection with the
acquisition described in Note 1).
<TABLE>
<S> <C>
1995............................................................... $ 9,436
1996............................................................... 1,101
1997............................................................... 1,101
1998............................................................... 764
---------
$ 12,402
---------
---------
</TABLE>
4. LEASE COMMITMENTS
The Company leases certain of its equipment and automobiles under
noncancelable lease agreements. These leases have been accounted for as
operating leases.
Minimum lease payments under long-term operating leases in effect at August
16, 1995 are as follows:
<TABLE>
<S> <C>
1996............................................................... $ 298
1997............................................................... 95
1998............................................................... 24
---------
Total minimum lease payments....................................... $ 417
---------
---------
</TABLE>
Rent expense under all operating leases for the periods ended September 30,
1993, September 30, 1994 and August 16, 1995 was approximately $407, $318 and
$301, respectively.
F-29
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
5. INCOME TAXES
The provision for income taxes is summarized as follows for the periods
ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, AUGUST 16,
1993 1994 1995
--------------- --------------- -----------
<S> <C> <C> <C>
Current tax expense:
Federal.............................................................. $ 182 $ 565 $ 2,056
State................................................................ 75 172 374
----- ----- -----------
Total current...................................................... 257 737 2,430
----- ----- -----------
Deferred tax expense (benefit):
Federal.............................................................. 89 111 (703)
State................................................................ 22 28 (132)
----- ----- -----------
Total deferred..................................................... 111 139 (835)
----- ----- -----------
Provision for income taxes............................................. $ 368 $ 876 $ 1,595
----- ----- -----------
----- ----- -----------
</TABLE>
Deferred taxes are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
---------------
<S> <C>
Deferred tax assets:
Accruals and other reserves.................................................. $ 706
Inventories.................................................................. 276
Other........................................................................ 86
-----
Gross deferred tax assets.................................................. 1,068
-----
Deferred tax liabilities:
Property, plant and equipment................................................ 552
Other........................................................................ 78
-----
Gross deferred tax liabilities................................................. 630
-----
Net deferred tax asset......................................................... $ 438
-----
-----
Current deferred tax asset..................................................... $ 877
Long-term deferred tax liability............................................... (439)
-----
Net deferred tax asset......................................................... $ 438
-----
-----
</TABLE>
F-30
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
5. INCOME TAXES (CONTINUED)
The income tax provision differs from the amount of expense determined by
applying the applicable U.S. statutory federal income tax rate to pre-tax
results as a result of the following differences for the periods ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, AUGUST 16,
1993 1994 1995
----------------- ----------------- -------------
<S> <C> <C> <C>
Statutory rate......................................................... 34.0% 34.0% 34.0%
Non-temporary differences:
State tax provision, net............................................. 7.2 6.0 3.7
Other................................................................ 0.4 (0.2) 3.4
--- --- ---
Total provision.................................................... 41.6% 39.8% 41.1%
--- --- ---
--- --- ---
</TABLE>
6. RETIREMENT PLANS
The Company offers all full-time non-union employees who have completed six
months of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. The Company also offers all union employees who have completed 30
days of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. On December 13, 1994, the Board of Directors approved a
non-elective Company contribution of 1% of the compensation paid during fiscal
1994 to each active participant (union and non-union) who was employed by the
Company as of August 31, 1994. For the periods ended September 30, 1993,
September 30, 1994 and August 16, 1995, Company contributions totaled $175, $726
and $822, respectively.
7. CLASS B MANDATORILY REDEEMABLE PREFERRED STOCK
The mandatorily redeemable preferred stock carries a 6% cumulative dividend
rate, payable quarterly based upon the liquidation value of such stock.
Liquidation value is defined as $1,000 per share plus any dividends in arrears.
Under the original terms of the Class B mandatorily redeemable preferred
stock, the Company is required to redeem all Class B preferred shares at October
31, 1995 at a price per share equal to the liquidation value plus twenty percent
of the Company's cumulative net income divided by 3,000. The Company is
accreting these shares to their currently estimated redemption price, using the
effective interest method over the period to the date of redemption. For the
periods ended September 30, 1994 and August 16, 1995, such accretion charged to
retained earnings approximated $262 and $530, respectively. The holder of this
preferred stock is also entitled to convert, at any time, each share into 1.829
shares of common stock. The holder of the Class B preferred stock is entitled to
one vote per common share which would be issuable upon conversion of the
preferred stock. The Company may force conversion at the time of a public
offering by the Company of its common stock. The Class B mandatorily redeemable
preferred stock has priority over Class A preferred stock and common stock upon
liquidation of the Company, to the extent of liquidation value. In addition,
Class B mandatorily redeemable preferred stock has preference over Class C
convertible redeemable preferred stock, up to an amount equal to 63% of the
liquidation value of the outstanding Class B shares.
F-31
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
7. CLASS B MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED)
The Company had reserved 5,487 shares of common stock for issuance upon
conversion. The mandatorily redeemable preferred stock was settled in connection
with the merger described in Note 1.
8. SHAREHOLDERS' EQUITY
CLASS A PREFERRED STOCK--The holders of this preferred stock are entitled to
convert, at any time, their shares into shares of common stock on a one-for-one
basis. The Company may force conversion at the time of a public offering by the
Company of its common stock. The Class A preferred stock has priority over
common stock upon liquidation of the Company, to the extent of liquidation
value. Each share of Class A preferred stock is entitled to one vote.
The Company had reserved 1,408 shares of common stock for issuance upon
conversion.
CLASS C CONVERTIBLE PREFERRED STOCK--The convertible preferred stock carries
a 6% cumulative dividend rate, payable quarterly based upon the liquidation
value of the stock. Liquidation value is defined as $1,000 per share plus any
dividends in arrears.
The holders of the Class C preferred stock are entitled to convert at any
time prior to September 15, 1995, each share into 1.11 shares of common stock.
The holder of this Class C preferred stock is entitled to one vote per common
share which would be issuable upon conversion of the preferred stock. On or
after September 15, 1995, the Company has the option to redeem the Class C
preferred shares, in whole or in part, at a price per share equal to the
liquidation value. The Class C convertible preferred stock has priority over
Class A preferred stock and common stock upon liquidation of the Company, to the
extent of liquidation value.
The Company had reserved 1,234 shares of common stock for issuance upon
conversion.
COMMON STOCK--Each share of common stock is entitled to one vote. On August
9, 1995, the Company's convertible notes payable were converted to 1,110 shares
of Common Stock.
ADDITIONAL PAID-IN CAPITAL--On August 9, 1995, the Company's convertible
notes payable were converted, based on the terms of their respective agreements,
at $900 per share into 1,110 shares of common stock and $997 of additional
paid-in capital.
TREASURY STOCK--During the period ended September 30, 1993, the Company took
receipt of 30 shares of its Class A preferred stock in exchange for forgiveness
of outstanding past-due receivable amounts from a customer. During the period
ended September 30, 1994, the Company repurchased 5 shares of its Class A
preferred stock for cash and took receipt of 100 shares of its Class A preferred
stock in exchange for forgiveness of outstanding past due receivable amounts
from a customer.
STOCK WARRANTS--The holders of the convertible subordinated notes
outstanding at September 30, 1994 (see Note 3) also hold warrants to purchase an
aggregate total of 320 shares of the Company's common stock at a price of $940
per share. These warrants are exercisable any time and expire on the earlier of
a) the date no further amounts remain outstanding under the convertible
subordinated notes payable or b) the closing of a registered offering of Company
common stock.
STOCK OPTIONS--Certain of the Company's officers have been granted options
to purchase an aggregate total of 600 shares of the Company's common stock at a
price between $750 and $940 per share
F-32
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
8. SHAREHOLDERS' EQUITY (CONTINUED)
as set forth in the respective common stock option agreements. These options are
exercisable immediately and terminate between 2001 and 2003.
At September 30, 1994, no options were exercised.
All the above described preferred stock, stock warrants and stock options
were settled in connection with the merger described in Note 1.
9. POSTRETIREMENT BENEFITS
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (OPEB or SFAS 106) at October 1, 1994. This standard requires
recognition of the cost of providing postretirement benefits during an
employee's period of service.
The Company provides health care and life insurance benefits for certain
employees who retired prior to November 13, 1987 (less than 100 retirees at
September 30, 1994). Management plans to fund the premiums as incurred, net of
reimbursements received by plan participants.
In the period ended August 16, 1995, the Company recorded a $408 accrued
postretirement benefit obligation, which represents a change in accounting
principle. There are no plan assets. For measurement purposes, a 10.5% annual
rate of increase in health care premiums was assumed for 1995; this rate was
assumed to decrease 1% per year to 5.5% in 2000 and remain at that level
thereafter. The weighted average discount rate used to determine the accumulated
postretirement benefit obligation was 7.5% at August 16, 1995. The obligation
was calculated utilizing the 1983 group annuity mortality tables for males and
females. The annual periodic postretirement benefit cost for the plan year
beginning July 1, 1995 will approximate $29.
10. RELATED PARTIES
Several of the Company's shareholders are dealers in the Company's
equipment. Sales of equipment to these dealers approximated $7,921, $13,672 and
$17,303 for the periods ended September 30, 1993, September 30, 1994 and August
16, 1995, respectively. One of the Company's shareholders supplies inventory to
the Company. Purchases of inventory from this shareholder amounted to $2,715,
$2,479 and $4,166 for the periods ended September 30, 1993, September 30, 1994
and August 16, 1995, respectively. Management believes these transactions to be
at arms-length.
The Company had trade receivables from related parties of $2,235 at
September 30, 1994. The Company also had trade payables to related parties of
$294 at September 30, 1994.
The holders of the Company's convertible notes payable described in Note 3
also own the Company's Class B mandatorily redeemable preferred stock and hold
stock warrants. The holders of the Company's other subordinated notes payable
own the Company's Class C preferred stock.
See also discussion of other noncurrent assets in Note 2.
F-33
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
11. CUSTOMER FINANCING ARRANGEMENTS
The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under a floor plan
arrangement. The Company is obligated to repurchase the outstanding loan balance
of a dealer in the event of default by the dealer which is not cured by such
dealer within a 90 day period. A security interest in the equipment financed is
maintained by the finance companies. Aggregate outstanding loan balances under
these agreements at September 30, 1994 approximated $22,390. Aggregate losses
under one of the arrangements for calendar year 1995 are limited to 25% of the
outstanding loan balance at December 31, 1994. The outstanding loan balance at
December 31, 1994 under this arrangement approximated $24,841.
The Company maintains a reserve for potential repurchases of loans in
default under the floor plan arrangements described above. This reserve is
included in other current liabilities and totaled approximately $47 and $177 at
September 30, 1994 and August 16, 1995, respectively. The related provision
charged to operations totaled approximately $28, $148 and $151 for the periods
ended September 30, 1993, September 30, 1994 and August 16, 1995, respectively.
In conjunction with these floor plan arrangements the Company incurs
dealer-related finance charges at varying rates up to a maximum of six months.
The finance charges incurred by the Company for the periods ended September 30,
1993, September 30, 1994 and August 16, 1995 for all outstanding customer
financing arrangements totaled $535, $864 and $1,320, respectively.
12. CONCENTRATIONS OF CREDIT
The Company principally sells its products through a distribution network
and performs ongoing credit evaluations of its dealers and distributors. The
Company maintains reserves for potential credit losses and historically such
losses have been within management's expectations. At September 30, 1994 the
Company's five largest dealers and distributors represented approximately 21% of
trade receivables. In addition, sales to such dealers and distributors for the
periods ended September 30, 1993, September 30, 1994 and August 16, 1995
approximated 17%, 23% and 22%, respectively, of the Company's net sales.
13. CONTINGENCIES
The Company is included in various litigation consisting almost entirely of
product and general liability claims arising in the normal course of business.
The Company maintains insurance policies relative to product and general
liability claims and has provided reserves for the estimated cost of the
self-insured retention; accordingly, these actions, when ultimately concluded,
are not expected to have a material adverse effect on the financial position or
results of operations of the Company.
F-34
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
14. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
------------------
<S> <C>
ACCOUNTS RECEIVABLE, NET:
Trade receivables....................................................... $ 10,385
Less allowance for doubtful accounts.................................... (162)
Other receivables....................................................... 137
-------
$ 10,360
-------
-------
INVENTORIES:
Finished goods.......................................................... $ 4,267
Work in process......................................................... 1,751
Raw materials........................................................... 2,686
-------
$ 8,704
-------
-------
PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Deferred income taxes................................................... $ 877
Other................................................................... 466
-------
$ 1,343
-------
-------
PROPERTY, PLANT AND EQUIPMENT, NET:
Machinery and equipment................................................. $ 5,775
Buildings and building improvements..................................... 3,095
Land and land improvements.............................................. 263
Construction in progress................................................ 201
-------
Total property, plant and equipment, at cost............................ 9,334
Less: accumulated depreciation.......................................... (3,137)
-------
$ 6,197
-------
-------
ACCRUED LIABILITIES:
Accrued employee compensation and benefits, including taxes............. $ 880
Accrued warranty........................................................ 638
Accrued compensation.................................................... 389
Product liability reserves.............................................. 264
Other................................................................... 448
-------
$ 2,619
-------
-------
</TABLE>
F-35
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for fiscal 1994 and 1995 appears below:
<TABLE>
<CAPTION>
NET INCOME (LOSS)
NET SALES GROSS PROFIT
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1995(1) 1994 1995(1) 1994 1995(1)
--------- --------- --------- --------- --------- ---------
First quarter........................................... $ 10,210 $ 17,821 $ 1,692 $ 4,223 $ (888) $ 38(2)
Second quarter.......................................... 15,628 22,914 3,606 5,288 876 867
Third quarter........................................... 18,676 24,229 4,599 5,671 758 850
Fourth quarter.......................................... 16,459 10,437 3,868 2,512 579 533
--------- --------- --------- --------- --------- ---------
$ 60,973 $ 75,401 $ 13,765 $ 17,694 $ 1,325 $ 2,288
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Amounts are for the period from October 1, 1994 through August 16, 1995, the
period preceding the acquisition described in Note 1.
(2) In October 1994, TRAK adopted Statement of Financial Accounting Standards
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $408, less applicable income tax benefits of $167.
F-36
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Omniquip International, Inc.
In our opinion, the accompanying balance sheet and related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of Lull Industries, Inc. at
December 31, 1994 and 1995 and June 30, 1996, and the results of its operations
and its cash flows for the fiscal years ended December 31, 1994 and 1995,
respectively, and for the six months ended June 30, 1996, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As explained in Note 1, effective August 15, 1996, Omniquip International,
Inc. purchased substantially all of the assets and assumed certain liabilities
of Lull Industries, Inc.
Price Waterhouse LLP
St. Louis, Missouri
August 30, 1996
F-37
<PAGE>
LULL INDUSTRIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
ASSETS
Current assets:
Cash......................................................................... $ 870 $ 520 $ 365
Accounts receivable, net..................................................... 2,296 5,106 7,301
Inventories.................................................................. 4,627 10,422 11,964
Rental equipment, less accumulated depreciation of $38, $52 and $0,
respectively............................................................... 339 997
Prepaid expenses and other current assets.................................... 116 147 188
--------- --------- ---------
Total current assets..................................................... 8,248 17,192 19,818
Property, plant and equipment, net............................................. 4,544 6,350 6,933
Other assets, net.............................................................. 583 541 520
--------- --------- ---------
$ 13,375 $ 24,083 $ 27,271
--------- --------- ---------
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............................................ $ 100 $ 986 $ 605
Current portion of long-term debt-related party.............................. 500 500 500
Accounts payable............................................................. 3,149 4,255 6,366
Accrued liabilities.......................................................... 1,953 7,107 6,687
--------- --------- ---------
Total current liabilities................................................ 5,702 12,848 14,158
Long-term debt................................................................. -- 898 862
Long-term debt-related parties................................................. 3,000 3,000 3,000
--------- --------- ---------
Total liabilities........................................................ 8,702 16,746 18,020
--------- --------- ---------
Commitments and contingencies (Notes 4 and 9)
Stockholders' equity:
Class A voting common stock; no par value, stated at $100 per share; authorized
1,000,000 shares; issued 20,000, 21,400 and 21,400 shares, respectively........ 2,000 2,140 2,140
Class B nonvoting common stock; authorized 1,000,000 shares; no shares issued....
Additional paid-in capital....................................................... 238 238
Retained earnings................................................................ 2,673 5,040 6,931
--------- --------- ---------
4,673 7,418 9,309
Less notes receivable from stockholders (Note 5)................................. -- (81) (58)
--------- --------- ---------
Total stockholders' equity....................................................... 4,673 7,337 9,251
--------- --------- ---------
$ 13,375 $ 24,083 $ 27,271
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying Notes to Financial Statements.
F-38
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR FOR THE SIX MONTHS
ENDED ENDED
DECEMBER 31, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1994 1995 1996 1995
--------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales............................................................. $ 45,838 $ 74,747 $ 49,776 $ 35,220
Cost of sales......................................................... 37,669 59,318 39,483 27,468
--------- --------- --------- ---------
Gross profit.......................................................... 8,169 15,429 10,293 7,752
Selling, general and administrative expenses.......................... 3,565 5,987 3,848 2,593
Boom warranty charge (Note 4)......................................... 2,881
Stock compensation expense (Note 5)................................... 234 504 425 252
--------- --------- --------- ---------
Operating income...................................................... 4,370 6,057 6,020 4,907
Other (income) expense:
Interest expense, net............................................... 169 86 103 36
Interest expense-related parties.................................... 240 243 141 120
Other, net.......................................................... 510 (424) (40) (48)
--------- --------- --------- ---------
Net income............................................................ $ 3,451 $ 6,152 $ 5,816 $ 4,799
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying Notes to Financial Statements.
F-39
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED DECEMBER 31, 1994 AND
DECEMBER 31, 1995 AND THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
COMMON SHARES
OUTSTANDING RETAINED NOTES
--------------- ADDITIONAL EARNINGS RECEIVABLE
CLASS A CLASS A PAID-IN (ACCUMULATED FROM
VOTING VOTING CAPITAL DEFICIT) SHAREHOLDERS TOTAL
--------------- --------- ------------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance, January 1, 1994..................... 20 $ 2,000 $ -- $ (386) $ -- $ 1,614
Net income................................. 3,451 3,451
Distribution to stockholders............... -- -- -- (392) -- (392)
------ --------- ----- ------ --- ---------
Balance, December 31, 1994................... 20 2,000 -- 2,673 -- 4,673
Net income................................. 6,152 6,152
Distribution to stockholders............... (3,716) (3,716)
Exercise of employee stock options (Note
5)....................................... 1 140 238 (144) 234
Interest on stockholder notes receivable... (6) (6)
Distributions to stockholders applied to
notes receivable......................... -- -- -- (69) 69 --
------ --------- ----- ------ --- ---------
Balance, December 31, 1995................... 21 2,140 238 5,040 (81) 7,337
Net income................................. 5,816 5,816
Distribution to stockholders............... (3,897) (3,897)
Interest on stockholder notes receivable... (5) (5)
Distributions to stockholders applied to
notes receivable......................... (28) 28
------ --------- ----- ------ --- ---------
Balance, June 30, 1996....................... 21 $ 2,140 $ 238 $ 6,931 $ (58) $ 9,251
------ --------- ----- ------ --- ---------
------ --------- ----- ------ --- ---------
</TABLE>
See accompanying Notes to Financial Statements.
F-40
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS FOR THE SIX
ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------- --------------------
1994 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................................... $ 3,451 $ 6,152 $ 5,816 $ 4,799
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................... 504 627 545 217
Interest on stockholder notes receivable.................................... (6) (5) --
Donations of equipment (Note 10)............................................ 432
(Increase) decrease in current assets:
Accounts receivable, net.................................................. (590) (2,810) (2,194) (2,313)
Inventories............................................................... (1,908) (5,494) (1,542) (2,392)
Prepaid expenses and other current assets................................. 63 (33) (41) (111)
Rental equipment.......................................................... (339) (657) 852 339
Increase (decrease) in current liabilities:
Accounts payable.......................................................... 2,723 1,106 2,111 1,339
Accrued liabilities....................................................... 492 5,388 (419) (67)
--------- --------- --------- ---------
Net cash provided by operating activities............................... 4,828 4,273 5,123 1,811
--------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures, net..................................................... (2,670) (2,191) (963) (914)
Purchase of Mahto Industries, Inc. (Note 11).................................. -- (500) -- (500)
--------- --------- --------- ---------
Net cash used in investing activities................................... (2,670) (2,691) (963) (1,414)
--------- --------- --------- ---------
Cash flows from financing activities:
Distributions to stockholders................................................. (392) (3,716) (3,897) (2,682)
Net proceeds (payments) on debt under
revolving credit facility................................................... (2,905) (100) 104 2,500
Proceeds from long-term debt.................................................. 1,994 250
Principal payments on long-term debt.......................................... (110) (522) (103)
Borrowings from stockholders.................................................. 1,000
Principal payments on stockholder notes payable............................... (500) -- -- --
--------- --------- --------- ---------
Net cash used in financing activities................................... (2,797) (1,932) (4,315) (35)
--------- --------- --------- ---------
Net decrease in cash.................................................... (639) (350) (155) 362
Cash at beginning of period..................................................... 1,509 870 520 870
--------- --------- --------- ---------
Cash at end of period........................................................... $ 870 $ 520 $ 365 $ 1,232
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED FOR THE SIX
DECEMBER 31, MONTHS ENDED
-------------------- JUNE 30,
1994 1995 1996
--------- --------- ---------------
<S> <C> <C> <C>
(IN THOUSANDS)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest................................................. $ 446 $ 370 $ 163
--------- --------- ------
--------- --------- ------
Supplemental schedule of noncash investing and financing activities:
Stockholder notes receivable issued for stock............................ $ -- $ 144 $ --
--------- --------- ------
--------- --------- ------
Compensation expense recorded as additional paid-in capital on stock
issuance............................................................... $ -- $ 234 $ --
--------- --------- ------
--------- --------- ------
Distributions to stockholders applied to notes receivable................ $ -- $ 69 $ 28
--------- --------- ------
--------- --------- ------
</TABLE>
See accompanying Notes to Financial Statements.
F-41
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. ACQUISITION OF THE COMPANY'S ASSETS AND ASSUMPTION OF CERTAIN LIABILITIES
On August 15, 1996, Omniquip International, Inc. purchased substantially all
of the assets of Lull Industries, Inc. (the Company), excluding cash, certain
accounts receivable and rental equipment, and assumed certain liabilities of the
Company. The purchase price paid to the Company for the assets totaled
approximately $70,000, subject to certain adjustments, and assumed liabilities
totaled approximately $11,500. The acquisition was financed through additional
borrowings. The accompanying financial statements have been prepared on a
preacquisition basis of accounting and do not reflect the effects of the
acquisition of the net assets of the Company by Omniquip International, Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by the Company require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from these estimates. The significant accounting policies followed by the
Company are described below and are in conformity with generally accepted
accounting principles.
BUSINESS
The Company commenced full-time operations effective January 1, 1994 after
purchasing the assets of a predecessor business out of bankruptcy in November
1993, and after the completion of a plant and equipment reorganization in
November and December 1993. As a result thereof, a statement of operations for
the period November 1993 through December 31, 1993 is not presented in the
financial statements. The accumulated deficit at December 31, 1993 of ($386)
reflects the net start-up costs of the Company. The acquisition in November 1993
was accounted for under the purchase method of accounting and the purchase price
of approximately $7,000 was assigned to the net assets acquired based on their
fair market value at the acquisition date.
The Company is principally engaged in the manufacture and sale of rough
terrain telescopic material handlers to customers in the United States with a
primary focus on national rental fleets.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. The Company maintains its cash in bank deposit accounts
which may at times exceed federally insured limits. The Company has not
experienced any losses due to exceeding these limits.
RELATIONSHIPS WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
F-42
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete, excess or unsaleable inventories
are reflected at their estimated realizable values.
RENTAL EQUIPMENT
Rental equipment consists of machines leased to the Company's largest
customer based on agreements which have expired in 1996. The rental equipment
had been depreciated on a straight-line basis over the estimated life of the
equipment. In June 1996, these machines were sold to the customer, with gross
profit of $232 recognized for the excess of the sales price of $1,084 over the
carrying value of the machines.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated using
the straight-line method over the estimated useful lives of the assets which
range from five to thirty-nine years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. As further discussed in Note 4, the Company also provides for specific
warranty obligations as necessary and appropriate.
CUSTOMER REBATES
The Company offers its customers the opportunity to earn rebates based upon
volume of sales during the fiscal year. The Company provides, by a current
charge to income, an amount it estimates will ultimately be paid as rebates to
those customers based upon current sales levels and anticipated sales trends.
INCOME TAXES
The Company has elected to be taxed as a subchapter S Corporation under
sections of the federal and state income tax laws which provide that, in lieu of
corporate income taxes, the Company's stockholders include in their individual
income tax returns their pro rata share of the Corporation's taxable income.
Therefore, these statements do not include any provision for corporate income
taxes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
F-43
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FISCAL YEAR
The Company's fiscal year end is December 31.
EARNINGS PER SHARE INFORMATION
Given the historical organization and capital structure of the Company,
earnings per share information is not considered meaningful or relevant and has
not been presented in the accompanying financial statements or the notes
thereto.
UNAUDITED INFORMATION
The income statement and cash flow data for the six months ended June 30,
1995 are unaudited. However, in the opinion of management, such information has
been prepared on a basis consistent with the audited financial statements and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations presented.
3. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
<S> <C> <C> <C>
Stockholder note payable--principal due November 23, 1998; interest due annually at
8%; subordinated to bank debt; secured by all assets of the Company............... $ 3,000 $ 3,000 $ 3,000
Stockholder note payable--principal due January 31, 1996 and in arrears; interest
due monthly at the prime rate plus .5% (9% at June 30, 1996); secured by land and
buildings......................................................................... 500 500 500
Term note payable to City of Eagan, MN--principal plus interest at 4% due in monthly
installments of $2,531 with a final payment due in April 2005; secured by certain
equipment and personal guarantees of the Company's stockholders................... 236 226
Term notes payable to financing company--principal plus interest at 9.5% due in
monthly installments of $87,205, with a final payment due in November 1996;
secured by certain rental equipment............................................... 915 429
Mortgage note payable to bank--principal due in monthly installments of $4,167, plus
interest at the prime rate (8.5% at June 30, 1996), through August 1998, with
remaining balance due September 1998; secured by building......................... 733 708
Revolving credit agreement.......................................................... 100 -- 104
--------- --------- -----------
3,600 5,384 4,967
Less--current portion of long-term debt............................................. 600 1,486 1,105
--------- --------- -----------
$ 3,000 $ 3,898 $ 3,862
--------- --------- -----------
--------- --------- -----------
</TABLE>
F-44
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. FINANCING (CONTINUED)
The Company maintains a revolving credit agreement with a bank. This
agreement provides for borrowings of up to the lesser of $4,000 or a borrowing
base formula determined by eligible receivables and inventories. Borrowings
under this line of credit are due April 30, 1997 and bear interest at the prime
rate (8.5% at June 30, 1996). Borrowings outstanding under the agreement were
$100, $0 and $104 at December 31, 1994, 1995, and June 30, 1996, respectively.
At June 30, 1996, the Company had unused borrowing capacity of $3,896 under this
facility. Substantially all of the Company's assets are pledged as security
under the credit agreement. In addition, the Company's two primary stockholders
have personally guaranteed any borrowings thereunder up to $500 in total, and
have pledged their shares of the Company's common stock as collateral. The loan
requires maintenance of minimum working capital, net worth, and other financial
ratios and contains other covenants limiting borrowings, cash dividends or
distributions, and equipment purchases. The Company has obtained a waiver from
the bank for any covenant violations.
Interest expense relative to stockholder notes payable approximated $240,
$243 and $141 for the fiscal years ended December 31, 1994 and 1995 and the six
months ended June 30, 1996, respectively.
Maturities of long-term debt for the period and fiscal years subsequent to
June 30, 1996 are as follows:
<TABLE>
<S> <C>
July 1--December 31, 1996........................................... $ 1,069
1997................................................................ 72
1998................................................................ 3,656
1999................................................................ 24
2000................................................................ 25
Thereafter.......................................................... 121
---------
$ 4,967
---------
---------
</TABLE>
4. BOOM WARRANTY CHARGE
During 1995, the Company determined that a specific warranty obligation had
been incurred on certain manufactured boom units. The Company completed its
initial assessment of the magnitude of the potential warranty claims and
recorded a charge to operations of $2,881 for the fiscal year ended December 31,
1995. This amount represents the Company's estimate of the total costs
associated with this warranty obligation. At December 31, 1995 and June 30,
1996, a corresponding liability of $2,881 and $2,350, respectively, is reflected
as a component of accrued liabilities in the accompanying balance sheet.
5. STOCK COMPENSATION EXPENSE
The Company has a stock option plan for certain key employees whereby the
Company granted options on January 5, 1994 to purchase 9,114 shares of the
Company's Class A common stock at exercise prices ranging from $100 to $110 per
share. Fair value of the common stock was determined by the Board of Directors
to be $100 per share at the grant date. These options are exercisable over five
years from date of grant based upon individual vesting provisions and Company
profitability. Additionally, the options contain a repurchase provision whereby
the Company may buy back the stock at some future date, based on a per share
price equal to 110% of the Company's net book value. During 1995, options to
acquire 1,400 common shares were exercised in accordance with the terms of the
agreement. Approximately $144 in interest-bearing notes were issued to the
employees to finance the exercise of the stock options, which
F-45
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
5. STOCK COMPENSATION EXPENSE (CONTINUED)
have carrying values of $81 and $58 at December 31, 1995 and June 30, 1996,
respectively. The options and any related stock purchases may be canceled if
income levels are not achieved over the five-year period or in the event of
termination of employment of the key employees. Options to acquire 1,750 common
shares are exercisable as of June 30, 1996.
During the fiscal years ended December 31, 1994 and 1995, and in the six
months ended June 30, 1996, stock compensation expense in the amount of $234,
$504 and $425, respectively, has been recorded and charged to operations in
relation to this plan. Such compensation expense was determined based on the
difference between the exercise price at the date of grant and the formula price
to be paid by the Company upon repurchase.
6. RETIREMENT PLANS
Effective August 1, 1995, the Company adopted a 401(k) profit sharing plan
which covers substantially all eligible employees who meet certain service and
age requirements. Commencing January 1, 1996, the Company has provided a
matching contribution equal to 100% of each eligible participant's contributions
to the plan at a rate of between 1% and 5% of the employee's salary, depending
on the employee's years of service, as defined. In addition, the Company may
make discretionary contributions to the plan. During the six months ended June
30, 1996, the Company contributed $52 to the plan.
7. CUSTOMER FINANCING ARRANGEMENTS
The Company is a party to a retail finance agreement with a financing
company, which provides the Company's distributors with financing for equipment
purchases from the Company. The financing company has also agreed to provide
financing for distributors' purchases of Company-produced equipment used as
rental inventory by the distributors. Such contracts are arranged on an
instalment basis with a balloon payment by the distributor for the residual
balance at the end of the term (typically due 48 months from date of shipment).
In the event the distributor does not elect to pay or refinance the balloon
payment, the Company has agreed to pay the residual amount if requested by the
financing company. A secured interest in the equipment financed is maintained by
the finance company. Aggregate outstanding loan balances under this agreement as
of December 31, 1994, 1995 and June 30, 1996 were approximately $0, $2,600 and
$13,600, respectively. This contingency would be reduced by proceeds from the
sales of related equipment. Management believes that any such liability under
this arrangement, if incurred, would not have a material impact on the results
of operations or financial condition of the Company.
8. CONCENTRATIONS OF CREDIT
Sales are made throughout the United States primarily on credit terms
established on an individual customer basis. The Company performs ongoing credit
evaluations of its customers. The Company maintains reserves for potential
credit losses and historically such losses have been within management's
expectations. Sales to the Company's five largest customers during the fiscal
years ended December 31, 1994 and 1995 and the six months ended June 30, 1996,
were 49%, 48% and 47% of net sales, respectively. Receivables from these
customers approximated 21%, 13% and 51% of trade accounts receivable at December
31, 1994, 1995 and June 30, 1996, respectively.
F-46
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
9. CONTINGENCIES
The Company is included in various litigation consisting almost entirely of
product and general liability claims arising in the normal course of business.
The Company maintains insurance policies relative to product and general
liability claims and has provided reserves for the estimated cost of the
self-insured retention; accordingly, these actions, when ultimately concluded,
are not expected to have a material adverse effect on the financial position or
results of operations of the Company.
10. DONATIONS OF EQUIPMENT
The Company donated certain equipment with a net book value of $432 to
various nonprofit organizations in 1994. These items were originally acquired by
the Company in 1993 in connection with the acquisition and formation of the
business. This type of donation is not expected to occur in the future and
accordingly, management has classified the associated expense as nonoperating.
11. ACQUISITION OF MAHTO INDUSTRIES, INC.
In April 1995, the Company purchased the inventory and production equipment
of Mahto Industries, Inc., a manufacturer of light-duty construction equipment
for $500. The acquisition has been accounted for as a purchase, and results of
operations since the date of acquisition are included in the statement of
income. The fair value of the net assets acquired exceeded the purchase price by
approximately $200, which was applied to reduce the carrying value of the
production equipment. The pro forma impact of this acquisition on the Company's
operating results was immaterial.
F-47
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
12. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE, NET:
Trade receivables............................................................... $ 2,346 $ 4,906 $ 7,411
Less allowance for doubtful accounts............................................ (50) (100) (124)
Other receivables............................................................... -- 300 14
--------- --------- ---------
$ 2,296 $ 5,106 $ 7,301
--------- --------- ---------
--------- --------- ---------
INVENTORIES:
Finished goods.................................................................. $ 240 $ 1,958 $ 2,855
Work in process................................................................. 802 743 1,542
Raw materials................................................................... 3,585 7,721 7,567
--------- --------- ---------
$ 4,627 $ 10,422 $ 11,964
--------- --------- ---------
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT, NET:
Machinery and equipment......................................................... $ 2,413 $ 3,451 $ 4,315
Buildings and building improvements............................................. 1,665 2,785 2,865
Land and land improvements...................................................... 414 414 414
Furniture and fixtures.......................................................... 451 796 807
--------- --------- ---------
Total property, plant and equipment, at cost.................................... 4,943 7,446 8,401
Less: accumulated depreciation.................................................. (399) (1,096) (1,468)
--------- --------- ---------
$ 4,544 $ 6,350 $ 6,933
--------- --------- ---------
--------- --------- ---------
ACCRUED LIABILITIES:
Accrued customer rebates........................................................ $ 1,138 $ 2,532 $ 1,651
Accrued salaries and employee benefits.......................................... 239 422 671
Accrued stock compensation expense.............................................. 234 504 929
Accrued boom warranty........................................................... -- 2,881 2,350
Other accrued warranty.......................................................... 172 346 537
Other........................................................................... 170 422 549
--------- --------- ---------
$ 1,953 $ 7,107 $ 6,687
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-48
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the Offering (other than the
underwriting discounts and commissions) are set forth in the following table
(all amounts except the SEC registration fee, the NASD filing fee and the NASDAQ
listing fee are estimated):
<TABLE>
<CAPTION>
PAYABLE BY
COMPANY
----------
<S> <C>
Securities and Exchange Commission registration fee............................... $ 34,849
NASD filing fee................................................................... 12,000
Accounting fees and expenses...................................................... *
Legal fees and expenses........................................................... *
Printing.......................................................................... *
Blue Sky fees and expenses........................................................ *
NASDAQ listing fee................................................................ *
Miscellaneous..................................................................... *
----------
Total......................................................................... *
----------
----------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware permits
the Company, subject to the standards set forth therein, to indemnify any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that such person is or was a director, officer, employee or
agent of the Company or is or was serving as such with respect to another
corporation or entity at the request of the Company. Article VII, Section 8 of
the Company's By-laws provides for full indemnification of its officers,
directors and employees to the extent permitted by Section 145.
Pursuant to the Underwriting Agreement filed hereto as Exhibit No. 1, the
Underwriters will agree to indemnify the Company's officers, directors and
controlling persons against, or contribute to, certain liabilities which might
arise under the Securities Act of 1933, as amended. The agreement of limited
partnership of Investments L.P. provides for the indemnification by
The agreement of limited partnership of Investments L.P. provides for the
indemnification by Investments L.P. of the Company (as an affiliate of the
general partner of Investments L.P.) and its directors, officers and employees
against certain liabilities which might arise under the Securities Act of 1933,
as amended.
Pursuant to an Indemnification Agreement between the Company and Investments
L.P. filed as an exhibit hereto, the Company will agree to indemnify Investments
L.P. against certain liabilities which might arise under the Securities Act of
1933, as amended.
Directors and officers of the Company will be insured against certain
liabilities, including liabilities arising under the Securities Act of 1993, as
amended.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities of the Company were sold by the Company within the
past three years without registration:
On August 16, 1995, Uniquip Corporation sold 820,000 shares of Common Stock
to Harbour Group Investments III, L.P. for $5,209,411.76 payable in cash.
On August 16, 1995, Uniquip Corporation sold 100,000 shares of Common Stock
to Uniquip-HGI Associates, L.P. for $635,294.12 payable $600,000 in cash and the
balance by a promissory note.
On August 16, 1995, Uniquip Corporation sold 30,000 shares of Common Stock
to P. Enoch Stiff for $190,588.24 payable in cash.
On September 20, 1995, Uniquip Corporation sold 20,000 shares of Common
Stock to P. Enoch Stiff for $127,059 payable $200 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to James H. Hook for $47,647 payable $75 in cash and the balance by a promissory
note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Curtis J. Laetz for $47,647 payable $75 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Robert D. Melin for $47,647 payable $75 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Paul D. Roblee for $47,647 payable $75 in cash and the balance by a
promissory note.
All such transactions were effected in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933.
On September 30, 1996, Uniquip Corporation changed its name to Omniquip
International, Inc. and effected a 10 for 1 stock split.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
*1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation of the Registrant
3.2 Amended By-laws of the Registrant
*5 Opinion of Dickstein Shapiro Morin & Oshinsky LLP re: legality of Common Stock being
registered
10.1 Purchase and Stockholder Agreement, dated September 20, 1995, by and between Uniquip
Corporation and P. Enoch Stiff
10.2 Stock Pledge Agreement, dated September 20, 1995, by and between P. Enoch Stiff and
Uniquip Corporation
10.3 $126,859 Promissory Note, dated September 20, 1995, by P. Enoch Stiff to Uniquip
Corporation
10.4 Letter Agreement, dated September 20, 1995, by and between P. Enoch Stiff and
Uniquip Corporation
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.5 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and P. Enoch Stiff
10.6 Investment Agreement, dated August 16, 1995, by and between P. Enoch Stiff and
Harbour Group Investments III, L.P.
10.7 Participation Agreement, dated August 16, 1995, by and between P. Enoch Stiff and
Harbour Group Investments III, L.P.
10.8 Purchase and Stockholder Agreement, dated September 20, 1995, by and between Uniquip
Corporation and James H. Hook
10.9 Stock Pledge Agreement, dated September 20, 1995, by and between James H. Hook and
Uniquip Corporation
10.10 $47,572 Promissory Note, dated September 20, 1995, by James H. Hook to Uniquip
Corporation
10.11 Letter Agreement, dated September 20, 1995, by and between James H. Hook and Uniquip
Corporation
10.12 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and James H. Hook
10.13 Purchase and Stockholder Agreement, dated September 20, 1995, by and between Uniquip
Corporation and Curtis J. Laetz
10.14 Stock Pledge Agreement, dated September 20, 1995, by and between Curtis J. Laetz and
Uniquip Corporation
10.15 $47,572 Promissory Note, dated September 20, 1995, by Curtis J. Laetz to Uniquip
Corporation
10.16 Letter Agreement, dated September 20, 1995, by and between Curtis J. Laetz and
Uniquip Corporation
10.17 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Curtis J. Laetz
10.18 Purchase and Stockholder Agreement, dated September 20, 1995, by and between Uniquip
Corporation and Robert D. Melin
10.19 Stock Pledge Agreement, dated September 20, 1995, by and between Robert D. Melin and
Uniquip Corporation
10.20 $47,572 Promissory Note, dated September 20, 1995, by Robert D. Melin to Uniquip
Corporation
10.21 Letter Agreement, dated September 20, 1995, by and between Robert D. Melin and
Uniquip Corporation
10.22 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Robert D. Melin
10.23 Purchase and Stockholder Agreement, dated September 20, 1995, by and between Uniquip
Corporation and Paul D. Roblee
10.24 Stock Pledge Agreement, dated September 20, 1995, by and between Paul D. Roblee and
Uniquip Corporation
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.25 $47,572 Promissory Note, dated September 20, 1995, by Paul D. Roblee to Uniquip
Corporation
10.26 Letter Agreement, dated September 20, 1995, by and between Paul D. Roblee and
Uniquip Corporation
10.27 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Paul D. Roblee
10.28 Omniquip International, Inc. 1996 Executive Stock Option Plan
10.29 Form of Option Agreement pursuant to the Omniquip International, Inc. 1996 Executive
Stock Option Plan
10.30 Omniquip International, Inc. 1996 Long-Term Incentive Plan
10.31 Omniquip International, Inc. 1996 Directors Non-Qualified Stock Option Plan
10.32 Form of Option Agreement pursuant to the Omniquip International, Inc. 1996 Directors
Non-Qualified Stock Option Plan
10.33 Amended and Restated Subordinated Note Agreement, dated August 16, 1996, by and
between TRAK International, Inc. and Harbour Group Investments III, L.P.
10.34 Subordinated Note Agreement, dated August 16, 1996, by and between Uniquip
Corporation and The Boatmen's National Bank of St. Louis
*10.35 Loan Agreement, dated August 16, 1996, by and among The Boatmen's National Bank of
St. Louis, as agent, The Boatmen's National Bank of St. Louis and the other lenders
named therein, as lenders, TRAK International, Inc. and Lull Lift Corporation
*10.36 Note Purchase Agreement, dated August 16, 1995, by and between TRAK International,
Inc. and The Minnesota Mutual Life Insurance Company
*10.37 First Amendment to Note Agreements, dated as of July 18, 1996, by and between TRAK
International, Inc. and The Minnesota Mutual Life Insurance Company
*10.38 Second Amendment to Note Agreements, dated August 16, 1996, by and between TRAK
International, Inc. and The Minnesota Mutual Life Insurance Company
10.39 Insurance Agreement, dated September 27, 1996, by and between Harbour Group Ltd. and
Uniquip Corporation
*10.40 Corporate Development Consulting and Advisory Services Letter Agreement, dated
September 30, 1996, by and between Omniquip International, Inc. and Harbour Group
Industries, Inc.
*10.41 Operations Consulting and Advisory Services Letter Agreement, dated September 30,
1996, by and between Omniquip International, Inc. and Harbour Group Ltd.
*10.42 Registration Rights Agreement, dated September 30, 1996, by and among Omniquip
International, Inc., Uniquip-HGI Associates, L.P. and Harbour Group Investments III,
L.P.
10.43 Stock Option Agreement, dated September 20, 1995, by and between Uniquip Corporation
and Harbour Group Investments III, L.P.
10.44 Termination of Option Agreement, dated September 30, 1996, by and between Omniquip
International, Inc. and Harbour Group Investments III, L.P.
10.45 Agreement and Plan of Merger, dated July 19, 1995, by and among TRK Acquisition
Corporation, TRAK International, Inc. and the major stockholders of TRAK
International, Inc. listed therein
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.46 Indemnification and Escrow Agreement, dated August 16, 1995, by and among TRAK
International, Inc., the stockholders of TRAK International, Inc. listed therein and
The Boatmen's Trust Company, as Escrow Agent
10.47 Asset Purchase Agreement, dated August 15, 1996, by and among Lull Lift Corporation,
Lull Industries, Inc. and the stockholders of Lull Industries, Inc. listed therein
10.48 Collective Bargaining Agreement, effective from November 1, 1994 to October 31,
1998, by and between TRAK International, Inc. and Local 1430, District No. 10
International Association of Machinists and Aerospace Workers
*10.49 Contract No. DAAE07-95-D-R012 between TRAK International, Inc. and U.S. Army Tank--
Automotive Command
*10.50 Floor Plan Repurchase Agreement, dated October 2, 1990, by and between TRAK
International, Inc. and Deutsche Financial Services
*10.51 Letter Agreement, dated September 24, 1996, by and between TRAK International, Inc.
and Deutsche Financial Services
*10.52 TRAK International, Inc. Deferred Compensation Arrangement for management executives
and directors
10.53 Agreement, dated January 19, 1995, between RJ Associates and Lull Industries, Inc.
10.54 Industrial Park Lease, dated April 1, 1995, by and between the City of Oakes and
Lull Industries, Inc.
*10.55 Retail Finance Agreement, effective July 14, 1994, between Lull Industries, Inc. and
Deere Credit, Inc.
*10.56 Indemnification Agreement, dated September 30, 1996, by and between Omniquip
International, Inc. and Harbour Group Investments III, L.P.
21.0 Subsidiaries of the Registrant
23.1 Consents of Price Waterhouse LLP
23.2 Consent of Dickstein Shapiro Morin & Oshinsky LLP (contained in Exhibit 5)
23.3 Consent to serve as a director of Omniquip International, Inc. of Paul W. Jones
23.4 Consent to serve as a director of Omniquip International, Inc. of Jerry E. Ritter
23.5 Consent to serve as a director of Omniquip International, Inc. of Joseph F.
Shaughnessy
23.6 Consent to serve as a director of Omniquip International, Inc. of Robert L. Virgil
24.0 Powers of Attorney
</TABLE>
- ------------------------
* To be filed by amendment.
II-5
<PAGE>
(b) Financial Statement Schedules
Schedule VII-- Omniquip International, Inc. Valuation and Qualifying
Accounts and Reserves for the period August 17, 1995 to
September 30, 1995 and the period October 1, 1995 to June 30,
1996.
-- TRAK International, Inc. Valuation and Qualifying Accounts and
Reserves for the period October 1, 1994 to August 16, 1995 and
the fiscal years ended September 30, 1994 and 1993.
Other Financial Statement Schedules are either not applicable, or the
information is included elsewhere in the Consolidated Financial Statements.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Port Washington, State of
Wisconsin, on October 1, 1996.
OMNIQUIP INTERNATIONAL, INC.
(Registrant)
By: /s/ PHILIP G. FRANKLIN
-----------------------------------
Philip G. Franklin
VICE PRESIDENT--FINANCE AND
CHIEF FINANCIAL OFFICER
Pursuant to the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities indicated on October 1, 1996.
<TABLE>
<C> <S>
* President, Chief Executive Officer and
- ------------------------------------------- Director
P. Enoch Stiff (Principal executive officer)
/s/ PHILIP G. FRANKLIN Vice President--Finance and Chief Financial
- ------------------------------------------- Officer (Principal financial and accounting
Philip G. Franklin officer)
* Director and Chairman of the Board
- -------------------------------------------
Donald E. Nickelson
* Director
- -------------------------------------------
Peter S. Finley
* Director
- -------------------------------------------
Jeffrey L. Fox
* Director
- -------------------------------------------
Samuel A. Hamacher
</TABLE>
*By: /s/ PHILIP G. FRANKLIN
-------------------------
Philip G. Franklin
ATTORNEY-IN-FACT
- ------------------------
* Such signature has been affixed pursuant to the following Power of Attorney:
II-7
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-8
<PAGE>
SCHEDULE VII
OMNIQUIP INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE PERIOD OCTOBER 1, 1995 TO JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- ------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------------------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 173 $ 2 $ -- $ 19 $ 156
------ ----- ----- ----- -----
------ ----- ----- ----- -----
Excess and obsolete
inventory reserves................................ $ 1,355 $ -- $ -- $ 362 $ 993
------ ----- ----- ----- -----
------ ----- ----- ----- -----
</TABLE>
S-1
<PAGE>
SCHEDULE VII
OMNIQUIP INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE PERIOD AUGUST 17, 1995 TO SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- ------------- -------------------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ ------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 173 $ -- $ -- $ -- $ 173
------ ----- ----- ----- -----------
------ ----- ----- ----- -----------
Excess and obsolete inventory reserves.............. $ 1,218 $ 165 $ -- $ 28 $ 1,355
------ ----- ----- ----- -----------
------ ----- ----- ----- -----------
</TABLE>
S-2
<PAGE>
SCHEDULE VII
TRAK INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE PERIOD OCTOBER 1, 1994 TO AUGUST 16, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 162 $ 11 $ -- $ -- $ 173
----- ----- --- --- -----
----- ----- --- --- -----
Excess and obsolete inventory reserves.............. $ 559 $ 115 $ -- $ 97 $ 577
----- ----- --- --- -----
----- ----- --- --- -----
</TABLE>
S-3
<PAGE>
SCHEDULE VII
TRAK INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 171 $ 35 $ -- $ 44 $ 162
----- ----- --- ----- -----
----- ----- --- ----- -----
Excess and obsolete inventory reserves.............. $ 572 $ 120 $ -- $ 133 $ 559
----- ----- --- ----- -----
----- ----- --- ----- -----
</TABLE>
S-4
<PAGE>
SCHEDULE VII
TRAK INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 13 $ 226(1) $ -- $ 68 $ 171
----- ----- --- ----- -----
----- ----- --- ----- -----
Excess and obsolete inventory reserves.............. $ 338 $ 360 $ -- $ 126 $ 572
----- ----- --- ----- -----
----- ----- --- ----- -----
</TABLE>
- ------------------------
(1) Reflects the increase in the reserve related to the implementation of
tighter credit policies.
S-5
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
UNIQUIP CORPORATION
Uniquip Corporation (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
I. The Corporation was originally incorporated on May 16, 1995.
II. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates,
integrates and further amends the provisions of the Certificate of Incorporation
of the Corporation.
III. The Restated Certificate of Incorporation has been duly adopted in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware and written notice of such action has been provided in
accordance with Section 228(d).
IV. The Certificate of Incorporation of the Corporation is restated and
amended to read in its entirety as follows:
1. The name of the Corporation is Omniquip International, Inc.
2. Its registered office in the State of Delaware is to be located
at 1013 Centre Road, in the City of Wilmington, County of New Castle, Delaware
19805. Its registered agent at such address is Corporation Service Company.
<PAGE>
3. The purpose of the Corporation is to engage in any lawful acts or
activities for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 101,500,000 shares which shall be
divided into two classes as follows:
(a) 1,500,000 shares of Preferred Stock, $.01 par value
(Preferred Stock); and
(b) 100,000,000 shares of Common Stock, $.01 par value (Common
Stock). Upon the filing of this Restated Certificate of Incorporation, each
then issued and outstanding share of Common Stock shall be changed and split on
the basis of 10 shares for each such share of Common Stock issued and
outstanding.
The designations, voting powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions of the above classes of stock and other general
provisions relating thereto shall be as follows:
A. Preferred Stock
(a) Shares of Preferred Stock may be issued in one or more
series at such time or times and for such consideration or considerations as the
Board of Directors may determine. All shares of any one series shall be of
equal rank and identical in all respects
2
<PAGE>
except that the dates from which dividends accrue or accumulate with respect
thereto may vary.
(b) The Board of Directors is expressly authorized at any time,
and from time to time, to provide for the issuance of shares of Preferred Stock
in one or more series, with such voting powers, full or limited, or without
voting powers, and with such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
and as are not stated and expressed in this Restated Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(i) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of
Directors.
(ii) The dividend rate or rates on the shares of such series
and the relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other
series of Preferred Stock, the terms and conditions upon which
and the periods in respect of which
3
<PAGE>
dividends shall be payable, whether and upon what conditions
such dividends shall be cumulative and, if cumulative, the date
or dates from which dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable,
and, if redeemable, whether redeemable for cash, property or
rights, including securities of any other corporation, at the
option of either the holder or the Corporation or upon the
happening of a specified event, the limitations and restrictions
with respect to such redemption, the time or times when, the
price or prices or rate or rates at which the adjustments with
which and the manner in which such shares shall be redeemable,
including the manner of selecting shares of such series for
redemption if less than all shares are to be redeemed.
(iv) The rights to which the holders of shares of such
series shall be entitled, and the preferences, if any, over any
other series (or of any other series over such series), upon the
voluntary or involuntary liquidation, dissolution, distribution
or winding up of the Corporation, which rights may vary depending
on whether such liquidation, dissolution, distribution or winding
up is voluntary or involuntary, and, if voluntary, may vary at
different dates.
4
<PAGE>
(v) Whether the shares of such series shall be subject to
the operation of a purchase, retirement or sinking fund, and, if
so, whether and upon what conditions such purchase, retirement or
sinking fund shall be cumulative or noncumulative, the extent to
which and the manner in which such fund shall be applied to the
purchase or redemption of the shares of such series for
retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or of any
other series of any class of capital stock of the Corporation,
and, if so convertible or exchangeable, the price or prices or
the rate or rates of conversion or exchange and the method, if
any, of adjusting the same, and any other terms and conditions of
such conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of
the shares of such series, and whether and under what conditions
the shares of such series (alone or together with the shares of
one or more other series having similar provisions) shall be
entitled to vote separately as a single class, for the election
of one or more additional directors of the Corporation in case of
dividend arrearages or other specified events, or upon other
matters.
5
<PAGE>
(viii) Whether the issuance of any additional shares of
such series, or of any shares of any other series, shall be
subject to restrictions as to issuance, or as to the powers,
preferences or rights of any such other series.
(ix) Any other preferences, privileges and powers and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as
the Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of this Restated Certificate of
Incorporation.
(c) Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors creating any
series of Preferred Stock pursuant to this Section 4(A), the holders of the
Preferred Stock shall have no voting power with respect to any matter
whatsoever.
(d) Shares of Preferred Stock redeemed, converted, exchanged,
purchased, retired or surrendered to the Corporation, or which have been issued
and reacquired in any manner, may, upon compliance with any applicable
provisions of the General Corporation Law of the State of Delaware, be given the
status of authorized and unissued shares of Preferred Stock and may be reissued
by the Board of Directors as part of the series of which they were originally a
part or may be reclassified into and reissued as
6
<PAGE>
part of a new series or as a part of any other series, all subject to the
protective conditions or restrictions of any outstanding series of Preferred
Stock.
7
<PAGE>
B. Common Stock
(a) Except as otherwise required by law or by any amendment to
this Restated Certificate of Incorporation, each holder of Common Stock shall
have one vote for each share of stock held by him on all matters voted upon by
the stockholders.
(b) Subject to the preferential dividend rights, if any,
applicable to shares of Preferred Stock and subject to applicable requirements,
if any, with respect to the setting aside of sums for purchase, retirement or
sinking funds for Preferred Stock, the holders of Common Stock shall be entitled
to receive, to the extent permitted by law, such dividends as may be declared
from time to time by the Board of Directors.
(c) In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of Preferred Stock, holders of Common Stock shall be
entitled to receive all of the remaining assets of the Corporation of whatever
kind available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively. The Board of
Directors may distribute in kind to the holders of Common Stock such remaining
assets of the Corporation or may sell, transfer or otherwise dispose of all or
any part of such remaining assets to any other corporation, trust or entity, or
any combination thereof, and may sell all or any part of the consideration so
received and distribute any balance thereof in kind to holders of Common Stock.
The merger or consolidation of the Corporation into
8
<PAGE>
or with any other corporation, or the merger of any other corporation into it,
or any purchase or redemption of shares of stock of the Corporation of any
class, shall not be deemed to be a dissolution, liquidation or winding up of the
Corporation for the purposes of this paragraph.
(d) Such numbers of shares of Common Stock as may from time to
time be required for such purpose shall be reserved for issuance (i) upon
conversion of any shares of Preferred Stock or any obligation of the Corporation
convertible into shares of Common Stock which is at the time outstanding or
issuable upon exercise of any options or warrants at the time outstanding and
(ii) upon exercise of any options or warrants at the time outstanding to
purchase shares of Common Stock.
5. The Corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
9
<PAGE>
By a majority of the whole Board, to designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not she/he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
or in the by-laws of the Corporation, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
by-laws of the Corporation; and, unless the resolution or by-laws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
To make, alter or repeal the by-laws of the Corporation.
10
<PAGE>
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the Corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in whole
or in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
shall deem expedient and for the best interests of the Corporation.
7. (a) The number of directors that shall constitute the whole Board
of Directors shall be fixed by, or in the manner provided in, the by-laws of the
Corporation.
(b) Directors of the Corporation shall be elected to hold office
until the expiration of the term for which they are elected, and until their
successors have been duly elected and qualified. The directors of the
Corporation shall be divided into three classes as nearly equal in size as
practicable, hereby designated Class I, Class II and Class III. The term of
office of the initial Class I directors shall expire at the next succeeding
annual meeting of stockholders, the term of the initial Class II directors shall
expire at the second succeeding annual meeting of stockholders and the term of
office of the initial Class III directors shall expire at the third succeeding
annual meeting of stockholders. For the purposes hereof, the initial Class I
directors shall be P. Enoch Stiff and Donald E. Nickelson, the initial Class II
directors shall be Peter S. Finley and Jeffrey L. Fox and the initial Class III
director shall be Samuel A. Hamacher. At each annual meeting of the
stockholders, directors to replace those of a class whose terms expire at such
annual meeting shall be elected to hold office until the third succeeding annual
meeting and until
11
<PAGE>
their respective successors shall have been duly elected and shall qualify. If
the number of directors that shall constitute the whole Board of Directors is
hereafter changed, as provided in Article 7(a) hereof, any newly created
directorships or decrease in directorships shall be so apportioned among the
classes as to make all classes as nearly equal in number as is practicable.
8. Elections of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation.
9. No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable
law, (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit. If
the Delaware General Corporation Law is
12
<PAGE>
amended after the date hereof to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended. No amendment
to or repeal of this Section IX shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendments.
10. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have subscribed this document on the date set
forth below and due hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by me and are true and correct.
Signed on: September 30, 1996
/s/ Philip G. Franklin
--------------------------
Philip G. Franklin
Vice President
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OMNIQUIP INTERNATIONAL, INC.
AMENDED BY-LAWS
Article I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
Article II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Milwaukee, State of Wisconsin, at such place as may
be fixed from time to time by the board of directors or at such other places
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders, commencing with the year 1997,
shall be held on the third Tuesday in February if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10:00 A.M., or at such
other date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be
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held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board or the president and
shall be called by the chairman of the board or the president or secretary at
the request in writing of a majority of the board of directors, or at the
request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
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Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Article III
DIRECTORS
Section 1. The number of directors of the corporation shall be not less
than three (3) nor more than eleven (11), the exact number of directors to be
determined from time to time by resolution adopted by a majority of the entire
board. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Section, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders. Any director may resign at any time upon
written notice to the corporation.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and each of the directors so chosen shall hold office until the next
annual election for the term for which he is elected and until his successor is
duly elected and qualified or until his earlier resignation or removal. No
decrease in the board shall shorten the term of any incumbent director. If, at
the time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
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Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following the annual meeting of the stockholders,
unless otherwise determined by the board of directors or the stockholders at the
annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the chairman of
the board or the president, and the chairman of the board or the president or
the secretary shall call a special meeting upon the written request of two
directors unless the board consists of only one director; in which case special
meetings shall be called by the chairman of the board or the president or
secretary on the written request of the sole director. If given personally, by
telephone or by telegram, the notice shall be given at least two days prior to
the meeting. Notice may be given by mail if it is mailed at least three days
before the meeting.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
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Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
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COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors and/or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by-laws, any director or the entire board of directors may be
removed, with or without cause, at any time by the holders of a majority of
shares then entitled to vote at an election of directors, and the vacancy in the
board of directors caused by such removal may be filled by the stockholders at
the time of such removal.
Article IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Article V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors as soon as practicable after each annual meeting of stockholders and
shall be a
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president, a secretary and a treasurer. Any number of offices may be held by
the same person, unless the certificate of incorporation or these by-laws
otherwise provide.
Section 2. The board of directors may appoint such other officers and
agents as it shall deem necessary, including a chairman of the board, a vice
chairman of the board, one or more vice presidents and one or more assistant
secretaries and assistant treasurers, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 3. The salaries of all officers and agents of the corporation
shall be fixed by or under the direction of the board of directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the board of directors. Each officer shall hold his office until
his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
corporation. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD
Section 5. The chairman of the board shall be a member of the board and
shall preside at its meetings and at all meetings of stockholders. The chairman
of the board shall exercise such other powers and perform such other duties as
may from time to time be assigned to him by the board or prescribed by the
by-laws.
THE PRESIDENT
Section 6. The president shall, subject to the direction and under the
supervision of the board, be the principal executive officer of the corporation
and shall have general charge of the business and affairs of the corporation and
shall keep the board fully advised. At the direction of the board, he shall
have power in the name of the corporation and on its behalf to execute any
instruments in writing. He shall employ and discharge employees and agents of
the corporation, except such as shall hold their offices by appointment of the
board, but he may delegate these powers to other officers as to employees under
their immediate supervision. He shall have such powers and perform such duties
as generally pertain to the office of president, as well as such further powers
and duties as may be prescribed by the board.
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THE VICE-PRESIDENTS
Section 7. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of
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directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 13. The assistant treasurer, or if there be more than one, the
assistant treasurer in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Article VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors, or the president or a
vice-president and the treasurer, or the secretary or an assistant secretary of
the corporation, certifying the number of shares owned by him in the
corporation.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to issuance thereof, require the owner
of such lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the
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same in such manner as it shall require and/or to give the corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
Article VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash,
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in property, or in shares of the capital stock, subject to the provisions of the
certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
EXECUTION OF DOCUMENTS
Section 3. Unless otherwise authorized by the board of directors, all
contracts, leases, deeds, deeds of trust, mortgages, powers of attorney to
transfer stock and for other purposes, and all other documents requiring the
seal of the corporation shall be executed for and on behalf of the corporation
by the president or any vice president and the corporate seal shall be affixed
and attested by the secretary or an assistant secretary, or the treasurer or an
assistant treasurer.
ANNUAL STATEMENT
Section 4. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
FISCAL YEAR
Section 5 The fiscal year of the corporation shall be the one year period
ending on September 30 of each calendar year or as may otherwise be fixed by
resolution of the board of directors.
SEAL
Section 6 The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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Article VIII
INDEMNIFICATION
Section 1. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the fullest extent
permitted by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such indemnitee in connection
therewith. Such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in subparagraph (b) hereof, the corporation shall
indemnify any such indemnitee seeking indemnification in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article VIII shall
be a contract right and shall include the right to be paid by the corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition (an "expense advancement"); provided, however, that, if the Delaware
General Corporation Law so requires, the payment of such expenses incurred by an
indemnitee in his or her capacity as a director or officer of the corporation
(and not in any other capacity in which service was or is rendered by such
indemnitee while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made upon delivery to the corporation of an undertaking, by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such indemnitee is not entitled to be indemnified
under this Article VIII or otherwise; and provided, further, that no expense
advancement shall be paid by the corporation if independent legal counsel shall
advise the board of directors in a written opinion that based upon the facts
known to such counsel at the time, (i) the indemnitee acted in bad faith or
deliberately breached his or her duty to the corporation or its stockholders,
and (ii) as a result of such conduct by the indemnitee, it is more likely than
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not that it will ultimately be determined that such indemnitee has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify such indemnitee. The
corporation may, by action of its board of directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) If a claim under subparagraph (a) of this Article VIII is not paid in
full by the corporation within 30 days after a written claim has been received
by the corporation, the indemnitee may at any time thereafter bring suit against
the corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the corporation to
recover an expense advancement, the indemnitee shall also be entitled to be paid
the expense of prosecuting or defending such suit. It shall be a defense to any
such action that the indemnitee has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the indemnitee is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
indemnitee has not met the applicable standard of conduct; provided, however,
that a determination by the board of directors denying an expense advancement
based upon the written opinion of independent legal counsel as provided for in
subparagraph (a) above shall be a complete defense to any action seeking an
expense advancement, but such determination shall not be a defense or create a
presumption that the indemnitee is not entitled to be indemnified hereunder upon
the final disposition of the proceeding.
(c) The right to indemnification and the payment of expense incurred in
defending a proceeding in advance of its final disposition conferred in this
Article VIII shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Restated
Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss under the Delaware General
Corporation Law.
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Article IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate or
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
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PURCHASE AND STOCKHOLDER AGREEMENT
This Purchase and Stockholder Agreement, made this September 20, 1995,
between Uniquip Corporation, a Delaware corporation (the "Corporation") and
P. Enoch Stiff (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Corporation is authorized to issue One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par value One Cent ($.01) per
share (the "Common Stock");
WHEREAS, the Executive is the President of TRAK International, Inc., a
Subsidiary of the Corporation;
WHEREAS, the Executive has offered to purchase from the Corporation
twenty thousand shares (20,000) shares of the Common Stock, representing Two
Percent (2%) of the then issued and outstanding shares of the Common Stock on
a fully diluted basis, at an aggregate price of One Hundred Twenty-Seven
Thousand Fifty-Nine Dollars ($127,059.00) (the "Purchase Price"), and the
Corporation has agreed to accept such offer to purchase such shares of the
Common Stock, subject to the right of the Corporation to purchase all of the
shares of the Common Stock now owned or hereafter acquired by the Executive
in certain circumstances; and
WHEREAS, the Corporation and the Executive desire to set forth their
understandings and agreements with respect to restrictions on certain
transfers of shares of the Common Stock now owned or hereafter acquired by
the Executive, the right of the Corporation to purchase all of the shares of
the Common Stock now owned or hereafter acquired by the Executive in certain
circumstances and certain other matters; including provisions with respect to
the Executive's post-termination employment and/or interest in competing
enterprises; and
WHEREAS, the Corporation and the Executive acknowledge and agree that
the restrictions on certain transfers of shares of the Common Stock now owned
or hereafter acquired
This Agreement is in not accordance with SOP I-4. Variances from SOP have
been approved by memorandum dated August 7, 1995.
<PAGE>
by the Executive further the Corporation's interest by having shares of the
Common Stock owned by full time employees of the Corporation and its
Subsidiaries, and that other provisions hereof are consistent with the
bonafide interests of the Corporation and of other full time employees of the
Corporation and its Subsidiaries; and
WHEREAS, it is recognized and acknowledged by the Executive that the
success of the Corporation and its Affiliates, including the Majority
Stockholder and other stockholders of the Corporation, is attributable in
major part to the manner by which the Corporation and its Affiliates source
and evaluate acquisition candidates and integrate their acquisitions,
referred to as the "Harbour Group Culture", all of which involve special and
proprietary techniques, procedures and training; and
WHEREAS, in order for the Executive to make a meaningful contribution in
his job, the Executive must learn and practice the intricacies of the
Corporation's and Harbour Group's procedures and know-how, benefit from the
collective Harbour Group experience in implementation of the "Harbour Group
Culture" and work with a small group of executives who have also learned the
intricacies of the "Harbour Group Culture", pursuant to which executives
engaged in acquisitions, finance, and operations work in concert; and
WHEREAS, Harbour Group enjoys a reputation in the business community of
the United States and elsewhere with particular but not exclusive reference
to its reputation among institutional investors, commercial banking
institutions, investment bankers, business brokers and sellers and buyers of
business enterprises; and
WHEREAS, the Executive's reputation will be enhanced and his experience
will be enhanced by his relationship with the Corporation and with Harbour
Group; and
WHEREAS, the Executive acknowledges that special harm and injury will or
may be sustained by the Corporation and the Majority Stockholder and other
stockholders should acts otherwise prohibited herein nonetheless be taken.
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NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
1. DEFINITIONS.
a. "Act" shall mean the Securities Act of 1933, as amended.
b. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person. "Affiliate of
the Majority Stockholder" shall not include any full-time employee of the
Corporation or any Subsidiary.
c. "Benefits" shall mean Health and Welfare Plans in accordance
with the current policies of the Corporation or any Subsidiary by which the
Executive is employed.
d. "Benefits Period" shall have the meaning set forth in Paragraph 26.
e. "Bona Fide Employee's Offer" shall have the meaning set forth in
Paragraph 4.
f. "Cause" shall mean (i) the material breach by the Executive of
this Agreement, including without limitation, any breach of Paragraphs 9 and
10; (ii) the Executive's dishonesty in connection with the business of the
Corporation or any Subsidiary which is materially detrimental to the best
interests of the Corporation or any Subsidiary; (iii) the Executive's
conviction of a felony crime; (iv) any material act or omission by the
Executive during his employment with the Corporation or any Subsidiary
involving willful malfeasance or gross negligence in the performance of his
duties to the Corporation or any such Subsidiary; or (v) any other act or
omission by the Executive during his employment in the Corporation or any
Subsidiary which provides the Corporation with a ground for terminating the
Executive's employment for cause under the employment law of the state in
which the Corporation's principal place of business is located.
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g. "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
h. "Health and Welfare Plans" shall mean employee life, health and
disability insurance plans or other fringe benefit programs, if any,
maintained by the Corporation or any Subsidiary by which the Executive is
employed.
i. "Majority Stockholder" shall have the meaning set forth in
Paragraph 14.
j. "New Issue Securities" shall have the meaning set forth in
Paragraph 16.
k. "Note" means the Promissory Note of the Executive issued to the
Corporation dated the date hereof in an original principal amount which is
the Purchase Price MINUS two hundred dollars ($200.00).
l. "100% Purchaser" shall have the meaning set forth in Paragraph 14.
m. "Ordinary Course of Business" means the conduct of the business
and affairs of the Corporation or its Subsidiaries in the usual and ordinary
course and in a manner which advances the purposes, and is in the best
interest, of the Corporation and its Subsidiaries.
n. "Permanent Disability" shall have the meaning set forth in
Paragraph 26.
o. "Person" means any individual, corporation, firm, partnership or
other business entity.
p. "Post-Employment Restriction Period" shall have the meaning set
forth in Paragraph 26.
q. "Prime Rate" means the annual rate of interest designated as the
"prime rate" in the listing of "money rates" as published from time to time
in THE WALL STREET JOURNAL, or if such publication is discontinued, the rate
published as the "prime rate" or "base rate" from time to time by any similar
or successor publication designated by the Board of Directors of the
Corporation.
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r. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of the Corporation or its Affiliates including,
without limitation, methods of operation, customers and customer lists,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices, fees, costs, plans, designs, technology, know-how, software,
marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters of the
Corporation or any of its Affiliates.
s. "Publicly Traded," with respect to the Common Stock, means
listed for trading on any national or regional securities exchange or quoted
on the National Association of Securities Dealers Automated Quotation system
or a successor system.
t. "Purchase Price" shall have the meaning set forth in the third
WHEREAS clause.
u. "Registration Notice" shall have the meaning set forth in
Paragraph 15.
v. "Sale of Control Notice" shall have the meaning set forth in
Paragraph 14.
w. "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
x. "Shares" shall have the meaning set forth in Paragraph 2.
y. "Stockholder's Included Shares" shall have the meaning set forth
in Paragraph 14.
z. "Stockholder's Registered Shares" shall have the meaning set
forth in Paragraph 15.
aa. "Subsidiary" shall mean any corporation or other entity of which
the Corporation directly or indirectly owns beneficially or of record fifty
percent (50%) or more of (i) the
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outstanding shares of capital stock if such entity is a corporation or (ii)
the outstanding ownership interests if such entity is not a corporation.
bb. "Written Notice" shall have the meaning set forth in Paragraph 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Executive or any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns), whether such shares are now
owned or hereafter acquired (collectively the "Shares"), and whether such
transfers are voluntary, involuntary or by operation of law, resulting from
death or otherwise.
3. RESTRICTIONS ON THE TRANSFER OF SHARES.
a. Except as otherwise provided in Paragraphs 3b, 3c, 3d, 4, 11,
12, 14 and 15 of this Agreement, neither the Executive nor any of his
transferees (direct or indirect, including without limitation the Executive's
personal or legal representatives, successors and assigns) shall or may sell,
exchange, deliver, assign, bequeath or give, pledge, mortgage, hypothecate or
otherwise encumber, transfer or permit to be transferred, or otherwise
dispose of, any or all of the Shares, whether voluntarily, involuntarily or
by operation of law (including without limitation the laws of bankruptcy,
intestacy, descent and distribution and succession).
b. In the event of the Executive's death, the Shares may be
transferred to the Executive's personal or legal representatives, estate or
distributees of such estate, and such transfer shall be registered on the
stock transfer books of the Corporation.
c. In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Corporation under Paragraphs 11 and 12 of this
Agreement to purchase the Shares which are then owned by the Executive or any
representative, successor or transferee of the Executive shall lapse but all
of the other provisions of this Agreement shall continue in full force and
effect. On the fourth anniversary of the date on which shares of the Common
Stock are first Publicly
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Traded, the restrictions on the transfer of the Shares contained in
Paragraphs 3a, 4, 5 and 7 of this Agreement shall lapse; provided, however,
that in the event of the death of the Executive prior to the date of such
fourth anniversary, all of the Shares owned by the Executive on the date of
his death may be sold without any restriction imposed by this Agreement.
d. Provided that such action is not objected to by any underwriter
then engaged in discussions with the Corporation regarding public offerings
of the Corporation's securities and the Corporation has reasonably determined
that such action will not adversely affect the market for its securities, the
Corporation shall, upon the request of the Executive at the following times,
permit the Executive to sell or otherwise transfer without regard to
Paragraphs 3a, 4, 5 and 7 of this Agreement a portion of the Shares not to
exceed the whole number of Shares equaling the following percentage of the
number of Shares (adjusted for any intervening conversion, stock split, stock
dividend or the like) held by the Executive on the date on which the Common
Stock is first Publicly Traded:
(i) after the first anniversary of the date on which the Common
Stock is first Publicly Traded, twenty-five percent (25%);
(ii) after the second anniversary of the date on which the Common
Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the third anniversary of the date on which the Common
Stock is first Publicly Traded, a cumulative seventy-five percent (75%).
4. RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES TO
EMPLOYEES OF THE CORPORATION.
a. In the event that the Executive shall receive a Bona Fide
Employee's Offer (hereinafter defined) to purchase any or all of the Shares
and the Executive desires to accept such Bona Fide Employee's Offer, the
Executive shall promptly send Written Notice (hereinafter defined) to the
Corporation, offering to sell such Shares to the Corporation in accordance
with subparagraph 4c hereof, at the same price and upon the same terms and
conditions as are
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<PAGE>
contained in the Bona Fide Employee's Offer. Such offer shall be irrevocable
for a period of ninety (90) days from the receipt of Written Notice by the
Corporation. The Written Notice shall contain a true and complete copy of
the Bona Fide Employee's Offer, setting forth the price and all terms and
conditions of such offer, as well as the name(s), address(es) (both home and
office), and business(es) or occupation(s) of the third party offeror (or
offerors). The Written Notice shall be accompanied by evidence that
sufficient funds are available to the third party offeror (or offerors) to
carry out the terms of such offer. Any Written Notice that does not contain
all such requisite information shall not be considered a "Written Notice" for
purposes of this subparagraph 4a.
b. As used in this Agreement, the term "Bona Fide Employee's Offer"
shall mean a legally enforceable offer in writing, made and signed by a
person who is then a full time employee of the Corporation or any Subsidiary
and who is financially capable of carrying out the terms of such Bona Fide
Employee's Offer.
c. Whenever a Bona Fide Employee's Offer to purchase Shares has
been received by the Executive, and Written Notice thereof has been sent to
the Corporation, the following procedure shall be complied with: For a
period of ninety (90) days from its receipt of such Written Notice, the
Corporation shall have the right, in its sole discretion, without obligation,
to purchase all (but no less than all) of the Shares so offered. If the
Corporation elects to purchase all of the Shares so offered, it must send
Written Notice thereof to the Executive within said ninety (90) day period.
If the Corporation does not elect to purchase the Shares so offered within
the prescribed time period, the Executive shall have the right to accept the
Bona Fide Employee's Offer in whole (but not in part) and to sell such
Shares, subject to the provisions and restrictions of this Agreement, but
only in strict accordance with all of the provisions of the Bona Fide
Employee's Offer and only if (i) the sale is fully consummated within one
hundred and twenty (120) days after the mailing of the initial Written Notice
to the Corporation and (ii) the Executive has prepaid the Note in accordance
with its terms. In the event that such sale is not fully
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<PAGE>
consummated within one hundred and twenty (120) days after the mailing of the
Written Notice, the provisions of this Paragraph 4 must again be complied
with by the Executive.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares
are transferred to any Person, at any time or from time to time, by operation
of law or pursuant to the provisions of Paragraphs 3 or 4 hereof, the
transferee(s) shall agree in writing (for and on behalf of himself or itself,
his or its personal or legal representatives, transferees, successors and
assigns) to be bound by all provisions of this Agreement as a party hereto.
Prior to any such transfer, the transferee shall provide the Corporation with
the transferee's written agreement so to be bound. In the absence of any
such written agreement no such transfer shall be effective for any purpose,
but the failure to obtain such written agreement shall in no way diminish the
applicability of the provisions hereof. Without limiting the generality of
the preceding provisions of this Paragraph 5, in the event that any Shares
are transferred to any full time employee of the Corporation or any
Subsidiary pursuant to the provisions of Paragraph 4, such full time employee
shall agree in writing to be bound by all provisions of this Agreement,
including without limitation the provisions of Paragraph 12, and such
employee shall be deemed thereafter to be the Executive in respect of the
Shares transferred to such employee as if initially named in this Agreement
and shall be subject as such to the provisions of this Agreement, PROVIDED
THAT the price at which the Corporation may purchase the Shares from such
employee pursuant to Paragraph 11 shall be the price at which the Shares were
sold to such employee pursuant to Paragraph 4. Prior to any such transfer,
the transferee shall provide the Corporation with the transferee's written
agreement so to be bound. In the absence of any such written agreement no
such transfer shall be effective for any purpose, but the failure to obtain
such written agreement shall in no way diminish the applicability of the
provisions hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer
book in which shall be recorded, among other things, the name and address of
each of its stockholders. No transfer of any Shares shall be effective or
valid unless and until recorded in such stock transfer book. The Corporation
shall not record any transfer of Shares in such stock transfer book unless
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<PAGE>
the transfer is in strict compliance with all provisions of this Agreement.
The Executive agrees that, in the event he desires to make a transfer within
the provisions hereof, he shall furnish to the Corporation such evidence of
his compliance with this Agreement and that the proposed transfer may be
effected without registration under the Securities Laws as from time to time
may be required by the Board of Directors of, or counsel for, the Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate
representing Shares shall bear the following legends:
"The encumbering, transfer or other disposition (including,
without limitation, any transfer or disposition pursuant to
the laws of bankruptcy, intestacy, descent and distribution
and succession) of the shares of common stock evidenced by
the within Certificate is restricted under the terms of a
Purchase and Stockholder Agreement, dated August ___, 1995,
between Uniquip Corporation (the "Corporation") and P. Enoch
Stiff, a copy of which Agreement is on file at the principal
office of the Corporation. Such shares are also subject to
a voting agreement contained in said Purchase and
Stockholder Agreement. Upon written request of any
stockholder of the Corporation, the Corporation shall
furnish, without charge to any such stockholder, a copy of
said Purchase and Stockholder Agreement."
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities law (collectively, the "Securities
Laws") and may not be sold, transferred or otherwise
disposed of unless (i) a registration statement covering
such shares is effective under the Securities Laws or (ii)
the transaction is exempt from registration under the
Securities Laws and, if the Corporation requests, an opinion
satisfactory to the Corporation to such effect has been
rendered by counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase
of any Shares pursuant to Paragraph 4 of this Agreement, the Executive shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing
such documentary stamps, if any, as are necessary, and such assignments,
certificates of authority, tax releases, consents to transfer, instruments
and evidences of title of the Executive and of the Executive's compliance
with this Agreement as may be reasonably required by the purchaser or by
counsel for the purchaser.
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9. COVENANT NOT TO DISCLOSE.
a. The Executive covenants and agrees that he will not, during the
period of his employment with the Corporation or at any time thereafter,
except with the express prior written consent of the Chairman and Chief
Executive Officer of Harbour Group Ltd., any successor to Harbour Group Ltd.
or their respective designees, directly or indirectly disclose, communicate
or divulge to any Person, or use for the benefit of any Person, any
Proprietary Information. The restriction contained in the preceding sentence
shall not apply to any Proprietary Information that (i) is a matter of public
knowledge (which shall include knowledge in the industries in which the
Corporation or its Subsidiaries are engaged) on the date of this Agreement,
(ii) becomes a matter of public knowledge (which shall include knowledge in
the industries in which the Corporation or its Subsidiaries are engaged)
after the date of this Agreement from another source which is under no
obligation of confidentiality to the Corporation or its Affiliates or (iii)
that is furnished in the Ordinary Course of Business to Persons which sell,
provide or propose to sell or provide goods or services to the Corporation or
its Subsidiaries or which purchase, obtain or propose to purchase or obtain
goods or services from the Corporation or its Subsidiaries.
b. All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or
has been furnished to the Executive or which may be produced, prepared or
designed by the Executive in connection with his employment with the
Corporation shall be, become and remain the exclusive property of the
Corporation. Upon the termination of the Executive's employment with the
Corporation, all originals, copies and reprints in the Executive's
possession, custody, or control shall be promptly surrendered and/or
delivered to the Corporation, and the Executive shall thereafter make no
further use, either directly or indirectly, of any such data, designs,
drawings, blueprints, tracings, sketches, plans, layouts, specifications,
models, programs, cards, tapes, disks, printouts, writings, manuals, guides,
notes or other memoranda or written information.
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10. COVENANTS NOT TO COMPETE.
a. The Executive covenants and agrees that he will not at any time
during his employment with the Corporation and thereafter for the applicable
Post-Employment Restriction Period, except with the express prior written
consent of the Chairman and Chief Executive Officer of Harbour Group Ltd.,
any successor to Harbour Group Ltd. or their respective designees, directly
or indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, shareholder (except as the holder of not more than one percent
(1%) of the outstanding shares of a corporation whose stock is listed on any
national or regional securities exchange or reported by the National
Association of Securities Dealers Automated Quotations System or any
successor thereto) either (i) establish any Person that competes with the
Corporation or any of its Subsidiaries or (ii) be affiliated or connected
with any Person that carries on any business within the states of Wisconsin,
Illinois and Missouri, the states contiguous thereto, elsewhere in the United
States and the world, that is competitive with the business of the
Corporation or any of its Subsidiaries in a capacity which is competitive in
any of its duties, responsibilities or activities with the business of the
Corporation or any of its Subsidiaries. Without limiting the generality of
the preceding sentence, the Executive covenants and agrees that he will not
directly or indirectly solicit, divert or accept business from or otherwise
take away or interfere with any customer of the Corporation or any of its
Subsidiaries, including without limitation any Person who was a customer or
whose business was being pursued by the Corporation or any of its
Subsidiaries within (x) the period of the Executive's employment with the
Corporation, (y) one (1) year prior to such employment or (z) one (1) year
after the termination of such employment, including all customers directly or
indirectly produced or generated by the Executive. The parties further agree
that if the Executive becomes affiliated or connected with any Person
described in clause (ii) of this Paragraph 10(a) during either his employment
with the Corporation or the Post-Employment Restriction Period, the Executive
shall be obliged to show by clear and convincing evidence that none of his
duties, responsibilities or activities entail employment in a capacity which
has been, is or is likely to become, competitive with the business of the
Corporation or any of its Subsidiaries. The parties hereto
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agree that the covenant contained in clause (ii) of this Paragraph 10(a)
shall be construed as a series of separate covenants, one for each state or
other geographic area specified in such clause and, except for geographic
coverage, each separate covenant shall be deemed identical.
b. The Executive further covenants and agrees that he will not for
a period of three (3) years after the termination of his employment
hereunder, except with the express prior written consent of the Chairman and
Chief Executive Officer of Harbour Group Ltd., any successor to Harbour Group
Ltd. or their respective designees, directly or indirectly, accept
employment, be employed by or be a principal of any business or enterprise
operating within the United States which then employs or has as a principal
or holder of any interest therein (except as the holder of not more than one
percent (1%) of the outstanding shares of a corporation whose shares are
publicly traded) any individual who was previously employed in a managerial
or executive position with the Corporation or any of its Affiliates, provided
however, that this prohibition shall not be applicable if (i) such business
or enterprise does not compete with the Corporation or its Affiliates, or
(ii) (x) such business or enterprise engages in activities which do compete
and other activities which do not compete with the Corporation or its
Affiliates, (y) the Executive and the other individual who was previously
employed by the Corporation or any of its Affiliates are employed by such
business or enterprise in connection with activities which in no way compete
with the Corporation or its Affiliates and (z) neither the Executive nor the
other individual who was previously employed by the Corporation or its
Affiliates is or proposes to be a principal of such business or enterprise.
c. If any provision of the covenants and agreements set forth above
shall be held invalid or unenforceable because of the scope of the territory
or the actions thereby restricted, or the period of time within which such
covenant or agreement is operative, or for any other reason, it is the intent
of the parties hereto that such provision shall be construed by limiting and
reducing it, or, if necessary, eliminating it so that the provisions hereof
be valid and enforceable to the extent compatible with applicable law as
determined by a court of competent jurisdiction.
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11. OPTION TO PURCHASE THE SHARES.
a. In the event that the Executive breaches any of the covenants
contained in Paragraphs 9 or 10, the Corporation shall have the right, but is
not required, to purchase all of the Shares which are then owned by the
Executive or any representative, successor or transferee of the Executive.
Any right to purchase under this Paragraph 11 shall be exercised in writing
within sixty (60) days of the date on which the Corporation becomes aware
that any such breach has occurred. Settlement shall be held at the principal
office of the Corporation at such date and time within ninety (90) days from
the time that the notice of intent to exercise required by this subparagraph
11a has been sent by the Corporation as shall be selected by the Corporation.
For purposes of this subparagraph 11a, (i) the Executive shall be
conclusively deemed and considered to own all Shares owned by himself, his
estate, his executors or administrators, his distributees and his personal
and legal representatives, and (ii) no Shares owned by a transferee of the
Executive other than those transferees referred to in clause (i) above shall
be subject to purchase by the Corporation. Except as otherwise provided in
Paragraph 5, the purchase price for such Shares shall be the original
principal amount of the Note.
b. The purchase price for the Shares purchased pursuant to
subparagraph 11a above shall be paid by delivering to the Executive or any
transferee of the Executive referred to in subparagraph 11a(i) above the Note
marked paid in full, together with the Corporation's check in the amount, if
any, by which the purchase price exceeds the principal balance then
outstanding on the Note.
12. MANDATORY PURCHASE OF THE SHARES.
a. If the Executive's employment with the Corporation terminates
for any reason (including his death) and if shares of the Common Stock are
not Publicly Traded on the date of such termination, the Corporation shall
repurchase to the extent it may lawfully do so, and the Executive or each
transferee of the Executive under subparagraph 3b shall sell to the
Corporation, the Shares then owned by the Executive. For purposes of this
subparagraph 12a,
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the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors or administrators, his
distributees and his personal and legal representatives and any other
transferee. Settlement shall be held at the principal office of the
Corporation at such date and time within one hundred and twenty (120) days of
the termination of the Executive's employment as shall be selected by the
Corporation. The purchase price for such Shares shall be their book value,
as computed by the Corporation's internal auditing staff and certified by the
chief financial officer of Harbour Group Ltd. (or any successor to Harbour
Group Ltd.), as of the last day of the month preceding the month in which the
Executive's employment was terminated, which certification shall be final and
binding; provided, however, that the purchase price for shares purchased
pursuant to this subparagraph 12a shall not be less than eighty percent (80%)
of the Purchase Price.
b. The purchase price for the Shares purchased pursuant to
subparagraph 12a above shall be paid in the following manner:
(i) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is not greater than one
hundred thousand dollars ($100,000.00), the Corporation shall pay the
purchase price for the Shares by (a) returning to the Executive or any
transferee referred to in subparagraph 12a above the Note marked "paid in
full", and (b) paying by cash or check the difference between the purchase
price of the Shares and the principal balance, plus accrued interest, due on
the Note.
(ii) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is greater than one hundred
thousand dollars ($100,000.00), the Corporation shall pay the purchase price
in installments as follows: (a) the first installment by (1) returning to
the Executive or any transferee referred to in subparagraph 12a above the
Note marked "paid in full", and (2) paying by cash or check one hundred
thousand dollars ($100,000.00) and (b) annual
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installments thereafter by paying by cash or check an amount equal to the
lesser of one hundred thousand dollars ($100,000.00) and the balance of the
purchase price remaining outstanding on the date each installment is due,
plus interest on such outstanding balance calculated at a rate equal to the
Prime Rate on such due date. The Corporation shall be entitled to prepay all
or any portion of the purchase price, plus interest thereon, at any time
without penalty.
(iii) If the purchase price for the Shares, as determined
pursuant to Paragraph 12a above, does not exceed the principal balance, plus
accrued interest, due on the Note, then the purchase price shall be paid by
crediting amounts due under the Note, up to the purchase price amount, with
such credit applied first to accrued interest due under the Note then to
principal.
13. CONFLICT BETWEEN PARAGRAPHS. Notwithstanding any other provision
of this Agreement to the contrary, to the extent that there shall be any
conflict between the provisions of Paragraphs 3 or 4 and the provisions of
Paragraph 11 in regard to the right of the Corporation to purchase the Shares
from the Executive, the provisions of Paragraph 11 shall control, and to the
further extent that there shall be any conflict between the provisions of
Paragraphs 11 and 12 in regard to the right or obligation of the Corporation
to purchase the Shares from the Executive, the provisions of Paragraph 11
shall control.
14. SALE OF CONTROL.
a. In the event that the holder of more than fifty percent (50%) of
the outstanding shares of the Common Stock or more than fifty percent (50%)
of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock (in either case, the "Majority Stockholder") shall seek to sell more
than fifty percent (50%) of the outstanding shares of the Common Stock to a
Person which is not an Affiliate of the Majority Stockholder (other than an
underwriter in connection with an offering pursuant to a registration
statement filed under the Act), the Executive shall be provided a written
notice which specifies the identity of the proposed purchaser, the number of
shares of the Common Stock proposed to be purchased and the consideration
proposed to be paid by such
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purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Executive shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Majority Stockholder to include in such proposed sale the number of Shares
(the "Stockholder's Included Shares") which is calculated in the manner
specified in the following sentence. The Stockholder's Included Shares shall
be determined by multiplying the number of Shares owned by the Executive on
the date that the Sale of Control Notice is mailed by a fraction, the
numerator of which is the number of shares of the Common Stock which the
proposed purchaser desires to purchase and the denominator of which is the
total number of shares of the Common Stock which are outstanding on the date
that the Sale of Control Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Included Shares shall be the next larger whole integer and in the event that
the number so determined includes a fraction which is equal to or less than
.50, the Stockholder's Included Shares shall be the next smaller whole
integer. For example, assume the proposed purchaser desires to purchase
450,000 shares of the Common Stock. On the date that the Sale of Control
Notice is mailed, there are 500,000 shares of the Common Stock outstanding
and the Executive owns 1,500 of such shares. The number of the Stockholder's
Included Shares would be 1,350, which is 1,500 times 450,000/500,000.
b. The parties hereto recognize and acknowledge that any
prospective purchaser of the business of the Corporation may wish to purchase
(i) all of the outstanding shares of the Common Stock, (ii) all of the
outstanding shares of the common stock of the Majority Stockholder or (iii)
all or substantially all of the assets of the Corporation, which purchase may
be made in conjunction with the purchase of the business of an Affiliate or
Affiliates of the Corporation. Accordingly, the Executive and each
transferee of the Executive under subparagraph 3b agrees, upon the request of
the Corporation, to (x) sell all of the Shares then owned by the Executive to
any prospective purchaser of the business of the Corporation which is not an
Affiliate of the Majority Stockholder (a "100% Purchaser") or, at the option
of the Majority Stockholder or the Corporation, to the Corporation in
connection with the sale of all of
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the outstanding shares of the Common Stock to a 100% Purchaser or the sale of
all of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock to a 100% Purchaser and (y) at any time prior to the tenth anniversary
of this Agreement, vote the Shares then owned by the Executive in favor of
(A) any sale of all or substantially all of the assets of the Corporation to
a 100% Purchaser or (B) any merger or consolidation of the Corporation with a
100% Purchaser, in each case which has been approved by the Board of
Directors of the Corporation in accordance with the provisions of this
subparagraph 14b. The Executive and each such transferee agrees promptly
upon any request made by the Corporation prior to the tenth anniversary of
this Agreement and without compensation to execute and deliver an amendment
to this Agreement or other instrument which extends for an additional ten
year period the Executive's agreement to vote the Shares as specified in
subparagraph 14(b)(y). For purposes of this subparagraph 14b, the Executive
shall be conclusively deemed and considered to own all Shares owned by
himself, his estate, his executors and administrators, his distributees and
his personal and other legal representatives and any other transferee.
In the event that the Majority Stockholder shall have entered
into an agreement to sell (a) all of the outstanding shares of the Common
Stock owned by it or (b) all of the outstanding shares of the common stock of
an Affiliate of the Corporation which owns a majority of the outstanding
shares of the Common Stock to a 100% Purchaser or the Corporation shall have
entered into an agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser, whether individually or in conjunction
with the sale of the business of an Affiliate or Affiliates of the
Corporation, the Corporation's auditors, or their designee, shall allocate
such portion of the total purchase price to the then outstanding shares of
the Common Stock which is fair and reasonable (with each outstanding share
being allocated the same portion of the purchase price) giving such
consideration as they deem appropriate to the (i) terms and conditions of
such agreement to sell, (ii) book value and the earnings and projected
earnings of the Corporation and each Affiliate of the Corporation whose
business is or will be sold pursuant
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to such agreement to sell, determined in accordance with generally accepted
accounting principles consistently applied where relevant and appropriate in
the opinion of the Corporation's auditors or such designee and (iii) such
other factors as they may deem relevant to such allocation. The
determination of such allocation by the Corporation's auditors or their
designee shall be final and binding upon the parties hereto with respect to
the portion of the total purchase price which the Executive is entitled to
receive for the Shares pursuant to this subparagraph 14b. The Executive and
each transferee of the Executive under subparagraph 3b agrees to sell the
Shares to the Persons specified in this subparagraph 14b at the price per
share of the Common Stock allocated by such auditors or their designee at the
closing of the transactions contemplated by such agreement to sell.
For purposes of effectuating any sale of the Shares pursuant to
this subparagraph 14b, the Executive and each transferee of the Executive
under subparagraph 3b hereby grants to each of the Majority Stockholder and
the Corporation and their respective designees and assigns an irrevocable
power of attorney with respect to the transfer of the Shares and authorizes
the Corporation to deliver to the Majority Stockholder or any 100% Purchaser
each stock certificate representing the Shares. The Executive and each such
transferee agrees promptly upon request and without compensation to do all
acts and execute all agreements, documents, proxies, consents of stockholders
and instruments as shall be necessary or desirable to effectuate the
consummation of any agreement to sell all of the outstanding shares of the
Common Stock to a 100% Purchaser, any agreement to sell all of the
outstanding shares of the common stock of an Affiliate of the Corporation
which owns a majority of the outstanding shares of the Common Stock to a 100%
Purchaser and any agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser pursuant to this subparagraph 14b
including, but not limited to, delivering executed stock assignments separate
from certificate naming each of the Majority Stockholder and the Corporation
and their respective assigns and designees as his attorneys for the purpose
of effectuating such transfer. The Majority Stockholder and, in the event
that the Majority Stockholder or the Corporation elects to have the
Corporation purchase the Shares, the
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Corporation agree to deliver or cause to be delivered to the Executive or his
transferees promptly following any sale of the Shares pursuant to this
Paragraph 14b the purchase price for the Shares less all amounts then owed by
the Executive to the Corporation pursuant to the Note.
15. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
a. If the Corporation proposes to register for sale any shares of
the Common Stock owned by the Majority Stockholder under the Act at a time
when the Executive or any transferee of the Executive permitted by
subparagraph 3b owns any of the Shares, it will at each such time give
written notice (the "Registration Notice") to the Executive or such
transferee of its intention to do so and, upon the written request of the
Executive or such transferee given within twenty (20) days after the
Corporation gives such notice (which request shall state the intended method
of disposition of such holder's Shares), the Corporation will use its best
efforts to effect the registration of the number of the Shares (the
"Stockholder's Registered Shares") which is calculated in the manner
specified in the following sentence by including the Stockholder's Registered
Shares in such registration statement, all to the extent required to permit
the sale or other disposition of such Shares in accordance with the intended
method of sale or other disposition given in each such request. The
Stockholder's Registered Shares shall be determined by multiplying the number
of the Shares owned by the Executive and each transferee of the Executive
under subparagraph 3b on the date that the Registration Notice is mailed by a
fraction, the numerator of which is the number of shares of the Common Stock
which are included in such registration statement and the denominator of
which is the total number of shares of the Common Stock outstanding on the
date that the Registration Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Registered Shares shall be the next larger whole integer and in the event
that the number so determined includes a fraction which is equal to or less
than .50, the Stockholder's Registered Shares shall be that number alone.
For example, assume 250,000 shares of the Common Stock are included in such
registration statement. On the date that the Corporation mails the
Registration Notice, there are 500,000 shares of the Common Stock outstanding
and the Executive and such transferees own
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1,500 of such shares. The number of the Stockholder's Registered Shares
would be 750, which is 1,500 times 250,000/500,000.
b. Notwithstanding anything to the contrary contained in
subparagraph 15a:
(i) In the event that any registration statement to be filed
pursuant to subparagraph 15a shall be, in whole or in part, in connection
with an underwritten public offering, the number of the Stockholder's
Registered Shares to be included in such registration statement may be
reduced, or no Stockholder's Registered Shares may be included in such
registration statement, if and to the extent that the managing underwriter(s)
shall give their written opinion that such inclusion would adversely affect
the marketing of the securities to be sold therein by the Majority
Stockholder.
(ii) The Corporation (A) may withdraw any registration
statement referred to in this Paragraph 15 without thereby incurring any
liability to the Executive and (B) shall in no event be obligated to register
any Shares in connection with the first underwritten public offering after
the date hereof, whether primary or secondary, of shares of the Common Stock,
including without limitation any sales of shares of the Common Stock related
to over-allotments in connection with such offering.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subparagraph 15a is
to be underwritten, then any distribution of the Stockholder's Registered
Shares shall be underwritten by the same underwriters who are underwriting
the distribution of the securities of the Corporation for the account of the
Majority Stockholder, and the Executive shall enter into the agreement with
such underwriters contemplated under subparagraph 15b(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Executive and each transferee of the Executive under subparagraph 3b shall
refrain from selling, making any short sale of, loaning,
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granting any option for the purchase of, or otherwise disposing of any of
their Shares not registered pursuant to subparagraph 15a during the period of
time which is the longer of (A) the period of distribution of the shares of
the Common Stock by such underwriter(s) in the offering and (B) the period
requested by such underwriter(s), which shall in no event exceed one hundred
eighty (180) days.
16. RIGHT TO ACQUIRE ADDITIONAL SHARES. If at any time during the
Executive's employment with the Corporation or any Subsidiary, the
Corporation issues any shares of the Common Stock, any securities convertible
into or exchangeable for shares of the Common Stock or any options, warrants
or rights to acquire shares of the Common Stock or securities convertible
into or exchangeable for shares of the Common Stock to the Majority
Stockholder or any Affiliate of the Majority Stockholder (the "New Issue
Securities"), and if shares of the Common Stock are not Publicly Traded on
the date of such issuance, the Corporation agrees that not later than sixty
(60) days after the sale of any New Issue Securities it will offer in writing
to sell to the Executive such number or principal amount of the New Issue
Securities as would enable the Executive to maintain the same aggregate
percentage ownership interest in the shares of the Common Stock (which for
purposes of this Paragraph 16 shall include shares of the Common Stock issued
and outstanding, shares held in the Corporation's treasury from time to time
and shares subject to purchase pursuant to an option held by the Majority
Stockholder on the date hereof) after such sale of the New Issue Securities
as specified in the third WHEREAS clause of this Agreement. Notwithstanding
the immediately preceding sentence, the term "New Issue Securities" shall not
include shares of the Common Stock which are at any time subject to purchase,
by the Majority Stockholder pursuant to an Option Agreement between the
Corporation and the Majority Stockholder dated on or prior to the date of
this Agreement. The offer of the Corporation to the Executive described in
the first sentence of this Paragraph 16 shall contain the same price per
share, security, option, warrant or other right constituting New Issue
Securities and substantially similar terms and conditions as the sale of the
New Issue Securities which obligates the Corporation to make the offer. The
Executive shall be entitled to accept such offer only without
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modification and only in writing for a period of ten (10) days after the
offer is made. In the event that such offer is accepted by the Executive,
the Executive shall deliver to the Corporation (i) a check in the amount of
the par value of the New Issue Securities being offered to the Executive and
(ii) a promissory note payable to the Corporation in the same form and having
the same date of maturity as the Note, bearing interest at a rate which is
two percent (2%) in excess of the Prime Rate and in the aggregate principal
amount of the purchase price of the shares of the New Issue Securities
offered to the Executive, less the amount of such check, within fifteen (15)
days after the offer is made. The note shall be secured by a pledge of the
New Issue Securities purchased by the Executive with the proceeds of the loan
evidenced thereby.
17. SPECIFIC PERFORMANCE. The Executive acknowledges that the services
to be rendered by him are of a special, unique and extraordinary character,
and in connection with rendering such services, he will have access to
Proprietary Information. The parties agree that it is impossible to measure
in money the damages that will accrue to the Corporation and its Subsidiaries
by reason of the Executive's failure to perform his obligations under this
Agreement, that such failure to perform will result in irreparable damage to
the Corporation and its Subsidiaries, and that specific performance of the
Executive's obligations may therefore be obtained by suit in equity. Without
limiting the generality of the foregoing sentence, the Corporation or any
Subsidiary shall be entitled to apply to any court of competent jurisdiction
for an injunction restraining the Executive from committing or continuing any
violation of Paragraphs 9 and/or 10. The Executive will not assert any claim
or defense in any action or proceeding to enforce any provision hereof that
the Corporation or any Subsidiary has or had an adequate remedy at law.
18. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified
mail, return receipt requested, with first-class postage prepaid, or by
facsimile with answer-back; and such notices shall be addressed: (i) if to
the Corporation, to the Secretary of the Corporation at the Corporation's
principal business office, with a copy to Chairman, Harbour Group Ltd., 7701
Forsyth Boulevard, Suite 600,
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Clayton, Missouri 63105; and (ii) if to the Executive, to his address as
reflected in the records of the Corporation; or to such other address(es) as
the parties hereto shall designate by Written Notice, furnished to all
parties in the manner provided herein. Any notice which is required to be
made within a stated period of time shall be considered timely if delivered
or mailed before midnight of the last day of such period.
19. CERTAIN TRANSACTIONS ON BEHALF OF AFFILIATES. The Executive
recognizes and acknowledges that the Corporation may on the date of this
Agreement be, or may after the date of this Agreement become, liable for the
indebtedness of Affiliates of the Corporation as a consequence of being or
becoming a party to agreements evidencing such indebtedness or guaranteeing
such indebtedness. The Executive agrees to (i) the Corporation incurring
liability for the indebtedness of its Affiliates, whether such liability was
incurred prior to the date of this Agreement or incurred after the date of
this Agreement and (ii) not assert any claim against the Corporation or its
directors, officers or stockholders in connection with or relating to such
liability of the Corporation for the indebtedness of its Affiliates, whether
such liability was incurred prior to the date of this Agreement or incurred
after the date of this Agreement. The Executive further acknowledges that
the Majority Stockholder has the option to acquire up to 40,000 shares of
newly issued Common Stock (subject to adjustment for stock splits,
recapitalizations and the like) which option is exercisable at any time to
the extent that executive employees of the Corporation and its Subsidiaries
are holders less than 40,000 shares of the Common Stock.
20. NO RIGHT TO CONTINUED EMPLOYMENT. The Executive agrees that
neither the sale of the Shares by the Corporation to him nor any provision of
this Agreement shall (i) give the Executive any right to be retained in the
employ of the Corporation or any Subsidiary, (ii) affect the right of the
Corporation or any Subsidiary to discharge the Executive at any time or (iii)
affect the Executive's right to terminate his employment with the Corporation
or any Subsidiary at any time.
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21. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had been omitted.
22. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective personal
or legal representatives, successors and assigns.
23. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed
to be and include the plural (and vice versa), whenever appropriate.
24. RULE 144 ACKNOWLEDGMENTS.
a. The Executive represents and warrants to the Corporation that
(i) he is purchasing the Shares for his own account without a view to any
distribution thereof in violation of the Act or any applicable state
securities laws, (ii) he is experienced in evaluating and making investments
of this type, and has had access to, and to his knowledge has received, all
the information that he reasonably has required to evaluate this investment
and (iii) he is financially able to bear the risks associated with an
investment in the Shares being purchased hereby.
b. The Executive acknowledges that the Corporation is issuing and
selling the Shares in reliance upon the representations and warranties set
forth in subparagraph 24a and that the Shares so acquired will be "restricted
securities" within the meaning of Rule 144 under the Act, and acknowledges
that such Shares may only be offered, sold, pledged or otherwise transferred
by him (i) if registered under the Act and registered or otherwise qualified
for sale under any applicable state securities laws or (ii) pursuant to any
exemption from such registration or qualification requirements, and that the
certificate(s) representing the Shares will bear a legend to this effect.
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25. MODIFICATIONS. No change or modification of this Agreement shall
be valid unless the same is in writing and signed by all the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the party against whom it is sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other condition, promise, agreement or
understanding at a future time.
26. POST-EMPLOYMENT RESTRICTION PERIOD; ADDITIONAL COMPENSATION. For
the purposes of this Agreement the applicable "Post-Employment Restriction
Period" shall be determined as follows:
a. If the Executive's employment with the Corporation or any
Subsidiary is terminated for Cause, the Post-Employment Restriction Period
shall be a period of one (1) year commencing on the date of termination of
such employment.
b. If the Executive's employment with the Corporation and the
Subsidiaries is terminated due to a Permanent Disability, the Post-Employment
Restriction Period shall be a period of one (1) year commencing on the date
of termination of such employment. For the purpose of this Paragraph 26,
the Executive has suffered a "Permanent Disability" if the Board of Directors
of the Corporation determines that the Executive has been or will be unable,
as a result of physical or mental illness or incapacity, to perform his
duties to the Corporation and the Subsidiaries for a period of four (4)
consecutive months or for an aggregate of more than six (6) months in any
twelve-month period.
c. If the Executive's employment with the Corporation and its
Subsidiaries shall be terminated by the Corporation or such Subsidiaries
without Cause, or if the Executive terminates his employment within sixty
(60) days after a substantial reduction in his duties, responsibilities or
compensation, the Post-Employment Restriction Period shall be a period of one
(1) year commencing on the date of termination of such employment; provided
that (i) during the
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Post-Employment Restriction Period the Corporation or its Subsidiaries shall
make monthly payments to the Executive and (ii) during the Benefits Period
the Corporation or a Subsidiary shall provide to the Executive, the Benefits,
as in effect on the date of termination of such employment, or the reasonable
equivalent thereof, as determined by the Board of Directors of the
Corporation in its sole discretion and business judgment. For the purposes
of this Paragraph 26, "Benefits Period" means a period, commencing on the
date that the Executive's employment with the Corporation and all of its
Subsidiaries terminates and ending on the earlier of (a) the end of the
initial Post-Employment Restriction Period and (b) the date that the
Executive commences other employment or any consulting arrangement. The
amount of the monthly payments shall be equal to one-twelfth (1/12) of the
Executive's annual base compensation as in effect on the date of termination
during the Benefits Period and 50% of such amount thereafter until the end of
the initial Post-Employment Restriction Period determined by this Paragraph
26c.
d. If the Executive terminates his employment with the Corporation
and the Subsidiaries for any reason other than the Corporation substantially
reducing his duties, responsibilities or compensation, within thirty (30)
days of the date of such termination the Corporation shall have the option to
designate an initial Post-Employment Restriction Period of six (6) months
commencing on the date of termination which option is exercisable by notice
given within thirty (30) days after the date on which the Corporation
receives notice of the Executive's termination of his employment.
Thereafter, the Corporation shall have three (3) additional options to extend
the Post-Employment Restriction Period for additional consecutive periods of
six (6) months each, which options shall be exercisable at the times and in
the manner set forth in this Paragraph 26d. If the initial Post-Employment
Restriction Period is determined by subparagraphs a, b or c above, at the end
of the initial Post-Employment Restriction Period the Corporation shall have
two (2) options to extend the Post-Employment Restriction Period for
additional consecutive periods of six (6) months each. The Corporation may
exercise its additional options under this Paragraph 26d by giving notice to
the Executive of each such election at any time which is not less than thirty
(30) days prior to the expiration of the
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Post-Employment Restriction Period (as may have then been extended by prior
exercise of an option pursuant to this Paragraph 26d). During any such
extension of the Post-Employment Restriction Period, the Corporation shall
make monthly payments to the Executive in an amount equal to one twelfth
(1/12th) of the Executive's annual base compensation as in effect on the date
of termination of his employment until the first full month in which the
Executive has obtained other employment or any consulting arrangement and 50%
of such amount thereafter. Notwithstanding any provision of this Paragraph 26
to the contrary, the Post-Employment Restriction Period shall not be extended
beyond a period of two (2) years without the consent of the Executive.
e. During the Post-Employment Restriction Period (including any
extensions thereof) the Executive shall give written notice to the
Corporation within five (5) days of any change in his employment or in his
duties, responsibilities or activities pursuant thereto. If the Executive
voluntarily terminates his employment with the Corporation and all of its
Subsidiaries, the Executive shall give written notice to the Corporation of
any employment which the Executive at that time expects to be engaged in
within the six-month period following his termination.
f. Notwithstanding any other provision of this Paragraph 26 to the
contrary, the provisions of this Paragraph do not, and are not intended to,
waive, disclaim or otherwise extinguish any rights of the Executive as an
employee under any applicable federal, state or local statute or ordinance.
27. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations
between the parties hereto with respect to the subject matter of this
Agreement. This Agreement is, and is intended by the parties to be, an
integration of any and all prior agreements or understandings, oral or
written, with respect to the subject matter of this Agreement.
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28. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in
Paragraph 1(f) and the following sentence. All matters concerning the
authorization of this Agreement and the consummation of the transactions
contemplated hereby including without limitation the issuance of the Shares,
the payment for the Shares and the fully paid and nonassessable status of the
Shares, shall be construed and enforced in accordance with the General
Corporation Law of the State of Delaware.
29. HEADINGS. The headings and other captions in this Agreement are
for convenience and reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
[The balance of this page has been intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
WITNESS: UNIQUIP CORPORATION
/s/ Elizabeth Bowling By: /s/ Peter S. Finley
- --------------------------- ------------------------------------
Name: Peter S. Finley
Title: VP
/s/ Joan M. Shank /s/ P. Enoch Stiff
- --------------------------- ------------------------------------
P. Enoch Stiff
The undersigned, being the record and beneficial owner of more than
fifty percent (50%) of the issued and outstanding shares of the Common Stock
of either the above-named Corporation, hereby agrees to comply with the
provisions of Paragraph 14 hereof.
Harbour Group Investments III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P.,
General Partner
By: HGM III Co., General Partner
by: /s/ Francis M. Loveland
------------------------------------
Francis M. Loveland
Vice President
Dated: September 20, 1995
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated September 20, 1995 between P. Enoch Stiff
(the "Pledgor") and Uniquip Corporation, a Delaware corporation (the "Pledgee").
WHEREAS, the Pledgee has made a loan to the Pledgor in order to permit
the Pledgor to acquire certain shares of common stock of the Pledgee described
in Schedule 1 hereto, which loan is evidenced by a Promissory Note of the
Pledgor of even date herewith;
WHEREAS, the Pledgee requires the Pledgor, as a condition to making the
aforementioned loan, to enter into this Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the making of such loan, the Pledgor
hereby agrees with the Pledgee as follows:
SECTION 1. PLEDGE. To secure the due and punctual payment by the
Pledgor of the Liabilities (as hereinafter defined), the Pledgor hereby
pledges, hypothecates, assigns, transfers, sets over and delivers unto the
Pledgee and hereby grants to the Pledgee a security interest in the following:
(i) the shares of stock specified in Schedule 1 hereto and all other
shares of stock of the Pledgee hereafter acquired by the Pledgor
(herein collectively called the "Pledged Shares") and the
certificates representing the Pledged Shares, and all cash,
securities, interest, dividends, options, rights and other
property at any time and from time to time received, receivable
or otherwise distributed in respect of, or in exchange for, any
or all of the Pledged Shares;
(ii) all other property hereafter delivered to the Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends, options,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof; and
(iii) all proceeds of any of the foregoing (the Pledged Shares and all
such additional shares, certificates, instruments, cash,
securities, interest, dividends, options, rights and other
property being herein collectively called the "Collateral").
The term "Liabilities," as used herein shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith.
SECTION 2. CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a) The Pledgee shall not be liable for its failure to collect or
realize upon the Liabilities or any collateral, security or guaranty therefor,
or any part thereof, or for any delay in so doing, nor shall the Pledgee be
under any obligation to take any action whatsoever with respect thereto.
(b) The Pledgee may from time to time, after any portion of the
Liabilities shall become due and payable, without notice to the Pledgor,
(i) transfer all or any part of the Collateral into the name of the Pledgee or
its nominee, with or without disclosing that such Collateral is subject to the
lien and security interest granted hereby, (ii) enforce collection of any of the
Collateral, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, (iii) resort to the Collateral for payment of any portion of the
<PAGE>
Liabilities whether or not it shall have resorted to any other property securing
payment of any portion of the Liabilities or shall have proceeded against any
party primarily or secondarily liable on any portion of the Liabilities and
(iv) take control of any proceeds of the Collateral.
SECTION 3. DIVIDENDS, ETC.
(a) So long as no portion of the Liabilities shall be due and
payable, the Pledgor shall be entitled to vote the Pledged Shares, to give
consents, waivers and ratifications in respect of the Pledged Shares and to
receive and retain cash dividends made on or in respect of the Pledged Shares;
provided, however, that any and all cash, stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions made on or
in respect of the Pledged Shares resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Shares or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of assets to which
the issuer thereof may be a party or otherwise, and any and all cash and other
property received in exchange for any Collateral shall be and become part of the
Collateral pledged hereunder and, if received by the Pledgor, shall be held by
the Pledgor in trust on behalf of and for the benefit of the Pledgee and shall
forthwith be delivered to the Pledgee or its designated nominee (accompanied, if
appropriate, by proper instruments of assignment and/or stock powers executed by
the Pledgor in accordance with the Pledgee's instructions) to be held subject to
the terms of this Agreement; and provided further that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair the
Collateral or the security interests granted hereby.
(b) Upon the nonpayment, when due, of any portion of the
Liabilities, all rights of the Pledgor pursuant to Section 3(a) hereof shall, at
the election of the Pledgee, cease, and the Pledgee shall have the sole and
exclusive right and authority to vote, to give consents, waivers and
ratifications, and receive all dividends and distributions pursuant to Section
3(a) hereof.
SECTION 4. REMEDIES. In the event that any portion of the Liabilities
is not paid when due, the Pledgee, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Pledgor or any other
person (all and each of which demands, advertisements, and/or notices being
hereby expressly waived by the Pledgor), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
parcels at public or private sales, at any exchange or broker's board or at any
of the Pledgee's offices or elsewhere, upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk, with the right upon
any such sale, public or private, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Pledgor,
which right or equity is hereby expressly waived and released by the Pledgor.
The Pledgee shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way relating
to the rights of the Pledgee hereunder (including reasonable attorney's fees and
legal expenses), to the payment in whole or in part of the Liabilities in such
order as it may elect, and only after such application of such net proceeds and
after the payment in full of the Liabilities by the Pledgee and any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need the Pledgee account for the
surplus, if any, to the Pledgor. The Pledgor agrees that the Pledgee need not
give more than ten days' notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition is to take
place and that such notice is reasonable notification of such matters. No
2
<PAGE>
notification need be given the Pledgor if, after any portion of the Liabilities
is not paid when due, it shall have signed a statement renouncing or modifying
any right to notification of any sale or other intended disposition. The
Pledgee shall not be obligated to make any sale pursuant to any such notice.
The Pledgee may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Pledgee until the selling price is paid by the purchaser
thereof, but the Pledgee shall incur no liability in the case of the failure of
such purchaser to take up and pay for the Collateral so sold and in case of any
such failure such Collateral may again be sold on like notice. The Pledgee,
however, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit at law or in equity to foreclose the pledge and security
interest under this Agreement and sell the Collateral, or any part thereof,
under a judgment or decree of a court of competent jurisdiction. In addition to
the rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to any portion of the
Liabilities, the Pledgee shall have all the rights and remedies of a secured
party under the Uniform Commercial Code. The Pledgor further agrees to waive
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents and warrants that (a) the Pledgor is the legal record and beneficial
owner of, and has good and marketable title to, the Pledged Shares, subject to
no perfected lien whatsoever except the lien created by this Agreement; (b) no
consent of any other person (including, without limitation, his creditors) and
no consent, license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by him in connection
with the execution, delivery or performance of this Agreement; (c) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation, or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Pledgor is a party or which purports to
be binding upon the Pledgor or upon any of the Pledgor's assets, and will not
result in the creation or imposition of any lien on any of the Pledgor's assets
except as contemplated by this Agreement; and (d) the Pledgor has delivered to
the Pledgee the Pledged Shares, with the certificates therefor duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, and the pledge,
assignment and delivery of the Pledged Shares pursuant to this Agreement creates
a valid lien on and a perfected security interest in the Pledged Shares, and the
proceeds thereof, subject to no prior lien, or to any agreement purporting to
grant to any third party a security interest in the Pledgor's property or assets
which would include the Pledged Shares. The Pledgor covenants and agrees that
the Pledgor will not sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, nor will the Pledgor
create, incur or permit to exist any perfected lien with respect to any part of
the Collateral, or any interest therein, or any proceeds thereof, except for the
lien created by this Agreement, without the prior written consent of the
Pledgee; and the Pledgor further covenants and agrees that the Pledgor will
defend the Pledgee's right, title and security interest in and to the Collateral
and the proceeds thereof against the claims and demands of all persons; and the
Pledgor further covenants and agrees to deliver to the Pledgee from time to time
on request such stock powers and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee may
request.
3
<PAGE>
SECTION 6. SALE OF THE PLEDGED SHARES.
(a) The Pledgor recognizes that the Pledgee may be unable to effect
a public sale of any or all of the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable to the seller than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall not be deemed to have been made in commercially
unreasonable manner by virtue of its private nature. The Pledgee shall be under
no obligation to delay a sale of any of the Pledged Shares for the period of
time necessary to permit the issuer thereof to register such securities for
public sale under the Securities Act or under applicable state securities laws
even if the issuer would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Pledged Shares valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense.
SECTION 7. FURTHER ASSURANCE. The Pledgor agrees that, at any time and
from time to time upon the written request of the Pledgee, it will execute and
deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of the Agreement.
SECTION 8. AUTHORITY OF PLEDGEE.
(a) The Pledgee is hereby appointed the attorney-in-fact of the
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which the Pledgee may deem
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, provided that no
action may be taken by the Pledgee pursuant to such appointment so long as the
Liabilities are not yet due and payable. Without limiting the generality of the
foregoing, the Pledgee shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
(b) The Pledgee shall have and be entitled to exercise all such
powers hereunder as are specifically delegated to the Pledgee by the terms
hereof, together with such powers as are incidental thereto. The Pledgee may
execute any of its duties hereunder by or through agents or employees and shall
be entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither the
Pledgee, nor any director, officer or employee of the Pledgee, shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct. The Pledgor hereby agrees to reimburse the Pledgee, on demand, for
all reasonable expenses incurred by the Pledgee in connection with the
enforcement of this Agreement (including expenses incurred by any agent employed
by the Pledgee) and agrees to indemnify and hold harmless the Pledgee and/or any
such agent from and against any and all liability incurred by the Pledgee or
such agent hereunder or in connection herewith, unless such liability shall be
due to willful misconduct or negligence on the part of the Pledgee or such
agent.
4
<PAGE>
SECTION 9. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10. NO WAIVER, CUMULATIVE REMEDIES. The Pledgee shall not by
any act, delay, omission or otherwise be deemed to have waived any of its
rights, powers or remedies hereunder and no waiver shall be valid unless in
writing, signed by the Pledgee, and then only to the extent therein set forth.
A waiver by the Pledgee of any right, power or remedy hereunder on any one
occasion shall not be construed as a bar to the exercise of any right, power or
remedy which the Pledgee would otherwise have on any future occasion. No
failure to exercise, nor any delay in exercising, on the part of the Pledgee any
right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The rights, powers and remedies herein provided are cumulative and
may be exercised singly or concurrently, and are not exclusive of any rights,
powers or remedies provided by law.
SECTION 11. NOTICES. All notices, demands, requests and other
communications provided for or permitted under this Agreement shall be in
writing, either delivered in hand or sent by registered first class mail,
postage prepaid, or by facsimile with answer-back, addressed, if to the Pledgor,
to P. Enoch Stiff at his address as reflected in the records of the Pledgee and,
if to the Pledgee, to Chairman, Uniquip Corporation, 7701 Forsyth Boulevard,
Suite 600, Clayton, Missouri 63105 or to such other address as the party to
receive any such notice, demand, request or communication may have designated by
written notice to the other party, which notice complies as to delivery with the
terms of this Section 11.
SECTION 12. TERMINATION. Upon payment in full of the Liabilities in
accordance with their terms and the performance by the Pledgor of all of the
Pledgor's obligations under this Agreement, this Agreement shall terminate and
the Pledgor shall be entitled to the return, at the Pledgor's expense, of such
of the Collateral in the possession or control of the Pledgee as may have been
pledged by the Pledgor under this Agreement and which has not theretofore been
disposed of pursuant to the provisions hereof.
SECTION 13. MISCELLANEOUS. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon his successors and assigns, and shall,
together with the rights, powers and remedies of the Pledgee hereunder, inure to
the benefit of the Pledgee and its successors and assigns.
SECTION 14. AMENDMENTS; APPLICABLE LAW. None of the terms or
provisions of this Agreement may be amended except by an instrument in writing,
duly executed by the Pledgee. This Agreement shall be governed by and construed
in accordance with the laws of the State of Missouri, without regard to the
conflicts of laws principles of such jurisdiction.
5
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and
delivered this Agreement on the day and year first above written.
PLEDGOR
/s/ P. Enoch Stiff
--------------------------------------
P. Enoch Stiff
PLEDGEE
UNIQUIP CORPORATION
BY: /s/ Peter S. Finley
-----------------------------------
Name: Peter S. Finley
Title: VP
6
<PAGE>
SCHEDULE 1
ISSUER OF CERTIFICATE NUMBER OF
PLEDGED SHARES CLASS NUMBER SHARES
Uniquip Corporation Common Stock 8.00 20,000
7
<PAGE>
EXHIBIT 10.3
PROMISSORY NOTE
$126,859.00 September 20, 1995
FOR VALUE RECEIVED, on or before ten (10) years from the date hereof, the
undersigned, P. Enoch Stiff (the "Maker"), promises to pay to the order of
Uniquip Corporation, a Delaware corporation (the "Lender"), at 7701 Forsyth
Boulevard, Suite 600, St. Louis, Missouri 63105, or at such other place as the
holder hereof may from time to time designate in writing, the principal sum of
one hundred twenty-six thousand eight hundred fifty-nine dollars ($126,859.00),
or so much thereof as shall be advanced or readvanced and from time to time
remain unpaid, plus interest on the principal balance thereof at a rate of six
and fifty-six hundredths (6.56%) per annum annually, which is the applicable
federal rate for debt instruments with a term in excess of nine (9) years, as
determined by the Internal Revenue Service in accordance with Section 1274(d) of
the Internal Revenue Code of 1986, as amended and in effect on the date hereof.
This Note shall be payable in successive annual installments of accrued
interest only, followed by one (1) final installment at maturity in the amount
of the then outstanding principal balance of this Note and all accrued and
unpaid interest thereon. Such consecutive annual installments shall be due on
each December 31 after the date hereof until the tenth anniversary of the date
hereof, the maturity date of this Note, when the entire principal balance of
this Note and all accrued and unpaid interest thereon, as well as all other
costs, fees or charges payable hereunder, if any, shall be due and payable in
full. Interest on this Note shall be calculated on a 360 day year, per diem
basis. All payments hereunder shall be made in lawful currency of the United
States and in immediately available funds.
This Note may be prepaid, in whole or in part, at any time without
penalty and shall be prepaid in full at such time as the Maker shall sell all or
any part of the Pledged Shares (as such term is defined in that certain Stock
Pledge Agreement of even date herewith between the Maker and the Lender). Any
partial prepayments shall not, however, relieve the Maker of the obligation to
pay principal hereunder as and when the same would otherwise fall due.
The Maker (i) waives presentment, demand, protest and notice of
presentment, notice of protest and notice of dishonor of this debt and each and
every other notice of any kind with respect to this Note, (ii) agrees that the
holder of this Note, at any time or times, without notice to it or its consent,
may grant extensions of time, without limit as to the number or the aggregate
period of such extensions, for the payment of any sums due hereunder, and (iii)
to the extent not prohibited by law, waives the benefit of any law or rule of
law intended for its advantage or protection as an obligor hereunder or
providing for its release or discharge from liability under this Note, in whole
or in part, on account of any facts or circumstances other than full and
complete payment of all amounts due hereunder.
In the event any one or more of the provisions contained in this Note or
any of the other security documents shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note or such other
security document, but this Note and the other security documents shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein or therein.
<PAGE>
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is secured by a certain Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement") by and between the Maker and the Lender.
(This Note and the Stock Pledge Agreement, together with all extensions,
renewals and modifications thereof and substitutions therefor, being herein
collectively referred to as the "security documents").
All of the terms, covenants, provisions, conditions, stipulations,
promises and agreements contained in the security documents to be kept, observed
and performed by the Maker are hereby made a part of this Note and incorporated
herein by reference to the same extent and with the same force and effect as if
they were fully set forth herein, and the Maker promises and agrees to keep,
observe and perform them, or cause them to be kept, observed and performed,
strictly in accordance with the terms and provisions thereof.
The Maker warrants and represents that the loan evidenced hereby is being
made for business or investment purposes.
This Note shall be governed in all respects by the laws of Missouri and
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
Oral agreements or commitments to loan money, extend credit or to forbear
from enforcing repayment of a debt including promises to extend or renew such
debts are not enforceable. To protect the Maker and the Lender, or any holder
of this Note, from misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is the complete and
exclusive statement of the agreement between us, except as we may later agree in
writing to modify it.
WITNESS:
/s/ Joan M. Shank /s/ P. Enoch Stiff (SEAL)
- ---------------------------------- -----------------------------
P. Enoch Stiff
Maker
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<PAGE>
UNIQUIP CORPORATION
EXHIBIT 10.4
September 20, 1995
Mr. P. Enoch Stiff
TRAK International, Inc.
369 West Western Avenue
Port Washington, WI 53704
Dear Mr. Stiff,
Reference is made to that promissory note (the "Note") dated today made by you
in connection with the sale by Uniquip Corporation (the "Corporation") to you of
twenty thousand (20,000) shares of the Corporation's Common Stock. The
Corporation hereby promises to compensate you for so long as you are employed by
the Corporation or its subsidiaries, by bonus or otherwise and in addition to
any other compensation (including bonus) payable to you, in amounts sufficient
to allow you to pay (i) interest on the Note as and when such interest becomes
due and payable, (ii) approximately all federal and state income, determined
solely with respect to your aggregate compensation from the Corporation and its
subsidiaries, taxes that you will incur as a consequence of the receipt of
amounts paid under clause (i) and (ii) of this letter.
Very truly yours,
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
---------------------------
Peter S. Finley
Vice President
<PAGE>
AMENDMENT TO PROMISSORY NOTE AND
STOCK PLEDGE AGREEMENT
AMENDMENT TO PROMISSORY NOTE AND STOCK PLEDGE AGREEMENT (the "Agreement"),
dated September 30, 1996, by and among Omniquip International, Inc., a Delaware
corporation formerly known as Uniquip Corporation (the "Corporation"), and P.
Enoch Stiff (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Corporation sold two hundred thousand (200,000) shares (as
adjusted for stock splits effected or to be effected prior to the effective date
of this Agreement) of its Common Stock, par value $.01 per share (the "Shares"),
to the Stockholder at an aggregate purchase price of one hundred twenty-seven
thousand fifty-nine dollars ($127,059.00);
WHEREAS, in connection with the sale of the Shares to the Stockholder: (i)
the Stockholder and the Corporation entered into a Purchase and Stockholder
Agreement (the "Stockholder Agreement"), dated September 20, 1995; (ii) the
Stockholder executed and delivered a Promissory Note, dated September 20, 1995,
payable to the order of the Corporation in the principal amount of one hundred
twenty-six thousand eight hundred fifty-nine dollars ($126,859.00) (the
"Stockholder Note"); and (iii) the Stockholder and the Corporation entered into
a Stock Pledge Agreement (the "Stock Pledge Agreement"), dated September 20,
1995, pursuant to which the Stockholder pledged the Shares as security for the
performance of his obligations under the Stockholder Note; and
WHEREAS, the parties hereto desire (i) to modify the Stockholder Note and
(ii) to amend the Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MODIFICATION OF STOCKHOLDER NOTE. The third paragraph of the
Stockholder Note is hereby amended and restated on the Effective Date to read in
its entirety as follows:
"This Note may be prepaid, in whole or in part, at any time without
penalty. Upon the sale or other transfer of any of the Pledged Shares (as
such term is defined in that certain Stock Pledge Agreement, dated
September 20, 1995, by the Maker in favor of the Lender (as the same may be
amended, modified or supplemented, the "Stock Pledge Agreement")), a
prepayment of this Note shall be made in an amount equal to the then
outstanding principal balance of this Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Notwithstanding the preceding sentence, no
prepayment hereunder shall be required in connection with any transfer of
the Pledged Shares to the Lender upon the exercise of any option granted to
the Maker under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), PROVIDED that as a condition to such transfer, the Maker
agrees to deliver to the Lender the certificates evidencing the shares
issued upon exercise of such option (accompanied by duly executed stock
powers) and subjects such shares to the lien of the Stock Pledge Agreement
in substitution for the Pledged Shares so transferred. Any partial
prepayments hereunder shall not relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due."
<PAGE>
B. AMENDMENT TO STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended on the Effective Date as follows:
1. by deleting Schedule 1 thereto in its entirety and inserting in lieu
thereof the schedule attached hereto as Schedule 1
2. by deleting the definition of the term "Liabilities" therein and
inserting in lieu thereof the following:
"The term "Liabilities," as used herein, shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith, as may be amended, modified or supplemented
from time to time (the "Stockholder Note")."
3. by inserting a new Section 15 as follows:
"Section 15. TRANSFER AND PARTIAL RELEASE OF SHARES. The Pledgee agrees
that the Pledgor may sell or otherwise transfer all or any portion of the
Pledged Shares without the prior consent of the Pledgee, PROVIDED THAT
prior to or simultaneous with such sale or transfer a prepayment of the
Stockholder Note is made in an amount equal to the then outstanding
principal balance of the Stockholder Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Upon such prepayment, the Pledgee shall
deliver to the Pledgor certificates evidencing the Pledged Shares being
sold or transferred, registered in such names as the Pledgor may request,
PROVIDED that the Pledgor shall be responsible for any transfer or similar
tax arising by reason of any such transfer.
Notwithstanding the foregoing, the Pledgor may transfer all of the Pledged
Shares to the Pledgee upon the exercise of any option granted to the
Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note,
PROVIDED that as a condition to such transfer, the Pledgor agrees to
deliver to the Pledgee the certificates evidencing the shares issued upon
exercise of such option (accompanied by duly executed stock powers) and
subjects such shares to the lien of this Stock Pledge Agreement in
substitution for the Pledged Shares so transferred."
D. WAIVER OF STOCKHOLDER AGREEMENT RESTRICTIONS. Notwithstanding anything
to the contrary contained in the Stockholder Agreement, the Pledgor may transfer
all of the Pledged Shares to the Pledgee upon the exercise of any option granted
to the Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note, PROVIDED
that as a condition to such transfer, the Pledgor agrees to deliver to the
Pledgee the certificates evidencing the shares issued upon exercise of such
option (accompanied by duly executed stock powers) and subjects such shares to
the lien of this Stock Pledge Agreement in substitution for the Pledged Shares
so transferred
E. EFFECTIVE DATE. This Agreement and each of the amendments effected
hereby shall become effective on the date the Corporation's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Corporation's Common Stock becomes effective under the Act (the "Effective
Date"). Until the Effective Date, the Stockholder
- 2 -
<PAGE>
Note, the Stock Pledge Agreement and the Stockholder Agreement, as in effect on
the date hereof, shall remain in full force and effect without giving effect to
this Agreement. On and after the Effective Date, the Stockholder Note, the
Stock Pledge Agreement and the Stockholder Agreement, as modified hereby shall
continue to be in full force and effect and each is hereby ratified and
confirmed in all respects.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Missouri (without giving effect to such
jurisdiction's conflict of laws principles).
G. HEADINGS. The headings and captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
H. LEGEND. The Corporation shall cause the following legend to be typed
onto the face of the Stockholder Note:
"This Promissory Note has been modified pursuant to an Amendment to
Promissory Note and Stock Pledge Agreement, dated September 20, 1995, by
and between the Maker and the Lender, dated September 30, 1996."
I. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ Philip G. Franklin
------------------------------------------
Name: Philip G. Franklin
Title: Chief Financial Officer
/s/ P. Enoch Stiff
---------------------------------------------
P. Enoch Stiff
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<PAGE>
Schedule 1
Issuer of Certificate Number of
Pledged Shares Class Number Shares
- ------------------------- ----- ----------- ---------
Omniquip International, Inc. Common 200,000
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EXHIBIT 10.6
INVESTMENT AGREEMENT
This Investment Agreement, made this August 16th, 1995, between Harbour
Group Investments III, L.P., a Delaware limited partnership (the "Partnership"),
P. Enoch Stiff (the "Investor") and Uniquip Corporation, a Delaware corporation
(the "Corporation").
W I T N E S S E T H T H A T:
WHEREAS, the Partnership has determined to make an investment in the
Corporation consisting of the purchase of (i) 820,000 shares of the
Corporation's common stock, par value one cent ($.01) per share (the "Common
Stock") (the "Partnership Equity Investment") and (ii) the 15% Subordinated
Note, Due August 31, 2003, of the Corporation's subsidiary, TRAK International,
Inc., a Delaware corporation, in the original principal amount of $2,000,000
(the "Note");
WHEREAS, Uniquip-HGI Associates, L.P., an Affiliate of the Partnership,
has agreed to acquire 100,000 shares of Common Stock;
WHEREAS, the board of directors of the Corporation has resolved to issue
up to 50,000 shares of Common Stock (the "Management Shares") to executive
employees of the Corporation and its Subsidiaries;
WHEREAS, the Investor has offered to make an investment with the
Partnership in the Common Stock consisting of 30,000 shares of Common Stock (the
"Investor Equity Investment"), and
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the Corporation has agreed to accept such offer, subject to the terms and
conditions set forth in this Agreement; and
WHEREAS, in connection with the Investor Equity Investment, the Investor
has offered to participate in sixty thousand dollars ($60,000) in principal
amount of the Note (the "Investor Debt Investment"), and the Partnership has
agreed to accept such offer, subject to the terms and conditions set forth in
this Agreement.
NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1.DEFINITIONS.
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person.
(c) "Additional Investment" shall have the meaning set forth in
Section 12.
(d) "Additional Investment Notice" shall have the meaning set forth in
Section 12.
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(e) "Bona Fide Offer" shall have the meaning set forth in Section 4.
(f) "Book Value" of Shares or New Issue Securities shall be their book
value per share, on a fully diluted basis, as computed by the Corporation's
internal auditing staff in accordance with generally accepted accounting
principles consistent with past practice of the Corporation and certified by the
chief financial officer of Harbour Group Ltd. (or any successor to Harbour Group
Ltd.), as of the last day of the month preceding the month in which the event
requiring valuation occurs, which certification shall be final and binding.
(g) "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
(h) "EBIT" shall have the meaning set forth in Section 9.
(i) "Equity Value" shall have the meaning set forth in Section 9.
(j) "Investor's Included Shares" shall have the meaning set forth in
Section 10.
(k) "Investor Debt Investment" shall have the meaning set forth in the
third WHEREAS clause.
(l) "Investor Equity Investment" shall have the meaning set forth in
the second WHEREAS clause.
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(m) "Investor's Registered Shares" shall have the meaning set forth in
Section 11.
(n) "New Issue Securities" shall have the meaning set forth in
Section 12.
(o) "Note" shall have the meaning set forth in the first WHEREAS
clause.
(p) "100% Purchaser" shall have the meaning set forth in Section 10.
(q) "Option" shall have the meaning set forth in Section 9.
(r) "Participation Agreement" shall have the meaning set forth in
Section 13.
(s) "Partnership Equity Investment" shall have the meaning set forth in
the first WHEREAS clause.
(t) "Person" means any individual, corporation, firm, partnership or
other business entity.
(u) "Publicly Traded," with respect to the Common Stock, means listed
for trading on any national or regional securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation system or a
successor system.
(v) "Registration Notice" shall have the meaning set forth in Section
11.
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(w) "Sale of Control Notice" shall have the meaning set forth in
Section 10.
(x) "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
(y) "Shares" shall have the meaning set forth in Section 2.
(z) "Subsidiary" shall mean any corporation or other entity of which
the Corporation directly or indirectly owns beneficially or of record fifty
percent (50%) or more of (i) the outstanding shares of capital stock if such
entity is a corporation or (ii) the outstanding ownership interests if such
entity is not a corporation.
(aa) "Written Notice" shall have the meaning set forth in Section 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Investor or any of his transferees (direct
or indirect, including without limitation the Investor's personal or legal
representatives, successors and assigns) acquired pursuant to the Investor
Equity Investment or hereafter acquired by virtue of ownership of such shares
(E.G., through stock dividends, stock splits, stock exchanges, etc.)
(collectively the "Shares"), and whether such transfers are voluntary,
involuntary or by operation of law, resulting from death or otherwise. This
Agreement shall not apply to shares of Common Stock acquired by the Investor
pursuant
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<PAGE>
to that certain Purchase and Stockholder Agreement between the Investor and the
Corporation and to any shares of Common Stock acquired by virtue of the
ownership of such Common Stock.
3 RESTRICTIONS ON THE TRANSFER OF SHARES.
(a) Except as otherwise provided in Sections 3(b), 3(c), 3(d), 4, 9,
10, and 11 of this Agreement, neither the Investor nor any of his transferees
(direct or indirect, including without limitation the Investor's personal or
legal representatives, successors and assigns) shall or may sell, exchange,
deliver, assign, bequeath or give, pledge, mortgage, hypothecate or otherwise
encumber, transfer or permit to be transferred, or otherwise dispose of, any or
all of the Shares, whether voluntarily, involuntarily or by operation of law
(including without limitation the laws of bankruptcy, intestacy, descent and
distribution and succession).
(b) In the event of the Investor's death, the Shares may be transferred
to the Investor's personal or legal representatives, estate or distributees of
such estate, and such transfer shall be registered on the stock transfer books
of the Corporation.
(c) In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Partnership under Section 11 of this Agreement to
purchase the Shares which are then owned by the Investor or any representative,
successor or transferee of the Investor shall lapse but all of the other
provisions of this
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<PAGE>
Agreement shall continue in full force and effect. On the second anniversary of
the date on which shares of the Common Stock are first Publicly Traded, the
restrictions on the transfer of the Shares contained in Sections 3(a), 4, 5 and
7 of this Agreement shall lapse; provided, however, that in the event of the
death of the Investor prior to the date of such second anniversary, all of the
Shares owned by the Investor on the date of his death may be sold without any
restriction imposed by this Agreement.
(d) Provided that such action is not objected to by any underwriter
then engaged in discussions with the Corporation regarding public offerings of
the Corporation's securities and the Corporation has reasonably determined that
such action will not adversely affect the market for its securities, the
Corporation shall, upon the request of the Investor at the following times,
permit the Investor to sell or otherwise transfer without regard to Sections
3(a), 4, 5 and 7 of this Agreement a portion of the Shares not to exceed the
whole number of Shares equaling the following percentage of the number of Shares
(adjusted for any intervening conversion, stock split, stock dividend or the
like) held by the Investor on the date on which the Common Stock is first
Publicly Traded:
(i) after the last day of the sixth (6th) full month following
the date on which the Common Stock is first Publicly Traded, twenty-five percent
(25%);
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<PAGE>
(ii) after the first anniversary of the date on which the Common
Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the eighteenth (18th) full month following the date
on which the Common Stock is first Publicly Traded, a cumulative seventy-five
percent (75%).
(4) RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES.
(a) In the event that the Investor shall receive a Bona Fide Offer
(hereinafter defined) to purchase any or all of the Shares and the Investor
desires to accept such Bona Fide Offer, the Investor shall promptly send Written
Notice (hereinafter defined) to the Partnership, offering to sell such Shares to
the Partnership in accordance with subsection 4(c) hereof, at the same price and
upon the same terms and conditions as are contained in the Bona Fide Offer.
Such offer shall be irrevocable for a period of ninety (90) days from the
receipt of Written Notice by the Partnership. The Written Notice shall contain
a true and complete copy of the Bona Fide Offer, setting forth the price and all
terms and conditions of such offer, as well as the name(s), address(es) (both
home and office), and business(es) or occupation(s) of the third party offeror
(or offerors). The Written Notice shall be accompanied by evidence that
sufficient funds are available to the third party offeror (or offerors) to carry
out the terms of such offer. Any Written Notice that does not contain all such
requisite information shall
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<PAGE>
not be considered a "Written Notice" for purposes of this subsection 4(a).
(b) As used in this Agreement, the term "Bona Fide Offer" shall mean a
legally enforceable offer in writing, made and signed by a Person who is
financially capable of carrying out the terms of such Bona Fide Offer.
(c) Whenever a Bona Fide Offer to purchase Shares has been received by
the Investor, and Written Notice thereof has been sent to the Partnership, the
following procedure shall be complied with: For a period of ninety (90) days
from its receipt of such Written Notice, the Partnership shall have the right,
in its sole discretion, without obligation, to purchase all (but no less than
all) of the Shares so offered. If the Partnership elects to purchase all of the
Shares so offered, it must send written notice thereof to the Investor within
said ninety (90) day period. If the Partnership does not elect to purchase the
Shares so offered within the prescribed time period, the Investor shall have the
right to accept the Bona Fide Offer in whole (but not in part) and to sell such
Shares, subject to the provisions and restrictions of this Agreement, but only
in strict accordance with all of the provisions of the Bona Fide Offer and only
if the sale is fully consummated within one hundred and twenty (120) days after
the mailing of the initial Written Notice to the Partnership. In the event that
such sale is not fully consummated within one hundred and twenty (120) days
after the mailing of the Written Notice, the provisions of this Section 4
9
<PAGE>
must again be complied with by the Investor. The Partnership may assign its
rights under this Section 4 to the Corporation.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares are
transferred to any Person, at any time or from time to time, by operation of law
or pursuant to the provisions of Sections 3 or 4 hereof, the transferee(s) shall
agree in writing (for and on behalf of himself or itself, his or its personal or
legal representatives, transferees, successors and assigns) to be bound by all
provisions of this Agreement as a party hereto. Prior to any such transfer, the
transferee shall provide the Partnership with the transferee's written agreement
so to be bound. In the absence of any such written agreement no such transfer
shall be effective for any purpose, but the failure to obtain such written
agreement shall in no way diminish the applicability of the provisions hereof.
Without limiting the generality of the preceding provisions of this Section 5,
in the event that any Shares are transferred to any Person pursuant to the
provisions of Section 4, such Person shall agree in writing to be bound by all
provisions of this Agreement and such Person shall be deemed thereafter to be
the Investor in respect of the Shares transferred to such Person as if initially
named in this Agreement and shall be subject as such to the provisions of this
Agreement. Prior to any such transfer, the transferee shall provide the
Partnership with the transferee's written agreement so to be bound. In the
absence of any such written agreement no such transfer shall be effective for
any purpose, but the failure
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<PAGE>
to obtain such written agreement shall in no way diminish the applicability of
the provisions hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer book
in which shall be recorded, among other things, the name and address of each of
its stockholders. No transfer of any Shares shall be effective or valid unless
and until recorded in such stock transfer book. The Corporation shall not
record any transfer of Shares in such stock transfer book unless the transfer is
in strict compliance with all provisions of this Agreement. The Investor agrees
that, in the event he desires to make a transfer within the provisions hereof,
he shall furnish to the Corporation such evidence of his compliance with this
Agreement and that the proposed transfer may be effected without registration
under the Securities Laws as from time to time may be required by the Board of
Directors of, or counsel for, the Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate representing
Shares shall bear the following legends:
"The encumbering, transfer or other disposition (including, without
limitation, any transfer or disposition pursuant to the laws of
bankruptcy, intestacy, descent and distribution and succession) of the
shares of common stock evidenced by the within Certificate is restricted
under the terms of an Investment Agreement, dated August , 1995,
between Harbour Group Investments III, L.P., TRAK Holdings, Inc. (the
"Corporation") and Enoch Stiff, a copy of which Agreement is on file at
the principal office of the Corporation. Such shares are also subject
to a voting agreement contained in said Investment Agreement. Upon
written request of any stockholder of the Corporation, the Corporation
11
<PAGE>
shall furnish, without charge to any such stockholder, a copy of said
Investment Agreement."
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
law (collectively, the "Securities Laws") and may not be sold,
transferred or otherwise disposed of unless (i) a registration statement
covering such shares is effective under the Securities Laws or (ii) the
transaction is exempt from registration under the Securities Laws and,
if the Corporation requests, an opinion satisfactory to the Corporation
to such effect has been rendered by counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase of
any Shares pursuant to Section 4 or 9 of this Agreement, the Investor shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing such
documentary stamps, if any, as are necessary, and such assignments, certificates
of authority, tax releases, consents to transfer, instruments and evidences of
title of the Investor and of the Investor's compliance with this Agreement as
may be reasonably required by the purchaser or by counsel for the purchaser.
9. OPTION TO PURCHASE THE SHARES.
(a) The Investor hereby grants to the Partnership the option (the
"Option") to purchase the Shares at a price per share equal to the Equity Value
of the Corporation divided by the total number of shares of the Common Stock
then outstanding (on a fully diluted basis). For the purpose of computing the
purchase price per share of the Shares pursuant to this Section, the "Equity
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<PAGE>
Value" of the Corporation shall be equal to (a) the Corporation's consolidated
EBIT multiplied by five (5), reduced by (b) the outstanding balance of all
indebtedness of the Corporation and its Subsidiaries for borrowed money,
including without limitation, the outstanding principal balance of the Note.
For the purposes of this Section, "EBIT" means the consolidated earnings before
interest and taxes including depreciation and amortization of goodwill
(determined in accordance with generally accepted accounting principles) of the
Corporation and its Subsidiaries for the preceding twelve month period. The
computation of the Equity Value shall be made by the Corporation's internal
auditing staff and certified by the chief financial officer of Harbour Group
Ltd. (or any successor to Harbour Group Ltd.), which certification shall be
final and binding.
(b) The Option shall be exercisable upon the first to occur of the
following:
(i) the termination of the Investor's employment with the
Corporation and its Subsidiaries for any reason (including
his death); and
(ii) the default by the Investor in the payment or performance
of any of his obligations under this Agreement and the
continuation of such default thirty (30) days after the
giving of
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written notice thereof by the Partnership or the
Corporation.
(c) The Option may be exercised at any time upon or within 180 days
following the occurrence of an event described in Section 9(b) by the giving of
notice of such exercise to the Investor. Such notice shall designate a date,
time and location for the closing for the purchase of the Shares. At such
closing, the Investor, and/or his transferee, shall deliver the items described
in Section 8, against delivery of the purchase price for the Shares.
10. SALE OF CONTROL.
(a) In the event that the Partnership shall seek to sell more than
fifty percent (50%) of the outstanding shares of the Common Stock to a Person
which is not an Affiliate of the Partnership (other than an underwriter in
connection with an offering pursuant to a registration statement filed under the
Act), the Investor shall be provided a written notice which specifies the
identity of the proposed purchaser, the number of shares of the Common Stock
proposed to be purchased and the consideration proposed to be paid by such
purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Investor shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Partnership to include in such proposed sale the number of Shares (the
"Investor's Included Shares") which is calculated in the manner specified in the
following sentence.
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The Investor's Included Shares shall be determined by multiplying the number of
Shares owned by the Investor on the date that the Sale of Control Notice is
mailed by a fraction, the numerator of which is the number of shares of the
Common Stock which the proposed purchaser desires to purchase and the
denominator of which is the total number of shares of the Common Stock which are
outstanding on the date that the Sale of Control Notice is mailed. In the event
that the number so determined includes a fraction which is greater than .50, the
Investor's Included Shares shall be the next larger whole integer and in the
event that the number so determined includes a fraction which is equal to or
less than .50, the Investor's Included Shares shall be the next smaller whole
integer. For example, assume the proposed purchaser desires to purchase 450,000
shares of the Common Stock. On the date that the Sale of Control Notice is
mailed, there are 500,000 shares of the Common Stock outstanding and the
Investor owns 1,500 of such shares. The number of the Investor's Included
Shares would be 1,350, which is 1,500 times 450,000/500,000.
(b) The parties hereto recognize and acknowledge that any prospective
purchaser of the business of the Corporation may wish to (i) purchase all of the
outstanding shares of the Common Stock, (ii) purchase all or substantially all
of the assets of the Corporation or (iii) acquire the Common Stock or assets of
the Corporation by merger. Accordingly, the Investor and each transferee of the
Investor under subsection 3(b) agrees, upon the request of the Corporation, to
(x) sell all of the Shares then
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owned by the Investor to any prospective purchaser of the business of the
Corporation which is not an Affiliate of the Partnership (a "100% Purchaser")
or, at the option of the Partnership, to the Corporation in connection with the
sale of all of the outstanding shares of the Common Stock to a 100% Purchaser
and (y) at any time prior to the tenth anniversary of this Agreement, vote the
Shares then owned by the Investor in favor of (A) any sale of all or
substantially all of the assets of the Corporation to a 100% Purchaser or
(B) any merger or consolidation of the Corporation with a 100% Purchaser, in
each case which has been approved by the Board of Directors of the Corporation
in accordance with the provisions of this subsection 10(b). The Investor and
each such transferee agrees promptly upon any request made by the Partnership
prior to the tenth anniversary of this Agreement and without compensation to
execute and deliver an amendment to this Agreement or other instrument which
extends for an additional ten year period the Investor's agreement to vote the
Shares as specified in subsection 10(b)(y). For purposes of this subsection
10(b), the Investor shall be conclusively deemed and considered to own all
Shares owned by himself, his estate, his executors and administrators, his
distributees and his personal and other legal representatives and any other
transferee.
In the event that the Partnership shall have entered into an agreement
to sell all of the outstanding shares of the Common Stock owned by it to a 100%
Purchaser or the Corporation shall
16
<PAGE>
have entered into an agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser, whether individually or in conjunction with
the sale of the business of an Affiliate or Affiliates of the Corporation, the
Corporation's auditors, or their designee, shall allocate such portion of the
total purchase price to the then outstanding shares of the Common Stock which is
fair and reasonable (with each outstanding share being allocated the same
portion of the purchase price) giving such consideration as they deem
appropriate to the (i) terms and conditions of such agreement to sell, (ii) book
value and the earnings and projected earnings of the Corporation and each
Affiliate of the Corporation whose business is or will be sold pursuant to such
agreement to sell, determined in accordance with generally accepted accounting
principles consistently applied where relevant and appropriate in the opinion of
the Corporation's auditors or such designee and (iii) such other factors as they
may deem relevant to such allocation. The determination of such allocation by
the Corporation's auditors or their designee shall be final and binding upon the
parties hereto with respect to the portion of the total purchase price which the
Investor is entitled to receive for the Shares pursuant to this subsection
10(b). The Investor and each transferee of the Investor under subsection 3(b)
agrees to sell the Shares to the Persons specified in this subsection 10(b) at
the price per share of the Common Stock allocated by such auditors or their
designee at the closing of the transactions contemplated by such agreement to
sell.
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For purposes of effectuating any sale of the Shares pursuant to this
subsection 10(b), the Investor and each transferee of the Investor under
subsection 3(b) hereby grants to each of the Partnership and its designees
and assigns an irrevocable power of attorney with respect to the transfer of
the Shares and authorizes the Partnership to deliver to itself or to any 100%
Purchaser each stock certificate representing the Shares. The Invsetor and
each such transferee agrees promptly upon request and without compensation to
do all acts and execute all agreements, documents, proxies, consents of
stockholders and instruments as shall be necessary or desirable to effectuate
the consummation of any agreement to sell all of the outstanding shares of
the Common Stock to a 100% Purchaser and any agreement to sell all or
substantially all of the assets of the Corporation to a 100% Purchaser
pursuant to this subsection 14(b) including, but not limited to, delivering
executed stock assignments separate from certificate naming Partnership and
its assigns and designees as his attorneys for the purpose of effectuating
such transfer. The Partnership and, in the event that the Partnership or the
Corporation elects to have the Corporation purchase the Shares, the
Corporation agree to deliver or cause to be delivered to the Investor or his
transferees promptly following any sale of the Shares pursuant to this
Section 10(b) the purchase price for the Shares.
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11. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
(a) If the Corporation proposes to register for sale any shares of the
Common Stock owned by the Partnership under the Act at a time when the Investor
or any transferee of the Investor permitted by subsection 3(b) owns any of the
Shares, it will at each such time give written notice (the "Registration
Notice") to the Investor or such transferee of its intention to do so and, upon
the written request of the Investor or such transferee given within twenty (20)
days after the Corporation gives such notice (which request shall state the
intended method of disposition of such holder's Shares), the Corporation will
use its best efforts to effect the registration of the number of the Shares (the
"Investor's Registered Shares") which is calculated in the manner specified in
the following sentence by including the Investor's Registered Shares in such
registration statement, all to the extent required to permit the sale or other
disposition of such Shares in accordance with the intended method of sale or
other disposition given in each such request. The Investor's Registered Shares
shall be determined by multiplying the number of the Shares owned by the
Investor and each transferee of the Investor under subsection 3(b) on the date
that the Registration Notice is mailed by a fraction, the numerator of which is
the number of shares of the Common Stock owned by the Partnership which are
included in such registration statement and the denominator of which is the
total number of shares of the Common Stock outstanding on the date that the
Registration Notice is mailed. In the event that the number so determined
includes a
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fraction which is greater than .50, the Investor's Registered Shares shall be
the next larger whole integer and in the event that the number so determined
includes a fraction which is equal to or less than .50, the Investor's
Registered Shares shall be that number alone. For example, assume 250,000
shares of the Common Stock owned by the Partnership are included in such
registration statement. On the date that the Corporation mails the Registration
Notice, there are 500,000 shares of the Common Stock outstanding and the
Investor and such transferees own 1,500 of such shares. The number of the
Stockholder's Registered Shares would be 750, which is 1,500 times
250,000/500,000.
(b) Notwithstanding anything to the contrary contained in subsection
11(a):
(i) In the event that any registration statement to be filed
pursuant to subsection 11(a) shall be, in whole or in part, in connection with
an underwritten public offering and Investor is at such time an executive
officer of the Corporation, the number of the Investor's Registered Shares to be
included in such registration statement may be reduced, or no Investor's
Registered Shares may be included in such registration statement, if and to the
extent that the managing underwriter(s) shall give their written opinion that
such inclusion would adversely affect the marketing of the securities to be sold
therein by the Partnership.
(ii) The Corporation (A) may withdraw any registration statement
referred to in this Section 11 without
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thereby incurring any liability to the Investor and (B) shall not be obligated
to register any Shares in connection with the first underwritten public offering
after the date hereof, whether primary or secondary, of shares of the Common
Stock, including without limitation any sales of shares of the Common Stock
related to over-allotments in connection with such offering if the Investor is
at such time an executive officer of the Corporation.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subsection 15(a) is to
be underwritten, then any distribution of the Investor's Registered Shares shall
be underwritten by the same underwriters who are underwriting the distribution
of the securities of the Corporation for the account of the Partnership, and the
Investor shall enter into the agreement with such underwriters contemplated
under subsection 11(b)(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Investor and each transferee of the Investor under subsection 3(b) shall refrain
from selling, making any short sale of, loaning, granting any option for the
purchase of, or otherwise disposing of any of their Shares not registered
pursuant to subsection 11(a) during the period of time which is the longer of
(A) the period of distribution of the shares of the Common Stock by such
underwriter(s) in the offering and (B) the
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period requested by such underwriter(s), which shall in no event exceed one
hundred eighty (180) days.
12. RIGHT TO ACQUIRE ADDITIONAL SHARES; ADDITIONAL INVESTMENTS.
(a) If at any time during which the Investor owns Shares, the
Corporation issues any shares of the Common Stock, any securities convertible
into or exchangeable for shares of the Common Stock or any options, warrants or
rights to acquire shares of the Common Stock or securities convertible into or
exchangeable for shares of the Common Stock to the Partnership or any Affiliate
of the Partnership (the "New Issue Securities"), and if shares of the Common
Stock have not been Publicly Traded on or prior to the date of such issuance,
the Corporation agrees that not later than sixty (60) days after the sale of any
New Issue Securities it will offer in writing to sell to the Investor such
number or principal amount of the New Issue Securities as would enable the
Investor to maintain the same aggregate percentage ownership interest in the
shares of the Common Stock issued and outstanding (which for purposes of this
Section 12 shall include shares of the Common Stock held in the Corporation's
treasury from time to time) after such sale of the New Issue Securities as he
held immediately prior to such sale. Notwithstanding the immediately preceding
sentence, the term "New Issue Securities" shall not include shares of the Common
Stock which are at any time owned by any director, officer or employee of the
Corporation or any Subsidiary and thereafter purchased, or subject to purchase,
by the Corporation or by any Affiliate of
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the Corporation. The offer of the Corporation to the Investor described in the
first sentence of this Section 16 shall contain the same price per share,
security, option, warrant or other right constituting New Issue Securities and
substantially similar terms and conditions as the sale of the New Issue
Securities which obligates the Corporation to make the offer. The Investor
shall be entitled to accept such offer only without modification and only in
writing for a period of ten (10) days after the offer is made. In the event
that such offer is accepted by the Investor, the Investor shall deliver to the
Corporation the purchase price of the New Issue Securities being offered to the
Investor, within fifteen (15) days after the offer is made.
(b) If at any time during which the Investor holds Shares or his
Investor Debt Investment the Partnership determines to invest additional funds
in the Corporation (including any contributions of property of any kind to the
Corporation), and if shares of the Common Stock have not been Publicly Traded on
or prior to such time, the Partnership shall send a written notice to Investor
(the "Additional Investment Notice") setting forth the details of such proposed
additional investment and Investor's pro rata share (in accordance with their
respective ownership of Shares outstanding) of same and the closing date of such
additional investment. Within ten (10) business days following the giving of
the Additional Investment Notice, the Investor shall give written notice to the
Partnership electing either to participate in the Additional Investment or to
refrain from
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<PAGE>
participation in the Additional Investment. If the Investor elects to
participate in the Additional Investment, the Investor shall make payment of his
pro rata share of such Additional Investment contemporaneously with the
Partnership's payment of its share of such Additional Investment; provided that
Investor shall not be required to make such payment prior to thirty (30) days
after the date of the Additional Investment Notice. In the event of a default
by Investor of his obligation to fund his pro rata share of an Additional
Investment within the time period described in this Section 12(b), the Investor
shall pay to the Partnership interest on the amount of Investor's Additional
Investment which has not been timely funded at an annual rate of interest equal
to the rate on the Note from the date of such default until the Investor's
Additional Investment has been fully paid. If the Investor elects not to
participate in the Additional Investment, the Investor shall not be required to
fund such Additional Investment and he will have no rights under this Section;
provided, however, that any New Issue Securities issued in connection with the
Additional Investment shall be issued in exchange for not less than Book Value.
13. PARTICIPATION IN THE NOTE. The Investor shall make the Investor Debt
Investment in accordance with a participation agreement substantially in the
form set forth as Exhibit A attached hereto and made a part hereof (the
"Participation Agreement").
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14. SHARING OF EXPENSES.
All expenses reasonably incurred by the Partnership and the Investor,
jointly or on their mutual behalf, in connection with the Partnership Equity
Investment and the Investor Equity Investment after the closing of the Investor
Equity Investment, shall be shared pro rata by the Partnership and the Investor
in accordance with their respective holdings of the Common Stock at the time
such expenses are incurred. The expenses incurred by the parties in connection
with their respective investments in the Note shall be shared as set forth in
the Participation Agreement. Except as otherwise expressly provided herein,
each party to this Agreement will pay his, her or its own expenses in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated herein.
15. INJUNCTIVE RELIEF. The Investor acknowledges that the Shares held by
the Investor are unique, and for that reason among others, without limiting the
remedies available hereunder, the Investor acknowledges that his failure to
perform the obligations provided by this Agreement will result in material
irreparable injury to the Corporation and the Partnership for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Corporation and the Partnership shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
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activities prohibited by this Agreement or such other relief as may be required
to specifically enforce any of the obligations in this Agreement.
16 WRITTEN NOTICE. Any and all notices provided for herein shall be given
in writing and delivered by hand, or sent by registered or certified mail,
return receipt requested, with first-class postage prepaid, or by facsimile with
answer-back; and such notices shall be addressed: (i) if to the Partnership, to
Harbour Group III Management Co., L.P., general partner, 7701 Forsyth Boulevard,
Suite 600, Clayton, Missouri 63105; (ii) if to the Corporation, to the Secretary
of the Corporation at the Corporation's principal business office, with a copy
to Chairman, Harbour Group Ltd., 7701 Forsyth Boulevard, Suite 600, Clayton,
Missouri 63105; and (iii) if to the Investor, to his address as reflected in the
records of the Corporation; or to such other address(es) as the parties hereto
shall designate by written notice, furnished to all parties in the manner
provided herein. Any notice which is required to be made within a stated period
of time shall be considered timely if delivered or mailed before midnight of the
last day of such period.
17. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or unenforceability
of any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had been omitted.
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18. BENEFIT AND BURDEN. The Investor may not assign his rights or
obligations under this Agreement without the prior written consent of the
Partnership and the Corporation. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective personal or
legal representatives, successors and permitted assigns.
19. GENDER. The use of any gender herein shall be deemed to be and include
the other gender, and the use of the singular herein shall be deemed to be and
include the plural (and VICE VERSA), whenever appropriate.
20. ACKNOWLEDGMENTS.
(a) The Investor represents and warrants to the Corporation that (i) he
is purchasing the Shares and the participation in the Note for his own account
without a view to any distribution thereof in violation of the Securities Laws,
(ii) he is experienced in evaluating and making investments of this type, and
has had access to, and to his knowledge has received, all the information that
he reasonably has required to evaluate this investment and (iii) he is
financially able to bear the risks associated with an investment in the Shares
and the Note.
(b) The Investor acknowledges that the Corporation is issuing and
selling the Shares and the Partnership is selling a participation in the Note in
reliance upon the representations and warranties set forth in subsection 20(a)
and that the Shares
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and the participation in the Note so acquired will be "restricted securities"
within the meaning of Rule 144 under the Act, and acknowledges that such Shares
and participation in the Note may only be offered, sold, pledged or otherwise
transferred by him (i) if registered under the Act and registered or otherwise
qualified for sale under any applicable Securities Laws or (ii) pursuant to any
exemption from such registration or qualification requirements, and that the
certificate(s) representing the Shares and the Participation Agreement will each
bear a legend to this effect.
(c) The Investor acknowledges that the Partnership and the Corporation
have entered into a Stock Option Agreement pursuant to which the Corporation has
granted to the Partnership the option to purchase up to 50,000 newly-issued
shares of Common Stock for the purchase price of $6.35 per share which option is
exercisable from time to time to the extent Management Shares are not issued and
outstanding at such time.
21. MODIFICATIONS. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by all the parties hereto. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the party against whom it is sought to be enforced. The failure of
any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right
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to insist upon strict performance of the same or other condition, promise,
agreement or understanding at a future time.
22. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations between
the parties hereto with respect to the subject matter of this Agreement. This
Agreement is, and is intended by the parties to be, an integration of any and
all prior agreements or understandings, oral or written, with respect to the
subject matter of this Agreement.
23. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in Section
1(f) and the following sentence. All matters concerning the authorization of
this Agreement and the consummation of the transactions contemplated hereby
including without limitation the issuance of the Shares, the payment for the
Shares and the fully paid and nonassessable status of the Shares, shall be
construed and enforced in accordance with the General Corporation Law of the
State of Delaware.
24. HEADINGS. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management
Co., L.P., General Partner
By: HGM III Co., General Partner
by: /s/ Samuel A. Hamacher
---------------------------------
Name:
Title:
/s/ P. Enoch Stiff
-------------------------------------
Enoch Stiff
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
---------------------------------
Name:
Title:
30
<PAGE>
EXHIBIT 10.7
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, effective in all respects as of the 16th
day of August, 1995, by and between HARBOUR GROUP INVESTMENTS III, L.P., a
Delaware limited partnership, 7701 Forsyth Boulevard, St. Louis, Missouri
63105-1802 ("Holder") and P. Enoch Stiff, 720 East Newark Drive, West Bend,
Wisconsin 53095 ("Participant").
RECITALS:
A. Holder has purchased or is about to purchase a 15% Subordinated
Note, Due August 31, 2003, in the original principal amount of $2,000,000
(the "Note") from TRAK International, Inc., a Delaware corporation
("Issuer"), pursuant to the loan documentation attached hereto and made a
part hereof by reference consisting of the following: the Note and the
Subordinated Note Purchase Agreement dated August 16, 1995 (collectively
called the "Loan Documents").
B. Participant desires to purchase and Holder desires to sell a pro
rata participation in the above-referenced loan, on a non-recourse basis, on
the terms and conditions more fully hereinafter set forth.
1. DEFINITIONS.
(a) "Loan" means the principal amount of the subject loan, and all
advances, disbursements and other extensions of credit (and any extensions or
renewals of time for payment thereof) made or to be made by Holder to or on
behalf of Issuer pursuant to the said Loan Documents;
(b) "Collateral" means and includes the Loan Documents, and any
opinions of counsel, corporate and/or partnership certifications, and all
other instruments and documents received by Holder from or on behalf of
Issuer or otherwise required by Holder in connection with the Loan, together
with all extensions, renewals or modifications thereof; and
(c) "Collections" means all money (net of collection expenses
reasonably incurred by Holder as set forth in Paragraph 5 hereof), from
whatever source derived, received by Holder from time to time on account of
the Loan or as proceeds of the Collateral.
2. SALE OF PARTICIPATION.
Holder hereby sells to participant, and Participant hereby purchases
from and agrees to pay Holder, for a three percent (3%) pro rata
participation in the Loan on the terms and conditions herein set forth. As
funds are advanced under the Loan, Holder and Participant will each advance
their fractional share of each advance. Participant's share of the Loan
shall be a fractional interest in the Loan to the extent of Participant's
actual contributions from time to time in the principal amount of the Loan
outstanding.
<PAGE>
3. DOCUMENTATION.
Holder will retain the executed Loan Documents, true and correct copies
of which (as executed) have been heretofore or shall be delivered to
Participant, and shall make such Loan Documents available to Participant for
inspection at Holder's offices. Without Participant's prior consent, Holder
will not: (i) undertake to modify, extend, renew, amend or supplement the
Loan Documents or any of the Collateral , or (ii) release, waive or discharge
any obligations of the Issuer or the Collateral, except upon payment of the
Loan in accordance with the Loan Documents.
4. ADMINISTRATION.
(a) The Loan Documents and the Collateral shall be dealt with and
enforced by Holder, in Holder's own name, on behalf of Holder and
Participant. Holder will promptly notify Participant of any default in
payment under the Loan Documents which is not cured within thirty (30) days
of the due date of such payment and of any action proposed to be taken by
Holder in the administration of the Loan not in the ordinary course of
business. Holder will service the Loan in accordance with Holder's usual
practices and in conformity with the Loan Documents, in the ordinary course
of business, and Holder shall bear the usual servicing expenses except as is
hereinafter provided in Paragraph 5;
(b) When and as Holder shall be obligated to advance $2,000,000
under the Loan Documents, Participant shall make available to Holder on
demand $60,000, in immediately available funds or in other form reasonably
acceptable to Holder;
(c) Holder will receive and receipt for all Collections (on our
joint behalves) and will apply the same to Issuer's account, our respective
amounts in the Loan will be increased or reduced as each advance is made or
as principal is repaid. Participant's share of Collections will be remitted
to Participant as received by Holder, as Participant shall instruct.
Participant shall bear the risk of loss pro rata in accordance with its
fractional interest in the outstanding principal of the Loan without recourse
to Holder;
(d) Holder will not be liable to Participant for any action taken
or omitted, or for errors in judgment, except as the same may arise from
Holder's gross negligence or willful misconduct. Although Holder believes
the Loan to be collectible in accordance with the terms of the Loan
Documents, Holder does not assume or warrant and shall have no responsibility
or liability (expressed or implied) for the collectibility, enforceability,
adequacy, genuineness or validity of the Loan, Loan Documents or the
Collateral, or any credit or other information furnished by Holder to
Participant. Participant shall have independently determined the validity,
enforceability and adequacy of all matters involved in the Loan and the Loan
Documents and shall have made its own independent evaluation of Issuer and
other obligors under the Collateral prior to funding any portion of his
participation in the Loan.
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<PAGE>
5. EXPENSES.
All collection expenses reasonably incurred by Holder in connection with
the Loan, other than in the ordinary course of servicing a loan not in
default, including but not limited to counsel fees, court costs and
disbursements, and all recoveries thereof, shall be shared pro rata by Holder
and Participant in accordance with our respective fractional interests in the
Loan at the time such expenses are incurred.
6. OTHER PROVISIONS.
(a) This Participation Agreement is non-transferable.
(b) Nothing herein contained confers to Participant or Holder any
interest in or subjects Participant or Holder to any liability on account of
the assets or liabilities of the other, except for Participant's interest in
the Loan confirmed herein;
(c) Holder reserves the right to purchase at its option (upon two
(2) days notice) the unpaid principal amount of Participant's participation,
at par plus accrued interest thereon to the date of such purchase, but Holder
agrees not to sell its participation in the Loan without Participant's prior
consent.
(d) This Participation Agreement may not be modified orally, shall
be governed in all respects by the laws of Missouri and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
(e) All notices and other communications shall be given or
confirmed in writing and mailed to the addresses set forth on the first page
of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P., General Partner
By: HGM III Co., General Partner
by: /s/ Samuel A. Hamacher
------------------------------
Name:
Title:
/s/ P. Enoch Stiff
- ---------------------------------------
P. Enoch Stiff
3
<PAGE>
PURCHASE AND STOCKHOLDER AGREEMENT
This Purchase and Stockholder Agreement, made this September 20, 1995,
between Uniquip Corporation, a Delaware corporation (the "Corporation") and
James H. Hook (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Corporation is authorized to issue One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par value One Cent ($.01) per
share (the "Common Stock");
WHEREAS, the Executive is a Vice President of TRAK International, Inc.,
a Subsidiary of the Corporation;
WHEREAS, the Executive has offered to purchase from the Corporation
seven thousand five hundred shares (7,500) shares of the Common Stock,
representing Seventy-Five Hundredths Percent (.75%) of the then issued and
outstanding shares of the Common Stock on a fully diluted basis, at an
aggregate price of Forty-Seven Thousand Six Hundred Forty-Seven Dollars
($47,647.00) (the "Purchase Price"), and the Corporation has agreed to accept
such offer to purchase such shares of the Common Stock, subject to the right
of the Corporation to purchase all of the shares of the Common Stock now
owned or hereafter acquired by the Executive in certain circumstances; and
WHEREAS, the Corporation and the Executive desire to set forth their
understandings and agreements with respect to restrictions on certain
transfers of shares of the Common Stock now owned or hereafter acquired by
the Executive, the right of the Corporation to purchase all of the shares of
the Common Stock now owned or hereafter acquired by the Executive in certain
circumstances and certain other matters; including provisions with respect to
the Executive's post-termination employment and/or interest in competing
enterprises; and
<PAGE>
WHEREAS, the Corporation and the Executive acknowledge and agree that
the restrictions on certain transfers of shares of the Common Stock now owned
or hereafter acquired by the Executive further the Corporation's interest by
having shares of the Common Stock owned by full time employees of the
Corporation and its Subsidiaries, and that other provisions hereof are
consistent with the bonafide interests of the Corporation and of other full
time employees of the Corporation and its Subsidiaries; and
WHEREAS, it is recognized and acknowledged by the Executive that the
success of the Corporation and its Affiliates, including the Majority
Stockholder and other stockholders of the Corporation, is attributable in
major part to the manner by which the Corporation and its Affiliates source
and evaluate acquisition candidates and integrate their acquisitions,
referred to as the "Harbour Group Culture", all of which involve special and
proprietary techniques, procedures and training; and
WHEREAS, in order for the Executive to make a meaningful contribution in
his job, the Executive must learn and practice the intricacies of the
Corporation's and Harbour Group's procedures and know-how, benefit from the
collective Harbour Group experience in implementation of the "Harbour Group
Culture" and work with a small group of executives who have also learned the
intricacies of the "Harbour Group Culture", pursuant to which executives
engaged in acquisitions, finance, and operations work in concert; and
WHEREAS, Harbour Group enjoys a reputation in the business community of
the United States and elsewhere with particular but not exclusive reference
to its reputation among institutional investors, commercial banking
institutions, investment bankers, business brokers and sellers and buyers of
business enterprises; and
WHEREAS, the Executive's reputation will be enhanced and his experience
will be enhanced by his relationship with the Corporation and with Harbour
Group; and
2
<PAGE>
WHEREAS, the Executive acknowledges that special harm and injury will or
may be sustained by the Corporation and the Majority Stockholder and other
stockholders should acts otherwise prohibited herein nonetheless be taken.
NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
1. Definitions.
a. "Act" shall mean the Securities Act of 1933, as amended.
b. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person. "Affiliate of
the Majority Stockholder" shall not include any full-time employee of the
Corporation or any Subsidiary.
c. "Benefits" shall mean Health and Welfare Plans in accordance
with the current policies of the Corporation or any Subsidiary by which the
Executive is employed.
d. "Benefits Period" shall have the meaning set forth in Paragraph 26.
e. "Bona Fide Employee's Offer" shall have the meaning set forth in
Paragraph 4.
f. "Cause" shall mean (i) the material breach by the Executive of
this Agreement, including without limitation, any breach of Paragraphs 9 and
10; (ii) the Executive's dishonesty in connection with the business of the
Corporation or any Subsidiary which is materially detrimental to the best
interests of the Corporation or any Subsidiary; (iii) the Executive's
conviction of a felony crime; (iv) any material act or omission by the
Executive during his employment with the Corporation or any Subsidiary
involving willful malfeasance or gross negligence in the performance of his
duties to the Corporation or any such Subsidiary; or (v) any other act or
omission by the Executive during his employment in the Corporation or any
3
<PAGE>
Subsidiary which provides the Corporation with a ground for terminating the
Executive's employment for cause under the employment law of the state in
which the Corporation's principal place of business is located.
g. "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
h. "Health and Welfare Plans" shall mean employee life, health and
disability insurance plans or other fringe benefit programs, if any,
maintained by the Corporation or any Subsidiary by which the Executive is
employed.
i. "Majority Stockholder" shall have the meaning set forth in
Paragraph 14.
j. "New Issue Securities" shall have the meaning set forth in
Paragraph 16.
k. "Note" means the Promissory Note of the Executive issued to the
Corporation dated the date hereof in an original principal amount which is
the Purchase Price MINUS seventy-five dollars ($75.00).
l. "100% Purchaser" shall have the meaning set forth in Paragraph 14.
m. "Ordinary Course of Business" means the conduct of the business
and affairs of the Corporation or its Subsidiaries in the usual and ordinary
course and in a manner which advances the purposes, and is in the best
interest, of the Corporation and its Subsidiaries.
n. "Permanent Disability" shall have the meaning set forth in
Paragraph 26.
o. "Person" means any individual, corporation, firm, partnership or
other business entity.
p. "Post-Employment Restriction Period" shall have the meaning set
forth in Paragraph 26.
q. "Prime Rate" means the annual rate of interest designated as the
"prime rate" in the listing of "money rates" as published from time to time
in THE WALL STREET JOURNAL, or if such
4
<PAGE>
publication is discontinued, the rate published as the "prime rate" or "base
rate" from time to time by any similar or successor publication designated by
the Board of Directors of the Corporation.
r. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of the Corporation or its Affiliates including,
without limitation, methods of operation, customers and customer lists,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices, fees, costs, plans, designs, technology, know-how, software,
marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters of the
Corporation or any of its Affiliates.
s. "Publicly Traded," with respect to the Common Stock, means
listed for trading on any national or regional securities exchange or quoted
on the National Association of Securities Dealers Automated Quotation system
or a successor system.
t. "Purchase Price" shall have the meaning set forth in the third
WHEREAS clause.
u. "Registration Notice" shall have the meaning set forth in
Paragraph 15.
v. "Sale of Control Notice" shall have the meaning set forth in
Paragraph 14.
w. "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
x. "Shares" shall have the meaning set forth in Paragraph 2.
y. "Stockholder's Included Shares" shall have the meaning set forth
in Paragraph 14.
z. "Stockholder's Registered Shares" shall have the meaning set
forth in Paragraph 15.
5
<PAGE>
aa. "Subsidiary" shall mean any corporation or other entity of
which the Corporation directly or indirectly owns beneficially or of record
fifty percent (50%) or more of (i) the outstanding shares of capital stock if
such entity is a corporation or (ii) the outstanding ownership interests if
such entity is not a corporation.
ab. "Written Notice" shall have the meaning set forth in Paragraph 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Executive or any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns), whether such shares are now
owned or hereafter acquired (collectively the "Shares"), and whether such
transfers are voluntary, involuntary or by operation of law, resulting from
death or otherwise.
3. RESTRICTIONS ON THE TRANSFER OF SHARES.
a. Except as otherwise provided in Paragraphs 3b, 3c, 3d, 4, 11, 12,
14 and 15 of this Agreement, neither the Executive nor any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns) shall or may sell, exchange,
deliver, assign, bequeath or give, pledge, mortgage, hypothecate or otherwise
encumber, transfer or permit to be transferred, or otherwise dispose of, any
or all of the Shares, whether voluntarily, involuntarily or by operation of
law (including without limitation the laws of bankruptcy, intestacy, descent
and distribution and succession).
b. In the event of the Executive's death, the Shares may be
transferred to the Executive's personal or legal representatives, estate or
distributees of such estate, and such transfer shall be registered on the
stock transfer books of the Corporation.
c. In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Corporation under Paragraphs 11 and 12 of this
Agreement to purchase the Shares which are then owned by the Executive or any
representative, successor or transferee of the Executive
6
<PAGE>
shall lapse but all of the other provisions of this Agreement shall continue
in full force and effect. On the fourth anniversary of the date on which
shares of the Common Stock are first Publicly Traded, the restrictions on the
transfer of the Shares contained in Paragraphs 3a, 4, 5 and 7 of this
Agreement shall lapse; provided, however, that in the event of the death of
the Executive prior to the date of such fourth anniversary, all of the Shares
owned by the Executive on the date of his death may be sold without any
restriction imposed by this Agreement.
d. Provided that such action is not objected to by any underwriter
then engaged in discussions with the Corporation regarding public offerings
of the Corporation's securities and the Corporation has reasonably determined
that such action will not adversely affect the market for its securities, the
Corporation shall, upon the request of the Executive at the following times,
permit the Executive to sell or otherwise transfer without regard to
Paragraphs 3a, 4, 5 and 7 of this Agreement a portion of the Shares not to
exceed the whole number of Shares equaling the following percentage of the
number of Shares (adjusted for any intervening conversion, stock split, stock
dividend or the like) held by the Executive on the date on which the Common
Stock is first Publicly Traded:
(i) after the first anniversary of the date on which the Common
Stock is first Publicly Traded, twenty-five percent (25%);
(ii) after the second anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the third anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative seventy-five percent
(75%).
4. RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES TO
EMPLOYEES OF THE CORPORATION.
a. In the event that the Executive shall receive a Bona Fide
Employee's Offer (hereinafter defined) to purchase any or all of the Shares
and the Executive desires to accept such Bona Fide Employee's Offer, the
Executive shall promptly send Written Notice (hereinafter
7
<PAGE>
defined) to the Corporation, offering to sell such Shares to the Corporation
in accordance with subparagraph 4c hereof, at the same price and upon the
same terms and conditions as are contained in the Bona Fide Employee's Offer.
Such offer shall be irrevocable for a period of ninety (90) days from the
receipt of Written Notice by the Corporation. The Written Notice shall
contain a true and complete copy of the Bona Fide Employee's Offer, setting
forth the price and all terms and conditions of such offer, as well as the
name(s), address(es) (both home and office), and business(es) or
occupation(s) of the third party offeror (or offerors). The Written Notice
shall be accompanied by evidence that sufficient funds are available to the
third party offeror (or offerors) to carry out the terms of such offer. Any
Written Notice that does not contain all such requisite information shall not
be considered a "Written Notice" for purposes of this subparagraph 4a.
b. As used in this Agreement, the term "Bona Fide Employee's Offer"
shall mean a legally enforceable offer in writing, made and signed by a
person who is then a full time employee of the Corporation or any Subsidiary
and who is financially capable of carrying out the terms of such Bona Fide
Employee's Offer.
c. Whenever a Bona Fide Employee's Offer to purchase Shares has
been received by the Executive, and Written Notice thereof has been sent to
the Corporation, the following procedure shall be complied with: For a
period of ninety (90) days from its receipt of such Written Notice, the
Corporation shall have the right, in its sole discretion, without obligation,
to purchase all (but no less than all) of the Shares so offered. If the
Corporation elects to purchase all of the Shares so offered, it must send
Written Notice thereof to the Executive within said ninety (90) day period.
If the Corporation does not elect to purchase the Shares so offered within
the prescribed time period, the Executive shall have the right to accept the
Bona Fide Employee's Offer in whole (but not in part) and to sell such
Shares, subject to the provisions and restrictions of this Agreement, but
only in strict accordance with all of the provisions of the Bona Fide
Employee's Offer and only if (i) the sale is fully consummated within one
hundred and twenty (120) days after the mailing of the initial Written Notice
to the Corporation and (ii) the Executive
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has prepaid the Note in accordance with its terms. In the event that such
sale is not fully consummated within one hundred and twenty (120) days after
the mailing of the Written Notice, the provisions of this Paragraph 4 must
again be complied with by the Executive.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares
are transferred to any Person, at any time or from time to time, by operation
of law or pursuant to the provisions of Paragraphs 3 or 4 hereof, the
transferee(s) shall agree in writing (for and on behalf of himself or itself,
his or its personal or legal representatives, transferees, successors and
assigns) to be bound by all provisions of this Agreement as a party hereto.
Prior to any such transfer, the transferee shall provide the Corporation with
the transferee's written agreement so to be bound. In the absence of any
such written agreement no such transfer shall be effective for any purpose,
but the failure to obtain such written agreement shall in no way diminish the
applicability of the provisions hereof. Without limiting the generality of
the preceding provisions of this Paragraph 5, in the event that any Shares
are transferred to any full time employee of the Corporation or any
Subsidiary pursuant to the provisions of Paragraph 4, such full time employee
shall agree in writing to be bound by all provisions of this Agreement,
including without limitation the provisions of Paragraph 12, and such
employee shall be deemed thereafter to be the Executive in respect of the
Shares transferred to such employee as if initially named in this Agreement
and shall be subject as such to the provisions of this Agreement, PROVIDED
THAT the price at which the Corporation may purchase the Shares from such
employee pursuant to Paragraph 11 shall be the price at which the Shares were
sold to such employee pursuant to Paragraph 4. Prior to any such transfer,
the transferee shall provide the Corporation with the transferee's written
agreement so to be bound. In the absence of any such written agreement no
such transfer shall be effective for any purpose, but the failure to obtain
such written agreement shall in no way diminish the applicability of the
provisions hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer
book in which shall be recorded, among other things, the name and address of
each of its stockholders. No transfer of any Shares shall be effective or
valid unless and until recorded in such stock transfer
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book. The Corporation shall not record any transfer of Shares in such stock
transfer book unless the transfer is in strict compliance with all provisions
of this Agreement. The Executive agrees that, in the event he desires to
make a transfer within the provisions hereof, he shall furnish to the
Corporation such evidence of his compliance with this Agreement and that the
proposed transfer may be effected without registration under the Securities
Laws as from time to time may be required by the Board of Directors of, or
counsel for, the Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate
representing Shares shall bear the following legends:
"The encumbering, transfer or other disposition (including,
without limitation, any transfer or disposition pursuant to
the laws of bankruptcy, intestacy, descent and distribution
and succession) of the shares of common stock evidenced by
the within Certificate is restricted under the terms of a
Purchase and Stockholder Agreement, dated August ___, 1995,
between Uniquip Corporation (the "Corporation") and James H.
Hook, a copy of which Agreement is on file at the principal
office of the Corporation. Such shares are also subject to
a voting agreement contained in said Purchase and
Stockholder Agreement. Upon written request of any
stockholder of the Corporation, the Corporation shall
furnish, without charge to any such stockholder, a copy of
said Purchase and Stockholder Agreement."
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities law (collectively, the "Securities
Laws") and may not be sold, transferred or otherwise
disposed of unless (i) a registration statement covering
such shares is effective under the Securities Laws or (ii)
the transaction is exempt from registration under the
Securities Laws and, if the Corporation requests, an opinion
satisfactory to the Corporation to such effect has been
rendered by counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase
of any Shares pursuant to Paragraph 4 of this Agreement, the Executive shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing
such documentary stamps, if any, as are necessary, and such assignments,
certificates of authority, tax releases, consents to transfer, instruments
and evidences of title of the Executive and of the Executive's compliance
with this Agreement as may be reasonably required by the purchaser or by
counsel for the purchaser.
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9. COVENANT NOT TO DISCLOSE.
a. The Executive covenants and agrees that he will not, during the
period of his employment with the Corporation or at any time thereafter,
except with the express prior written consent of the Chairman and Chief
Executive Officer of Harbour Group Ltd., any successor to Harbour Group Ltd.
or their respective designees, directly or indirectly disclose, communicate
or divulge to any Person, or use for the benefit of any Person, any
Proprietary Information. The restriction contained in the preceding sentence
shall not apply to any Proprietary Information that (i) is a matter of public
knowledge (which shall include knowledge in the industries in which the
Corporation or its Subsidiaries are engaged) on the date of this Agreement,
(ii) becomes a matter of public knowledge (which shall include knowledge in
the industries in which the Corporation or its Subsidiaries are engaged)
after the date of this Agreement from another source which is under no
obligation of confidentiality to the Corporation or its Affiliates or (iii)
that is furnished in the Ordinary Course of Business to Persons which sell,
provide or propose to sell or provide goods or services to the Corporation or
its Subsidiaries or which purchase, obtain or propose to purchase or obtain
goods or services from the Corporation or its Subsidiaries.
b. All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or
has been furnished to the Executive or which may be produced, prepared or
designed by the Executive in connection with his employment with the
Corporation shall be, become and remain the exclusive property of the
Corporation. Upon the termination of the Executive's employment with the
Corporation, all originals, copies and reprints in the Executive's
possession, custody, or control shall be promptly surrendered and/or
delivered to the Corporation, and the Executive shall thereafter make no
further use, either directly or indirectly, of any such data, designs,
drawings, blueprints, tracings, sketches, plans, layouts, specifications,
models, programs, cards, tapes, disks, printouts, writings, manuals, guides,
notes or other memoranda or written information.
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10. COVENANTS NOT TO COMPETE.
a. The Executive covenants and agrees that he will not at any time
during his employment with the Corporation and thereafter for the applicable
Post-Employment Restriction Period, except with the express prior written
consent of the Chairman and Chief Executive Officer of Harbour Group Ltd.,
any successor to Harbour Group Ltd. or their respective designees, directly
or indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, shareholder (except as the holder of not more than one percent
(1%) of the outstanding shares of a corporation whose stock is listed on any
national or regional securities exchange or reported by the National
Association of Securities Dealers Automated Quotations System or any
successor thereto) either (i) establish any Person that competes with the
Corporation or any of its Subsidiaries or (ii) be affiliated or connected
with any Person that carries on any business within the states of Wisconsin,
Illinois and Missouri, the states contiguous thereto, elsewhere in the United
States and the world, that is competitive with the business of the
Corporation or any of its Subsidiaries in a capacity which is competitive in
any of its duties, responsibilities or activities with the business of the
Corporation or any of its Subsidiaries. Without limiting the generality of
the preceding sentence, the Executive covenants and agrees that he will not
directly or indirectly solicit, divert or accept business from or otherwise
take away or interfere with any customer of the Corporation or any of its
Subsidiaries, including without limitation any Person who was a customer or
whose business was being pursued by the Corporation or any of its
Subsidiaries within (x) the period of the Executive's employment with the
Corporation, (y) one (1) year prior to such employment or (z) one (1) year
after the termination of such employment, including all customers directly or
indirectly produced or generated by the Executive. The parties further agree
that if the Executive becomes affiliated or connected with any Person
described in clause (ii) of this Paragraph 10(a) during either his employment
with the Corporation or the Post-Employment Restriction Period, the Executive
shall be obliged to show by clear and convincing evidence that none of his
duties, responsibilities or activities entail employment in a capacity which
has been, is or is likely to become, competitive with the business of the
Corporation or any of its Subsidiaries. The parties hereto
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agree that the covenant contained in clause (ii) of this Paragraph 10(a)
shall be construed as a series of separate covenants, one for each state or
other geographic area specified in such clause and, except for geographic
coverage, each separate covenant shall be deemed identical.
b. The Executive further covenants and agrees that he will not for
a period of three (3) years after the termination of his employment
hereunder, except with the express prior written consent of the Chairman and
Chief Executive Officer of Harbour Group Ltd., any successor to Harbour Group
Ltd. or their respective designees, directly or indirectly, accept
employment, be employed by or be a principal of any business or enterprise
operating within the United States which then employs or has as a principal
or holder of any interest therein (except as the holder of not more than one
percent (1%) of the outstanding shares of a corporation whose shares are
publicly traded) any individual who was previously employed in a managerial
or executive position with the Corporation or any of its Affiliates, provided
however, that this prohibition shall not be applicable if (i) such business
or enterprise does not compete with the Corporation or its Affiliates, or
(ii) (x) such business or enterprise engages in activities which do compete
and other activities which do not compete with the Corporation or its
Affiliates, (y) the Executive and the other individual who was previously
employed by the Corporation or any of its Affiliates are employed by such
business or enterprise in connection with activities which in no way compete
with the Corporation or its Affiliates and (z) neither the Executive nor the
other individual who was previously employed by the Corporation or its
Affiliates is or proposes to be a principal of such business or enterprise.
c. If any provision of the covenants and agreements set forth above
shall be held invalid or unenforceable because of the scope of the territory
or the actions thereby restricted, or the period of time within which such
covenant or agreement is operative, or for any other reason, it is the intent
of the parties hereto that such provision shall be construed by limiting and
reducing it, or, if necessary, eliminating it so that the provisions hereof
be valid and enforceable to the extent compatible with applicable law as
determined by a court of competent jurisdiction.
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11. OPTION TO PURCHASE THE SHARES.
a. In the event that the Executive breaches any of the covenants
contained in Paragraphs 9 or 10, the Corporation shall have the right, but is
not required, to purchase all of the Shares which are then owned by the
Executive or any representative, successor or transferee of the Executive.
Any right to purchase under this Paragraph 11 shall be exercised in writing
within sixty (60) days of the date on which the Corporation becomes aware
that any such breach has occurred. Settlement shall be held at the principal
office of the Corporation at such date and time within ninety (90) days from
the time that the notice of intent to exercise required by this subparagraph
11a has been sent by the Corporation as shall be selected by the Corporation.
For purposes of this subparagraph 11a, (i) the Executive shall be
conclusively deemed and considered to own all Shares owned by himself, his
estate, his executors or administrators, his distributees and his personal
and legal representatives, and (ii) no Shares owned by a transferee of the
Executive other than those transferees referred to in clause (i) above shall
be subject to purchase by the Corporation. Except as otherwise provided in
Paragraph 5, the purchase price for such Shares shall be the original
principal amount of the Note.
b. The purchase price for the Shares purchased pursuant to
subparagraph 11a above shall be paid by delivering to the Executive or any
transferee of the Executive referred to in subparagraph 11a(i) above the Note
marked paid in full, together with the Corporation's check in the amount, if
any, by which the purchase price exceeds the principal balance then
outstanding on the Note.
12. MANDATORY PURCHASE OF THE SHARES.
a. If the Executive's employment with the Corporation terminates
for any reason (including his death) and if shares of the Common Stock are
not Publicly Traded on the date of such termination, the Corporation shall
repurchase to the extent it may lawfully do so, and the Executive or each
transferee of the Executive under subparagraph 3b shall sell to the
Corporation, the Shares then owned by the Executive. For purposes of this
subparagraph 12a,
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the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors or administrators, his
distributees and his personal and legal representatives and any other
transferee. Settlement shall be held at the principal office of the
Corporation at such date and time within one hundred and twenty (120) days of
the termination of the Executive's employment as shall be selected by the
Corporation. The purchase price for such Shares shall be their book value,
as computed by the Corporation's internal auditing staff and certified by the
chief financial officer of Harbour Group Ltd. (or any successor to Harbour
Group Ltd.), as of the last day of the month preceding the month in which the
Executive's employment was terminated, which certification shall be final and
binding; provided, however, that the purchase price for shares purchased
pursuant to this subparagraph 12a shall not be less than eighty percent (80%)
of the Purchase Price.
b. The purchase price for the Shares purchased pursuant to
subparagraph 12a above shall be paid in the following manner:
(i) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is not greater than one
hundred thousand dollars ($100,000.00), the Corporation shall pay the
purchase price for the Shares by (a) returning to the Executive or any
transferee referred to in subparagraph 12a above the Note marked "paid in
full", and (b) paying by cash or check the difference between the purchase
price of the Shares and the principal balance, plus accrued interest, due on
the Note.
(ii) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is greater than one hundred
thousand dollars ($100,000.00), the Corporation shall pay the purchase price
in installments as follows: (a) the first installment by (1) returning to
the Executive or any transferee referred to in subparagraph 12a above the
Note marked "paid in full", and (2) paying by cash or check one hundred
thousand dollars ($100,000.00) and (b) annual
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installments thereafter by paying by cash or check an amount equal to the
lesser of one hundred thousand dollars ($100,000.00) and the balance of the
purchase price remaining outstanding on the date each installment is due,
plus interest on such outstanding balance calculated at a rate equal to the
Prime Rate on such due date. The Corporation shall be entitled to prepay all
or any portion of the purchase price, plus interest thereon, at any time
without penalty.
(iii) If the purchase price for the Shares, as determined
pursuant to Paragraph 12a above, does not exceed the principal balance, plus
accrued interest, due on the Note, then the purchase price shall be paid by
crediting amounts due under the Note, up to the purchase price amount, with
such credit applied first to accrued interest due under the Note then to
principal.
13. CONFLICT BETWEEN PARAGRAPHS. Notwithstanding any other provision
of this Agreement to the contrary, to the extent that there shall be any
conflict between the provisions of Paragraphs 3 or 4 and the provisions of
Paragraph 11 in regard to the right of the Corporation to purchase the Shares
from the Executive, the provisions of Paragraph 11 shall control, and to the
further extent that there shall be any conflict between the provisions of
Paragraphs 11 and 12 in regard to the right or obligation of the Corporation
to purchase the Shares from the Executive, the provisions of Paragraph 11
shall control.
14. SALE OF CONTROL.
a. In the event that the holder of more than fifty percent (50%) of
the outstanding shares of the Common Stock or more than fifty percent (50%)
of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock (in either case, the "Majority Stockholder") shall seek to sell more
than fifty percent (50%) of the outstanding shares of the Common Stock to a
Person which is not an Affiliate of the Majority Stockholder (other than an
underwriter in connection with an offering pursuant to a registration
statement filed under the Act), the Executive shall be provided a written
notice which specifies the identity of the proposed purchaser, the number of
shares of the Common Stock proposed to be purchased and the consideration
proposed to be paid by such
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purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Executive shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Majority Stockholder to include in such proposed sale the number of Shares
(the "Stockholder's Included Shares") which is calculated in the manner
specified in the following sentence. The Stockholder's Included Shares shall
be determined by multiplying the number of Shares owned by the Executive on
the date that the Sale of Control Notice is mailed by a fraction, the
numerator of which is the number of shares of the Common Stock which the
proposed purchaser desires to purchase and the denominator of which is the
total number of shares of the Common Stock which are outstanding on the date
that the Sale of Control Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Included Shares shall be the next larger whole integer and in the event that
the number so determined includes a fraction which is equal to or less than
.50, the Stockholder's Included Shares shall be the next smaller whole
integer. For example, assume the proposed purchaser desires to purchase
450,000 shares of the Common Stock. On the date that the Sale of Control
Notice is mailed, there are 500,000 shares of the Common Stock outstanding
and the Executive owns 1,500 of such shares. The number of the Stockholder's
Included Shares would be 1,350, which is 1,500 times 450,000/500,000.
b. The parties hereto recognize and acknowledge that any
prospective purchaser of the business of the Corporation may wish to purchase
(i) all of the outstanding shares of the Common Stock, (ii) all of the
outstanding shares of the common stock of the Majority Stockholder or (iii)
all or substantially all of the assets of the Corporation, which purchase may
be made in conjunction with the purchase of the business of an Affiliate or
Affiliates of the Corporation. Accordingly, the Executive and each
transferee of the Executive under subparagraph 3b agrees, upon the request of
the Corporation, to (x) sell all of the Shares then owned by the Executive to
any prospective purchaser of the business of the Corporation which is not an
Affiliate of the Majority Stockholder (a "100% Purchaser") or, at the option
of the Majority Stockholder or the Corporation, to the Corporation in
connection with the sale of all of
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the outstanding shares of the Common Stock to a 100% Purchaser or the sale of
all of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock to a 100% Purchaser and (y) at any time prior to the tenth anniversary
of this Agreement, vote the Shares then owned by the Executive in favor of
(A) any sale of all or substantially all of the assets of the Corporation to
a 100% Purchaser or (B) any merger or consolidation of the Corporation with a
100% Purchaser, in each case which has been approved by the Board of
Directors of the Corporation in accordance with the provisions of this
subparagraph 14b. The Executive and each such transferee agrees promptly
upon any request made by the Corporation prior to the tenth anniversary of
this Agreement and without compensation to execute and deliver an amendment
to this Agreement or other instrument which extends for an additional ten
year period the Executive's agreement to vote the Shares as specified in
subparagraph 14(b)(y). For purposes of this subparagraph 14b, the Executive
shall be conclusively deemed and considered to own all Shares owned by
himself, his estate, his executors and administrators, his distributees and
his personal and other legal representatives and any other transferee.
In the event that the Majority Stockholder shall have entered into
an agreement to sell (a) all of the outstanding shares of the Common Stock
owned by it or (b) all of the outstanding shares of the common stock of an
Affiliate of the Corporation which owns a majority of the outstanding shares
of the Common Stock to a 100% Purchaser or the Corporation shall have entered
into an agreement to sell all or substantially all of the assets of the
Corporation to a 100% Purchaser, whether individually or in conjunction with
the sale of the business of an Affiliate or Affiliates of the Corporation,
the Corporation's auditors, or their designee, shall allocate such portion of
the total purchase price to the then outstanding shares of the Common Stock
which is fair and reasonable (with each outstanding share being allocated the
same portion of the purchase price) giving such consideration as they deem
appropriate to the (i) terms and conditions of such agreement to sell, (ii)
book value and the earnings and projected earnings of the Corporation and
each Affiliate of the Corporation whose business is or will be sold pursuant
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to such agreement to sell, determined in accordance with generally accepted
accounting principles consistently applied where relevant and appropriate in
the opinion of the Corporation's auditors or such designee and (iii) such
other factors as they may deem relevant to such allocation. The
determination of such allocation by the Corporation's auditors or their
designee shall be final and binding upon the parties hereto with respect to
the portion of the total purchase price which the Executive is entitled to
receive for the Shares pursuant to this subparagraph 14b. The Executive and
each transferee of the Executive under subparagraph 3b agrees to sell the
Shares to the Persons specified in this subparagraph 14b at the price per
share of the Common Stock allocated by such auditors or their designee at the
closing of the transactions contemplated by such agreement to sell.
For purposes of effectuating any sale of the Shares pursuant to this
subparagraph 14b, the Executive and each transferee of the Executive under
subparagraph 3b hereby grants to each of the Majority Stockholder and the
Corporation and their respective designees and assigns an irrevocable power
of attorney with respect to the transfer of the Shares and authorizes the
Corporation to deliver to the Majority Stockholder or any 100% Purchaser each
stock certificate representing the Shares. The Executive and each such
transferee agrees promptly upon request and without compensation to do all
acts and execute all agreements, documents, proxies, consents of stockholders
and instruments as shall be necessary or desirable to effectuate the
consummation of any agreement to sell all of the outstanding shares of the
Common Stock to a 100% Purchaser, any agreement to sell all of the
outstanding shares of the common stock of an Affiliate of the Corporation
which owns a majority of the outstanding shares of the Common Stock to a 100%
Purchaser and any agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser pursuant to this subparagraph 14b
including, but not limited to, delivering executed stock assignments separate
from certificate naming each of the Majority Stockholder and the Corporation
and their respective assigns and designees as his attorneys for the purpose
of effectuating such transfer. The Majority Stockholder and, in the event
that the Majority Stockholder or the Corporation elects to have the
Corporation purchase the Shares, the
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Corporation agree to deliver or cause to be delivered to the Executive or his
transferees promptly following any sale of the Shares pursuant to this
Paragraph 14b the purchase price for the Shares less all amounts then owed by
the Executive to the Corporation pursuant to the Note.
15. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
a. If the Corporation proposes to register for sale any shares of
the Common Stock owned by the Majority Stockholder under the Act at a time
when the Executive or any transferee of the Executive permitted by
subparagraph 3b owns any of the Shares, it will at each such time give
written notice (the "Registration Notice") to the Executive or such
transferee of its intention to do so and, upon the written request of the
Executive or such transferee given within twenty (20) days after the
Corporation gives such notice (which request shall state the intended method
of disposition of such holder's Shares), the Corporation will use its best
efforts to effect the registration of the number of the Shares (the
"Stockholder's Registered Shares") which is calculated in the manner
specified in the following sentence by including the Stockholder's Registered
Shares in such registration statement, all to the extent required to permit
the sale or other disposition of such Shares in accordance with the intended
method of sale or other disposition given in each such request. The
Stockholder's Registered Shares shall be determined by multiplying the number
of the Shares owned by the Executive and each transferee of the Executive
under subparagraph 3b on the date that the Registration Notice is mailed by a
fraction, the numerator of which is the number of shares of the Common Stock
which are included in such registration statement and the denominator of
which is the total number of shares of the Common Stock outstanding on the
date that the Registration Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Registered Shares shall be the next larger whole integer and in the event
that the number so determined includes a fraction which is equal to or less
than .50, the Stockholder's Registered Shares shall be that number alone.
For example, assume 250,000 shares of the Common Stock are included in such
registration statement. On the date that the Corporation mails the
Registration Notice, there are 500,000 shares of the Common Stock outstanding
and the Executive and such transferees own
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1,500 of such shares. The number of the Stockholder's Registered Shares
would be 750, which is 1,500 times 250,000/500,000.
b. Notwithstanding anything to the contrary contained in
subparagraph 15a:
(i) In the event that any registration statement to be filed
pursuant to subparagraph 15a shall be, in whole or in part, in connection
with an underwritten public offering, the number of the Stockholder's
Registered Shares to be included in such registration statement may be
reduced, or no Stockholder's Registered Shares may be included in such
registration statement, if and to the extent that the managing underwriter(s)
shall give their written opinion that such inclusion would adversely affect
the marketing of the securities to be sold therein by the Majority
Stockholder.
(ii) The Corporation (A) may withdraw any registration
statement referred to in this Paragraph 15 without thereby incurring any
liability to the Executive and (B) shall in no event be obligated to register
any Shares in connection with the first underwritten public offering after
the date hereof, whether primary or secondary, of shares of the Common Stock,
including without limitation any sales of shares of the Common Stock related
to over-allotments in connection with such offering.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subparagraph 15a is
to be underwritten, then any distribution of the Stockholder's Registered
Shares shall be underwritten by the same underwriters who are underwriting
the distribution of the securities of the Corporation for the account of the
Majority Stockholder, and the Executive shall enter into the agreement with
such underwriters contemplated under subparagraph 15b(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Executive and each transferee of the Executive under subparagraph 3b shall
refrain from selling, making any short sale of, loaning,
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granting any option for the purchase of, or otherwise disposing of any of
their Shares not registered pursuant to subparagraph 15a during the period of
time which is the longer of (A) the period of distribution of the shares of
the Common Stock by such underwriter(s) in the offering and (B) the period
requested by such underwriter(s), which shall in no event exceed one hundred
eighty (180) days.
16. RIGHT TO ACQUIRE ADDITIONAL SHARES. If at any time during the
Executive's employment with the Corporation or any Subsidiary, the
Corporation issues any shares of the Common Stock, any securities convertible
into or exchangeable for shares of the Common Stock or any options, warrants
or rights to acquire shares of the Common Stock or securities convertible
into or exchangeable for shares of the Common Stock to the Majority
Stockholder or any Affiliate of the Majority Stockholder (the "New Issue
Securities"), and if shares of the Common Stock are not Publicly Traded on
the date of such issuance, the Corporation agrees that not later than sixty
(60) days after the sale of any New Issue Securities it will offer in writing
to sell to the Executive such number or principal amount of the New Issue
Securities as would enable the Executive to maintain the same aggregate
percentage ownership interest in the shares of the Common Stock (which for
purposes of this Paragraph 16 shall include shares of the Common Stock issued
and outstanding, shares held in the Corporation's treasury from time to time
and shares subject to purchase pursuant to an option held by the Majority
Stockholder on the date hereof) after such sale of the New Issue Securities
as specified in the third WHEREAS clause of this Agreement. Notwithstanding
the immediately preceding sentence, the term "New Issue Securities" shall not
include shares of the Common Stock which are at any time subject to purchase,
by the Majority Stockholder pursuant to an Option Agreement between the
Corporation and the Majority Stockholder dated on or prior to the date of
this Agreement. The offer of the Corporation to the Executive described in
the first sentence of this Paragraph 16 shall contain the same price per
share, security, option, warrant or other right constituting New Issue
Securities and substantially similar terms and conditions as the sale of the
New Issue Securities which obligates the Corporation to make the offer. The
Executive shall be entitled to accept such offer only without
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modification and only in writing for a period of ten (10) days after the
offer is made. In the event that such offer is accepted by the Executive,
the Executive shall deliver to the Corporation (i) a check in the amount of
the par value of the New Issue Securities being offered to the Executive and
(ii) a promissory note payable to the Corporation in the same form and having
the same date of maturity as the Note, bearing interest at a rate which is
two percent (2%) in excess of the Prime Rate and in the aggregate principal
amount of the purchase price of the shares of the New Issue Securities
offered to the Executive, less the amount of such check, within fifteen (15)
days after the offer is made. The note shall be secured by a pledge of the
New Issue Securities purchased by the Executive with the proceeds of the loan
evidenced thereby.
17. SPECIFIC PERFORMANCE. The Executive acknowledges that the services
to be rendered by him are of a special, unique and extraordinary character,
and in connection with rendering such services, he will have access to
Proprietary Information. The parties agree that it is impossible to measure
in money the damages that will accrue to the Corporation and its Subsidiaries
by reason of the Executive's failure to perform his obligations under this
Agreement, that such failure to perform will result in irreparable damage to
the Corporation and its Subsidiaries, and that specific performance of the
Executive's obligations may therefore be obtained by suit in equity. Without
limiting the generality of the foregoing sentence, the Corporation or any
Subsidiary shall be entitled to apply to any court of competent jurisdiction
for an injunction restraining the Executive from committing or continuing any
violation of Paragraphs 9 and/or 10. The Executive will not assert any claim
or defense in any action or proceeding to enforce any provision hereof that
the Corporation or any Subsidiary has or had an adequate remedy at law.
18. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified
mail, return receipt requested, with first-class postage prepaid, or by
facsimile with answer-back; and such notices shall be addressed: (i) if to
the Corporation, to the Secretary of the Corporation at the Corporation's
principal business office, with a copy to Chairman, Harbour Group Ltd., 7701
Forsyth Boulevard, Suite 600,
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Clayton, Missouri 63105; and (ii) if to the Executive, to his address as
reflected in the records of the Corporation; or to such other address(es) as
the parties hereto shall designate by Written Notice, furnished to all
parties in the manner provided herein. Any notice which is required to be
made within a stated period of time shall be considered timely if delivered
or mailed before midnight of the last day of such period.
19. CERTAIN TRANSACTIONS ON BEHALF OF AFFILIATES. The Executive
recognizes and acknowledges that the Corporation may on the date of this
Agreement be, or may after the date of this Agreement become, liable for the
indebtedness of Affiliates of the Corporation as a consequence of being or
becoming a party to agreements evidencing such indebtedness or guaranteeing
such indebtedness. The Executive agrees to (i) the Corporation incurring
liability for the indebtedness of its Affiliates, whether such liability was
incurred prior to the date of this Agreement or incurred after the date of
this Agreement and (ii) not assert any claim against the Corporation or its
directors, officers or stockholders in connection with or relating to such
liability of the Corporation for the indebtedness of its Affiliates, whether
such liability was incurred prior to the date of this Agreement or incurred
after the date of this Agreement. The Executive further acknowledges that
the Majority Stockholder has the option to acquire up to 40,000 shares of
newly issued Common Stock (subject to adjustment for stock splits,
recapitalizations and the like) which option is exercisable at any time to
the extent that executive employees of the Corporation and its Subsidiaries
are holders less than 40,000 shares of the Common Stock.
20. NO RIGHT TO CONTINUED EMPLOYMENT. The Executive agrees that
neither the sale of the Shares by the Corporation to him nor any provision of
this Agreement shall (i) give the Executive any right to be retained in the
employ of the Corporation or any Subsidiary, (ii) affect the right of the
Corporation or any Subsidiary to discharge the Executive at any time or (iii)
affect the Executive's right to terminate his employment with the Corporation
or any Subsidiary at any time.
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21. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had been omitted.
22. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective personal
or legal representatives, successors and assigns.
23. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed
to be and include the plural (and VICE VERSA), whenever appropriate.
24. RULE 144 ACKNOWLEDGMENTS.
a. The Executive represents and warrants to the Corporation that
(i) he is purchasing the Shares for his own account without a view to any
distribution thereof in violation of the Act or any applicable state
securities laws, (ii) he is experienced in evaluating and making investments
of this type, and has had access to, and to his knowledge has received, all
the information that he reasonably has required to evaluate this investment
and (iii) he is financially able to bear the risks associated with an
investment in the Shares being purchased hereby.
b. The Executive acknowledges that the Corporation is issuing and
selling the Shares in reliance upon the representations and warranties set
forth in subparagraph 24a and that the Shares so acquired will be "restricted
securities" within the meaning of Rule 144 under the Act, and acknowledges
that such Shares may only be offered, sold, pledged or otherwise transferred
by him (i) if registered under the Act and registered or otherwise qualified
for sale under any applicable state securities laws or (ii) pursuant to any
exemption from such registration or qualification requirements, and that the
certificate(s) representing the Shares will bear a legend to this effect.
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25. MODIFICATIONS. No change or modification of this Agreement shall
be valid unless the same is in writing and signed by all the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the party against whom it is sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other condition, promise, agreement or
understanding at a future time.
26. POST-EMPLOYMENT RESTRICTION PERIOD; ADDITIONAL COMPENSATION. For
the purposes of this Agreement the applicable "Post-Employment Restriction
Period" shall be determined as follows:
a. If the Executive's employment with the Corporation or any
Subsidiary is terminated for Cause, the Post-Employment Restriction Period
shall be a period of one (1) year commencing on the date of termination of
such employment.
b. If the Executive's employment with the Corporation and the
Subsidiaries is terminated due to a Permanent Disability, the Post-Employment
Restriction Period shall be a period of one (1) year commencing on the date
of termination of such employment. For the purpose of this Paragraph 26,
the Executive has suffered a "Permanent Disability" if the Board of Directors
of the Corporation determines that the Executive has been or will be unable,
as a result of physical or mental illness or incapacity, to perform his
duties to the Corporation and the Subsidiaries for a period of four (4)
consecutive months or for an aggregate of more than six (6) months in any
twelve-month period.
c. If the Executive's employment with the Corporation and its
Subsidiaries shall be terminated by the Corporation or such Subsidiaries
without Cause, or if the Executive terminates his employment within sixty
(60) days after a substantial reduction in his duties, responsibilities or
compensation, the Post-Employment Restriction Period shall be a period of one
(1) year commencing on the date of termination of such employment; provided
that (i) during the
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Post-Employment Restriction Period the Corporation or its Subsidiaries shall
make monthly payments to the Executive and (ii) during the Benefits Period
the Corporation or a Subsidiary shall provide to the Executive, the Benefits,
as in effect on the date of termination of such employment, or the reasonable
equivalent thereof, as determined by the Board of Directors of the
Corporation in its sole discretion and business judgment. For the purposes
of this Paragraph 26, "Benefits Period" means a period, commencing on the
date that the Executive's employment with the Corporation and all of its
Subsidiaries terminates and ending on the earlier of (a) the end of the
initial Post-Employment Restriction Period and (b) the date that the
Executive commences other employment or any consulting arrangement. The
amount of the monthly payments shall be equal to one-twelfth (1/12) of the
Executive's annual base compensation as in effect on the date of termination
during the Benefits Period and 50% of such amount thereafter until the end of
the initial Post-Employment Restriction Period determined by this Paragraph
26c.
d. If the Executive terminates his employment with the Corporation
and the Subsidiaries for any reason other than the Corporation substantially
reducing his duties, responsibilities or compensation, within thirty (30)
days of the date of such termination the Corporation shall have the option to
designate an initial Post-Employment Restriction Period of six (6) months
commencing on the date of termination which option is exercisable by notice
given within thirty (30) days after the date on which the Corporation
receives notice of the Executive's termination of his employment.
Thereafter, the Corporation shall have three (3) additional options to extend
the Post-Employment Restriction Period for additional consecutive periods of
six (6) months each, which options shall be exercisable at the times and in
the manner set forth in this Paragraph 26d. If the initial Post-Employment
Restriction Period is determined by subparagraphs a, b or c above, at the end
of the initial Post-Employment Restriction Period the Corporation shall have
two (2) options to extend the Post-Employment Restriction Period for
additional consecutive periods of six (6) months each. The Corporation may
exercise its additional options under this Paragraph 26d by giving notice to
the Executive of each such election at any time which is not less than thirty
(30) days prior to the expiration of the
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Post-Employment Restriction Period (as may have then been extended by prior
exercise of an option pursuant to this Paragraph 26d). During any such
extension of the Post-Employment Restriction Period, the Corporation shall
make monthly payments to the Executive in an amount equal to one twelfth
(1/12th) of the Executive's annual base compensation as in effect on the date
of termination of his employment until the first full month in which the
Executive has obtained other employment or any consulting arrangement and 50%
of such amount thereafter. Notwithstanding any provision of this Paragraph 26
to the contrary, the Post-Employment Restriction Period shall not be extended
beyond a period of two (2) years without the consent of the Executive.
e. During the Post-Employment Restriction Period (including any
extensions thereof) the Executive shall give written notice to the
Corporation within five (5) days of any change in his employment or in his
duties, responsibilities or activities pursuant thereto. If the Executive
voluntarily terminates his employment with the Corporation and all of its
Subsidiaries, the Executive shall give written notice to the Corporation of
any employment which the Executive at that time expects to be engaged in
within the six-month period following his termination.
f. Notwithstanding any other provision of this Paragraph 26 to the
contrary, the provisions of this Paragraph do not, and are not intended to,
waive, disclaim or otherwise extinguish any rights of the Executive as an
employee under any applicable federal, state or local statute or ordinance.
27. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations
between the parties hereto with respect to the subject matter of this
Agreement. This Agreement is, and is intended by the parties to be, an
integration of any and all prior agreements or understandings, oral or
written, with respect to the subject matter of this Agreement.
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28. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in
Paragraph 1(f) and the following sentence. All matters concerning the
authorization of this Agreement and the consummation of the transactions
contemplated hereby including without limitation the issuance of the Shares,
the payment for the Shares and the fully paid and nonassessable status of the
Shares, shall be construed and enforced in accordance with the General
Corporation Law of the State of Delaware.
29. HEADINGS. The headings and other captions in this Agreement are
for convenience and reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
[The balance of this page has been intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
WITNESS: UNIQUIP CORPORATION
/s/ Elizabeth Bowling By: /s/ Peter S. Finley
- -------------------------- -------------------------------
Name: Peter S. Finley
Title: Vice President
/s/ Curtis J. Laetz /s/ James H. Hook
- -------------------------- -------------------------------
James H. Hook
The undersigned, being the record and beneficial owner of more than
fifty percent (50%) of the issued and outstanding shares of the Common Stock
of either the above-named Corporation, hereby agrees to comply with the
provisions of Paragraph 14 hereof.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P.,
General Partner
By: HGM III Co., General Partner
by: /s/ Francis M. Loveland
--------------------------------------
Francis M. Loveland
Vice President
Dated: September 20, 1995
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated September 20, 1995 between James H. Hook
(the "Pledgor") and Uniquip Corporation, a Delaware corporation (the "Pledgee").
WHEREAS, the Pledgee has made a loan to the Pledgor in order to permit
the Pledgor to acquire certain shares of common stock of the Pledgee described
in Schedule 1 hereto, which loan is evidenced by a Promissory Note of the
Pledgor of even date herewith;
WHEREAS, the Pledgee requires the Pledgor, as a condition to making the
aforementioned loan, to enter into this Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the making of such loan, the Pledgor
hereby agrees with the Pledgee as follows:
SECTION 1. PLEDGE. To secure the due and punctual payment by the
Pledgor of the Liabilities (as hereinafter defined), the Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto the Pledgee and
hereby grants to the Pledgee a security interest in the following:
(i) the shares of stock specified in Schedule 1 hereto and all other
shares of stock of the Pledgee hereafter acquired by the Pledgor
(herein collectively called the "Pledged Shares") and the
certificates representing the Pledged Shares, and all cash,
securities, interest, dividends, options, rights and other property
at any time and from time to time received, receivable or otherwise
distributed in respect of, or in exchange for, any or all of the
Pledged Shares;
(ii) all other property hereafter delivered to the Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends, options,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(iii) all proceeds of any of the foregoing (the Pledged Shares and all
such additional shares, certificates, instruments, cash,
securities, interest, dividends, options, rights and other property
being herein collectively called the "Collateral").
The term "Liabilities," as used herein shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith.
SECTION 2. CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a) The Pledgee shall not be liable for its failure to collect or
realize upon the Liabilities or any collateral, security or guaranty therefor,
or any part thereof, or for any delay in so doing, nor shall the Pledgee be
under any obligation to take any action whatsoever with respect thereto.
(b) The Pledgee may from time to time, after any portion of the
Liabilities shall become due and payable, without notice to the Pledgor,
(i) transfer all or any part of the Collateral into the name of the Pledgee or
its nominee, with or without disclosing that such Collateral is subject to the
lien and security interest granted hereby, (ii) enforce collection of any of the
Collateral, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, (iii) resort to the Collateral for payment of any portion of the
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Liabilities whether or not it shall have resorted to any other property securing
payment of any portion of the Liabilities or shall have proceeded against any
party primarily or secondarily liable on any portion of the Liabilities and
(iv) take control of any proceeds of the Collateral.
SECTION 3. DIVIDENDS, ETC.
(a) So long as no portion of the Liabilities shall be due and
payable, the Pledgor shall be entitled to vote the Pledged Shares, to give
consents, waivers and ratifications in respect of the Pledged Shares and to
receive and retain cash dividends made on or in respect of the Pledged Shares;
provided, however, that any and all cash, stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions made on or
in respect of the Pledged Shares resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Shares or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of assets to which
the issuer thereof may be a party or otherwise, and any and all cash and other
property received in exchange for any Collateral shall be and become part of the
Collateral pledged hereunder and, if received by the Pledgor, shall be held by
the Pledgor in trust on behalf of and for the benefit of the Pledgee and shall
forthwith be delivered to the Pledgee or its designated nominee (accompanied, if
appropriate, by proper instruments of assignment and/or stock powers executed by
the Pledgor in accordance with the Pledgee's instructions) to be held subject to
the terms of this Agreement; and provided further that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair the
Collateral or the security interests granted hereby.
(b) Upon the nonpayment, when due, of any portion of the
Liabilities, all rights of the Pledgor pursuant to Section 3(a) hereof shall, at
the election of the Pledgee, cease, and the Pledgee shall have the sole and
exclusive right and authority to vote, to give consents, waivers and
ratifications, and receive all dividends and distributions pursuant to Section
3(a) hereof.
SECTION 4. REMEDIES. In the event that any portion of the Liabilities
is not paid when due, the Pledgee, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Pledgor or any other
person (all and each of which demands, advertisements, and/or notices being
hereby expressly waived by the Pledgor), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
parcels at public or private sales, at any exchange or broker's board or at any
of the Pledgee's offices or elsewhere, upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery, without assumption of any credit risk, with the right upon
any such sale, public or private, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Pledgor,
which right or equity is hereby expressly waived and released by the Pledgor.
The Pledgee shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way relating
to the rights of the Pledgee hereunder (including reasonable attorney's fees and
legal expenses), to the payment in whole or in part of the Liabilities in such
order as it may elect, and only after such application of such net proceeds and
after the payment in full of the Liabilities by the Pledgee and any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need the Pledgee account for the
surplus, if any, to the Pledgor. The Pledgor agrees that the Pledgee need not
give more than ten days' notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition is to take
place and that such notice is reasonable notification of such matters. No
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notification need be given the Pledgor if, after any portion of the Liabilities
is not paid when due, it shall have signed a statement renouncing or modifying
any right to notification of any sale or other intended disposition. The
Pledgee shall not be obligated to make any sale pursuant to any such notice.
The Pledgee may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Pledgee until the selling price is paid by the purchaser
thereof, but the Pledgee shall incur no liability in the case of the failure of
such purchaser to take up and pay for the Collateral so sold and in case of any
such failure such Collateral may again be sold on like notice. The Pledgee,
however, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit at law or in equity to foreclose the pledge and security
interest under this Agreement and sell the Collateral, or any part thereof,
under a judgment or decree of a court of competent jurisdiction. In addition to
the rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to any portion of the
Liabilities, the Pledgee shall have all the rights and remedies of a secured
party under the Uniform Commercial Code. The Pledgor further agrees to waive
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents and warrants that (a) the Pledgor is the legal record and beneficial
owner of, and has good and marketable title to, the Pledged Shares, subject to
no perfected lien whatsoever except the lien created by this Agreement; (b) no
consent of any other person (including, without limitation, his creditors) and
no consent, license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by him in connection
with the execution, delivery or performance of this Agreement; (c) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation, or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Pledgor is a party or which purports to
be binding upon the Pledgor or upon any of the Pledgor's assets, and will not
result in the creation or imposition of any lien on any of the Pledgor's assets
except as contemplated by this Agreement; and (d) the Pledgor has delivered to
the Pledgee the Pledged Shares, with the certificates therefor duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, and the pledge,
assignment and delivery of the Pledged Shares pursuant to this Agreement creates
a valid lien on and a perfected security interest in the Pledged Shares, and the
proceeds thereof, subject to no prior lien, or to any agreement purporting to
grant to any third party a security interest in the Pledgor's property or assets
which would include the Pledged Shares. The Pledgor covenants and agrees that
the Pledgor will not sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, nor will the Pledgor
create, incur or permit to exist any perfected lien with respect to any part of
the Collateral, or any interest therein, or any proceeds thereof, except for the
lien created by this Agreement, without the prior written consent of the
Pledgee; and the Pledgor further covenants and agrees that the Pledgor will
defend the Pledgee's right, title and security interest in and to the Collateral
and the proceeds thereof against the claims and demands of all persons; and the
Pledgor further covenants and agrees to deliver to the Pledgee from time to time
on request such stock powers and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee may
request.
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SECTION 6. SALE OF THE PLEDGED SHARES.
(a) The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all of the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable to the seller than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall not be deemed to have been made in commercially
unreasonable manner by virtue of its private nature. The Pledgee shall be under
no obligation to delay a sale of any of the Pledged Shares for the period of
time necessary to permit the issuer thereof to register such securities for
public sale under the Securities Act or under applicable state securities laws
even if the issuer would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Pledged Shares valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense.
SECTION 7. FURTHER ASSURANCE. The Pledgor agrees that, at any time and
from time to time upon the written request of the Pledgee, it will execute and
deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of the Agreement.
SECTION 8. AUTHORITY OF PLEDGEE.
(a) The Pledgee is hereby appointed the attorney-in-fact of the
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which the Pledgee may deem
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, provided that no
action may be taken by the Pledgee pursuant to such appointment so long as the
Liabilities are not yet due and payable. Without limiting the generality of the
foregoing, the Pledgee shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
(b) The Pledgee shall have and be entitled to exercise all such powers
hereunder as are specifically delegated to the Pledgee by the terms hereof,
together with such powers as are incidental thereto. The Pledgee may execute
any of its duties hereunder by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither the
Pledgee, nor any director, officer or employee of the Pledgee, shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct. The Pledgor hereby agrees to reimburse the Pledgee, on demand, for
all reasonable expenses incurred by the Pledgee in connection with the
enforcement of this Agreement (including expenses incurred by any agent employed
by the Pledgee) and agrees to indemnify and hold harmless the Pledgee and/or any
such agent from and against any and all liability incurred by the Pledgee or
such agent hereunder or in connection herewith, unless such liability shall be
due to willful misconduct or negligence on the part of the Pledgee or such
agent.
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SECTION 9. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10. NO WAIVER, CUMULATIVE REMEDIES. The Pledgee shall not by
any act, delay, omission or otherwise be deemed to have waived any of its
rights, powers or remedies hereunder and no waiver shall be valid unless in
writing, signed by the Pledgee, and then only to the extent therein set forth.
A waiver by the Pledgee of any right, power or remedy hereunder on any one
occasion shall not be construed as a bar to the exercise of any right, power or
remedy which the Pledgee would otherwise have on any future occasion. No
failure to exercise, nor any delay in exercising, on the part of the Pledgee any
right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The rights, powers and remedies herein provided are cumulative and
may be exercised singly or concurrently, and are not exclusive of any rights,
powers or remedies provided by law.
SECTION 11. NOTICES. All notices, demands, requests and other
communications provided for or permitted under this Agreement shall be in
writing, either delivered in hand or sent by registered first class mail,
postage prepaid, or by facsimile with answer-back, addressed, if to the Pledgor,
to James H. Hook at his address as reflected in the records of the Pledgee and,
if to the Pledgee, to Chairman, Uniquip Corporation, 7701 Forsyth Boulevard,
Suite 600, Clayton, Missouri 63105 or to such other address as the party to
receive any such notice, demand, request or communication may have designated by
written notice to the other party, which notice complies as to delivery with the
terms of this Section 11.
SECTION 12. TERMINATION. Upon payment in full of the Liabilities in
accordance with their terms and the performance by the Pledgor of all of the
Pledgor's obligations under this Agreement, this Agreement shall terminate and
the Pledgor shall be entitled to the return, at the Pledgor's expense, of such
of the Collateral in the possession or control of the Pledgee as may have been
pledged by the Pledgor under this Agreement and which has not theretofore been
disposed of pursuant to the provisions hereof.
SECTION 13. MISCELLANEOUS. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon his successors and assigns, and shall,
together with the rights, powers and remedies of the Pledgee hereunder, inure to
the benefit of the Pledgee and its successors and assigns.
SECTION 14. AMENDMENTS; APPLICABLE LAW. None of the terms or provisions
of this Agreement may be amended except by an instrument in writing, duly
executed by the Pledgee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
conflicts of laws principles of such jurisdiction.
5
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and delivered
this Agreement on the day and year first above written.
PLEDGOR
/s/ James H. Hook
-------------------------------
James H. Hook
PLEDGEE
UNIQUIP CORPORATION
BY: /s/ Peter S. Finley
--------------------------
Name: Peter S. Finley
Title: VP
6
<PAGE>
SCHEDULE 1
ISSUER OF CERTIFICATE NUMBER OF
PLEDGED SHARES CLASS NUMBER SHARES
-------------- ----- ----------- ---------
Uniquip Corporation Common 4 7,500
Stock
7
<PAGE>
PROMISSORY NOTE
$47,572.00 September 20, 1995
FOR VALUE RECEIVED, on or before ten (10) years from the date hereof,
the undersigned, James H. Hook (the "Maker"), promises to pay to the order of
Uniquip Corporation, a Delaware corporation (the "Lender"), at 7701 Forsyth
Boulevard, Suite 600, St. Louis, Missouri 63105, or at such other place as
the holder hereof may from time to time designate in writing, the principal
sum of forty-seven thousand five hundred seventy-two dollars ($47,572.00), or
so much thereof as shall be advanced or readvanced and from time to time
remain unpaid, plus interest on the principal balance thereof at a rate of
six and fifty-six hundredths (6.56%) per annum annually, which is the
applicable federal rate for debt instruments with a term in excess of nine
(9) years, as determined by the Internal Revenue Service in accordance with
Section 1274(d) of the Internal Revenue Code of 1986, as amended and in
effect on the date hereof.
This Note shall be payable in successive annual installments of accrued
interest only, followed by one (1) final installment at maturity in the
amount of the then outstanding principal balance of this Note and all accrued
and unpaid interest thereon. Such consecutive annual installments shall be
due on each December 31 after the date hereof until the tenth anniversary of
the date hereof, the maturity date of this Note, when the entire principal
balance of this Note and all accrued and unpaid interest thereon, as well as
all other costs, fees or charges payable hereunder, if any, shall be due and
payable in full. Interest on this Note shall be calculated on a 360 day
year, per diem basis. All payments hereunder shall be made in lawful
currency of the United States and in immediately available funds.
This Note may be prepaid, in whole or in part, at any time without
penalty and shall be prepaid in full at such time as the Maker shall sell all
or any part of the Pledged Shares (as such term is defined in that certain
Stock Pledge Agreement of even date herewith between the Maker and the
Lender). Any partial prepayments shall not, however, relieve the Maker of
the obligation to pay principal hereunder as and when the same would
otherwise fall due.
The Maker (i) waives presentment, demand, protest and notice of
presentment, notice of protest and notice of dishonor of this debt and each
and every other notice of any kind with respect to this Note, (ii) agrees
that the holder of this Note, at any time or times, without notice to it or
its consent, may grant extensions of time, without limit as to the number or
the aggregate period of such extensions, for the payment of any sums due
hereunder, and (iii) to the extent not prohibited by law, waives the benefit
of any law or rule of law intended for its advantage or protection as an
obligor hereunder or providing for its release or discharge from liability
under this Note, in whole or in part, on account of any facts or
circumstances other than full and complete payment of all amounts due
hereunder.
In the event any one or more of the provisions contained in this Note or
any of the other security documents shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Note or such
other security document, but this Note and the other security documents shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
<PAGE>
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is secured by a certain Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement") by and between the Maker and the
Lender. (This Note and the Stock Pledge Agreement, together with all
extensions, renewals and modifications thereof and substitutions therefor,
being herein collectively referred to as the "security documents").
All of the terms, covenants, provisions, conditions, stipulations,
promises and agreements contained in the security documents to be kept,
observed and performed by the Maker are hereby made a part of this Note and
incorporated herein by reference to the same extent and with the same force
and effect as if they were fully set forth herein, and the Maker promises and
agrees to keep, observe and perform them, or cause them to be kept, observed
and performed, strictly in accordance with the terms and provisions thereof.
The Maker warrants and represents that the loan evidenced hereby is
being made for business or investment purposes.
This Note shall be governed in all respects by the laws of Missouri and
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, personal representatives,
successors and assigns.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or
renew such debts are not enforceable. To protect the Maker and the Lender,
or any holder of this Note, from misunderstanding or disappointment, any
agreements we reach covering such matters are contained in this writing,
which is the complete and exclusive statement of the agreement between us,
except as we may later agree in writing to modify it.
WITNESS:
/s/ Curtis J. Laetz /s/ James H. Hook (SEAL)
- -------------------------- --------------------------------------
James H. Hook
Maker
2
<PAGE>
UNIQUIP CORPORATION
September 20, 1995
Mr. James H. Hook
TRAK International, Inc.
369 West Western Avenue
Port Washington, WI 53704
Dear Mr. Hook,
Reference is made to that promissory note (the "Note") dated today made by
you in connection with the sale by Uniquip Corporation (the "Corporation") to
you of seven thousand five hundred (7,500) shares of the Corporation's Common
Stock. The Corporation hereby promises to compensate you for so long as you
are employed by the Corporation or its subsidiaries, by bonus or otherwise
and in addition to any other compensation (including bonus) payable to you,
in amounts sufficient to allow you to pay (i) interest on the Note as and
when such interest becomes due and payable, (ii) approximately all federal
and state income, determined solely with respect to your aggregate
compensation from the Corporation and its subsidiaries, taxes that you will
incur as a consequence of the receipt of amounts paid under clause (i) and
(ii) of this letter.
Very truly yours,
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
----------------------------------
Peter S. Finley
Vice President
<PAGE>
AMENDMENT TO PROMISSORY NOTE AND
STOCK PLEDGE AGREEMENT
AMENDMENT TO PROMISSORY NOTE AND STOCK PLEDGE AGREEMENT (the "Agreement"),
dated September 30, 1996, by and among Omniquip International, Inc., a Delaware
corporation formerly known as Uniquip Corporation (the "Corporation"), and James
H. Hook (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Corporation sold seventy-five thousand (75,000) shares (as
adjusted for stock splits effected or to be effected prior to the effective date
of this Agreement) of its Common Stock, par value $.01 per share (the "Shares"),
to the Stockholder at an aggregate purchase price of forty-seven thousand six
hundred forty-seven dollars ($47,647.00);
WHEREAS, in connection with the sale of the Shares to the Stockholder: (i)
the Stockholder and the Corporation entered into a Purchase and Stockholder
Agreement (the "Stockholder Agreement"), dated September 20, 1995; (ii) the
Stockholder executed and delivered a Promissory Note, dated September 20, 1995,
payable to the order of the Corporation in the principal amount of forty-seven
thousand five hundred seventy-two dollars ($47,572.00) (the "Stockholder Note");
and (iii) the Stockholder and the Corporation entered into a Stock Pledge
Agreement (the "Stock Pledge Agreement"), dated September 20, 1995, pursuant to
which the Stockholder pledged the Shares as security for the performance of his
obligations under the Stockholder Note; and
WHEREAS, the parties hereto desire (i) to modify the Stockholder Note and
(ii) to amend the Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MODIFICATION OF STOCKHOLDER NOTE. The third paragraph of the
Stockholder Note is hereby amended and restated on the Effective Date to read in
its entirety as follows:
"This Note may be prepaid, in whole or in part, at any time without
penalty. Upon the sale or other transfer of any of the Pledged Shares (as
such term is defined in that certain Stock Pledge Agreement, dated
September 20, 1995, by the Maker in favor of the Lender (as the same may be
amended, modified or supplemented, the "Stock Pledge Agreement")), a
prepayment of this Note shall be made in an amount equal to the then
outstanding principal balance of this Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Notwithstanding the preceding sentence, no
prepayment hereunder shall be required in connection with any transfer of
the Pledged Shares to the Lender upon the exercise of any option granted to
the Maker under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), PROVIDED that as a condition to such transfer, the Maker
agrees to deliver to the Lender the certificates evidencing the shares
issued upon exercise of such option (accompanied by duly executed stock
powers) and subjects such shares to the lien of the Stock Pledge Agreement
in substitution for the Pledged Shares so transferred. Any partial
prepayments hereunder shall not relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due."
<PAGE>
B. AMENDMENT TO STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended on the Effective Date as follows:
1. by deleting Schedule 1 thereto in its entirety and inserting in lieu
thereof the schedule attached hereto as Schedule 1
2. by deleting the definition of the term "Liabilities" therein and
inserting in lieu thereof the following:
"The term "Liabilities," as used herein, shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith, as may be amended, modified or supplemented
from time to time (the "Stockholder Note")."
3. by inserting a new Section 15 as follows:
"Section 15. TRANSFER AND PARTIAL RELEASE OF SHARES. The Pledgee agrees
that the Pledgor may sell or otherwise transfer all or any portion of the
Pledged Shares without the prior consent of the Pledgee, PROVIDED THAT
prior to or simultaneous with such sale or transfer a prepayment of the
Stockholder Note is made in an amount equal to the then outstanding
principal balance of the Stockholder Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Upon such prepayment, the Pledgee shall
deliver to the Pledgor certificates evidencing the Pledged Shares being
sold or transferred, registered in such names as the Pledgor may request,
PROVIDED that the Pledgor shall be responsible for any transfer or similar
tax arising by reason of any such transfer.
Notwithstanding the foregoing, the Pledgor may transfer all of the Pledged
Shares to the Pledgee upon the exercise of any option granted to the
Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note,
PROVIDED that as a condition to such transfer, the Pledgor agrees to
deliver to the Pledgee the certificates evidencing the shares issued upon
exercise of such option (accompanied by duly executed stock powers) and
subjects such shares to the lien of this Stock Pledge Agreement in
substitution for the Pledged Shares so transferred."
D. WAIVER OF STOCKHOLDER AGREEMENT RESTRICTIONS. Notwithstanding anything
to the contrary contained in the Stockholder Agreement, the Pledgor may transfer
all of the Pledged Shares to the Pledgee upon the exercise of any option granted
to the Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note, PROVIDED
that as a condition to such transfer, the Pledgor agrees to deliver to the
Pledgee the certificates evidencing the shares issued upon exercise of such
option (accompanied by duly executed stock powers) and subjects such shares to
the lien of this Stock Pledge Agreement in substitution for the Pledged Shares
so transferred
E. EFFECTIVE DATE. This Agreement and each of the amendments effected
hereby shall become effective on the date the Corporation's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Corporation's Common Stock becomes effective under the Act (the "Effective
Date"). Until the Effective Date, the Stockholder
- 2 -
<PAGE>
Note, the Stock Pledge Agreement and the Stockholder Agreement, as in effect on
the date hereof, shall remain in full force and effect without giving effect to
this Agreement. On and after the Effective Date, the Stockholder Note, the
Stock Pledge Agreement and the Stockholder Agreement, as modified hereby shall
continue to be in full force and effect and each is hereby ratified and
confirmed in all respects.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Missouri (without giving effect to such
jurisdiction's conflict of laws principles).
G. HEADINGS. The headings and captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
H. LEGEND. The Corporation shall cause the following legend to be typed
onto the face of the Stockholder Note:
"This Promissory Note has been modified pursuant to an Amendment to
Promissory Note and Stock Pledge Agreement, dated September 20, 1995, by
and between the Maker and the Lender, dated September 30, 1996."
I. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ Philip G. Franklin
--------------------------------------
Name: Philip G. Franklin
Title: Chief Financial Officer
/s/ James H. Hook
----------------------------------------
James H. Hook
- 4 -
<PAGE>
Schedule 1
Issuer of Certificate Number of
Pledged Shares Class Number Shares
- ------------------- ------ ----------- ---------
Omniquip International, Inc. Common 75,000
- 5 -
<PAGE>
PURCHASE AND STOCKHOLDER AGREEMENT
This Purchase and Stockholder Agreement, made this September 20, 1995,
between Uniquip Corporation, a Delaware corporation (the "Corporation") and
Curtis J. Laetz (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Corporation is authorized to issue One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par value One Cent ($.01) per
share (the "Common Stock");
WHEREAS, the Executive is an executive employee of TRAK International,
Inc., a Subsidiary of the Corporation;
WHEREAS, the Executive has offered to purchase from the Corporation
seven thousand five hundred shares (7,500) shares of the Common Stock,
representing Seventy-Five Hundredths Percent (.75%) of the then issued and
outstanding shares of the Common Stock on a fully diluted basis, at an
aggregate price of Forty-Seven Thousand Six Hundred Forty-Seven Dollars
($47,647.00) (the "Purchase Price"), and the Corporation has agreed to accept
such offer to purchase such shares of the Common Stock, subject to the right
of the Corporation to purchase all of the shares of the Common Stock now
owned or hereafter acquired by the Executive in certain circumstances; and
WHEREAS, the Corporation and the Executive desire to set forth their
understandings and agreements with respect to restrictions on certain
transfers of shares of the Common Stock now owned or hereafter acquired by
the Executive, the right of the Corporation to purchase all of the shares of
the Common Stock now owned or hereafter acquired by the Executive in certain
circumstances and certain other matters; including provisions with respect to
the Executive's post-termination employment and/or interest in competing
enterprises; and
<PAGE>
WHEREAS, the Corporation and the Executive acknowledge and agree that
the restrictions on certain transfers of shares of the Common Stock now owned
or hereafter acquired by the Executive further the Corporation's interest by
having shares of the Common Stock owned by full time employees of the
Corporation and its Subsidiaries, and that other provisions hereof are
consistent with the bonafide interests of the Corporation and of other full
time employees of the Corporation and its Subsidiaries; and
WHEREAS, it is recognized and acknowledged by the Executive that the
success of the Corporation and its Affiliates, including the Majority
Stockholder and other stockholders of the Corporation, is attributable in
major part to the manner by which the Corporation and its Affiliates source
and evaluate acquisition candidates and integrate their acquisitions,
referred to as the "Harbour Group Culture", all of which involve special and
proprietary techniques, procedures and training; and
WHEREAS, in order for the Executive to make a meaningful contribution in
his job, the Executive must learn and practice the intricacies of the
Corporation's and Harbour Group's procedures and know-how, benefit from the
collective Harbour Group experience in implementation of the "Harbour Group
Culture" and work with a small group of executives who have also learned the
intricacies of the "Harbour Group Culture", pursuant to which executives
engaged in acquisitions, finance, and operations work in concert; and
WHEREAS, Harbour Group enjoys a reputation in the business community of
the United States and elsewhere with particular but not exclusive reference
to its reputation among institutional investors, commercial banking
institutions, investment bankers, business brokers and sellers and buyers of
business enterprises; and
WHEREAS, the Executive's reputation will be enhanced and his experience
will be enhanced by his relationship with the Corporation and with Harbour
Group; and
2
<PAGE>
WHEREAS, the Executive acknowledges that special harm and injury will or
may be sustained by the Corporation and the Majority Stockholder and other
stockholders should acts otherwise prohibited herein nonetheless be taken.
NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
1. DEFINITIONS.
a. "Act" shall mean the Securities Act of 1933, as amended.
b. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person. "Affiliate of
the Majority Stockholder" shall not include any full-time employee of the
Corporation or any Subsidiary.
c. "Benefits" shall mean Health and Welfare Plans in accordance
with the current policies of the Corporation or any Subsidiary by which the
Executive is employed.
d. "Benefits Period" shall have the meaning set forth in Paragraph 26.
e. "Bona Fide Employee's Offer" shall have the meaning set forth in
Paragraph 4.
f. "Cause" shall mean (i) the material breach by the Executive of
this Agreement, including without limitation, any breach of Paragraphs 9 and
10; (ii) the Executive's dishonesty in connection with the business of the
Corporation or any Subsidiary which is materially detrimental to the best
interests of the Corporation or any Subsidiary; (iii) the Executive's
conviction of a felony crime; (iv) any material act or omission by the
Executive during his employment with the Corporation or any Subsidiary
involving willful malfeasance or gross negligence in the performance of his
duties to the Corporation or any such Subsidiary; or (v) any other act or
omission by the Executive during his employment in the Corporation or any
3
<PAGE>
Subsidiary which provides the Corporation with a ground for terminating the
Executive's employment for cause under the employment law of the state in
which the Corporation's principal place of business is located.
g. "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
h. "Health and Welfare Plans" shall mean employee life, health and
disability insurance plans or other fringe benefit programs, if any,
maintained by the Corporation or any Subsidiary by which the Executive is
employed.
i. "Majority Stockholder" shall have the meaning set forth in
Paragraph 14.
j. "New Issue Securities" shall have the meaning set forth in
Paragraph 16.
k. "Note" means the Promissory Note of the Executive issued to the
Corporation dated the date hereof in an original principal amount which is
the Purchase Price MINUS seventy-five dollars ($75.00).
l. "100% Purchaser" shall have the meaning set forth in Paragraph 14.
m. "Ordinary Course of Business" means the conduct of the business
and affairs of the Corporation or its Subsidiaries in the usual and ordinary
course and in a manner which advances the purposes, and is in the best
interest, of the Corporation and its Subsidiaries.
n. "Permanent Disability" shall have the meaning set forth in
Paragraph 26.
o. "Person" means any individual, corporation, firm, partnership or
other business entity.
p. "Post-Employment Restriction Period" shall have the meaning set
forth in Paragraph 26.
q. "Prime Rate" means the annual rate of interest designated as the
"prime rate" in the listing of "money rates" as published from time to time
in THE WALL STREET JOURNAL, or if such
4
<PAGE>
publication is discontinued, the rate published as the "prime rate" or "base
rate" from time to time by any similar or successor publication designated by
the Board of Directors of the Corporation.
r. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of the Corporation or its Affiliates including,
without limitation, methods of operation, customers and customer lists,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices, fees, costs, plans, designs, technology, know-how, software,
marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters of the
Corporation or any of its Affiliates.
s. "Publicly Traded," with respect to the Common Stock, means
listed for trading on any national or regional securities exchange or quoted
on the National Association of Securities Dealers Automated Quotation system
or a successor system.
t. "Purchase Price" shall have the meaning set forth in the third
WHEREAS clause.
u. "Registration Notice" shall have the meaning set forth in
Paragraph 15.
v. "Sale of Control Notice" shall have the meaning set forth in
Paragraph 14.
w. "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
x. "Shares" shall have the meaning set forth in Paragraph 2.
y. "Stockholder's Included Shares" shall have the meaning set forth
in Paragraph 14.
z. "Stockholder's Registered Shares" shall have the meaning set
forth in Paragraph 15.
5
<PAGE>
aa. "Subsidiary" shall mean any corporation or other entity of
which the Corporation directly or indirectly owns beneficially or of record
fifty percent (50%) or more of (i) the outstanding shares of capital stock if
such entity is a corporation or (ii) the outstanding ownership interests if
such entity is not a corporation.
ab. "Written Notice" shall have the meaning set forth in Paragraph 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Executive or any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns), whether such shares are now
owned or hereafter acquired (collectively the "Shares"), and whether such
transfers are voluntary, involuntary or by operation of law, resulting from
death or otherwise.
3. RESTRICTIONS ON THE TRANSFER OF SHARES.
a. Except as otherwise provided in Paragraphs 3b, 3c, 3d, 4, 11,
12, 14 and 15 of this Agreement, neither the Executive nor any of his
transferees (direct or indirect, including without limitation the Executive's
personal or legal representatives, successors and assigns) shall or may sell,
exchange, deliver, assign, bequeath or give, pledge, mortgage, hypothecate or
otherwise encumber, transfer or permit to be transferred, or otherwise
dispose of, any or all of the Shares, whether voluntarily, involuntarily or
by operation of law (including without limitation the laws of bankruptcy,
intestacy, descent and distribution and succession).
b. In the event of the Executive's death, the Shares may be
transferred to the Executive's personal or legal representatives, estate or
distributees of such estate, and such transfer shall be registered on the
stock transfer books of the Corporation.
c. In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Corporation under Paragraphs 11 and 12 of this
Agreement to purchase the Shares which are then owned by the Executive or any
representative, successor or transferee of the Executive
6
<PAGE>
shall lapse but all of the other provisions of this Agreement shall continue
in full force and effect. On the fourth anniversary of the date on which
shares of the Common Stock are first Publicly Traded, the restrictions on the
transfer of the Shares contained in Paragraphs 3a, 4, 5 and 7 of this
Agreement shall lapse; provided, however, that in the event of the death of
the Executive prior to the date of such fourth anniversary, all of the Shares
owned by the Executive on the date of his death may be sold without any
restriction imposed by this Agreement.
d. Provided that such action is not objected to by any underwriter
then engaged in discussions with the Corporation regarding public offerings
of the Corporation's securities and the Corporation has reasonably determined
that such action will not adversely affect the market for its securities, the
Corporation shall, upon the request of the Executive at the following times,
permit the Executive to sell or otherwise transfer without regard to
Paragraphs 3a, 4, 5 and 7 of this Agreement a portion of the Shares not to
exceed the whole number of Shares equaling the following percentage of the
number of Shares (adjusted for any intervening conversion, stock split, stock
dividend or the like) held by the Executive on the date on which the Common
Stock is first Publicly Traded:
(i) after the first anniversary of the date on which the Common
Stock is first Publicly Traded, twenty-five percent (25%);
(ii) after the second anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the third anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative seventy-five percent
(75%).
4. RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES TO
EMPLOYEES OF THE CORPORATION.
a. In the event that the Executive shall receive a Bona Fide
Employee's Offer (hereinafter defined) to purchase any or all of the Shares
and the Executive desires to accept such Bona Fide Employee's Offer, the
Executive shall promptly send Written Notice (hereinafter
7
<PAGE>
defined) to the Corporation, offering to sell such Shares to the Corporation
in accordance with subparagraph 4c hereof, at the same price and upon the
same terms and conditions as are contained in the Bona Fide Employee's Offer.
Such offer shall be irrevocable for a period of ninety (90) days from the
receipt of Written Notice by the Corporation. The Written Notice shall
contain a true and complete copy of the Bona Fide Employee's Offer, setting
forth the price and all terms and conditions of such offer, as well as the
name(s), address(es) (both home and office), and business(es) or
occupation(s) of the third party offeror (or offerors). The Written Notice
shall be accompanied by evidence that sufficient funds are available to the
third party offeror (or offerors) to carry out the terms of such offer. Any
Written Notice that does not contain all such requisite information shall not
be considered a "Written Notice" for purposes of this subparagraph 4a.
b. As used in this Agreement, the term "Bona Fide Employee's Offer"
shall mean a legally enforceable offer in writing, made and signed by a
person who is then a full time employee of the Corporation or any Subsidiary
and who is financially capable of carrying out the terms of such Bona Fide
Employee's Offer.
c. Whenever a Bona Fide Employee's Offer to purchase Shares has
been received by the Executive, and Written Notice thereof has been sent to
the Corporation, the following procedure shall be complied with: For a
period of ninety (90) days from its receipt of such Written Notice, the
Corporation shall have the right, in its sole discretion, without obligation,
to purchase all (but no less than all) of the Shares so offered. If the
Corporation elects to purchase all of the Shares so offered, it must send
Written Notice thereof to the Executive within said ninety (90) day period.
If the Corporation does not elect to purchase the Shares so offered within
the prescribed time period, the Executive shall have the right to accept the
Bona Fide Employee's Offer in whole (but not in part) and to sell such
Shares, subject to the provisions and restrictions of this Agreement, but
only in strict accordance with all of the provisions of the Bona Fide
Employee's Offer and only if (i) the sale is fully consummated within one
hundred and twenty (120) days after the mailing of the initial Written Notice
to the Corporation and (ii) the Executive
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has prepaid the Note in accordance with its terms. In the event that such
sale is not fully consummated within one hundred and twenty (120) days after
the mailing of the Written Notice, the provisions of this Paragraph 4 must
again be complied with by the Executive.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares
are transferred to any Person, at any time or from time to time, by operation
of law or pursuant to the provisions of Paragraphs 3 or 4 hereof, the
transferee(s) shall agree in writing (for and on behalf of himself or itself,
his or its personal or legal representatives, transferees, successors and
assigns) to be bound by all provisions of this Agreement as a party hereto.
Prior to any such transfer, the transferee shall provide the Corporation with
the transferee's written agreement so to be bound. In the absence of any
such written agreement no such transfer shall be effective for any purpose,
but the failure to obtain such written agreement shall in no way diminish the
applicability of the provisions hereof. Without limiting the generality of
the preceding provisions of this Paragraph 5, in the event that any Shares
are transferred to any full time employee of the Corporation or any
Subsidiary pursuant to the provisions of Paragraph 4, such full time employee
shall agree in writing to be bound by all provisions of this Agreement,
including without limitation the provisions of Paragraph 12, and such
employee shall be deemed thereafter to be the Executive in respect of the
Shares transferred to such employee as if initially named in this Agreement
and shall be subject as such to the provisions of this Agreement, PROVIDED
THAT the price at which the Corporation may purchase the Shares from such
employee pursuant to Paragraph 11 shall be the price at which the Shares were
sold to such employee pursuant to Paragraph 4. Prior to any such transfer,
the transferee shall provide the Corporation with the transferee's written
agreement so to be bound. In the absence of any such written agreement no
such transfer shall be effective for any purpose, but the failure to obtain
such written agreement shall in no way diminish the applicability of the
provisions hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer
book in which shall be recorded, among other things, the name and address of
each of its stockholders. No transfer of any Shares shall be effective or
valid unless and until recorded in such stock transfer
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book. The Corporation shall not record any transfer of Shares in such stock
transfer book unless the transfer is in strict compliance with all provisions
of this Agreement. The Executive agrees that, in the event he desires to
make a transfer within the provisions hereof, he shall furnish to the
Corporation such evidence of his compliance with this Agreement and that the
proposed transfer may be effected without registration under the Securities
Laws as from time to time may be required by the Board of Directors of, or
counsel for, the Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate
representing Shares shall bear the following legends:
"The encumbering, transfer or other disposition (including,
without limitation, any transfer or disposition pursuant to
the laws of bankruptcy, intestacy, descent and distribution
and succession) of the shares of common stock evidenced by
the within Certificate is restricted under the terms of a
Purchase and Stockholder Agreement, dated August ___, 1995,
between Uniquip Corporation (the "Corporation") and Curtis
J. Laetz, a copy of which Agreement is on file at the
principal office of the Corporation. Such shares are also
subject to a voting agreement contained in said Purchase and
Stockholder Agreement. Upon written request of any
stockholder of the Corporation, the Corporation shall
furnish, without charge to any such stockholder, a copy of
said Purchase and Stockholder Agreement."
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities law (collectively, the "Securities
Laws") and may not be sold, transferred or otherwise
disposed of unless (i) a registration statement covering
such shares is effective under the Securities Laws or (ii)
the transaction is exempt from registration under the
Securities Laws and, if the Corporation requests, an opinion
satisfactory to the Corporation to such effect has been
rendered by counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase
of any Shares pursuant to Paragraph 4 of this Agreement, the Executive shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing
such documentary stamps, if any, as are necessary, and such assignments,
certificates of authority, tax releases, consents to transfer, instruments
and evidences of title of the Executive and of the Executive's compliance
with this Agreement as may be reasonably required by the purchaser or by
counsel for the purchaser.
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9. COVENANT NOT TO DISCLOSE.
a. The Executive covenants and agrees that he will not, during the
period of his employment with the Corporation or at any time thereafter,
except with the express prior written consent of the Chairman and Chief
Executive Officer of Harbour Group Ltd., any successor to Harbour Group Ltd.
or their respective designees, directly or indirectly disclose, communicate
or divulge to any Person, or use for the benefit of any Person, any
Proprietary Information. The restriction contained in the preceding sentence
shall not apply to any Proprietary Information that (i) is a matter of public
knowledge (which shall include knowledge in the industries in which the
Corporation or its Subsidiaries are engaged) on the date of this Agreement,
(ii) becomes a matter of public knowledge (which shall include knowledge in
the industries in which the Corporation or its Subsidiaries are engaged)
after the date of this Agreement from another source which is under no
obligation of confidentiality to the Corporation or its Affiliates or (iii)
that is furnished in the Ordinary Course of Business to Persons which sell,
provide or propose to sell or provide goods or services to the Corporation or
its Subsidiaries or which purchase, obtain or propose to purchase or obtain
goods or services from the Corporation or its Subsidiaries.
b. All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or
has been furnished to the Executive or which may be produced, prepared or
designed by the Executive in connection with his employment with the
Corporation shall be, become and remain the exclusive property of the
Corporation. Upon the termination of the Executive's employment with the
Corporation, all originals, copies and reprints in the Executive's
possession, custody, or control shall be promptly surrendered and/or
delivered to the Corporation, and the Executive shall thereafter make no
further use, either directly or indirectly, of any such data, designs,
drawings, blueprints, tracings, sketches, plans, layouts, specifications,
models, programs, cards, tapes, disks, printouts, writings, manuals, guides,
notes or other memoranda or written information.
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10. COVENANTS NOT TO COMPETE.
a. The Executive covenants and agrees that he will not at any time
during his employment with the Corporation and thereafter for the applicable
Post-Employment Restriction Period, except with the express prior written
consent of the Chairman and Chief Executive Officer of Harbour Group Ltd.,
any successor to Harbour Group Ltd. or their respective designees, directly
or indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, shareholder (except as the holder of not more than one percent
(1%) of the outstanding shares of a corporation whose stock is listed on any
national or regional securities exchange or reported by the National
Association of Securities Dealers Automated Quotations System or any
successor thereto) either (i) establish any Person that competes with the
Corporation or any of its Subsidiaries or (ii) be affiliated or connected
with any Person that carries on any business within the states of Wisconsin,
Illinois and Missouri, the states contiguous thereto, elsewhere in the United
States and the world, that is competitive with the business of the
Corporation or any of its Subsidiaries in a capacity which is competitive in
any of its duties, responsibilities or activities with the business of the
Corporation or any of its Subsidiaries. Without limiting the generality of
the preceding sentence, the Executive covenants and agrees that he will not
directly or indirectly solicit, divert or accept business from or otherwise
take away or interfere with any customer of the Corporation or any of its
Subsidiaries, including without limitation any Person who was a customer or
whose business was being pursued by the Corporation or any of its
Subsidiaries within (x) the period of the Executive's employment with the
Corporation, (y) one (1) year prior to such employment or (z) one (1) year
after the termination of such employment, including all customers directly or
indirectly produced or generated by the Executive. The parties further agree
that if the Executive becomes affiliated or connected with any Person
described in clause (ii) of this Paragraph 10(a) during either his employment
with the Corporation or the Post-Employment Restriction Period, the Executive
shall be obliged to show by clear and convincing evidence that none of his
duties, responsibilities or activities entail employment in a capacity which
has been, is or is likely to become, competitive with the business of the
Corporation or any of its Subsidiaries. The parties hereto
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agree that the covenant contained in clause (ii) of this Paragraph 10(a)
shall be construed as a series of separate covenants, one for each state or
other geographic area specified in such clause and, except for geographic
coverage, each separate covenant shall be deemed identical.
b. The Executive further covenants and agrees that he will not for
a period of three (3) years after the termination of his employment
hereunder, except with the express prior written consent of the Chairman and
Chief Executive Officer of Harbour Group Ltd., any successor to Harbour Group
Ltd. or their respective designees, directly or indirectly, accept
employment, be employed by or be a principal of any business or enterprise
operating within the United States which then employs or has as a principal
or holder of any interest therein (except as the holder of not more than one
percent (1%) of the outstanding shares of a corporation whose shares are
publicly traded) any individual who was previously employed in a managerial
or executive position with the Corporation or any of its Affiliates, provided
however, that this prohibition shall not be applicable if (i) such business
or enterprise does not compete with the Corporation or its Affiliates, or
(ii) (x) such business or enterprise engages in activities which do compete
and other activities which do not compete with the Corporation or its
Affiliates, (y) the Executive and the other individual who was previously
employed by the Corporation or any of its Affiliates are employed by such
business or enterprise in connection with activities which in no way compete
with the Corporation or its Affiliates and (z) neither the Executive nor the
other individual who was previously employed by the Corporation or its
Affiliates is or proposes to be a principal of such business or enterprise.
c. If any provision of the covenants and agreements set forth above
shall be held invalid or unenforceable because of the scope of the territory
or the actions thereby restricted, or the period of time within which such
covenant or agreement is operative, or for any other reason, it is the intent
of the parties hereto that such provision shall be construed by limiting and
reducing it, or, if necessary, eliminating it so that the provisions hereof
be valid and enforceable to the extent compatible with applicable law as
determined by a court of competent jurisdiction.
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11. OPTION TO PURCHASE THE SHARES.
a. In the event that the Executive breaches any of the covenants
contained in Paragraphs 9 or 10, the Corporation shall have the right, but is
not required, to purchase all of the Shares which are then owned by the
Executive or any representative, successor or transferee of the Executive.
Any right to purchase under this Paragraph 11 shall be exercised in writing
within sixty (60) days of the date on which the Corporation becomes aware
that any such breach has occurred. Settlement shall be held at the principal
office of the Corporation at such date and time within ninety (90) days from
the time that the notice of intent to exercise required by this subparagraph
11a has been sent by the Corporation as shall be selected by the Corporation.
For purposes of this subparagraph 11a, (i) the Executive shall be
conclusively deemed and considered to own all Shares owned by himself, his
estate, his executors or administrators, his distributees and his personal
and legal representatives, and (ii) no Shares owned by a transferee of the
Executive other than those transferees referred to in clause (i) above shall
be subject to purchase by the Corporation. Except as otherwise provided in
Paragraph 5, the purchase price for such Shares shall be the original
principal amount of the Note.
b. The purchase price for the Shares purchased pursuant to
subparagraph 11a above shall be paid by delivering to the Executive or any
transferee of the Executive referred to in subparagraph 11a(i) above the Note
marked paid in full, together with the Corporation's check in the amount, if
any, by which the purchase price exceeds the principal balance then
outstanding on the Note.
12. MANDATORY PURCHASE OF THE SHARES.
a. If the Executive's employment with the Corporation terminates
for any reason (including his death) and if shares of the Common Stock are
not Publicly Traded on the date of such termination, the Corporation shall
repurchase to the extent it may lawfully do so, and the Executive or each
transferee of the Executive under subparagraph 3b shall sell to the
Corporation, the Shares then owned by the Executive. For purposes of this
subparagraph 12a,
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the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors or administrators, his
distributees and his personal and legal representatives and any other
transferee. Settlement shall be held at the principal office of the
Corporation at such date and time within one hundred and twenty (120) days of
the termination of the Executive's employment as shall be selected by the
Corporation. The purchase price for such Shares shall be their book value,
as computed by the Corporation's internal auditing staff and certified by the
chief financial officer of Harbour Group Ltd. (or any successor to Harbour
Group Ltd.), as of the last day of the month preceding the month in which the
Executive's employment was terminated, which certification shall be final and
binding; provided, however, that the purchase price for shares purchased
pursuant to this subparagraph 12a shall not be less than eighty percent (80%)
of the Purchase Price.
b. The purchase price for the Shares purchased pursuant to
subparagraph 12a above shall be paid in the following manner:
(i) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is not greater than one
hundred thousand dollars ($100,000.00), the Corporation shall pay the
purchase price for the Shares by (a) returning to the Executive or any
transferee referred to in subparagraph 12a above the Note marked "paid in
full", and (b) paying by cash or check the difference between the purchase
price of the Shares and the principal balance, plus accrued interest, due on
the Note.
(ii) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is greater than one hundred
thousand dollars ($100,000.00), the Corporation shall pay the purchase price
in installments as follows: (a) the first installment by (1) returning to
the Executive or any transferee referred to in subparagraph 12a above the
Note marked "paid in full", and (2) paying by cash or check one hundred
thousand dollars ($100,000.00) and (b) annual
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installments thereafter by paying by cash or check an amount equal to the
lesser of one hundred thousand dollars ($100,000.00) and the balance of the
purchase price remaining outstanding on the date each installment is due,
plus interest on such outstanding balance calculated at a rate equal to the
Prime Rate on such due date. The Corporation shall be entitled to prepay all
or any portion of the purchase price, plus interest thereon, at any time
without penalty.
(iii) If the purchase price for the Shares, as determined
pursuant to Paragraph 12a above, does not exceed the principal balance, plus
accrued interest, due on the Note, then the purchase price shall be paid by
crediting amounts due under the Note, up to the purchase price amount, with
such credit applied first to accrued interest due under the Note then to
principal.
13. CONFLICT BETWEEN PARAGRAPHS. Notwithstanding any other provision
of this Agreement to the contrary, to the extent that there shall be any
conflict between the provisions of Paragraphs 3 or 4 and the provisions of
Paragraph 11 in regard to the right of the Corporation to purchase the Shares
from the Executive, the provisions of Paragraph 11 shall control, and to the
further extent that there shall be any conflict between the provisions of
Paragraphs 11 and 12 in regard to the right or obligation of the Corporation
to purchase the Shares from the Executive, the provisions of Paragraph 11
shall control.
14. SALE OF CONTROL.
a. In the event that the holder of more than fifty percent (50%) of
the outstanding shares of the Common Stock or more than fifty percent (50%)
of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock (in either case, the "Majority Stockholder") shall seek to sell more
than fifty percent (50%) of the outstanding shares of the Common Stock to a
Person which is not an Affiliate of the Majority Stockholder (other than an
underwriter in connection with an offering pursuant to a registration
statement filed under the Act), the Executive shall be provided a written
notice which specifies the identity of the proposed purchaser, the number of
shares of the Common Stock proposed to be purchased and the consideration
proposed to be paid by such
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purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Executive shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Majority Stockholder to include in such proposed sale the number of Shares
(the "Stockholder's Included Shares") which is calculated in the manner
specified in the following sentence. The Stockholder's Included Shares shall
be determined by multiplying the number of Shares owned by the Executive on
the date that the Sale of Control Notice is mailed by a fraction, the
numerator of which is the number of shares of the Common Stock which the
proposed purchaser desires to purchase and the denominator of which is the
total number of shares of the Common Stock which are outstanding on the date
that the Sale of Control Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Included Shares shall be the next larger whole integer and in the event that
the number so determined includes a fraction which is equal to or less than
.50, the Stockholder's Included Shares shall be the next smaller whole
integer. For example, assume the proposed purchaser desires to purchase
450,000 shares of the Common Stock. On the date that the Sale of Control
Notice is mailed, there are 500,000 shares of the Common Stock outstanding
and the Executive owns 1,500 of such shares. The number of the Stockholder's
Included Shares would be 1,350, which is 1,500 times 450,000/500,000.
b. The parties hereto recognize and acknowledge that any
prospective purchaser of the business of the Corporation may wish to purchase
(i) all of the outstanding shares of the Common Stock, (ii) all of the
outstanding shares of the common stock of the Majority Stockholder or (iii)
all or substantially all of the assets of the Corporation, which purchase may
be made in conjunction with the purchase of the business of an Affiliate or
Affiliates of the Corporation. Accordingly, the Executive and each
transferee of the Executive under subparagraph 3b agrees, upon the request of
the Corporation, to (x) sell all of the Shares then owned by the Executive to
any prospective purchaser of the business of the Corporation which is not an
Affiliate of the Majority Stockholder (a "100% Purchaser") or, at the option
of the Majority Stockholder or the Corporation, to the Corporation in
connection with the sale of all of
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the outstanding shares of the Common Stock to a 100% Purchaser or the sale of
all of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock to a 100% Purchaser and (y) at any time prior to the tenth anniversary
of this Agreement, vote the Shares then owned by the Executive in favor of
(A) any sale of all or substantially all of the assets of the Corporation to
a 100% Purchaser or (B) any merger or consolidation of the Corporation with a
100% Purchaser, in each case which has been approved by the Board of
Directors of the Corporation in accordance with the provisions of this
subparagraph 14b. The Executive and each such transferee agrees promptly
upon any request made by the Corporation prior to the tenth anniversary of
this Agreement and without compensation to execute and deliver an amendment
to this Agreement or other instrument which extends for an additional ten
year period the Executive's agreement to vote the Shares as specified in
subparagraph 14(b)(y). For purposes of this subparagraph 14b, the Executive
shall be conclusively deemed and considered to own all Shares owned by
himself, his estate, his executors and administrators, his distributees and
his personal and other legal representatives and any other transferee.
In the event that the Majority Stockholder shall have entered into
an agreement to sell (a) all of the outstanding shares of the Common Stock
owned by it or (b) all of the outstanding shares of the common stock of an
Affiliate of the Corporation which owns a majority of the outstanding shares
of the Common Stock to a 100% Purchaser or the Corporation shall have entered
into an agreement to sell all or substantially all of the assets of the
Corporation to a 100% Purchaser, whether individually or in conjunction with
the sale of the business of an Affiliate or Affiliates of the Corporation,
the Corporation's auditors, or their designee, shall allocate such portion of
the total purchase price to the then outstanding shares of the Common Stock
which is fair and reasonable (with each outstanding share being allocated the
same portion of the purchase price) giving such consideration as they deem
appropriate to the (i) terms and conditions of such agreement to sell, (ii)
book value and the earnings and projected earnings of the Corporation and
each Affiliate of the Corporation whose business is or will be sold pursuant
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to such agreement to sell, determined in accordance with generally accepted
accounting principles consistently applied where relevant and appropriate in
the opinion of the Corporation's auditors or such designee and (iii) such
other factors as they may deem relevant to such allocation. The
determination of such allocation by the Corporation's auditors or their
designee shall be final and binding upon the parties hereto with respect to
the portion of the total purchase price which the Executive is entitled to
receive for the Shares pursuant to this subparagraph 14b. The Executive and
each transferee of the Executive under subparagraph 3b agrees to sell the
Shares to the Persons specified in this subparagraph 14b at the price per
share of the Common Stock allocated by such auditors or their designee at the
closing of the transactions contemplated by such agreement to sell.
For purposes of effectuating any sale of the Shares pursuant to this
subparagraph 14b, the Executive and each transferee of the Executive under
subparagraph 3b hereby grants to each of the Majority Stockholder and the
Corporation and their respective designees and assigns an irrevocable power
of attorney with respect to the transfer of the Shares and authorizes the
Corporation to deliver to the Majority Stockholder or any 100% Purchaser each
stock certificate representing the Shares. The Executive and each such
transferee agrees promptly upon request and without compensation to do all
acts and execute all agreements, documents, proxies, consents of stockholders
and instruments as shall be necessary or desirable to effectuate the
consummation of any agreement to sell all of the outstanding shares of the
Common Stock to a 100% Purchaser, any agreement to sell all of the
outstanding shares of the common stock of an Affiliate of the Corporation
which owns a majority of the outstanding shares of the Common Stock to a 100%
Purchaser and any agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser pursuant to this subparagraph 14b
including, but not limited to, delivering executed stock assignments separate
from certificate naming each of the Majority Stockholder and the Corporation
and their respective assigns and designees as his attorneys for the purpose
of effectuating such transfer. The Majority Stockholder and, in the event
that the Majority Stockholder or the Corporation elects to have the
Corporation purchase the Shares, the
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Corporation agree to deliver or cause to be delivered to the Executive or his
transferees promptly following any sale of the Shares pursuant to this
Paragraph 14b the purchase price for the Shares less all amounts then owed by
the Executive to the Corporation pursuant to the Note.
15. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
a. If the Corporation proposes to register for sale any shares of
the Common Stock owned by the Majority Stockholder under the Act at a time
when the Executive or any transferee of the Executive permitted by
subparagraph 3b owns any of the Shares, it will at each such time give
written notice (the "Registration Notice") to the Executive or such
transferee of its intention to do so and, upon the written request of the
Executive or such transferee given within twenty (20) days after the
Corporation gives such notice (which request shall state the intended method
of disposition of such holder's Shares), the Corporation will use its best
efforts to effect the registration of the number of the Shares (the
"Stockholder's Registered Shares") which is calculated in the manner
specified in the following sentence by including the Stockholder's Registered
Shares in such registration statement, all to the extent required to permit
the sale or other disposition of such Shares in accordance with the intended
method of sale or other disposition given in each such request. The
Stockholder's Registered Shares shall be determined by multiplying the number
of the Shares owned by the Executive and each transferee of the Executive
under subparagraph 3b on the date that the Registration Notice is mailed by a
fraction, the numerator of which is the number of shares of the Common Stock
which are included in such registration statement and the denominator of
which is the total number of shares of the Common Stock outstanding on the
date that the Registration Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Registered Shares shall be the next larger whole integer and in the event
that the number so determined includes a fraction which is equal to or less
than .50, the Stockholder's Registered Shares shall be that number alone.
For example, assume 250,000 shares of the Common Stock are included in such
registration statement. On the date that the Corporation mails the
Registration Notice, there are 500,000 shares of the Common Stock outstanding
and the Executive and such transferees own
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1,500 of such shares. The number of the Stockholder's Registered Shares
would be 750, which is 1,500 times 250,000/500,000.
b. Notwithstanding anything to the contrary contained in
subparagraph 15a:
(i) In the event that any registration statement to be filed
pursuant to subparagraph 15a shall be, in whole or in part, in connection
with an underwritten public offering, the number of the Stockholder's
Registered Shares to be included in such registration statement may be
reduced, or no Stockholder's Registered Shares may be included in such
registration statement, if and to the extent that the managing underwriter(s)
shall give their written opinion that such inclusion would adversely affect
the marketing of the securities to be sold therein by the Majority
Stockholder.
(ii) The Corporation (A) may withdraw any registration
statement referred to in this Paragraph 15 without thereby incurring any
liability to the Executive and (B) shall in no event be obligated to register
any Shares in connection with the first underwritten public offering after
the date hereof, whether primary or secondary, of shares of the Common Stock,
including without limitation any sales of shares of the Common Stock related
to over-allotments in connection with such offering.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subparagraph 15a is
to be underwritten, then any distribution of the Stockholder's Registered
Shares shall be underwritten by the same underwriters who are underwriting
the distribution of the securities of the Corporation for the account of the
Majority Stockholder, and the Executive shall enter into the agreement with
such underwriters contemplated under subparagraph 15b(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Executive and each transferee of the Executive under subparagraph 3b shall
refrain from selling, making any short sale of, loaning,
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granting any option for the purchase of, or otherwise disposing of any of
their Shares not registered pursuant to subparagraph 15a during the period of
time which is the longer of (A) the period of distribution of the shares of
the Common Stock by such underwriter(s) in the offering and (B) the period
requested by such underwriter(s), which shall in no event exceed one hundred
eighty (180) days.
16. RIGHT TO ACQUIRE ADDITIONAL SHARES. If at any time during the
Executive's employment with the Corporation or any Subsidiary, the
Corporation issues any shares of the Common Stock, any securities convertible
into or exchangeable for shares of the Common Stock or any options, warrants
or rights to acquire shares of the Common Stock or securities convertible
into or exchangeable for shares of the Common Stock to the Majority
Stockholder or any Affiliate of the Majority Stockholder (the "New Issue
Securities"), and if shares of the Common Stock are not Publicly Traded on
the date of such issuance, the Corporation agrees that not later than sixty
(60) days after the sale of any New Issue Securities it will offer in writing
to sell to the Executive such number or principal amount of the New Issue
Securities as would enable the Executive to maintain the same aggregate
percentage ownership interest in the shares of the Common Stock (which for
purposes of this Paragraph 16 shall include shares of the Common Stock issued
and outstanding, shares held in the Corporation's treasury from time to time
and shares subject to purchase pursuant to an option held by the Majority
Stockholder on the date hereof) after such sale of the New Issue Securities
as specified in the third WHEREAS clause of this Agreement. Notwithstanding
the immediately preceding sentence, the term "New Issue Securities" shall not
include shares of the Common Stock which are at any time subject to purchase,
by the Majority Stockholder pursuant to an Option Agreement between the
Corporation and the Majority Stockholder dated on or prior to the date of
this Agreement. The offer of the Corporation to the Executive described in
the first sentence of this Paragraph 16 shall contain the same price per
share, security, option, warrant or other right constituting New Issue
Securities and substantially similar terms and conditions as the sale of the
New Issue Securities which obligates the Corporation to make the offer. The
Executive shall be entitled to accept such offer only without
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modification and only in writing for a period of ten (10) days after the
offer is made. In the event that such offer is accepted by the Executive,
the Executive shall deliver to the Corporation (i) a check in the amount of
the par value of the New Issue Securities being offered to the Executive and
(ii) a promissory note payable to the Corporation in the same form and having
the same date of maturity as the Note, bearing interest at a rate which is
two percent (2%) in excess of the Prime Rate and in the aggregate principal
amount of the purchase price of the shares of the New Issue Securities
offered to the Executive, less the amount of such check, within fifteen (15)
days after the offer is made. The note shall be secured by a pledge of the
New Issue Securities purchased by the Executive with the proceeds of the loan
evidenced thereby.
17. SPECIFIC PERFORMANCE. The Executive acknowledges that the services
to be rendered by him are of a special, unique and extraordinary character,
and in connection with rendering such services, he will have access to
Proprietary Information. The parties agree that it is impossible to measure
in money the damages that will accrue to the Corporation and its Subsidiaries
by reason of the Executive's failure to perform his obligations under this
Agreement, that such failure to perform will result in irreparable damage to
the Corporation and its Subsidiaries, and that specific performance of the
Executive's obligations may therefore be obtained by suit in equity. Without
limiting the generality of the foregoing sentence, the Corporation or any
Subsidiary shall be entitled to apply to any court of competent jurisdiction
for an injunction restraining the Executive from committing or continuing any
violation of Paragraphs 9 and/or 10. The Executive will not assert any claim
or defense in any action or proceeding to enforce any provision hereof that
the Corporation or any Subsidiary has or had an adequate remedy at law.
18. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified
mail, return receipt requested, with first-class postage prepaid, or by
facsimile with answer-back; and such notices shall be addressed: (i) if to
the Corporation, to the Secretary of the Corporation at the Corporation's
principal business office, with a copy to Chairman, Harbour Group Ltd., 7701
Forsyth Boulevard, Suite 600,
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Clayton, Missouri 63105; and (ii) if to the Executive, to his address as
reflected in the records of the Corporation; or to such other address(es) as
the parties hereto shall designate by Written Notice, furnished to all
parties in the manner provided herein. Any notice which is required to be
made within a stated period of time shall be considered timely if delivered
or mailed before midnight of the last day of such period.
19. CERTAIN TRANSACTIONS ON BEHALF OF AFFILIATES. The Executive
recognizes and acknowledges that the Corporation may on the date of this
Agreement be, or may after the date of this Agreement become, liable for the
indebtedness of Affiliates of the Corporation as a consequence of being or
becoming a party to agreements evidencing such indebtedness or guaranteeing
such indebtedness. The Executive agrees to (i) the Corporation incurring
liability for the indebtedness of its Affiliates, whether such liability was
incurred prior to the date of this Agreement or incurred after the date of
this Agreement and (ii) not assert any claim against the Corporation or its
directors, officers or stockholders in connection with or relating to such
liability of the Corporation for the indebtedness of its Affiliates, whether
such liability was incurred prior to the date of this Agreement or incurred
after the date of this Agreement. The Executive further acknowledges that
the Majority Stockholder has the option to acquire up to 40,000 shares of
newly issued Common Stock (subject to adjustment for stock splits,
recapitalizations and the like) which option is exercisable at any time to
the extent that executive employees of the Corporation and its Subsidiaries
are holders less than 40,000 shares of the Common Stock.
20. NO RIGHT TO CONTINUED EMPLOYMENT. The Executive agrees that
neither the sale of the Shares by the Corporation to him nor any provision of
this Agreement shall (i) give the Executive any right to be retained in the
employ of the Corporation or any Subsidiary, (ii) affect the right of the
Corporation or any Subsidiary to discharge the Executive at any time or (iii)
affect the Executive's right to terminate his employment with the Corporation
or any Subsidiary at any time.
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21. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had been omitted.
22. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective personal
or legal representatives, successors and assigns.
23. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed
to be and include the plural (and vice versa), whenever appropriate.
24. RULE 144 ACKNOWLEDGMENTS.
a. The Executive represents and warrants to the Corporation that
(i) he is purchasing the Shares for his own account without a view to any
distribution thereof in violation of the Act or any applicable state
securities laws, (ii) he is experienced in evaluating and making investments
of this type, and has had access to, and to his knowledge has received, all
the information that he reasonably has required to evaluate this investment
and (iii) he is financially able to bear the risks associated with an
investment in the Shares being purchased hereby.
b. The Executive acknowledges that the Corporation is issuing and
selling the Shares in reliance upon the representations and warranties set
forth in subparagraph 24a and that the Shares so acquired will be "restricted
securities" within the meaning of Rule 144 under the Act, and acknowledges
that such Shares may only be offered, sold, pledged or otherwise transferred
by him (i) if registered under the Act and registered or otherwise qualified
for sale under any applicable state securities laws or (ii) pursuant to any
exemption from such registration or qualification requirements, and that the
certificate(s) representing the Shares will bear a legend to this effect.
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25. MODIFICATIONS. No change or modification of this Agreement shall
be valid unless the same is in writing and signed by all the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the party against whom it is sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other condition, promise, agreement or
understanding at a future time.
26. POST-EMPLOYMENT RESTRICTION PERIOD; ADDITIONAL COMPENSATION. For
the purposes of this Agreement the applicable "Post-Employment Restriction
Period" shall be determined as follows:
a. If the Executive's employment with the Corporation or any
Subsidiary is terminated for Cause, the Post-Employment Restriction Period
shall be a period of one (1) year commencing on the date of termination of
such employment.
b. If the Executive's employment with the Corporation and the
Subsidiaries is terminated due to a Permanent Disability, the Post-Employment
Restriction Period shall be a period of one (1) year commencing on the date
of termination of such employment. For the purpose of this Paragraph 26,
the Executive has suffered a "Permanent Disability" if the Board of Directors
of the Corporation determines that the Executive has been or will be unable,
as a result of physical or mental illness or incapacity, to perform his
duties to the Corporation and the Subsidiaries for a period of four (4)
consecutive months or for an aggregate of more than six (6) months in any
twelve-month period.
c. If the Executive's employment with the Corporation and its
Subsidiaries shall be terminated by the Corporation or such Subsidiaries
without Cause, or if the Executive terminates his employment within sixty
(60) days after a substantial reduction in his duties, responsibilities or
compensation, the Post-Employment Restriction Period shall be a period of one
(1) year commencing on the date of termination of such employment; provided
that (i) during the
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Post-Employment Restriction Period the Corporation or its Subsidiaries shall
make monthly payments to the Executive and (ii) during the Benefits Period
the Corporation or a Subsidiary shall provide to the Executive, the Benefits,
as in effect on the date of termination of such employment, or the reasonable
equivalent thereof, as determined by the Board of Directors of the
Corporation in its sole discretion and business judgment. For the purposes
of this Paragraph 26, "Benefits Period" means a period, commencing on the
date that the Executive's employment with the Corporation and all of its
Subsidiaries terminates and ending on the earlier of (a) the end of the
initial Post-Employment Restriction Period and (b) the date that the
Executive commences other employment or any consulting arrangement. The
amount of the monthly payments shall be equal to one-twelfth (1/12) of the
Executive's annual base compensation as in effect on the date of termination
during the Benefits Period and 50% of such amount thereafter until the end of
the initial Post-Employment Restriction Period determined by this Paragraph
26c.
d. If the Executive terminates his employment with the Corporation
and the Subsidiaries for any reason other than the Corporation substantially
reducing his duties, responsibilities or compensation, within thirty (30)
days of the date of such termination the Corporation shall have the option to
designate an initial Post-Employment Restriction Period of six (6) months
commencing on the date of termination which option is exercisable by notice
given within thirty (30) days after the date on which the Corporation
receives notice of the Executive's termination of his employment.
Thereafter, the Corporation shall have three (3) additional options to extend
the Post-Employment Restriction Period for additional consecutive periods of
six (6) months each, which options shall be exercisable at the times and in
the manner set forth in this Paragraph 26d. If the initial Post-Employment
Restriction Period is determined by subparagraphs a, b or c above, at the end
of the initial Post-Employment Restriction Period the Corporation shall have
two (2) options to extend the Post-Employment Restriction Period for
additional consecutive periods of six (6) months each. The Corporation may
exercise its additional options under this Paragraph 26d by giving notice to
the Executive of each such election at any time which is not less than thirty
(30) days prior to the expiration of the
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Post-Employment Restriction Period (as may have then been extended by prior
exercise of an option pursuant to this Paragraph 26d). During any such
extension of the Post-Employment Restriction Period, the Corporation shall
make monthly payments to the Executive in an amount equal to one twelfth
(1/12th) of the Executive's annual base compensation as in effect on the date
of termination of his employment until the first full month in which the
Executive has obtained other employment or any consulting arrangement and 50%
of such amount thereafter. Notwithstanding any provision of this Paragraph 26
to the contrary, the Post-Employment Restriction Period shall not be extended
beyond a period of two (2) years without the consent of the Executive.
e. During the Post-Employment Restriction Period (including any
extensions thereof) the Executive shall give written notice to the
Corporation within five (5) days of any change in his employment or in his
duties, responsibilities or activities pursuant thereto. If the Executive
voluntarily terminates his employment with the Corporation and all of its
Subsidiaries, the Executive shall give written notice to the Corporation of
any employment which the Executive at that time expects to be engaged in
within the six-month period following his termination.
f. Notwithstanding any other provision of this Paragraph 26 to the
contrary, the provisions of this Paragraph do not, and are not intended to,
waive, disclaim or otherwise extinguish any rights of the Executive as an
employee under any applicable federal, state or local statute or ordinance.
27. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations
between the parties hereto with respect to the subject matter of this
Agreement. This Agreement is, and is intended by the parties to be, an
integration of any and all prior agreements or understandings, oral or
written, with respect to the subject matter of this Agreement.
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28. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in
Paragraph 1(f) and the following sentence. All matters concerning the
authorization of this Agreement and the consummation of the transactions
contemplated hereby including without limitation the issuance of the Shares,
the payment for the Shares and the fully paid and nonassessable status of the
Shares, shall be construed and enforced in accordance with the General
Corporation Law of the State of Delaware.
29. HEADINGS. The headings and other captions in this Agreement are
for convenience and reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
[The balance of this page has been intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
WITNESS: UNIQUIP CORPORATION
/s/ Elizabeth Bowling By: /s/ Peter S. Finley
- --------------------------- -------------------------------------
Name: Peter S. Finley
Title: Vice President
/s/ James H. Hook /s/ Curtis J. Laetz
- --------------------------- -------------------------------------
Curtis J. Laetz
The undersigned, being the record and beneficial owner of more than
fifty percent (50%) of the issued and outstanding shares of the Common Stock
of either the above-named Corporation, hereby agrees to comply with the
provisions of Paragraph 14 hereof.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P.,
General Partner
By: HGM III Co., General Partner
by: /s/ Francis M. Loveland
------------------------------------
Francis M. Loveland
Vice President
Dated: September 20, 1995
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated September 20, 1995 between Curtis J. Laetz
(the "Pledgor") and Uniquip Corporation, a Delaware corporation (the
"Pledgee").
WHEREAS, the Pledgee has made a loan to the Pledgor in order to permit
the Pledgor to acquire certain shares of common stock of the Pledgee
described in Schedule 1 hereto, which loan is evidenced by a Promissory Note
of the Pledgor of even date herewith;
WHEREAS, the Pledgee requires the Pledgor, as a condition to making the
aforementioned loan, to enter into this Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the making of such loan, the Pledgor
hereby agrees with the Pledgee as follows:
SECTION 1. PLEDGE. To secure the due and punctual payment by the
Pledgor of the Liabilities (as hereinafter defined), the Pledgor hereby
pledges, hypothecates, assigns, transfers, sets over and delivers unto the
Pledgee and hereby grants to the Pledgee a security interest in the following:
(i) the shares of stock specified in Schedule 1 hereto and all
other shares of stock of the Pledgee hereafter acquired by the
Pledgor (herein collectively called the "Pledged Shares") and
the certificates representing the Pledged Shares, and all cash,
securities, interest, dividends, options, rights and other
property at any time and from time to time received, receivable
or otherwise distributed in respect of, or in exchange for, any
or all of the Pledged Shares;
(ii) all other property hereafter delivered to the Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends,
options, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all thereof; and
(iii) all proceeds of any of the foregoing (the Pledged Shares and
all such additional shares, certificates, instruments, cash,
securities, interest, dividends, options, rights and other
property being herein collectively called the "Collateral").
The term "Liabilities," as used herein shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith.
SECTION 2. CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a) The Pledgee shall not be liable for its failure to collect or
realize upon the Liabilities or any collateral, security or guaranty
therefor, or any part thereof, or for any delay in so doing, nor shall the
Pledgee be under any obligation to take any action whatsoever with respect
thereto.
(b) The Pledgee may from time to time, after any portion of the
Liabilities shall become due and payable, without notice to the Pledgor, (i)
transfer all or any part of the Collateral into the name of the Pledgee or
its nominee, with or without disclosing that such Collateral is subject to
the lien and security interest granted hereby, (ii) enforce collection of any
of the Collateral, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any obligations of any nature of any party
with respect thereto, (iii) resort to the Collateral for payment of any
portion of the
<PAGE>
Liabilities whether or not it shall have resorted to any other property
securing payment of any portion of the Liabilities or shall have proceeded
against any party primarily or secondarily liable on any portion of the
Liabilities and (iv) take control of any proceeds of the Collateral.
SECTION 3. DIVIDENDS, ETC.
(a) So long as no portion of the Liabilities shall be due and payable,
the Pledgor shall be entitled to vote the Pledged Shares, to give consents,
waivers and ratifications in respect of the Pledged Shares and to receive and
retain cash dividends made on or in respect of the Pledged Shares; provided,
however, that any and all cash, stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions made on
or in respect of the Pledged Shares resulting from a subdivision, combination
or reclassification of the outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Shares or any part thereof or as a
result of any merger, consolidation, acquisition or other exchange of assets
to which the issuer thereof may be a party or otherwise, and any and all cash
and other property received in exchange for any Collateral shall be and
become part of the Collateral pledged hereunder and, if received by the
Pledgor, shall be held by the Pledgor in trust on behalf of and for the
benefit of the Pledgee and shall forthwith be delivered to the Pledgee or its
designated nominee (accompanied, if appropriate, by proper instruments of
assignment and/or stock powers executed by the Pledgor in accordance with the
Pledgee's instructions) to be held subject to the terms of this Agreement;
and provided further that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair the Collateral or the
security interests granted hereby.
(b) Upon the nonpayment, when due, of any portion of the Liabilities,
all rights of the Pledgor pursuant to Section 3(a) hereof shall, at the
election of the Pledgee, cease, and the Pledgee shall have the sole and
exclusive right and authority to vote, to give consents, waivers and
ratifications, and receive all dividends and distributions pursuant to
Section 3(a) hereof.
SECTION 4. REMEDIES. In the event that any portion of the Liabilities
is not paid when due, the Pledgee, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Pledgor or
any other person (all and each of which demands, advertisements, and/or
notices being hereby expressly waived by the Pledgor), may forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give options to purchase, contract to sell
or otherwise dispose of and deliver the Collateral, or any part thereof, in
one or more parcels at public or private sales, at any exchange or broker's
board or at any of the Pledgee's offices or elsewhere, upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery, without assumption of any
credit risk, with the right upon any such sale, public or private, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released by the Pledgor. The Pledgee shall apply the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred therein or incidental to the care, safekeeping or
otherwise of any and all of the Collateral or in any way relating to the
rights of the Pledgee hereunder (including reasonable attorney's fees and
legal expenses), to the payment in whole or in part of the Liabilities in
such order as it may elect, and only after such application of such net
proceeds and after the payment in full of the Liabilities by the Pledgee and
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Uniform Commercial Code, need the
Pledgee account for the surplus, if any, to the Pledgor. The Pledgor agrees
that the Pledgee need not give more than ten days' notice of the time and
place of any public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is reasonable
notification of such matters. No
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notification need be given the Pledgor if, after any portion of the
Liabilities is not paid when due, it shall have signed a statement renouncing
or modifying any right to notification of any sale or other intended
disposition. The Pledgee shall not be obligated to make any sale pursuant to
any such notice. The Pledgee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In case of
any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Pledgee until the
selling price is paid by the purchaser thereof, but the Pledgee shall incur
no liability in the case of the failure of such purchaser to take up and pay
for the Collateral so sold and in case of any such failure such Collateral
may again be sold on like notice. The Pledgee, however, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit
at law or in equity to foreclose the pledge and security interest under this
Agreement and sell the Collateral, or any part thereof, under a judgment or
decree of a court of competent jurisdiction. In addition to the rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any portion of the Liabilities,
the Pledgee shall have all the rights and remedies of a secured party under
the Uniform Commercial Code. The Pledgor further agrees to waive and agrees
not to assert any rights or privileges which it may acquire under Section
9-112 of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents and warrants that (a) the Pledgor is the legal record and
beneficial owner of, and has good and marketable title to, the Pledged
Shares, subject to no perfected lien whatsoever except the lien created by
this Agreement; (b) no consent of any other person (including, without
limitation, his creditors) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority, domestic or foreign, is
required to be obtained by him in connection with the execution, delivery or
performance of this Agreement; (c) the execution, delivery and performance of
this Agreement will not violate any provision of any applicable law or
regulation, or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which the Pledgor is a party or which purports to be binding
upon the Pledgor or upon any of the Pledgor's assets, and will not result in
the creation or imposition of any lien on any of the Pledgor's assets except
as contemplated by this Agreement; and (d) the Pledgor has delivered to the
Pledgee the Pledged Shares, with the certificates therefor duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, and the pledge,
assignment and delivery of the Pledged Shares pursuant to this Agreement
creates a valid lien on and a perfected security interest in the Pledged
Shares, and the proceeds thereof, subject to no prior lien, or to any
agreement purporting to grant to any third party a security interest in the
Pledgor's property or assets which would include the Pledged Shares. The
Pledgor covenants and agrees that the Pledgor will not sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with respect
to, the Collateral, nor will the Pledgor create, incur or permit to exist any
perfected lien with respect to any part of the Collateral, or any interest
therein, or any proceeds thereof, except for the lien created by this
Agreement, without the prior written consent of the Pledgee; and the Pledgor
further covenants and agrees that the Pledgor will defend the Pledgee's
right, title and security interest in and to the Collateral and the proceeds
thereof against the claims and demands of all persons; and the Pledgor
further covenants and agrees to deliver to the Pledgee from time to time on
request such stock powers and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee may
request.
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SECTION 6. SALE OF THE PLEDGED SHARES.
(a) The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all of the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not be deemed to have
been made in commercially unreasonable manner by virtue of its private
nature. The Pledgee shall be under no obligation to delay a sale of any of
the Pledged Shares for the period of time necessary to permit the issuer
thereof to register such securities for public sale under the Securities Act
or under applicable state securities laws even if the issuer would agree to
do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion
or all of the Pledged Shares valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
the Pledgor's expense.
SECTION 7. FURTHER ASSURANCE. The Pledgor agrees that, at any time and
from time to time upon the written request of the Pledgee, it will execute
and deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of the
Agreement.
SECTION 8. AUTHORITY OF PLEDGEE.
(a) The Pledgee is hereby appointed the attorney-in-fact of the Pledgor
for the purpose of carrying out the provisions of this Agreement and taking
any action and executing any instruments which the Pledgee may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, provided that
no action may be taken by the Pledgee pursuant to such appointment so long as
the Liabilities are not yet due and payable. Without limiting the generality
of the foregoing, the Pledgee shall have the right and power to receive,
endorse and collect all checks made payable to the order of the Pledgor
representing any dividend or other distribution in respect of the Collateral
or any part thereof and to give full discharge for the same.
(b) The Pledgee shall have and be entitled to exercise all such powers
hereunder as are specifically delegated to the Pledgee by the terms hereof,
together with such powers as are incidental thereto. The Pledgee may execute
any of its duties hereunder by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither
the Pledgee, nor any director, officer or employee of the Pledgee, shall be
liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or
willful misconduct. The Pledgor hereby agrees to reimburse the Pledgee, on
demand, for all reasonable expenses incurred by the Pledgee in connection
with the enforcement of this Agreement (including expenses incurred by any
agent employed by the Pledgee) and agrees to indemnify and hold harmless the
Pledgee and/or any such agent from and against any and all liability incurred
by the Pledgee or such agent hereunder or in connection herewith, unless such
liability shall be due to willful misconduct or negligence on the part of the
Pledgee or such agent.
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SECTION 9. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10. NO WAIVER, CUMULATIVE REMEDIES. The Pledgee shall not by
any act, delay, omission or otherwise be deemed to have waived any of its
rights, powers or remedies hereunder and no waiver shall be valid unless in
writing, signed by the Pledgee, and then only to the extent therein set
forth. A waiver by the Pledgee of any right, power or remedy hereunder on
any one occasion shall not be construed as a bar to the exercise of any
right, power or remedy which the Pledgee would otherwise have on any future
occasion. No failure to exercise, nor any delay in exercising, on the part
of the Pledgee any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The rights, powers and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights, powers or remedies
provided by law.
SECTION 11. NOTICES. All notices, demands, requests and other
communications provided for or permitted under this Agreement shall be in
writing, either delivered in hand or sent by registered first class mail,
postage prepaid, or by facsimile with answer-back, addressed, if to the
Pledgor, to Curtis J. Laetz at his address as reflected in the records of the
Pledgee and, if to the Pledgee, to Chairman, Uniquip Corporation, 7701
Forsyth Boulevard, Suite 600, Clayton, Missouri 63105 or to such other
address as the party to receive any such notice, demand, request or
communication may have designated by written notice to the other party, which
notice complies as to delivery with the terms of this Section 11.
SECTION 12. TERMINATION. Upon payment in full of the Liabilities in
accordance with their terms and the performance by the Pledgor of all of the
Pledgor's obligations under this Agreement, this Agreement shall terminate
and the Pledgor shall be entitled to the return, at the Pledgor's expense, of
such of the Collateral in the possession or control of the Pledgee as may
have been pledged by the Pledgor under this Agreement and which has not
theretofore been disposed of pursuant to the provisions hereof.
SECTION 13. MISCELLANEOUS. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon his successors and assigns, and
shall, together with the rights, powers and remedies of the Pledgee
hereunder, inure to the benefit of the Pledgee and its successors and assigns.
SECTION 14. AMENDMENTS; APPLICABLE LAW. None of the terms or
provisions of this Agreement may be amended except by an instrument in
writing, duly executed by the Pledgee. This Agreement shall be governed by
and construed in accordance with the laws of the State of Missouri, without
regard to the conflicts of laws principles of such jurisdiction.
5
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and
delivered this Agreement on the day and year first above written.
PLEDGOR
/s/ Curtis J. Laetz
----------------------------------------
Curtis J. Laetz
PLEDGEE
UNIQUIP CORPORATION
BY: /s/ Peter S. Finley
------------------------------------
Name: Peter S. Finley
Title: VP
6
<PAGE>
SCHEDULE 1
ISSUER OF CERTIFICATE NUMBER OF
PLEDGED SHARES CLASS NUMBER SHARES
-------------- ----- ----------- ---------
Uniquip Corporation Common 5 7,500
Stock
7
<PAGE>
PROMISSORY NOTE
$47,572.00 September 20, 1995
FOR VALUE RECEIVED, on or before ten (10) years from the date hereof,
the undersigned, Curtis J. Laetz (the "Maker"), promises to pay to the order
of Uniquip Corporation, a Delaware corporation (the "Lender"), at 7701
Forsyth Boulevard, Suite 600, St. Louis, Missouri 63105, or at such other
place as the holder hereof may from time to time designate in writing, the
principal sum of forty-seven thousand five hundred seventy-two dollars
($47,572.00), or so much thereof as shall be advanced or readvanced and from
time to time remain unpaid, plus interest on the principal balance thereof at
a rate of six and fifty-six hundredths (6.56%) per annum annually, which is
the applicable federal rate for debt instruments with a term in excess of
nine (9) years, as determined by the Internal Revenue Service in accordance
with Section 1274(d) of the Internal Revenue Code of 1986, as amended and in
effect on the date hereof.
This Note shall be payable in successive annual installments of accrued
interest only, followed by one (1) final installment at maturity in the
amount of the then outstanding principal balance of this Note and all accrued
and unpaid interest thereon. Such consecutive annual installments shall be
due on each December 31 after the date hereof until the tenth anniversary of
the date hereof, the maturity date of this Note, when the entire principal
balance of this Note and all accrued and unpaid interest thereon, as well as
all other costs, fees or charges payable hereunder, if any, shall be due and
payable in full. Interest on this Note shall be calculated on a 360 day
year, per diem basis. All payments hereunder shall be made in lawful
currency of the United States and in immediately available funds.
This Note may be prepaid, in whole or in part, at any time without
penalty and shall be prepaid in full at such time as the Maker shall sell all
or any part of the Pledged Shares (as such term is defined in that certain
Stock Pledge Agreement of even date herewith between the Maker and the
Lender). Any partial prepayments shall not, however, relieve the Maker of
the obligation to pay principal hereunder as and when the same would
otherwise fall due.
The Maker (i) waives presentment, demand, protest and notice of
presentment, notice of protest and notice of dishonor of this debt and each
and every other notice of any kind with respect to this Note, (ii) agrees
that the holder of this Note, at any time or times, without notice to it or
its consent, may grant extensions of time, without limit as to the number or
the aggregate period of such extensions, for the payment of any sums due
hereunder, and (iii) to the extent not prohibited by law, waives the benefit
of any law or rule of law intended for its advantage or protection as an
obligor hereunder or providing for its release or discharge from liability
under this Note, in whole or in part, on account of any facts or
circumstances other than full and complete payment of all amounts due
hereunder.
In the event any one or more of the provisions contained in this Note or
any of the other security documents shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Note or such
other security document, but this Note and the other security documents shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
<PAGE>
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is secured by a certain Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement") by and between the Maker and the
Lender. (This Note and the Stock Pledge Agreement, together with all
extensions, renewals and modifications thereof and substitutions therefor,
being herein collectively referred to as the "security documents").
All of the terms, covenants, provisions, conditions, stipulations,
promises and agreements contained in the security documents to be kept,
observed and performed by the Maker are hereby made a part of this Note and
incorporated herein by reference to the same extent and with the same force
and effect as if they were fully set forth herein, and the Maker promises and
agrees to keep, observe and perform them, or cause them to be kept, observed
and performed, strictly in accordance with the terms and provisions thereof.
The Maker warrants and represents that the loan evidenced hereby is
being made for business or investment purposes.
This Note shall be governed in all respects by the laws of Missouri and
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, personal representatives,
successors and assigns.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or
renew such debts are not enforceable. To protect the Maker and the Lender,
or any holder of this Note, from misunderstanding or disappointment, any
agreements we reach covering such matters are contained in this writing,
which is the complete and exclusive statement of the agreement between us,
except as we may later agree in writing to modify it.
WITNESS:
/s/ James H. Hook /s/ Curtis J. Laetz (SEAL)
- ------------------------------ --------------------------------
Curtis J. Laetz
Maker
2
<PAGE>
UNIQUIP CORPORATION
September 20, 1995
Mr. Curtis J. Laetz
TRAK International, Inc.
369 West Western Avenue
Port Washington, WI 53704
Dear Mr. Laetz,
Reference is made to that promissory note (the "Note") dated today made by
you in connection with the sale by Uniquip Corporation (the "Corporation") to
you of seven thousand five hundred (7,500) shares of the Corporation's Common
Stock. The Corporation hereby promises to compensate you for so long as you
are employed by the Corporation or its subsidiaries, by bonus or otherwise
and in addition to any other compensation (including bonus) payable to you,
in amounts sufficient to allow you to pay (i) interest on the Note as and
when such interest becomes due and payable, (ii) approximately all federal
and state income, determined solely with respect to your aggregate
compensation from the Corporation and its subsidiaries, taxes that you will
incur as a consequence of the receipt of amounts paid under clause (i) and
(ii) of this letter.
Very truly yours,
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
----------------------------------
Peter S. Finley
Vice President
<PAGE>
AMENDMENT TO PROMISSORY NOTE AND
STOCK PLEDGE AGREEMENT
AMENDMENT TO PROMISSORY NOTE AND STOCK PLEDGE AGREEMENT (the "Agreement"),
dated September 30, 1996, by and among Omniquip International, Inc., a Delaware
corporation formerly known as Uniquip Corporation (the "Corporation"), and
Curtis J. Laetz (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Corporation sold seventy-five thousand (75,000) shares (as
adjusted for stock splits effected or to be effected prior to the effective date
of this Agreement) of its Common Stock, par value $.01 per share (the "Shares"),
to the Stockholder at an aggregate purchase price of forty-seven thousand six
hundred forty-seven dollars ($47,647.00);
WHEREAS, in connection with the sale of the Shares to the Stockholder: (i)
the Stockholder and the Corporation entered into a Purchase and Stockholder
Agreement (the "Stockholder Agreement"), dated September 20, 1995; (ii) the
Stockholder executed and delivered a Promissory Note, dated September 20, 1995,
payable to the order of the Corporation in the principal amount of forty-seven
thousand five hundred seventy-two dollars ($47,572.00) (the "Stockholder Note");
and (iii) the Stockholder and the Corporation entered into a Stock Pledge
Agreement (the "Stock Pledge Agreement"), dated September 20, 1995, pursuant to
which the Stockholder pledged the Shares as security for the performance of his
obligations under the Stockholder Note; and
WHEREAS, the parties hereto desire (i) to modify the Stockholder Note and
(ii) to amend the Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MODIFICATION OF STOCKHOLDER NOTE. The third paragraph of the
Stockholder Note is hereby amended and restated on the Effective Date to read in
its entirety as follows:
"This Note may be prepaid, in whole or in part, at any time without
penalty. Upon the sale or other transfer of any of the Pledged Shares (as
such term is defined in that certain Stock Pledge Agreement, dated
September 20, 1995, by the Maker in favor of the Lender (as the same may be
amended, modified or supplemented, the "Stock Pledge Agreement")), a
prepayment of this Note shall be made in an amount equal to the then
outstanding principal balance of this Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Notwithstanding the preceding sentence, no
prepayment hereunder shall be required in connection with any transfer of
the Pledged Shares to the Lender upon the exercise of any option granted to
the Maker under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), PROVIDED that as a condition to such transfer, the Maker
agrees to deliver to the Lender the certificates evidencing the shares
issued upon exercise of such option (accompanied by duly executed stock
powers) and subjects such shares to the lien of the Stock Pledge Agreement
in substitution for the Pledged Shares so transferred. Any partial
prepayments hereunder shall not relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due."
<PAGE>
B. AMENDMENT TO STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended on the Effective Date as follows:
1. by deleting Schedule 1 thereto in its entirety and inserting in lieu
thereof the schedule attached hereto as Schedule 1
2. by deleting the definition of the term "Liabilities" therein and
inserting in lieu thereof the following:
"The term "Liabilities," as used herein, shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith, as may be amended, modified or supplemented
from time to time (the "Stockholder Note")."
3. by inserting a new Section 15 as follows:
"Section 15. TRANSFER AND PARTIAL RELEASE OF SHARES. The Pledgee agrees
that the Pledgor may sell or otherwise transfer all or any portion of the
Pledged Shares without the prior consent of the Pledgee, PROVIDED THAT
prior to or simultaneous with such sale or transfer a prepayment of the
Stockholder Note is made in an amount equal to the then outstanding
principal balance of the Stockholder Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Upon such prepayment, the Pledgee shall
deliver to the Pledgor certificates evidencing the Pledged Shares being
sold or transferred, registered in such names as the Pledgor may request,
PROVIDED that the Pledgor shall be responsible for any transfer or similar
tax arising by reason of any such transfer.
Notwithstanding the foregoing, the Pledgor may transfer all of the Pledged
Shares to the Pledgee upon the exercise of any option granted to the
Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note,
PROVIDED that as a condition to such transfer, the Pledgor agrees to
deliver to the Pledgee the certificates evidencing the shares issued upon
exercise of such option (accompanied by duly executed stock powers) and
subjects such shares to the lien of this Stock Pledge Agreement in
substitution for the Pledged Shares so transferred."
D. WAIVER OF STOCKHOLDER AGREEMENT RESTRICTIONS. Notwithstanding anything
to the contrary contained in the Stockholder Agreement, the Pledgor may transfer
all of the Pledged Shares to the Pledgee upon the exercise of any option granted
to the Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note, PROVIDED
that as a condition to such transfer, the Pledgor agrees to deliver to the
Pledgee the certificates evidencing the shares issued upon exercise of such
option (accompanied by duly executed stock powers) and subjects such shares to
the lien of this Stock Pledge Agreement in substitution for the Pledged Shares
so transferred
E. EFFECTIVE DATE. This Agreement and each of the amendments effected
hereby shall become effective on the date the Corporation's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Corporation's Common Stock becomes effective under the Act (the "Effective
Date"). Until the Effective Date, the Stockholder
- 2 -
<PAGE>
Note, the Stock Pledge Agreement and the Stockholder Agreement, as in effect on
the date hereof, shall remain in full force and effect without giving effect to
this Agreement. On and after the Effective Date, the Stockholder Note, the
Stock Pledge Agreement and the Stockholder Agreement, as modified hereby shall
continue to be in full force and effect and each is hereby ratified and
confirmed in all respects.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Missouri (without giving effect to such
jurisdiction's conflict of laws principles).
G. HEADINGS. The headings and captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
H. LEGEND. The Corporation shall cause the following legend to be typed
onto the face of the Stockholder Note:
"This Promissory Note has been modified pursuant to an Amendment to
Promissory Note and Stock Pledge Agreement, dated September 20, 1995, by
and between the Maker and the Lender, dated September 30, 1996."
I. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
OMNIQUIP INTERNATIONAL, INC.
By /S/ PHILIP G. FRANKLIN
--------------------------------------
Name: Philip G. Franklin
Title: Chief Financial Officer
/S/ CURTIS J. LAETZ
----------------------------------------
Curtis J. Laetz
- 4 -
<PAGE>
Schedule 1
Issuer of Certificate Number of
Pledged Shares Class Number Shares
- ------------------------- ----- ----------- ---------
Omniquip International, Inc. Common 75,000
- 5 -
<PAGE>
EXHIBIT 10.18
PURCHASE AND STOCKHOLDER AGREEMENT
This Purchase and Stockholder Agreement, made this September 20, 1995,
between Uniquip Corporation, a Delaware corporation (the "Corporation") and
Robert D. Melin (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Corporation is authorized to issue One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par value One Cent ($.01) per share
(the "Common Stock");
WHEREAS, the Executive is a Vice President of TRAK International, Inc., a
Subsidiary of the Corporation;
WHEREAS, the Executive has offered to purchase from the Corporation seven
thousand five hundred shares (7,500) shares of the Common Stock, representing
Seventy-Five Hundredths Percent (.75%) of the then issued and outstanding shares
of the Common Stock on a fully diluted basis, at an aggregate price of
Forty-Seven Thousand Six Hundred Forty-Seven Dollars ($47,647.00) (the "Purchase
Price"), and the Corporation has agreed to accept such offer to purchase such
shares of the Common Stock, subject to the right of the Corporation to purchase
all of the shares of the Common Stock now owned or hereafter acquired by the
Executive in certain circumstances; and
WHEREAS, the Corporation and the Executive desire to set forth their
understandings and agreements with respect to restrictions on certain transfers
of shares of the Common Stock now owned or hereafter acquired by the Executive,
the right of the Corporation to purchase all of the shares of the Common Stock
now owned or hereafter acquired by the Executive in certain circumstances and
certain other matters; including provisions with respect to the Executive's
post-termination employment and/or interest in competing enterprises; and
This Agreement is in not accordance with SOP I-4. Variances from SOP have been
approved by memorandum dated August 7, 1995.
<PAGE>
WHEREAS, the Corporation and the Executive acknowledge and agree that the
restrictions on certain transfers of shares of the Common Stock now owned or
hereafter acquired by the Executive further the Corporation's interest by having
shares of the Common Stock owned by full time employees of the Corporation and
its Subsidiaries, and that other provisions hereof are consistent with the
bonafide interests of the Corporation and of other full time employees of the
Corporation and its Subsidiaries; and
WHEREAS, it is recognized and acknowledged by the Executive that the
success of the Corporation and its Affiliates, including the Majority
Stockholder and other stockholders of the Corporation, is attributable in major
part to the manner by which the Corporation and its Affiliates source and
evaluate acquisition candidates and integrate their acquisitions, referred to as
the "Harbour Group Culture", all of which involve special and proprietary
techniques, procedures and training; and
WHEREAS, in order for the Executive to make a meaningful contribution in
his job, the Executive must learn and practice the intricacies of the
Corporation's and Harbour Group's procedures and know-how, benefit from the
collective Harbour Group experience in implementation of the "Harbour Group
Culture" and work with a small group of executives who have also learned the
intricacies of the "Harbour Group Culture", pursuant to which executives engaged
in acquisitions, finance, and operations work in concert; and
WHEREAS, Harbour Group enjoys a reputation in the business community of the
United States and elsewhere with particular but not exclusive reference to its
reputation among institutional investors, commercial banking institutions,
investment bankers, business brokers and sellers and buyers of business
enterprises; and
WHEREAS, the Executive's reputation will be enhanced and his experience
will be enhanced by his relationship with the Corporation and with Harbour
Group; and
2
<PAGE>
WHEREAS, the Executive acknowledges that special harm and injury will or
may be sustained by the Corporation and the Majority Stockholder and other
stockholders should acts otherwise prohibited herein nonetheless be taken.
NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. DEFINITIONS.
a. "Act" shall mean the Securities Act of 1933, as amended.
b. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person. "Affiliate of the
Majority Stockholder" shall not include any full-time employee of the
Corporation or any Subsidiary.
c. "Benefits" shall mean Health and Welfare Plans in accordance with
the current policies of the Corporation or any Subsidiary by which the Executive
is employed.
d. "Benefits Period" shall have the meaning set forth in Paragraph
26.
e. "Bona Fide Employee's Offer" shall have the meaning set forth in
Paragraph 4.
f. "Cause" shall mean (i) the material breach by the Executive of
this Agreement, including without limitation, any breach of Paragraphs 9 and 10;
(ii) the Executive's dishonesty in connection with the business of the
Corporation or any Subsidiary which is materially detrimental to the best
interests of the Corporation or any Subsidiary; (iii) the Executive's conviction
of a felony crime; (iv) any material act or omission by the Executive during his
employment with the Corporation or any Subsidiary involving willful malfeasance
or gross negligence in the performance of his duties to the Corporation or any
such Subsidiary; or (v) any other act or omission by the Executive during his
employment in the Corporation or any
3
<PAGE>
Subsidiary which provides the Corporation with a ground for terminating the
Executive's employment for cause under the employment law of the state in which
the Corporation's principal place of business is located.
g. "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
h. "Health and Welfare Plans" shall mean employee life, health and
disability insurance plans or other fringe benefit programs, if any, maintained
by the Corporation or any Subsidiary by which the Executive is employed.
i. "Majority Stockholder" shall have the meaning set forth in
Paragraph 14.
j. "New Issue Securities" shall have the meaning set forth in
Paragraph 16.
k. "Note" means the Promissory Note of the Executive issued to the
Corporation dated the date hereof in an original principal amount which is the
Purchase Price MINUS seventy-five dollars ($75.00).
l."100% Purchaser" shall have the meaning set forth in Paragraph 14.
m."Ordinary Course of Business" means the conduct of the business and
affairs of the Corporation or its Subsidiaries in the usual and ordinary course
and in manner which advances the purposes, and is in the best interest, of the
Corporation and its Subsidiaries.
n. "Permanent Disability" shall have the meaning set forth in
Paragraph 26.
o. "Person" means any individual, corporation, firm, partnership or
other business entity.
p. "Post-Employment Restriction Period" shall have the meaning set
forth in Paragraph 26.
q. "Prime Rate" means the annual rate of interest designated as the
"prime rate" in the listing of "money rates" as published from time to time in
THE WALL STREET JOURNAL, or if such
4
<PAGE>
publication is discontinued, the rate published as the "prime rate" or "base
rate" from time to time by any similar or successor publication designated by
the Board of Directors of the Corporation.
r. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of the Corporation or its Affiliates including, without
limitation, methods of operation, customers and customer lists, products,
proposed products, former products, proposed, pending or completed acquisitions
of any company, division, product line or other business unit, prices, fees,
costs, plans, designs, technology, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters of the Corporation or any of its Affiliates.
s. "Publicly Traded," with respect to the Common Stock, means listed
for trading on any national or regional securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation system or a
successor system.
t. "Purchase Price" shall have the meaning set forth in the third
WHEREAS clause.
u. "Registration Notice" shall have the meaning set forth in
Paragraph 15.
v. "Sale of Control Notice" shall have the meaning set forth in
Paragraph 14.
w. "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
x. "Shares" shall have the meaning set forth in Paragraph 2.
y. "Stockholder's Included Shares" shall have the meaning set forth
in Paragraph 14.
z. "Stockholder's Registered Shares" shall have the meaning set
forth in Paragraph 15.
5
<PAGE>
aa. "Subsidiary" shall mean any corporation or other entity of which
the Corporation directly or indirectly owns beneficially or of record fifty
percent (50%) or more of (i) the outstanding shares of capital stock if such
entity is a corporation or (ii) the outstanding ownership interests if such
entity is not a corporation.
ab. "Written Notice" shall have the meaning set forth in Paragraph 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Executive or any of his transferees (direct
or indirect, including without limitation the Executive's personal or legal
representatives, successors and assigns), whether such shares are now owned or
hereafter acquired (collectively the "Shares"), and whether such transfers are
voluntary, involuntary or by operation of law, resulting from death or
otherwise.
3. RESTRICTIONS ON THE TRANSFER OF SHARES.
a. Except as otherwise provided in Paragraphs 3b, 3c, 3d, 4, 11, 12,
14 and 15 of this Agreement, neither the Executive nor any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns) shall or may sell, exchange,
deliver, assign, bequeath or give, pledge, mortgage, hypothecate or otherwise
encumber, transfer or permit to be transferred, or otherwise dispose of, any or
all of the Shares, whether voluntarily, involuntarily or by operation of law
(including without limitation the laws of bankruptcy, intestacy, descent and
distribution and succession).
b. In the event of the Executive's death, the Shares may be
transferred to the Executive's personal or legal representatives, estate or
distributees of such estate, and such transfer shall be registered on the stock
transfer books of the Corporation.
c. In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Corporation under Paragraphs 11 and 12 of this
Agreement to purchase the Shares which are then owned by the Executive or any
representative, successor or transferee of the Executive
6
<PAGE>
shall lapse but all of the other provisions of this Agreement shall continue in
full force and effect. On the fourth anniversary of the date on which shares of
the Common Stock are first Publicly Traded, the restrictions on the transfer of
the Shares contained in Paragraphs 3a, 4, 5 and 7 of this Agreement shall lapse;
provided, however, that in the event of the death of the Executive prior to the
date of such fourth anniversary, all of the Shares owned by the Executive on the
date of his death may be sold without any restriction imposed by this Agreement.
d. Provided that such action is not objected to by any underwriter
then engaged in discussions with the Corporation regarding public offerings of
the Corporation's securities and the Corporation has reasonably determined that
such action will not adversely affect the market for its securities, the
Corporation shall, upon the request of the Executive at the following times,
permit the Executive to sell or otherwise transfer without regard to Paragraphs
3a, 4, 5 and 7 of this Agreement a portion of the Shares not to exceed the whole
number of Shares equaling the following percentage of the number of Shares
(adjusted for any intervening conversion, stock split, stock dividend or the
like) held by the Executive on the date on which the Common Stock is first
Publicly Traded:
(i) after the first anniversary of the date on which the Common
Stock is first Publicly Traded, twenty-five percent (25%);
(ii) after the second anniversary of the date on which the Common
Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the third anniversary of the date on which the Common
Stock is first Publicly Traded, a cumulative seventy-five percent (75%).
4. RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES TO
EMPLOYEES OF THE CORPORATION.
a. In the event that the Executive shall receive a Bona Fide
Employee's Offer (hereinafter defined) to purchase any or all of the Shares and
the Executive desires to accept such Bona Fide Employee's Offer, the Executive
shall promptly send Written Notice (hereinafter
7
<PAGE>
defined) to the Corporation, offering to sell such Shares to the Corporation in
accordance with subparagraph 4c hereof, at the same price and upon the same
terms and conditions as are contained in the Bona Fide Employee's Offer. Such
offer shall be irrevocable for a period of ninety (90) days from the receipt of
Written Notice by the Corporation. The Written Notice shall contain a true and
complete copy of the Bona Fide Employee's Offer, setting forth the price and all
terms and conditions of such offer, as well as the name(s), address(es) (both
home and office), and business(es) or occupation(s) of the third party offeror
(or offerors). The Written Notice shall be accompanied by evidence that
sufficient funds are available to the third party offeror (or offerors) to carry
out the terms of such offer. Any Written Notice that does not contain all such
requisite information shall not be considered a "Written Notice" for purposes of
this subparagraph 4a.
b. As used in this Agreement, the term "Bona Fide Employee's Offer"
shall mean a legally enforceable offer in writing, made and signed by a person
who is then a full time employee of the Corporation or any Subsidiary and who is
financially capable of carrying out the terms of such Bona Fide Employee's
Offer.
c. Whenever a Bona Fide Employee's Offer to purchase Shares has been
received by the Executive, and Written Notice thereof has been sent to the
Corporation, the following procedure shall be complied with: For a period of
ninety (90) days from its receipt of such Written Notice, the Corporation shall
have the right, in its sole discretion, without obligation, to purchase all (but
no less than all) of the Shares so offered. If the Corporation elects to
purchase all of the Shares so offered, it must send Written Notice thereof to
the Executive within said ninety (90) day period. If the Corporation does not
elect to purchase the Shares so offered within the prescribed time period, the
Executive shall have the right to accept the Bona Fide Employee's Offer in whole
(but not in part) and to sell such Shares, subject to the provisions and
restrictions of this Agreement, but only in strict accordance with all of the
provisions of the Bona Fide Employee's Offer and only if (i) the sale is fully
consummated within one hundred and twenty (120) days after the mailing of the
initial Written Notice to the Corporation and (ii) the Executive
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has prepaid the Note in accordance with its terms. In the event that such sale
is not fully consummated within one hundred and twenty (120) days after the
mailing of the Written Notice, the provisions of this Paragraph 4 must again be
complied with by the Executive.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares are
transferred to any Person, at any time or from time to time, by operation of law
or pursuant to the provisions of Paragraphs 3 or 4 hereof, the transferee(s)
shall agree in writing (for and on behalf of himself or itself, his or its
personal or legal representatives, transferees, successors and assigns) to be
bound by all provisions of this Agreement as a party hereto. Prior to any such
transfer, the transferee shall provide the Corporation with the transferee's
written agreement so to be bound. In the absence of any such written agreement
no such transfer shall be effective for any purpose, but the failure to obtain
such written agreement shall in no way diminish the applicability of the
provisions hereof. Without limiting the generality of the preceding provisions
of this Paragraph 5, in the event that any Shares are transferred to any full
time employee of the Corporation or any Subsidiary pursuant to the provisions of
Paragraph 4, such full time employee shall agree in writing to be bound by all
provisions of this Agreement, including without limitation the provisions of
Paragraph 12, and such employee shall be deemed thereafter to be the Executive
in respect of the Shares transferred to such employee as if initially named in
this Agreement and shall be subject as such to the provisions of this Agreement,
PROVIDED THAT the price at which the Corporation may purchase the Shares from
such employee pursuant to Paragraph 11 shall be the price at which the Shares
were sold to such employee pursuant to Paragraph 4. Prior to any such transfer,
the transferee shall provide the Corporation with the transferee's written
agreement so to be bound. In the absence of any such written agreement no such
transfer shall be effective for any purpose, but the failure to obtain such
written agreement shall in no way diminish the applicability of the provisions
hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer
book in which shall be recorded, among other things, the name and address of
each of its stockholders. No transfer of any Shares shall be effective or valid
unless and until recorded in such stock transfer
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book. The Corporation shall not record any transfer of Shares in such stock
transfer book unless the transfer is in strict compliance with all provisions of
this Agreement. The Executive agrees that, in the event he desires to make a
transfer within the provisions hereof, he shall furnish to the Corporation such
evidence of his compliance with this Agreement and that the proposed transfer
may be effected without registration under the Securities Laws as from time to
time may be required by the Board of Directors of, or counsel for, the
Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate
representing Shares shall bear the following legends:
"The encumbering, transfer or other disposition (including, without
limitation, any transfer or disposition pursuant to the laws of
bankruptcy, intestacy, descent and distribution and succession) of the
shares of common stock evidenced by the within Certificate is
restricted under the terms of a Purchase and Stockholder Agreement,
dated August ___, 1995, between Uniquip Corporation (the
"Corporation") and Robert D. Melin, a copy of which Agreement is on
file at the principal office of the Corporation. Such shares are also
subject to a voting agreement contained in said Purchase and
Stockholder Agreement. Upon written request of any stockholder of the
Corporation, the Corporation shall furnish, without charge to any such
stockholder, a copy of said Purchase and Stockholder Agreement."
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
law (collectively, the "Securities Laws") and may not be sold,
transferred or otherwise disposed of unless (i) a registration
statement covering such shares is effective under the Securities Laws
or (ii) the transaction is exempt from registration under the
Securities Laws and, if the Corporation requests, an opinion
satisfactory to the Corporation to such effect has been rendered by
counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase of
any Shares pursuant to Paragraph 4 of this Agreement, the Executive shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing such
documentary stamps, if any, as are necessary, and such assignments, certificates
of authority, tax releases, consents to transfer, instruments and evidences of
title of the Executive and of the Executive's compliance with this Agreement as
may be reasonably required by the purchaser or by counsel for the purchaser.
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9. COVENANT NOT TO DISCLOSE.
a. The Executive covenants and agrees that he will not, during the
period of his employment with the Corporation or at any time thereafter, except
with the express prior written consent of the Chairman and Chief Executive
Officer of Harbour Group Ltd., any successor to Harbour Group Ltd. or their
respective designees, directly or indirectly disclose, communicate or divulge to
any Person, or use for the benefit of any Person, any Proprietary Information.
The restriction contained in the preceding sentence shall not apply to any
Proprietary Information that (i) is a matter of public knowledge (which shall
include knowledge in the industries in which the Corporation or its Subsidiaries
are engaged) on the date of this Agreement, (ii) becomes a matter of public
knowledge (which shall include knowledge in the industries in which the
Corporation or its Subsidiaries are engaged) after the date of this Agreement
from another source which is under no obligation of confidentiality to the
Corporation or its Affiliates or (iii) that is furnished in the Ordinary Course
of Business to Persons which sell, provide or propose to sell or provide goods
or services to the Corporation or its Subsidiaries or which purchase, obtain or
propose to purchase or obtain goods or services from the Corporation or its
Subsidiaries.
b. All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or has
been furnished to the Executive or which may be produced, prepared or designed
by the Executive in connection with his employment with the Corporation shall
be, become and remain the exclusive property of the Corporation. Upon the
termination of the Executive's employment with the Corporation, all originals,
copies and reprints in the Executive's possession, custody, or control shall be
promptly surrendered and/or delivered to the Corporation, and the Executive
shall thereafter make no further use, either directly or indirectly, of any such
data, designs, drawings, blueprints, tracings, sketches, plans, layouts,
specifications, models, programs, cards, tapes, disks, printouts, writings,
manuals, guides, notes or other memoranda or written information.
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10. COVENANTS NOT TO COMPETE.
a. The Executive covenants and agrees that he will not at any time
during his employment with the Corporation and thereafter for the applicable
Post-Employment Restriction Period, except with the express prior written
consent of the Chairman and Chief Executive Officer of Harbour Group Ltd., any
successor to Harbour Group Ltd. or their respective designees, directly or
indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, shareholder (except as the holder of not more than one percent (1%)
of the outstanding shares of a corporation whose stock is listed on any national
or regional securities exchange or reported by the National Association of
Securities Dealers Automated Quotations System or any successor thereto) either
(i) establish any Person that competes with the Corporation or any of its
Subsidiaries or (ii) be affiliated or connected with any Person that carries on
any business within the states of Wisconsin, Illinois and Missouri, the states
contiguous thereto, elsewhere in the United States and the world, that is
competitive with the business of the Corporation or any of its Subsidiaries in a
capacity which is competitive in any of its duties, responsibilities or
activities with the business of the Corporation or any of its Subsidiaries.
Without limiting the generality of the preceding sentence, the Executive
covenants and agrees that he will not directly or indirectly solicit, divert or
accept business from or otherwise take away or interfere with any customer of
the Corporation or any of its Subsidiaries, including without limitation any
Person who was a customer or whose business was being pursued by the Corporation
or any of its Subsidiaries within (x) the period of the Executive's employment
with the Corporation, (y) one (1) year prior to such employment or (z) one (1)
year after the termination of such employment, including all customers directly
or indirectly produced or generated by the Executive. The parties further agree
that if the Executive becomes affiliated or connected with any Person described
in clause (ii) of this Paragraph 10(a) during either his employment with the
Corporation or the Post-Employment Restriction Period, the Executive shall be
obliged to show by clear and convincing evidence that none of his duties,
responsibilities or activities entail employment in a capacity which has been,
is or is likely to become, competitive with the business of the Corporation or
any of its Subsidiaries. The parties hereto
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agree that the covenant contained in clause (ii) of this Paragraph 10(a) shall
be construed as a series of separate covenants, one for each state or other
geographic area specified in such clause and, except for geographic coverage,
each separate covenant shall be deemed identical.
b. The Executive further covenants and agrees that he will not for a
period of three (3) years after the termination of his employment hereunder,
except with the express prior written consent of the Chairman and Chief
Executive Officer of Harbour Group Ltd., any successor to Harbour Group Ltd. or
their respective designees, directly or indirectly, accept employment, be
employed by or be a principal of any business or enterprise operating within the
United States which then employs or has as a principal or holder of any interest
therein (except as the holder of not more than one percent (1%) of the
outstanding shares of a corporation whose shares are publicly traded) any
individual who was previously employed in a managerial or executive position
with the Corporation or any of its Affiliates, provided however, that this
prohibition shall not be applicable if (i) such business or enterprise does not
compete with the Corporation or its Affiliates, or (ii) (x) such business or
enterprise engages in activities which do compete and other activities which do
not compete with the Corporation or its Affiliates, (y) the Executive and the
other individual who was previously employed by the Corporation or any of its
Affiliates are employed by such business or enterprise in connection with
activities which in no way compete with the Corporation or its Affiliates and
(z) neither the Executive nor the other individual who was previously employed
by the Corporation or its Affiliates is or proposes to be a principal of such
business or enterprise.
c. If any provision of the covenants and agreements set forth above
shall be held invalid or unenforceable because of the scope of the territory or
the actions thereby restricted, or the period of time within which such covenant
or agreement is operative, or for any other reason, it is the intent of the
parties hereto that such provision shall be construed by limiting and reducing
it, or, if necessary, eliminating it so that the provisions hereof be valid and
enforceable to the extent compatible with applicable law as determined by a
court of competent jurisdiction.
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11. OPTION TO PURCHASE THE SHARES.
a. In the event that the Executive breaches any of the covenants
contained in Paragraphs 9 or 10, the Corporation shall have the right, but is
not required, to purchase all of the Shares which are then owned by the
Executive or any representative, successor or transferee of the Executive. Any
right to purchase under this Paragraph 11 shall be exercised in writing within
sixty (60) days of the date on which the Corporation becomes aware that any such
breach has occurred. Settlement shall be held at the principal office of the
Corporation at such date and time within ninety (90) days from the time that the
notice of intent to exercise required by this subparagraph 11a has been sent by
the Corporation as shall be selected by the Corporation. For purposes of this
subparagraph 11a, (i) the Executive shall be conclusively deemed and considered
to own all Shares owned by himself, his estate, his executors or administrators,
his distributees and his personal and legal representatives, and (ii) no Shares
owned by a transferee of the Executive other than those transferees referred to
in clause (i) above shall be subject to purchase by the Corporation. Except as
otherwise provided in Paragraph 5, the purchase price for such Shares shall be
the original principal amount of the Note.
b. The purchase price for the Shares purchased pursuant to
subparagraph 11a above shall be paid by delivering to the Executive or any
transferee of the Executive referred to in subparagraph 11a(i) above the Note
marked paid in full, together with the Corporation's check in the amount, if
any, by which the purchase price exceeds the principal balance then outstanding
on the Note.
12. MANDATORY PURCHASE OF THE SHARES.
a. If the Executive's employment with the Corporation terminates for
any reason (including his death) and if shares of the Common Stock are not
Publicly Traded on the date of such termination, the Corporation shall
repurchase to the extent it may lawfully do so, and the Executive or each
transferee of the Executive under subparagraph 3b shall sell to the Corporation,
the Shares then owned by the Executive. For purposes of this subparagraph 12a,
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the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors or administrators, his distributees
and his personal and legal representatives and any other transferee. Settlement
shall be held at the principal office of the Corporation at such date and time
within one hundred and twenty (120) days of the termination of the Executive's
employment as shall be selected by the Corporation. The purchase price for such
Shares shall be their book value, as computed by the Corporation's internal
auditing staff and certified by the chief financial officer of Harbour Group
Ltd. (or any successor to Harbour Group Ltd.), as of the last day of the month
preceding the month in which the Executive's employment was terminated, which
certification shall be final and binding; provided, however, that the purchase
price for shares purchased pursuant to this subparagraph 12a shall not be less
than eighty percent (80%) of the Purchase Price.
b. The purchase price for the Shares purchased pursuant to
subparagraph 12a above shall be paid in the following manner:
(i) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus accrued
interest, due on the Note and such excess is not greater than one hundred
thousand dollars ($100,000.00), the Corporation shall pay the purchase price for
the Shares by (a) returning to the Executive or any transferee referred to in
subparagraph 12a above the Note marked "paid in full", and (b) paying by cash or
check the difference between the purchase price of the Shares and the principal
balance, plus accrued interest, due on the Note.
(ii) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus accrued
interest, due on the Note and such excess is greater than one hundred thousand
dollars ($100,000.00), the Corporation shall pay the purchase price in
installments as follows: (a) the first installment by (1) returning to the
Executive or any transferee referred to in subparagraph 12a above the Note
marked "paid in full", and (2) paying by cash or check one hundred thousand
dollars ($100,000.00) and (b) annual
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installments thereafter by paying by cash or check an amount equal to the lesser
of one hundred thousand dollars ($100,000.00) and the balance of the purchase
price remaining outstanding on the date each installment is due, plus interest
on such outstanding balance calculated at a rate equal to the Prime Rate on such
due date. The Corporation shall be entitled to prepay all or any portion of the
purchase price, plus interest thereon, at any time without penalty.
(iii) If the purchase price for the Shares, as determined
pursuant to Paragraph 12a above, does not exceed the principal balance, plus
accrued interest, due on the Note, then the purchase price shall be paid by
crediting amounts due under the Note, up to the purchase price amount, with such
credit applied first to accrued interest due under the Note then to principal.
13. CONFLICT BETWEEN PARAGRAPHS. Notwithstanding any other provision of
this Agreement to the contrary, to the extent that there shall be any conflict
between the provisions of Paragraphs 3 or 4 and the provisions of Paragraph 11
in regard to the right of the Corporation to purchase the Shares from the
Executive, the provisions of Paragraph 11 shall control, and to the further
extent that there shall be any conflict between the provisions of Paragraphs 11
and 12 in regard to the right or obligation of the Corporation to purchase the
Shares from the Executive, the provisions of Paragraph 11 shall control.
14. SALE OF CONTROL.
a. In the event that the holder of more than fifty percent (50%) of
the outstanding shares of the Common Stock or more than fifty percent (50%) of
the outstanding shares of the common stock of an Affiliate of the Corporation
which owns a majority of the outstanding shares of the Common Stock (in either
case, the "Majority Stockholder") shall seek to sell more than fifty percent
(50%) of the outstanding shares of the Common Stock to a Person which is not an
Affiliate of the Majority Stockholder (other than an underwriter in connection
with an offering pursuant to a registration statement filed under the Act), the
Executive shall be provided a written notice which specifies the identity of the
proposed purchaser, the number of shares of the Common Stock proposed to be
purchased and the consideration proposed to be paid by such
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purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Executive shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Majority Stockholder to include in such proposed sale the number of Shares (the
"Stockholder's Included Shares") which is calculated in the manner specified in
the following sentence. The Stockholder's Included Shares shall be determined
by multiplying the number of Shares owned by the Executive on the date that the
Sale of Control Notice is mailed by a fraction, the numerator of which is the
number of shares of the Common Stock which the proposed purchaser desires to
purchase and the denominator of which is the total number of shares of the
Common Stock which are outstanding on the date that the Sale of Control Notice
is mailed. In the event that the number so determined includes a fraction which
is greater than .50, the Stockholder's Included Shares shall be the next larger
whole integer and in the event that the number so determined includes a fraction
which is equal to or less than .50, the Stockholder's Included Shares shall be
the next smaller whole integer. For example, assume the proposed purchaser
desires to purchase 450,000 shares of the Common Stock. On the date that the
Sale of Control Notice is mailed, there are 500,000 shares of the Common Stock
outstanding and the Executive owns 1,500 of such shares. The number of the
Stockholder's Included Shares would be 1,350, which is 1,500 times
450,000/500,000.
b. The parties hereto recognize and acknowledge that any prospective
purchaser of the business of the Corporation may wish to purchase (i) all of the
outstanding shares of the Common Stock, (ii) all of the outstanding shares of
the common stock of the Majority Stockholder or (iii) all or substantially all
of the assets of the Corporation, which purchase may be made in conjunction with
the purchase of the business of an Affiliate or Affiliates of the Corporation.
Accordingly, the Executive and each transferee of the Executive under
subparagraph 3b agrees, upon the request of the Corporation, to (x) sell all of
the Shares then owned by the Executive to any prospective purchaser of the
business of the Corporation which is not an Affiliate of the Majority
Stockholder (a "100% Purchaser") or, at the option of the Majority Stockholder
or the Corporation, to the Corporation in connection with the sale of all of
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the outstanding shares of the Common Stock to a 100% Purchaser or the sale of
all of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common Stock
to a 100% Purchaser and (y) at any time prior to the tenth anniversary of this
Agreement, vote the Shares then owned by the Executive in favor of (A) any sale
of all or substantially all of the assets of the Corporation to a 100% Purchaser
or (B) any merger or consolidation of the Corporation with a 100% Purchaser, in
each case which has been approved by the Board of Directors of the Corporation
in accordance with the provisions of this subparagraph 14b. The Executive and
each such transferee agrees promptly upon any request made by the Corporation
prior to the tenth anniversary of this Agreement and without compensation to
execute and deliver an amendment to this Agreement or other instrument which
extends for an additional ten year period the Executive's agreement to vote the
Shares as specified in subparagraph 14(b)(y). For purposes of this subparagraph
14b, the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors and administrators, his distributees
and his personal and other legal representatives and any other transferee.
In the event that the Majority Stockholder shall have entered into an
agreement to sell (a) all of the outstanding shares of the Common Stock owned by
it or (b) all of the outstanding shares of the common stock of an Affiliate of
the Corporation which owns a majority of the outstanding shares of the Common
Stock to a 100% Purchaser or the Corporation shall have entered into an
agreement to sell all or substantially all of the assets of the Corporation to a
100% Purchaser, whether individually or in conjunction with the sale of the
business of an Affiliate or Affiliates of the Corporation, the Corporation's
auditors, or their designee, shall allocate such portion of the total purchase
price to the then outstanding shares of the Common Stock which is fair and
reasonable (with each outstanding share being allocated the same portion of the
purchase price) giving such consideration as they deem appropriate to the (i)
terms and conditions of such agreement to sell, (ii) book value and the earnings
and projected earnings of the Corporation and each Affiliate of the Corporation
whose business is or will be sold pursuant
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to such agreement to sell, determined in accordance with generally accepted
accounting principles consistently applied where relevant and appropriate in the
opinion of the Corporation's auditors or such designee and (iii) such other
factors as they may deem relevant to such allocation. The determination of such
allocation by the Corporation's auditors or their designee shall be final and
binding upon the parties hereto with respect to the portion of the total
purchase price which the Executive is entitled to receive for the Shares
pursuant to this subparagraph 14b. The Executive and each transferee of the
Executive under subparagraph 3b agrees to sell the Shares to the Persons
specified in this subparagraph 14b at the price per share of the Common Stock
allocated by such auditors or their designee at the closing of the transactions
contemplated by such agreement to sell.
For purposes of effectuating any sale of the Shares pursuant to this
subparagraph 14b, the Executive and each transferee of the Executive under
subparagraph 3b hereby grants to each of the Majority Stockholder and the
Corporation and their respective designees and assigns an irrevocable power of
attorney with respect to the transfer of the Shares and authorizes the
Corporation to deliver to the Majority Stockholder or any 100% Purchaser each
stock certificate representing the Shares. The Executive and each such
transferee agrees promptly upon request and without compensation to do all acts
and execute all agreements, documents, proxies, consents of stockholders and
instruments as shall be necessary or desirable to effectuate the consummation of
any agreement to sell all of the outstanding shares of the Common Stock to a
100% Purchaser, any agreement to sell all of the outstanding shares of the
common stock of an Affiliate of the Corporation which owns a majority of the
outstanding shares of the Common Stock to a 100% Purchaser and any agreement to
sell all or substantially all of the assets of the Corporation to a 100%
Purchaser pursuant to this subparagraph 14b including, but not limited to,
delivering executed stock assignments separate from certificate naming each of
the Majority Stockholder and the Corporation and their respective assigns and
designees as his attorneys for the purpose of effectuating such transfer. The
Majority Stockholder and, in the event that the Majority Stockholder or the
Corporation elects to have the Corporation purchase the Shares, the
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Corporation agree to deliver or cause to be delivered to the Executive or his
transferees promptly following any sale of the Shares pursuant to this Paragraph
14b the purchase price for the Shares less all amounts then owed by the
Executive to the Corporation pursuant to the Note.
15. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
a. If the Corporation proposes to register for sale any shares of
the Common Stock owned by the Majority Stockholder under the Act at a time when
the Executive or any transferee of the Executive permitted by subparagraph 3b
owns any of the Shares, it will at each such time give written notice (the
"Registration Notice") to the Executive or such transferee of its intention to
do so and, upon the written request of the Executive or such transferee given
within twenty (20) days after the Corporation gives such notice (which request
shall state the intended method of disposition of such holder's Shares), the
Corporation will use its best efforts to effect the registration of the number
of the Shares (the "Stockholder's Registered Shares") which is calculated in the
manner specified in the following sentence by including the Stockholder's
Registered Shares in such registration statement, all to the extent required to
permit the sale or other disposition of such Shares in accordance with the
intended method of sale or other disposition given in each such request. The
Stockholder's Registered Shares shall be determined by multiplying the number of
the Shares owned by the Executive and each transferee of the Executive under
subparagraph 3b on the date that the Registration Notice is mailed by a
fraction, the numerator of which is the number of shares of the Common Stock
which are included in such registration statement and the denominator of which
is the total number of shares of the Common Stock outstanding on the date that
the Registration Notice is mailed. In the event that the number so determined
includes a fraction which is greater than .50, the Stockholder's Registered
Shares shall be the next larger whole integer and in the event that the number
so determined includes a fraction which is equal to or less than .50, the
Stockholder's Registered Shares shall be that number alone. For example, assume
250,000 shares of the Common Stock are included in such registration statement.
On the date that the Corporation mails the Registration Notice, there are
500,000 shares of the Common Stock outstanding and the Executive and such
transferees own
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1,500 of such shares. The number of the Stockholder's Registered Shares would
be 750, which is 1,500 times 250,000/500,000.
b. Notwithstanding anything to the contrary contained in
subparagraph 15a:
(i) In the event that any registration statement to be filed
pursuant to subparagraph 15a shall be, in whole or in part, in connection with
an underwritten public offering, the number of the Stockholder's Registered
Shares to be included in such registration statement may be reduced, or no
Stockholder's Registered Shares may be included in such registration statement,
if and to the extent that the managing underwriter(s) shall give their written
opinion that such inclusion would adversely affect the marketing of the
securities to be sold therein by the Majority Stockholder.
(ii) The Corporation (A) may withdraw any registration statement
referred to in this Paragraph 15 without thereby incurring any liability to the
Executive and (B) shall in no event be obligated to register any Shares in
connection with the first underwritten public offering after the date hereof,
whether primary or secondary, of shares of the Common Stock, including without
limitation any sales of shares of the Common Stock related to over-allotments in
connection with such offering.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subparagraph 15a is to
be underwritten, then any distribution of the Stockholder's Registered Shares
shall be underwritten by the same underwriters who are underwriting the
distribution of the securities of the Corporation for the account of the
Majority Stockholder, and the Executive shall enter into the agreement with such
underwriters contemplated under subparagraph 15b(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Executive and each transferee of the Executive under subparagraph 3b shall
refrain from selling, making any short sale of, loaning,
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granting any option for the purchase of, or otherwise disposing of any of their
Shares not registered pursuant to subparagraph 15a during the period of time
which is the longer of (A) the period of distribution of the shares of the
Common Stock by such underwriter(s) in the offering and (B) the period requested
by such underwriter(s), which shall in no event exceed one hundred eighty (180)
days.
16. RIGHT TO ACQUIRE ADDITIONAL SHARES. If at any time during the
Executive's employment with the Corporation or any Subsidiary, the Corporation
issues any shares of the Common Stock, any securities convertible into or
exchangeable for shares of the Common Stock or any options, warrants or rights
to acquire shares of the Common Stock or securities convertible into or
exchangeable for shares of the Common Stock to the Majority Stockholder or any
Affiliate of the Majority Stockholder (the "New Issue Securities"), and if
shares of the Common Stock are not Publicly Traded on the date of such issuance,
the Corporation agrees that not later than sixty (60) days after the sale of any
New Issue Securities it will offer in writing to sell to the Executive such
number or principal amount of the New Issue Securities as would enable the
Executive to maintain the same aggregate percentage ownership interest in the
shares of the Common Stock (which for purposes of this Paragraph 16 shall
include shares of the Common Stock issued and outstanding, shares held in the
Corporation's treasury from time to time and shares subject to purchase pursuant
to an option held by the Majority Stockholder on the date hereof) after such
sale of the New Issue Securities as specified in the third WHEREAS clause of
this Agreement. Notwithstanding the immediately preceding sentence, the term
"New Issue Securities" shall not include shares of the Common Stock which are at
any time subject to purchase, by the Majority Stockholder pursuant to an Option
Agreement between the Corporation and the Majority Stockholder dated on or prior
to the date of this Agreement. The offer of the Corporation to the Executive
described in the first sentence of this Paragraph 16 shall contain the same
price per share, security, option, warrant or other right constituting New Issue
Securities and substantially similar terms and conditions as the sale of the New
Issue Securities which obligates the Corporation to make the offer. The
Executive shall be entitled to accept such offer only without
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modification and only in writing for a period of ten (10) days after the offer
is made. In the event that such offer is accepted by the Executive, the
Executive shall deliver to the Corporation (i) a check in the amount of the par
value of the New Issue Securities being offered to the Executive and (ii) a
promissory note payable to the Corporation in the same form and having the same
date of maturity as the Note, bearing interest at a rate which is two percent
(2%) in excess of the Prime Rate and in the aggregate principal amount of the
purchase price of the shares of the New Issue Securities offered to the
Executive, less the amount of such check, within fifteen (15) days after the
offer is made. The note shall be secured by a pledge of the New Issue
Securities purchased by the Executive with the proceeds of the loan evidenced
thereby.
17. SPECIFIC PERFORMANCE. The Executive acknowledges that the services to
be rendered by him are of a special, unique and extraordinary character, and in
connection with rendering such services, he will have access to Proprietary
Information. The parties agree that it is impossible to measure in money the
damages that will accrue to the Corporation and its Subsidiaries by reason of
the Executive's failure to perform his obligations under this Agreement, that
such failure to perform will result in irreparable damage to the Corporation and
its Subsidiaries, and that specific performance of the Executive's obligations
may therefore be obtained by suit in equity. Without limiting the generality of
the foregoing sentence, the Corporation or any Subsidiary shall be entitled to
apply to any court of competent jurisdiction for an injunction restraining the
Executive from committing or continuing any violation of Paragraphs 9 and/or 10.
The Executive will not assert any claim or defense in any action or proceeding
to enforce any provision hereof that the Corporation or any Subsidiary has or
had an adequate remedy at law.
18. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified mail,
return receipt requested, with first-class postage prepaid, or by facsimile with
answer-back; and such notices shall be addressed: (i) if to the Corporation, to
the Secretary of the Corporation at the Corporation's principal business office,
with a copy to Chairman, Harbour Group Ltd., 7701 Forsyth Boulevard, Suite 600,
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Clayton, Missouri 63105; and (ii) if to the Executive, to his address as
reflected in the records of the Corporation; or to such other address(es) as the
parties hereto shall designate by Written Notice, furnished to all parties in
the manner provided herein. Any notice which is required to be made within a
stated period of time shall be considered timely if delivered or mailed before
midnight of the last day of such period.
19. CERTAIN TRANSACTIONS ON BEHALF OF AFFILIATES. The Executive
recognizes and acknowledges that the Corporation may on the date of this
Agreement be, or may after the date of this Agreement become, liable for the
indebtedness of Affiliates of the Corporation as a consequence of being or
becoming a party to agreements evidencing such indebtedness or guaranteeing such
indebtedness. The Executive agrees to (i) the Corporation incurring liability
for the indebtedness of its Affiliates, whether such liability was incurred
prior to the date of this Agreement or incurred after the date of this Agreement
and (ii) not assert any claim against the Corporation or its directors, officers
or stockholders in connection with or relating to such liability of the
Corporation for the indebtedness of its Affiliates, whether such liability was
incurred prior to the date of this Agreement or incurred after the date of this
Agreement. The Executive further acknowledges that the Majority Stockholder has
the option to acquire up to 40,000 shares of newly issued Common Stock (subject
to adjustment for stock splits, recapitalizations and the like) which option is
exercisable at any time to the extent that executive employees of the
Corporation and its Subsidiaries are holders less than 40,000 shares of the
Common Stock.
20. NO RIGHT TO CONTINUED EMPLOYMENT. The Executive agrees that neither
the sale of the Shares by the Corporation to him nor any provision of this
Agreement shall (i) give the Executive any right to be retained in the employ of
the Corporation or any Subsidiary, (ii) affect the right of the Corporation or
any Subsidiary to discharge the Executive at any time or (iii) affect the
Executive's right to terminate his employment with the Corporation or any
Subsidiary at any time.
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21. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had been omitted.
22. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective personal or legal
representatives, successors and assigns.
23. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed to
be and include the plural (and VICE VERSA), whenever appropriate.
24. RULE 144 ACKNOWLEDGMENTS.
a. The Executive represents and warrants to the Corporation that (i)
he is purchasing the Shares for his own account without a view to any
distribution thereof in violation of the Act or any applicable state securities
laws, (ii) he is experienced in evaluating and making investments of this type,
and has had access to, and to his knowledge has received, all the information
that he reasonably has required to evaluate this investment and (iii) he is
financially able to bear the risks associated with an investment in the Shares
being purchased hereby.
b. The Executive acknowledges that the Corporation is issuing and
selling the Shares in reliance upon the representations and warranties set forth
in subparagraph 24a and that the Shares so acquired will be "restricted
securities" within the meaning of Rule 144 under the Act, and acknowledges that
such Shares may only be offered, sold, pledged or otherwise transferred by him
(i) if registered under the Act and registered or otherwise qualified for sale
under any applicable state securities laws or (ii) pursuant to any exemption
from such registration or qualification requirements, and that the
certificate(s) representing the Shares will bear a legend to this effect.
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25. MODIFICATIONS. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by all the parties hereto. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the party against whom it is sought to be enforced. The failure of
any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of the
same or other condition, promise, agreement or understanding at a future time.
26. POST-EMPLOYMENT RESTRICTION PERIOD; ADDITIONAL COMPENSATION. For the
purposes of this Agreement the applicable "Post-Employment Restriction Period"
shall be determined as follows:
a. If the Executive's employment with the Corporation or any
Subsidiary is terminated for Cause, the Post-Employment Restriction Period shall
be a period of one (1) year commencing on the date of termination of such
employment.
b. If the Executive's employment with the Corporation and the
Subsidiaries is terminated due to a Permanent Disability, the Post-Employment
Restriction Period shall be a period of one (1) year commencing on the date of
termination of such employment. For the purpose of this Paragraph 26, the
Executive has suffered a "Permanent Disability" if the Board of Directors of the
Corporation determines that the Executive has been or will be unable, as a
result of physical or mental illness or incapacity, to perform his duties to the
Corporation and the Subsidiaries for a period of four (4) consecutive months or
for an aggregate of more than six (6) months in any twelve-month period.
c. If the Executive's employment with the Corporation and its
Subsidiaries shall be terminated by the Corporation or such Subsidiaries without
Cause, or if the Executive terminates his employment within sixty (60) days
after a substantial reduction in his duties, responsibilities or compensation,
the Post-Employment Restriction Period shall be a period of one (1) year
commencing on the date of termination of such employment; provided that (i)
during the
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Post-Employment Restriction Period the Corporation or its Subsidiaries shall
make monthly payments to the Executive and (ii) during the Benefits Period the
Corporation or a Subsidiary shall provide to the Executive, the Benefits, as in
effect on the date of termination of such employment, or the reasonable
equivalent thereof, as determined by the Board of Directors of the Corporation
in its sole discretion and business judgment. For the purposes of this
Paragraph 26, "Benefits Period" means a period, commencing on the date that the
Executive's employment with the Corporation and all of its Subsidiaries
terminates and ending on the earlier of (a) the end of the initial
Post-Employment Restriction Period and (b) the date that the Executive commences
other employment or any consulting arrangement. The amount of the monthly
payments shall be equal to one-twelfth (1/12) of the Executive's annual base
compensation as in effect on the date of termination during the Benefits Period
and 50% of such amount thereafter until the end of the initial Post-Employment
Restriction Period determined by this Paragraph 26c.
d. If the Executive terminates his employment with the Corporation
and the Subsidiaries for any reason other than the Corporation substantially
reducing his duties, responsibilities or compensation, within thirty (30) days
of the date of such termination the Corporation shall have the option to
designate an initial Post-Employment Restriction Period of six (6) months
commencing on the date of termination which option is exercisable by notice
given within thirty (30) days after the date on which the Corporation receives
notice of the Executive's termination of his employment. Thereafter, the
Corporation shall have three (3) additional options to extend the
Post-Employment Restriction Period for additional consecutive periods of six (6)
months each, which options shall be exercisable at the times and in the manner
set forth in this Paragraph 26d. If the initial Post-Employment Restriction
Period is determined by subparagraphs a, b or c above, at the end of the initial
Post-Employment Restriction Period the Corporation shall have two (2) options to
extend the Post-Employment Restriction Period for additional consecutive periods
of six (6) months each. The Corporation may exercise its additional options
under this Paragraph 26d by giving notice to the Executive of each such election
at any time which is not less than thirty (30) days prior to the expiration of
the
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Post-Employment Restriction Period (as may have then been extended by prior
exercise of an option pursuant to this Paragraph 26d). During any such
extension of the Post-Employment Restriction Period, the Corporation shall make
monthly payments to the Executive in an amount equal to one twelfth (1/12th) of
the Executive's annual base compensation as in effect on the date of termination
of his employment until the first full month in which the Executive has obtained
other employment or any consulting arrangement and 50% of such amount
thereafter. Notwithstanding any provision of this Paragraph 26 to the contrary,
the Post-Employment Restriction Period shall not be extended beyond a period of
two (2) years without the consent of the Executive.
e. During the Post-Employment Restriction Period (including any
extensions thereof) the Executive shall give written notice to the Corporation
within five (5) days of any change in his employment or in his duties,
responsibilities or activities pursuant thereto. If the Executive voluntarily
terminates his employment with the Corporation and all of its Subsidiaries, the
Executive shall give written notice to the Corporation of any employment which
the Executive at that time expects to be engaged in within the six-month period
following his termination.
f. Notwithstanding any other provision of this Paragraph 26 to the
contrary, the provisions of this Paragraph do not, and are not intended to,
waive, disclaim or otherwise extinguish any rights of the Executive as an
employee under any applicable federal, state or local statute or ordinance.
27. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations between
the parties hereto with respect to the subject matter of this Agreement. This
Agreement is, and is intended by the parties to be, an integration of any and
all prior agreements or understandings, oral or written, with respect to the
subject matter of this Agreement.
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28. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in Paragraph
1(f) and the following sentence. All matters concerning the authorization of
this Agreement and the consummation of the transactions contemplated hereby
including without limitation the issuance of the Shares, the payment for the
Shares and the fully paid and nonassessable status of the Shares, shall be
construed and enforced in accordance with the General Corporation Law of the
State of Delaware.
29. HEADINGS. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
[The balance of this page has been intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first hereinabove written.
WITNESS: UNIQUIP CORPORATION
/s/ Elizabeth Bowling By:/s/ Peter S. Finley
- ------------------------------------- -------------------------------------
Name: Peter S. Finley
Title: VP
/s/ James H. Hook /s/ Robert D. Melin
- ------------------------------------- -------------------------------------
Robert D. Melin
The undersigned, being the record and beneficial owner of more than fifty
percent (50%) of the issued and outstanding shares of the Common Stock of either
the above-named Corporation, hereby agrees to comply with the provisions of
Paragraph 14 hereof.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management
Co., L.P.,
General Partner
By: HGM III Co., General Partner
by: /s/ Francis M. Loveland
---------------------------
Francis M. Loveland
Vice President
Dated: September 20, 1995
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated September 20, 1995 between Robert D. Melin
(the "Pledgor") and Uniquip Corporation, a Delaware corporation (the "Pledgee").
WHEREAS, the Pledgee has made a loan to the Pledgor in order to permit the
Pledgor to acquire certain shares of common stock of the Pledgee described in
Schedule 1 hereto, which loan is evidenced by a Promissory Note of the Pledgor
of even date herewith;
WHEREAS, the Pledgee requires the Pledgor, as a condition to making the
aforementioned loan, to enter into this Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the making of such loan, the Pledgor
hereby agrees with the Pledgee as follows:
SECTION 1. PLEDGE. To secure the due and punctual payment by the Pledgor
of the Liabilities (as hereinafter defined), the Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto the Pledgee and
hereby grants to the Pledgee a security interest in the following:
(i). the shares of stock specified in Schedule 1 hereto and all other
shares of stock of the Pledgee hereafter acquired by the Pledgor
(herein collectively called the "Pledged Shares") and the
certificates representing the Pledged Shares, and all cash,
securities, interest, dividends, options, rights and other
property at any time and from time to time received, receivable
or otherwise distributed in respect of, or in exchange for, any
or all of the Pledged Shares;
(ii). all other property hereafter delivered to the Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends, options,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(iii). all proceeds of any of the foregoing (the Pledged Shares and all
such additional shares, certificates, instruments, cash,
securities, interest, dividends, options, rights and other
property being herein collectively called the "Collateral").
The term "Liabilities," as used herein shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith.
SECTION 2. CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a). The Pledgee shall not be liable for its failure to collect or
realize upon the Liabilities or any collateral, security or guaranty therefor,
or any part thereof, or for any delay in so doing, nor shall the Pledgee be
under any obligation to take any action whatsoever with respect thereto.
(b). The Pledgee may from time to time, after any portion of the
Liabilities shall become due and payable, without notice to the Pledgor, (i)
transfer all or any part of the Collateral into the name of the Pledgee or its
nominee, with or without disclosing that such Collateral is subject to the lien
and security interest granted hereby, (ii) enforce collection of any of the
Collateral, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, (iii) resort to the Collateral for payment of any portion of the
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Liabilities whether or not it shall have resorted to any other property securing
payment of any portion of the Liabilities or shall have proceeded against any
party primarily or secondarily liable on any portion of the Liabilities and (iv)
take control of any proceeds of the Collateral.
SECTION 3. DIVIDENDS, ETC.
(a). So long as no portion of the Liabilities shall be due and
payable, the Pledgor shall be entitled to vote the Pledged Shares, to give
consents, waivers and ratifications in respect of the Pledged Shares and to
receive and retain cash dividends made on or in respect of the Pledged Shares;
provided, however, that any and all cash, stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions made on or
in respect of the Pledged Shares resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Shares or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of assets to which
the issuer thereof may be a party or otherwise, and any and all cash and other
property received in exchange for any Collateral shall be and become part of the
Collateral pledged hereunder and, if received by the Pledgor, shall be held by
the Pledgor in trust on behalf of and for the benefit of the Pledgee and shall
forthwith be delivered to the Pledgee or its designated nominee (accompanied, if
appropriate, by proper instruments of assignment and/or stock powers executed by
the Pledgor in accordance with the Pledgee's instructions) to be held subject to
the terms of this Agreement; and provided further that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair the
Collateral or the security interests granted hereby.
(b). Upon the nonpayment, when due, of any portion of the Liabilities,
all rights of the Pledgor pursuant to Section 3(a) hereof shall, at the election
of the Pledgee, cease, and the Pledgee shall have the sole and exclusive right
and authority to vote, to give consents, waivers and ratifications, and receive
all dividends and distributions pursuant to Section 3(a) hereof.
SECTION 4. REMEDIES. In the event that any portion of the Liabilities is
not paid when due, the Pledgee, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other person
(all and each of which demands, advertisements, and/or notices being hereby
expressly waived by the Pledgor), may forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give options to purchase, contract to sell or otherwise dispose of and
deliver the Collateral, or any part thereof, in one or more parcels at public or
private sales, at any exchange or broker's board or at any of the Pledgee's
offices or elsewhere, upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk, with the right upon any such
sale, public or private, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Pledgor, which right or
equity is hereby expressly waived and released by the Pledgor. The Pledgee
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Collateral or in any way relating to the
rights of the Pledgee hereunder (including reasonable attorney's fees and legal
expenses), to the payment in whole or in part of the Liabilities in such order
as it may elect, and only after such application of such net proceeds and after
the payment in full of the Liabilities by the Pledgee and any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need the Pledgee account for the
surplus, if any, to the Pledgor. The Pledgor agrees that the Pledgee need not
give more than ten days' notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition is to take
place and that such notice is reasonable notification of such matters. No
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notification need be given the Pledgor if, after any portion of the Liabilities
is not paid when due, it shall have signed a statement renouncing or modifying
any right to notification of any sale or other intended disposition. The
Pledgee shall not be obligated to make any sale pursuant to any such notice.
The Pledgee may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Pledgee until the selling price is paid by the purchaser
thereof, but the Pledgee shall incur no liability in the case of the failure of
such purchaser to take up and pay for the Collateral so sold and in case of any
such failure such Collateral may again be sold on like notice. The Pledgee,
however, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit at law or in equity to foreclose the pledge and security
interest under this Agreement and sell the Collateral, or any part thereof,
under a judgment or decree of a court of competent jurisdiction. In addition to
the rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to any portion of the
Liabilities, the Pledgee shall have all the rights and remedies of a secured
party under the Uniform Commercial Code. The Pledgor further agrees to waive
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents and warrants that (a) the Pledgor is the legal record and beneficial
owner of, and has good and marketable title to, the Pledged Shares, subject to
no perfected lien whatsoever except the lien created by this Agreement; (b) no
consent of any other person (including, without limitation, his creditors) and
no consent, license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by him in connection
with the execution, delivery or performance of this Agreement; (c) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation, or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Pledgor is a party or which purports to
be binding upon the Pledgor or upon any of the Pledgor's assets, and will not
result in the creation or imposition of any lien on any of the Pledgor's assets
except as contemplated by this Agreement; and (d) the Pledgor has delivered to
the Pledgee the Pledged Shares, with the certificates therefor duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, and the pledge,
assignment and delivery of the Pledged Shares pursuant to this Agreement creates
a valid lien on and a perfected security interest in the Pledged Shares, and the
proceeds thereof, subject to no prior lien, or to any agreement purporting to
grant to any third party a security interest in the Pledgor's property or assets
which would include the Pledged Shares. The Pledgor covenants and agrees that
the Pledgor will not sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, nor will the Pledgor
create, incur or permit to exist any perfected lien with respect to any part of
the Collateral, or any interest therein, or any proceeds thereof, except for the
lien created by this Agreement, without the prior written consent of the
Pledgee; and the Pledgor further covenants and agrees that the Pledgor will
defend the Pledgee's right, title and security interest in and to the Collateral
and the proceeds thereof against the claims and demands of all persons; and the
Pledgor further covenants and agrees to deliver to the Pledgee from time to time
on request such stock powers and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee may
request.
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SECTION 6. SALE OF THE PLEDGED SHARES.
(a). The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all of the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable to the seller than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall not be deemed to have been made in commercially
unreasonable manner by virtue of its private nature. The Pledgee shall be under
no obligation to delay a sale of any of the Pledged Shares for the period of
time necessary to permit the issuer thereof to register such securities for
public sale under the Securities Act or under applicable state securities laws
even if the issuer would agree to do so.
(b). The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Pledged Shares valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense.
SECTION 7. FURTHER ASSURANCE. The Pledgor agrees that, at any time and
from time to time upon the written request of the Pledgee, it will execute and
deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of the Agreement.
SECTION 8. AUTHORITY OF PLEDGEE.
(a). The Pledgee is hereby appointed the attorney-in-fact of the
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which the Pledgee may deem
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, provided that no
action may be taken by the Pledgee pursuant to such appointment so long as the
Liabilities are not yet due and payable. Without limiting the generality of the
foregoing, the Pledgee shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
(b). The Pledgee shall have and be entitled to exercise all such
powers hereunder as are specifically delegated to the Pledgee by the terms
hereof, together with such powers as are incidental thereto. The Pledgee may
execute any of its duties hereunder by or through agents or employees and shall
be entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither the
Pledgee, nor any director, officer or employee of the Pledgee, shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct. The Pledgor hereby agrees to reimburse the Pledgee, on demand, for
all reasonable expenses incurred by the Pledgee in connection with the
enforcement of this Agreement (including expenses incurred by any agent employed
by the Pledgee) and agrees to indemnify and hold harmless the Pledgee and/or any
such agent from and against any and all liability incurred by the Pledgee or
such agent hereunder or in connection herewith, unless such liability shall be
due to willful misconduct or negligence on the part of the Pledgee or such
agent.
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SECTION 9. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10. NO WAIVER, CUMULATIVE REMEDIES. The Pledgee shall not by any
act, delay, omission or otherwise be deemed to have waived any of its rights,
powers or remedies hereunder and no waiver shall be valid unless in writing,
signed by the Pledgee, and then only to the extent therein set forth. A waiver
by the Pledgee of any right, power or remedy hereunder on any one occasion shall
not be construed as a bar to the exercise of any right, power or remedy which
the Pledgee would otherwise have on any future occasion. No failure to
exercise, nor any delay in exercising, on the part of the Pledgee any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The rights, powers and remedies herein provided are cumulative and may
be exercised singly or concurrently, and are not exclusive of any rights, powers
or remedies provided by law.
SECTION 11. NOTICES. All notices, demands, requests and other
communications provided for or permitted under this Agreement shall be in
writing, either delivered in hand or sent by registered first class mail,
postage prepaid, or by facsimile with answer-back, addressed, if to the Pledgor,
to Robert D. Melin at his address as reflected in the records of the Pledgee
and, if to the Pledgee, to Chairman, Uniquip Corporation, 7701 Forsyth
Boulevard, Suite 600, Clayton, Missouri 63105 or to such other address as the
party to receive any such notice, demand, request or communication may have
designated by written notice to the other party, which notice complies as to
delivery with the terms of this Section 11.
SECTION 12. TERMINATION. Upon payment in full of the Liabilities in
accordance with their terms and the performance by the Pledgor of all of the
Pledgor's obligations under this Agreement, this Agreement shall terminate and
the Pledgor shall be entitled to the return, at the Pledgor's expense, of such
of the Collateral in the possession or control of the Pledgee as may have been
pledged by the Pledgor under this Agreement and which has not theretofore been
disposed of pursuant to the provisions hereof.
SECTION 13. MISCELLANEOUS. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon his successors and assigns, and shall,
together with the rights, powers and remedies of the Pledgee hereunder, inure to
the benefit of the Pledgee and its successors and assigns.
SECTION 14. AMENDMENTS; APPLICABLE LAW. None of the terms or provisions
of this Agreement may be amended except by an instrument in writing, duly
executed by the Pledgee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
conflicts of laws principles of such jurisdiction.
5
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and
delivered this Agreement on the day and year first above written.
PLEDGOR
/s/ Robert D. Melin
------------------------------
Robert D. Melin
PLEDGEE
UNIQUIP CORPORATION
BY: /s/ Peter S. Finley
--------------------------
Name: Peter S. Finley
Title: VP
6
<PAGE>
SCHEDULE 1
ISSUER OF CERTIFICATE NUMBER OF
PLEDGED SHARES CLASS NUMBER SHARES
-------------- ----- ----------- ---------
Uniquip Corporation Common 6 7,500
Stock
7
<PAGE>
PROMISSORY NOTE
$47,572.00 September 20, 1995
FOR VALUE RECEIVED, on or before ten (10) years from the date hereof, the
undersigned, Robert D. Melin (the "Maker"), promises to pay to the order of
Uniquip Corporation, a Delaware corporation (the "Lender"), at 7701 Forsyth
Boulevard, Suite 600, St. Louis, Missouri 63105, or at such other place as the
holder hereof may from time to time designate in writing, the principal sum of
forty-seven thousand five hundred seventy-two dollars ($47,572.00), or so much
thereof as shall be advanced or readvanced and from time to time remain unpaid,
plus interest on the principal balance thereof at a rate of six and fifty-six
hundredths (6.56%) per annum annually, which is the applicable federal rate for
debt instruments with a term in excess of nine (9) years, as determined by the
Internal Revenue Service in accordance with Section 1274(d) of the Internal
Revenue Code of 1986, as amended and in effect on the date hereof.
This Note shall be payable in successive annual installments of accrued
interest only, followed by one (1) final installment at maturity in the amount
of the then outstanding principal balance of this Note and all accrued and
unpaid interest thereon. Such consecutive annual installments shall be due on
each December 31 after the date hereof until the tenth anniversary of the date
hereof, the maturity date of this Note, when the entire principal balance of
this Note and all accrued and unpaid interest thereon, as well as all other
costs, fees or charges payable hereunder, if any, shall be due and payable in
full. Interest on this Note shall be calculated on a 360 day year, per diem
basis. All payments hereunder shall be made in lawful currency of the United
States and in immediately available funds.
This Note may be prepaid, in whole or in part, at any time without penalty
and shall be prepaid in full at such time as the Maker shall sell all or any
part of the Pledged Shares (as such term is defined in that certain Stock Pledge
Agreement of even date herewith between the Maker and the Lender). Any partial
prepayments shall not, however, relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due.
The Maker (i) waives presentment, demand, protest and notice of
presentment, notice of protest and notice of dishonor of this debt and each and
every other notice of any kind with respect to this Note, (ii) agrees that the
holder of this Note, at any time or times, without notice to it or its consent,
may grant extensions of time, without limit as to the number or the aggregate
period of such extensions, for the payment of any sums due hereunder, and (iii)
to the extent not prohibited by law, waives the benefit of any law or rule of
law intended for its advantage or protection as an obligor hereunder or
providing for its release or discharge from liability under this Note, in whole
or in part, on account of any facts or circumstances other than full and
complete payment of all amounts due hereunder.
In the event any one or more of the provisions contained in this Note or
any of the other security documents shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note or such other
security document, but this Note and the other security documents shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein or therein.
<PAGE>
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is secured by a certain Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement") by and between the Maker and the Lender.
(This Note and the Stock Pledge Agreement, together with all extensions,
renewals and modifications thereof and substitutions therefor, being herein
collectively referred to as the "security documents").
All of the terms, covenants, provisions, conditions, stipulations, promises
and agreements contained in the security documents to be kept, observed and
performed by the Maker are hereby made a part of this Note and incorporated
herein by reference to the same extent and with the same force and effect as if
they were fully set forth herein, and the Maker promises and agrees to keep,
observe and perform them, or cause them to be kept, observed and performed,
strictly in accordance with the terms and provisions thereof.
The Maker warrants and represents that the loan evidenced hereby is being
made for business or investment purposes.
This Note shall be governed in all respects by the laws of Missouri and
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
Oral agreements or commitments to loan money, extend credit or to forbear
from enforcing repayment of a debt including promises to extend or renew such
debts are not enforceable. To protect the Maker and the Lender, or any holder
of this Note, from misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is the complete and
exclusive statement of the agreement between us, except as we may later agree in
writing to modify it.
WITNESS:
/s/ James H. Hook /s/ Robert D. Melin (SEAL)
- ----------------------------------- ----------------------------------------
Robert D. Melin
Maker
2
<PAGE>
UNIQUIP CORPORATION
Exhibit 10.21
September 20, 1995
Mr. Robert D. Melin
TRAK International, Inc.
369 West Western Avenue
Port Washington, WI 53704
Dear Mr. Melin,
Reference is made to that promissory note (the "Note") dated today made by
you in connection with the sale by Uniquip Corporation (the "Corporation") to
you of seven thousand five hundred (7,500) shares of the Corporation's Common
Stock. The Corporation hereby promises to compensate you for so long as you
are employed by the Corporation or its subsidiaries, by bonus or otherwise
and in addition to any other compensation (including bonus) payable to you,
in amounts sufficient to allow you to pay (i) interest on the Note as and
when such interest becomes due and payable, (ii) approximately all federal
and state income, determined solely with respect to your aggregate
compensation from the Corporation and its subsidiaries, taxes that you will
incur as a consequence of the receipt of amounts paid under clause (i) and
(ii) of this letter.
Very truly yours,
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
------------------------------------
Peter S. Finley
Vice President
<PAGE>
AMENDMENT TO PROMISSORY NOTE AND
STOCK PLEDGE AGREEMENT
AMENDMENT TO PROMISSORY NOTE AND STOCK PLEDGE AGREEMENT (the "Agreement"),
dated September 30, 1996, by and among Omniquip International, Inc., a Delaware
corporation formerly known as Uniquip Corporation (the "Corporation"), and
Robert D. Melin (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Corporation sold seventy-five thousand (75,000) shares (as
adjusted for stock splits effected or to be effected prior to the effective date
of this Agreement) of its Common Stock, par value $.01 per share (the "Shares"),
to the Stockholder at an aggregate purchase price of forty-seven thousand six
hundred forty-seven dollars ($47,647.00);
WHEREAS, in connection with the sale of the Shares to the Stockholder: (i)
the Stockholder and the Corporation entered into a Purchase and Stockholder
Agreement (the "Stockholder Agreement"), dated September 20, 1995; (ii) the
Stockholder executed and delivered a Promissory Note, dated September 20, 1995,
payable to the order of the Corporation in the principal amount of forty-seven
thousand five hundred seventy-two dollars ($47,572.00) (the "Stockholder Note");
and (iii) the Stockholder and the Corporation entered into a Stock Pledge
Agreement (the "Stock Pledge Agreement"), dated September 20, 1995, pursuant to
which the Stockholder pledged the Shares as security for the performance of his
obligations under the Stockholder Note; and
WHEREAS, the parties hereto desire (i) to modify the Stockholder Note and
(ii) to amend the Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MODIFICATION OF STOCKHOLDER NOTE. The third paragraph of the
Stockholder Note is hereby amended and restated on the Effective Date to read in
its entirety as follows:
"This Note may be prepaid, in whole or in part, at any time without
penalty. Upon the sale or other transfer of any of the Pledged Shares (as
such term is defined in that certain Stock Pledge Agreement, dated
September 20, 1995, by the Maker in favor of the Lender (as the same may be
amended, modified or supplemented, the "Stock Pledge Agreement")), a
prepayment of this Note shall be made in an amount equal to the then
outstanding principal balance of this Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Notwithstanding the preceding sentence, no
prepayment hereunder shall be required in connection with any transfer of
the Pledged Shares to the Lender upon the exercise of any option granted to
the Maker under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), PROVIDED that as a condition to such transfer, the Maker
agrees to deliver to the Lender the certificates evidencing the shares
issued upon exercise of such option (accompanied by duly executed stock
powers) and subjects such shares to the lien of the Stock Pledge Agreement
in substitution for the Pledged Shares so transferred. Any partial
prepayments hereunder shall not relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due."
<PAGE>
B. AMENDMENT TO STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended on the Effective Date as follows:
1. by deleting Schedule 1 thereto in its entirety and inserting in lieu
thereof the schedule attached hereto as Schedule 1
2. by deleting the definition of the term "Liabilities" therein and
inserting in lieu thereof the following:
"The term "Liabilities," as used herein, shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith, as may be amended, modified or supplemented
from time to time (the "Stockholder Note")."
3. by inserting a new Section 15 as follows:
"Section 15. TRANSFER AND PARTIAL RELEASE OF SHARES. The Pledgee agrees
that the Pledgor may sell or otherwise transfer all or any portion of the
Pledged Shares without the prior consent of the Pledgee, PROVIDED THAT
prior to or simultaneous with such sale or transfer a prepayment of the
Stockholder Note is made in an amount equal to the then outstanding
principal balance of the Stockholder Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Upon such prepayment, the Pledgee shall
deliver to the Pledgor certificates evidencing the Pledged Shares being
sold or transferred, registered in such names as the Pledgor may request,
PROVIDED that the Pledgor shall be responsible for any transfer or similar
tax arising by reason of any such transfer.
Notwithstanding the foregoing, the Pledgor may transfer all of the Pledged
Shares to the Pledgee upon the exercise of any option granted to the
Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note,
PROVIDED that as a condition to such transfer, the Pledgor agrees to
deliver to the Pledgee the certificates evidencing the shares issued upon
exercise of such option (accompanied by duly executed stock powers) and
subjects such shares to the lien of this Stock Pledge Agreement in
substitution for the Pledged Shares so transferred."
D. WAIVER OF STOCKHOLDER AGREEMENT RESTRICTIONS. Notwithstanding anything
to the contrary contained in the Stockholder Agreement, the Pledgor may transfer
all of the Pledged Shares to the Pledgee upon the exercise of any option granted
to the Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note, PROVIDED
that as a condition to such transfer, the Pledgor agrees to deliver to the
Pledgee the certificates evidencing the shares issued upon exercise of such
option (accompanied by duly executed stock powers) and subjects such shares to
the lien of this Stock Pledge Agreement in substitution for the Pledged Shares
so transferred
E. EFFECTIVE DATE. This Agreement and each of the amendments effected
hereby shall become effective on the date the Corporation's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Corporation's Common Stock becomes effective under the Act (the "Effective
Date"). Until the Effective Date, the Stockholder
- 2 -
<PAGE>
Note, the Stock Pledge Agreement and the Stockholder Agreement, as in effect on
the date hereof, shall remain in full force and effect without giving effect to
this Agreement. On and after the Effective Date, the Stockholder Note, the
Stock Pledge Agreement and the Stockholder Agreement, as modified hereby shall
continue to be in full force and effect and each is hereby ratified and
confirmed in all respects.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Missouri (without giving effect to such
jurisdiction's conflict of laws principles).
G. HEADINGS. The headings and captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
H. LEGEND. The Corporation shall cause the following legend to be typed
onto the face of the Stockholder Note:
"This Promissory Note has been modified pursuant to an Amendment to
Promissory Note and Stock Pledge Agreement, dated September 20, 1995, by
and between the Maker and the Lender, dated September 30, 1996."
I. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ Philip G. Franklin
--------------------------------------
Name: Philip G. Franklin
Title: Chief Financial Officer
/s/ Robert D. Melin
----------------------------------------
Robert D. Melin
- 4 -
<PAGE>
Schedule 1
Issuer of Certificate Number of
Pledged Shares Class Number Shares
- --------------------- ----- ----------- ---------
Omniquip International, Inc. Common 75,000
- 5 -
<PAGE>
Exh - 10.23
PURCHASE AND STOCKHOLDER AGREEMENT
This Purchase and Stockholder Agreement, made this September 20, 1995,
between Uniquip Corporation, a Delaware corporation (the "Corporation") and
Paul D. Roblee (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Corporation is authorized to issue One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par value One Cent ($.01) per
share (the "Common Stock");
WHEREAS, the Executive is an executive employee of TRAK International,
Inc., a Subsidiary of the Corporation;
WHEREAS, the Executive has offered to purchase from the Corporation
seven thousand five hundred shares (7,500) shares of the Common Stock,
representing Seventy-Five Hundredths Percent (.75%) of the then issued and
outstanding shares of the Common Stock on a fully diluted basis, at an
aggregate price of Forty-Seven Thousand Six Hundred Forty-Seven Dollars
($47,647.00) (the "Purchase Price"), and the Corporation has agreed to accept
such offer to purchase such shares of the Common Stock, subject to the right
of the Corporation to purchase all of the shares of the Common Stock now
owned or hereafter acquired by the Executive in certain circumstances; and
WHEREAS, the Corporation and the Executive desire to set forth their
understandings and agreements with respect to restrictions on certain
transfers of shares of the Common Stock now owned or hereafter acquired by
the Executive, the right of the Corporation to purchase all of the shares of
the Common Stock now owned or hereafter acquired by the Executive in certain
circumstances and certain other matters; including provisions with respect to
the Executive's post-termination employment and/or interest in competing
enterprises; and
<PAGE>
WHEREAS, the Corporation and the Executive acknowledge and agree that
the restrictions on certain transfers of shares of the Common Stock now owned
or hereafter acquired by the Executive further the Corporation's interest by
having shares of the Common Stock owned by full time employees of the
Corporation and its Subsidiaries, and that other provisions hereof are
consistent with the bonafide interests of the Corporation and of other full
time employees of the Corporation and its Subsidiaries; and
WHEREAS, it is recognized and acknowledged by the Executive that the
success of the Corporation and its Affiliates, including the Majority
Stockholder and other stockholders of the Corporation, is attributable in
major part to the manner by which the Corporation and its Affiliates source
and evaluate acquisition candidates and integrate their acquisitions,
referred to as the "Harbour Group Culture", all of which involve special and
proprietary techniques, procedures and training; and
WHEREAS, in order for the Executive to make a meaningful contribution in
his job, the Executive must learn and practice the intricacies of the
Corporation's and Harbour Group's procedures and know-how, benefit from the
collective Harbour Group experience in implementation of the "Harbour Group
Culture" and work with a small group of executives who have also learned the
intricacies of the "Harbour Group Culture", pursuant to which executives
engaged in acquisitions, finance, and operations work in concert; and
WHEREAS, Harbour Group enjoys a reputation in the business community of
the United States and elsewhere with particular but not exclusive reference
to its reputation among institutional investors, commercial banking
institutions, investment bankers, business brokers and sellers and buyers of
business enterprises; and
WHEREAS, the Executive's reputation will be enhanced and his experience
will be enhanced by his relationship with the Corporation and with Harbour
Group; and
2
<PAGE>
WHEREAS, the Executive acknowledges that special harm and injury will or
may be sustained by the Corporation and the Majority Stockholder and other
stockholders should acts otherwise prohibited herein nonetheless be taken.
NOW THEREFORE, in consideration of the mutual covenants, agreements and
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
1. DEFINITIONS.
a. "Act" shall mean the Securities Act of 1933, as amended.
b. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person. "Affiliate of
the Majority Stockholder" shall not include any full-time employee of the
Corporation or any Subsidiary.
c. "Benefits" shall mean Health and Welfare Plans in accordance
with the current policies of the Corporation or any Subsidiary by which the
Executive is employed.
d. "Benefits Period" shall have the meaning set forth in Paragraph 26.
e. "Bona Fide Employee's Offer" shall have the meaning set forth
in Paragraph 4.
f. "Cause" shall mean (i) the material breach by the Executive of
this Agreement, including without limitation, any breach of Paragraphs 9 and
10; (ii) the Executive's dishonesty in connection with the business of the
Corporation or any Subsidiary which is materially detrimental to the best
interests of the Corporation or any Subsidiary; (iii) the Executive's
conviction of a felony crime; (iv) any material act or omission by the
Executive during his employment with the Corporation or any Subsidiary
involving willful malfeasance or gross negligence in the performance of his
duties to the Corporation or any such Subsidiary; or (v) any other act or
omission by the Executive during his employment in the Corporation or any
3
<PAGE>
Subsidiary which provides the Corporation with a ground for terminating the
Executive's employment for cause under the employment law of the state in
which the Corporation's principal place of business is located.
g. "Common Stock" shall have the meaning set forth in the first
WHEREAS clause.
h. "Health and Welfare Plans" shall mean employee life, health
and disability insurance plans or other fringe benefit programs, if any,
maintained by the Corporation or any Subsidiary by which the Executive is
employed.
i. "Majority Stockholder" shall have the meaning set forth in
Paragraph 14.
j. "New Issue Securities" shall have the meaning set forth in
Paragraph 16.
k. "Note" means the Promissory Note of the Executive issued to
the Corporation dated the date hereof in an original principal amount which
is the Purchase Price minus seventy-five dollars ($75.00).
l. "100% Purchaser" shall have the meaning set forth in Paragraph
14. m."Ordinary Course of Business" means the conduct of the business and
affairs of the Corporation or its Subsidiaries in the usual and ordinary
course and in a manner which advances the purposes, and is in the best
interest, of the Corporation and its Subsidiaries.
m. ""Ordinary Course of Business'' means the conduct of the
business and affairs of the Corporation or its Subsidiaries in the usual and
ordinary course and in a manner which advances the purposes, and is in the
best interest, of the Corporation and its Subsidiaries.
n. "Permanent Disability" shall have the meaning set forth in
Paragraph 26.
o. "Person" means any individual, corporation, firm, partnership
or other business entity.
p. "Post-Employment Restriction Period" shall have the meaning
set forth in Paragraph 26.
q. "Prime Rate" means the annual rate of interest designated as
the "prime rate" in the listing of "money rates" as published from time to
time in THE WALL STREET JOURNAL, or if such
4
<PAGE>
publication is discontinued, the rate published as the "prime rate" or "base
rate" from time to time by any similar or successor publication designated by
the Board of Directors of the Corporation.
r. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of the Corporation or its Affiliates including,
without limitation, methods of operation, customers and customer lists,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices, fees, costs, plans, designs, technology, know-how, software,
marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters of the
Corporation or any of its Affiliates.
s. "Publicly Traded," with respect to the Common Stock, means
listed for trading on any national or regional securities exchange or quoted
on the National Association of Securities Dealers Automated Quotation system
or a successor system.
t. "Purchase Price" shall have the meaning set forth in the third
WHEREAS clause.
u. "Registration Notice" shall have the meaning set forth in
Paragraph 15.
v. "Sale of Control Notice" shall have the meaning set forth in
Paragraph 14.
w. "Securities Laws" means, collectively, the Act and all other
applicable state securities laws.
x. "Shares" shall have the meaning set forth in Paragraph 2.
y. "Stockholder's Included Shares" shall have the meaning set
forth in Paragraph 14.
z. "Stockholder's Registered Shares" shall have the meaning set
forth in Paragraph 15.
5
<PAGE>
aa. "Subsidiary" shall mean any corporation or other entity of
which the Corporation directly or indirectly owns beneficially or of record
fifty percent (50%) or more of (i) the outstanding shares of capital stock if
such entity is a corporation or (ii) the outstanding ownership interests if
such entity is not a corporation.
ab. "Written Notice" shall have the meaning set forth in
Paragraph 4.
2. SCOPE OF AGREEMENT. This Agreement shall apply to all transfers of
shares of Common Stock owned by the Executive or any of his transferees
(direct or indirect, including without limitation the Executive's personal or
legal representatives, successors and assigns), whether such shares are now
owned or hereafter acquired (collectively the "Shares"), and whether such
transfers are voluntary, involuntary or by operation of law, resulting from
death or otherwise.
3. RESTRICTIONS ON THE TRANSFER OF SHARES.
a. Except as otherwise provided in Paragraphs 3b, 3c, 3d, 4, 11,
12, 14 and 15 of this Agreement, neither the Executive nor any of his
transferees (direct or indirect, including without limitation the Executive's
personal or legal representatives, successors and assigns) shall or may sell,
exchange, deliver, assign, bequeath or give, pledge, mortgage, hypothecate or
otherwise encumber, transfer or permit to be transferred, or otherwise
dispose of, any or all of the Shares, whether voluntarily, involuntarily or
by operation of law (including without limitation the laws of bankruptcy,
intestacy, descent and distribution and succession).
b. In the event of the Executive's death, the Shares may be
transferred to the Executive's personal or legal representatives, estate or
distributees of such estate, and such transfer shall be registered on the
stock transfer books of the Corporation.
c. In the event that shares of the Common Stock shall be Publicly
Traded, the right of the Corporation under Paragraphs 11 and 12 of this
Agreement to purchase the Shares which are then owned by the Executive or any
representative, successor or transferee of the Executive
6
<PAGE>
shall lapse but all of the other provisions of this Agreement shall continue
in full force and effect. On the fourth anniversary of the date on which
shares of the Common Stock are first Publicly Traded, the restrictions on the
transfer of the Shares contained in Paragraphs 3a, 4, 5 and 7 of this
Agreement shall lapse; provided, however, that in the event of the death of
the Executive prior to the date of such fourth anniversary, all of the Shares
owned by the Executive on the date of his death may be sold without any
restriction imposed by this Agreement.
d. Provided that such action is not objected to by any
underwriter then engaged in discussions with the Corporation regarding public
offerings of the Corporation's securities and the Corporation has reasonably
determined that such action will not adversely affect the market for its
securities, the Corporation shall, upon the request of the Executive at the
following times, permit the Executive to sell or otherwise transfer without
regard to Paragraphs 3a, 4, 5 and 7 of this Agreement a portion of the Shares
not to exceed the whole number of Shares equaling the following percentage of
the number of Shares (adjusted for any intervening conversion, stock split,
stock dividend or the like) held by the Executive on the date on which the
Common Stock is first Publicly Traded:
(i) after the first anniversary of the date on which the
Common Stock is first Publicly Traded, twenty-five percent (25%);
(ii) after the second anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative fifty percent (50%); and
(iii) after the third anniversary of the date on which the
Common Stock is first Publicly Traded, a cumulative seventy-five percent
(75%).
4. RIGHT OF FIRST REFUSAL WITH RESPECT TO THE SALE OF THE SHARES TO
EMPLOYEES OF THE CORPORATION.
a. In the event that the Executive shall receive a Bona Fide
Employee's Offer (hereinafter defined) to purchase any or all of the Shares
and the Executive desires to accept such Bona Fide Employee's Offer, the
Executive shall promptly send Written Notice (hereinafter
7
<PAGE>
defined) to the Corporation, offering to sell such Shares to the Corporation
in accordance with subparagraph 4c hereof, at the same price and upon the
same terms and conditions as are contained in the Bona Fide Employee's Offer.
Such offer shall be irrevocable for a period of ninety (90) days from the
receipt of Written Notice by the Corporation. The Written Notice shall
contain a true and complete copy of the Bona Fide Employee's Offer, setting
forth the price and all terms and conditions of such offer, as well as the
name(s), address(es) (both home and office), and business(es) or
occupation(s) of the third party offeror (or offerors). The Written Notice
shall be accompanied by evidence that sufficient funds are available to the
third party offeror (or offerors) to carry out the terms of such offer. Any
Written Notice that does not contain all such requisite information shall not
be considered a "Written Notice" for purposes of this subparagraph 4a.
b. As used in this Agreement, the term "Bona Fide Employee's Offer"
shall mean a legally enforceable offer in writing, made and signed by a
person who is then a full time employee of the Corporation or any Subsidiary
and who is financially capable of carrying out the terms of such Bona Fide
Employee's Offer.
c. Whenever a Bona Fide Employee's Offer to purchase Shares has
been received by the Executive, and Written Notice thereof has been sent to
the Corporation, the following procedure shall be complied with: For a
period of ninety (90) days from its receipt of such Written Notice, the
Corporation shall have the right, in its sole discretion, without obligation,
to purchase all (but no less than all) of the Shares so offered. If the
Corporation elects to purchase all of the Shares so offered, it must send
Written Notice thereof to the Executive within said ninety (90) day period.
If the Corporation does not elect to purchase the Shares so offered within
the prescribed time period, the Executive shall have the right to accept the
Bona Fide Employee's Offer in whole (but not in part) and to sell such
Shares, subject to the provisions and restrictions of this Agreement, but
only in strict accordance with all of the provisions of the Bona Fide
Employee's Offer and only if (i) the sale is fully consummated within one
hundred and twenty (120) days after the mailing of the initial Written Notice
to the Corporation and (ii) the Executive
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has prepaid the Note in accordance with its terms. In the event that such
sale is not fully consummated within one hundred and twenty (120) days after
the mailing of the Written Notice, the provisions of this Paragraph 4 must
again be complied with by the Executive.
5. AGREEMENT BINDING UPON TRANSFEREES. In the event that any Shares
are transferred to any Person, at any time or from time to time, by operation
of law or pursuant to the provisions of Paragraphs 3 or 4 hereof, the
transferee(s) shall agree in writing (for and on behalf of himself or itself,
his or its personal or legal representatives, transferees, successors and
assigns) to be bound by all provisions of this Agreement as a party hereto.
Prior to any such transfer, the transferee shall provide the Corporation with
the transferee's written agreement so to be bound. In the absence of any
such written agreement no such transfer shall be effective for any purpose,
but the failure to obtain such written agreement shall in no way diminish the
applicability of the provisions hereof. Without limiting the generality of
the preceding provisions of this Paragraph 5, in the event that any Shares
are transferred to any full time employee of the Corporation or any
Subsidiary pursuant to the provisions of Paragraph 4, such full time employee
shall agree in writing to be bound by all provisions of this Agreement,
including without limitation the provisions of Paragraph 12, and such
employee shall be deemed thereafter to be the Executive in respect of the
Shares transferred to such employee as if initially named in this Agreement
and shall be subject as such to the provisions of this Agreement, PROVIDED
THAT the price at which the Corporation may purchase the Shares from such
employee pursuant to Paragraph 11 shall be the price at which the Shares were
sold to such employee pursuant to Paragraph 4. Prior to any such transfer,
the transferee shall provide the Corporation with the transferee's written
agreement so to be bound. In the absence of any such written agreement no
such transfer shall be effective for any purpose, but the failure to obtain
such written agreement shall in no way diminish the applicability of the
provisions hereof.
6. STOCK TRANSFER RECORD. The Corporation shall keep a stock transfer
book in which shall be recorded, among other things, the name and address of
each of its stockholders. No transfer of any Shares shall be effective or
valid unless and until recorded in such stock transfer
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book. The Corporation shall not record any transfer of Shares in such stock
transfer book unless the transfer is in strict compliance with all provisions
of this Agreement. The Executive agrees that, in the event he desires to
make a transfer within the provisions hereof, he shall furnish to the
Corporation such evidence of his compliance with this Agreement and that the
proposed transfer may be effected without registration under the Securities
Laws as from time to time may be required by the Board of Directors of, or
counsel for, the Corporation.
7. ENTRY OF LEGENDS UPON STOCK CERTIFICATES. Each certificate
representing Shares shall bear the following legends:
"The encumbering, transfer or other disposition
(including, without limitation, any transfer or
disposition pursuant to the laws of bankruptcy,
intestacy, descent and distribution and succession) of
the shares of common stock evidenced by the within
Certificate is restricted under the terms of a Purchase
and Stockholder Agreement, dated August ___, 1995,
between Uniquip Corporation (the "Corporation") and Paul
D. Roblee, a copy of which Agreement is on file at the
principal office of the Corporation. Such shares are
also subject to a voting agreement contained in said
Purchase and Stockholder Agreement. Upon written request
of any stockholder of the Corporation, the Corporation
shall furnish, without charge to any such stockholder, a
copy of said Purchase and Stockholder Agreement."
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended,
or any state securities law (collectively, the
"Securities Laws") and may not be sold, transferred or
otherwise disposed of unless (i) a registration statement
covering such shares is effective under the Securities
Laws or (ii) the transaction is exempt from registration
under the Securities Laws and, if the Corporation
requests, an opinion satisfactory to the Corporation to
such effect has been rendered by counsel."
8. DELIVERY OF SHARES AND DOCUMENTS. Upon the closing of any purchase
of any Shares pursuant to Paragraph 4 of this Agreement, the Executive shall
deliver to the purchaser the following: the certificate or certificates
representing the Shares being sold, duly endorsed for transfer and bearing
such documentary stamps, if any, as are necessary, and such assignments,
certificates of authority, tax releases, consents to transfer, instruments
and evidences of title of the Executive and of the Executive's compliance
with this Agreement as may be reasonably required by the purchaser or by
counsel for the purchaser.
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9. COVENANT NOT TO DISCLOSE.
a. The Executive covenants and agrees that he will not, during the
period of his employment with the Corporation or at any time thereafter,
except with the express prior written consent of the Chairman and Chief
Executive Officer of Harbour Group Ltd., any successor to Harbour Group Ltd.
or their respective designees, directly or indirectly disclose, communicate
or divulge to any Person, or use for the benefit of any Person, any
Proprietary Information. The restriction contained in the preceding sentence
shall not apply to any Proprietary Information that (i) is a matter of public
knowledge (which shall include knowledge in the industries in which the
Corporation or its Subsidiaries are engaged) on the date of this Agreement,
(ii) becomes a matter of public knowledge (which shall include knowledge in
the industries in which the Corporation or its Subsidiaries are engaged)
after the date of this Agreement from another source which is under no
obligation of confidentiality to the Corporation or its Affiliates or (iii)
that is furnished in the Ordinary Course of Business to Persons which sell,
provide or propose to sell or provide goods or services to the Corporation or
its Subsidiaries or which purchase, obtain or propose to purchase or obtain
goods or services from the Corporation or its Subsidiaries.
b. All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or
has been furnished to the Executive or which may be produced, prepared or
designed by the Executive in connection with his employment with the
Corporation shall be, become and remain the exclusive property of the
Corporation. Upon the termination of the Executive's employment with the
Corporation, all originals, copies and reprints in the Executive's
possession, custody, or control shall be promptly surrendered and/or
delivered to the Corporation, and the Executive shall thereafter make no
further use, either directly or indirectly, of any such data, designs,
drawings, blueprints, tracings, sketches, plans, layouts, specifications,
models, programs, cards, tapes, disks, printouts, writings, manuals, guides,
notes or other memoranda or written information.
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10. COVENANTS NOT TO COMPETE.
a. The Executive covenants and agrees that he will not at any time
during his employment with the Corporation and thereafter for the applicable
Post-Employment Restriction Period, except with the express prior written
consent of the Chairman and Chief Executive Officer of Harbour Group Ltd.,
any successor to Harbour Group Ltd. or their respective designees, directly
or indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, shareholder (except as the holder of not more than one percent
(1%) of the outstanding shares of a corporation whose stock is listed on any
national or regional securities exchange or reported by the National
Association of Securities Dealers Automated Quotations System or any
successor thereto) either (i) establish any Person that competes with the
Corporation or any of its Subsidiaries or (ii) be affiliated or connected
with any Person that carries on any business within the states of Wisconsin,
Illinois and Missouri, the states contiguous thereto, elsewhere in the United
States and the world, that is competitive with the business of the
Corporation or any of its Subsidiaries in a capacity which is competitive in
any of its duties, responsibilities or activities with the business of the
Corporation or any of its Subsidiaries. Without limiting the generality of
the preceding sentence, the Executive covenants and agrees that he will not
directly or indirectly solicit, divert or accept business from or otherwise
take away or interfere with any customer of the Corporation or any of its
Subsidiaries, including without limitation any Person who was a customer or
whose business was being pursued by the Corporation or any of its
Subsidiaries within (x) the period of the Executive's employment with the
Corporation, (y) one (1) year prior to such employment or (z) one (1) year
after the termination of such employment, including all customers directly or
indirectly produced or generated by the Executive. The parties further agree
that if the Executive becomes affiliated or connected with any Person
described in clause (ii) of this Paragraph 10(a) during either his employment
with the Corporation or the Post-Employment Restriction Period, the Executive
shall be obliged to show by clear and convincing evidence that none of his
duties, responsibilities or activities entail employment in a capacity which
has been, is or is likely to become, competitive with the business of the
Corporation or any of its Subsidiaries. The parties hereto
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agree that the covenant contained in clause (ii) of this Paragraph 10(a)
shall be construed as a series of separate covenants, one for each state or
other geographic area specified in such clause and, except for geographic
coverage, each separate covenant shall be deemed identical.
b. The Executive further covenants and agrees that he will not for
a period of three (3) years after the termination of his employment
hereunder, except with the express prior written consent of the Chairman and
Chief Executive Officer of Harbour Group Ltd., any successor to Harbour Group
Ltd. or their respective designees, directly or indirectly, accept
employment, be employed by or be a principal of any business or enterprise
operating within the United States which then employs or has as a principal
or holder of any interest therein (except as the holder of not more than one
percent (1%) of the outstanding shares of a corporation whose shares are
publicly traded) any individual who was previously employed in a managerial
or executive position with the Corporation or any of its Affiliates, provided
however, that this prohibition shall not be applicable if (i) such business
or enterprise does not compete with the Corporation or its Affiliates, or
(ii) (x) such business or enterprise engages in activities which do compete
and other activities which do not compete with the Corporation or its
Affiliates, (y) the Executive and the other individual who was previously
employed by the Corporation or any of its Affiliates are employed by such
business or enterprise in connection with activities which in no way compete
with the Corporation or its Affiliates and (z) neither the Executive nor the
other individual who was previously employed by the Corporation or its
Affiliates is or proposes to be a principal of such business or enterprise.
c. If any provision of the covenants and agreements set forth above
shall be held invalid or unenforceable because of the scope of the territory
or the actions thereby restricted, or the period of time within which such
covenant or agreement is operative, or for any other reason, it is the intent
of the parties hereto that such provision shall be construed by limiting and
reducing it, or, if necessary, eliminating it so that the provisions hereof
be valid and enforceable to the extent compatible with applicable law as
determined by a court of competent jurisdiction.
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11. OPTION TO PURCHASE THE SHARES.
a. In the event that the Executive breaches any of the covenants
contained in Paragraphs 9 or 10, the Corporation shall have the right, but is
not required, to purchase all of the Shares which are then owned by the
Executive or any representative, successor or transferee of the Executive.
Any right to purchase under this Paragraph 11 shall be exercised in writing
within sixty (60) days of the date on which the Corporation becomes aware
that any such breach has occurred. Settlement shall be held at the principal
office of the Corporation at such date and time within ninety (90) days from
the time that the notice of intent to exercise required by this subparagraph
11a has been sent by the Corporation as shall be selected by the Corporation.
For purposes of this subparagraph 11a, (i) the Executive shall be
conclusively deemed and considered to own all Shares owned by himself, his
estate, his executors or administrators, his distributees and his personal
and legal representatives, and (ii) no Shares owned by a transferee of the
Executive other than those transferees referred to in clause (i) above shall
be subject to purchase by the Corporation. Except as otherwise provided in
Paragraph 5, the purchase price for such Shares shall be the original
principal amount of the Note.
b. The purchase price for the Shares purchased pursuant to
subparagraph 11a above shall be paid by delivering to the Executive or any
transferee of the Executive referred to in subparagraph 11a(i) above the Note
marked paid in full, together with the Corporation's check in the amount, if
any, by which the purchase price exceeds the principal balance then
outstanding on the Note.
12. MANDATORY PURCHASE OF THE SHARES.
a. If the Executive's employment with the Corporation terminates
for any reason (including his death) and if shares of the Common Stock are
not Publicly Traded on the date of such termination, the Corporation shall
repurchase to the extent it may lawfully do so, and the Executive or each
transferee of the Executive under subparagraph 3b shall sell to the
Corporation, the Shares then owned by the Executive. For purposes of this
subparagraph 12a,
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the Executive shall be conclusively deemed and considered to own all Shares
owned by himself, his estate, his executors or administrators, his
distributees and his personal and legal representatives and any other
transferee. Settlement shall be held at the principal office of the
Corporation at such date and time within one hundred and twenty (120) days of
the termination of the Executive's employment as shall be selected by the
Corporation. The purchase price for such Shares shall be their book value,
as computed by the Corporation's internal auditing staff and certified by the
chief financial officer of Harbour Group Ltd. (or any successor to Harbour
Group Ltd.), as of the last day of the month preceding the month in which the
Executive's employment was terminated, which certification shall be final and
binding; provided, however, that the purchase price for shares purchased
pursuant to this subparagraph 12a shall not be less than eighty percent (80%)
of the Purchase Price.
b. The purchase price for the Shares purchased pursuant to
subparagraph 12a above shall be paid in the following manner:
(i) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is not greater than one
hundred thousand dollars ($100,000.00), the Corporation shall pay the
purchase price for the Shares by (a) returning to the Executive or any
transferee referred to in subparagraph 12a above the Note marked "paid in
full", and (b) paying by cash or check the difference between the purchase
price of the Shares and the principal balance, plus accrued interest, due on
the Note.
(ii) If the purchase price for the Shares, as determined
pursuant to subparagraph 12a above, exceeds the principal balance, plus
accrued interest, due on the Note and such excess is greater than one hundred
thousand dollars ($100,000.00), the Corporation shall pay the purchase price
in installments as follows: (a) the first installment by (1) returning to
the Executive or any transferee referred to in subparagraph 12a above the
Note marked "paid in full", and (2) paying by cash or check one hundred
thousand dollars ($100,000.00) and (b) annual
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installments thereafter by paying by cash or check an amount equal to the
lesser of one hundred thousand dollars ($100,000.00) and the balance of the
purchase price remaining outstanding on the date each installment is due,
plus interest on such outstanding balance calculated at a rate equal to the
Prime Rate on such due date. The Corporation shall be entitled to prepay all
or any portion of the purchase price, plus interest thereon, at any time
without penalty.
(iii) If the purchase price for the Shares, as determined
pursuant to Paragraph 12a above, does not exceed the principal balance, plus
accrued interest, due on the Note, then the purchase price shall be paid by
crediting amounts due under the Note, up to the purchase price amount, with
such credit applied first to accrued interest due under the Note then to
principal.
13. CONFLICT BETWEEN PARAGRAPHS. Notwithstanding any other provision
of this Agreement to the contrary, to the extent that there shall be any
conflict between the provisions of Paragraphs 3 or 4 and the provisions of
Paragraph 11 in regard to the right of the Corporation to purchase the Shares
from the Executive, the provisions of Paragraph 11 shall control, and to the
further extent that there shall be any conflict between the provisions of
Paragraphs 11 and 12 in regard to the right or obligation of the Corporation
to purchase the Shares from the Executive, the provisions of Paragraph 11
shall control.
14. SALE OF CONTROL.
a. In the event that the holder of more than fifty percent (50%) of
the outstanding shares of the Common Stock or more than fifty percent (50%)
of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock (in either case, the "Majority Stockholder") shall seek to sell more
than fifty percent (50%) of the outstanding shares of the Common Stock to a
Person which is not an Affiliate of the Majority Stockholder (other than an
underwriter in connection with an offering pursuant to a registration
statement filed under the Act), the Executive shall be provided a written
notice which specifies the identity of the proposed purchaser, the number of
shares of the Common Stock proposed to be purchased and the consideration
proposed to be paid by such
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purchaser for each share of the Common Stock (the "Sale of Control Notice").
The Executive shall have the option, exercisable in writing within ten (10)
calendar days of the mailing of the Sale of Control Notice, to require the
Majority Stockholder to include in such proposed sale the number of Shares
(the "Stockholder's Included Shares") which is calculated in the manner
specified in the following sentence. The Stockholder's Included Shares shall
be determined by multiplying the number of Shares owned by the Executive on
the date that the Sale of Control Notice is mailed by a fraction, the
numerator of which is the number of shares of the Common Stock which the
proposed purchaser desires to purchase and the denominator of which is the
total number of shares of the Common Stock which are outstanding on the date
that the Sale of Control Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Included Shares shall be the next larger whole integer and in the event that
the number so determined includes a fraction which is equal to or less than
.50, the Stockholder's Included Shares shall be the next smaller whole
integer. For example, assume the proposed purchaser desires to purchase
450,000 shares of the Common Stock. On the date that the Sale of Control
Notice is mailed, there are 500,000 shares of the Common Stock outstanding
and the Executive owns 1,500 of such shares. The number of the Stockholder's
Included Shares would be 1,350, which is 1,500 times 450,000/500,000.
b. The parties hereto recognize and acknowledge that any
prospective purchaser of the business of the Corporation may wish to purchase
(i) all of the outstanding shares of the Common Stock, (ii) all of the
outstanding shares of the common stock of the Majority Stockholder or (iii)
all or substantially all of the assets of the Corporation, which purchase may
be made in conjunction with the purchase of the business of an Affiliate or
Affiliates of the Corporation. Accordingly, the Executive and each
transferee of the Executive under subparagraph 3b agrees, upon the request of
the Corporation, to (x) sell all of the Shares then owned by the Executive to
any prospective purchaser of the business of the Corporation which is not an
Affiliate of the Majority Stockholder (a "100% Purchaser") or, at the option
of the Majority Stockholder or the Corporation, to the Corporation in
connection with the sale of all of
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the outstanding shares of the Common Stock to a 100% Purchaser or the sale of
all of the outstanding shares of the common stock of an Affiliate of the
Corporation which owns a majority of the outstanding shares of the Common
Stock to a 100% Purchaser and (y) at any time prior to the tenth anniversary
of this Agreement, vote the Shares then owned by the Executive in favor of
(A) any sale of all or substantially all of the assets of the Corporation to
a 100% Purchaser or (B) any merger or consolidation of the Corporation with a
100% Purchaser, in each case which has been approved by the Board of
Directors of the Corporation in accordance with the provisions of this
subparagraph 14b. The Executive and each such transferee agrees promptly
upon any request made by the Corporation prior to the tenth anniversary of
this Agreement and without compensation to execute and deliver an amendment
to this Agreement or other instrument which extends for an additional ten
year period the Executive's agreement to vote the Shares as specified in
subparagraph 14(b)(y). For purposes of this subparagraph 14b, the Executive
shall be conclusively deemed and considered to own all Shares owned by
himself, his estate, his executors and administrators, his distributees and
his personal and other legal representatives and any other transferee.
In the event that the Majority Stockholder shall have entered into an
agreement to sell (a) all of the outstanding shares of the Common Stock owned
by it or (b) all of the outstanding shares of the common stock of an
Affiliate of the Corporation which owns a majority of the outstanding shares
of the Common Stock to a 100% Purchaser or the Corporation shall have entered
into an agreement to sell all or substantially all of the assets of the
Corporation to a 100% Purchaser, whether individually or in conjunction with
the sale of the business of an Affiliate or Affiliates of the Corporation,
the Corporation's auditors, or their designee, shall allocate such portion of
the total purchase price to the then outstanding shares of the Common Stock
which is fair and reasonable (with each outstanding share being allocated the
same portion of the purchase price) giving such consideration as they deem
appropriate to the (i) terms and conditions of such agreement to sell, (ii)
book value and the earnings and projected earnings of the Corporation and
each Affiliate of the Corporation whose business is or will be sold pursuant
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to such agreement to sell, determined in accordance with generally accepted
accounting principles consistently applied where relevant and appropriate in
the opinion of the Corporation's auditors or such designee and (iii) such
other factors as they may deem relevant to such allocation. The
determination of such allocation by the Corporation's auditors or their
designee shall be final and binding upon the parties hereto with respect to
the portion of the total purchase price which the Executive is entitled to
receive for the Shares pursuant to this subparagraph 14b. The Executive and
each transferee of the Executive under subparagraph 3b agrees to sell the
Shares to the Persons specified in this subparagraph 14b at the price per
share of the Common Stock allocated by such auditors or their designee at the
closing of the transactions contemplated by such agreement to sell.
For purposes of effectuating any sale of the Shares pursuant to this
subparagraph 14b, the Executive and each transferee of the Executive under
subparagraph 3b hereby grants to each of the Majority Stockholder and the
Corporation and their respective designees and assigns an irrevocable power
of attorney with respect to the transfer of the Shares and authorizes the
Corporation to deliver to the Majority Stockholder or any 100% Purchaser each
stock certificate representing the Shares. The Executive and each such
transferee agrees promptly upon request and without compensation to do all
acts and execute all agreements, documents, proxies, consents of stockholders
and instruments as shall be necessary or desirable to effectuate the
consummation of any agreement to sell all of the outstanding shares of the
Common Stock to a 100% Purchaser, any agreement to sell all of the
outstanding shares of the common stock of an Affiliate of the Corporation
which owns a majority of the outstanding shares of the Common Stock to a 100%
Purchaser and any agreement to sell all or substantially all of the assets of
the Corporation to a 100% Purchaser pursuant to this subparagraph 14b
including, but not limited to, delivering executed stock assignments separate
from certificate naming each of the Majority Stockholder and the Corporation
and their respective assigns and designees as his attorneys for the purpose
of effectuating such transfer. The Majority Stockholder and, in the event
that the Majority Stockholder or the Corporation elects to have the
Corporation purchase the Shares, the
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Corporation agree to deliver or cause to be delivered to the Executive or his
transferees promptly following any sale of the Shares pursuant to this
Paragraph 14b the purchase price for the Shares less all amounts then owed by
the Executive to the Corporation pursuant to the Note.
15. CERTAIN INCIDENTAL REGISTRATION RIGHTS.
a. If the Corporation proposes to register for sale any shares of
the Common Stock owned by the Majority Stockholder under the Act at a time
when the Executive or any transferee of the Executive permitted by
subparagraph 3b owns any of the Shares, it will at each such time give
written notice (the "Registration Notice") to the Executive or such
transferee of its intention to do so and, upon the written request of the
Executive or such transferee given within twenty (20) days after the
Corporation gives such notice (which request shall state the intended method
of disposition of such holder's Shares), the Corporation will use its best
efforts to effect the registration of the number of the Shares (the
"Stockholder's Registered Shares") which is calculated in the manner
specified in the following sentence by including the Stockholder's Registered
Shares in such registration statement, all to the extent required to permit
the sale or other disposition of such Shares in accordance with the intended
method of sale or other disposition given in each such request. The
Stockholder's Registered Shares shall be determined by multiplying the number
of the Shares owned by the Executive and each transferee of the Executive
under subparagraph 3b on the date that the Registration Notice is mailed by a
fraction, the numerator of which is the number of shares of the Common Stock
which are included in such registration statement and the denominator of
which is the total number of shares of the Common Stock outstanding on the
date that the Registration Notice is mailed. In the event that the number so
determined includes a fraction which is greater than .50, the Stockholder's
Registered Shares shall be the next larger whole integer and in the event
that the number so determined includes a fraction which is equal to or less
than .50, the Stockholder's Registered Shares shall be that number alone.
For example, assume 250,000 shares of the Common Stock are included in such
registration statement. On the date that the Corporation mails the
Registration Notice, there are 500,000 shares of the Common Stock outstanding
and the Executive and such transferees own
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1,500 of such shares. The number of the Stockholder's Registered Shares
would be 750, which is 1,500 times 250,000/500,000.
b. Notwithstanding anything to the contrary contained in
subparagraph 15a:
(i) In the event that any registration statement to be filed
pursuant to subparagraph 15a shall be, in whole or in part, in connection
with an underwritten public offering, the number of the Stockholder's
Registered Shares to be included in such registration statement may be
reduced, or no Stockholder's Registered Shares may be included in such
registration statement, if and to the extent that the managing underwriter(s)
shall give their written opinion that such inclusion would adversely affect
the marketing of the securities to be sold therein by the Majority
Stockholder.
(ii) The Corporation (A) may withdraw any registration
statement referred to in this Paragraph 15 without thereby incurring any
liability to the Executive and (B) shall in no event be obligated to register
any Shares in connection with the first underwritten public offering after
the date hereof, whether primary or secondary, of shares of the Common Stock,
including without limitation any sales of shares of the Common Stock related
to over-allotments in connection with such offering.
(iii) In the event that a distribution of shares of the Common
Stock covered by a registration statement referred to in subparagraph 15a is
to be underwritten, then any distribution of the Stockholder's Registered
Shares shall be underwritten by the same underwriters who are underwriting
the distribution of the securities of the Corporation for the account of the
Majority Stockholder, and the Executive shall enter into the agreement with
such underwriters contemplated under subparagraph 15b(iv).
(iv) In the event that the Corporation has an underwritten
offering of shares of the Common Stock, whether primary or secondary, the
Executive and each transferee of the Executive under subparagraph 3b shall
refrain from selling, making any short sale of, loaning,
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granting any option for the purchase of, or otherwise disposing of any of
their Shares not registered pursuant to subparagraph 15a during the period of
time which is the longer of (A) the period of distribution of the shares of
the Common Stock by such underwriter(s) in the offering and (B) the period
requested by such underwriter(s), which shall in no event exceed one hundred
eighty (180) days.
16. RIGHT TO ACQUIRE ADDITIONAL SHARES. If at any time during the
Executive's employment with the Corporation or any Subsidiary, the
Corporation issues any shares of the Common Stock, any securities convertible
into or exchangeable for shares of the Common Stock or any options, warrants
or rights to acquire shares of the Common Stock or securities convertible
into or exchangeable for shares of the Common Stock to the Majority
Stockholder or any Affiliate of the Majority Stockholder (the "New Issue
Securities"), and if shares of the Common Stock are not Publicly Traded on
the date of such issuance, the Corporation agrees that not later than sixty
(60) days after the sale of any New Issue Securities it will offer in writing
to sell to the Executive such number or principal amount of the New Issue
Securities as would enable the Executive to maintain the same aggregate
percentage ownership interest in the shares of the Common Stock (which for
purposes of this Paragraph 16 shall include shares of the Common Stock issued
and outstanding, shares held in the Corporation's treasury from time to time
and shares subject to purchase pursuant to an option held by the Majority
Stockholder on the date hereof) after such sale of the New Issue Securities
as specified in the third WHEREAS clause of this Agreement. Notwithstanding
the immediately preceding sentence, the term "New Issue Securities" shall not
include shares of the Common Stock which are at any time subject to purchase,
by the Majority Stockholder pursuant to an Option Agreement between the
Corporation and the Majority Stockholder dated on or prior to the date of
this Agreement. The offer of the Corporation to the Executive described in
the first sentence of this Paragraph 16 shall contain the same price per
share, security, option, warrant or other right constituting New Issue
Securities and substantially similar terms and conditions as the sale of the
New Issue Securities which obligates the Corporation to make the offer. The
Executive shall be entitled to accept such offer only without
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modification and only in writing for a period of ten (10) days after the
offer is made. In the event that such offer is accepted by the Executive,
the Executive shall deliver to the Corporation (i) a check in the amount of
the par value of the New Issue Securities being offered to the Executive and
(ii) a promissory note payable to the Corporation in the same form and having
the same date of maturity as the Note, bearing interest at a rate which is
two percent (2%) in excess of the Prime Rate and in the aggregate principal
amount of the purchase price of the shares of the New Issue Securities
offered to the Executive, less the amount of such check, within fifteen (15)
days after the offer is made. The note shall be secured by a pledge of the
New Issue Securities purchased by the Executive with the proceeds of the loan
evidenced thereby.
17. SPECIFIC PERFORMANCE. The Executive acknowledges that the services
to be rendered by him are of a special, unique and extraordinary character,
and in connection with rendering such services, he will have access to
Proprietary Information. The parties agree that it is impossible to measure
in money the damages that will accrue to the Corporation and its Subsidiaries
by reason of the Executive's failure to perform his obligations under this
Agreement, that such failure to perform will result in irreparable damage to
the Corporation and its Subsidiaries, and that specific performance of the
Executive's obligations may therefore be obtained by suit in equity. Without
limiting the generality of the foregoing sentence, the Corporation or any
Subsidiary shall be entitled to apply to any court of competent jurisdiction
for an injunction restraining the Executive from committing or continuing any
violation of Paragraphs 9 and/or 10. The Executive will not assert any claim
or defense in any action or proceeding to enforce any provision hereof that
the Corporation or any Subsidiary has or had an adequate remedy at law.
18. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified
mail, return receipt requested, with first-class postage prepaid, or by
facsimile with answer-back; and such notices shall be addressed: (i) if to
the Corporation, to the Secretary of the Corporation at the Corporation's
principal business office, with a copy to Chairman, Harbour Group Ltd., 7701
Forsyth Boulevard, Suite 600,
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Clayton, Missouri 63105; and (ii) if to the Executive, to his address as
reflected in the records of the Corporation; or to such other address(es) as
the parties hereto shall designate by Written Notice, furnished to all
parties in the manner provided herein. Any notice which is required to be
made within a stated period of time shall be considered timely if delivered
or mailed before midnight of the last day of such period.
19. CERTAIN TRANSACTIONS ON BEHALF OF AFFILIATES. The Executive recognizes
and acknowledges that the Corporation may on the date of this Agreement be,
or may after the date of this Agreement become, liable for the indebtedness
of Affiliates of the Corporation as a consequence of being or becoming a
party to agreements evidencing such indebtedness or guaranteeing such
indebtedness. The Executive agrees to (i) the Corporation incurring
liability for the indebtedness of its Affiliates, whether such liability was
incurred prior to the date of this Agreement or incurred after the date of
this Agreement and (ii) not assert any claim against the Corporation or its
directors, officers or stockholders in connection with or relating to such
liability of the Corporation for the indebtedness of its Affiliates, whether
such liability was incurred prior to the date of this Agreement or incurred
after the date of this Agreement. The Executive further acknowledges that
the Majority Stockholder has the option to acquire up to 40,000 shares of
newly issued Common Stock (subject to adjustment for stock splits,
recapitalizations and the like) which option is exercisable at any time to
the extent that executive employees of the Corporation and its Subsidiaries
are holders less than 40,000 shares of the Common Stock.
20. NO RIGHT TO CONTINUED EMPLOYMENT. The Executive agrees that
neither the sale of the Shares by the Corporation to him nor any provision of
this Agreement shall (i) give the Executive any right to be retained in the
employ of the Corporation or any Subsidiary, (ii) affect the right of the
Corporation or any Subsidiary to discharge the Executive at any time or (iii)
affect the Executive's right to terminate his employment with the Corporation
or any Subsidiary at any time.
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21. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had been omitted.
22. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective personal
or legal representatives, successors and assigns.
23. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed
to be and include the plural (and vice versa), whenever appropriate.
24. RULE 144 ACKNOWLEDGMENTS.
a. The Executive represents and warrants to the Corporation that (i)
he is purchasing the Shares for his own account without a view to any
distribution thereof in violation of the Act or any applicable state
securities laws, (ii) he is experienced in evaluating and making investments
of this type, and has had access to, and to his knowledge has received, all
the information that he reasonably has required to evaluate this investment
and (iii) he is financially able to bear the risks associated with an
investment in the Shares being purchased hereby.
b. The Executive acknowledges that the Corporation is issuing and
selling the Shares in reliance upon the representations and warranties set
forth in subparagraph 24a and that the Shares so acquired will be "restricted
securities" within the meaning of Rule 144 under the Act, and acknowledges
that such Shares may only be offered, sold, pledged or otherwise transferred
by him (i) if registered under the Act and registered or otherwise qualified
for sale under any applicable state securities laws or (ii) pursuant to any
exemption from such registration or qualification requirements, and that the
certificate(s) representing the Shares will bear a legend to this effect.
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25. MODIFICATIONS. No change or modification of this Agreement shall
be valid unless the same is in writing and signed by all the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the party against whom it is sought to be enforced. The
failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other condition, promise, agreement or
understanding at a future time.
26. Post-Employment Restriction Period; Additional Compensation. For
the purposes of this Agreement the applicable "Post-Employment Restriction
Period" shall be determined as follows:
a. If the Executive's employment with the Corporation or any
Subsidiary is terminated for Cause, the Post-Employment Restriction Period
shall be a period of one (1) year commencing on the date of termination of
such employment.
b. If the Executive's employment with the Corporation and the
Subsidiaries is terminated due to a Permanent Disability, the Post-Employment
Restriction Period shall be a period of one (1) year commencing on the date
of termination of such employment. For the purpose of this Paragraph 26,
the Executive has suffered a "Permanent Disability" if the Board of Directors
of the Corporation determines that the Executive has been or will be unable,
as a result of physical or mental illness or incapacity, to perform his
duties to the Corporation and the Subsidiaries for a period of four (4)
consecutive months or for an aggregate of more than six (6) months in any
twelve-month period.
c. If the Executive's employment with the Corporation and its
Subsidiaries shall be terminated by the Corporation or such Subsidiaries
without Cause, or if the Executive terminates his employment within sixty
(60) days after a substantial reduction in his duties, responsibilities or
compensation, the Post-Employment Restriction Period shall be a period of one
(1) year commencing on the date of termination of such employment; provided
that (i) during the
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Post-Employment Restriction Period the Corporation or its Subsidiaries shall
make monthly payments to the Executive and (ii) during the Benefits Period
the Corporation or a Subsidiary shall provide to the Executive, the Benefits,
as in effect on the date of termination of such employment, or the reasonable
equivalent thereof, as determined by the Board of Directors of the
Corporation in its sole discretion and business judgment. For the purposes
of this Paragraph 26, "Benefits Period" means a period, commencing on the
date that the Executive's employment with the Corporation and all of its
Subsidiaries terminates and ending on the earlier of (a) the end of the
initial Post-Employment Restriction Period and (b) the date that the
Executive commences other employment or any consulting arrangement. The
amount of the monthly payments shall be equal to one-twelfth (1/12) of the
Executive's annual base compensation as in effect on the date of termination
during the Benefits Period and 50% of such amount thereafter until the end of
the initial Post-Employment Restriction Period determined by this Paragraph
26c.
d. If the Executive terminates his employment with the Corporation
and the Subsidiaries for any reason other than the Corporation substantially
reducing his duties, responsibilities or compensation, within thirty (30)
days of the date of such termination the Corporation shall have the option to
designate an initial Post-Employment Restriction Period of six (6) months
commencing on the date of termination which option is exercisable by notice
given within thirty (30) days after the date on which the Corporation
receives notice of the Executive's termination of his employment.
Thereafter, the Corporation shall have three (3) additional options to extend
the Post-Employment Restriction Period for additional consecutive periods of
six (6) months each, which options shall be exercisable at the times and in
the manner set forth in this Paragraph 26d. If the initial Post-Employment
Restriction Period is determined by subparagraphs a, b or c above, at the end
of the initial Post-Employment Restriction Period the Corporation shall have
two (2) options to extend the Post-Employment Restriction Period for
additional consecutive periods of six (6) months each. The Corporation may
exercise its additional options under this Paragraph 26d by giving notice to
the Executive of each such election at any time which is not less than thirty
(30) days prior to the expiration of the
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Post-Employment Restriction Period (as may have then been extended by prior
exercise of an option pursuant to this Paragraph 26d). During any such
extension of the Post-Employment Restriction Period, the Corporation shall
make monthly payments to the Executive in an amount equal to one twelfth
(1/12th) of the Executive's annual base compensation as in effect on the date
of termination of his employment until the first full month in which the
Executive has obtained other employment or any consulting arrangement and 50%
of such amount thereafter. Notwithstanding any provision of this Paragraph 26
to the contrary, the Post-Employment Restriction Period shall not be extended
beyond a period of two (2) years without the consent of the Executive.
e. During the Post-Employment Restriction Period (including any
extensions thereof) the Executive shall give written notice to the
Corporation within five (5) days of any change in his employment or in his
duties, responsibilities or activities pursuant thereto. If the Executive
voluntarily terminates his employment with the Corporation and all of its
Subsidiaries, the Executive shall give written notice to the Corporation of
any employment which the Executive at that time expects to be engaged in
within the six-month period following his termination.
f. Notwithstanding any other provision of this Paragraph 26 to the
contrary, the provisions of this Paragraph do not, and are not intended to,
waive, disclaim or otherwise extinguish any rights of the Executive as an
employee under any applicable federal, state or local statute or ordinance.
27. ENTIRE AGREEMENT. This Agreement contains all of the promises,
agreements, conditions, understandings, warranties and representations
between the parties hereto with respect to the subject matter of this
Agreement. This Agreement is, and is intended by the parties to be, an
integration of any and all prior agreements or understandings, oral or
written, with respect to the subject matter of this Agreement.
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28. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Missouri, except as otherwise provided in
Paragraph 1(f) and the following sentence. All matters concerning the
authorization of this Agreement and the consummation of the transactions
contemplated hereby including without limitation the issuance of the Shares,
the payment for the Shares and the fully paid and nonassessable status of the
Shares, shall be construed and enforced in accordance with the General
Corporation Law of the State of Delaware.
29. HEADINGS. The headings and other captions in this Agreement are
for convenience and reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
[The balance of this page has been intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
WITNESS: UNIQUIP CORPORATION
/s/ Elizabeth Bowling By: /s/ Peter S. Finley
- ----------------------------- ---------------------------
Name: Peter S. Finley
Title: VP
/s/ Joan M. Shank /s/ Paul D. Roblee
- ----------------------------- ---------------------------
Paul D. Roblee
The undersigned, being the record and beneficial owner of more than
fifty percent (50%) of the issued and outstanding shares of the Common Stock
of either the above-named Corporation, hereby agrees to comply with the
provisions of Paragraph 14 hereof.
Harbour Group Investments III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P.,
General Partner
By: HGM III Co., General Partner
by: /s/ Francis M. Loveland
---------------------------------
Francis M. Loveland
Vice President
Dated: September 20, 1995
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Exh - 10.24
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated September 20, 1995 between Paul D. Roblee
(the "Pledgor") and Uniquip Corporation, a Delaware corporation (the
"Pledgee").
WHEREAS, the Pledgee has made a loan to the Pledgor in order to permit
the Pledgor to acquire certain shares of common stock of the Pledgee
described in Schedule 1 hereto, which loan is evidenced by a Promissory Note
of the Pledgor of even date herewith;
WHEREAS, the Pledgee requires the Pledgor, as a condition to making the
aforementioned loan, to enter into this Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the making of such loan, the
Pledgor hereby agrees with the Pledgee as follows:
SECTION 1. PLEDGE. To secure the due and punctual payment by the
Pledgor of the Liabilities (as hereinafter defined), the Pledgor hereby
pledges, hypothecates, assigns, transfers, sets over and delivers unto the
Pledgee and hereby grants to the Pledgee a security interest in the following:
(i) the shares of stock specified in Schedule 1 hereto and all
other shares of stock of the Pledgee hereafter acquired by the
Pledgor (herein collectively called the "Pledged Shares") and the
certificates representing the Pledged Shares, and all cash,
securities, interest, dividends, options, rights and other
property at any time and from time to time received, receivable
or otherwise distributed in respect of, or in exchange for, any
or all of the Pledged Shares;
(ii) all other property hereafter delivered to the Pledgee in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends, options,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
(iii) all proceeds of any of the foregoing (the Pledged Shares
and all such additional shares, certificates, instruments, cash,
securities, interest, dividends, options, rights and other
property being herein collectively called the "Collateral").
The term "Liabilities," as used herein shall mean all
obligations and liabilities of the Pledgor to the Pledgee under
the Promissory Note of the Pledgor of even date herewith.
SECTION 2. CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a) The Pledgee shall not be liable for its failure to collect or
realize upon the Liabilities or any collateral, security or guaranty
therefor, or any part thereof, or for any delay in so doing, nor shall the
Pledgee be under any obligation to take any action whatsoever with respect
thereto.
(b) The Pledgee may from time to time, after any portion of the
Liabilities shall become due and payable, without notice to the Pledgor, (i)
transfer all or any part of the Collateral into the name of the Pledgee or
its nominee, with or without disclosing that such Collateral is subject to
the lien and security interest granted hereby, (ii) enforce collection of any
of the Collateral, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any obligations of any nature of any party
with respect thereto, (iii) resort to the Collateral for payment of any
portion of the
<PAGE>
Liabilities whether or not it shall have resorted to any other property
securing payment of any portion of the Liabilities or shall have proceeded
against any party primarily or secondarily liable on any portion of the
Liabilities and (iv) take control of any proceeds of the Collateral.
SECTION 3. DIVIDENDS, ETC.
(a) So long as no portion of the Liabilities shall be due and payable,
the Pledgor shall be entitled to vote the Pledged Shares, to give consents,
waivers and ratifications in respect of the Pledged Shares and to receive and
retain cash dividends made on or in respect of the Pledged Shares; provided,
however, that any and all cash, stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions made on
or in respect of the Pledged Shares resulting from a subdivision, combination
or reclassification of the outstanding capital stock of the issuer thereof or
received in exchange for the Pledged Shares or any part thereof or as a
result of any merger, consolidation, acquisition or other exchange of assets
to which the issuer thereof may be a party or otherwise, and any and all cash
and other property received in exchange for any Collateral shall be and
become part of the Collateral pledged hereunder and, if received by the
Pledgor, shall be held by the Pledgor in trust on behalf of and for the
benefit of the Pledgee and shall forthwith be delivered to the Pledgee or its
designated nominee (accompanied, if appropriate, by proper instruments of
assignment and/or stock powers executed by the Pledgor in accordance with the
Pledgee's instructions) to be held subject to the terms of this Agreement;
and provided further that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair the Collateral or the
security interests granted hereby.
(b) Upon the nonpayment, when due, of any portion of the Liabilities,
all rights of the Pledgor pursuant to Section 3(a) hereof shall, at the
election of the Pledgee, cease, and the Pledgee shall have the sole and
exclusive right and authority to vote, to give consents, waivers and
ratifications, and receive all dividends and distributions pursuant to
Section 3(a) hereof.
SECTION 4. REMEDIES. In the event that any portion of the Liabilities
is not paid when due, the Pledgee, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Pledgor or
any other person (all and each of which demands, advertisements, and/or
notices being hereby expressly waived by the Pledgor), may forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give options to purchase, contract to sell
or otherwise dispose of and deliver the Collateral, or any part thereof, in
one or more parcels at public or private sales, at any exchange or broker's
board or at any of the Pledgee's offices or elsewhere, upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery, without assumption of any
credit risk, with the right upon any such sale, public or private, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released by the Pledgor. The Pledgee shall apply the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred therein or incidental to the care, safekeeping or
otherwise of any and all of the Collateral or in any way relating to the
rights of the Pledgee hereunder (including reasonable attorney's fees and
legal expenses), to the payment in whole or in part of the Liabilities in
such order as it may elect, and only after such application of such net
proceeds and after the payment in full of the Liabilities by the Pledgee and
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Uniform Commercial Code, need the
Pledgee account for the surplus, if any, to the Pledgor. The Pledgor agrees
that the Pledgee need not give more than ten days' notice of the time and
place of any public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is reasonable
notification of such matters. No
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notification need be given the Pledgor if, after any portion of the
Liabilities is not paid when due, it shall have signed a statement renouncing
or modifying any right to notification of any sale or other intended
disposition. The Pledgee shall not be obligated to make any sale pursuant to
any such notice. The Pledgee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In case of
any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Pledgee until the
selling price is paid by the purchaser thereof, but the Pledgee shall incur
no liability in the case of the failure of such purchaser to take up and pay
for the Collateral so sold and in case of any such failure such Collateral
may again be sold on like notice. The Pledgee, however, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit
at law or in equity to foreclose the pledge and security interest under this
Agreement and sell the Collateral, or any part thereof, under a judgment or
decree of a court of competent jurisdiction. In addition to the rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any portion of the Liabilities,
the Pledgee shall have all the rights and remedies of a secured party under
the Uniform Commercial Code. The Pledgor further agrees to waive and agrees
not to assert any rights or privileges which it may acquire under Section
9-112 of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents and warrants that (a) the Pledgor is the legal record and
beneficial owner of, and has good and marketable title to, the Pledged
Shares, subject to no perfected lien whatsoever except the lien created by
this Agreement; (b) no consent of any other person (including, without
limitation, his creditors) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority, domestic or foreign, is
required to be obtained by him in connection with the execution, delivery or
performance of this Agreement; (c) the execution, delivery and performance of
this Agreement will not violate any provision of any applicable law or
regulation, or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which the Pledgor is a party or which purports to be binding
upon the Pledgor or upon any of the Pledgor's assets, and will not result in
the creation or imposition of any lien on any of the Pledgor's assets except
as contemplated by this Agreement; and (d) the Pledgor has delivered to the
Pledgee the Pledged Shares, with the certificates therefor duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, and the pledge,
assignment and delivery of the Pledged Shares pursuant to this Agreement
creates a valid lien on and a perfected security interest in the Pledged
Shares, and the proceeds thereof, subject to no prior lien, or to any
agreement purporting to grant to any third party a security interest in the
Pledgor's property or assets which would include the Pledged Shares. The
Pledgor covenants and agrees that the Pledgor will not sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with respect
to, the Collateral, nor will the Pledgor create, incur or permit to exist any
perfected lien with respect to any part of the Collateral, or any interest
therein, or any proceeds thereof, except for the lien created by this
Agreement, without the prior written consent of the Pledgee; and the Pledgor
further covenants and agrees that the Pledgor will defend the Pledgee's
right, title and security interest in and to the Collateral and the proceeds
thereof against the claims and demands of all persons; and the Pledgor
further covenants and agrees to deliver to the Pledgee from time to time on
request such stock powers and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee may
request.
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SECTION 6. SALE OF THE PLEDGED SHARES.
(a) The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all of the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not be deemed to have
been made in commercially unreasonable manner by virtue of its private
nature. The Pledgee shall be under no obligation to delay a sale of any of
the Pledged Shares for the period of time necessary to permit the issuer
thereof to register such securities for public sale under the Securities Act
or under applicable state securities laws even if the issuer would agree to
do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion
or all of the Pledged Shares valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
the Pledgor's expense.
SECTION 7. FURTHER ASSURANCE. The Pledgor agrees that, at any time and
from time to time upon the written request of the Pledgee, it will execute
and deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of the
Agreement.
SECTION 8. AUTHORITY OF PLEDGEE.
(a) The Pledgee is hereby appointed the attorney-in-fact of the Pledgor
for the purpose of carrying out the provisions of this Agreement and taking
any action and executing any instruments which the Pledgee may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, provided that
no action may be taken by the Pledgee pursuant to such appointment so long as
the Liabilities are not yet due and payable. Without limiting the generality
of the foregoing, the Pledgee shall have the right and power to receive,
endorse and collect all checks made payable to the order of the Pledgor
representing any dividend or other distribution in respect of the Collateral
or any part thereof and to give full discharge for the same.
(b) The Pledgee shall have and be entitled to exercise all such powers
hereunder as are specifically delegated to the Pledgee by the terms hereof,
together with such powers as are incidental thereto. The Pledgee may execute
any of its duties hereunder by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither
the Pledgee, nor any director, officer or employee of the Pledgee, shall be
liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or
willful misconduct. The Pledgor hereby agrees to reimburse the Pledgee, on
demand, for all reasonable expenses incurred by the Pledgee in connection
with the enforcement of this Agreement (including expenses incurred by any
agent employed by the Pledgee) and agrees to indemnify and hold harmless the
Pledgee and/or any such agent from and against any and all liability incurred
by the Pledgee or such agent hereunder or in connection herewith, unless such
liability shall be due to willful misconduct or negligence on the part of the
Pledgee or such agent.
4
<PAGE>
SECTION 9. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10. NO WAIVER, CUMULATIVE REMEDIES. The Pledgee shall not by
any act, delay, omission or otherwise be deemed to have waived any of its
rights, powers or remedies hereunder and no waiver shall be valid unless in
writing, signed by the Pledgee, and then only to the extent therein set
forth. A waiver by the Pledgee of any right, power or remedy hereunder on
any one occasion shall not be construed as a bar to the exercise of any
right, power or remedy which the Pledgee would otherwise have on any future
occasion. No failure to exercise, nor any delay in exercising, on the part
of the Pledgee any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The rights, powers and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights, powers or remedies
provided by law.
SECTION 11. NOTICES. All notices, demands, requests and other
communications provided for or permitted under this Agreement shall be in
writing, either delivered in hand or sent by registered first class mail,
postage prepaid, or by facsimile with answer-back, addressed, if to the
Pledgor, to Paul D. Roblee at his address as reflected in the records of the
Pledgee and, if to the Pledgee, to Chairman, Uniquip Corporation, 7701
Forsyth Boulevard, Suite 600, Clayton, Missouri 63105 or to such other
address as the party to receive any such notice, demand, request or
communication may have designated by written notice to the other party, which
notice complies as to delivery with the terms of this Section 11.
SECTION 12. TERMINATION. Upon payment in full of the Liabilities in
accordance with their terms and the performance by the Pledgor of all of the
Pledgor's obligations under this Agreement, this Agreement shall terminate
and the Pledgor shall be entitled to the return, at the Pledgor's expense, of
such of the Collateral in the possession or control of the Pledgee as may
have been pledged by the Pledgor under this Agreement and which has not
theretofore been disposed of pursuant to the provisions hereof.
SECTION 13. MISCELLANEOUS. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon his successors and assigns, and
shall, together with the rights, powers and remedies of the Pledgee
hereunder, inure to the benefit of the Pledgee and its successors and assigns.
SECTION 14. AMENDMENTS; APPLICABLE LAW. None of the terms or provisions
of this Agreement may be amended except by an instrument in writing, duly
executed by the Pledgee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
conflicts of laws principles of such jurisdiction.
5
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and
delivered this Agreement on the day and year first above written.
PLEDGOR
/s/ Paul D. Roblee
-----------------------------
Paul D. Roblee
PLEDGEE
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
--------------------------
Name: Peter S. Finley
Title: VP
6
<PAGE>
SCHEDULE 1
ISSUER OF CERTIFICATE NUMBER OF
PLEDGED SHARES CLASS NUMBER SHARES
-------------- ----- ----------- ---------
Uniquip Corporation Common 7 7,500
Stock
7
<PAGE>
PROMISSORY NOTE
$47,572.00 September 20, 1995
FOR VALUE RECEIVED, on or before ten (10) years from the date hereof, the
undersigned, Paul D. Roblee (the "Maker"), promises to pay to the order of
Uniquip Corporation, a Delaware corporation (the "Lender"), at 7701 Forsyth
Boulevard, Suite 600, St. Louis, Missouri 63105, or at such other place as the
holder hereof may from time to time designate in writing, the principal sum of
forty-seven thousand five hundred seventy-two dollars ($47,572.00), or so much
thereof as shall be advanced or readvanced and from time to time remain unpaid,
plus interest on the principal balance thereof at a rate of six and fifty-six
hundredths (6.56%) per annum annually, which is the applicable federal rate for
debt instruments with a term in excess of nine (9) years, as determined by the
Internal Revenue Service in accordance with Section 1274(d) of the Internal
Revenue Code of 1986, as amended and in effect on the date hereof.
This Note shall be payable in successive annual installments of accrued
interest only, followed by one (1) final installment at maturity in the amount
of the then outstanding principal balance of this Note and all accrued and
unpaid interest thereon. Such consecutive annual installments shall be due on
each December 31 after the date hereof until the tenth anniversary of the date
hereof, the maturity date of this Note, when the entire principal balance of
this Note and all accrued and unpaid interest thereon, as well as all other
costs, fees or charges payable hereunder, if any, shall be due and payable in
full. Interest on this Note shall be calculated on a 360 day year, per diem
basis. All payments hereunder shall be made in lawful currency of the United
States and in immediately available funds.
This Note may be prepaid, in whole or in part, at any time without penalty
and shall be prepaid in full at such time as the Maker shall sell all or any
part of the Pledged Shares (as such term is defined in that certain Stock Pledge
Agreement of even date herewith between the Maker and the Lender). Any partial
prepayments shall not, however, relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due.
The Maker (i) waives presentment, demand, protest and notice of
presentment, notice of protest and notice of dishonor of this debt and each and
every other notice of any kind with respect to this Note, (ii) agrees that the
holder of this Note, at any time or times, without notice to it or its consent,
may grant extensions of time, without limit as to the number or the aggregate
period of such extensions, for the payment of any sums due hereunder, and (iii)
to the extent not prohibited by law, waives the benefit of any law or rule of
law intended for its advantage or protection as an obligor hereunder or
providing for its release or discharge from liability under this Note, in whole
or in part, on account of any facts or circumstances other than full and
complete payment of all amounts due hereunder.
In the event any one or more of the provisions contained in this Note or
any of the other security documents shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note or such other
security document, but this Note and the other security documents shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein or therein.
<PAGE>
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is secured by a certain Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement") by and between the Maker and the Lender.
(This Note and the Stock Pledge Agreement, together with all extensions,
renewals and modifications thereof and substitutions therefor, being herein
collectively referred to as the "security documents").
All of the terms, covenants, provisions, conditions, stipulations, promises
and agreements contained in the security documents to be kept, observed and
performed by the Maker are hereby made a part of this Note and incorporated
herein by reference to the same extent and with the same force and effect as if
they were fully set forth herein, and the Maker promises and agrees to keep,
observe and perform them, or cause them to be kept, observed and performed,
strictly in accordance with the terms and provisions thereof.
The Maker warrants and represents that the loan evidenced hereby is being
made for business or investment purposes.
This Note shall be governed in all respects by the laws of Missouri and
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
Oral agreements or commitments to loan money, extend credit or to forbear
from enforcing repayment of a debt including promises to extend or renew such
debts are not enforceable. To protect the Maker and the Lender, or any holder
of this Note, from misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is the complete and
exclusive statement of the agreement between us, except as we may later agree in
writing to modify it.
WITNESS:
/s/ Joan M. Shank /s/ Paul D. Roblee (SEAL)
- ----------------------------------- --------------------------------------
Paul D. Roblee
Maker
2
<PAGE>
UNIQUIP CORPORATION
September 20, 1995
Mr. Paul D. Roblee
TRAK International, Inc.
369 West Western Avenue
Port Washington, WI 53704
Dear Mr. Roblee,
Reference is made to that promissory note (the "Note") dated today made by
you in connection with the sale by Uniquip Corporation (the "Corporation") to
you of seven thousand five hundred (7,500) shares of the Corporation's Common
Stock. The Corporation hereby promises to compensate you for so long as you
are employed by the Corporation or its subsidiaries, by bonus or otherwise
and in addition to any other compensation (including bonus) payable to you,
in amounts sufficient to allow you to pay (i) interest on the Note as and
when such interest becomes due and payable, (ii) approximately all federal
and state income, determined solely with respect to your aggregate
compensation from the Corporation and its subsidiaries, taxes that you will
incur as a consequence of the receipt of amounts paid under clause (i) and
(ii) of this letter.
Very truly yours,
UNIQUIP CORPORATION
By: /s/ Peter S. Finley
-----------------------------------
Peter S. Finley
Vice President
<PAGE>
AMENDMENT TO PROMISSORY NOTE AND
STOCK PLEDGE AGREEMENT
AMENDMENT TO PROMISSORY NOTE AND STOCK PLEDGE AGREEMENT (the "Agreement"),
dated September 30, 1996, by and among Omniquip International, Inc., a Delaware
corporation formerly known as Uniquip Corporation (the "Corporation"), and Paul
D. Roblee (the "Stockholder").
W I T N E S S E T H:
WHEREAS, the Corporation sold seventy-five thousand (75,000) shares (as
adjusted for stock splits effected or to be effected prior to the effective date
of this Agreement) of its Common Stock, par value $.01 per share (the "Shares"),
to the Stockholder at an aggregate purchase price of forty-seven thousand six
hundred forty-seven dollars ($47,647.00);
WHEREAS, in connection with the sale of the Shares to the Stockholder: (i)
the Stockholder and the Corporation entered into a Purchase and Stockholder
Agreement (the "Stockholder Agreement"), dated September 20, 1995; (ii) the
Stockholder executed and delivered a Promissory Note, dated September 20, 1995,
payable to the order of the Corporation in the principal amount of forty-seven
thousand five hundred seventy-two dollars ($47,572.00) (the "Stockholder Note");
and (iii) the Stockholder and the Corporation entered into a Stock Pledge
Agreement (the "Stock Pledge Agreement"), dated September 20, 1995, pursuant to
which the Stockholder pledged the Shares as security for the performance of his
obligations under the Stockholder Note; and
WHEREAS, the parties hereto desire (i) to modify the Stockholder Note and
(ii) to amend the Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MODIFICATION OF STOCKHOLDER NOTE. The third paragraph of the
Stockholder Note is hereby amended and restated on the Effective Date to read in
its entirety as follows:
"This Note may be prepaid, in whole or in part, at any time without
penalty. Upon the sale or other transfer of any of the Pledged Shares (as
such term is defined in that certain Stock Pledge Agreement, dated
September 20, 1995, by the Maker in favor of the Lender (as the same may be
amended, modified or supplemented, the "Stock Pledge Agreement")), a
prepayment of this Note shall be made in an amount equal to the then
outstanding principal balance of this Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Notwithstanding the preceding sentence, no
prepayment hereunder shall be required in connection with any transfer of
the Pledged Shares to the Lender upon the exercise of any option granted to
the Maker under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), PROVIDED that as a condition to such transfer, the Maker
agrees to deliver to the Lender the certificates evidencing the shares
issued upon exercise of such option (accompanied by duly executed stock
powers) and subjects such shares to the lien of the Stock Pledge Agreement
in substitution for the Pledged Shares so transferred. Any partial
prepayments hereunder shall not relieve the Maker of the obligation to pay
principal hereunder as and when the same would otherwise fall due."
<PAGE>
B. AMENDMENT TO STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended on the Effective Date as follows:
1. by deleting Schedule 1 thereto in its entirety and inserting in lieu
thereof the schedule attached hereto as Schedule 1
2. by deleting the definition of the term "Liabilities" therein and
inserting in lieu thereof the following:
"The term "Liabilities," as used herein, shall mean all obligations and
liabilities of the Pledgor to the Pledgee under the Promissory Note of the
Pledgor of even date herewith, as may be amended, modified or supplemented
from time to time (the "Stockholder Note")."
3. by inserting a new Section 15 as follows:
"Section 15. TRANSFER AND PARTIAL RELEASE OF SHARES. The Pledgee agrees
that the Pledgor may sell or otherwise transfer all or any portion of the
Pledged Shares without the prior consent of the Pledgee, PROVIDED THAT
prior to or simultaneous with such sale or transfer a prepayment of the
Stockholder Note is made in an amount equal to the then outstanding
principal balance of the Stockholder Note multiplied by a fraction, the
numerator of which is the number of Pledged Shares sold or transferred and
the denominator of which is the total number of Pledged Shares immediately
prior to such sale or transfer. Upon such prepayment, the Pledgee shall
deliver to the Pledgor certificates evidencing the Pledged Shares being
sold or transferred, registered in such names as the Pledgor may request,
PROVIDED that the Pledgor shall be responsible for any transfer or similar
tax arising by reason of any such transfer.
Notwithstanding the foregoing, the Pledgor may transfer all of the Pledged
Shares to the Pledgee upon the exercise of any option granted to the
Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note,
PROVIDED that as a condition to such transfer, the Pledgor agrees to
deliver to the Pledgee the certificates evidencing the shares issued upon
exercise of such option (accompanied by duly executed stock powers) and
subjects such shares to the lien of this Stock Pledge Agreement in
substitution for the Pledged Shares so transferred."
D. WAIVER OF STOCKHOLDER AGREEMENT RESTRICTIONS. Notwithstanding anything
to the contrary contained in the Stockholder Agreement, the Pledgor may transfer
all of the Pledged Shares to the Pledgee upon the exercise of any option granted
to the Pledgor under the Omniquip International 1996 Executive Stock Option Plan
(the "Plan"), without making any prepayment of the Stockholder Note, PROVIDED
that as a condition to such transfer, the Pledgor agrees to deliver to the
Pledgee the certificates evidencing the shares issued upon exercise of such
option (accompanied by duly executed stock powers) and subjects such shares to
the lien of this Stock Pledge Agreement in substitution for the Pledged Shares
so transferred
E. EFFECTIVE DATE. This Agreement and each of the amendments effected
hereby shall become effective on the date the Corporation's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Corporation's Common Stock becomes effective under the Act (the "Effective
Date"). Until the Effective Date, the Stockholder
- 2 -
<PAGE>
Note, the Stock Pledge Agreement and the Stockholder Agreement, as in effect on
the date hereof, shall remain in full force and effect without giving effect to
this Agreement. On and after the Effective Date, the Stockholder Note, the
Stock Pledge Agreement and the Stockholder Agreement, as modified hereby shall
continue to be in full force and effect and each is hereby ratified and
confirmed in all respects.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Missouri (without giving effect to such
jurisdiction's conflict of laws principles).
G. HEADINGS. The headings and captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
H. LEGEND. The Corporation shall cause the following legend to be typed
onto the face of the Stockholder Note:
"This Promissory Note has been modified pursuant to an Amendment to
Promissory Note and Stock Pledge Agreement, dated September 20, 1995, by
and between the Maker and the Lender, dated September 30, 1996."
I. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ Philip G. Franklin
------------------------------------
Name: Philip G. Franklin
Title: Chief Financial Officer
/s/ Paul D. Roblee
---------------------------------------
Paul D. Roblee
- 4 -
<PAGE>
Schedule 1
Issuer of Certificate Number of
Pledged Shares Class Number Shares
- --------------------- ----- ----------- ---------
Omniquip International, Inc. Common 75,000
- 5 -
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
1996 EXECUTIVE STOCK OPTION PLAN
1. ADOPTION AND PURPOSE OF THE PLAN. Omniquip International, Inc. (the
"Company") hereby adopts the 1996 Executive Stock Option Plan (the "Plan") dated
September 30, 1996, which provides for the granting of non-qualified stock
options ("Options") to purchase shares of the Company's Common Stock, $.01 par
value per share (the "Common Stock"), to certain executive employees
("Grantees") of the Company. This Plan will give such Grantees added financial
incentive to further the Company's financial well being and increase the
Company's value to the benefit of the Company's shareholders.
The effective date of the Plan shall be September 30, 1996.
2. PLAN ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board") or a duly authorized committee of the
Board, appointed from time to time (the "Committee") to administer the Plan.
In administering the Plan, the Board or the Committee, as the case may be,
may adopt rules and regulations as necessary for carrying out the purposes and
intent of the Plan. Any action taken by a majority of the Board or the
Committee in the interpretation or administration of the Plan shall, as between
the Company and the Grantees, be final and conclusive. Members of the Board or
the Committee may vote without appearing in person at any meeting. The Board or
the Committee may consult with counsel, who may
<PAGE>
be counsel to the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel. Within the
limitations of the Plan, the employees to whom Options will be granted, the
exercise price, the number of shares of Common Stock for which Options will be
granted from time to time and the vesting and exercise periods with respect to
Options will be determined by the Board or the Committee.
3. PARTICIPANTS. Options may be granted only to executive officers or
directors of the Company or any subsidiary of the Company as set forth below.
As used herein, the term "subsidiary" means any present or future corporation
which is or would be a "subsidiary corporation" within the meaning of Section
424 of the Internal Revenue Code of 1986, as amended.
The following individuals shall each be granted an Option to purchase the
number of shares of Common Stock set forth opposite each such person's name on
the date the Company's Registration Statement on Form S-1, (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act") with
respect to the initial public offering of the Common Stock becomes effective
under the Act (the "Effective Date"):
P. Enoch Stiff 200,000 shares
James H. Hook 75,000 shares
Curtis J. Laetz 75,000 shares
Paul D. Roblee 75,000 shares
Robert D. Melin 75,000 shares
- 2 -
<PAGE>
4. NUMBER OF SHARES SUBJECT TO THE PLAN; GRANT OF OPTIONS. The total
number of shares of Common Stock which may be issued under Options granted
pursuant to the Plan shall not exceed 500,000 shares (subject to adjustment in
the event of a reorganization, merger, consolidation, stock split, dividend
payable in Common Stock, split-up, combination or other exchange of shares).
Shares of Common Stock issuable upon exercise of Options granted under the Plan
may be either authorized and unissued shares or previously issued shares
reacquired by the Company and held in treasury. If any Option granted under the
Plan is surrendered before exercise, lapses without exercise, or, for any other
reason, ceases to be exercisable, the shares subject to such Option shall not be
available for the grant of Options under the Plan. Subject to the provisions of
Section 11 hereof, the Plan shall remain in effect until all shares of Common
Stock now or hereafter subject to the Plan have been purchased pursuant to the
exercise of Options granted under the Plan; provided that the Plan shall
terminate on the tenth (10th) anniversary of the Effective Date, and no Option
may be granted hereunder after such date.
5. STOCK ADJUSTMENTS. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to this
Plan but not yet subject to Option shall be adjusted by adding to each such
share of Common Stock the number of shares of Common Stock which would be
distributable in respect thereof if such shares had been outstanding on the
record date for the issuance of such stock dividend. In the event
- 3 -
<PAGE>
that the outstanding shares of Common Stock shall be converted into or
exchanged for a different number of shares or other securities of the Company or
of another corporation, whether through stock split, recapitalization, split-up,
merger, consolidation, reorganization, combination or other issuance or exchange
of shares, then there shall be substituted for each share of Common Stock
subject to any outstanding Option under this Plan and for each share of Common
Stock reserved for the grant of Options pursuant to the Plan but not yet subject
to Option, the number and kind of shares or other securities which each
outstanding share of Common Stock shall have been so converted into or for which
each share shall have been so exchanged. In the case of any substitution or
adjustment as provided in this Section 5, the Option price of any share subject
to any outstanding Option shall be adjusted so that there will be no change in
the aggregate purchase price payable upon exercise of any such Option.
6. OPTION PRICE. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the "fair market value" of such
shares at the date on which the Option is exercised. "Fair market value" as of
any date shall mean, during any period in which (i) the Common Stock is not
listed for trading on a national securities exchange, but is reported by the
National Association of Securities Dealers Automated Quotation System ("Nasdaq")
National Market ("NM"), the last transaction price per share as reported by
Nasdaq NM on such date, (ii) the Common Stock is neither listed for trading on a
national securities exchange or reported by Nasdaq NM but is reported by Nasdaq,
the closing bid price as reported by Nasdaq on such date, (iii) the
- 4 -
<PAGE>
Common Stock is listed for trading on a national securities exchange, the
closing price per share on such exchange as of the close of such trading day,
and (iv) neither (i) - (iii) is applicable, as determined by the Committee in
good faith. If fair market value is to be determined as of a day when there
were no transactions in the Common Stock, fair market value shall be the fair
market value on the immediately preceding date when transactions in the Common
Stock were effected.
7. EXERCISABILITY. Except as otherwise set forth in Section 9 hereof,
Options shall become exercisable on the date of grant.
No Option may be exercised after the tenth (10th) anniversary of the
Effective Date. Options which have become exercisable may only be exercised
in whole. No partial exercise will be permitted. Upon exercise, the
purchase price thereunder shall be payable only in the form of shares of
Common Stock held by such Grantee subject to the terms of a Purchase and
Stockholder Agreement between such Grantee and the Company in effect on the
Effective Date (the "Restricted Stock") having a fair market value equal to
that of the shares to be issued upon exercise of the Option. The fair market
value of each share of Restricted Stock tendered upon exercise of an Option
shall be determined as provided in Section 6, without regard to any
restrictions on the transferability of such Restricted Stock. An Option may
not be exercised for fractional shares of Common Stock.
An Option shall be exercised when written notice of such exercise has been
given to the Company by the Grantee, accompanied by certificates evidencing an
- 5 -
<PAGE>
equivalent number of shares of Restricted Stock, duly endorsed for transfer.
Until the issuance of the stock certificates evidencing the shares of Common
Stock issuable upon such exercise, no right to vote, receive dividends or any
other rights as a stockholder shall exist with respect to such shares
notwithstanding the prior exercise of the Option. No adjustment will be made
for dividends or other rights for which the record date is prior to the date the
stock certificate is issued except as provided in Section 5.
The Company shall have the right to withhold or require any Grantee to
remit to the Company, an amount sufficient to satisfy federal, state and
local withholding tax requirements, if any, with respect to any Option. To
the extent permissible under applicable law, the Company may in its sole
discretion permit a Grantee to satisfy a tax withholding requirement by
directing the Company to apply shares to which a Grantee is entitled as the
result of an exercise of an Option to satisfy such requirement.
8. LISTING AND REGISTRATION. The Company, in its discretion, may
postpone the issuance and delivery of shares upon any exercise of an Option
until completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or regulation
as the Company may consider appropriate. The Company may also require any
person exercising an Option to make such representations and furnish such
information as it may consider appropriate or necessary in connection with the
issuance of the shares of Common Stock subject to such Option.
- 6 -
<PAGE>
9. FORM OF OPTIONS AND CONDITIONS OF EXERCISE. Options shall be
evidenced by stock option agreements in such form, not inconsistent with the
provisions of this Plan, as determined by the Committee and approved by the
Board of Directors from time to time. Options will not be assignable or
transferable by the Grantee other than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Grantee only by
the Grantee.
Shares of Common Stock issued upon the exercise of an Option granted
hereunder shall not be assignable or transferable until the last day of the
sixth (6th) full month following the date of exercise and shall continue to
be subject to such further restrictions, if any as are set forth in any
Purchase and Stockholder Agreement between the Company and the Grantee.
The above described restrictions shall not apply to (a) pledges of such
shares to the Company as security for indebtedness of such Grantee to the
Company, and (b) transfers to the Company in satisfaction of any tax withholding
requirement arising as a result of the exercise of an Option.
The termination of employment of a Grantee with the Company shall not
affect the rights of such Grantee with respect to any Options granted hereunder.
Upon the death of any Grantee, any Option held by the Grantee on the date
of death may be exercised during its remaining term by the person or persons to
whom his or her rights with respect to the remaining shares of Restricted Stock
owned by such Grantee
- 7 -
<PAGE>
shall have passed by will or by the laws of descent and distribution, but in
no event later than the tenth (10th) anniversary of the Effective Date.
10. RESERVATION OF SHARES. The Company, during the term of the Plan, will
at all times reserve and keep available, the number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain the necessary approvals from any regulatory body having
jurisdiction or authority deemed necessary by the Company's counsel to the
lawful issuance and sale of any shares of Common Stock under the Plan shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
11. AMENDMENT OF THE PLAN. The Plan may be terminated or amended at any
time by the Board No amendment to the Plan shall affect the terms of any
Options granted prior thereto.
12. NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not be construed as
giving a Grantee any right to continued employment with the Company or its
subsidiaries or to affect or limit in any way the right of the Company to
terminate the employment of the Grantee.
13. GOVERNING LAW. The Plan and any related documents or instruments
shall be governed and construed in accordance with the laws of the State of
Delaware.
- 8 -
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
1996 EXECUTIVE STOCK OPTION PLAN
FORM OF STOCK OPTION AGREEMENT
Option No. ___.
No. of shares subject to Option: ______.
This AGREEMENT dated this ___ day of _________, 1996, between Omniquip
International, Inc., a Delaware corporation, (the "Company") and
________________ (the "Grantee").
W I T N E S S E T H:
1. GRANT OF OPTION. Pursuant to the provisions of the Company's 1996
Executive Stock Option Plan (the "Plan"), the Company hereby grants to the
Grantee, subject to the terms and conditions of the Plan and subject further to
the terms and conditions herein set forth, the right and option to purchase from
the Company __________ shares of Common Stock (subject to readjustment as
provided in the Plan) at a purchase price per share equal to the fair market
value thereof on the date of exercise, determined in accordance with the Plan
(the "Option").
2. DEFINITIONS. Capitalized terms contained in this Agreement that are
not otherwise defined in the Agreement have the same meaning as they are given
in the Plan. The form of notice of exercise is attached as Exhibit 1.
3. TERMS AND CONDITIONS. It is understood and agreed that the Option
evidenced hereby is subject to the terms and conditions set forth in the Plan,
including without limitation the form of purchase consideration, exercisability
of the Option and restrictions on transfer.
<PAGE>
4. RIGHTS AS A STOCKHOLDER. The Grantee shall have no rights as a
stockholder with respect to any shares of Common Stock issuable or transferable
upon exercise hereof until the issuance of the stock certificates evidencing
such shares of Common Stock.
5. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement shall not be
construed as giving the Grantee any right to continued service as an officer,
employee or member of the Board of Directors of the Company or to affect or
limit in any way the right of the Company and its stockholders to remove such
Grantee.
6. COMPLIANCE WITH LAW AND REGULATIONS. This Option and the obligation
of the Company to sell and deliver shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Company shall
not be required to issue or deliver shares of Common Stock prior to (i) the
listing of such shares on any stock exchange on which Common Stock may then be
listed, and (ii) the completion of any registration or qualification of such
shares under any federal or state law, or any rule or regulation of any
government agency which the Company shall, in its reasonable discretion,
determine to be necessary or advisable unless the Grantee has delivered an
opinion of counsel reasonably satisfactory to the Company that such registration
or qualification is not required in connection with such issuance.
7. GRANTEE BOUND BY PLAN. The Grantee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
8. NOTICE. Any notice hereunder to the Company shall be addressed to it
at its offices, 369 West Western Avenue, Port Washington, Wisconsin 53074,
Attention: Secretary, and any notice hereunder to the Grantee shall be addressed
to him or her at
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_______________________________________, subject to the right of either party to
designate at any time hereafter in writing some other address.
IN WITNESS WHEREOF, Omniquip International, Inc. has caused this Agreement
to be executed by its President or a Vice-President and the Grantee has executed
this Agreement, as of the day and year first above written.
OMNIQUIP INTERNATIONAL, INC.
By:
--------------------------
Name:
Title:
------------------------------------
, Grantee
-----------------
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EXHIBIT 1
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Re: EXERCISE OF STOCK OPTION
Gentlemen:
I hereby exercise the Option granted to me under the Stock Option
Agreement dated ___________________, to purchase ______ shares of Omniquip
International, Inc. (the "Company") common stock, $.01 par value per share
(the "Common Stock"). As consideration for such shares, I have enclosed
herewith a certificate and/or stock power evidencing an equal number of
shares of Restricted Stock (as defined in the Company's 1996 Executive Stock
Option Plan), duly endorsed for transfer.
Please issue in my name and send the certificates representing the shares
purchased by my exercise of this Stock Option to me at the address indicated
below.
Date:
------------ ------------------------------------
, Grantee
----------------
------------------------------------
------------------------------------
------------------------------------
Address
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OMNIQUIP INTERNATIONAL, INC.
1996 LONG-TERM INCENTIVE PLAN
1. ADOPTION AND PURPOSE
Omniquip International, Inc. (the "Company") hereby adopts this 1996 Long-Term
Incentive Plan dated September 30, 1996 (the "Plan"). The purposes of the Plan
are to promote the interests of the Company and its stockholders by
(a) attracting and retaining exceptional executive personnel and other key
employees of the Company and its Subsidiaries (as defined below); (b) motivating
such employees by means of performance-related incentives to achieve long-range
performance goals; and (c) enabling such employees to participate in the
long-term growth and financial success of the Company.
2. DEFINITIONS
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
"Award" means, individually or collectively, a grant under this Plan of Options
or Restricted Shares or a Performance Stock Award. The issuance of Restricted
Shares pursuant to a Performance Stock Award shall not be a new Award under this
Plan.
"Award Agreement" means a written agreement entered into between the Company and
a Participant setting forth the terms and conditions of an Award made to such
Participant under this Plan, in the form prescribed by the Committee.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning specified in Section 12(b).
"Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Committee" means a committee appointed by the Board, each member of which shall
be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
Act and shall be an "outside director" within the meaning of Section 162(m) of
the Code. The Committee shall be composed of at least two (2) such directors,
and shall be formed no later than the date of the first duly held meeting of the
Board occurring after the first duly held annual meeting of the Company's
shareholders following the Initial Public Offering.
<PAGE>
"Common Stock" means the common stock of the Company.
"Company" means Omniquip International, Inc., a Delaware corporation
headquartered in Port Washington, Wisconsin.
"Effective Date" means the effective date of this Plan as defined in Section 17.
"Employee" means a key employee of the Company or a Subsidiary.
"Employee Award" means an Award to an Employee under this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the Exchange Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Fair Market Value" means the closing price of the Common Stock as reported on
the NASDAQ "National Market" on the relevant valuation date or, if there were no
Common Stock transactions on the valuation date, on the next preceding date on
which there were Common Stock transactions.
"Incentive Stock Option" has the meaning specified in Section 6(b).
"Initial Public Offering" means the closing of the first offering of Common
Stock pursuant to a registration under the Securities Act.
"Negative Discretion" means other factors to be applied by the Committee in
reducing the number of Restricted Shares to be issued pursuant to a Performance
Stock Award if the Performance Goals have been met or exceeded if, in the
Committee's sole judgment, such application is appropriate in order to act in
the best interest of the Company and its shareholders.
"Participant" means an Employee who has been granted an Award under this Plan.
"Performance Goals" means, with respect to any Performance Period, performance
goals based on any of the following criteria and established by the Committee
prior to the beginning of such Performance Period or performance goals based on
any of the following criteria and established by the Committee after the
beginning of such Performance Period that meet the requirements to be considered
pre-established performance goals under Section 162(m) of the Code: earnings or
earnings growth; earnings per share; return on equity, assets, capital employed
or investment; revenues or revenue growth; gross profit;
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gross margin; operating profit; operating margin; operating cash flow; stock
price appreciation and total shareholder return. Such Performance Goals may be
particular to an Employee or the division, department, branch, line of business,
Subsidiary or other unit in which the Employee works, or may be based on the
performance of the Company generally.
"Performance Period" means the period of time designated by the Committee
applicable to a Performance Stock Award during which the Performance Goals shall
be measured.
"Performance Stock Award" shall have the meaning specified in Section 6(d).
"Plan" means this Omniquip International, Inc. 1996 Long-Term Incentive Plan.
"Plan Year" means an annual period coinciding with the Company's fiscal year.
"Reporting Person" means an officer or director of the Company subject to the
reporting requirements of Section 16 of the Exchange Act.
"Restricted Shares" have the meaning specified in Section 6(c).
"Securities Act" means the Securities Act of 1933, as amended. Reference to a
specific section of the Securities Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Stock Option" has the meaning specified in Section 6(a).
"Subsidiary" means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a proprietary
interest of more than 50% by reason of stock ownership or otherwise.
3. ELIGIBILITY
Any Employee selected by the Committee is eligible to receive an Employee Award.
3A. AWARDS PRIOR TO INITIAL PUBLIC OFFERING
No Awards under the Plan, other than those Awards made pursuant to this Section
3A, shall be made prior to the Initial Public Offering. Notwithstanding
anything contained herein to the contrary, the Board shall have the authority to
make Awards under the Plan prior to the Initial Public Offering subject to the
following terms and conditions:
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<PAGE>
(a) The term "Board" shall be substituted for the term "Committee" as necessary
throughout the Plan (other than in this Section 3A) with respect to Awards made
pursuant to this Section 3A, until such time as the Committee is duly formed.
(b) The Board shall only make Awards of Stock Options as described in Section
6(a). In addition to any other termination provisions that may apply, all such
Awards shall terminate in the event that the Initial Public Offering does not
occur on or before June 30, 1997.
(c) The exercise price per share for such Awards of Stock Options shall be equal
to the price at which the Company's Common Stock is sold in the Initial Public
Offering.
(d) The term Change of Control with respect to such Awards of Stock Options
shall mean a Change of Control which occurs subsequent to the formation of the
Committee.
4. PLAN ADMINISTRATION
(a) This Plan shall be administered by the Committee. The Committee shall
periodically make determinations with respect to the participation of Employees
in this Plan and, except as otherwise required by law or this Plan, the grant
terms of Awards including vesting schedules, price, performance standards
(including Performance Goals), length of relevant performance, restriction or
option period, dividend rights, post-retirement and termination rights, payment
alternatives such as cash, stock, contingent awards or other means of payment
consistent with the purposes of this Plan, and such other terms and conditions
as the Committee deems appropriate. Except as otherwise required by this Plan,
the Committee shall have authority to interpret and construe the provisions of
this Plan and the Award Agreements and make determinations pursuant to any Plan
provision or Award Agreement which shall be final and binding on all persons.
(b) The Committee, in its sole discretion and on such terms and conditions as it
may provide, may delegate all or any part of its authority and powers under this
Plan to one or more directors or officers of the Company; provided, however,
that the Committee may not delegate its authority and powers (i) with respect to
Reporting Persons, or (ii) in any way which would jeopardize this Plan's
qualification under Section 162(m) of the Code or Rule 16b-3 of the Exchange
Act.
(c) All determinations and decisions made by the Committee and any delegate of
the Committee pursuant to Section 4(b) shall be final, conclusive, and binding
on all persons, and shall be given the maximum deference permitted by law.
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<PAGE>
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall either be shares of
authorized but unissued Common Stock, shares of Common Stock held as treasury
stock or previously issued shares of Common Stock reacquired by the Company,
including shares purchased on the open market. Subject to adjustment in
accordance with the provisions of Section 10, (i) the total number of shares of
Common Stock with respect to which Awards may be granted under this Plan may not
exceed 1,600,000 shares, (ii) the total number of shares of Common Stock with
respect to which Awards may be granted in any Plan Year may not exceed 400,000
shares and (iii) the total number of Restricted Shares with respect to which
Awards may be granted in any Plan Year shall not exceed 100,000 shares.
(b) Subject to adjustment in accordance with Section 10, and subject to Section
5(a), (i) the total number of shares of Common Stock with respect to which
Awards may be granted in any Plan Year to any Employee shall not exceed 100,000
shares and (ii) the total number of Restricted Shares with respect to which
Awards may be granted in any Plan Year to any Employee shall not exceed 50,000
shares.
(c) For purposes of calculating the total number of shares of Common Stock
available for grants of Awards, the grant of an Award of Restricted Shares or a
Performance Stock Award shall be deemed to be equal to the maximum number of
shares of Common Stock which may be issued under the Award.
(d)Subject to clauses (ii) and (iii) of Section 5(a) and subject to Section
5(b), there shall again be available for Awards under this Plan, all of the
following: (i) shares of Common Stock represented by Awards which have been
canceled, forfeited, surrendered, terminated or expire unexercised during
preceding Plan Years; and (ii) the excess amount of variable Awards which become
fixed at less than their maximum limitations.
6. EMPLOYEE AWARDS UNDER THIS PLAN
Subject to the provisions of this Plan, the Committee shall have the sole and
complete authority to determine the Employees to whom Awards shall be granted
and the type, terms and conditions of such Awards. As the Committee may
determine, the following types of Awards may be granted under this Plan to
Employees on a stand alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common Stock
at a fixed exercise price during a specified time, and subject to such other
terms and conditions, all as the Committee may determine; provided that the
exercise price of any Stock Option shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant of the Award.
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<PAGE>
(b) Incentive Stock Option. An award in the form of a Stock Option which
shall comply with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time.
(c) Restricted Shares. A transfer of shares of Common Stock to a Participant,
subject to such restrictions, if any, on transfer or other incidents of
ownership, for such periods of time (with respect to each Award, a "Restriction
Period") as the Committee may determine. The stock certificate or certificates
representing Restricted Shares shall be registered in the name of the
Participant to whom such Restricted Shares shall have been awarded. During the
Restriction Period, certificates representing the Restricted Shares shall bear a
restrictive legend to the effect that ownership of the Restricted Shares, and
the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the applicable Award
Agreement. Such certificates shall remain in the custody of the Company and the
Participant shall deposit with the Company stock powers or other instruments of
assignment, each endorsed in blank, so as to permit retransfer to the Company of
all or any portion of the Restricted Shares that shall be forfeited or otherwise
not become vested in accordance with the Plan and the applicable Award
Agreement.
Restricted Shares shall constitute issued and outstanding shares of Common Stock
for all corporate purposes. The Participant will have the right to vote such
Restricted Shares, to receive and retain all dividends and distributions paid or
distributed on such Restricted Shares, and to exercise all other rights, powers
and privileges of a holder of Common Stock with respect to such Restricted
Shares; except, that (i) the Participant will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Shares until the
Restriction Period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled or waived; (ii) the Company will
retain custody of the stock certificate or certificates representing the
Restricted Shares during the Restriction Period; (iii) any such dividends and
distributions paid in shares of Common Stock shall constitute Restricted Shares
and be subject to all of the same restrictions during the Restriction Period as
the Restricted Shares with respect to which they were paid; (iv) the Participant
may not sell, assign, transfer, pledge, exchange, encumber or dispose of the
Restricted Shares or his or her interest in any of them during the Restriction
Period; and (v) a breach of any restrictions, terms or conditions provided in
the Plan or established by the Committee with respect to any Restricted Shares
will cause a forfeiture of such Restricted Shares.
(d) Performance Stock Awards. A right, granted to an Employee, to receive
Restricted Shares (as defined in Section 6(c) hereof) that are not to be issued
to the Employee until after the satisfaction of the Performance Goals during a
Performance Period.
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<PAGE>
7. PERFORMANCE STOCK AWARDS.
(a) Administration. Performance Stock Awards may be granted to Employees either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the Employees to whom Performance Stock Awards shall be awarded
for any Performance Period, the duration of the applicable Performance Period,
the number of Restricted Shares to be awarded at the end of a Performance Period
to Employees if the Performance Goals are met or exceeded and the terms and
conditions of the Performance Stock Award in addition to those contained in this
Section 7.
(b) Payment of Award. During or after the end of a Performance Period, the
financial performance of the Company during such Performance Period shall be
measured against the Performance Goals. If the Performance Goals are not met,
no Restricted Shares shall be issued pursuant to the Performance Stock Award.
If the Performance Goals are met or exceeded, the Committee shall certify that
fact in writing in the Committee minutes or elsewhere and certify the number of
Restricted Shares to be issued under each Performance Stock Award in accordance
with the related Award Agreement. The Committee may, in its sole discretion,
apply Negative Discretion to reduce the number of Restricted Shares to be issued
under a Performance Stock Award.
(c) Requirement of Employment. To be entitled to receive a Performance Stock
Award, an Employee must remain in the employment of the Company or its
Subsidiaries through the end of the Performance Period, except that the
Committee may provide for partial or complete exceptions to this requirement as
it deems equitable in its sole discretion.
8. OTHER TERMS AND CONDITIONS
(a) Assignability. No Stock Option or Performance Stock Award shall be
assignable or transferable except by will or by the laws of descent and
distribution and during the lifetime of a Participant, Stock Options shall be
exercisable only by such Participant.
(b) Award Agreement. Each Award under this Plan shall be evidenced by an Award
Agreement.
(c) Rights As A Shareholder. Except as otherwise provided in this Plan or in
any Award Agreement, a Participant shall have no rights as a shareholder with
respect to shares of Common Stock covered by an Award until the date the
Participant is the holder of record of such shares.
(d) No Obligation to Exercise. The grant of an Award shall impose no obligation
upon the Participant to exercise the Award.
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(e) Payments by Participants. The Committee may determine that Awards for which
a payment is due from a Participant may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the Company,
by money transfers or direct account debits; (ii) through the delivery or deemed
delivery based on attestation to the ownership of shares of Common Stock with a
Fair Market Value equal to the total payment due from the Participant; (iii) by
a combination of the methods described in (i) and (ii) above; or (iv) by such
other methods as the Committee may deem appropriate.
(f) Tax Withholding. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to an Award
or any dividends or other distributions payable with respect thereto. Subject
to the requirements of Rule 16b-3 of the Exchange Act, the Committee, in its
sole discretion and pursuant to such procedures as it may specify from time to
time, may permit a Participant to satisfy such tax withholding obligation, in
whole or in part, by (i) electing to have the Company withhold otherwise
deliverable shares of Common Stock having a Fair Market Value not exceeding the
minimum amount required to be withheld, or (ii) delivering to the Company shares
of Common Stock then owned by the Participant. The amount of the withholding
obligation satisfied by shares of Common Stock withheld or delivered shall be
the Fair Market Value of such shares determined as of the date that the taxes
are required to be withheld.
(g) Restrictions On Sale and Exercise. If and to the extent required to comply
with rules promulgated under Section 16 of the Exchange Act, (i) no Award
providing for exercise, a vesting period, a Restriction Period or the attainment
of performance standards shall permit unrestricted ownership of shares of Common
Stock by the Participant for at least six months from the date of grant, and
(ii) shares of Common Stock acquired pursuant to an Award granted under this
Plan may not be sold or otherwise disposed of for at least six months after the
date of the grant of the Award.
(h) Requirements of Law. The granting of Awards and the issuance of shares of
Common Stock upon the exercise of Awards shall be subject to all applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges (including the Nasdaq Stock Market) upon which the Common Stock may be
listed. As a condition precedent to the issuance of shares of Common Stock
pursuant to the grant or exercise of an Award, the Company may require the
Participant to take any reasonable action to meet such requirements.
(i) Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock
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options and the awarding of stock and cash otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(j) Unfunded Plan. Neither the Company nor any Subsidiary shall be required to
segregate any cash or any shares of Common Stock which may at any time be
represented by Awards and the Plan shall constitute an "unfunded" plan of the
Company. Neither the Company nor any Subsidiary shall, by any provisions of the
Plan, be deemed to be a trustee of any Common Stock or any other property, and
the liabilities of the Company and any Subsidiary to any Employee pursuant to
the Plan shall be those of a debtor pursuant to such contract obligations as are
created by or pursuant to the Plan, and the rights of any Employee, former
employee or beneficiary under the Plan shall be limited to those of a general
creditor of the Company or the applicable Subsidiary, as the case may be. In
its sole discretion, the Board may authorize the creation of trusts or other
arrangements to meet the obligations of the Company under the Plan, provided,
however, that the existence of such trusts or other arrangements is consistent
with the unfunded status of the Plan.
(k) Legends. In addition to any legend contemplated by Section 6(c), each
certificate evidencing Common Stock subject to an Award shall bear such legends
as the Committee deems necessary or appropriate to reflect or refer to any
terms, conditions or restrictions of the Award applicable to such shares,
including, without limitation, any to the effect that the shares represented
thereby may not be disposed of unless the Company has received an opinion of
counsel, acceptable to the Company, that such disposition will not violate any
federal or state securities laws.
(l) Company's Rights. The grant of Awards pursuant to the Plan shall not
affect in any way the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business structure or
to merge, consolidate, liquidate, sell or otherwise dispose of all or any part
of its business or assets.
(m) Designation of Beneficiaries. If permitted by the Committee, a Participant
may designate a beneficiary or beneficiaries in the event of the death of the
Participant and may change such designation from time to time by filing a
written designation of beneficiary or beneficiaries with the Committee on a form
to be prescribed by it, provided that no such designation shall be effective
unless so filed prior to the death of such Participant.
9. AMENDMENTS
(a) Except as otherwise provided in this Plan, the Board may at any time
terminate and, from time to time, may amend or modify this Plan. Any such action
of the Board may be taken without the approval of the Company's shareholders,
but only to the extent that such shareholder approval is not required by
applicable law or regulation or the requirements of any securities exchange or
market on which the Common Stock is listed or authorized for
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quotation, including specifically Rule 16b-3 under the Exchange Act and Section
162(m) of the Code.
(b) No amendment, modification or termination of this Plan shall in any manner
adversely affect any Awards theretofore granted to a Participant under this Plan
without the consent of such Participant. No amendment or modification of this
Plan may change any Performance Goal, or increase the benefits payable for
achievement of a Performance Goal, once established for a Performance Stock
Award.
10. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be granted
to Participants, the number of shares thereof covered by each outstanding Award,
and the price per share thereof in each such Award, shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or other such change.
Any such adjustment may provide for the elimination of fractional shares.
11. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the grant of
an Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company or a Subsidiary. Nothing in this Plan shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any
Subsidiary.
12. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Agreement to
the contrary, in the event of a Change of Control, as defined below, the
following may, in the sole discretion of the Committee (as constituted prior to
the occurrence of the Change of Control), occur with respect to any and all
Employee Awards outstanding as of such Change of Control:
(i) automatic lapse of all restrictions and acceleration of any time periods
relating to the exercise or vesting of Stock Options and Restricted Shares so
that such Awards may be immediately exercised or vested in full on or before the
relevant date fixed in the Award Agreement; and automatic satisfaction of
Performance Goals on a pro rata basis with respect to the maximum number of
Restricted Shares issuable pursuant to a Performance
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Stock Award, or on such other basis as set forth in the Award Agreement, so that
such pro rata or other portion of such Restricted Shares may be immediately
vested;
(ii) upon exercise of a Stock Option (including an Incentive Stock Option)
during the 60-day period from and after the date of a Change of Control, the
Participant exercising the Stock Option may in lieu of the receipt of Common
Stock upon the exercise of the Stock Option, elect by written notice to the
Company to receive an amount in cash equal to the excess of the aggregate Value
(as defined below) of the shares of Common Stock covered by the Stock Option or
portion thereof surrendered determined on the date the Stock Option is
exercised, over the aggregate exercise price of the Stock Option. As used in
this Section 12(a)(iii) the term "Value" means the higher of (i) the highest
Fair Market Value during the 60-day period from and after the date of a Change
of Control and (ii) if the Change of Control is the result of a transaction or
series of transactions described in paragraphs (i) or (iii) of the definition of
Change of Control, the highest price per share of the Common Stock paid in such
transaction or series of transactions (which in the case of paragraph (i) shall
be the highest price per share of the Common Stock as reflected in a Schedule
13D filed by the person having made the acquisition);
(iii) following a Change of Control, if a Participant's employment terminates
for any reason other than retirement or death, any Stock Options held by such
Participant may be exercised by such Participant until the earlier of three
months after the termination of employment or the expiration date of such Stock
Options; and
(iv) all Awards become non-cancellable.
(b) A "Change of Control" of the Company shall be deemed to have occurred upon
the happening of any of the following events:
(i) the acquisition, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
of beneficial ownership of 35% or more of either the then outstanding shares of
Common Stock of the Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors; provided, however, that the acquisition of Common Stock or other
outstanding voting securities by one or more underwriters in connection with a
public offering thereof shall not constitute a Change of Control; and provided,
further, that any acquisition by the Company or any of its Subsidiaries, or any
employee benefit plan (or related trust) of the Company or its Subsidiaries, or
any corporation with respect to which, following such acquisition, more than 50%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Common Stock and voting securities of the
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Company immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the
then outstanding shares of Common Stock of the Company or the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be, shall not constitute
a Change of Control;
(ii) individuals who constitute the Board as of the Effective Date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to such date
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) approval by the shareholders of the Company of a reorganization, merger or
consolidation of the Company, in each case, with respect to which the
individuals and entities who were the respective beneficial owners of the Common
Stock and voting securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the sale or other disposition of
all or substantially all of the assets of the Company.
13. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall be
construed in accordance with and governed by the law of the State of Delaware.
14. CAPTIONS
Captions are provided herein for convenience of reference only, and shall not
serve as a basis for interpretation or construction of this Plan.
15. RESERVATION OF SHARES
The Company, during the term of the Plan, will at all times reserve and keep
available the number of shares of Common Stock as shall be sufficient to satisfy
the requirements of the
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<PAGE>
Plan. The inability of the Company to obtain the necessary approvals from any
regulatory body having jurisdiction or approval deemed necessary by the
Company's counsel to the lawful issuance and sale of any shares of Common Stock
under the Plan shall relieve the Company of any liability in respect of the
nonissuance or sale of such shares of Common Stock as to which such requisite
authority shall not have been obtained.
16. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Employees who are Reporting
Persons, Rule 16b-3 under the Exchange Act. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in any
respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by law, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan. Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to Participants who are Reporting Persons without so restricting, limiting or
conditioning this Plan with respect to other Participants. All Awards of Stock
Options and Performance Stock Awards are intended not to be subject to the
limitations contained in Section 162(m) of the Code.
17. EFFECTIVE DATE AND TERM
The effective date (the "Effective Date") of this Plan shall be the date of its
approval by the Company's shareholders. If such approval is not obtained on or
before February 1, 1997, this Plan shall terminate on such date. No new Awards
shall be granted under this Plan after the tenth anniversary of the Effective
Date. Unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted hereunder may, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
continue after the authority for grant of new Awards hereunder has been
exhausted.
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<PAGE>
OMNIQUIP INTERNATIONAL, INC.
1996 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
1. ADOPTION AND PURPOSE OF THE PLAN. Omniquip International, Inc. (the
"Company") hereby adopts the 1996 Directors Non-Qualified Stock Option Plan (the
"Plan") dated September 30, 1996, which provides for the granting of
non-qualified stock options ("Options") to purchase shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), to members of the
Board of Directors who are not employees of the Company ("Grantees"). This Plan
will give such Grantees added financial incentive to further the Company's
financial well being and increase the Company's value to the benefit of the
Company's shareholders. The Company believes that the Plan will enable it to be
competitive in encouraging directors to remain in its service and to attract
other qualified persons to the Company.
The effective date of the Plan shall be September 30, 1996. Options may be
granted hereunder at any time and from time to time through the date of
termination of the Plan.
2. PLAN ADMINISTRATION. The Plan shall be administered and interpreted
by the Board of Directors of the Company (the "Board") or, if determined from
time to time by the Board, any committee of the Board. In addition to grant or
award transactions made pursuant to the formula provisions of Section 4 hereof,
grant or award transactions with Grantees, as well as transactions involving the
disposition or settlement of grants or awards previously made, shall be
effective if approved by any of the following: (i) the Board
<PAGE>
of Directors of the Company, either by affirmative vote of a majority of the
Board at a meeting duly held at which a quorum is present or by unanimous
written consent; (ii) a committee of the Board, appointed from time to time (or
any successor committee appointed by the Board), consisting of two or more
"Non-Employee Directors" as defined under Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Act") (the "Committee"); or (iii) the affirmative
votes of the holders of a majority of the Common Stock present or represented,
and entitled to vote at a meeting duly held or by the written consent of the
holders of a majority of the Common Stock entitled to vote; provided, however,
that transactions may be authorized and effected with Grantees in any other
manner approved by the Board of Directors; provided, that as a condition to
any such transaction, the Grantee is required to hold the Common Stock so
acquired for a period of not less then six (6) months following the date of
acquisition of Common Stock from the Company.
The foregoing shall not prohibit service on a committee administering this
Plan solely by reason of the receipt of Options granted pursuant to the formula
provisions of Section 4 hereof, or affect the eligibility of committee members
to receive Options granted pursuant to the formula provisions of Section 4.
In administering the Plan, the Board or any authorized committee thereof
may adopt rules and regulations as necessary for carrying out the purposes and
intent of the Plan. Any action taken by the Board or a majority of such
committee in the interpretation or administration of the Plan shall, as between
the Company and the Grantees, be final and
2
<PAGE>
conclusive. Members of any such committee may vote without appearing in person
at any meeting of the committee. The Board or such committee may consult with
counsel, who may be counsel to the Company, and shall not incur any liability
for any action taken in good faith in reliance upon the advice of counsel.
Within the limitations of the Plan, the Eligible Directors (as defined below) to
whom Options will be granted, the exercise price and the number of shares of
Common Stock for which Options will be granted from time to time will be as
specified in Section 4 below, except with respect to any other Options granted
hereunder, in which case such matters will be determined in a manner consistent
with the provisions of Section 2 hereof.
3. PARTICIPANTS. Options may be granted to directors of the Company who
are not employees of the Company or any subsidiary of the Company (an "Eligible
Director"). As used herein, the term "subsidiary" means any present or future
corporation which is or would be a "subsidiary corporation" within the meaning
of Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").
4. INITIAL GRANT OF OPTIONS.
(a) Each Eligible Director on the date the Company's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "33 Act"), with respect to the initial public offering of
the Common Stock becomes effective under the 33 Act (the "Effective Date") shall
be granted an Option with respect to 10,000 shares of Common Stock, at an
exercise price per share equal to the
3
<PAGE>
initial public offering price per share set forth in the Registration Statement
at the time it becomes effective.
(b) Each person first becoming an Eligible Director subsequent to the
Effective Date by reason of his or her election or appointment to the Board of
Directors subsequent to such date shall be granted an Option with respect to
10,000 shares of Common Stock on the date such person is first elected or
appointed and duly qualified to serve on the Board of Directors (the
"Qualification Date"), at an exercise price per share equal to the fair market
value thereof as determined in accordance with Section 7 hereof.
(c) In the event the Chairman of the Board of Directors on the Effective
Date is an Eligible Director, he or she shall be granted an additional Option
with respect to 5,000 shares of Common Stock, at an exercise price per share
equal to the initial public offering price per share set forth in the
Registration Statement at the time it becomes effective.
(d) Each person first becoming Chairman of the Board of Directors
subsequent to the Effective Date by reason of election or appointment to such
position after such date, provided he or she is an Eligible Director, shall be
granted an Option with respect to 5,000 shares of Common Stock on the date such
person is first elected or appointed Chairman, at an exercise price per share
equal to the fair market value thereof as determined in accordance with Section
7 hereof.
4
<PAGE>
5. NUMBER OF SHARES SUBJECT TO THE PLAN. The total number of shares of
Common Stock which may be issued under Options granted pursuant to the Plan
shall not exceed 250,000 shares. Shares of Common Stock issuable upon exercise
of Options granted under the Plan may be either authorized and unissued shares
or previously issued shares reacquired by the Company and held in treasury. If
any Option granted under the Plan is surrendered before exercise, lapses without
exercise, or, for any other reason, ceases to be exercisable, the shares subject
to such Option shall be available for the grant of Options under the Plan.
Subject to the provisions of Section 12 hereof, the Plan shall remain in effect
until all shares of Common Stock now or hereafter subject to the Plan have been
purchased pursuant to the exercise of Options granted under the Plan; provided
that the Plan shall terminate on the (10th) tenth anniversary of the effective
date, and no Option may be granted hereunder after such date.
6. STOCK ADJUSTMENTS. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to this
Plan but not yet subject to Option shall be adjusted by adding to each such
share of Common Stock the number of shares of Common Stock which would be
distributable in respect thereof if such shares had been outstanding on the
record date for the issuance of such stock dividend. In the event that the
outstanding shares of Common Stock shall be converted into or exchanged for a
different number of shares or other securities of the Company or of another
corporation,
5
<PAGE>
whether through stock split, recapitalization, split-up, merger, consolidation,
reorganization, combination or other issuance or exchange of shares, then there
shall be substituted for each share of Common Stock subject to any outstanding
Option under this Plan and for each share of Common Stock reserved for the grant
of Options pursuant to the Plan but not yet subject to Option, the number and
kind of shares or other securities which each outstanding share of Common Stock
shall have been so converted into or for which each share shall have been so
exchanged. In the case of any substitution or adjustment as provided in this
Section 6, the Option price of any share subject to an outstanding Option shall
be adjusted so that there will be no change in the aggregate purchase price
payable upon exercise of any such Option.
7. OPTION PRICE. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the fair market value of such
shares at the date on which the Option is granted, which, in the case of the
Options to be granted in accordance with Section 4 (a) and (c) hereof, shall be
the initial public offering price per share set forth in the Registration
Statement at the time it becomes effective and in the case of all other awards
the fair market value on such date. For the purposes of this Section, the fair
market value of a share of Common Stock on any date shall be equal to the
closing sale price of a share of the Common Stock as published by a national
securities exchange on which the shares of the Common Stock are traded on such
date or, if there is no sale of the Common Stock on such date, the average of
the bid and asked prices on such exchange at the close of trading on such date
or, if shares of Common Stock are not listed on a national
6
<PAGE>
securities exchange on such date but are authorized for quotation in the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
National Market ("NM"), the last transaction price per share as reported by
NASDAQ NM on such date or, if shares of Common Stock are not authorized for
quotation in NASDAQ NM on such date, the average of the bid and asked prices in
the over the counter market or, if the Common Stock is not listed on a national
securities exchange, quoted in NASDAQ NM or quoted in the over the counter
market, the fair market value of a share of the Common Stock on such date as
shall be determined in good faith by the Board or any authorized committee
thereof. For purposes of the Plan, the determination of the Board or any
committee thereof of the fair market value of a share shall be conclusive.
8. EXERCISABILITY. Except as otherwise set forth in Section 10 hereof,
Options shall become exercisable with respect to one-fourth of the shares
covered thereby on each anniversary of the date of grant, commencing on the
second (2nd) anniversary of such date.
No Option may be exercised after the expiration of ten (10) years from the
date of grant of such Option. Options which have become exercisable may be
exercised from time to time, in whole or in part, provided that no partial
exercise will be permitted which would result in the issuance of less than fifty
(50) shares of Common Stock. Upon exercise, the purchase price thereunder shall
be payable in full in cash or in kind, or part in cash and part in kind, by
surrender of currently exercisable Options having a value (determined by
subtracting the exercise price from the fair market value of Common Stock
7
<PAGE>
and multiplying such amount by the number of Options surrendered) on the date of
exercise, equal to the portion of the exercise price so paid. An Option may not
be exercised for fractional shares of Common Stock and any fractional shares
resulting from payment in kind shall be cancelled.
Any issuance of Common Stock pursuant to the exercise of an Option under
the Plan shall not be made until appropriate arrangements satisfactory to the
Board or any committee thereof have been made for the payment of any tax amounts
(federal, state, local or other) that may be required to be withheld or paid by
the Company (or any subsidiary or parent thereof) with respect to such Grantee.
Subject to the requirements of Rule 16b-3 of the Act, the Board or any committee
thereof, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Grantee to satisfy such tax withholding
obligation, in whole or in part, by (i) electing to have the Company withhold
otherwise deliverable shares of Common Stock having a fair market value, as
defined in Section 7, not exceeding the minimum amount required to be withheld,
or (ii) delivering to the Company shares of Common Stock then owned by the
Grantee.
An Option shall be exercised when written notice of such exercise has been
given to the Company by the Grantee, accompanied by payment of the purchase
price. Until the issuance of the stock certificates evidencing the shares of
Common Stock issuable upon such exercise, no right to vote, receive dividends or
any other rights as a shareholder shall exist with respect to such shares
notwithstanding the prior exercise of the Option. No adjustment will be made
for dividends or other rights for which the record date is prior to the date the
stock certificate is issued except as provided in Section 6.
8
<PAGE>
9. LISTING AND REGISTRATION. The Company, in its discretion, may
postpone the issuance and delivery of shares upon any exercise of an Option
until completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or regulation
as the Company may consider appropriate. The Company may also require any
person exercising an Option to make such representations and furnish such
information as it may consider appropriate or necessary in connection with the
issuance of the shares of Common Stock subject to such Option.
10. FORM OF OPTIONS AND CONDITIONS OF EXERCISE. Options shall be
evidenced by stock option agreements in such form, not inconsistent with the
provisions of this Plan, as determined by the Board or any authorized committee
thereof. Options will not be assignable or transferable by the Grantee other
than by will or the laws of descent and distribution and shall be exercisable
during the lifetime of the Grantee only by the Grantee.
Grantees may be granted more than one Option under the Plan. The granting
of an Option under the Plan shall not affect any unexercised Option previously
granted to the Grantee under the Plan or any unexercised Option granted to the
Grantee under any other plan.
Except as otherwise set forth herein, no Option shall be exercisable after
resignation or removal from the Board of Directors.
9
<PAGE>
Upon the removal of a Grantee for cause (as determined by a majority of the
Board), all Options then held by such Grantee, whether or not exercisable on
such date, shall be forfeited and automatically expire on the date of removal.
Upon the voluntary resignation of a Grantee (or the failure of a Grantee to
be re-elected to the Board), all Options held by such Grantee and exercisable as
of the date of resignation shall be exercisable in whole or in part by such
Grantee for a period of thirty (30) days from the date of resignation (or
determination of the election results) but in no event later than ten (10) years
from the date of grant, and all Options held by such Grantee which are not
exercisable on such date of resignation shall be forfeited and automatically
expire on such date. A director on leave of absence may, for purposes of the
Plan, be considered a director of the Company, provided that notwithstanding
such leave of absence, in no event shall an Option be exercised later than ten
(10) years from the date of grant. Upon the death of any Grantee, all Options
exercisable by the Grantee on the date of death may be exercised in whole or
part for a period of one (1) year from the date of such Grantee's death by the
person or persons to whom his or her rights under the Option shall have passed
by will or by the laws of descent and distribution, but in no event later than
ten (10) years from the date of grant and all Options held by such Grantee which
are not exercisable on the date of death shall be forfeited and automatically
expire on such date.
11. RESERVATION OF SHARES. The Company, during the term of the Plan, will
at all times reserve and keep available the number of shares of Common Stock as
shall be
10
<PAGE>
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain the necessary approvals from any regulatory body having
jurisdiction or authority deemed necessary by the Company's counsel to the
lawful issuance and sale of any shares of Common Stock under the Plan shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
12. AMENDMENT OF THE PLAN. The Plan may be terminated or amended at any
time by the Board or any committee thereof authorized to administer the Plan.
13. NO RIGHT TO CONTINUED SERVICE. The Plan shall not be construed as
giving a Grantee any right to continued service as a member of the Board or to
affect or limit in any way the right of the Company and its stockholders to
remove such Grantee.
14. GOVERNING LAW. The Plan and any related documents or instruments
shall be governed and construed in accordance with the laws of the State of
Delaware.
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<PAGE>
OMNIQUIP INTERNATIONAL, INC.
1996 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
FORM OF
DIRECTORS NON-QUALIFIED STOCK OPTION AGREEMENT
Option No. ___.
No. of shares subject to Option: ______.
This AGREEMENT dated this ____ day of _______, 19__, between Omniquip
International, Inc., a Delaware corporation (the "Company"), and
________________ (the "Optionee").
W I T N E S S E T H:
1. GRANT OF OPTION. Pursuant to the provisions of the Company's 1996
Directors Non-Qualified Stock Option Plan (the "Plan"), the Company hereby
grants to the Optionee, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the right and
option to purchase from the Company all or any part of an aggregate of ______
shares of Common Stock at the purchase price of _____ Dollars ($____) per share
or at a purchase price per share equal to the fair market value thereof on the
date of exercise, determined in accordance with the Plan (the "Option").
<PAGE>
2. DEFINITIONS. Capitalized terms contained in this Agreement that are
not otherwise defined in the Agreement have the same meaning as they are given
in the Plan. A form of notice of exercise is attached hereto as Exhibit 1.
3. TERMS AND CONDITIONS. It is understood and agreed that the Option
evidenced hereby is subject to the terms and conditions set forth in the Plan,
including without limitation the exercisability and forfeiture of the Option and
restrictions on transfer.
4. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock issuable or transferable
upon exercise thereof until the issuance of the stock certificates evidencing
such shares of Common Stock.
5. COMPLIANCE WITH LAW AND REGULATIONS. This Option and the obligation
of the Company to sell and deliver shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Company shall
not be required to issue or deliver shares of Common Stock prior to (i) the
listing of such shares on any stock exchange on which Common Stock may then be
listed, and (ii) the completion of any registration or qualification of such
shares under any federal or state law, or any rule or regulation of any
government agency which the Company shall, in its reasonable discretion,
determine to be necessary or advisable unless the Optionee has delivered an
opinion of counsel reasonably
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<PAGE>
satisfactory to the Company that such registration or qualification is not
required in connection with such issuance.
6. OPTIONEE BOUND BY PLAN. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
7. NOTICE. Any notice hereunder to the Company shall be addressed to it
at its offices, 369 West Western Avenue, Port Washington, Wisconsin 53074,
Attention: Secretary, and any notice hereunder to the Optionee shall be
addressed to him or her at ____________________________, subject to the right of
either party to designate at any time hereafter in writing some other address.
IN WITNESS WHEREOF, Omniquip International, Inc. has caused this Agreement
to be executed by its President or Vice-President and the Optionee has executed
this Agreement, as of the day and year first above written.
OMNIQUIP INTERNATIONAL, INC.
By:
-------------------------------
Name:
Title:
----------------------------------
[Name], Optionee
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<PAGE>
EXHIBIT 1
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Re: EXERCISE OF NON-QUALIFIED STOCK OPTION
Gentlemen:
I hereby exercise the Option granted to me under the Directors
Non-Qualified Stock Option Agreement dated ___________________, to purchase
______ shares of Omniquip International, Inc. common stock, $0.01 par value per
share (the "Common Stock"), with respect to _______ shares of Common Stock for
an aggregate purchase price of $_________. As consideration for such shares, I
have enclosed payment in the amount of $__________.
Please issue in my name and send the certificates representing the shares
purchased by my exercise of this Non-Qualified Stock Option to me at the address
indicated below.
Date:
----------- -------------------------
Optionee,
----------------
--------------------------
--------------------------
--------------------------
Address
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<PAGE>
TRAK INTERNATIONAL, INC.
369 WEST WESTERN AVENUE
PORT WASHINGTON, WISCONSIN 53074
AMENDED AND RESTATED
SUBORDINATED NOTE AGREEMENT
$2,000,000 15% Subordinated Note
Due February 28, 2004
HARBOUR GROUP INVESTMENTS III, L.P.
c/o Harbour Group III Management Co., L.P.
7701 Forsyth Boulevard
Clayton, Missouri 63105
Attention: Chief Executive Officer
Notices to be addressed as above and
all payments to be credited (by Federal
funds wire transfer or other immediately
available funds) to Harbour Group Investments III, L.P.'s
Account No. __________________ at
Boatmen's Bank
One Boatmen's Plaza
St. Louis, MO 63102
ABA
Attn:
identifying each such payment as principal or interest with respect to the
15% Subordinated Note Due February 28, 2004 of TRAK International, Inc.
Gentlemen:
The undersigned, TRAK International, Inc., a Delaware corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTE AND COMMITMENT.
1.1. DESCRIPTION OF NOTE.
The Company will authorize the issue and exchange of its Amended
and Restated Subordinated Note in the principal amount of $2,000,000.00, to be
dated the date of issue, to bear interest from such date at a rate of 15% per
annum, compounding semiannually on the fifteenth day of each June and December
in
<PAGE>
each year (commencing on the first of such dates after the date hereof) (each an
"Interest Date"), payable as provided in Section 2.3 hereof and at maturity, and
to pay interest on overdue principal (including overdue required prepayment of
principal) and (to the extent legally enforceable) on any overdue installment of
interest at the rate of 16% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature on February 28, 2004, and
otherwise to be substantially in the form attached hereto as Annex I. The
Amended and Restated Subordinated Note will be exchanged for the Company's 15%
Subordinated Note Due August 31, 2003 in the principal amount of $2,000,000.00,
dated August 16, 1995 (the "OLD SUBORDINATED NOTE") as provided in Section 1.2.
Interest on the Amended and Restated Subordinated Note shall be
computed on the basis of a 360-day year of twelve 30-day months.
The term "NOTE" as used in this Agreement shall mean and
include the amended and restated note in the principal amount of
$2,000,000.00 originally issued pursuant to this Agreement and all notes
issued in substitution or exchange for said note pursuant to this Agreement
and, where applicable, shall include the plural number as well as singular.
1.2. COMMITMENT AND CLOSING DATE.
Subject to the terms and conditions hereof and on the basis of
the representations and warranties hereinafter set forth, the Company agrees to
issue to you, in exchange for the Old Subordinated Note, and you agree to accept
from the Company in exchange for the Old Subordinated Note, on the Closing Date
hereinafter described, the Note in the principal amount of $2,000,000.00. The
closing will take place at the offices of Lewis, Rice & Fingersh, 500 N.
Broadway, Suite 2000, St. Louis, Missouri 63102-2147, at 10:00 A.M. Central
Time, on August 16, 1996 or such other date as shall be mutually agreed upon
(the "CLOSING DATE"). On the Closing Date, delivery of the Note will be made
against delivery of the Old Subordinated Note to the Company for cancellation.
The Note delivered to you on the Closing Date shall be registered in your name
and shall be substantially in the form attached hereto as Annex I.
SECTION 2. REPAYMENT OF NOTE.
2.1. REQUIRED PAYMENT.
The outstanding principal balance of this Note shall be due and
payable in a single installment on February 28, 2004.
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<PAGE>
2.2. OPTIONAL PREPAYMENTS.
Except as prohibited by the terms of any of the Senior
Indebtedness, the Company may, at any time and from time to time, prepay the
outstanding Note, either in whole or in part, by payment of the principal amount
to be prepaid and accrued interest thereon to the date of such prepayment.
2.3. PAYMENTS IN KIND OF INTEREST.
Notwithstanding any other provisions of this Agreement or the
Note to the contrary, interest accrued on the principal amount of the Note from
time to time outstanding from the date of issue through and including the first
Interest Date, and thereafter from each Interest Date through and including the
next succeeding Interest Date, shall be added to the principal balance of the
Note and bear interest from the applicable Interest Date at the rate provided in
the Note.
2.4. DIRECT PAYMENT.
Notwithstanding anything to the contrary in this Agreement or the
Note, in the case the Note is owned by you or your nominee or owned by any other
institutional holder which has given written notice to the Company requesting
that the provisions of this Section shall apply, the Company will promptly and
punctually pay when due the principal thereof and premium, if any, and interest
thereon, without any presentment thereof, directly to you or such subsequent
holder at your address set forth at the beginning of this Agreement or at such
other address as you or such subsequent holder may from time to time designate
in writing to the Company or, if a bank account is designated for you at the
beginning of this Agreement or in any written notice to the Company from you or
any such subsequent holder, the Company will make such payments in immediately
available funds to such bank account, marked for attention as indicated, or in
such other manner or to such other account of yours or such holder in any bank
in the United States as you or any such subsequent holder may from time to time
direct in writing. The holder of the Note agrees that if this Section shall
apply, in the event it shall sell or transfer the Note (i) it will, prior to the
delivery of the Note (unless it has already done so), make a notation thereon of
all principal, if any, prepaid on the Note and will also note thereon the date
to which interest has been paid on the Note, and (ii) it will promptly notify
the Company of the name and address of the transferee of the Note. The Company
shall be entitled to presume conclusively that the original or such subsequent
institutional holder as shall have requested the provisions hereof to apply to
the Note remains the holder of the Note until (x) the Company shall have
received notice of the transfer of the Note, and of the name and address of the
transferee, or (y) the Note shall have been presented to the Company as evidence
of the transfer.
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<PAGE>
SECTION 3. COMPANY COVENANTS.
The Company hereby covenants that, so long as the Note or any
portion thereof remains outstanding:
3.1. SENIOR INDEBTEDNESS.
The Company shall duly and punctually pay, observe and perform
each of its obligations under the terms of its Senior Indebtedness.
3.2. PERFORMANCE OF OBLIGATIONS.
The Company shall duly and punctually pay, observe and perform
each of its obligations set forth herein and under any material binding
agreement to which it may be obligated as the same may be at any time amended,
modified or supplemented and in effect, all in accordance with the terms thereof
other than contracts under which amounts to be received or paid by the Company
are not in the aggregate in excess of $50,000 or which are being contested in
good faith and for which the Company has reserved an amount at least equal to
the full amount of potential liability and damages.
SECTION 4. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
4.1. EVENTS OF DEFAULT.
Any one or more of the following shall constitute an "Event of
Default" as the term is used herein:
(a) Default shall occur in the payment of interest on the
Note when the same shall have become due and such amount shall
remain unpaid for a period of five business days; or
(b) Default shall occur in the making of any required
payment on the Note as provided in Section 2.1; or
(c) The Company or any Significant Subsidiary becomes
insolvent or bankrupt, is generally not paying its debts as they
become due or makes an assignment for the benefit of creditors,
or the Company or any Significant Subsidiary causes or suffers an
order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to
the appointment of a custodian, trustee or receiver for the
Company or such Significant Subsidiary or for the major part of
the property of either; or
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<PAGE>
(d) A custodian, trustee or receiver is appointed for the
Company or any Significant Subsidiary or for the major part of
the property of either and is not discharged within 30 days after
such appointment; or
(e) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy
or similar law or laws for the relief of debtors, are instituted
by or against the Company or any Significant Subsidiary and, if
instituted against the Company or any Significant Subsidiary, are
consented to or are not dismissed within 60 days after such
institution.
4.2. ACCELERATION OF MATURITY.
When any Event of Default described in paragraphs (a) or (b)
of Section 4.1 has happened and is continuing, the holder of the Note (or, if
more than one note has been issued in substitution or exchange for the Note, the
holder or holders of 25% or more of the principal amount of the notes at the
time outstanding) may, by notice in writing sent by registered or certified mail
to the Company, declare the entire principal and all interest accrued on the
Note to be, and the Note shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, and the Company shall forthwith pay to the
holder of the Note the entire principal amount thereof, and interest accrued
thereon. When any Event of Default described in paragraphs (c), (d) or (e) of
Section 4.1 has occurred, then the Note shall immediately become due and payable
without presentment, demand or notice of any kind. Upon the Note becoming due
and payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holder of the Note the entire principal and interest
accrued on the Note. No course of dealing on the part of the Note holder nor
any delay or failure on the part of the Note holder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the extent permitted by law
and whether any Event of Default is subsequently rescinded or annulled, to pay
to the holder of the Note reasonable costs and expenses incurred by it in the
collection of the Note upon any default hereunder or thereon, including
reasonable compensation to such holder's attorneys for all services rendered in
connection therewith.
4.3. RESCISSION OF ACCELERATION.
The provisions of Section 4.2 are subject to the condition that
if the principal of and accrued interest on the Note have been declared
immediately due and payable by reason of
5
<PAGE>
the occurrence of any Event of Default described in paragraphs (a) through
(j), inclusive, of Section 4.1, the holder of (or if more than one note has
been issued in substitution or exchange for the Note, the holder or holders
of 66-2/3% of aggregate principal amount of the notes then outstanding) may,
by written instrument filed with the Company, rescind and annul such
declaration and the consequences thereof, PROVIDED that at the time such
declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Note or this Agreement;
(b) all arrears of interest upon the Note, late charges,
and all other sums payable under the Note and under this
Agreement (except any principal or interest on such Note which
has become due and payable solely by reason of such declaration
under Section 4.2) shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to Section 5.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 5. AMENDMENTS, WAIVERS AND CONSENTS.
5.1. CONSENT REQUIRED.
Any term, covenant, agreement or condition of this Agreement may,
with the consent of the Company, be amended or compliance therewith may be
waived (either generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in writing of the
holder of the Note (or, if more than one note has been issued in substitution or
exchange for the Note, the holder or holders of at least 66-2/3% in aggregate
principal amount of the notes then outstanding); provided that without the
written consent of the holder of the Note (or in the event there is more than
one note, all of the notes then outstanding), no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any prepayment required by Section 2.1) of the principal of
or the interest on any Note or reduce the principal amount thereof or change the
rate of interest thereon, or (ii) which will change any of the provisions of
Sections 2 or 4 or this Section 5.
6
<PAGE>
5.2. EFFECT OF AMENDMENT OR WAIVER.
Any such amendment or waiver shall be binding upon each future
holder of any Note and upon the Company, whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 6. INTERPRETATION OF AGREEMENT; DEFINITIONS.
6.1. DEFINITIONS.
Unless the context otherwise requires, the terms hereinafter set
forth when used herein shall have the following meanings and shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined:
"AFFILIATE" shall mean any Person (other than a Subsidiary)
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company, (ii) which beneficially owns or holds
10% or more of the Voting Stock of the Company or (iii) 10% or
more of the Voting Stock (or in the case of a Person which is not
a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The
term "CONTROL" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"CAPITALIZED LEASE" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a
balance sheet of the lessee in accordance with generally accepted
accounting principles.
"CAPITALIZED RENTALS" shall mean as of the date of any
determination the amount at which the aggregate Rentals due and
to become due under all Capitalized Leases under which the
Company or any Subsidiary is a lessee would be reflected as a
liability on a consolidated balance sheet of the Company and its
Subsidiaries.
"DEFAULT" shall mean any event or condition, the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default as defined in Section
4.1.
7
<PAGE>
"GUARANTIES" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation, of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or
obligation, or (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof.
"INDEBTEDNESS" of any Person shall mean and include all
obligations of such Person which in accordance with generally
accepted accounting principles shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any
event shall include all (i) obligations of such Person for
borrowed money or which have been incurred in connection with the
acquisition of property or assets, (ii) obligations secured by
any lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (iii) obligations created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property,
(iv) Capitalized Rentals under any Capitalized Lease and (v) all
Guaranties of such Person.
"LIEN" means, with respect to any asset or property, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset or property.
8
<PAGE>
"NOTE" is defined in Section 1.1.
"PARTNERSHIP" shall mean Harbour Group Investments III, L.P.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency
or political subdivision thereof.
"POST-PETITION INTEREST" means interest accruing in respect
of Senior Indebtedness after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding by or against the
Company, at the rate applicable to such Senior Indebtedness
pursuant to the terms of the Senior Financing Agreements, whether
or not such interest is allowed as a claim enforceable against
the Company in any such proceeding.
"RENTALS" shall mean and include all fixed rents (including
as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property)
payable by the Company or a Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called, "percentage leases"
shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume
or gross revenues.
"SECURITY" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" of any Person shall mean (i) all
indebtedness of such Person for borrowed money or which has been
incurred in connection with the acquisition of assets or capital
stock by such Person, including without limitation all of such
Person's indebtedness, obligations and liabilities of every kind
and nature, whether now existing or hereafter arising, incurred
pursuant to (A) that certain Loan Agreement, dated as of
August 16, 1996, among Trak International, Inc., Lull Lift
Corporation, The Boatmen's National Bank of St. Louis, as agent
for itself and the other Lenders named therein (the "Agent"), and
the Lenders, as amended, modified, restated or replaced from time
to
9
<PAGE>
time (together with all documents, certficates and agreements
executed in connection therewith, the "SENIOR CREDIT AGREEMENT"),
and (B) that certain Note Purchase Agreement, dated as of August
16, 1995, between Trak International, Inc. and The Minnesota
Mutual Life Insurance Company, as amended from time to time (the
"MIMLIC NOTE AGREEMENT") (the Senior Credit Agreement and the
MIMLIC Note Agreement are herein referred to collectively as the
"SENIOR FINANCING AGREEMENTS"), (ii) all Capitalized Rentals of
such Person, (iii) all Guaranties of such Person of obligations
of others of the type described in clauses (i) and (ii) above,
and (iv) all Post-Petition Interest in respect of any of the
foregoing; provided, however, that "Senior Indebtedness" shall
not include (a) Indebtedness evidenced by the Note and other
loans and guarantees made to the Company and/or its Subsidiaries
by the Partnership, or (b) Indebtedness that is expressly
subordinated in all respects to the Indebtedness described in
clause (a). "CONSOLIDATED" when used as a prefix to any Senior
Indebtedness shall mean the aggregate amount of all such Senior
Indebtedness of the Company and its Subsidiaries on a
consolidated basis eliminating inter-company items.
"SIGNIFICANT SUBSIDIARY" shall mean, with respect to a
Subsidiary of the Company, a Subsidiary having a book value of,
or generating revenues at least equal to, 10% of, respectively,
the total book value of or the total revenues generated by the
Company and all of its Subsidiaries.
"SUBSIDIARY" shall mean, as to any particular parent
corporation, any corporation of which more than 80% (by number of
votes) of each class of the Voting Stock shall be owned by such
parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation.
"VOTING STOCK" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote in the election of the corporate
directors (or Persons performing similar functions).
6.2. ACCOUNTING PRINCIPLES.
Where the character or amount of any asset or liability or item
of income or expense is required to be determined or any consolidation or
other accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with generally accepted
10
<PAGE>
accounting principles in effect on the date hereof, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
6.3. DIRECTLY OR INDIRECTLY.
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether the action in question is taken directly
or indirectly by such Person.
SECTION 7. MISCELLANEOUS.
7.1. REGISTERED NOTE.
The Company shall cause to be kept at its principal office a
register for the registration and transfer of the Note (hereinafter called the
"Note Register"), and the Company will register or transfer or cause to be
registered or transferred, as hereinafter provided and under such reasonable
regulations as it may prescribe, the Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of the
Note may transfer such Note upon surrender thereof at the principal office of
the Company duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing.
The Person in whose name the Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal and interest on the Note
shall be made to or upon the written order of such registered holder.
7.2. EXCHANGE OF NOTE.
At any time, and from time to time, upon not less than ten days'
notice to that effect given by the holder of the Note initially delivered or of
any Note substituted therefor pursuant to Sections 7.1 or 7.3 or this Section
7.2, and, upon surrender of such Note at its office, the Company will deliver in
exchange therefor, without expense to the holder, except as set forth below, a
Note for the same aggregate principal amount as the then unpaid principal amount
of the Note so surrendered, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Note so surrendered for exchange. The Company may
require the payment of
11
<PAGE>
a sum sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer. All Notes shall be legended to state that the
indebtedness evidenced thereby is subordinated to the indebtedness described in
clause (i) of the definition of Senior Indebtedness pursuant to the applicable
subordination agreement.
7.3. LOSS, THEFT, ETC. OF NOTE
Upon receipt of evidence satisfactory to the Company of the loss,
theft, mutilation or destruction of the Note, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note, the Company will
make and deliver without expense to the holder thereof, a new Note, of like
tenor, in lieu of such lost, stolen, destroyed or mutilated Note. If the
Partnership or any subsequent institutional holder is the owner of such lost,
stolen or destroyed Note, then the affidavit of an authorized officer of such
owner, setting forth the fact of loss, theft or destruction and of its ownership
of the Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
7.4. EXPENSES, STAMP TAX INDEMNITY.
Whether the transactions herein contemplated shall be
consummated, the Company agrees to pay directly all of your reasonable
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated hereby, including
but not limited to the reasonable charges and disbursements of your counsel,
duplicating and printing costs and charges for shipping the Note, adequately
insured to you at your home office or at such other place as you may designate,
and so long as you hold the Note, all such expenses relating to any amendment,
waivers or consents pursuant to the provisions hereof. The Company also agrees
that it will pay and save you harmless against any and all liability with
respect to stamp and other taxes, if any, which may be payable or which may be
determined to be payable in connection with the execution and delivery of this
Agreement or the Note, whether the Note is then outstanding. The Company agrees
to protect and indemnify you against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.
12
<PAGE>
7.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE.
No delay or failure on the part of the holder of the Note in the
exercise of any power or right shall operate as a waiver thereof; nor shall any
single or partial exercise of the same preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies of the holder of the Note are cumulative to and are not exclusive of
any rights or remedies any such holder would otherwise have, and no waiver or
consent, given or extended pursuant to Section 7 hereof, shall extend to or
affect any obligation or right not expressly waived or consented to.
7.6. NOTICES.
All communications provided for hereunder shall be in writing
and, if to you, delivered or mailed by registered or certified mail, addressed
to you at your address appearing at the beginning of this Agreement or such
other address as you or the subsequent holder of any Note initially issued to
you, may designate to the Company in writing, and if to the Company, delivered
or mailed by registered or certified mail to the Company at: TRAK
International, Inc., c/o Harbour Group Industries, Inc., 7701 Forsyth
Boulevard, Clayton, Missouri 63105, Attention: Chief Executive Officer, or to
such other address as the Company may in writing designate to you or to a
subsequent holder of the Note initially issued to you.
7.7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to your benefit and to the benefit of
your successors and assigns, including each successive holder or holders of the
Note, and if any subsequent holder of any Note shall have presented the same to
the Company for inspection, accompanied by a written designation of the address
to which notice in respect of the Note of such holder is to be given, then
wherever in this Agreement it is provided that notice shall be given to the
holder of the Note, the notice in respect of the Note so presented shall be
addressed to such holder at the address so given.
7.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS.
All covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant hereto, whether in connection
with the Closing Date, shall survive the closing and the delivery of this
Agreement and the Note.
13
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7.9. SEVERABILITY.
Should any part of this Agreement for any reason be declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such part,
parts, or portion which may, for any reason, be hereafter declared invalid.
7.10. GOVERNING LAW.
This Agreement and the Note issued and sold hereunder shall be
governed by and construed in accordance with Missouri law.
7.11. CAPTIONS.
The descriptive headings of the various Sections or parts of this
Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
7.12. LIMITATION ON INTEREST.
No provision of this Agreement or of the Note shall require the
payment or permit the collection of interest in excess of the maximum which is
permitted by law. If any such excess interest is provided for herein or in the
Note, or shall be adjudicated to be so provided for, then the Company shall not
be obligated to pay such interest in excess of the maximum permitted by law, and
the right to demand payment of any such excess interest is hereby waived, any
other provisions in this Agreement or in the Note to the contrary
notwithstanding.
7.13. STATEMENT PURSUANT TO Section 432.045 OF THE REVISED STATUTES OF
MISSOURI.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or renew
such debts are not enforceable. To protect you and the Company from
misunderstanding or disappointment, any agreements we reach covering such
matters are contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later agree in writing
to modify it.
SECTION 8. [INTENTIONALLY DELETED]
14
<PAGE>
SECTION 9. EXECUTION; COUNTERPARTS.
The execution hereof by you shall constitute a contract between
us for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
[signature page follows]
15
<PAGE>
TRAK INTERNATIONAL, INC.
By:/s/ James H. Hook
-----------------------
Name:
Title:
Accepted on August 16, 1996
HARBOUR GROUP INVESTMENTS III, L.P.
By: /s/ Francis M. Loveland
---------------------------
Name:
Title:
16
<PAGE>
ANNEX I
FORM OF
TRAK INTERNATIONAL, INC.
Amended and Restated
15% Subordinated Note
Due February 28, 2004
No. R-2
$2,000,000.00 August , 1996
TRAK INTERNATIONAL, INC., a Delaware corporation (the "Company"), for
value received hereby promises to pay to
HARBOUR GROUP INVESTMENTS III, L.P.
or registered assigns
on the 28th day of February, 2004
the principal amount of
TWO MILLION DOLLARS
($2,000,000.00)
or such aggregate unpaid principal amount as shall be outstanding under this
Note, plus all interest accrued thereon. Interest (computed on the basis of a
360-day year of twelve 30-day months) shall accrue on the principal amount from
time to time remaining unpaid hereon at the rate of 15% per annum, compounding
semiannually on the fifteenth day of each June and December in each year
commencing on the first of such dates after the date hereof (each an "Interest
Date"), from the date hereof until maturity. Interest accrued on the principal
amount of the Note from time to time outstanding from the date of issue through
and including the first Interest Date, and thereafter from each Interest Date
through and including the next succeeding Interest Date, shall be added to the
principal balance of the Note and bear interest from the applicable Interest
Date at the rate provided in the Note. The Company agrees to pay interest on
overdue principal (including any overdue required prepayment of principal) and
(to the extent legally enforceable) on any overdue installment of interest at
the rate of 16% per annum after maturity, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of Harbour Group Investments III. L.P., 7701 Forsyth Boulevard,
St. Louis, Missouri 63105 in coin or currency
<PAGE>
of the United States of America which at the time of payment shall be legal
tender for the payment of public and private debts.
This Amended and Restated Subordinated Note is issued under and
pursuant to the terms and provisions of that certain Amended and Restated
Subordinated Note Agreement dated August , 1996, entered into by Harbour
Group Investments III, L.P. ("Creditor") with the Company (the "Subordinated
Note Agreement") and SHALL BE SUBORDINATED AND INFERIOR IN RIGHT OF PAYMENT
TO THE COMPANY'S SENIOR INDEBTEDNESS AS DEFINED IN THE SUBORDINATED NOTE
AGREEMENT UPON THE TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT OF EVEN DATE BETWEEN THE CREDITOR AND THE BOATMEN'S
NATIONAL BANK OF ST. LOUIS, AS AGENT FOR ITSELF AND OTHER LENDERS, AND THAT
CERTAIN SUBORDINATION AGREEMENT OF EVEN DATE BETWEEN THE CREDITOR AND THE
MINNESOTA MUTUAL LIFE INSURANCE COMPANY.
This Amended and Restated Subordinated Note may be declared due
prior to its expressed maturity date and certain optional prepayments may be
made thereon, all in the events, on the terms and in the manner and amounts as
provided in the Subordinated Note Agreement.
This Amended and Restated Subordinated Note is registered on the
books of the Company and is transferable only by surrender thereof at the
principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this
Subordinated Note or its attorney duly authorized in writing. Payment of or
on account of principal and interest on this Amended and Restated
Subordinated Note shall be made only to or upon the order in writing of the
registered holder.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or
renew such debts are not enforceable. To protect the Creditor and the
Company from misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is the complete
and exclusive statement of the agreement between us, except as we may later
agree in writing to modify it.
TRAK INTERNATIONAL, INC.
By:
--------------------------
Name:
Title:
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNIQUIP CORPORATION
7701 Forsyth BoulevardClayton, Missouri 63105
SUBORDINATED NOTE AGREEMENT
Dated August 16, 1996
$14,000,000 15% Subordinated Note
Due February 28, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION HEADING PAGE
1. DESCRIPTION OF NOTE AND COMMITMENT . . . . . . . . . . . . . . . 1
1.1 Description of Note . . . . . . . . . . . . . . . . . . . 1
1.2 Commitment and Closing Date . . . . . . . . . . . . . . . 2
2. REPAYMENT OF NOTE . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Required Payment . . . . . . . . . . . . . . . . . . . . 2
2.2 Optional Prepayments . . . . . . . . . . . . . . . . . . 2
2.3 Payments In Kind of Interest. . . . . . . . . . . . . . . 3
2.4 Direct Payment . . . . . . . . . . . . . . . . . . . . . 3
3. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Senior Indebtedness . . . . . . . . . . . . . . . . . . . 4
3.2 Performance of Obligations. . . . . . . . . . . . . . . . 4
4. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . . 4
4.1 Events of Default . . . . . . . . . . . . . . . . . . . . 4
4.2 Acceleration of Maturity. . . . . . . . . . . . . . . . . 5
4.3 Rescission of Acceleration. . . . . . . . . . . . . . . . 5
5. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . 6
5.1 Consent Required . . . . . . . . . . . . . . . . . . . . 6
5.2 Effect of Amendment or Waiver . . . . . . . . . . . . . . 7
6. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . 7
6.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Accounting Principles . . . . . . . . . . . . . . . . . . 10
6.3 Directly or Indirectly . . . . . . . . . . . . . . . . . 11
7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.1 Registered Note . . . . . . . . . . . . . . . . . . . . . 11
7.2 Exchange of Note . . . . . . . . . . . . . . . . . . . . 11
7.3 Loss, Theft, Etc. of Note . . . . . . . . . . . . . . . . 12
7.4 Expenses, Stamp Tax Indemnity . . . . . . . . . . . . . . 12
7.5 Powers and Rights Not Waived; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . . . . 12
7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Successors and Assigns . . . . . . . . . . . . . . . . . 13
7.8 Survival of Covenants and Representations . . . . . . . . 13
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . 13
ii
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7.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . 14
7.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . 14
7.12 Limitation on Interest . . . . . . . . . . . . . . . . . 14
7.13 Statement Pursuant to Section 432.045 of the
Revised Statutes of Missouri . . . . . . . . . . . . . 14
8. [Intentionally Deleted]
9. Execution; Counterparts. . . . . . . . . . . . . . . . . . . . . 14
Attachment to Note Agreement:
Annex I - Form of Subordinated Note
iii
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UNIQUIP CORPORATION
7701 FORSYTH BOULEVARD
CLAYTON, MISSOURI 63105
SUBORDINATED NOTE AGREEMENT
$14,000,000 15% Subordinated Note
Due February 28, 2004
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
One Boatmen's Plaza, 14th Floor
800 Market Street
St. Louis, Missouri 63101
Attention: Leveraged Finance Group -- TRAK Internaional, Inc.
Notices to be addressed as above and
all payments to be credited (by Federal
funds wire transfer or other immediately
available funds) to The Boatmen's National Bank of St. Louis'
Account No. _____________ at
Boatmen's Bank
One Boatmen's Plaza
St. Louis, MO 63102
ABA 081000032
Attn: Leveraged Finance Group -- TRAK International, Inc.
identifying each such payment as principal
or interest with respect to the 15% Subordinated Note Due February 28, 2004 of
UNIQUIP CORPORATION
Gentlemen:
The undersigned, UNIQUIP CORPORATION, a Delaware corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTE AND COMMITMENT.
1.1. DESCRIPTION OF NOTE.
The Company will authorize the issue and sale of its Subordinated
Note in the principal amount of $14,000,000.00, to be dated the date of issue,
to bear interest from such date at a rate of 15% per annum, compounding
semiannually on the fifteenth day of each June and December in each year
(commencing on the first of such dates after the date hereof) (each an "Interest
<PAGE>
Date"), payable as provided in Section 2.3 hereof and at maturity, and to pay
interest on overdue principal (including overdue required prepayment of
principal) and (to the extent legally enforceable) on any overdue installment of
interest at the rate of 16% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature on February 28, 2004, and
otherwise to be substantially in the form attached hereto as Annex I.
Interest on the Subordinated Note shall be computed on the basis
of a 360-day year of twelve 30-day months.
The term "NOTE" as used in this Agreement shall mean and include
the note in the principal amount of $14,000,000.00 originally issued pursuant
to this Agreement and all notes issued in substitution or exchange for said
note pursuant to this Agreement and, where applicable, shall include the plural
number as well as singular.
1.2. COMMITMENT AND CLOSING DATE.
Subject to the terms and conditions hereof and on the basis of
the representations and warranties hereinafter set forth, the Company agrees to
issue and sell to you, and you agree to purchase from the Company, on the
Closing Date hereinafter described, at a purchase price equal to 100% of the
principal amount of said Note, the Note in the principal amount of
$14,000,000.00. The closing will take place at the offices of Lewis, Rice &
Fingersh, 500 N. Broadway, Suite 2000, St. Louis, Missouri 63102-2147, at 10:00
A.M. Central Time, on August 16 1996 or such other date as shall be mutually
agreed upon (the "CLOSING DATE"). On the Closing Date, delivery of the Note
will be made against payment therefor in Federal or other funds current and
available in U.S. Dollars in an aggregate amount of the purchase price. The
Note delivered to you on the Closing Date shall be registered in your name and
shall be substantially in the form attached hereto as Annex I.
SECTION 2. REPAYMENT OF NOTE.
2.1. REQUIRED PAYMENT.
The outstanding principal balance of this Note shall be due and
payable in a single installment on February 28, 2004.
2.2. OPTIONAL PREPAYMENTS.
Except as prohibited by the terms of any of the Senior
Indebtedness, the Company may, at any time and from time to time, prepay the
outstanding Note, either in whole or in part,
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by payment of the principal amount to be prepaid and accrued interest thereon to
the date of such prepayment.
2.3. PAYMENTS IN KIND OF INTEREST.
Notwithstanding any other provisions of this Agreement or the
Note to the contrary, interest accrued on the principal amount of the Note from
time to time outstanding from the date of issue through and including the first
Interest Date, and thereafter from each Interest Date through and including the
next succeeding Interest Date, shall be added to the principal balance of the
Note and bear interest from the applicable Interest Date at the rate provided in
the Note.
2.4. DIRECT PAYMENT.
Notwithstanding anything to the contrary in this Agreement or the
Note, in the case the Note is owned by you or your nominee or owned by any other
institutional holder which has given written notice to the Company requesting
that the provisions of this Section shall apply, the Company will promptly and
punctually pay when due the principal thereof and premium, if any, and interest
thereon, without any presentment thereof, directly to you or such subsequent
holder at your address set forth at the beginning of this Agreement or at such
other address as you or such subsequent holder may from time to time designate
in writing to the Company or, if a bank account is designated for you at the
beginning of this Agreement or in any written notice to the Company from you or
any such subsequent holder, the Company will make such payments in immediately
available funds to such bank account, marked for attention as indicated, or in
such other manner or to such other account of yours or such holder in any bank
in the United States as you or any such subsequent holder may from time to time
direct in writing. The holder of the Note agrees that if this Section shall
apply, in the event it shall sell or transfer the Note (i) it will, prior to the
delivery of the Note (unless it has already done so), make a notation thereon of
all principal, if any, prepaid on the Note and will also note thereon the date
to which interest has been paid on the Note, and (ii) it will promptly notify
the Company of the name and address of the transferee of the Note. The Company
shall be entitled to presume conclusively that the original or such subsequent
institutional holder as shall have requested the provisions hereof to apply to
the Note remains the holder of the Note until (x) the Company shall have
received notice of the transfer of the Note, and of the name and address of the
transferee, or (y) the Note shall have been presented to the Company as evidence
of the transfer.
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SECTION 3. COMPANY COVENANTS.
The Company hereby covenants that, so long as the Note or any
portion thereof remains outstanding:
3.1. SENIOR INDEBTEDNESS.
The Company shall duly and punctually pay, observe and perform
each of its obligations under the terms of its Senior Indebtedness.
3.2. PERFORMANCE OF OBLIGATIONS.
The Company shall duly and punctually pay, observe and perform
each of its obligations set forth herein and under any material binding
agreement to which it may be obligated as the same may be at any time amended,
modified or supplemented and in effect, all in accordance with the terms thereof
other than contracts under which amounts to be received or paid by the Company
are not in the aggregate in excess of $50,000 or which are being contested in
good faith and for which the Company has reserved an amount at least equal to
the full amount of potential liability and damages.
SECTION 4. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
4.1. EVENTS OF DEFAULT.
Any one or more of the following shall constitute an "Event of
Default" as the term is used herein:
(a) Default shall occur in the payment of interest on the
Note when the same shall have become due and such amount shall
remain unpaid for a period of five business days; or
(b) Default shall occur in the making of any required
payment on the Note as provided in Section 2.1; or
(c) The Company or any Significant Subsidiary becomes
insolvent or bankrupt, is generally not paying its debts as they
become due or makes an assignment for the benefit of creditors,
or the Company or any Significant Subsidiary causes or suffers an
order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to
the appointment of a custodian, trustee or receiver for the
Company or such Significant Subsidiary or for the major part of
the property of either; or
4
<PAGE>
(d) A custodian, trustee or receiver is appointed for the
Company or any Significant Subsidiary or for the major part of
the property of either and is not discharged within 30 days after
such appointment; or
(e) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy
or similar law or laws for the relief of debtors, are instituted
by or against the Company or any Significant Subsidiary and, if
instituted against the Company or any Significant Subsidiary, are
consented to or are not dismissed within 60 days after such
institution.
4.2. ACCELERATION OF MATURITY.
When any Event of Default described in paragraphs (a) or (b) of
Section 4.1 has happened and is continuing, the holder of the Note (or, if more
than one note has been issued in substitution or exchange for the Note, the
holder or holders of 25% or more of the principal amount of the notes at the
time outstanding) may, by notice in writing sent by registered or certified mail
to the Company, declare the entire principal and all interest accrued on the
Note to be, and the Note shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, and the Company shall forthwith pay to the
holder of the Note the entire principal amount thereof, and interest accrued
thereon. When any Event of Default described in paragraphs (c), (d) or (e) of
Section 4.1 has occurred, then the Note shall immediately become due and payable
without presentment, demand or notice of any kind. Upon the Note becoming due
and payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holder of the Note the entire principal and interest
accrued on the Note. No course of dealing on the part of the Note holder nor
any delay or failure on the part of the Note holder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the extent permitted by law
and whether any Event of Default is subsequently rescinded or annulled, to pay
to the holder of the Note reasonable costs and expenses incurred by it in the
collection of the Note upon any default hereunder or thereon, including
reasonable compensation to such holder's attorneys for all services rendered in
connection therewith.
4.3. RESCISSION OF ACCELERATION.
The provisions of Section 4.2 are subject to the condition that
if the principal of and accrued interest on the Note have been declared
immediately due and payable by reason of
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<PAGE>
the occurrence of any Event of Default described in paragraphs (a) through (j),
inclusive, of Section 4.1, the holder of (or if more than one note has been
issued in substitution or exchange for the Note, the holder or holders of
66-2/3% of aggregate principal amount of the notes then outstanding) may, by
written instrument filed with the Company, rescind and annul such declaration
and the consequences thereof, PROVIDED that at the time such declaration is
annulled and rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Note or this Agreement;
(b) all arrears of interest upon the Note, late charges,
and all other sums payable under the Note and under this
Agreement (except any principal or interest on such Note which
has become due and payable solely by reason of such declaration
under Section 4.2) shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to Section 5.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 5. AMENDMENTS, WAIVERS AND CONSENTS.
5.1. CONSENT REQUIRED.
Any term, covenant, agreement or condition of this Agreement
may, with the consent of the Company, be amended or compliance therewith may
be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Company shall have obtained the
consent in writing of the holder of the Note (or, if more than one note has
been issued in substitution or exchange for the Note, the holder or holders
of at least 66-2/3% in aggregate principal amount of the notes then
outstanding); provided that without the written consent of the holder of the
Note (or in the event there is more than one note, all of the notes then
outstanding), no such waiver, modification, alteration or amendment shall be
effective (i) which will change the time of payment (including any prepayment
required by Section 2.1) of the principal of or the interest on any Note or
reduce the principal amount thereof or change the rate of interest thereon,
or (ii) which will change any of the provisions of Sections 2 or 4 or this
Section 5.
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<PAGE>
5.2. EFFECT OF AMENDMENT OR WAIVER.
Any such amendment or waiver shall be binding upon each future
holder of any Note and upon the Company, whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 6. INTERPRETATION OF AGREEMENT; DEFINITIONS.
6.1. DEFINITIONS.
Unless the context otherwise requires, the terms hereinafter set
forth when used herein shall have the following meanings and shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined:
"AFFILIATE" shall mean any Person (other than a Subsidiary)
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company, (ii) which beneficially owns or holds
10% or more of the Voting Stock of the Company or (iii) 10% or
more of the Voting Stock (or in the case of a Person which is not
a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The
term "CONTROL" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"CAPITALIZED LEASE" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a
balance sheet of the lessee in accordance with generally accepted
accounting principles.
"CAPITALIZED RENTALS" shall mean as of the date of any
determination the amount at which the aggregate Rentals due and
to become due under all Capitalized Leases under which the
Company or any Subsidiary is a lessee would be reflected as a
liability on a consolidated balance sheet of the Company and its
Subsidiaries.
"DEFAULT" shall mean any event or condition, the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default as defined in Section
4.1.
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"GUARANTIES" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation, of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or
obligation, or (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof.
"INDEBTEDNESS" of any Person shall mean and include all
obligations of such Person which in accordance with generally
accepted accounting principles shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any
event shall include all (i) obligations of such Person for
borrowed money or which have been incurred in connection with the
acquisition of property or assets, (ii) obligations secured by
any lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (iii) obligations created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property,
(iv) Capitalized Rentals under any Capitalized Lease and (v) all
Guaranties of such Person.
"LIEN" means, with respect to any asset or property, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset or property.
8
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"NOTE" is defined in Section 1.1.
"PARTNERSHIP" shall mean Harbour Group Investments III, L.P.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency
or political subdivision thereof.
"POST-PETITION INTEREST" means interest accruing in respect
of Senior Indebtedness after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding by or against the
Company, at the rate applicable to such Senior Indebtedness
pursuant to the terms of the Senior Financing Agreements, whether
or not such interest is allowed as a claim enforceable against
the Company in any such proceeding.
"RENTALS" shall mean and include all fixed rents (including
as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property)
payable by the Company or a Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called, "percentage leases"
shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume
or gross revenues.
"SECURITY" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" of any Person shall mean (i) all
indebtedness of such Person for borrowed money or which has been
incurred in connection with the acquisition of assets or capital
stock by such Person, including without limitation all of such
Person's indebtedness, obligations and liabilities of every kind
and nature, whether now existing or hereafter arising, incurred
pursuant to (A) that certain Loan Agreement dated as of
August 16, 1996 among Trak International, Inc., Lull Lift Lift
Corporation, The Boatmen's National Bank of St. Louis, as agent
for itself and the other Lenders named therein (the "AGENT"), and
the Lenders, as amended, modified, restated or replaced from
time to
9
<PAGE>
time (together with all documents, certificates and agreements
executed in connection therewith, the "SENIOR CREDIT AGREEMENT"),
and (B) that certain Note Purchase Agreement, dated as of August
16, 1995, between Trak International, Inc. and The Minnesota
Mutual Life Insurance Company, as amended from time to time (the
"MIMLIC NOTE AGREEMENT") (the Senior Credit Agreement and the
MIMLIC Note Agreement are herein referred to collectively as the
"SENIOR FINANCING AGREEMENTS"), (ii) all Capitalized Rentals of
such Person, (iii) all Guaranties of such Person of obligations
of others of the type described in clauses (i) and (ii) above,
and (iv) all Post-Petition Interest in respect of any of the
foregoing; provided, however, that "Senior Indebtedness" shall
not include (a) Indebtedness evidenced by the Note and other
loans and guarantees made to the Company and/or its Subsidiaries
by the Partnership, or (b) Indebtedness that is expressly
subordinated in all respects to the Indebtedness described in
clause (a). "CONSOLIDATED" when used as a prefix to any Senior
Indebtedness shall mean the aggregate amount of all such Senior
Indebtedness of the Company and its Subsidiaries on a
consolidated basis eliminating inter-company items.
"SIGNIFICANT SUBSIDIARY" shall mean, with respect to a
Subsidiary of the Company, a Subsidiary having a book value of,
or generating revenues at least equal to, 10% of, respectively,
the total book value of or the total revenues generated by the
Company and all of its Subsidiaries.
"SUBSIDIARY" shall mean, as to any particular parent
corporation, any corporation of which more than 80% (by number of
votes) of each class of the Voting Stock shall be owned by such
parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation.
"VOTING STOCK" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote in the election of the corporate
directors (or Persons performing similar functions).
6.2. ACCOUNTING PRINCIPLES.
Where the character or amount of any asset or liability or item
of income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with generally accepted
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accounting principles in effect on the date hereof, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
6.3. DIRECTLY OR INDIRECTLY.
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether the action in question is taken directly
or indirectly by such Person.
SECTION 7. MISCELLANEOUS.
7.1. REGISTERED NOTE.
The Company shall cause to be kept at its principal office a
register for the registration and transfer of the Note (hereinafter called the
"Note Register"), and the Company will register or transfer or cause to be
registered or transferred, as hereinafter provided and under such reasonable
regulations as it may prescribe, the Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of the
Note may transfer such Note upon surrender thereof at the principal office of
the Company duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing.
The Person in whose name the Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal and interest on the Note
shall be made to or upon the written order of such registered holder.
7.2. EXCHANGE OF NOTE.
At any time, and from time to time, upon not less than ten days'
notice to that effect given by the holder of the Note initially delivered or of
any Note substituted therefor pursuant to Sections 7.1 or 7.3 or this Section
7.2, and, upon surrender of such Note at its office, the Company will deliver in
exchange therefor, without expense to the holder, except as set forth below, a
Note for the same aggregate principal amount as the then unpaid principal amount
of the Note so surrendered, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Note so surrendered for exchange. The Company may
require the payment of
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<PAGE>
a sum sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer. All Notes shall be legended to state that the
indebtedness evidenced thereby is subordinated to the indebtedness described in
clause (i) of the definition of Senior Indebtedness pursuant to the applicable
subordination agreement.
7.3. LOSS, THEFT, ETC. OF NOTE
Upon receipt of evidence satisfactory to the Company of the loss,
theft, mutilation or destruction of the Note, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note, the Company will
make and deliver without expense to the holder thereof, a new Note, of like
tenor, in lieu of such lost, stolen, destroyed or mutilated Note. If the
Partnership or any subsequent institutional holder is the owner of such lost,
stolen or destroyed Note, then the affidavit of an authorized officer of such
owner, setting forth the fact of loss, theft or destruction and of its ownership
of the Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
7.4. EXPENSES, STAMP TAX INDEMNITY.
Whether the transactions herein contemplated shall be
consummated, the Company agrees to pay directly all of your reasonable
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated hereby, including
but not limited to the reasonable charges and disbursements of your counsel,
duplicating and printing costs and charges for shipping the Note, adequately
insured to you at your home office or at such other place as you may designate,
and so long as you hold the Note, all such expenses relating to any amendment,
waivers or consents pursuant to the provisions hereof. The Company also agrees
that it will pay and save you harmless against any and all liability with
respect to stamp and other taxes, if any, which may be payable or which may be
determined to be payable in connection with the execution and delivery of this
Agreement or the Note, whether the Note is then outstanding. The Company agrees
to protect and indemnify you against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.
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7.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE.
No delay or failure on the part of the holder of the Note in the
exercise of any power or right shall operate as a waiver thereof; nor shall any
single or partial exercise of the same preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies of the holder of the Note are cumulative to and are not exclusive of
any rights or remedies any such holder would otherwise have, and no waiver or
consent, given or extended pursuant to Section 7 hereof, shall extend to or
affect any obligation or right not expressly waived or consented to.
7.6. NOTICES.
All communications provided for hereunder shall be in writing
and, if to you, delivered or mailed by registered or certified mail, addressed
to you at your address appearing at the beginning of this Agreement or such
other address as you or the subsequent holder of any Note initially issued to
you, may designate to the Company in writing, and if to the Company, delivered
or mailed by registered or certified mail to the Company at: UNIQUIP
CORPORATION, c/o Harbour Group Industries, Inc., 7701 Forsyth Boulevard,
Clayton, Missouri 63105, Attention: Chief Executive Officer, or to such other
address as the Company may in writing designate to you or to a subsequent holder
of the Note initially issued to you.
7.7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to your benefit and to the benefit of
your successors and assigns, including each successive holder or holders of the
Note, and if any subsequent holder of any Note shall have presented the same to
the Company for inspection, accompanied by a written designation of the address
to which notice in respect of the Note of such holder is to be given, then
wherever in this Agreement it is provided that notice shall be given to the
holder of the Note, the notice in respect of the Note so presented shall be
addressed to such holder at the address so given. The Company aggrees that The
Boatmen's National Bank of St. Louis, the original holder of the Note, may
assign and sell the Note to Harbour Group Investments III, L.P.
7.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS.
All covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant hereto, whether in connection
with the Closing Date, shall survive the closing and the delivery of this
Agreement and the Note.
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7.9. SEVERABILITY.
Should any part of this Agreement for any reason be declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such part,
parts, or portion which may, for any reason, be hereafter declared invalid.
7.10. GOVERNING LAW.
This Agreement and the Note issued and sold hereunder shall be
governed by and construed in accordance with Missouri law.
7.11. CAPTIONS.
The descriptive headings of the various Sections or parts of this
Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
7.12. LIMITATION ON INTEREST.
No provision of this Agreement or of the Note shall require the
payment or permit the collection of interest in excess of the maximum which is
permitted by law. If any such excess interest is provided for herein or in the
Note, or shall be adjudicated to be so provided for, then the Company shall not
be obligated to pay such interest in excess of the maximum permitted by law, and
the right to demand payment of any such excess interest is hereby waived, any
other provisions in this Agreement or in the Note to the contrary
notwithstanding.
7.13. STATEMENT PURSUANT TO SECTION 432.045 OF THE REVISED STATUTES OF
MISSOURI.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or renew
such debts are not enforceable. To protect you and the Company from
misunderstanding or disappointment, any agreements we reach covering such
matters are contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later agree in writing
to modify it.
SECTION 8. [INTENTIONALLY DELETED]
14
<PAGE>
SECTION 9. EXECUTION; COUNTERPARTS.
The execution hereof by you shall constitute a contract between
us for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
[signature page follows]
15
<PAGE>
UNIQUIP CORPORATION
By:/s/ Francis M. Loveland
--------------------------
Name:
Title:
Accepted on August 16, 1996
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By: /s/ Paul Porter
------------------------
Name:
Title:
16
<PAGE>
ANNEX I
FORM OF
UNIQUIP CORPORATION
15% Subordinated Note
Due February 28, 2004
No. R-1
$14,000,000.00 August , 1996
UNIQUIP CORPORATION, a Delaware corporation (the "Company"), for value
received hereby promises to pay to
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
or registered assigns
on the 28th day of February, 2004
the principal amount of
FOURTEEN MILLION DOLLARS
($14,000,000.00)
or such aggregate unpaid principal amount as shall be outstanding under this
Note, plus all interest accrued thereon. Interest (computed on the basis of a
360-day year of twelve 30-day months) shall accrue on the principal amount from
time to time remaining unpaid hereon at the rate of 15% per annum, compounding
semiannually on the fifteenth day of each June and December in each year
commencing on the first of such dates after the date hereof (each an "Interest
Date"), from the date hereof until maturity. Interest accrued on the principal
amount of the Note from time to time outstanding from the date of issue through
and including the first Interest Date, and thereafter from each Interest Date
through and including the next succeeding Interest Date, shall be added to the
principal balance of the Note and bear interest from the applicable Interest
Date at the rate provided in the Note. The Company agrees to pay interest on
overdue principal (including any overdue required prepayment of principal) and
(to the extent legally enforceable) on any overdue installment of interest at
the rate of 16% per annum after maturity, whether by acceleration or otherwise,
until paid. Both
<PAGE>
the principal hereof and interest hereon are payable at the principal office of
The Boatmen's National Bank of St. Louis, One Boatmen's Plaza, 14th Floor, 800
Market Street, St. Louis, Missouri 63101 in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts.
This Subordinated Note is issued under and pursuant to the terms and
provisions of that certain Subordinated Note Agreement dated August , 1996,
entered into by The Boatmen's National Bank of St. Louis ("CREDITOR") with the
Company (the "SUBORDINATED NOTE AGREEMENT") and shall be subordinated and
inferior in right of payment to the Company's Senior Indebtedness as defined in
the Subordinated Note Agreement upon the terms and conditions set forth in that
certain Subordination Agreement of even date between the Creditor and The
Boatmen's National Bank of St. Louis, as agent for itself and other lenders, and
that certain Subordination Agreement of even date between the Creditor and The
Minnesota Mutual Life Insurance Company.
This Subordinated Note may be declared due prior to its expressed
maturity date and certain optional prepayments may be made thereon, all in the
events, on the terms and in the manner and amounts as provided in the
Subordinated Note Agreement.
This Subordinated Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Subordinated Note or its attorney duly
authorized in writing. Payment of or on account of principal and interest on
this Subordinated Note shall be made only to or upon the order in writing of the
registered holder.
Oral agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to extend or renew
such debts are not enforceable. To protect the Creditor and the Company from
misunderstanding or disappointment, any agreements we reach covering such
matters are contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later agree in writing
to modify it.
UNIQUIP CORPORATION
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.39
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT (this "Agreement"), dated September 27, 1996,
intended to be effective as of August 16, 1995 (the "Effective Date"), by and
between Harbour Group Ltd., a Delaware corporation ("Limited"), and Uniquip
Corporation, a Delaware corporation (the "Company").
RECITALS
WHEREAS, Limited has entered into an Insurance Program which Insurance
Program provides for, among other things, workers compensation and employers'
liability, general liability and automobile liability and physical damage
coverage for Limited and for Eligible Companies which are named insureds under
the Insurance Program;
WHEREAS, the Company is an Eligible Company and desires to obtain the
benefits of participating as a named insured in the Insurance Program;
WHEREAS, the Insurance Program includes a retrospective rating plan and
automatic premium adjustment plan, which provide for calculation of the premiums
for the Insurance Program based on application of a rating formula to actual
incurred losses and reserves for future losses and which require adjustment of
the premiums retrospectively; and
WHEREAS, the Company and Limited desire to provide for the payment and
reimbursement by and of each other with respect to premiums and retrospective
adjustments of premiums as more particularly described in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants which are made and to be performed by the respective parties, it is
hereby agreed as of the Effective Date as follows:
SECTION 1. CERTAIN DEFINITIONS.
When used in this Agreement the terms listed in this Section shall have the
following meanings:
"Adjusted Premium" means, with respect to any Rating Period, the aggregate
of adjusted premiums, adjusted deductible prepayments, actual claims handling
fees (to the extent not included in adjusted deductible prepayments) and other
amounts paid or incurred by Limited with respect to such Rating Period,
including without limitation interest and letter of credit fees paid in
connection with any deferral of premium payments, minus declared dividends or
returned premiums (to the extent not reflected in adjusted premiums) payable to
Limited by Insurer with respect to such Rating Period, all determined in
accordance with the provisions of the Insurance Program in effect for such
Rating Period.
<PAGE>
"Affiliate" of a Person means any Person (other than a Participating
Company) who Controls, is Controlled by, or is under common Control with, such
Person.
"Allocate Share" means, with respect to each Participating Company, that
portion of Estimated Premiums with respect to a given Rating Period attributable
to the employees, products, assets and operations of such Participating Company
as conclusively determined by the Broker in a manner analogous to the manner in
which Estimated Premiums were determined pursuant to the Insurance Program, and
that portion of Adjusted Premiums with respect to a given Rating Period
attributable to the employees, products, assets and operations of such
Participating Company as conclusively determined by the Broker in a manner
analogous to the manner in which Adjusted Premiums were determined pursuant to
the Insurance Program, including without limitation the taking into account of
such Participating Company's claims experience during the Rating Period. Each
Participating Company's Allocate Share of the Premium Adjustment with respect to
each Rating Period shall be the difference, positive or negative, of the
Participating Company's Allocate Share of Estimated Premiums minus such
Participating Company's Allocate Share of Adjusted Premiums for such Rating
Period. Its Allocate Share of the Premium Adjustment, if negative, is an amount
payable by the Participating Company to Limited or to Broker at Limited's
direction and if positive, an amount payable or creditable to the Participating
Company by Limited or Broker on Limited's behalf.
"Broker" means Willis Corroon Corporation of Missouri, or any successor
providing similar services in connection with any Insurance Program with respect
to any Rating Period. In the event that there is no such successor providing
similar services, Broker shall mean Limited, or its designee.
"Calculation Date" means, with respect to any Rating Period, the date six
months after the end of such Rating Period, and annually thereafter, as of which
dates the Premium Adjustment is determined.
"Control" shall mean, with respect to a Person, the ownership or control of
voting interests capable of electing a majority of the managing body of such
Person.
"Eligible Company" means a Person more than fifty percent (50%) of the
ownership interests of which are owned by Harbour Group and eligible to
participate in the Insurance Program, as it may be amended from time to time.
"Estimated Premiums" means, with respect to each Rating Period, the
aggregate of premiums (unadjusted), deductible prepayments, estimated claims
handling charges (to the extent not included in deductible prepayments) and
other amounts paid or incurred by Limited with respect to such Rating Period,
including without limitation interest and letter of credit fees paid in
connection with any deferral of premium payments, minus interim advances
(adjustments) of dividends payable to Limited by Insurer with respect to such
Rating Period, all determined in accordance with the provisions of the Insurance
Program in effect for such Rating Period.
2
<PAGE>
"Harbour Group" means, as applicable, Limited, Harbour Group Investments,
L.P. and/or any of their respective Affiliates.
"Insurer" means the CNA Companies, including Transportation Insurance
Company, Continental Casualty Company, Transcontinental Technical Services, Inc.
and any other Person providing all or any part of an Insurance Program.
"Insurance Program" means, as applicable, that certain CNA Casualty
Insurance Program for the period effective April 1, 1996 to April 1, 1997, prior
programs as in effect for the one year period ending April 1, 1996 and any
successor program, as each may have been or may be amended from time to time.
"Participating Company" means, with respect to each Rating Period, an
Eligible Company which has been included as a named insured in the Insurance
Program.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization or association, trust or other entity.
"Premium Adjustment" means the difference, positive or negative, of
Estimated Premiums with respect to a given Rating Period minus Adjusted Premiums
with respect to such Rating Period, determined as of each Calculation Date for
such Rating Period. The Premium Adjustment, if negative, is an amount payable by
Limited to the Insurer and if positive, an amount payable or creditable to
Limited by the Insurer.
"Rating Period" means the period commencing on April 1 of each year and
ending on April 1 of the following year, or other period determined in
accordance with the Insurance Program.
"Retrospective Adjustment Statement" means the statement issued by Broker
to each Participating Company as of each Calculation Date and as of final
settlement with respect to each Rating Period setting forth the calculation of
such Participating Company's Allocate Share of the Premium Adjustment for such
Rating Period.
Terms not otherwise defined herein shall have the meanings given such terms
in the Insurance Program, unless the context clearly indicates otherwise.
SECTION 2. PARTICIPATION IN INSURANCE PROGRAM.
During each Rating Period for which the Company is an Eligible Company,
Limited may, at its election, include the Company as a Participating Company in
the Insurance Program. In the event that the Company is an Eligible Company and
Limited elects not to include the Company as a Participating Company, Limited
shall give notice to the Company of its election prior to the commencement of
such Rating Period; provided that any failure to give such notice shall not
obligate Limited to include the Company as a Participating Company. The Company
shall cease to be a Participating Company immediately upon the earlier to occur
of the Company ceases to be an Eligible Company, and the Insurance Program is
terminated for any reason, including, without limitation, a voluntary
termination by Limited; provided, however, that the provisions of Section 3 of
3
<PAGE>
this Agreement shall continue to apply with respect to any Rating Period during
which the Company was a Participating Company. In the event that during a
Rating Period the Company ceases to be a Participating Company, Limited shall
promptly give notice to the Company of such event; provided that Limited shall
in no way be liable to the Company for any failure to give such notice.
SECTION 3. AGREEMENT TO REIMBURSE.
With respect to each Rating Period for which the Company is a Participating
Company, the Company shall reimburse Limited in the amount of the Company's
Allocate Share of Adjusted Premiums for such Rating Period.
Within fifteen (15) days of receipt from Broker of each monthly invoice
setting forth the Company's Allocate Share of each installment of Estimated
Premiums for each Rating Period during which the Company is a Participating
Company, the Company shall remit to Limited, or on Limited's behalf and at its
direction to Broker or Insurer, the Company's Allocate Share of each installment
of Estimated Premiums.
Upon determination of the Company's Allocate Share of the Premium
Adjustment on each Calculation Date, the Company shall be provided with a
Retrospective Adjustment Statement setting forth the Company's Allocate Share of
the Premium Adjustment. If the Company's Allocate Share of the Premium
Adjustment is positive, Limited or on Limited's behalf, Broker shall pay to the
Company an amount equal to such positive amount within fifteen (15) days of the
date of the Retrospective Adjustment Statement. If the Company's Allocate Share
of the Premium Adjustment is negative, the Company shall pay to Limited or at
Limited's direction to Broker an amount equal to such negative amount within
fifteen (15) days of the date of the Retrospective Adjustment Statement.
In the event that for any Rating Period there are any claims under the
Insurance Program with respect to any Participating Company which claims remain
open or a balance remains in the deductible prepayment fund after the first
Calculation Date, as of each subsequent Calculation Date there shall be a new
determination of the Adjusted Premium, the Premium Adjustment and each
Participating Company's Allocate Share of the Premium Adjustment and the Company
shall be provided with a recalculated Retrospective Adjustment Statement.
Upon final settlement of all claims with respect to a Rating Period,
Limited shall request the Broker to make a final determination of the Adjusted
Premium, the Premium Adjustment and each Participating Company's Allocate Share
of the Premium Adjustment taking into account the final reconciliation of the
deductible prepayment fund and to provide to the Company and Limited a final
Retrospective Adjustment Statement setting forth the Company's Allocate Share of
the final Premium Adjustment. If the Company's Allocate Share of the final
Premium Adjustment for the Rating Period exceeds the amounts previously paid to
Limited or Broker on account of the Insurance Program for such Rating Period,
the Company shall remit the excess to Limited or at Limited's direction to
Broker
4
<PAGE>
within thirty (30) days of the date of the final Retrospective Adjustment
Statement. If the amounts previously paid by the Company on account of such
Insurance Program for the Rating Period exceed the Company's Allocate Share of
the final Premium Adjustment for such Rating Period, Limited shall remit the
excess to the Company within thirty (30) days of the date of the final
Retrospective Adjustment Statement.
SECTION 4. FURTHER ASSURANCES.
Each party hereto shall cooperate with the others, and execute and deliver,
or cause to be executed and delivered, all such other instruments and take all
such other actions as may be reasonably requested by the other party hereto from
time to time, consistent with the terms of this Agreement, to effectuate the
purposes and provisions of this Agreement.
SECTION 5. NOTICES.
All notices, requests, consents and other communications hereunder shall be
in writing and may be delivered personally (including by courier) or by first
class registered or certified mail, postage prepaid, addressed:
(a) if to the Company, to:
Uniquip Corporation
369 W. Western Avenue
Port Washington, WI 53074
Attention: Chief Executive Officer
(b) if to Limited, to:
Harbour Group Ltd.
7701 Forsyth Boulevard
Suite 600
St. Louis, MO 63105
Attention: Mr. Francis M. Loveland
or at such other address as may have been furnished by such party to the others
in writing. Service of any such notice or other communication so made by mail
shall be deemed complete on the earliest to occur of the day of actual delivery
thereof as shown by the addressee's registry or certification receipt or at the
expiration of the third (3rd) day after the date of mailing.
SECTION 6. GOVERNING LAW; PROCESS.
This Agreement shall be governed by the substantive laws of the State of
Missouri without regard to the provisions for choice of law thereunder. The
parties hereto (a) agree that any legal suit, action or proceeding arising out
of or relating to this Agreement must be instituted in a State or Federal Court
in the City of St. Louis, County
5
<PAGE>
of St. Louis and State of Missouri, (b) waive any objection which they may have
now or hereafter to the laying of venue of any such suit, action or proceeding,
(c) irrevocably submit to the jurisdiction of any such court in any such suit,
action or proceeding, and (d) consent to service of process by mail, in the
manner set forth in Section 5, in respect of any legal suit, action or
proceeding arising out of or relating to this Purchase Agreement.
SECTION 7. MODIFICATION; WAIVER.
This Agreement shall not be altered or otherwise amended except pursuant to
an instrument in writing signed by each of the parties hereto. Any party may
waive any misrepresentation by any other party, or any breach of warranty by, or
failure to perform any covenant, obligation or agreement of, any other party,
provided that mere inaction or failure to exercise any right, remedy or option
under this Agreement, or delay in exercising the same, will not operate as nor
shall be construed as a waiver, and no waiver will be effective unless set forth
in writing and only to the extent specifically stated therein.
SECTION 8. ENTIRE AGREEMENT.
This Agreement contains the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements, discussions,
negotiations and understandings related to the subject matter hereof. This
Agreement may be amended only by a document in writing executed by all of the
parties hereto.
SECTION 9. ASSIGNMENT; SUCCESSORS AND ASSIGNS.
This Agreement may not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 10. SEVERABILITY.
The provisions of this Agreement are severable, and in the event that any
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
SECTION 11. EXECUTION IN COUNTERPART.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above, effective as of the Effective Date.
HARBOUR GROUP LTD.
By: /s/ Francis M. Loveland
--------------------------
Name: Francis M. Loveland
Title: Vice President - Finance
UNIQUIP CORPORATION
By: /s/ Francis M. Loveland
--------------------------
Name: Francis M. Loveland
Title: Treasurer
7
<PAGE>
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is dated as of August 16,
1995 between Uniquip Corporation, a Delaware corporation (the "Corporation") and
Harbour Group Investments III, L.P., a Delaware limited partnership (the
"Optionee").
W I T N E S S E T H :
WHEREAS, the Optionee is the holder of more than eighty percent of the
issued and outstanding common stock, par value $.01 per share (the "Common
Stock"), of the Corporation; and
WHEREAS, on or after the date hereof, the Corporation will issue and sell
up to fifty thousand (50,000) newly issued shares of Common Stock to executive
employees of the Corporation;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION. The Corporation hereby grants the Optionee, subject
to the terms and conditions herein set forth, a transferable option (the
"Option") to purchase up to an aggregate fifty thousand (50,000) shares of the
Common Stock the Option Shares for a price of six dollars and thirty-five cents
($6.35) per Option Share (the "Option Price").
2. TERMS AND CONDITIONS. It is understood and agreed that the Option
evidenced hereby is subject to the following terms and conditions:
(a) EXERCISE DATE. The Option may be exercised by the Optionee at
any time or from time to time the Corporation as to a number of Option Shares
equal to the excess of (i) fifty thousand (50,000) shares, over (ii) the sum of
(A) the aggregate number of shares of the
<PAGE>
Common Stock issued and outstanding at the time of any exercise of the Option to
officers, directors or other executives of the Corporation and its subsidiaries,
or their respective transferees pursuant to agreements with respect to purchase,
transfer and sale of such shares between the Corporation and such executives,
and (B) the number of shares of the Common Stock with respect to which the
Option has previously been validly exercised.
(b) NOTICE OF EXERCISE. In the event the Optionee desires to
exercise the Option with respect to all or any portion of the Option Shares as
to which it is at the time exercisable, the Optionee shall give written notice
(the "Notice") to the Corporation specifying the number of such Option Shares as
to which the Option is being exercised.
(c) PAYMENT OF PURCHASE PRICE UPON EXERCISE. At the time of any
exercise, the purchase price of the Option Shares as to which the Option shall
be exercised shall be paid in full to the Corporation by delivery of (i) an
amount of cash equal to not less than the par value of such Option Shares and
(ii) the Optionee's promissory note in the amount of the balance of such
purchase price, payable upon demand to the order of the Corporation and in form
reasonably satisfactory to the Corporation and its counsel.
(d) TRANSFERABILITY. The Option granted hereby shall be transferable
by the Optionee without restriction.
(e) ADJUSTMENTS. In the event of any change in the shares of the
Common Stock of the Corporation by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, then in any such event the number and kind of the Option
Shares subject to the Option and their purchase price per Option Share shall be
appropriately adjusted consistent with such change in such manner as the Board
of Directors of the Corporation may deem equitable to prevent dilution or
enlargement of the rights
2
<PAGE>
granted to the Optionee hereunder. Any adjustment so made shall be final and
binding upon the Optionee.
(f) COMPLIANCE WITH LAW AND REGULATIONS. The Option granted hereby
and the obligations of the Corporation to sell and deliver the Option Shares
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Corporation shall not be required to issue or deliver any
certificates for shares of the Common Stock prior to the completion of any
registration or qualification of such shares under any federal or state law, or
any rule or regulation of any government agency which the Board of Directors of
the Corporation shall, in its sole discretion, determine to be necessary or
advisable. Moreover, the Option may not be exercised if its exercise, or the
receipt of shares of the Common Stock pursuant thereto, would be contrary to
applicable law.
3. WRITTEN NOTICE. Any and all notices provided for herein shall be
given in writing and delivered by hand, or sent by registered or certified mail,
return receipt requested, with first-class postage prepaid; and such notices
shall be addressed: (i) if to the Optionee, to Chairman, HGM III Co.,
7701 Forsyth Boulevard, Suite 600, Clayton, Missouri 63105; and (ii) if to the
Corporation, to the Secretary of the Corporation at the Corporation's principal
business office; or to such other address(es) as the parties hereto shall
designate by written notice, furnished to all parties in the manner provided
herein. Any notice which is required to be made within a stated period of time
shall be considered timely if delivered or mailed before midnight of the last
day of such period.
4. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this
3
<PAGE>
Agreement shall be construed in all respects as if such invalid or unenforceable
provision has been omitted.
5. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective personal or legal
representatives, successors and assigns.
6. GENDER. The use of any gender herein shall be deemed to be and
include the other gender, and the use of the singular herein shall be deemed to
be and include the plural (and vice versa), whenever appropriate.
7. MODIFICATIONS. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by both of the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the party against whom it is sought to be enforced. The failure
of any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of the
same or other condition, promise, agreement or understanding at a future time.
8. ENTIRE AGREEMENT. This Agreement completely restates and replaces the
Original Agreement and contains all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Option. This Agreement is, and is intended by the parties to be,
an integration of any and all prior agreements or understandings, oral or
written, with respect to the Option.
9. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of Delaware, without giving effect to such
jurisdiction's conflicts of laws principles.
4
<PAGE>
10. HEADINGS. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the day and year first hereinabove written.
UNIQUIP CORPORATION,
a Delaware corporation
By: /s/ William A. Schmalz
----------------------------
Name: William A. Schmalz
Title: Ass't Secy
HARBOUR GROUP
INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III
Management Co., L.P.
General Partner
By: HGM III Co.,
General Partner
by: /s/ William A. Schmalz
---------------------------------
William A. Schmalz, Vice Chairman
5
<PAGE>
TERMINATION OF OPTION AGREEMENT
TERMINATION OF OPTION AGREEMENT (the "Agreement"), dated September 30,
1996, by and between Omniquip International, Inc., a Delaware corporation
formerly known as Uniquip Corporation (the "Corporation"), and Harbour Group
Investments III, L.P., a Delaware limited partnership (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee is owner of over eighty percent (80%) of the issued
and outstanding shares of the common stock, par value $.01 (the "Common Stock"),
of the Corporation;
WHEREAS, the Corporation, pursuant to a Stock Option Agreement (the "Option
Agreement") between the Corporation and the Optionee, dated September 20, 1995,
granted to the Optionee an option (the "Option") to purchase up to fifty
thousand (50,000) shares of the Common Stock (the "Option Shares") upon the
terms and subject to the conditions set forth in the Option Agreement;
WHEREAS, the Corporation has filed a Registration Statement on Form S-1
(the "Registration Statement"), under the Securities Act of 1933, as amended
(the "Act") with respect to the initial public offering of the Common Stock (the
"Offering);
WHEREAS, the Optionee will receive substantial financial benefit from the
Offering; and
WHEREAS, in connection with the Offering, the parties hereto desire to
terminate the Option Agreement on the Effective Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. TERMINATION OF OPTION AGREEMENT. The Option Agreement is hereby
terminated on the Effective Date and shall thereafter be of no further force and
effect. The Optionee hereby releases the Corporation, effective on the
Effective Date, from all of the Corporation's obligations to the Optionee
arising under or in connection with the Option Agreement with respect to any
Option Shares not heretofore issued to the Optionee pursuant to an exercise
of an Option.
2. EFFECTIVE DATE. This Agreement shall become effective on the date the
Registration Statement becomes effective under the Act (the "Effective Date").
Until the Effective Date, the Option Agreement shall remain in full force and
effect.
3. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective personal or legal
representatives, successors and assigns.
4. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware.
5. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
HARBOUR GROUP INVESTMENTS III, L.P.
By: Harbour Group III Management Co., L.P.
general partner
By: HARBOUR GROUP MANAGEMENT
III CO., general partner
By: /s/ Francis M. Loveland
--------------------------------
Name:
Title:
OMNIQUIP INTERNATIONAL, INC.
By: /s/ Philip G. Franklin
------------------------------------------
Philip G. Franklin
Chief Financial Officer
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EXHIBIT 10.45
AGREEMENT AND PLAN OF MERGER
by and among
TRK Acquisition Corporation,
TRAK International, Inc.
and
the Major Stockholders listed herein
July 19, 1995
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TABLE OF CONTENTS
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ARTICLE I--DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Interpretive Rules . . . . . . . . . . . . . . . . . 7
ARTICLE II--THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Effective Time of the Merger . . . . . . . . . . . . 7
Section 2.3 Rights of the Surviving Corporation. . . . . . . . . 7
Section 2.4 Certificate of Incorporation . . . . . . . . . . . . 8
Section 2.5 By-Laws. . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.6 Directors and Officers . . . . . . . . . . . . . . . 8
Section 2.7 Conversion of Shares . . . . . . . . . . . . . . . . 8
Section 2.8 Appointment of Representative. . . . . . . . . . . . 9
Section 2.9 Closing of Company Transfer Books. . . . . . . . . . 10
Section 2.10 Supplementary Action . . . . . . . . . . . . . . . . 10
ARTICLE III--MERGER CONSIDERATION; CLOSING . . . . . . . . . . . . . . . 11
Section 3.1 Merger Consideration Determination . . . . . . . . . 11
Section 3.2 Payment of Merger Consideration. . . . . . . . . . . 13
Section 3.3 Payment for Stock. . . . . . . . . . . . . . . . . . 15
Section 3.4 Dissenting Shares. . . . . . . . . . . . . . . . . . 16
Section 3.5 Closing. . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.6 Deliveries by the Company. . . . . . . . . . . . . . 16
Section 3.7 Deliveries by TRK. . . . . . . . . . . . . . . . . . 17
ARTICLE IV--ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . 18
Section 4.1 Indemnification and Escrow Agreement . . . . . . . . 18
Section 4.2 Noncompetition Agreements. . . . . . . . . . . . . . 18
Section 4.3 Stockholder Releases . . . . . . . . . . . . . . . . 18
Section 4.4 HSR Act. . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V--REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 18
Section 5.1 Corporate Organization . . . . . . . . . . . . . . . 19
Section 5.2 Valid and Binding Agreement. . . . . . . . . . . . . 19
Section 5.3 No Violation . . . . . . . . . . . . . . . . . . . . 20
Section 5.4 Consents and Approvals . . . . . . . . . . . . . . . 20
Section 5.5 Capitalization . . . . . . . . . . . . . . . . . . . 20
Section 5.6 Subsidiaries and Affiliates. . . . . . . . . . . . . 21
Section 5.7 Financial Statements . . . . . . . . . . . . . . . . 21
Section 5.8 Absence of Undisclosed Liabilities . . . . . . . . . 22
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Section 5.9 Interim Operations and Absence of Certain Changes. . 22
Section 5.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11 Employee Benefit Plans . . . . . . . . . . . . . . . 27
Section 5.12 Compliance with Law. . . . . . . . . . . . . . . . . 29
Section 5.13 Litigation; Claims . . . . . . . . . . . . . . . . . 29
Section 5.14 Contracts and Commitments. . . . . . . . . . . . . . 29
Section 5.15 Intellectual Property Rights . . . . . . . . . . . . 30
Section 5.16 Liens. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.17 Insurance. . . . . . . . . . . . . . . . . . . . . . 31
Section 5.18 Disclosure . . . . . . . . . . . . . . . . . . . . . 32
Section 5.19 Accounts Receivable and Accounts Payable . . . . . . 32
Section 5.20 Inventories. . . . . . . . . . . . . . . . . . . . . 32
Section 5.21 Tangible Personal Property . . . . . . . . . . . . . 33
Section 5.22 Real Property. . . . . . . . . . . . . . . . . . . . 33
Section 5.23 Environmental Matters. . . . . . . . . . . . . . . . 34
Section 5.24 Employees. . . . . . . . . . . . . . . . . . . . . . 37
Section 5.25 Employee Relations . . . . . . . . . . . . . . . . . 37
Section 5.26 Vendors. . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.27 Distributors and Representatives . . . . . . . . . . 38
Section 5.28 Governmental Authorizations. . . . . . . . . . . . . 38
Section 5.29 Broker's or Finder's Fees. . . . . . . . . . . . . . 39
Section 5.30 Certain Transactions . . . . . . . . . . . . . . . . 39
Section 5.31 Absence of Questionable Payments . . . . . . . . . . 39
Section 5.32 Directors and Officers; Bank Accounts. . . . . . . . 39
Section 5.33 Government Contracts . . . . . . . . . . . . . . . . 39
ARTICLE VI--CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS . . . . . . . . 41
Section 6.1 Certain Assurances of the Major Stockholders . . . . 41
ARTICLE VII--REPRESENTATIONS AND WARRANTIES OF TRK . . . . . . . . . . . 42
Section 7.1 Corporate Organization . . . . . . . . . . . . . . . 42
Section 7.2 Valid and Binding Agreements . . . . . . . . . . . . 42
Section 7.3 No Violation . . . . . . . . . . . . . . . . . . . . 42
Section 7.4 Consents and Approvals . . . . . . . . . . . . . . . 43
Section 7.5 Broker's or Finder's Fees. . . . . . . . . . . . . . 43
ARTICLE VIII--COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.1 Compliance with Law. . . . . . . . . . . . . . . . . 43
Section 8.2 Operation of Business Prior to Closing . . . . . . . 43
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Section 8.3 Access . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.4 Stockholders' Meeting. . . . . . . . . . . . . . . . 45
ARTICLE IX--CONDITIONS PRECEDENT TO OBLIGATIONS OF TRK . . . . . . . . . 46
Section 9.1 Representations and Warranties . . . . . . . . . . . 46
Section 9.2 Covenants, Agreements and Conditions . . . . . . . . 46
Section 9.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 46
Section 9.4 Corporate Proceedings. . . . . . . . . . . . . . . . 46
Section 9.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 47
Section 9.6 Governmental Approvals . . . . . . . . . . . . . . . 47
Section 9.7 No Material Adverse Change . . . . . . . . . . . . . 47
Section 9.8 Insurance. . . . . . . . . . . . . . . . . . . . . . 47
Section 9.9 Deliveries . . . . . . . . . . . . . . . . . . . . . 47
Section 9.10 Tax Status Certification . . . . . . . . . . . . . . 47
Section 9.11 Exercise of Rights . . . . . . . . . . . . . . . . . 47
Section 9.12 HSR Act Requirements . . . . . . . . . . . . . . . . 48
Section 9.13 Dissenting Shares. . . . . . . . . . . . . . . . . . 48
Section 9.14 Financing. . . . . . . . . . . . . . . . . . . . . . 48
Section 9.15 Payment of Certain Notes . . . . . . . . . . . . . . 48
ARTICLE X--CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE MAJOR STOCKHOLDERS . . . . . . . . . . 48
Section 10.1 Representations and Warranties . . . . . . . . . . . 49
Section 10.2 Covenants, Agreements and Conditions . . . . . . . . 49
Section 10.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 49
Section 10.4 Corporate Proceedings. . . . . . . . . . . . . . . . 49
Section 10.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 49
Section 10.6 Governmental Approvals . . . . . . . . . . . . . . . 49
Section 10.7 Deliveries . . . . . . . . . . . . . . . . . . . . . 50
Section 10.8 HSR Act Requirements . . . . . . . . . . . . . . . . 50
Section 10.9 Merger Consideration Adjustment. . . . . . . . . . . 50
Section 10.10 SWIB Debt. . . . . . . . . . . . . . . . . . . . . . 50
Section 10.11 Financing. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI--OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.1 Confidentiality. . . . . . . . . . . . . . . . . . . 50
Section 11.2 Further Assurances . . . . . . . . . . . . . . . . . 50
ARTICLE XII--TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.1 Methods of Termination . . . . . . . . . . . . . . . 51
Section 12.2 Procedure Upon Termination . . . . . . . . . . . . . 51
ARTICLE XIII--MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 52
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Section 13.1 Survival of Representations,
Warranties and Agreements. . . . . . . . . . . . . . 52
Section 13.2 Service of Process . . . . . . . . . . . . . . . . . 52
Section 13.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.4 Governing Law. . . . . . . . . . . . . . . . . . . . 54
Section 13.5 Modification; Waiver . . . . . . . . . . . . . . . . 54
Section 13.6 Entire Agreement . . . . . . . . . . . . . . . . . . 54
Section 13.7 Assignment; Successors and Assigns . . . . . . . . . 54
Section 13.8 Public Announcements . . . . . . . . . . . . . . . . 55
Section 13.9 Severability . . . . . . . . . . . . . . . . . . . . 55
Section 13.10 No Third Party Beneficiary . . . . . . . . . . . . . 55
Section 13.11 Expenses . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.12 Execution in Counterpart . . . . . . . . . . . . . . 55
EXHIBIT A -- Stockholders
EXHIBIT A-1--Major Stockholders
EXHIBIT A-2--Stockholders Executing Noncompetition
Agreements
EXHIBIT B -- Form of Closing Certificate
EXHIBIT C -- Form of Indemnification and Escrow Agreement
EXHIBIT D -- Principles and Procedures
EXHIBIT E -- Form of Noncompetition Agreement
EXHIBIT F -- Form of Stockholder Release
EXHIBIT G -- Certificate of Incorporation of the Surviving
Corporation
EXHIBIT H -- Form of Opinion of Hill & Barlow
EXHIBIT I -- Form of Opinion of Dickstein, Shapiro & Morin,
L.L.P.
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Schedule 5.1 Foreign Qualifications
Schedule 5.4 Consents and Approvals
Schedule 5.5 Capitalization
Schedule 5.6 Subsidiaries and Affiliates
Schedule 5.7 Company Financial Statements
Schedule 5.7A Company Interim Financial Statements
Schedule 5.8 Liabilities and Obligations
Schedule 5.9 Changes During Interim Operations
Schedule 5.10 Tax Matters
Schedule 5.11 Employee Benefit Plans
Schedule 5.12 Compliance with Law
Schedule 5.13 Litigation; Claims
Schedule 5.14 Contracts and Commitments
Schedule 5.15 Intellectual Property Rights
Schedule 5.16 Liens
Schedule 5.17 Insurance
Schedule 5.20 Inventories
Schedule 5.21 Tangible Personal Property Owned
Schedule 5.21A Tangible Personal Property Leased
Schedule 5.22 Real Property
Schedule 5.23 Environmental Matters
Schedule 5.24 Employees
Schedule 5.25 Employee Relations
Schedule 5.26 Vendors
Schedule 5.27 Distributors and Representatives
Schedule 5.28 Governmental Authorizations
Schedule 5.30 Certain Transactions
Schedule 5.32 Directors and Officers; Bank Accounts
Schedule 5.33 Government Contracts; Assignments
Schedule 7.5 Broker's or Finder's Fee
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated July 19, 1995,
by and among TRK Acquisition Corporation, a Delaware corporation ("TRK"), TRAK
International, Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company listed on EXHIBIT A-1 attached hereto (the "Major
Stockholders").
WITNESSETH:
WHEREAS, the respective Boards of Directors of TRK and the Company have
approved the merger of TRK with and into the Company (the "Merger"), pursuant to
and subject to the conditions set forth herein;
WHEREAS, TRK, the Company and the Major Stockholders desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants which are to be made and performed by
the respective parties, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
The following terms when used in this Agreement have the meanings set
forth below:
(a) "Affiliate" means any Person now or hereinafter controlling,
controlled by or under common control with another Person.
(b) "Arbitrator" has the meaning set forth in Section 3.1(b)(iii).
(c) "Atlas Adjustment" has the meaning set forth in
Section 3.1(c).
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(d) "Atlas Program" means that certain U.S. Army Tank-Automotive
Command project to procure telescopic lifts, as more particularly described in
Request for Proposal DAAE07-94-R-R077 dated November 17, 1994, or any substitute
project resubmitted for bid with substantially the same product and performance
specifications.
(e) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.
(f) "CERCLIS" has the meaning set forth in Section 5.23(h).
(g) "Certificate of Merger" has the meaning set forth in Section
2.2.
(h) "Class A Preferred Stock" means the Class A Convertible
Preferred Stock of the Corporation, par value $500.00 per share.
(i) "Class B Preferred Stock" means the Class B Convertible
Preferred Stock of the Company, par value $1,000.00 per share.
(j) "Class C Preferred Stock" means the Class C Convertible
Preferred Stock, par value $1,000.00 per share.
(k) "Closing" has the meaning set forth in Section 3.5.
(l) "Closing Certificate" means the certificate in the form annexed
hereto as EXHIBIT B delivered by the chief financial officer of the Company
pursuant to Section 3.2(c).
(m) "Closing Date" has the meaning set forth in Section 3.5.
(n) "Closing Report" has the meaning set forth in Section 3.1(b).
(o) "Closing Statements" has the meaning set forth in Section
3.1(b).
(p) "Code" means the United States Internal Revenue Code of 1986,
as amended.
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(q) "Common Stock" means the common stock of the Company, par value
$1.00 per share.
(r) "Company" has the meaning set forth in the Preamble.
(s) "Company Financial Statements" has the meaning set forth in
Section 5.7.
(t) "Company Interim Financial Statements" has the meaning set
forth in Section 5.7.
(u) "Constituent Corporations" means TRK and the Company.
(v) "Debt" means (i) the principal amount of all indebtedness for
borrowed money of the Company owed as of a particular date plus (ii) the
actuarially determined retiree healthcare obligations of the Company as of the
Closing Date, as such obligations are determined in accordance with the
Principles and Procedures.
(w) "Debt Variance" means the amount equal to the Debt as of the
Closing Date, as determined pursuant to Section 3.1(b), MINUS $12,262,000.
(x) "Dissenting Shares" has the meaning set forth in Section 3.4.
(y) "Effective Time" has the meaning set forth in Section 2.2.
(z) "Environmental Laws" has the meaning set forth in Section
5.23(c).
(aa) "ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
(ab) "Escrow Agent" means the escrow agent selected by the parties
to act pursuant to the Indemnification and Escrow Agreement.
(ac) "Escrow Amount" has the meaning set forth in Section 3.2(b).
(ad) "Estimated Debt" means the estimated Debt of the Company
determined as of the Closing Date and set forth on the Closing Certificate.
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(ae) "Estimated Merger Consideration" has the meaning set forth in
Section 3.2(a).
(af) "Estimated Merger Consideration Adjustment" means the estimated
amount, if any, of the Merger Consideration Adjustment as determined from the
Estimated Net Assets and Estimated Debt on the basis of the Closing Certificate
delivered by the chief financial officer in accordance with Section 3.2(c).
(ag) "Estimated Net Assets" means the estimated Net Assets of the
Company determined as of the Closing Date and set forth on the Closing
Certificate.
(ah) "GAAP" means generally accepted accounting principles of the
United States applied in a manner consistent with past practice of the Company,
except as otherwise disclosed in the Company Financial Statements.
(ai) "GCL" means the Delaware General Corporation Law.
(aj) "Government" has the meaning set forth in Section 5.33(a).
(ak) "Government Contracts" has the meaning set forth in
Section 5.33(a).
(al) "Hazardous Material" has the meaning set forth in Section
5.23(a).
(am) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
(an) "Improvements" has the meaning set forth in Section 5.22(a).
(ao) "Indemnification and Escrow Agreement" means an indemnification
and escrow agreement substantially in the form attached hereto as EXHIBIT C.
(ap) "Intellectual Property" means any and all inventions, Marks
(including trademarks, service marks, certification marks, collective marks, and
collective membership marks whether word, logo, or other forms of Marks, all of
the foregoing collectively referred to as "Marks"), trade names, copyrights,
applications therefor, patents thereon, registrations thereof and licenses
thereof, royalty rights, any and all goodwill associated with the business or
represented by the
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assets of the Company, trade secrets, secret processes and procedures,
engineering, production, assembly design and installation encompassed in any and
all embodiments including, but not limited to technical drawings and
specifications, working notes and memos, market studies, consultants' reports,
technical and laboratory data, competitive samples, engineering prototypes, and
confidential information, know-how, and all similar property of any nature,
tangible or intangible, including, but not limited to, all property listed or
described on SCHEDULE 5.15.
(aq) "IRS" means the United States Internal Revenue Service.
(ar) "Knowledge" means the actual knowledge of a senior officer of
the Company, after due inquiry with respect thereto.
(as) "Marks" has the meaning set forth in Section 1.1(ap).
(at) "Material Adverse Effect" means, with respect to the Company,
any effect which is materially adverse to the business, properties, financial
condition, operations, or results of the operation of the Company.
(au) "Merger" has the meaning set forth in the Preamble.
(av) "Merger Consideration" has the meaning set forth in Section
3.1(a).
(aw) "Merger Consideration Adjustment" is equal to the excess, if
any, of the Debt Variance over the Net Assets Variance, such that (i) if the
Debt Variance exceeds the Net Assets Variance (each, as determined in accordance
with Section 3.1(b)), then the Merger Consideration Adjustment is equal to the
amount of such excess or (ii) if the Debt Variance is zero (0) or, if greater
than zero (0), is equal to or less than the Net Assets Variance (each, as
determined in accordance with Section 3.1(b)), then the Merger Consideration
Adjustment is equal to zero (0).
(ax) "Merger Consideration Variance" means the amount equal to the
Merger Consideration Adjustment, as determined pursuant to Section 3.1(b), minus
the Estimated Merger Consideration Adjustment.
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(ay) "Net Assets" means the excess as of a particular date of
(i) the Company's assets over (ii) the Company's non-interest bearing current
liabilities, each as determined in accordance with the Principles and
Procedures.
(az) "Net Assets Variance" means the amount equal to the Net Assets
as of the Closing Date, as finally determined pursuant to Section 3.1(b), MINUS
$19,122,000 (subject to adjustment pursuant to the third and sixth paragraphs of
Section III(D) and Section III(I) of the Principles and Procedures).
(ba) "Noncompetition Agreements" has the meaning set forth in
Section 4.2.
(bb) "Operating Agreements" has the meaning set forth in Section
5.14.
(bc) "Pension Plans" has the meaning set forth in Section
5.11(c)(i).
(bd) "Permits" has the meaning set forth in Section 5.28.
(be) "Person" means and includes an individual, a partnership, a
joint venture, a corporation or trust, an unincorporated organization, a group
or a government or other department or agency thereof.
(bf) "Plans" has the meaning set forth in Section 5.11(a).
(bg) "Price Waterhouse" means the St. Louis office of Price
Waterhouse LLP, as independent certified public accountants for TRK and the
Surviving Corporation.
(bh) "Principles and Procedures" means the principles and procedures
set forth on EXHIBIT D.
(bi) "Real Property" has the meaning set forth in Section 5.22(a).
(bj) "Reports" has the meaning set forth in Section 5.23(b).
(bk) "Stock" means the Common Stock, the Class A Preferred Stock,
the Class B Preferred Stock and the Class C Preferred Stock.
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(bl) "Stockholders" means the holders of the Company's capital stock
listed on EXHIBIT A.
(bm) "Stockholder Release" has the meaning set forth in Section 4.3.
(bn) "Stockholders' Representative" has the meaning set forth in
Section 2.8.
(bo) "Surviving Corporation" has the meaning set forth in Section
2.1.
(bp) "SWIB" means the State of Wisconsin Investment Board.
(bq) "SWIB Debt" means all principal and accrued and unpaid interest
owed as of the Closing Date pursuant to each of the Subordinated Promissory Note
of the Company, dated October 30, 1987, made payable to SWIB in the original
principal amount of $3,000,000, due on October 30, 1997, and the Subordinated
Promissory Note of the Company, dated July 6, 1988, made payable to SWIB in the
original principal amount of $1,200,000, due on June 30, 1998.
(br) "TRK" has the meaning set forth in the Preamble.
(bs) "Tax" has the meaning set forth in Section 5.10(c).
(bt) "Taxing Authority" has the meaning set forth in Section
5.10(a).
(bu) "Tax Return" has the meaning set forth in Section 5.10(d).
SECTION 1.2 INTERPRETIVE RULES.
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires: (a) defined terms include the
plural as well as the singular and the use of any gender shall be deemed to
include the other gender; (b) references to "Articles," "Sections" and other
subdivisions and to "Schedules" and "Exhibits" without reference to a document,
are to designated Articles, Sections and other subdivisions of, and to Schedules
and Exhibits to, this Agreement; (c) the use of the term "including" means
"including but not limited to"; and (d) the words "herein," "hereof,"
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"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular provision.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER.
At the Effective Time, TRK shall be merged with and into the Company in
accordance with the applicable provisions of the GCL and the separate existence
of TRK shall thereupon cease, and the Company, as the surviving corporation in
the Merger (the "Surviving Corporation"), shall continue its corporate existence
in accordance with the GCL under the name TRAK International, Inc.
SECTION 2.2 EFFECTIVE TIME OF THE MERGER.
At the Closing, the Company shall cause the Merger to be consummated by
filing with the Secretary of State of Delaware an appropriate certificate of
merger (the "Certificate of Merger") duly executed in accordance with this
Agreement and the GCL. The date and time at which the Certificate of Merger is
filed is referred to herein as the "Effective Time."
SECTION 2.3 RIGHTS OF THE SURVIVING CORPORATION.
At the Effective Time, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, powers and franchises as well of
a public as of a private nature, of each of the Constituent Corporations, and be
subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations, and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well for stock subscriptions as all other things in
action or belonging to each of the Constituent Corporations shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate, vested by
deed, or otherwise, under the laws of the State of
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Delaware or elsewhere, in either of the Constituent Corporations, shall not
revert or be in any way impaired by reason of the Merger; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of each of the Constituent Corporations shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by it; all in
accordance with Section 259(a) of the GCL.
SECTION 2.4 CERTIFICATE OF INCORPORATION.
The Certificate of Incorporation of the Company as amended and restated in
the form set forth on EXHIBIT G shall be the Certificate of Incorporation of the
Surviving Corporation.
SECTION 2.5 BY-LAWS.
The By-Laws of TRK as in effect at the Effective Time shall be the By-Laws
of the Surviving Corporation.
SECTION 2.6 DIRECTORS AND OFFICERS.
The directors of the Surviving Corporation at the Effective Time shall be
the directors of TRK in office immediately prior to the Effective Time, to serve
in accordance with the By-Laws of the Surviving Corporation. The officers of
the Surviving Corporation at the Effective Time shall be the officers of TRK
immediately prior to the Effective Time, to serve in accordance with the By-Laws
of the Surviving Corporation.
SECTION 2.7 CONVERSION OF SHARES.
At the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any securities of the Constituent Corporations:
(a) each share of Common Stock then outstanding, other than Common Stock
to be canceled pursuant to Section 2.7(c) and other than Dissenting Shares, and
each share of Common Stock which is issuable pursuant to a warrant, option or
conversion right which warrant, option or conversion right has been exercised
(including the payment of all sums and/or delivery of all documents and
instruments) on or prior to the Closing Date (for the purposes of this Section
2.7, such shares of Common
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Stock are hereby deemed to be outstanding as of the Effective Time), and all
rights with respect thereto, shall be converted into and represent the right to
receive the amounts of cash set forth in Section 3.1, payable as provided in
Sections 3.2 and 3.3 and subject to adjustment as provided in Sections 3.1 and
3.2;
(b) each share of Class A Preferred Stock, Class B Preferred Stock and
Class C Preferred Stock, other than such stock to be canceled pursuant to
Section 2.7(c) and other than Dissenting Shares, and all rights with respect
thereto, shall be converted into and represent the right to receive the amounts
of cash set forth in Section 3.1, payable as provided in Section 3.2 and 3.3 and
subject to adjustment as provided in Sections 3.1 and 3.2;
(c) each share of the Company's capital stock held in the Company's
treasury shall be canceled and retired without payment of any consideration
therefor; and
(d) each issued and outstanding share of common stock of TRK, $0.01 par
value per share, outstanding immediately prior to the Effective Time shall
remain outstanding and unchanged as a share of common stock of the Surviving
Corporation.
SECTION 2.8 APPOINTMENT OF REPRESENTATIVE.
Upon approval of the Merger by the Stockholders, such Stockholders, with
the exception of SWIB, which, unless it otherwise agrees in writing, shall
continue to act on its own behalf, shall have been deemed to appoint Robert L.
Feind, Jr., Esq., as their agent and attorney-in-fact (the "Stockholders'
Representative"), with full power and authority (including power of
substitution), except as otherwise expressly provided in this Agreement, in the
name of and for and on behalf of such Stockholders, or in his own name as
Stockholders' Representative, to take all actions required or permitted under
this Agreement and the Indemnification and Escrow Agreement (including giving
and receiving all accountings, reports, notices and consents). The
Stockholders' Representative may engage advisors, including attorneys and
accountants, as it deems reasonable, with the prior written consent of SWIB, and
the costs and expenses of such advisors shall be borne by the Stockholders. The
authority conferred under this Section 2.8 shall be an agency coupled with an
interest, and all authority conferred hereby is irrevocable and not subject to
termination by the Stockholders or any of them, or by operation of law, whether
by the death or incapacity
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of any Stockholder, the termination of any trust or estate or the occurrence of
any other event. If any Stockholder should die or become incapacitated, if any
trust or estate should terminate or if any other such event should occur, any
action taken by the Stockholders' Representative pursuant to this Section 2.8
shall be as valid as if such death or incapacity, termination or other event had
not occurred, regardless of whether or not the Stockholders' Representative, TRK
or the Surviving Corporation shall have received notice of such death,
incapacity, termination or other event. Any notice given to the Stockholders'
Representative pursuant to Section 13.3 shall constitute effective notice to all
Stockholders other than SWIB, and any other party to this Agreement or any other
Person may rely on any notice, consent, election or other communication received
from the Stockholders' Representative as if such notice, consent, election or
other communication had been received from all Stockholders other than SWIB.
SECTION 2.9 CLOSING OF COMPANY TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Common Stock
thereafter. If, after the Effective Time, subject to the terms and conditions
of this Agreement, certificates representing any such shares are presented to
the Surviving Corporation, they shall be canceled and exchanged for cash in
accordance with Section 2.7.
SECTION 2.10 SUPPLEMENTARY ACTION.
If at any time after the Effective Time, any further assignments or
assurances in law or any other things are necessary or desirable to vest or to
perfect or confirm of record in the Surviving Corporation the title to any
property or rights of either of the Constituent Corporations, or otherwise to
carry out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
respective Constituent Corporations, in the name of and on behalf of the
appropriate Constituent Corporation, to execute and deliver any and all things
necessary or proper to vest or to perfect or confirm title to such property or
rights in the Surviving Corporation, and otherwise carry out the purposes and
provisions of this Agreement.
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ARTICLE III
MERGER CONSIDERATION; CLOSING
SECTION 3.1 MERGER CONSIDERATION DETERMINATION.
(a) MERGER CONSIDERATION. Subject to Section 3.4, the aggregate
Merger Consideration shall be (i) Fifteen Million Four Hundred Fifteen Thousand
Four Hundred Dollars ($15,415,400) PLUS (ii) the Atlas Adjustment MINUS (iii)
the Merger Consideration Adjustment. The aggregate Merger Consideration shall
be distributed to the individual Stockholders pursuant to the various
percentages listed on EXHIBIT A.
(b) DETERMINATION OF MERGER CONSIDERATION ADJUSTMENT. The amount
of the Merger Consideration Adjustment shall be determined in the following
manner:
(i) CLOSING STATEMENTS; REVIEW. Promptly after the Closing
Date, the Surviving Corporation will prepare statements in accordance with this
Agreement and the Principles and Procedures which shall set forth the Net Assets
and Debt as of the Closing Date, the Net Assets Variance, the Debt Variance, the
Merger Consideration Adjustment and the Merger Consideration Variance (the
"Closing Statements"). Price Waterhouse, at the Surviving Corporation's
expense, will audit the Closing Statements in accordance with U.S. generally
accepted auditing standards and the Principles and Procedures and issue their
report as to the results of such audit (the "Closing Report"). Upon completion
of the Closing Report, the Surviving Corporation will deliver the Closing
Statements and Closing Report to the Stockholders' Representative and to SWIB.
The Surviving Corporation shall direct Price Waterhouse to deliver drafts of the
Closing Statement and Closing Report to the Stockholders' Representative and to
SWIB for review and analysis at least ten (10) days prior to final issuance of
the Closing Statements and Closing Report and delivery to the Stockholders'
Representative and to SWIB as noted above. The Stockholders' Representative and
SWIB shall have the opportunity to review and evaluate all working papers,
worksheets and other documents utilized by the Surviving Corporation in the
preparation of the Closing Statement and by Price Waterhouse in the audit of the
Closing Statement. Price Waterhouse, the Stockholders' Representative and SWIB
will attempt to resolve any disputed items prior to issuance of the Closing
Statements and Closing Report.
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(ii) REVIEW BY THE PARTIES. Failing such resolution, the
Stockholders' Representative (and SWIB, if it so chooses) will provide the
Surviving Corporation within fifteen (15) days of receipt of the Closing
Statements and Closing Report detailed written explanations of any disputed
items in the Closing Statements and the Closing Report. The amount of the
Merger Consideration Adjustment not affected by the disputed items will be
deemed to be as set forth in the Closing Statements and Closing Report. Within
a further period of ten (10) days from the end of the aforementioned review
period, the parties will attempt to resolve in good faith any disputed items.
(iii) ARBITRATION. Failing resolution pursuant to paragraph
(ii) above, the unresolved disputed items will be referred for final binding
resolution to Arthur Andersen & Co. or to such other nationally-recognized firm
of certified public accountants as the Surviving Corporation, the Stockholders'
Representative and SWIB may hereafter jointly select (the "Arbitrator"). Such
referral shall be in the form of written statements of position by the
Stockholders' Representative (including, at the election of the Stockholders'
Representative, a written statement by its selected accountant), SWIB (if it so
chooses), the Surviving Corporation and Price Waterhouse, with each party having
an opportunity to respond to such written statements and any requests for
statements or information by the Arbitrator. If the Arbitrator determines that
the resolution of a given disputed item requires an interpretation of law, then,
with the permission of the Surviving Corporation, the Stockholders'
Representative and SWIB, the Arbitrator may request a law firm of national
standing chosen by it to render a legal opinion as to such matter. The amount
of the Merger Consideration Adjustment affected by such unresolved disputed
items (if any) will be as determined by the Arbitrator. The cost of such
Arbitrator's review (including reasonable attorneys' fees, if any) shall be
borne by the party or parties as determined by the Arbitrator.
(c) DETERMINATION OF ATLAS ADJUSTMENT. For each unit ordered by the
U.S. Army under the Atlas Program within five years from the Closing Date, the
Stockholders shall receive, and the Surviving Corporation shall pay
unconditionally, without right of offset or counterclaim, the following
increase, if any, in the aggregate Merger Consideration (the "Atlas
Adjustment"):
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(i) The Surviving Corporation shall pay the Stockholders,
in accordance with the Atlas percentages listed on EXHIBIT A, Two Thousand
Dollars ($2,000) for each of the first three hundred (300) units ordered under
the Atlas Program each such payment to be earned when the Surviving Corporation
(or the Company, if prior to the Closing Date) receives an order, without regard
to the dates of shipment or acceptance;
(ii) Upon receipt by the Surviving Corporation (or the
Company, if prior to the Closing Date) of the order for the three hundredth
(300th) unit under the Atlas Program, the Surviving Corporation shall pay the
Stockholders, in accordance with the Atlas percentages listed on EXHIBIT A, (A)
Four Hundred Thousand Dollars ($400,000) PLUS (B) for each of such three hundred
(300) units so ordered, interest on One Thousand Three Hundred Thirty-Three
Dollars ($1,333), calculated at the rate of five percent (5%) per annum (based
on a 365-day year), from the date of receipt by the Surviving Corporation of the
order through the date of payment to the Stockholders pursuant to this Section
3.1(c)(ii); and
(iii) In the event the aggregate number of units ordered
under the Atlas Program exceeds three hundred (300), then the Surviving
Corporation shall pay the Stockholders, in accordance with the Atlas percentages
listed on EXHIBIT A, Three Thousand Three Hundred Thirty-Three Dollars ($3,333)
for each unit in excess of three hundred (300) ordered under the Atlas Program,
each such payment to be earned when the Surviving Corporation (or the Company,
if prior to the Closing Date) receives an order, without regard to the dates of
shipment or acceptance; provided, however, that the aggregate Atlas Adjustment
payable pursuant to this Section 3.1(c) shall not exceed the sum of (i) Two
Million Dollars ($2,000,000) PLUS (ii) the sums payable pursuant to Section
3.1(c)(ii)(B).
(iv) As of the end of each calendar quarter, the Surviving
Corporation will provide a certificate to the Stockholders' Representative and
SWIB, signed by the Surviving Corporation's chief executive officer or chief
financial officer, stating the aggregate number of units ordered under the Atlas
Program (i) since its inception and (ii) since the last such certificate. The
Stockholders' Representative, SWIB, and their representatives shall have the
same access described in Section 8.3, after the Closing Date, for the purpose of
establishing the number of units ordered under the Atlas Program.
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SECTION 3.2 PAYMENT OF MERGER CONSIDERATION.
(a) ESTIMATED PAYMENTS. Subject to Section 3.4, at the Closing,
TRK shall pay the Stockholders (i) Fifteen Million Four Hundred Fifteen Thousand
Four Hundred Dollars ($15,415,400) MINUS (ii) the sum of (A) the Estimated
Merger Consideration Adjustment and (B) the Escrow Amount to be deposited with
the Escrow Agent pursuant to Section 3.2(b), PLUS (iii) any portion of the Atlas
Adjustment which has been earned as of such time (the "Estimated Merger
Consideration"). The payments to the individual Stockholders pursuant to clause
(i) above shall be made on the basis of the closing percentages listed on
EXHIBIT A, and payments pursuant to clause (iii) above shall be made on the
basis of the Atlas percentages listed on EXHIBIT A.
(b) ESCROW AMOUNT. TRK shall deposit Two Million Dollars
($2,000,000) (the "Escrow Amount") with the Escrow Agent pursuant to the terms
of the Indemnification and Escrow Agreement.
(c) CLOSING CERTIFICATE. At the Closing, the chief financial
officer of the Company shall deliver to TRK the Closing Certificate, which shall
set forth his or her best estimate of Estimated Net Assets, Estimated Debt and
Estimated Merger Consideration Adjustment.
(d) MERGER CONSIDERATION ADJUSTMENT AND MERGER CONSIDERATION
VARIANCE. The Net Assets and Debt as of the Closing Date, the Net Assets
Variance, the Debt Variance, the Merger Consideration Adjustment and the Merger
Consideration Variance shall be computed as provided in Section 3.1(b), and the
Merger Consideration Variance shall be paid within ten (10) business days
thereafter. If the Merger Consideration Variance is a positive number, that
amount shall be paid by the Stockholders to the Surviving Corporation from the
funds in the Escrow Funds. If the Merger Consideration Variance is a negative
number, that amount shall be paid by the Surviving Corporation to the
Stockholders on the basis of the closing percentages listed on EXHIBIT A. All
payments hereunder shall bear interest from and after the Closing Date, until
paid, at the rate which is equal to the rate of interest actually earned on the
Escrow Amount during such period, computed on the basis of a 365-day year and
paid for the actual number of days elapsed. Interest calculated in accordance
with this Section 3.2(d) shall be due and payable on the date on which the
corresponding payment is due.
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(e) ATLAS ADJUSTMENT. Except as provided pursuant to Section
3.2(a), the Surviving Corporation shall pay the Stockholders the Atlas
Adjustment pursuant to Sections 3.1(c)(i) and 3.1(c)(iii) on a calendar
quarterly basis (or within (10) days of the date when the aggregate unpaid
amount exceeds $100,000, if earlier) and pursuant to Section 3.1(c)(ii) within
10 days of the Surviving Corporation's receipt of the order for the 300th unit
under the Atlas Program; provided, however, the Surviving Corporation shall have
no obligation to pay the Atlas Adjustment for any units with respect to which
orders are received under the Atlas Program more than five (5) years after the
Closing Date.
(f) FORM OF PAYMENTS. All payments hereunder, other than payments
originating from the Escrow Agent, shall be made by depositing, by bank wire
transfer, the required amount (in immediately available funds) in an account of
the recipient, which account shall be designated by the recipient at least three
(3) business days prior to the date of the required payment.
SECTION 3.3 PAYMENT FOR STOCK.
(a) At the Effective Time, TRK shall make available for
disbursement in accordance with this Agreement, the Estimated Merger
Consideration into which shares of the Stock are to be converted in the Merger
pursuant to Section 2.7 hereof. Upon surrender to TRK of an outstanding
certificate or certificates, together with a letter of transmittal, duly
executed, TRK shall promptly disburse to the Stockholder entitled thereto the
amount of cash into which his shares shall have been converted in the Merger.
Until so surrendered, each certificate which immediately prior to the Effective
Time represented outstanding Stock shall be deemed for all corporate purposes to
evidence only the right to receive upon such surrender the cash into which his
shares represented thereby shall have been converted in the Merger. No interest
shall accrue or be paid on any cash payable upon the surrender of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Stock (including any certificates or instruments which prior to the
Effective Time represented preferred stock or convertible notes of the Company
to the extent such were converted into shares of Common Stock as of or prior to
the Effective Time). If outstanding certificates for shares of the Company are
not surrendered, or the cash payment therefor not claimed prior to six years
after the Effective Time (or, in any particular case,
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prior to such earlier date on which such cash payment would otherwise escheat to
or become the property of any governmental unit or agency), the unclaimed
amounts shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the certificates or
other instruments surrendered in exchange therefor are registered, it shall be a
condition to the payment of such Merger Consideration that the certificates or
instruments so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the Person requesting such transfer pay to
TRK any transfer or other taxes payable by reason of the foregoing or establish
to the satisfaction of TRK that such taxes have been paid or are not required to
be paid. Appropriate procedures shall be implemented to deal with lost stock
certificates and shares of Common Stock issuable pursuant warrants, option or
conversion rights exercised (including the payment of all sums and/or delivery
of all documents and instruments) on or prior to the Closing Date with respect
to which stock certificates had not been issued at the Effective Time.
SECTION 3.4 DISSENTING SHARES.
Notwithstanding anything herein to the contrary, any shares of the
Company's Stock outstanding immediately prior to the Effective Time and held by
holders who have not voted in favor of the Merger and who have complied with all
of the relevant provisions of Section 262 of the GCL (the "Dissenting Shares")
shall not be converted into the right to receive the Estimated Merger
Consideration, unless and until such holder shall have failed to perfect, or
shall have effectively withdrawn or lost, their rights to appraisal thereunder.
If, after the Effective Time, any holder of Dissenting Shares fails to protect
or withdraw or otherwise loses such right, each of such holders of shares of
capital stock of the Company shall thereupon be deemed to have converted into
the right to receive, as of the Effective Time, the Estimated Merger
Consideration without any interest thereon.
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SECTION 3.5 CLOSING.
The closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of the Company, 369 West Western Avenue, Port
Washington, Wisconsin 53074 on July 27, 1995, or at such other place, time or
date as may be agreed upon by the parties hereto (the "Closing Date"); provided,
however, TRK shall have the right to postpone the Closing until September 1,
1995 to satisfy the conditions set forth in Section 9.14.
SECTION 3.6 DELIVERIES BY THE COMPANY.
At the Closing, the Company shall deliver the following items to TRK:
(a) Certificates representing the shares of Stock, duly endorsed or
accompanied by stock powers duly executed in blank (with signatures guaranteed
by any national bank or trust company) and otherwise in form acceptable for
transfer on the books of the Company, with all requisite stock transfer tax
stamps attached;
(b) Documents and instruments, satisfactory to TRK and its counsel,
evidencing the exercise, and all payments and deliveries incident to such
exercise, by the holder thereof, of any and all warrants, options and conversion
rights exercised with respect to which Stock is issuable and deemed to be issued
and outstanding as of the Effective Time pursuant to Section 2.7;
(c) The stock books, stock ledgers, minute books and corporate seal
of the Company;
(d) Certificates from appropriate authorities, dated as of or about
the Closing Date, as to the good standing, qualification to do business of, and
payment of taxes by the Company in each jurisdiction where it is so qualified;
(e) The opinion of counsel to the Company referred to in
Section 9.5;
(f) The certificates referred to in Sections 3.2(c), 9.1, 9.2, and
9.10;
(g) The Indemnification and Escrow Agreement referred to in
Section 4.1, duly executed by the Major Stockholders;
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(h) The Noncompetition Agreements referred to in Section 4.2, duly
executed by each of the Stockholders listed on EXHIBIT A-2;
(i) The Stockholder Releases referred to in Section 4.3, duly
executed by each of the Major Stockholders;
(j) The resignation of each director and officer of the Company, as
requested by TRK; and
(k)
(l) All other previously undelivered items required to be delivered
by the Company or the Stockholders to TRK at or prior to the Closing pursuant to
this Agreement or otherwise required in connection herewith unless waived in
writing by TRK.
SECTION 3.7 DELIVERIES BY TRK.
At the Closing, TRK shall deliver the following items to the Stockholders
and as applicable, the Escrow Agent:
(a) The payments as required in Sections 3.2(a) and 3.2(b);
(b) The opinion of counsel to TRK referred to in Section 10.5;
(c) The certificates referred to in Sections 10.1 and 10.2;
(d) Agreements with the Company's President and Vice-Presidents
regarding equity interests in the corporate parent of TRK and severance
arrangements, substantially in the form previously delivered by TRK to the
President of the Company; and
(e) All other previously undelivered items required to be delivered
by TRK at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith unless waived in writing by the Company.
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ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 INDEMNIFICATION AND ESCROW AGREEMENT.
At the Closing, the Stockholders, the Company, TRK and the Escrow Agent
will enter into the Indemnification and Escrow Agreement, pursuant to which TRK
shall deliver the Escrow Amount to be held in escrow by the Escrow Agent.
SECTION 4.2 NONCOMPETITION AGREEMENTS.
In order to protect TRK's investment in the business of the Company, each
of the Stockholders listed on EXHIBIT A-2 shall execute and deliver to TRK at
the Closing, separate agreements dated as of the Closing Date not to compete
with the Surviving Corporation, in the form attached hereto as EXHIBIT E (the
"Noncompetition Agreement").
SECTION 4.3 STOCKHOLDER RELEASES.
At the Closing, each of the Major Stockholders shall deliver a release of
the Company in the form attached hereto as EXHIBIT F (the "Stockholder
Release").
SECTION 4.4 HSR ACT.
TRK, the Company and the Stockholders agree to furnish to each other such
necessary information and reasonable assistance as may be requested in
connection with any necessary filings or submissions required pursuant to the
HSR Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to TRK as follows, and TRK in
agreeing to consummate the transactions contemplated by this Agreement has
relied upon such representations and warranties, that:
SECTION 5.1 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State
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of Delaware and has the requisite power and authority (corporate and other) to
own, lease and operate its properties and to carry on its business as now being
conducted.
(b)The Company is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each of the jurisdictions listed
on SCHEDULE 5.1. The Company is not qualified or licensed to do business as a
foreign corporation in any other jurisdiction and there are no other
jurisdictions in which the failure to be qualified or licensed as a foreign
corporation would have a Material Adverse Effect on the Company.
(c) The copies of the certificate of incorporation and all
amendments thereto of the Company, as certified by the Secretary of State of
Delaware, and the by-laws, as amended to date, of the Company, as certified by
its secretary, which have heretofore been delivered to TRK, are true, complete
and correct copies of the certificate of incorporation and by-laws of the
Company, as amended and in effect on the date hereof, and will be true, complete
and correct as of the Closing Date.
(d) Except as otherwise disclosed in writing by counsel to the
Company, the minute books and records of the Company, copies of which have been
delivered to TRK prior to the date hereof, are the original minute books and
records of the Company, contain all proceedings of the stockholders, the Board
of Directors and any committees thereof with respect to the Company, and are
true, correct and complete in all material respects. There have been no
changes, alterations or additions to the minute books and records which have not
been furnished to counsel for TRK prior to the date hereof.
SECTION 5.2 VALID AND BINDING AGREEMENT.
The Company has the full corporate power to enter into this Agreement and
the Indemnification and Escrow Agreement. All necessary action on the part of
the Company has been taken to authorize the execution and delivery of this
Agreement and the Indemnification and Escrow Agreement, the performance of its
obligations hereunder and thereunder and (subject to the required approval by
the Stockholders) the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and as of the Closing Date, the
Indemnification and Escrow Agreement will be, duly and validly executed and
delivered by the Company, and, assuming such agreements constitute the valid and
binding agreements of the other parties thereto, will constitute
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valid and binding agreements of the Company, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization or
similar laws relating to creditors' rights generally and by principles of equity
regarding the availability of remedies.
SECTION 5.3 NO VIOLATION.
Neither the execution and delivery of this Agreement nor (subject to the
required approval by the Stockholders) the consummation of the transactions
contemplated hereby nor compliance by the Company with any of the provision
hereof will (a) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company, or (assuming compliance with the HSR
Act) any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to the Company, or (b) except as otherwise
disclosed on SCHEDULE 5.4, violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or any event which, with or without
due notice or lapse of time, or both, would constitute a default) under, or
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance
upon the capital stock or any of the properties or assets of the Company under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation of which the Company is a party or by which the Company or any of its
assets are bound.
SECTION 5.4 CONSENTS AND APPROVALS.
Except as set forth on SCHEDULE 5.4 and except for any filings required
under the HSR Act, no permit, consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority or third party is required to be made or obtained by the Company in
connection with the execution, delivery and performance of this Agreement or the
Indemnification and Escrow Agreement or the consummation of the transactions
contemplated hereby and thereby.
SECTION 5.5 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 20,000 shares of Common Stock, of which 3,990 shares are issued and
outstanding; (ii) 2,000 shares of Class A
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Preferred stock, par value $500 per share, of which 1,273 shares are issued and
outstanding; (iii) 3,000 shares of Class B Preferred stock, par value $1,000 per
share, of which 3,000 shares are issued and outstanding; and (iv) 5,000 shares
of Class C Preferred stock, par value $1,000 per share, of which 1,110 shares
are issued and outstanding. The issued and outstanding Stock of the Company is
duly authorized, validly issued, fully paid and nonassessable, and none of the
issued and outstanding shares of Stock of the Company were issued in violation
of the preemptive rights of any present or former stockholder of the Company.
(b) Except as set forth in Section 5.5(a) or SCHEDULE 5.5,
(i) there are no shares of capital stock or other equity securities (as the term
"equity security" is defined in the Securities Exchange Act of 1934, as amended)
of the Company outstanding, (ii) there are no outstanding subscriptions,
options, warrants or rights to purchase or acquire any equity securities of the
Company, (iii) no equity securities of the Company are reserved for issuance for
any purpose, and (iv) there are no contracts, commitments, agreements,
understandings, arrangements or restrictions to which the Company is a party or
by which the Company is bound, other than applicable securities laws
restrictions, relating to any shares of the capital stock or other equity
securities of the Company (including the Stock), whether or not outstanding.
(c) EXHIBIT A sets forth a true, correct and complete listing of
the record holders of the Stock and of each other instrument, certificate,
document or other right, whether or not represented by a certificate or other
document or instrument, convertible (with or without consideration) into the
Common Stock.
SECTION 5.6 SUBSIDIARIES AND AFFILIATES.
Except as set forth on SCHEDULE 5.6, the Company owns no capital stock or
other equity securities of any other corporation and has no other type of equity
interest in any other corporation, partnership, joint venture or other business
organization or entity. The interests of the Company in any Person as set forth
on SCHEDULE 5.6 are owned by the Company free and clear of all liens, options,
claims or encumbrances (including without limitation, rights of first refusal or
similar rights) with respect to the ownership thereof, except as
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otherwise identified on SCHEDULE 5.6. Except as otherwise set forth on SCHEDULE
5.6, the Company is not subject to any obligation or requirement to provide
funds for, or to make any investment (in the form of a loan, capital
contribution or otherwise) in, any Person.
SECTION 5.7 FINANCIAL STATEMENTS.
The audited financial statements of the Company for each of the three (3)
years ended August 29, 1992, August 28, 1993 and September 3, 1994, attached as
SCHEDULE 5.7 hereto (the "Company Financial Statements") (a) present fairly the
financial position, results of operations, shareholders' equity and cash flows
of the Company in accordance with GAAP, as of the statement dates and for the
periods indicated, and (b) have been prepared in accordance with the Company's
customary procedures for the preparation of financial statements consistently
applied throughout and among the periods indicated. The unaudited interim
financial statements of the Company for the five (5) months ended January 31,
1995, attached as SCHEDULE 5.7A hereto (the "Company Interim Financial
Statements") (a) present fairly the financial position, results of operations,
and cash flows of the Company, as of the statement date and for the period
indicated, and (b) have been prepared in accordance with the Company's customary
procedures for the preparation of interim financial statements consistently
applied throughout and among the periods indicated and are consistent with the
Company Financial Statements subject to year-end audit and other normal or
recurring year-end adjustments (made in accordance with GAAP, in the ordinary
course of business and consistent with prior year-end accounting principles and
adjustments).
SECTION 5.8 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 5.8, the Company has no liability which
must be accrued on a balance sheet or disclosed in the footnotes to a balance
sheet prepared in accordance with GAAP, except (a) such liabilities as are fully
reflected, reserved against or disclosed in the Company Financial Statements or
the Company Interim Financial Statements and (b) such liabilities as have been
incurred in the ordinary course of business, consistent with past practice,
since September 3, 1994.
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SECTION 5.9 INTERIM OPERATIONS AND ABSENCE OF CERTAIN CHANGES.
Since September 3, 1994, except as set forth on SCHEDULE 5.9, the Company
has conducted its business in the ordinary course and consistent with past
practice, and the Company did not:
(a) incur any indebtedness or other liabilities (whether absolute,
accrued, contingent or otherwise) or, except as set forth on SCHEDULE 5.8,
guarantee or agree to purchase any such indebtedness, except in the usual and
ordinary course of its business, consistent with past practice, and except for
indebtedness relating to the Company's capital expenditure program;
(b) suffer any change in its financial condition, assets,
liabilities or business, or suffer any other event or condition of any character
which individually or in the aggregate had or has a Material Adverse Effect on
the Company or materially diminishes the value of the assets of the Company;
(c) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) except in each case in
the ordinary course of business;
(d) cancel any debts or waive any claims or rights of substantial
value, except in each case in the ordinary course of business;
(e) pledge or permit the imposition of any lien on or sell, assign,
transfer or otherwise dispose of any of its tangible assets, except the sale of
inventory in the ordinary course of business;
(f) sell, assign, encumber, license, pledge, abandon or otherwise
transfer any patents, applications for patents, Marks, trade names, copyrights,
licenses or other intangible assets;
(g) make any change in any method of accounting or accounting
principle or practice;
(h) make any reduction in accruals or reserves, except to the
extent of related cash payments or other reductions consistent with past
practice;
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(i) write up or down the value of the inventory or determined as
collectible any notes or accounts receivable that were previously considered to
be uncollectible, except for write-ups or write-downs and other determinations
in accordance with GAAP and in the ordinary course of business and consistent
with past practice;
(j) grant any general increase in the compensation payable or to
become payable to its officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any special increase in the compensation payable or to become payable to any
officer or employee, except for normal merit and cost of living increases in the
ordinary course of business and in accordance with past practice and increases
pursuant to collective bargaining agreements;
(k) declare, pay or set aside for payment any dividend or other
distribution on any shares of its capital stock, other than dividends due in
accordance with the terms and conditions of such capital stock;
(l) make or guaranty any loans to any customer, vendor or
distributor of the Company or its products, other than as set forth on SCHEDULE
5.8 and other than normal open account activities;
(m) make any loans which in the aggregate exceed $5,000 to any
employee or make any loans to any stockholder, officer, director or Affiliate;
(n) make capital expenditures or commitments for same in excess of
$100,000 in the aggregate;
(o) except for any shares of Common Stock issued pursuant to the
warrants and options listed on EXHIBIT A, issue any additional shares of Common
Stock, whether pursuant to the exercise of warrants, options or conversion
rights or otherwise, or any other equity securities of the Company;
(p) lose or learn of the prospective loss of any vendor listed on
SCHEDULE 5.26 or any distributor, representative or agent listed on SCHEDULE
5.27 where the result of such loss would have a Material Adverse Effect; or
(q) agree, whether in writing or otherwise, to take any action
described in this Section 5.9.
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SECTION 5.10 TAXES.
(a) The Company has duly and timely filed with each appropriate
federal, state, local and foreign governmental entity or other authority
(individually or collectively, "Taxing Authority") all Tax Returns required to
be filed. All such Tax Returns were true, correct and complete in all material
respects. The Company has in all material respects paid all Taxes which have
become due and payable (whether or not shown on any Tax Return). Adequate
reserves and accruals in accordance with GAAP have been established by the
Company to provide for the payment of all Taxes which are not yet due and
payable with respect to the Company for taxable periods or portions thereof
ending on or before the Closing Date. There are no liens for Taxes upon the
Company or its assets except liens for current Taxes not yet due. The Company
has delivered to TRK correct and complete copies of all federal and state income
Tax Returns for the five (5) most recently completed years, all examination
reports by any Taxing Authority, and any statements of deficiencies proposed or
assessed against or agreed to by the Company. No audit, examination,
investigation, proceeding, action or claim with respect to the Company's Taxes
is pending, proposed or threatened, and to the best of the Company's Knowledge,
there is no basis for the assessment or collection of additional Taxes against
the Company.
Except as set forth on SCHEDULE 5.10, there has never been an examination
or notice of potential examination of the Tax Returns of the Company by any
Taxing Authority. No extension is in effect with respect to the filing of any
Tax Return, the payment of any Taxes, or any limitation period regarding the
assessment or collection of any Taxes.
(b) All Taxes that are required to have been withheld or collected
by the Company have been duly withheld or collected and, to the extent required,
have been paid to the proper governmental authorities or properly deposited as
required by applicable laws.
(c) As used in this Agreement, "Tax" means any of the Taxes and
"Taxes" means, with respect to the Company, all income taxes (including any tax
on or based upon net income, or gross income, or income as specially defined, or
earnings, or profits, or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp,
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occupation, premium, property or windfall profit taxes, alternative or add-on
minimum taxes, custom duties or other taxes, together with any interest,
penalties, additions to tax or additional amounts imposed by any Taxing
Authority whether disputed or not.
(d) As used in this Agreement, "Tax Return" is defined as any
return, report, information return or other document (including any related or
supporting information) filed or required to be filed with any Taxing Authority
or other authority in connection with the determination, assessment or
collection of any Tax paid or payable by the Company or the administration of
any laws, regulations or administrative requirements relating to any such Tax.
(e) SCHEDULE 5.10 lists each jurisdiction in which the Company
either files Tax Returns or pays Taxes with respect to which no returns are
required to be filed. No claim has ever been made by any Taxing Authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(f) No property of the Company recorded as an asset on the
Company's Interim Financial Statements is property that the Company is or will
(under current laws) be required to treat as owned for tax purposes by another
person, or is "tax-exempt use property" as defined in Section 168(h) of the
Code.
(g) The Company has never agreed to or been required to make any
adjustment pursuant to Section 481(a) of the Code by reason of any change in
accounting method initiated by the Company; the IRS has not proposed any such
adjustment or change in accounting method; and the Company has no application
pending with any Taxing Authority requesting permission for any change in
accounting method.
(h) The Company is not now and during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code has not been a United States
real property holding corporation as defined in Section 897(c)(2) of the Code.
(i) The Company is not now nor has ever been a party to any
agreement, contract, arrangement or plan that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
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(j) The Company has not filed a consent pursuant to Section 341(f)
of the Code nor has the Company agreed to have Section 341(f)(2) of the Code
apply to any disposition of a section (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company.
(k) The Company has never been (i) a member of an affiliated group
of corporations (as defined in Section 1504(a) of the Code), or filed or been
included in a combined, consolidated, or unitary Tax Return, or (ii) a party to
any tax allocation, sharing or reimbursement agreement or arrangement.
(l) The Company is not an obligor on and none of its assets has
been financed directly or indirectly by any tax-exempt bonds.
(m) Except as set forth on SCHEDULE 5.10, the Company has not
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law.
(n) The Company has no liability for the Taxes of any other person
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise.
(o) The Company does not have pending any request for a private
letter ruling.
(p) The Company has not been a personal holding company within the
meaning of Section 542 of the Code during the five-year period preceding the
date hereof.
(q) The Company has disclosed on its federal income tax Returns all
positions therein that could give rise to a substantial understatement of
federal income tax within the meaning of Code Section 6662.
SECTION 5.11 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.11 is a true and complete list of all annuity,
bonus, cafeteria, stock option, stock purchase, profit sharing, savings,
pension, retirement, incentive, group insurance, disability, employee welfare,
prepaid legal, nonqualified deferred compensation including without limitation,
excess benefit plans, top-hat plans, deferred bonuses, rabbi trusts, secular
trusts, nonqualified annuity contracts, insurance
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arrangements, nonqualified stock options, phantom stock plans, or golden
parachute payments, or other similar fringe benefit plans, and all other
employee benefit funds or programs (within the meaning of Section 3(3) of
ERISA), covering employees, former employees or directors of the Company (the
"Plans"). Except as set forth on SCHEDULE 5.11, and except for normal
compensation and agreements entered into in the ordinary course of business and
in accordance with past practice, the Company is not a party to any employee
agreement, understanding, plan, policy, procedure, or other enforceable
arrangement, whether written or oral, which provides compensation or fringe
benefits to its employees, and the Company is in compliance with all its
obligations under all such Plans, except for such noncompliance as would not
have a Material Adverse Effect.
(b) With respect to each employee benefit plan listed on SCHEDULE
5.11, and to the extent the following are required by applicable law, true and
complete copies of (i) all Plan documents (including all amendments and
modifications thereof), and related agreements including without limitation, the
trust agreement and amendments thereto, insurance contracts and investment
management agreements; (ii) the last three filed Form 5500 series and Schedules
A, B, C, P and/or SSA, as applicable, and Forms PBGC-1, if any; (iii) summary
plan descriptions; (iv) summary of material modifications, if any; (v) the most
recent auditor's report, and copies of any and all tax qualification
correspondence including without limitation, private letter rulings,
applications for determination and determination letters issued with respect to
the Plans; and (vi) the most recent annual and periodic accounting of related
Plan assets, have also been delivered to TRK.
(c) With respect to the Plans listed on SCHEDULE 5.11 which are
subject to ERISA:
(i) The Plans are in material compliance with the
applicable provisions of ERISA and each of the employee pension benefit plans,
within the meaning of Section 3(2) of ERISA (the "Pension Plans"), which are
intended to be qualified under Section 401(a) of the Code have received a
favorable determination letter from the IRS or a request for such determination
has been timely filed with the IRS (and to the Knowledge of the Company, nothing
has occurred to cause the IRS to revoke such determination and the IRS has not
indicated any disapproval of any request for such a determination);
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(ii) Each Plan has been operated in accordance with its
terms and all required filings that are due prior to the date hereof, including
without limitation, the Forms 5500, for all Plans have been timely made;
(iii) No prohibited transactions, as defined by Section 406
of ERISA or Section 4975 of the Code, have occurred with respect to any of the
Plans;
(iv) The Company has not engaged in any transaction in
connection with which the Company could be subjected to a criminal or civil
penalty under ERISA;
(v) None of the Plans, nor any trust which serves as a
funding medium for any of such Plans, nor any issue relating thereto is
currently under examination by or pending before the IRS, the Department of
Labor, the PBGC or any court, other than applications for determinations pending
before the IRS;
(vi) None of the Pension Plans is a defined benefit plan
within the meaning of Section 414(j) of the Code;
(vii) None of the Plans is a "multiemployer plan" as that
term is defined in Section 3(37) of ERISA and Section 411(f) of the Code, nor a
plan maintained by more than one employer (hereinafter referred to as an
"multiple employer plan"), nor a single employer plan under a multiple
controlled group within the meaning of Section 4063 of ERISA, and neither the
Company nor any entity required to be aggregated with the Company under Section
414(b), (c), (m), or (o) of the Code has incurred any withdrawal liability with
respect to any single plan, multiemployer or multiple employer plan, which
liability could constitute a liability of the Surviving Corporation;
(viii) No benefit claims (except those submitted in the
ordinary course of administration of such Plan) are currently pending against
any Plan;
(ix) Except as set forth on SCHEDULE 5.11, no Plan provides
for retiree medical or retiree life insurance benefits for former employees of
the Company; and
(x) No Pension Plan has been terminated by the Company.
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(d) There have been no failures to comply with the continuation
coverage provisions required by Sections 601-608 of ERISA and Section 4980B of
the Code under any Plan.
(e) There are no employee benefit plans which cover employees of
the Company which are required to comply with the provisions of any foreign law.
(f) All excess contributions, if any (together with any income
allocable thereto), have been distributed (or, if forfeitable, forfeited) before
the close of the first two and one half (21/2) months of the following plan
year; and there is no liability for excise tax under Section 4979 of the Code
with respect to such excess contributions, if any, for any Plan.
SECTION 5.12 COMPLIANCE WITH LAW.
Except as set forth on SCHEDULE 5.12, the Company has been, is and on the
Closing Date will continue to be in compliance with all applicable laws
(including duties imposed by common law), rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (federal,
state, local and foreign) and all requirements imposed under building, zoning,
occupational safety and health, pension, environmental control, toxic waste,
fair employment, equal opportunity or similar laws, rules, regulations and
ordinances, in each case the noncompliance with which would be likely to have a
Material Adverse Effect on the Company; provided that, notwithstanding the
foregoing, the representations and warranties contained in this Section 5.12
shall not apply to any matter as to which a more specific representation or
warranty applies.
SECTION 5.13 LITIGATION; CLAIMS.
SCHEDULE 5.13 hereto contains a complete and accurate list of (a) all
claims, actions, suits, proceedings or investigations pending or (to the
Knowledge of the Company) threatened by or against the Company, and (b) all
judgments, decrees, arbitration awards, consent agreements or orders binding
upon the Company. Except as set forth on SCHEDULE 5.13, during the past five
(5) years, no product liability claims have been asserted against the Company
and the Company has not been a party to any litigation in any capacity. To the
Knowledge of the Company, there is no basis for any material action, proceeding
or investigation involving the Company, other than as set forth on SCHEDULE
5.13.
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SECTION 5.14 CONTRACTS AND COMMITMENTS.
SCHEDULE 5.14 contains a complete and accurate list and brief description
of all contracts, agreements and commitments (other than the agreements or
arrangements set forth in SCHEDULES 5.11, 5.15, 5.17, 5.21A, 5.22A, 5.24, 5.26
and 5.27, and other than agreements or arrangements similar in nature thereto
but not set forth in such Schedules due to the limitations contained in the
corresponding Sections thereof), whether written or oral, of the Company that
involve commitments of the Company in excess of $100,000, have a term of six (6)
months or more, or that are not in the ordinary course of business.
The agreements set forth in SCHEDULES 5.11, 5.14, 5.15, 5.17, 5.21A, 5.22A,
5.24, 5.26 and 5.27 are hereinafter referred to collectively as the "Operating
Agreements." None of the Operating Agreements has been assigned or is the
subject of any security agreement, except as set forth on SCHEDULE 5.16. Except
as otherwise set forth on SCHEDULE 5.14, (a) each of the Operating Agreements is
a valid and binding obligation of the Company and (to the Knowledge of the
Company) the other party or parties thereto, enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to creditors' rights generally and by
principles of equity regarding the availability of remedies; (b) neither the
Company nor (to the Knowledge of the Company) any other party thereto, has
terminated, canceled, modified or waived any term or condition of any Operating
Agreement in a manner which would have a Material Adverse Effect; and
(c) neither the Company nor (to the Knowledge of the Company) any other party to
any Operating Agreement is in default or alleged to be in default under any
Operating Agreement in a manner which would have a Material Adverse Effect, and
there exists no event, condition or occurrence that, after notice or lapse of
time, or both, would constitute such a default by the Company or any party to
any such Operating Agreement. None of such Operating Agreements contains any
covenant or other restriction preventing or limiting the consummation of the
transactions contemplated hereby. The Company has no outstanding powers of
attorney except routine powers of attorney relating to the representation of the
Company before governmental agencies or given in connection with qualification
to conduct business or customs matters.
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SECTION 5.15 INTELLECTUAL PROPERTY RIGHTS.
SCHEDULE 5.15 contains a correct and complete list of the following assets
and related matters: (a) all patents and applications for patents, all Marks
and registration of Marks and applications for registration of Marks, all
copyright registrations and applications for copyright registration, and all
trade names, owned or used (pursuant to license agreements or otherwise) by the
Company, and in the case of any such Intellectual Property that is so owned, the
jurisdictions in or by which such assets or any of them have been registered,
filed or issued and (b) to the extent not listed on SCHEDULE 5.14, all
contracts, agreements or understandings pursuant to which the Company has
authorized any Person to use any of the Intellectual Property which is so owned.
The Company owns, possesses or licenses and as of the Closing Date will own,
possess or license, all right, title and interest in and to the items of
Intellectual Property that are required to conduct its businesses as now
conducted without conflict with the rights of others. Except as set forth in
SCHEDULE 5.15: (i) the Company has the right to use the Intellectual Property
(including applications for any of the foregoing) owned or licensed by the
Company, and, to the Company's Knowledge, the sole and exclusive rights to use
the patents and Marks contained in the Intellectual Property (including
applications for any of the foregoing) owned or licensed by the Company, and to
the Knowledge of the Company, none of the past or present employees, officers,
directors or stockholders of the Company, or anyone else, has any rights with
respect thereto; (ii) the consummation of the transactions contemplated hereby
will not alter or impair any such rights; (iii) the Company has not received any
notice or claim of infringement or any claim challenging or questioning the
validity or effectiveness of any of the items of Intellectual Property, and,
except as set forth on SCHEDULE 5.15, there is no valid basis for any such
claim; and (iv) to the Knowledge of the Company, the Company is not liable, nor
has it made any contract or arrangement whereby it may become liable, to any
Person for any royalty or other compensation for use of any of the items of
Intellectual Property.
SECTION 5.16 LIENS.
Except as set forth on SCHEDULE 5.16, none of the properties or assets,
whether real, personal or mixed, or tangible or intangible, owned or leased by
the Company is subject
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to any mortgage, lien, encumbrance or other security interest, except for
(a) liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof shall currently be
contested in good faith by appropriate proceedings; (b) liens in respect of
pledges or deposits under workmen's compensation laws or similar legislation,
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) liens
incidental to the conduct of the business.
SECTION 5.17 INSURANCE.
All insurance policies and fidelity bonds relating to the assets of the
Company, including identification of the insurer and the termination dates
thereof, are set forth on SCHEDULE 5.17. Except as set forth on SCHEDULE 5.17,
the Company has not had coverage limited by any insurance carrier to which it
has applied for insurance or with which it has carried insurance, during the
last two (2) years. If the Company receives, prior to the Closing, any notice
of cancellation or other termination of any such policies presently in effect,
the Company will use its best efforts to replace such policies not later than a
date prior to the effective date of any such cancellation or other termination
with policies providing substantially the same coverage.
SECTION 5.18 DISCLOSURE.
No representation or warranty by the Company contained in this Agreement,
and no statement contained in the Schedules hereto or any certificate furnished
to TRK or the Surviving Corporation pursuant to the provisions hereof, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein not misleading.
SECTION 5.19 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.
All accounts receivable of the Company whether reflected on the Closing
Statements, the Company Financial Statements and/or the Company Interim
Financial Statements, or otherwise, represent sales actually made in the
ordinary course of business or valid claims as to which full performance has
been rendered
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and the reserves against the accounts receivable for returns and bad debts are
commercially reasonable and have been determined in accordance with GAAP,
consistently applied. Except to the extent reserved against the accounts
receivable, no counterclaims or offsetting claims with respect to the accounts
receivable are pending or, to the Company's Knowledge, threatened. The accounts
payable of the Company reflected on the Company Financial Statements and the
Company Interim Financial Statements and to be reflected on the Closing
Statements arose, or will arise, from BONA FIDE transactions in the ordinary
course of business.
SECTION 5.20 INVENTORIES.
The inventories of the Company as of the date hereof consist of raw
materials, goods in process and finished goods salable or usable in the normal
course of the business of the Company, and such inventories are at levels
consistent with past practices of the business. All such inventories are
carried on the books of the Company pursuant to the normal inventory valuation
policy of the Company, which is in accordance with GAAP, as reflected in the
Company Financial Statements. SCHEDULE 5.20 sets forth the locations of all
inventories of the Company. Except as set forth on SCHEDULE 5.16, no items
included in inventories of the Company are or will be pledged as collateral or
held by the Company on consignment from others. The Company is not committed to
purchase inventories in amounts greater than are reasonably expected to be
usable in the ordinary course of business as presently conducted. At March 31,
1995, the total amount of outstanding purchase orders was in excess of $27.7
million.
SECTION 5.21 TANGIBLE PERSONAL PROPERTY.
SCHEDULE 5.21 lists all of the fixed assets of the Company and each item of
tangible personal property, other than inventory (whether finished goods or raw
materials) or supplies, owned by the Company including all such furniture,
furnishings, office equipment, machinery, tools and other equipment, in all
cases as of the date hereof. The Company has good title to all of the items
listed on SCHEDULE 5.21, free and clear of all liens, claims and encumbrances
except as set forth in Section 5.16 or on SCHEDULE 5.16. SCHEDULE 5.21A lists
all leases of tangible personal property leased by the Company and the location
thereof. None of such leases contains any covenant or restriction preventing
or limiting the consummation of the
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transactions contemplated hereunder. All of the personal property listed in
SCHEDULE 5.21 and the assets leased pursuant to the leases listed on SCHEDULE
5.21A are in operating condition.
SECTION 5.22 REAL PROPERTY.
(a) SCHEDULE 5.22 contains a correct and complete list of all the
real property that is owned by the Company or that the Company has agreed (or
has an option) to purchase, sell or lease, or may be obligated to purchase, sell
or lease to a third party in connection with its business and any title
insurance or guarantee policies providing owners coverage with respect thereto.
Such real property is hereinafter referred to as the "Real Property," and the
improvements and fixtures thereon are hereinafter referred to as the
"Improvements."
(b) Except as set forth on SCHEDULE 5.22, the Company does not
lease any real property, and the Company has neither an agreement to lease nor
an obligation to lease any real property in connection with its business.
(c) Except as set forth on SCHEDULE 5.22, the Company is the sole
legal and equitable owner of the Real Property, the Improvements and all
interests therein and possesses good and marketable title to the Real Property
and the Improvements, free and clear of all conditions, exceptions,
reservations, liens, restrictions, rights-of-way, easements, encumbrances and
other matters affecting marketability.
(d) There are no adverse or other parties in possession of the Real
Property, the Improvements, or any portion or portions thereof, and on the
Closing Date the Real Property and the Improvements will be free and clear of
any and all leases, licensees, occupants or tenants. To the Knowledge of the
Company, there are no pending or threatened condemnation, eminent domain or
similar proceedings, or litigation or other proceedings affecting the Real
Property, the Improvements or any portion or portions thereof. To the Knowledge
of the Company, there are no pending or threatened requests, applications or
proceedings to alter or restrict any zoning or other use restrictions applicable
to the Real Property or the Improvements that would interfere with the conduct
of the business of the Company or the use of the assets consistent with past
practice, which interference would have a Material Adverse Effect. Except as
set forth on SCHEDULE 5.22, to the Company's Knowledge, all water, sewer, gas,
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electric, telephone, drainage and other utility equipment, facilities and
services required by law or necessary for the operation of the Improvements are
installed and connected pursuant to valid permits and no notice has been
received by the Company regarding the termination or material impairment of any
such service. All necessary easements exist and are in full force and effect.
The Real Property has access, in accordance with past practice, to and from a
public right of way or road dedicated for public use and no notice has been
received by the Company relating to the termination or impairment of such access
(including applicable parking requirements).
SECTION 5.23 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement "Hazardous Material" shall mean:
(i) any "hazardous substance" as now defined pursuant to CERCLA, 42 U.S.C.
Section 9601(14), or any substance listed or identified by any characteristic
in any regulation adopted pursuant to any statute referred to or incorporated
into such definition, all as in effect on the date hereof; (ii) any petroleum,
including crude oil and any fraction thereof; (iii) any asbestos,
polychlorinated biphenyl (PCB), or isomer of dioxin, or any material or thing
containing or composed of such substance or substances.
(b) Except as disclosed in the reports identified on SCHEDULE 5.23
(the "Reports"), there is no Hazardous Material at, under or on any properties
owned or operated by the Company where such could have a Material Adverse
Effect. With respect to the period prior to January 1, 1990, neither the
Company, nor, to the Company's Knowledge, any of its predecessors in interest,
manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any such Hazardous Material, where such could have a
Material Adverse Effect. With respect to the period from January 1, 1990,
neither the Company, nor, to the Company's Knowledge, any of its predecessors in
interest, has manufactured, processed, distributed, used, treated, stored,
disposed of, transported or handled any such Hazardous Material, where such
could have a Material Adverse Effect, other than in compliance with applicable
law.
(c) Except as disclosed in the Reports, neither the Company nor, to
the Company's Knowledge, its predecessors in interest, has any obligation or
liability, known or unknown, matured or not matured, absolute or contingent,
assessed or
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unassessed, imposed or based upon any provision under any foreign, federal,
state or local law, rule, or regulation or common law, or any code, order,
decree, judgment or injunction applicable to the Company or its predecessors in
interest or any notice, or request for information issued, promulgated, approved
or entered thereunder, or the common law, relating to pollution, damage to or
protection of the environment including without limitation, laws relating to
emissions, discharges, releases or threatened releases of Hazardous Material
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or surface), (hereinafter collectively referred to as
"Environmental Laws") where such obligation or liability could have a Material
Adverse Effect; provided that the representations and warranties contained in
this sentence shall not apply to the matters described in Section 5.23(b).
Except as disclosed in the Reports, there are no specific facts or circumstances
that would indicate (i) that the Company is not, or the Company will not be
prior to the Closing, in compliance in all material respects with the
Environmental Laws and with the provisions of the Federal Occupational Safety
and Health Act, or (ii) to the Knowledge of the Company, that operation of the
Company's business and plant locations gives rise to any liability to any
Person, contingent or otherwise, under the Environmental Laws.
(d) The Company possesses and is in compliance in all material
respects with all permits, licenses, certificates, franchises and other
authorizations relating to the Environmental Laws necessary to conduct its
business or required by environmental regulations, except where the failure to
have any such permit, license, certificate, franchise or other authorization
would not have a Material Adverse Effect.
(e) Except as disclosed in the Reports, no claims have been made
against the Company or its predecessors in interest during the past three (3)
years (except minor claims, all of which have been resolved without material
fines or penalties), and no presently outstanding citations or notices have been
issued against the Company, under the Environmental Laws where such could have a
Material Adverse Effect, including without limitation, any such claim, citation
or notice relating to or arising out of or attributable, in whole or in part,
to:
(i) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any
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Hazardous Material by the Company or its predecessors in interest, or any of the
Company's employees, agents or representatives in connection with or in any way
arising from or relating to the Company or its predecessors in interest or any
of its properties;
(ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Material by
any other Person at, on or under any real property owned, leased, operated or
controlled by the Company where such activity could have a Material Adverse
Effect.
(f) The Company has not been subject to any civil, criminal or
administrative action, suit, claim, hearing, notice of violation, investigation,
inquiry or proceeding for failure to comply with, or received notice of any
violation or potential liability under the Environmental Laws where such could
have a Material Adverse Effect, nor is the Company aware of any information,
whether or not confirmed or reported, which could give rise to any such
potential liability.
(g) No real property, site or facility (as defined in CERCLA,
42 U.S.C. Section 9601(9)) owned by the Company is (i) listed or proposed for
listing on the National Priority List or (ii) to the Company's Knowledge, listed
on the Comprehensive Environmental Response, Compensation, Liability Information
System List ("CERCLIS") promulgated pursuant to CERCLA, or any comparable list
maintained by any foreign, state or local government authority.
(h) There are no underground storage tanks at any real property,
site or facility (as defined in CERCLA) owned by the Company and the Company
further warrants and represents that any prior use and operation of underground
storage tanks has been in material compliance with all Environmental Laws.
(i) The Company has delivered to TRK true, complete and correct
copies of results of any reports, studies, analyses, tests or monitoring in the
possession of or initiated by the Company pertaining to the existence of
Hazardous Material and any other environmental concerns relating to any of its
facilities, or sites or real property owned, leased, operated, used or
controlled by the Company or any of its predecessors in interest, or concerning
compliance with or liability under the Environmental Laws.
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(j) Except as disclosed in the Reports, (i) there are no
polychlorinated biphenyls ("PCBs") in or at any premises owned, leased, operated
or controlled by the Company, and (ii) the Company further warrants and
represents that any prior use, handling, storage, transport or disposal of PCBs
has been in compliance with all Environmental Laws.
(k) The Company has not assumed by contract the liability of any
other Person pursuant to any of the Environmental Laws.
(l) To the Knowledge of the Company, except as disclosed in the
Reports, there are no unasserted potential claims against the Company or its
predecessors in interest related to the generation, transport, treatment,
recycling, storage or disposal of Hazardous Material, or arrangement therefor,
to or at any facility owned, leased, controlled or operated by the Company or
any of its predecessors in interest.
SECTION 5.24 EMPLOYEES.
SCHEDULE 5.24 sets forth a complete and accurate list of all employees of
the Company having total annual compensation in excess of $65,000, showing for
each: name, hire date, current job title or description, current salary level
(including any bonus or deferred compensation arrangements) and any bonus,
commission or other remuneration paid during fiscal 1994, and describing any
existing contractual arrangement with such employee.
SECTION 5.25 EMPLOYEE RELATIONS.
Except as set forth on SCHEDULE 5.25, the Company has not at any time
during the past five years had, nor is there now threatened, any strike, picket,
work stoppage, work slowdowns or other job action due to labor disagreements.
Except as set forth on SCHEDULE 5.25, and except for those matters which would
not have a Material Adverse Effect, (a) the Company is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including the terms and provisions
of any collective bargaining agreement or other contract with a labor union
representing any employees of the Company and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint filed
against the Company, or (to the Knowledge of the Company) threatened before the
National Labor
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Relations Board or any foreign authority; (c) no question concerning
representation has been raised or is (to the Knowledge of the Company)
threatened respecting the employees of the Company; and (d) no grievance has
been made since November 1, 1993 nor is any arbitration proceeding arising out
of or under any collective bargaining agreement pending, and no claims therefor
exist.
SECTION 5.26 VENDORS.
SCHEDULE 5.26 sets forth correct and complete lists of the twenty-five (25)
largest (by dollar volume) vendors of the Company during the most recently
completed fiscal year. Except as set forth in SCHEDULE 5.26, there are no
outstanding disputes with any vendor listed thereon and no vendor listed thereon
has refused to continue to do business with the Company or has stated its
intention not to continue to do business with the Company.
SECTION 5.27 DISTRIBUTORS AND REPRESENTATIVES.
SCHEDULE 5.27 sets forth a correct and complete list of the twenty-five
(25) largest (by dollar volume) distributors, representatives and agents for the
sale of the products of the Company during the two most recently completed
fiscal years. Since September 3, 1994, there has been no termination of any
independent distributor, wholesaler, sales representative or agent relationship,
nor has any present independent distributor, wholesaler, sales representative or
agent indicated any present or future intention to terminate or materially
change the terms of its relationship with the Company.
SECTION 5.28 GOVERNMENTAL AUTHORIZATIONS.
The Company possesses all licenses, franchises, permits, certificates,
orders, approvals, exemptions, registrations or other authorizations
(collectively, "Permits") from governmental, regulatory or administrative
agencies or authorities required for the ownership of its properties and assets
and operation of its business in the manner presently conducted (including those
required pursuant to laws or regulations relating to the protection of the
environment), each of which will be in full force and effect on the Closing
Date, except where the failure to possess any such Permit would not have a
Material Adverse Effect. A list of all material Permits is set forth in
SCHEDULE 5.28. Except as specified in SCHEDULE 5.28, no registrations, filings,
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applications, notices, transfers, consents, approvals, orders, qualifications,
waivers or other actions of any kind are required by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to enable the Company to continue the possession and operation of its
properties and assets and the business of the Company as presently conducted in
all material respects.
SECTION 5.29 BROKER'S OR FINDER'S FEES.
No agent, broker, investment banker, Person or firm retained by the Company
or an Affiliate of the Company is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or indirectly from
the Company in connection with any of the transactions contemplated hereby.
SECTION 5.30 CERTAIN TRANSACTIONS.
Except as set forth on SCHEDULE 5.30, none of the directors or officers of
the Company is currently a party to any contractual relationship with the
Company (other than for services as employees, officers and directors),
including without limitation any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any
such Person, or to or from any corporation, partnership, trust or other entity
in which any such Person owns in excess of five percent (5%) of the outstanding
equity interest, which is not terminable without penalty at the will of the
Company.
SECTION 5.31 ABSENCE OF QUESTIONABLE PAYMENTS.
Neither the Company nor any present director, officer, agent, employee or
other Person acting on its behalf has, to the Company's Knowledge, (a) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Securities Exchange Act of
1934, as amended, or any other applicable foreign, federal or state law; or
(b) accepted or received any unlawful contributions, payments, expenditures or
gifts.
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SECTION 5.32 DIRECTORS AND OFFICERS; BANK ACCOUNTS.
SCHEDULE 5.32 lists each of the directors and officers and all of the bank
accounts (and signatories thereto) of the Company.
SECTION 5.33 GOVERNMENT CONTRACTS.
For purposes of this Agreement, "Government Contracts" means with respect to
any Person, any contract (including purchase orders, blanket purchase orders and
agreements and delivery orders) between such Person and the United States
Government or any department, agency, or instrumentality thereof or any state or
local governmental agency or authority (the "Government"), and any subcontract
at any tier held by such Person under a prime government contract. Except as
set forth on SCHEDULE 5.33, with respect to the Government Contracts to which
the Company is a party: (i) such Government Contracts constitute valid and
binding obligations of the Company and (to the Knowledge of the Company) the
other party or parties thereto, enforceable in accordance with their terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to creditors' rights generally; (ii) the Company is in
compliance in all material respects with the terms of all Government Contracts
to which it is a party and all laws, regulations, and contract provisions
applicable to the obtaining, formation, pricing, performance, billing,
administration, and other aspects of its Government Contracts, including
compliance in all material respects with the Truth in Negotiations Act (as
amended) and with all defective pricing, price reduction, or similar clauses
contained or incorporated in its Government Contracts, and the Company is in
compliance in all material respects with the False Claims Act (as amended), or
any similar applicable statutes or regulations concerning false claims, false
statements, defective pricing, misrepresentation, or procurement integrity
concerning any Government Contract, open market, commercial or other sale order
involving or pursuant to its Government Contracts; (iii) neither the Company nor
(to the Knowledge of the Company) any other party has terminated, canceled or
waived any material term or condition of any Government Contract; and (iv) the
cost accounting, estimating, property, and procurement systems relating to the
Company's Government Contracts are in compliance in all material respects with
applicable laws, regulations, and contract
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provisions, including applicable cost principles and applicable cost accounting
standards.
(b) In addition to the representations and warranties set forth in
Section 5.19, with respect to any Government Contracts to which the Company is a
Party, (i) each billed account receivable in excess of $25,000 (determined
individually) represents a bona fide claim against the Government for sales,
services performed, or other charges arising on or prior to the date hereof, and
all the products delivered and services performed which gave rise to such
accounts were delivered or performed in accordance with applicable Government
Contracts; and (ii) all unbilled or unreserved amounts included in accounts
receivable in excess of $25,000 (determined individually) will, in the ordinary
course of business as currently conducted and consistent with past practices,
mature into and become billed accounts receivable in the same or greater amount.
(c) None of such Government Contracts has a currently incurred or
currently projected cost overrun in an amount exceeding $100,000.
(d) Except as set forth on SCHEDULE 5.16 and those liens made in
accordance with the Assignment of Claims Act (as amended), 31 U.S.C. Section
3727, and the Assignment of Contracts Act (as amended), 31 U.S.C. Section 15,
which are listed on SCHEDULE 5.33, the Company has not assigned or otherwise
conveyed or transferred, or agreed to assign, to any Person, any Government
Contracts to which it is a party, or any account receivable relating thereto,
whether as a security interest or otherwise.
(e) The Company has not received any notice or other communication
in any form from the Government regarding its actual or threatened
disqualification, suspension, or debarment from contracting with the Government
including without limitation any show cause notice or cure notice.
(f) Except as set forth on SCHEDULE 5.33 or 5.13 there is no:
(i) pending or (to the Knowledge of the Company) threatened investigation
relating to any Government Contract to which the Company is a party;
(ii) existing or (to the Knowledge of the Company) threatened claim, cost
disallowance, pricing adjustment, or adverse audit finding relating to any
Government Contract to which the Company is a party; or (iii) termination for
default or cure notice or show cause notice proposed or
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currently in effect, relating to any Government Contract to which the Company is
a party.
(g) (i) Each bid or proposal involving more than $1,000,000
estimated gross revenues submitted by the Company on procurements in effect as
of the Closing Date ("Procurements") complies in all material respects with all
applicable laws and regulations; and (ii) under any teaming or other agreements
entered into by the Company with partners, vendors, suppliers or other third
parties ("Partners") in connection with each of the Procurements, if the Company
(A) withdraws its offers and/or (B) modifies or reprices its offers, as the
Company deems appropriate, in either event the Company will not incur any
material liability from either the Company's government customers issuing the
Procurements or the Company's Partners.
ARTICLE VI
CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS
SECTION 6.1 CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS.
The Major Stockholders agree to vote in favor of the Merger.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TRK
TRK represents and warrants to the Company, and the Company in agreeing to
consummate the transactions contemplated by this Agreement has relied upon such
representations and warranties, that:
SECTION 7.1 CORPORATE ORGANIZATION.
TRK is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite power and
authority (corporate and other) to own, lease and operate its properties and to
carry on its business as now being conducted.
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SECTION 7.2 VALID AND BINDING AGREEMENTS.
TRK has the full corporate power to enter into this Agreement and the
Indemnification and Escrow Agreement. All necessary action on the part of TRK
has been taken to authorize the execution and delivery of this Agreement and the
Indemnification and Escrow Agreement, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been, and as of the Closing Date, the
Indemnification and Escrow Agreement will be, duly and validly executed and
delivered by TRK, and, assuming such agreement constitutes the valid and binding
agreements of the other parties thereto, will constitute valid and binding
agreements of TRK, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization or similar laws relating to
creditors' rights generally and by principles of equity regarding the
availability of remedies.
SECTION 7.3 NO VIOLATION.
Neither the execution and delivery of this Agreement and the
Indemnification and Escrow Agreement nor the consummation of the transactions
contemplated hereby or thereby nor compliance by TRK with any of the provisions
hereof or thereof will (a) violate or conflict with any provision of the
certificate of incorporation or by-laws of TRK or (assuming compliance with the
HSR Act) any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to TRK, or (b) violate or conflict with, or
result in a breach of any provision of, or constitute a default (or any event
which, with or without due notice or lapse of time, or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon the stock or any of the properties or assets of TRK under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument of TRK.
SECTION 7.4 CONSENTS AND APPROVALS.
Except for any filings required under the HSR Act, no permit, consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory
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authority or third party is required to be made or obtained by TRK in connection
with the execution, delivery and performance of this Agreement or the
Indemnification and Escrow Agreement or the consummation of the transactions
contemplated hereby or thereby.
SECTION 7.5 BROKER'S OR FINDER'S FEES.
Except as set forth on SCHEDULE 7.5, no agent, broker, investment banker,
Person or firm retained by TRK or any Affiliate of TRK is or will be entitled to
any broker's or finder's fee or any other commission or similar fee directly or
indirectly from TRK in connection with any of the transactions contemplated
hereby.
ARTICLE VIII
COVENANTS
SECTION 8.1 COMPLIANCE WITH LAW.
From the date hereof through the Closing Date, the Company will promptly
comply in all material respects with the HSR Act and will promptly notify TRK of
any legal, administrative or other proceedings, investigations, inquiries,
complaints, notices of violation or other asserted claims, judgments,
injunctions or restrictions, pending, outstanding or, to the Knowledge of the
Company, threatened or contemplated, which could materially affect the business
or any of the assets of the Company.
SECTION 8.2 OPERATION OF BUSINESS PRIOR TO CLOSING.
During the period from the date hereof through the Closing Date, the
Company agrees that (except as expressly contemplated or permitted by this
Agreement or to the extent that TRK shall otherwise consent in writing):
(a) The Company shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable efforts to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it.
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(b) The Company shall not amend or propose to amend its certificate
of incorporation or by-laws, other than to (i) delete certain anti-dilution
rights of the holders of the Class B Preferred Stock as they relate to employee
stock issuances and (ii) delay the expiration of the conversion rights under the
Class C Preferred Stock.
(c) The Company shall not: (i) increase the compensation payable
or to become payable to its officers or employees, except for customary year-end
cash bonuses consistent with past practice as to the amount and category of
employees, increases in salaries and wages of employees consistent with past
practice, or grant any severance or termination pay to or enter into any
employment or severance agreement with any of its directors, officers or other
employees; (ii) except with respect to the gain-sharing program and except as
otherwise contemplated by this Agreement, establish, adopt, enter into or make
any new grants or awards under or amend any employee benefit plan or other
arrangement, plan or policy between the Company and one or more of its
directors, officers or employees; or (iii) except as otherwise contemplated by
this Agreement, establish, adopt, enter into or amend any Plan.
(d) The Company shall not settle or compromise any material claims
or litigation or, except in the ordinary and usual course of business, modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims.
(e) The Company shall not permit with its Knowledge any material
insurance policy to be canceled or terminated without notice to TRK, except in
the ordinary and usual course of business.
(f) The Company shall not fail to confer on a regular and frequent
basis with one or more representatives of TRK to report material operational
matters and the general status of ongoing operations.
(g) The Company shall not fail to use its reasonable efforts to
cause the conditions listed in Article IX to be satisfied on the Closing Date.
(h) The Company shall not issue, sell, pledge, lease, dispose of,
encumber, or authorize the issuance, sale, pledge, lease, disposition or
encumbrance of, (i) any shares of capital
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stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest, other than in connection with the exercise of existing
purchase or conversion rights or (ii) any assets that are material, alone or in
the aggregate, to the Company except for the sale of products in the ordinary
course of business and consistent with past practice.
(i) The Company shall not make any tax election or settle or
compromise any material federal, state, local or foreign income tax liability.
(j) The Company shall not (i) declare or pay any dividends on or
make other distributions in respect of any of its capital stock, except
declaration and payment of regularly scheduled dividends on its Class B
Preferred Stock and Class C Preferred Stock, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) repurchase or otherwise acquire any shares of its capital
stock.
SECTION 8.3 ACCESS.
At all times prior to the Closing Date, the Company shall provide TRK and
its representatives with full access to, and will make available for inspection
and review, all properties, personnel, books, records and accounts of the
Company in order that TRK may have full opportunity to make such investigation
as each shall desire to make of the affairs of the Company. It is understood
that TRK shall be permitted to maintain personnel on the premises of the Company
during customary business hours to observe all aspects of the operations of the
Company and to confer with their management, attorneys and other third parties
reasonably requested for verification of any information obtained pursuant to
such observations. The Company also consents to the examination by Price
Waterhouse of workpapers and other records of the Accountants pertaining to the
Company and will cooperate with TRK to obtain such access and related
information from the Accountants.
SECTION 8.4 STOCKHOLDERS' MEETING.
In order to consummate the Merger, the Company, acting through its Board of
Directors, shall in accordance with its Certificate of Incorporation and by-laws
and applicable law duly
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call, give notice of and hold a meeting of its Stockholders or execute a written
consent in lieu thereof as soon as practicable following the date hereof.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF TRK
All obligations of TRK that are to be discharged under this Agreement at
the Closing are subject to the Company's fulfillment, at the Closing or
effective as of the Closing Date, of each of the following conditions (unless
expressly waived in writing by TRK at any time at or prior to the Closing) and
the Company shall use its reasonable efforts to cause each of such conditions
to be satisfied:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES.
On the Closing Date, the representations and warranties of the Company set
forth in Article V of this Agreement shall be true and correct in all material
respects as though such representations and warranties had been made by the
Company on and as of the Closing Date and TRK shall have received at the
Closing a certificate, dated the Closing Date, signed by the President or a Vice
President of the Company to such effect.
SECTION 9.2 COVENANTS, AGREEMENTS AND CONDITIONS.
The Company shall have performed and complied in all material respects
with all covenants, agreements and conditions contained in this Agreement
required to be performed by the Company on or prior to the Closing Date, and
TRK shall have received at the Closing a certificate, dated the Closing Date,
signed by the President or a Vice President of the Company to such effect.
SECTION 9.3 PROCEEDINGS.
No action or proceeding shall be pending or threatened to restrain or
prevent the consummation of the transactions contemplated hereby.
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SECTION 9.4 CORPORATE PROCEEDINGS.
All corporate and other proceedings to be taken and all consents to be
obtained in connection with the transactions contemplated by this Agreement by
the Company and all documents incident thereto shall be reasonably satisfactory
in form and substance to TRK and its counsel, Dickstein, Shapiro & Morin,
L.L.P., each of whom shall have received all such originals or certified or
other copies of such documents as either may reasonably request.
SECTION 9.5 OPINION OF COUNSEL.
TRK shall have received a written opinion dated the Closing Date from
Hill & Barlow, counsel to the Company, in the form attached as EXHIBIT H hereto.
SECTION 9.6 GOVERNMENTAL APPROVALS.
Except for the filing and approval of the Certificate of Merger, there
shall have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
SECTION 9.7 NO MATERIAL ADVERSE CHANGE.
During the period from the date hereof through the Closing Date, there
shall not have been any material adverse change in the condition (financial or
otherwise) or earnings of the Company.
SECTION 9.8 INSURANCE.
The Company shall have maintained in full force and effect the insurance
coverage described on SCHEDULE 5.17 hereto or policies providing substantially
equivalent coverage.
SECTION 9.10 DELIVERIES.
The Company shall have delivered to TRK the items referred to in Section
3.5. TRK shall have received a certification from the Company, pursuant to and
complying with Treasury Regulation Sections
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1.897-2(h) and 1.1445-2(c)(3) that none of the interests in the Company is a
real property interest as defined in Section 897 of the Code.
SECTION 9.11 EXERCISE OF RIGHTS.
All outstanding warrants and options pursuant to which shares of Common
Stock are or may be issuable by the Company shall have been duly and fully
exercised by the holders thereof and all amounts payable to the Company pursuant
to such exercise shall have been paid and all other conditions precedent to the
issuance of shares of Common Stock pursuant thereto shall have been satisfied.
One million dollars in aggregate principal amount (but not more than such
aggregate amount) outstanding under the Company's 15% convertible subordinated
notes, due August 9, 1995, shall have been converted into shares of Common Stock
pursuant to the conversion rights of such notes and all conditions precedent to
the issuance of shares of Common Stock pursuant to such conversion rights shall
have been satisfied.
SECTION 9.12 HSR ACT REQUIREMENTS.
In the reasonable opinion of TRK, all necessary requirements of the HSR Act
and the regulations promulgated thereunder shall have been complied with, and
any "waiting period" applicable to the transactions contemplated hereby shall
have expired by the Closing Date or shall have been terminated by the
appropriate agency.
SECTION 9.13 DISSENTING SHARES.
Stockholders owning more than 750 shares of Common Stock, on a
fully-diluted basis, shall have not demanded appraisal of such Common Stock
pursuant to the GCL.
SECTION 9.14 FINANCING.
In addition to the capital and subordinated debt of the corporate parent of
TRK and its Affiliates in the approximate amount of $8,000,000, TRK shall have
received financing adequate to consummate the transactions contemplated hereby
on terms and conditions reasonably satisfactory to TRK.
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SECTION 9.15 PAYMENT OF CERTAIN NOTES.
TRK shall have received each of the original Promissory Note of P. Enoch
Stiff, dated September 1, 1991, made payable to the Company in the original
principal amount of $50,000 and the original Promissory Note of James R.
Holderfield, dated November 1, 1994, made payable to the Company in the original
principal amount of $27,208.02 marked "cancelled" or "paid-in-full."
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE COMPANY AND THE MAJOR STOCKHOLDERS
All obligations of the Company that are to be discharged under this
Agreement at the Closing are subject to TRK's fulfillment at the Closing or
effective as of the Closing Date of each of the following conditions (unless
expressly waived in writing by the Company, the Stockholders' Representative and
SWIB at any time at or prior to the Closing) and TRK shall use its reasonable
efforts to cause each of such conditions to be satisfied:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES.
On the Closing Date, the representations and warranties of TRK set forth in
Article VII of this Agreement shall be true and correct in all material respects
as though such representations and warranties had been made on and as of the
Closing Date, and the Company shall have received at the Closing a certificate,
dated the Closing Date, signed by the President or a Vice President of TRK to
such effect.
SECTION 10.2 COVENANTS, AGREEMENTS AND CONDITIONS.
TRK shall have performed and complied in all material respects with all
covenants, agreements and conditions contained in this Agreement required to be
performed by it on or prior to the Closing Date, and the Company shall have
received at the Closing a certificate, dated the Closing Date, signed by the
President or a Vice President of TRK to such effect.
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SECTION 10.3 PROCEEDINGS.
No action or proceeding shall be pending or threatened to restrain or
prevent the consummation of the transactions contemplated hereby.
SECTION 10.4 CORPORATE PROCEEDINGS.
All corporate and other proceedings to be taken and all consents to be
obtained in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and its counsel, Hill & Barlow, each of whom shall have
received all such originals or certified or other copies of such documents as
either may reasonably request.
SECTION 10.5 OPINION OF COUNSEL.
The Company shall have received a written opinion dated the Closing Date
from Dickstein, Shapiro & Morin, L.L.P., counsel to TRK, in the form attached as
EXHIBIT I hereto.
SECTION 10.6 GOVERNMENTAL APPROVALS.
Except for the filing and approval of the Certificate of Merger, there
shall have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
SECTION 10.7 DELIVERIES.
TRK shall have delivered to the Stockholders and the Escrow Agent the items
referred to in Section 3.6.
SECTION 10.8 HSR ACT REQUIREMENTS.
In the reasonable opinion of the Company, all necessary requirements of the
HSR Act and the regulations promulgated thereunder shall have been complied
with, and any "waiting period" applicable to the transactions contemplated
hereby shall have expired by the Closing Date or shall have been terminated by
the appropriate agency.
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SECTION 10.9 MERGER CONSIDERATION ADJUSTMENT.
The Merger Consideration Adjustment shall not in the reasonable opinion of
the Company be expected to exceed $1,000,000.
SECTION 10.10 SWIB DEBT.
All SWIB Debt outstanding on the Closing Date shall be paid in full.
SECTION 10.11 FINANCING.
The financing obtained by TRK shall provide express permission for the
payment of any and all amounts due from the Company to the Stockholders pursuant
to this Agreement without subordination.
ARTICLE XI
OTHER MATTERS
SECTION 11.1 CONFIDENTIALITY.
Notwithstanding the termination of this Agreement, each party hereto and
his, her or its respective accountants, attorneys, employees and other agents,
will, unless otherwise required by law, keep confidential all information, oral
and written, obtained from any other party hereto or its Affiliates and refrain
from using in any manner all information set forth above not otherwise publicly
available.
SECTION 11.2 FURTHER ASSURANCES.
Each party hereto shall cooperate with the others, and execute and deliver,
or cause to be executed and delivered, all such other instruments, including
instruments of conveyance, assignment and transfer, and take all such other
actions as may be reasonably requested by the other parties hereto from time to
time, consistent with the terms of this Agreement, to effectuate the purposes
and provisions of this Agreement.
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ARTICLE XII
TERMINATION
SECTION 12.1 METHODS OF TERMINATION.
This Agreement may be terminated at any time prior to the Closing,
notwithstanding Stockholder approval:
(a) by the mutual consent of TRK and the Company;
(b) by TRK at any time after the date which is sixty (60) days from
the date of this Agreement, or any such longer period as may be required in the
event of an extension of the waiting period under the HSR Act, if any of the
conditions provided for in Article IX of this Agreement shall not have been met
prior to such date;
(c) by the Company at any time after the date which is sixty (60)
days from the date of this Agreement, or any such longer period as may be
required in the event of an extension of the waiting period under the HSR Act,
if any of the conditions provided for in Article X of this Agreement shall not
have been met prior to such date;
(d) at any time prior to the Effective Time by either the Company
or TRK if the Merger shall not have been consummated by September 1, 1995; or
(e) by TRK or the Company, if any required approval of the
Stockholders shall not have been obtained by reason of failure to obtain the
required vote at a duly held meeting of Stockholders or at any adjournment
thereof.
SECTION 12.2 PROCEDURE UPON TERMINATION.
In the event of termination by TRK, the Company, or both, pursuant to this
Article XII, written notice thereof shall promptly be given to the other party
or parties and the obligations of TRK and the Company under this Agreement
shall, except as set forth below, terminate without further action. Upon any
such termination:
(a) each party will redeliver all documents, workpapers and other
materials of the other party or parties relating to the transactions
contemplated hereby, whether
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obtained before or after the execution hereof, to the party or parties
furnishing the same;
(b) all information received by any of the parties shall be kept
confidential in accordance with Section 11.1; and
(c) no party shall have any liability or further obligation to any
other party, except for such legal and equitable rights and remedies as any
party may have under this Agreement or otherwise, by reason of any breach or
violation of this Agreement by the other party.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations and warranties of TRK and the Company contained in
Articles V and VII herein and in any certificate executed and delivered by
either TRK or the Company in connection with this Agreement shall survive the
Closing Date and shall terminate and expire eighteen (18) months thereafter;
provided, however, that the representations and warranties contained in Sections
5.10 and 5.23 shall survive the Closing Date and terminate and expire two (2)
years thereafter. All agreements of the parties contemplating performance after
the Closing Date shall survive the Closing Date for a period equal to ninety
(90) days after the expiration of the applicable statute of limitations for any
claim relating thereto.
SECTION 13.2 SERVICE OF PROCESS.
Service of process on the Company, the Stockholders or TRK for any claim,
legal action or proceeding under this Agreement may be made in the manner set
forth in Section 13.3.
SECTION 13.3 NOTICES.
All notices, requests, consents and other communications hereunder shall be
deemed given if delivered personally (including by courier), telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the
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parties at the following addresses or to other such addresses as may be
furnished in writing by one party to the others:
(a) if to the Company (prior to Closing):
369 West Western Avenue
Port Washington, WI 53074
Attention: P. Enoch Stiff, President
with a copy to:
Hill & Barlow
One International Place
Boston, MA 02110
Attention: Terrence W. Mahoney, Esquire
(b) if to the Stockholders' Representative
(after the Closing):
Houseman & Feind
1214 13th Avenue
Grafton, WI 53024
Attention: Robert L. Feind, Jr., Esq.
with a copy to:
Hill & Barlow
One International Place
Boston, MA 02110
Attention: Terrence W. Mahoney, Esquire
and to:
State of Wisconsin Investment Board
121 E. Wilson Street
Madison, WI 53707
Attention: Robert L. Zobel
and to:
Whyte Hirschboeck Dudek S.C.
Suite 2100
111 E. Wisconsin Avenue
Milwaukee, WI 53202
Attention: Richard P. Buellesbach, Esq.
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(c) if to TRK or the Surviving Corporation:
c/o Harbour Group Industries, Inc.
7701 Forsyth Boulevard, Suite 600
St. Louis, MO 63105
Attention: Peter S. Finley
with a copy to:
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Attention: Ira H. Polon, Esquire
SECTION 13.4 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Wisconsin, without regard to such jurisdiction's conflicts
of laws principles. Any legal action or proceeding with respect to this
Agreement may be brought in the state or federal courts located in the State of
Wisconsin having subject matter jurisdiction, and, by execution and delivery of
this Agreement, each of parties hereto hereby irrevocably accepts for itself or
himself and in respect of any of its or his property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
hereto hereby irrevocably waives to the fullest extent it or he may effectively
do so, any objection it or he may have to venue and the defense of an
inconvenient forum to the maintenance of such actions or proceedings.
SECTION 13.5 MODIFICATION; WAIVER.
This Agreement shall not be altered or otherwise amended except pursuant to
an instrument in writing signed by TRK, the Company and the Stockholders'
Representative. Any party may waive any misrepresentation by any other party,
or any breach of warranty by, or failure to perform any covenant, obligation or
agreement of, any other party, PROVIDED that mere inaction or failure to
exercise any right, remedy or option under this Agreement, or delaying in
exercising the same, will not operate as nor shall be construed as a waiver, and
no waiver will be effective unless set forth in writing and only to the extent
specifically stated therein.
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SECTION 13.6 ENTIRE AGREEMENT.
This Agreement, the schedules and exhibits hereto, and any other agreements
or certificates delivered pursuant hereto constitute the entire agreement of the
parties hereto with respect to the matters contemplated hereby and supersede all
previous written or oral negotiations, commitments, representations and
agreements.
SECTION 13.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS.
Prior to the Closing, this Agreement may not be assigned by the Company or
the Major Stockholders without the prior written consent of TRK. After the
Closing, this Agreement may not be assigned by the Major Stockholders without
the prior written consent of the Surviving Corporation. Prior to the Closing,
this Agreement may not be assigned by TRK without the prior written consent of
the Company. After the Closing, the Surviving Corporation may assign this
Agreement. All covenants, representations, warranties and agreements of the
parties contained herein shall be binding upon and inure to the benefit of their
respective successors and permitted assigns.
SECTION 13.8 PUBLIC ANNOUNCEMENTS.
Prior to the Closing, no public announcement of the transactions
contemplated hereby or of the terms hereof shall be made by the parties to this
Agreement without the written consent, such consent not to be unreasonably
withheld or delayed, of TRK and the Company, except to the extent required by
law.
SECTION 13.9 SEVERABILITY.
The provisions of this Agreement are severable, and in the event that any
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
SECTION 13.10 NO THIRD PARTY BENEFICIARY.
This Agreement is intended and agreed to be solely for the benefit of the
parties hereto and their stockholders, and no other party shall accrue any
benefit, claim or right of any kind whatsoever pursuant to, under, by or through
this Agreement.
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SECTION 13.11 EXPENSES.
Except as otherwise expressly provided herein, each party to this Agreement
will pay his, her or its own expenses in connection with the negotiation of this
Agreement, the performance of its obligations hereunder, and the consummation of
the transactions contemplated herein; provided that all sales and other transfer
taxes and the like arising from the Merger shall be paid one-half by the Company
(through reduction in the aggregate Merger Consideration) and one-half by TRK.
No expense of the Stockholders shall be charged to the Company.
SECTION 13.12 EXECUTION IN COUNTERPART.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger as of the date first written above.
TRK ACQUISITION CORPORATION
By:/S/ PETER S. FINLEY
----------------------------------
Name:
Title:
TRAK INTERNATIONAL, INC.
By:/S/ P. ENOCH STIFF
----------------------------------
Name: P. Enoch Stiff
Title: President
MAJOR STOCKHOLDERS:
STATE OF WISCONSIN
INVESTMENT BOARD
By:/S/ ROBERT ZOBEL
----------------------------------
Name: Robert Zobel
Title: Inv. Dir.
/S/ DEAN R. AXTELL
-------------------------------------
Dean R. Axtell
/S/ P. ENOCH STIFF
-------------------------------------
P. Enoch Stiff
<PAGE>
The undersigned certifies that he is the duly elected Assistant Secretary
of the Company and that the foregoing Agreement and Plan of Merger was duly
adopted by the holders of the issued and outstanding capital stock of the
Company entitled to vote thereon on July 20, 1995.
/S/ PAUL D. ROBLEE
-------------------------------------
Name: Paul D. Roblee
Title: Asst. Sec.
The undersigned certifies that he is the duly elected Secretary of TRK and
that the foregoing Agreement and Plan of Merger was duly adopted by written
consent of the sole stockholder of TRK on July 28, 1995.
/S/ WILLIAM A. SCHMALZ
-------------------------------------
Name: William A. Schmalz
Title: Assistant Secretary
<PAGE>
EXHIBIT 10.46
INDEMNIFICATION AND ESCROW AGREEMENT
THIS INDEMNIFICATION AND ESCROW AGREEMENT, dated as of August 16, 1995
(the "Agreement"), by and among TRAK International, Inc., a Delaware corporation
(the "Company"), each of the persons listed on EXHIBIT A attached hereto
(collectively the "Stockholders"), and Boatmen's Trust Company, a Missouri trust
company, as Escrow Agent ("Escrow Agent").
WHEREAS, TRK Acquisition Corporation, a Delaware corporation ("TRK"),
the Company and the Major Stockholders listed therein have entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing for the merger
of TRK with and into the Company (the "Merger");
WHEREAS, Section 3.2(b) of the Merger Agreement provides for the
delivery of a sum equal to Two Million Dollars ($2,000,000) (the "Escrow
Amount") to the Escrow Agent at the closing of the Merger, such Escrow Amount to
be delivered to and maintained by the Escrow Agent in accordance with the terms
of this Agreement and EXHIBIT B hereto; and
WHEREAS, the parties hereto desire to provide for (i) any downward
adjustment in Merger Consideration pursuant to Section 3.2(d) of the Merger
Agreement, and (ii) indemnification for breaches of representations, warranties
and covenants and for certain other matters under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
2. INDEMNIFICATION.
(a) Subject to the limitations hereinafter set forth in this Section
2, including in particular the non-recourse provisions hereof, from and after
the Effective Time, the Stockholders shall protect, defend, hold harmless and
indemnify the Company, its officers, directors, stockholders, employees and
agents, and their respective successors and assigns from, against
<PAGE>
and in respect of any and all losses, liabilities, deficiencies, penalties,
fines costs, damages and expenses whatsoever (including without limitation,
reasonable professional fees and costs of investigation, litigation, settlement
and judgment and interest) (collectively, the "Losses") that may be suffered or
incurred by any of them arising from or by reason of any of the following:
(i) Any breach of any representation or warranty, made by the
Company in the Merger Agreement or contained in any certificate executed by the
Company to TRK in connection with the Merger;
(ii) Any breach of any covenant or agreement made by the Company
in the Merger Agreement to the extent such breach occurred on or prior to the
Closing Date;
(iii) Any breach of any covenant or agreement made by any of the
Major Stockholders in the Merger Agreement; and
(iv) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to the
foregoing and the enforcement of the provisions of this Section 2.
(b) Subject to the limitations hereinafter set forth in this Section
2, from and after the Effective Time, the Company shall protect, defend, hold
harmless and indemnify the Stockholders, their respective officers, directors,
employees, agents, and personnel or legal representatives, and their respective
successors and assigns from, against and in respect of any and all Losses that
may be suffered or incurred by any of them arising from or by reason of any of
the following:
(i) Any breach of any representation, warranty, covenant or
agreement made by TRK in the Merger Agreement or contained in any certificate
executed by TRK and delivered to the Company in connection with the Merger
Agreement;
(ii) Any breach of any covenant or agreement made by the Company
in the Merger Agreement to the extent such breach occurs after the Closing Date;
and
(iii) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and
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accounting fees) incident to the foregoing and the enforcement of the provisions
of this Section 2.
(c) Whenever the Company shall learn after Closing of a claim of a
third party that, if allowed (whether voluntarily or by judicial or
quasi-judicial tribunal or agency), would constitute a breach of, or give rise
to an obligation of indemnification under Section 2(a), before paying the same
or agreeing thereto, the Company shall promptly notify the Stockholders'
Representative and the State of Wisconsin Investment Board ("SWIB") in writing
of all such facts within the Company's knowledge with respect to such and the
amount thereof. If, prior to the expiration of twenty (20) days from the
mailing of such notice, either the Stockholders' Representative or SWIB shall
request, in writing, that such not be paid, the Company shall not pay the same,
provided the Stockholders' Representative or SWIB proceeds promptly, at the
Stockholders' expense (including employment of counsel reasonably satisfactory
to the Company), while reserving the right to contest the issue of whether the
Stockholders have an obligation under Section 2(a), to settle, compromise or
litigate, in good faith, such claim, and to pursue at its expense other sources
of indemnity, contribution or compensation with respect to such claim on the
Company's behalf, including insurance policies maintained by the Company or its
Affiliates. After notice from the Stockholders' Representative or SWIB
requesting the Company not to pay such claim and the Stockholders' assumption of
the defense of such claim at their expense, the Stockholders shall not be liable
to the Company for any legal or other expense subsequently incurred by the
Company in connection with the defense thereof. However, the Company shall have
the right to participate at its expense and with counsel of its choice in such
settlement, compromise or litigation and shall have the right to direct and
control the negotiations, settlement and litigation if the same (i) has a direct
and material effect upon the continuing operations of the Company or (ii)
involves a claim which may reasonably be expected to exceed the amount that is
available in the Escrow Account which is not subject to a Claim (as defined
below). The Company shall not be required to refrain from paying any claim
which has matured by a court judgment or decree, unless an appeal is duly taken
therefrom and execution thereof has been stayed, nor shall the Company be
required to refrain from paying any claim where the delay in paying such claim
would result in the foreclosure of a lien upon any of the property or assets
then held by the Company or where any delay in payment would cause the Company a
material economic loss. The failure to provide notice
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as provided in this paragraph shall not excuse the Stockholders from their
continuing obligations hereunder; however, the claim shall be reduced by any
damages to the Stockholders resulting from the Company's delay or failure to
provide notice as provided in this paragraph.
(d) Whenever the Stockholders shall learn after Closing of a claim
(other than a claim under Section 2(b)(ii), as to which only a demand for
payment by the Stockholders' Representative or SWIB shall be required) that, if
allowed (whether voluntarily or by judicial or quasi-judicial tribunal or
agency), would constitute a breach of, or give rise to an obligation of
indemnification under Section 2(b), before paying the same or agreeing thereto,
the Stockholders' Representative or SWIB shall promptly notify the Company in
writing of all such facts within the Stockholders' knowledge with respect to
such claim and the amount thereof. If, prior to the expiration of twenty (20)
days from the mailing of such notice, the Company shall request, in writing,
that such claim not be paid, the Stockholders shall not pay the same, provided
the Company proceeds promptly, at its own expense (including employment of
counsel reasonably satisfactory to the Stockholders' Representative and SWIB),
to settle, compromise or litigate, in good faith, such claim. After notice from
the Company requesting the Stockholders' Representative not to pay such claim
and the Company's assumption of the defense of such claim at its expense, the
Company shall not be liable to the Stockholders for any legal or other expense
subsequently incurred by the Stockholders in connection with the defense
thereof. The Stockholders shall not be required to refrain from paying any
claim which has matured by a court judgment or decree, unless an appeal is duly
taken therefrom and execution thereof has been stayed, nor shall the
Stockholders be required to refrain from paying any claim where the delay in
paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Stockholders or where any delay in payment
would cause the Stockholders a material economic loss. The failure to provide
notice as provided in this paragraph shall not excuse the Company from its
continuing obligations hereunder; however, the Stockholders' claim shall be
reduced by any damages to the Company resulting from the Stockholders' delay or
failure to provide notice as provided in this paragraph.
(e) Notwithstanding the foregoing, the Stockholders and the Company
shall not be responsible to each other for any Losses arising under this Section
2 or caused by any breach of a
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representation or warranty (other than those contained in Sections 5.5(c), 5.29,
5.32 and 7.5 of the Merger Agreement) made by the Company or TRK as to which the
Stockholders or the Company are otherwise entitled to indemnity under this
Section 2 unless and until such Losses exceed $350,000, and then only to the
extent of such excess; provided that the foregoing limitations shall not apply
to Losses under Section 2(b)(ii) to the extent such Losses relate to the Atlas
Adjustment, which Losses, together with the costs and expenses incident thereto
under Section 2(b)(iii), shall be recoverable in full by the Stockholders with
no deductible. In no event shall the Company have recourse to the Stockholders
for Losses under this Section 2 other than to the assets held hereunder by the
Escrow Agent in the Escrow Funds. In no event shall the Stockholders have
recourse to the Company for Losses under this Section 2 in excess of an amount
equal to (i) $2,000,000 PLUS (ii) the Atlas Adjustment owed by the Company as of
the date of the claim for which recourse is sought by the Stockholders.
(f) For purposes of this Section 2, any assertion of fact and/or law
by a third party that, if true, would constitute a breach of a representation or
warranty made by a party to the Merger Agreement or make operational an
indemnification obligation hereunder, shall, on the date that such assertion is
made, immediately invoke that party's obligation to protect, defend, hold
harmless and indemnify the other party pursuant to this Section 2.
(g) With respect to claims made under Section 2(a), the Stockholders
hereby waive and agree not to assert against the Company, its officers,
directors and any other Stockholders, any claims for contribution or
indemnification with respect to the representations, warranties and agreements
made by the Company with respect thereto.
(h) The amount recoverable by the Company or the Stockholders under
this Section 2 for Losses shall be determined after giving effect to the amount
of proceeds actually received by the indemnified party from third parties such
as insurance companies or other indemnitors with respect to any such Losses
(except to the extent any such proceeds must be repaid by the indemnified party
or its Affiliates through direct adjustments to past, present or future
insurance premiums or other methods).
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3. DEPOSIT OF ESCROW FUNDS.
Upon the execution of this Agreement, TRK will deliver to the Escrow
Agent the Escrow Amount by wire transfer, the receipt of which is hereby
acknowledged by the Escrow Agent. The Escrow Agent shall invest the Escrow
Amount and any additions thereto by the Company in an account identified as
being established pursuant to this Agreement (the "Escrow Account"). The Escrow
Agent will hold said Escrow Amount together with all investments thereof,
additions thereto and all interest accumulated thereon and proceeds therefrom
(the "Escrow Funds") in escrow upon the terms and conditions set forth in this
Agreement and shall not withdraw the Escrow Funds from the Escrow Account except
as provided herein.
4. INVESTMENTS.
(a) The Escrow Agent shall invest and reinvest from time to time the
Escrow Funds (i) in any obligation of, or guaranteed as to principal and
interest by, the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States supports the
obligation or guarantee of such agency or instrumentality), (ii) in any money
market fund that invests solely in such obligations or types described in clause
(i), (iii) in any other investment agreed to in writing by the Stockholders'
Representative, SWIB and the Company. In the absence of such direction, the
Escrow Agent shall invest the Escrow Funds in the Pilot U.S. Treasury Money
Market Fund. Investments may be executed by the Escrow Agent's own trading
department. To the extent the Escrow Agent invests any funds in the manner
provided for in this Section, no party hereto shall be liable for any loss which
may be incurred by reason of any such investment.
(b) The Escrow Agent shall have the power to reduce, sell or
liquidate the foregoing investments whenever the Escrow Agent shall be required
to release all or any portion of the Escrow Funds pursuant to Section 5 hereof.
The Escrow Agent shall have no liability for any investment losses resulting
from the investment, reinvestment, sale or liquidation of any portion of the
Escrow Funds, except in the case of the gross negligence or willful misconduct
of the Escrow Agent.
(c) Unless and until a Claims Notice has been given to the Escrow
Agent pursuant to Section 5 and remains unsatisfied,
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the Escrow Agent shall cause interest paid on the Escrow Amount, less amounts
owed to the Stockholders' Representative pursuant to Section 7 hereof, to be
paid to the Stockholders on a quarterly basis in accordance with the escrow
percentages listed on EXHIBIT A hereto.
5. CLAIMS
(a) At any time and from time to time, during the period from the
Closing Date through the Escrow Expiration Date (as defined in Section 8
hereof), the Company may give to the Escrow Agent one or more notices ("Claims
Notice") containing the information set forth in subparagraph (b) below and
stating that, pursuant to Sections 3.1 or 3.2 of the Merger Agreement and/or
Section 2 of this Agreement, the Company is asserting against the Stockholders a
right of indemnity with respect to a claim (a "Claim"). Upon receipt of the
Claims Notice, the Escrow Agent shall, if such Claims Notice sets forth the
amount of such Claim, hold a portion of the Escrow Funds equal to the amount of
such Claim as set forth in such Claims Notice (or, if the amount set forth
exceeds the entire amount of the Escrow Funds, the entire amount of the Escrow
Funds) in escrow until receiving notice of a Determination (as defined in
subparagraph (c) below) of such Claim. If the Claims Notice states that the
amount of such Claim is not reasonably ascertainable by the Company, the Escrow
Agent shall hold the entire amount of the Escrow Funds then in its possession
until subsequently notified by the Company of the amount of such Claim, and
thereafter shall hold a portion of the Escrow Funds equal to the amount of such
Claim as set forth in such subsequent notice in escrow until Determination of
such Claim. In the case of any Claim, the amount of which is not reasonably
ascertainable by the Company at the time the Claims Notice of such Claim is
given, the Company agrees to notify the Escrow Agent and the Stockholders'
Representative and SWIB of the amount of such Claim promptly after such amount
becomes reasonably ascertainable by the Company.
(b) The Claims Notice given to the Escrow Agent pursuant to
Section 5(a) shall set forth the nature and details of such Claim, the Section
of the Merger Agreement or this Agreement pursuant to which the Claim is made,
the amount thereof if reasonably ascertainable by the Company (or a statement
that the amount thereof is not then reasonably ascertainable by the Company and
the basis for such statement) and whether or not such Claim arises from the
assertion of liability by a third party. The
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Escrow Agent shall promptly forward such Claims Notice to the Stockholders'
Representative and to SWIB.
(c) For the purpose of this Agreement, a "Determination" shall mean
(A) a written compromise, settlement or joint notice signed by the Company, the
Stockholders' Representative and SWIB or (B) a binding arbitration award or a
judgment of a court of competent jurisdiction in the United States of America or
elsewhere (the time for appeal having expired and no appeal having been
perfected) in favor of the Company and against the Stockholders and based on a
Claim under Sections 3.1 or 3.2 of the Merger Agreement and/or Section 2 of this
Agreement; PROVIDED, HOWEVER, that in the case of a Claim not resulting from the
assertion of liability by a third party, the Claims Notice to the Escrow Agent
setting forth the amount thereof as reasonably ascertained by the Company shall
constitute a Determination of such Claim unless, within thirty (30) days of the
receipt by the Stockholders' Representative and SWIB of such Claims Notice, as
above provided, including the amount of such Claim, either the Stockholders'
Representative or SWIB notifies the Escrow Agent that it disputes such amount in
whole or in part (an "Objection").
(d) Within ten (10) business days following notice of a Determination
given to the Escrow Agent jointly by the Company, the Stockholders'
Representative and SWIB, the Escrow Agent shall disburse to the Company from the
Escrow Funds the amount set forth in such Determination. In the event of an
Objection, the Escrow Agent shall release the amount which is not in dispute, if
any, and shall hold the amount in dispute until such Objection is resolved in
accordance with the provisions of Section 6 hereof.
(e) One (1) year after the Closing Date, the Escrow Agent shall
distribute to the Stockholders in accordance with the escrow percentages set
forth in EXHIBIT A an amount equal to $750,000 minus the amount of the Escrow
Funds previously paid or set aside by the Escrow Agent for Claims of the Company
pursuant to Section 5(a); and two (2) years after the Closing Date the Escrow
Agent shall distribute to the Stockholders', in accordance with the same
percentages, an amount equal to the Escrow Funds remaining at that time minus
(i) the amount of the Escrow Funds set aside by the Escrow Agent for Claims of
the Company pursuant to Section 5(a) and (ii) the amount owed to the
Stockholders' Representative pursuant to Section 7 hereof.
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6. SETTLEMENT OF DISPUTES.
Any dispute which may arise under the Escrow Agreement with respect to
the delivery and/or ownership or right of possession of the Escrow Funds or any
part thereof, or the duties of the Escrow Agent hereunder, shall be settled
either by mutual agreement of the Company, the Stockholders' Representative and
SWIB (evidenced by appropriate instructions in writing to the Escrow Agent,
signed by such parties) or by a binding arbitration award or a final order,
decree or judgment of any appropriate court located in the State of Wisconsin
(the time for appeal having expired and no appeal having been perfected), each
party or parties bearing its own costs and expenses with respect to the dispute;
PROVIDED, HOWEVER, that neither the Company nor the Stockholders shall have the
right to dispute any Claim which has been the subject of a Determination. The
Escrow Agent shall be under no duty whatsoever to institute or defend any such
proceedings. Prior to the settlement of any such dispute, the Escrow Agent is
authorized and directed to retain in its possession, without liability to
anyone, that portion of the Escrow Funds which is the subject of such dispute.
7. EXPENSES OF STOCKHOLDERS' REPRESENTATIVE.
The costs and expenses incurred by the Stockholders' Representative in
connection with his duties hereunder and pursuant to the Merger Agreement which
have not been otherwise reimbursed to the Stockholders' Representative shall be
reimbursed to the Stockholders' Representative, as appropriate, first from the
interest earned on the Escrow Funds and then from the Escrow Funds' remaining on
the Expiration Date, after taking into account any funds set aside by the Escrow
Agent for Claims of the Company pursuant to Section 5(a). All requests for
reimbursement of expenses and costs under this Section 7 (the "Request for
Reimbursement") shall be in writing to the Escrow Agent and shall include an
itemized list of such expenses and costs. The Escrow Agent shall disburse funds
directly to the Stockholders' Representative or his designee upon receipt of a
Request for Reimbursement.
8. TERMINATION OF ESCROW AGREEMENT.
(a) This Agreement shall terminate upon the earlier to occur of: (i)
the second anniversary of the Closing Date; and (ii) the distribution of all of
the Escrow Funds by the Escrow
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Agent pursuant to this Agreement (the earliest to occur of (i) and (ii) above
being hereinafter referred to as the "Escrow Expiration Date"); provided,
however, that if there are any unresolved or unsettled claims pursuant to
Sections 3.1 or 3.2 of the Merger Agreement and/or Section 2 of this Agreement
outstanding on the last day of the foregoing two (2) year period, this Agreement
will not terminate until the resolution of all such Claims; and provided further
that the indemnification provisions of Sections 2(b)(ii) and 2(b)(iii) hereof
shall survive for so long as the Company has any obligation to the Stockholders,
whether fixed or contingent, in respect of the Atlas Adjustment.
(b) As soon as practicable after the Escrow Expiration Date, the
Escrow Agent shall promptly deliver to the Stockholders out of the Escrow
Account the excess, if any, of the total amount remaining in the Escrow Funds
over the sum of all amounts under unresolved or unsettled Claims then
outstanding, and the Escrow Agent shall continue to retain in the Escrow Funds
all such amounts under unresolved or unsettled Claims then outstanding, subject
to the terms of this Escrow Agreement until resolution of such Claims. Payments
from the Escrow Funds to the Stockholders shall be made to the Stockholders in
accordance with the escrow percentages listed on EXHIBIT A hereto.
9. CONCERNING THE ESCROW AGENT.
(a) The Escrow Agent shall have no duties or responsibilities except
those expressly set forth herein. The Escrow Agent may consult with counsel and
shall have no liability hereunder except for its own negligence or willful
misconduct. It may rely on any notice, instruction, certificate, statement,
request, consent, confirmation, agreement or other instrument which it
reasonably believes to be genuine and to have been signed or presented by a
proper person or persons.
(b) The Escrow Agent shall have no duties with respect to any
agreement or agreements with respect to any or all of the Escrow Funds other
than as provided in this Agreement. In the event that any of the terms and
provisions of any other agreement between any of the parties hereto conflict or
are inconsistent with any of the terms and provisions of this Agreement, the
terms and provisions of this Agreement shall govern and control in all respects.
Notwithstanding any provision to the contrary contained in any other agreement,
the Escrow Agent shall have no interest in the Escrow Funds except as provided
in this Agreement.
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<PAGE>
(c) So long as the Escrow Agent shall have any obligation to pay any
amount to the Stockholders and/or the Company from the Escrow Funds hereunder,
the Escrow Agent shall keep proper books of record and account, in which full
and correct entries shall be made of all receipts, disbursements and investment
activity in the Escrow Account.
(d) The Escrow Agent shall not be bound by any modification of this
Agreement affecting the rights, duties and obligations of the Escrow Agent,
unless such modification shall be in writing and signed by the other parties
hereto, and the Escrow Agent shall have given its prior written consent thereto.
The Escrow Agent shall not be bound by any other modification of this Agreement
unless the Escrow Agent shall have received written notice thereof.
(e) The Escrow Agent may resign as escrow agent at any time by giving
thirty (30) days written notice by registered or certified mail to the Company,
the Stockholders' Representative and SWIB and such resignation shall take effect
at the end of such 30 days or upon earlier appointment of a successor. A
successor escrow agent hereunder may be appointed by designation in writing
signed by the Company, the Stockholders' Representative and SWIB. The Company
and the Stockholders' Representative undertake to utilize their best efforts to
arrange for the appointment of a successor escrow agent. If any instrument of
acceptance by a successor escrow agent shall not have been delivered to the
Escrow Agent within sixty (60) days after the giving of such notice of
resignation, the resigning Escrow Agent may at the expense of the Stockholders
and the Company petition any court of competent jurisdiction for the appointment
of a successor escrow agent.
(f) If at any time hereafter the Escrow Agent shall resign, be
removed, be dissolved or otherwise become incapable of acting, or the bank or
trust company acting as the Escrow Agent shall be taken over by any government
official, agency, department or board, or the position of the Escrow Agent shall
become vacant for any of the foregoing reasons or for any other reason, the
Stockholders' Representative, the Company and SWIB shall appoint a successor
escrow agent to fill such vacancy.
(g) Every successor escrow agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor, and also to the Company, the
Stockholders' Representative and SWIB, an instrument in writing accepting such
appointment hereunder, and thereupon such successor escrow agent, without any
further act,
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<PAGE>
shall become fully vested with all the rights, immunities and powers and shall
be subject to all of the duties and obligations, of its predecessor; and every
predecessor escrow agent shall deliver all property and moneys held by it
hereunder to its successor.
(h) The Company and the Stockholders shall share equally the fee
charged by the Escrow Agent for performing its services hereunder. The portion
of such fee owed by the Stockholders shall be deducted from the Escrow Account
by the Escrow Agent. Except as provided in Section 9(i) hereof, the Company and
the Stockholders shall share equally any reasonable out of pocket cost incurred
by the Escrow Agent in performing its duties hereunder. This covenant shall
survive termination of this Agreement.
(i) The Company and the Stockholders (other than SWIB) shall
indemnify and hold the Escrow Agent harmless from and against any and all
expenses (including reasonable attorneys' fees), liabilities, claims, damages,
actions, suits or other charges ("Agent Claims") incurred by or assessed against
the Escrow Agent for anything done or omitted by the Escrow Agent in the
performance of the Escrow Agent's duties hereunder, except such which result
from the Escrow Agent's bad faith, gross negligence or willful misconduct.
Agent Claims payable hereunder shall be paid one-half by the Company and
one-half by the Stockholders. This indemnity shall survive the resignation of
the Escrow Agent or the termination of this Agreement. To the extent any amount
due to the Escrow Agent from the Stockholders pursuant to this Section 9(i) is
not paid, the Escrow Agent may deduct fifty percent (50%) of the same from the
Escrow Account.
(j) The Escrow Agent's fees shall be $1,800 per annum.
(k) To the extent of any conflict between the terms of this Agreement
and the terms of EXHIBIT B, the terms of EXHIBIT B shall control.
10. MISCELLANEOUS.
(a) This Agreement shall be construed by and governed in accordance
with the laws of the State of Wisconsin, without regard to such jurisdiction's
conflict of laws principles.
(b) No Stockholder may assign, sell, encumber or otherwise transfer
its beneficial interest in this Agreement or the Escrow Fund. This Agreement
shall be binding upon and shall
12
<PAGE>
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and permitted assigns of the parties hereto.
(c) This Agreement may be executed in one or more counterparts which
taken together shall constitute but one and the same instrument.
(d) Section headings contained herein have been inserted for
reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a written
instrument duly executed by all parties hereto or their respective successors or
assigns.
(f) All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given (unless
otherwise specifically provided for herein) if delivered personally (including
by courier), telecopied (which is confirmed) or mailed (registered or certified
mail), postage prepaid:
If to the Company:
c/o Harbour Group Industries, Inc.
7701 Forsyth Boulevard, Suite 600
St. Louis, MO 63105
Attention: Peter S. Finley
with a copy to:
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Attention: Ira H. Polon, Esquire
If to the Stockholders' Representative:
Houseman & Feind
1214 13th Avenue
Grafton, WI 53024
Attention: Robert L. Feind, Jr., Esq.
13
<PAGE>
with a copy to:
Hill & Barlow
One International Place
Boston, MA 02110
Attention: Terrence W. Mahoney, Esq.
If to SWIB:
State of Wisconsin Investment Board
121 E. Wilson Street
Madison, WI 53707
Attention: Robert L. Zobel
with a copy to:
Whyte Hirschboeck Dudek S.C.
Suite 2100
111 E. Wisconsin Avenue
Milwaukee, WI 53202
Attention: Richard P. Buellesbach Esq.
If to the Escrow Agent:
Boatmen's Trust Company
510 Locust Street
St. Louis, MO 63178
Attention: Corporate Trust Department
or to such other addresses or persons as any party may have furnished to the
other parties in writing, in accordance herewith, provided, however, that
notices to any party shall be deemed effective only upon receipt.
(g) The Escrow Agent shall not be liable to pay any tax on any
interest earned on the Escrow Amount, it being the understanding of the parties
that any tax attributable to interest earned on the Escrow Funds shall be the
responsibility of the Stockholders. The tax identification numbers for the
Stockholders are set forth on EXHIBIT A. The tax identification number of the
Company is 39-1594047.
(h) Pursuant to Section 2.8 of the Merger Agreement, the Stockholders
(other than SWIB) have irrevocably and unconditionally appointed Robert L.
Feind, Jr. or his designee as their Stockholders' Representative to take any and
all action on the Stockholders' behalf in connection with this Agreement. With
14
<PAGE>
respect to the Stockholders (other than SWIB), the Company and the Escrow Agent
shall be required only to deal with the Stockholders' Representative appointed
hereunder.
(i) If any party hereto refuses to comply with, or at any time
violates or attempts to violate, any term, covenant or agreement contained in
this Agreement, any other party hereto may, by injunctive action, compel the
defaulting party to comply with, or refrain from violating, such term, covenant
or agreement, and may, by injunctive action, compel specific performance of the
obligations of the defaulting party.
(j) Except as provided herein, the rights and obligations of the
parties under this Agreement shall not be assigned to any person or entity,
without the written consent of the other parties.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
TRAK INTERNATIONAL, INC.
By: /s/ Samuel A. Hamacher
--------------------------
Name:
Title:
MAJOR STOCKHOLDERS:
STATE OF WISCONSIN INVESTMENT
BOARD
By: /s/ Robert Zobel
Name: Robert L. Zobel
Title: Investment Director
/s/ Dean R. Axtell
------------------------------
Dean R. Axtell
/s/ P. Enoch Stiff
------------------------------
P. Enoch Stiff
STOCKHOLDERS' REPRESENTATIVE:
/s/ Robert L. Feind, Jr.
------------------------------
Robert L. Feind, Jr., Esq.
BOATMEN'S TRUST COMPANY
By /s/ Jerry Rector
---------------------------
Name: Jerry L. Rector
Title: Vice President
<PAGE>
EXHIBIT 10.47
ASSET PURCHASE AGREEMENT
BY AND AMONG
LULL LIFT CORPORATION,
LULL INDUSTRIES, INC.
AND
THE STOCKHOLDERS LISTED HEREIN
AUGUST 15, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Interpretive Rules. . . . . . . . . . . . . . . . 5
ARTICLE II SALE AND PURCHASE OF ASSETS AND ASSUMPTION
OF LIABILITIES
Section 2.1 The Purchase and Sale . . . . . . . . . . . . . . 5
Section 2.2 Assumption of Liabilities . . . . . . . . . . . . 7
Section 2.3 Liabilities Not Assumed . . . . . . . . . . . . . 8
Section 2.4 FMV Schedule. . . . . . . . . . . . . . . . . . . 8
ARTICLE III PURCHASE PRICE
Section 3.1 Purchase Price Determination. . . . . . . . . . . 9
Section 3.2 Payment . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Working Capital Statement; Adjustments. . . . . . 10
Section 3.4 Additional Purchase Price . . . . . . . . . . . . 11
ARTICLE IV CLOSING
Section 4.1 Closing . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V ADDITIONAL AGREEMENTS . . . . . . . . . . . . . .
Section 5.1 Expenses. . . . . . . . . . . . . . . . . . . . . 12
Section 5.2 Escrow Agreement. . . . . . . . . . . . . . . . . 12
Section 5.3 Noncompetition Agreements . . . . . . . . . . . . 12
Section 5.4 Employment and Consulting Agreement . . . . . . . 12
Section 5.5 Employee Benefit Matters. . . . . . . . . . . . . 12
Section 5.6 Certain Insurance Coverage. . . . . . . . . . . . 13
Section 5.7 Certain Software Licenses . . . . . . . . . . . . 13
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE
SELLERS
Section 6.1 Title to the Purchased Assets . . . . . . . . . . 13
Section 6.2 Valid and Binding Agreement . . . . . . . . . . . 13
Section 6.3 Corporate Organization. . . . . . . . . . . . . . 13
Section 6.4 No Violation. . . . . . . . . . . . . . . . . . . 14
Section 6.5 Consents and Approvals. . . . . . . . . . . . . . 14
Section 6.6 Financial Statements. . . . . . . . . . . . . . . 14
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<PAGE>
Section 6.7 Interim Operations and Absence of Certain Changes 15
Section 6.8 Employee Benefit Plans. . . . . . . . . . . . . . 16
Section 6.9 Compliance with Law . . . . . . . . . . . . . . . 18
Section 6.10 Litigation, Claims. . . . . . . . . . . . . . . . 19
Section 6.11 Contracts and Commitments . . . . . . . . . . . . 19
Section 6.12 Intellectual Property Rights. . . . . . . . . . . 19
Section 6.13 Liens . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.14 Insurance . . . . . . . . . . . . . . . . . . . . 20
Section 6.15 Disclosure. . . . . . . . . . . . . . . . . . . . 20
Section 6.16 Accounts Receivable and Accounts Payable. . . . . 20
Section 6.17 Inventory and Backlog . . . . . . . . . . . . . . 21
Section 6.18 Tangible Personal Property. . . . . . . . . . . . 21
Section 6.19 Real Property . . . . . . . . . . . . . . . . . . 21
Section 6.20 Employees . . . . . . . . . . . . . . . . . . . . 23
Section 6.21 Labor Disagreements . . . . . . . . . . . . . . . 23
Section 6.22 Governmental Authorizations . . . . . . . . . . . 23
Section 6.23 Tax Matters . . . . . . . . . . . . . . . . . . . 24
Section 6.24 Customers and Vendors . . . . . . . . . . . . . . 26
Section 6.25 Distributors and Representatives. . . . . . . . . 26
Section 6.26 Adequacy and Sufficiency of Assets. . . . . . . . 26
Section 6.27 Environmental Matters . . . . . . . . . . . . . . 26
Section 6.28 Government Contracts. . . . . . . . . . . . . . . 28
Section 6.29 Defects in Products or Designs; Product Safety. . 28
Section 6.30 Product Warranties. . . . . . . . . . . . . . . . 29
Section 6.31 Broker's or Finder's Fees . . . . . . . . . . . . 29
Section 6.32 Related Party Transactions. . . . . . . . . . . . 29
Section 6.33 Absence of Questionable Payments. . . . . . . . . 29
Section 6.34 Boom Recall Machines. . . . . . . . . . . . . . . 30
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE
BUYER
Section 7.1 Organization, Standing and Power. . . . . . . . . 30
Section 7.2 Valid and Binding Agreements. . . . . . . . . . . 30
Section 7.3 No Violation. . . . . . . . . . . . . . . . . . . 30
Section 7.4 Consents and Approvals. . . . . . . . . . . . . . 30
Section 7.5 Broker's or Finder's Fees . . . . . . . . . . . . 31
Section 7.6 Insurance . . . . . . . . . . . . . . . . . . . . 31
ii
<PAGE>
ARTICLE VIII COVENANTS
Section 8.1 Compliance with Law . . . . . . . . . . . . . . . 31
Section 8.2 Operation of Business Prior to Closing. . . . . . 31
Section 8.3 Access. . . . . . . . . . . . . . . . . . . . . . 33
Section 8.4 Environmental Matters . . . . . . . . . . . . . . 34
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE BUYER
Section 9.1 Representations and Warranties. . . . . . . . . . 35
Section 9.2 Covenants, Agreements and Conditions. . . . . . . 35
Section 9.3 No Material Adverse Change. . . . . . . . . . . . 35
Section 9.4 Corporate Proceedings; Consents and Approvals . . 35
Section 9.5 Proceedings . . . . . . . . . . . . . . . . . . . 35
Section 9.6 Governmental Approvals. . . . . . . . . . . . . . 35
Section 9.7 Insurance . . . . . . . . . . . . . . . . . . . . 36
Section 9.8 Deliveries. . . . . . . . . . . . . . . . . . . . 36
Section 9.9 Releases of Liens . . . . . . . . . . . . . . . . 36
Section 9.10 Customer Relationships. . . . . . . . . . . . . . 36
Section 9.11 Consents of Third Parties . . . . . . . . . . . . 37
Section 9.12 Opinion of Counsel. . . . . . . . . . . . . . . . 37
Section 9.13 Payment of Expenses . . . . . . . . . . . . . . . 37
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE SELLERS
Section 10.1 Representations and Warranties. . . . . . . . . . 37
Section 10.2 Covenants, Agreements and Conditions. . . . . . . 37
Section 10.3 Proceedings . . . . . . . . . . . . . . . . . . . 37
Section 10.4 Corporate Proceedings; Consents and Approvals . . 37
Section 10.5 Governmental Approvals. . . . . . . . . . . . . . 38
Section 10.6 Deliveries. . . . . . . . . . . . . . . . . . . . 38
Section 10.7 Opinion of Counsel. . . . . . . . . . . . . . . . 38
Section 10.8 Insurance . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XI POST-CLOSING MATTERS
Section 11.1 Indemnification . . . . . . . . . . . . . . . . . 38
Section 11.2 Compliance with Environmental Regulatory
Requirements and Environmental Indemnification. . 41
Section 11.3 Indemnification Procedures. . . . . . . . . . . . 42
Section 11.4 Limitations on Buyer's Remedies . . . . . . . . . 44
Section 11.5 Special Boom Recall Provisions . . . . . . . . . 44
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<PAGE>
Section 11.6 Sellers' Agents . . . . . . . . . . . . . . . . . 46
Section 11.7 Dispute Resolution by Arbitration . . . . . . . . 47
Section 11.8 Confidentiality . . . . . . . . . . . . . . . . . 47
Section 11.9 Noncompetition. . . . . . . . . . . . . . . . . . 48
Section 11.10 Further Assurances. . . . . . . . . . . . . . . . 48
Section 11.11 Accounts Receivable . . . . . . . . . . . . . . . 48
Section 11.12 Pro-Rating of Expenses. . . . . . . . . . . . . . 49
Section 11.13 Use of Name . . . . . . . . . . . . . . . . . . . 49
Section 11.14 Maintenance of Corporate Existence. . . . . . . . 49
Section 11.15 Sellers' Access to Tax Information. . . . . . . . 49
ARTICLE XII TERMINATION
Section 12.1 Methods of Termination. . . . . . . . . . . . . . 50
Section 12.2 Procedure Upon Termination. . . . . . . . . . . . 50
ARTICLE XIII MISCELLANEOUS
Section 13.1 Survival of Representations and Warranties. . . . 51
Section 13.2 Notices . . . . . . . . . . . . . . . . . . . . . 51
Section 13.3 Governing Law . . . . . . . . . . . . . . . . . . 52
Section 13.4 Modification; Waiver. . . . . . . . . . . . . . . 52
Section 13.5 Entire Agreement. . . . . . . . . . . . . . . . . 52
Section 13.6 Assignment; Successors and Assigns. . . . . . . . 52
Section 13.7 Public Announcements. . . . . . . . . . . . . . . 52
Section 13.8 Severability. . . . . . . . . . . . . . . . . . . 53
Section 13.9 No Third Party Beneficiary. . . . . . . . . . . . 53
Section 13.10 Execution in Counterpart. . . . . . . . . . . . . 53
iv
<PAGE>
Exhibit A Principles and Procedures
Exhibit B Form of Escrow Agreement
Exhibit C Form of Bill of Sale, Assignment and
Assumption Agreement
Exhibits D-1 and D-2 Forms of Noncompetition and Nondisclosure Agreements
Exhibit D-3 Form of Employment, Consulting and Noncompetition
Agreement
Exhibit E Form of Opinion of Leonard, Street and Deinard
Exhibit F Form of Opinion of Dickstein Shapiro Morin & Oshinsky
LLP
Exhibit G Boom Recall
Schedule 2.1(v) Hertz Equipment Rentals
Schedule 2.2 Assumed Liabilities
Schedule 2.4 FMV Schedule
Schedule 5.7 Certain Software Licenses
Schedule 6.1 Title to the Purchased Assets
Schedule 6.3 Corporate Organization
Schedule 6.5 Consents and Approvals
Schedule 6.6A Financial Statements
Schedule 6.6B Interim Financial Statements
Schedule 6.7 Interim Operations
Schedule 6.8 Employee Benefit Plans
Schedule 6.10 Litigation, Claims
Schedule 6.11 Contracts and Commitments
Schedule 6.12 Intellectual Property Rights
Schedule 6.13 Liens
Schedule 6.14 Insurance
Schedule 6.17 Inventory and Backlog
Schedule 6.18A Owned Tangible Personal Property
Schedule 6.18B Leased Tangible Personal Property
Schedule 6.19A Owned Real Property
Schedule 6.19B Leased Real Property
Schedule 6.20 Employees
Schedule 6.21 Labor Disagreements
Schedule 6.22 Governmental Authorizations
Schedule 6.23 Tax Matters
Schedule 6.24 Customers and Vendors
Schedule 6.25 Distributors and Representatives
Schedule 6.27(a) Hazardous Materials used on the Real Estate
Schedule 6.27(b) Underground Storage Tanks
Schedule 6.29 Defects in Products or Designs
v
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Schedule 6.31 Broker's or Finder's Fees
Schedule 6.32 Related Party Transactions
Schedule 7.4 Consents and Approvals
Schedule 7.5 Broker's or Finder's Fees
Schedule 7.6 Buyer's Insurance
Schedule 8.2(b) Contracts for Capital Expenditures
Schedule 8.2(c) New Employment Agreements
Schedule 8.2(j) Company Obligations Satisfied as of
the Closing Date
Schedule 8.4(f) Work Performed by ENSR Consultants
Schedule 9.9 Certain Encumbrances
Schedule 9.11 Consents of Third Parties
vi
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated August 15, 1996, by
and among Lull Lift Corporation, a Delaware corporation (the "Buyer"), Lull
Industries, Inc., a Minnesota corporation (the "Company"), and the stockholders
of the Company listed on the signature page hereto (the "Stockholders," and
collectively with the Company, the "Sellers").
RECITALS
WHEREAS, the Company is engaged in the business of the design, manufacture
and sale of rough terrain telescoping boom forklifts (the "Business");
WHEREAS, the Stockholders own all of the issued and outstanding stock of
the Company; and
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers the Business and substantially all the assets of the
Company upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants which are to be made and performed by
the respective parties, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement have the meanings set forth below:
(a) "Accountants" means McGladrey & Pullen, LLP, as independent certified
public accountants for the Company.
(b) "Accounts Receivable" has the meaning set forth in Section 11.11.
(c) "Additional Purchase Price" has the meaning set forth in Section 3.4.
(d) "Affiliate" means any Person now or hereinafter controlling,
controlled by or under common control with another Person.
(e) "Appraiser" has the meaning set forth in Section 2.4.
<PAGE>
(f) "Arbitrator" has the meaning set forth in Section 11.7.
(g) "Assumed Liabilities" has the meaning set forth in Section 2.2.
(h) "Bill of Sale, Assignment and Assumption Agreement" means the bill of
sale, assignment and assumption agreement substantially in the form attached
hereto as EXHIBIT C.
(i) "Boom Recall" means the recall by the Company of the innertube
sections of 2-section and 3-section booms which are mounted in rough terrain
telescopic boom forklift trucks manufactured by the Company, known as models
644-B, 6K, 844-C, 8K, 1044-C, and 10k, as such recall is further described on
EXHIBIT G.
(j) "Boom Recall Certificate" has the meaning set forth in Section 3.4.
(k) "Boom Recall Costs" is equal to all costs and expenses incurred by the
Buyer after the Closing Date in connection with the Boom Recall, as determined
in accordance with, and limited to, EXHIBIT G.
(l) "Boom Recall Vehicles" has the meaning set forth in EXHIBIT G.
(m) "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.
(n) "Claims Amount Escrow Fund" has the meaning set forth in Section 3.2.
(o) "Closing" has the meaning set forth in Section 4.1.
(p) "Closing Date" has the meaning set forth in Section 4.1.
(q) "Closing Report" has the meaning set forth in Section 3.3(a).
(r) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(s) "ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
(t) "Environmental Laws" has the meaning set forth in Section 6.27(b).
(u) "Escrow Agent" means the escrow agent selected by the parties to act
pursuant to the Escrow Agreement.
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(v) "Escrow Agreement" means an escrow agreement substantially in the form
attached hereto as EXHIBIT B.
(w) "Escrow Amount" has the meaning set forth in Section 3.2.
(x) "Estimated Working Capital Statement" has the meaning set forth in
Section 3.1(b).
(y) "Estimated Purchase Price" has the meaning set forth in Section
3.1(b).
(z) "Estimated Working Capital" means the estimated Working Capital of the
Company determined by the Company as of the Closing Date in good faith and set
forth on the Estimated Working Capital Statement.
(aa) "Excluded Assets" has the meaning set forth in Section 2.1(b).
(ab) "Financial Statements" has the meaning set forth in Section 6.6.
(ac) "GAAP" means generally accepted accounting principles of the United
States.
(ad) "Hazardous Material" has the meaning set forth in Section 6.27.
(ae) "Improvements" has the meaning set forth in Section 6.19(a).
(af) "Intellectual Property" means any and all inventions, Marks (including
trademarks, service marks, certification marks, collective marks, and collective
membership marks whether word, logo, or other forms of Marks, all of the
foregoing collectively referred to as "Marks"), trade names, copyrights,
applications therefor, patents thereon, registrations thereof and licenses
thereof, royalty rights, any and all goodwill associated with the Business or
represented by the assets of the Company, trade secrets, secret processes and
procedures, engineering, production, assembly design and installation
encompassed in any and all embodiments including, but not limited to technical
drawings and specifications, working notes and memos, market studies,
consultants' reports, technical and laboratory data, competitive samples,
engineering prototypes, and confidential information, know-how, and all similar
property of any nature, tangible or intangible, including, but not limited to,
all property listed or described on SCHEDULE 6.12.
(ag) "Interim Financial Statements" has the meaning set forth in Section
6.6.
(ah) "IRS" means the United States Internal Revenue Service.
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(ai) "Leased Improvements" has the meaning set forth in Section 6.19(b).
(aj) "Leased Property" has the meaning set forth in Section 6.19(b).
(ak) "Material Adverse Effect" means, with respect to any Person, any
event, fact, condition, occurrence or effect which is materially adverse to the
business, properties, assets, liabilities, financial condition or operations of
such Person.
(al) "Original Boom Recall Machines" has the meaning set forth in EXHIBIT
G.
(am) "Pension Plans" has the meaning set forth in Section 6.8(c).
(an) "Person" means and includes an individual, a partnership, a joint
venture, a corporation or trust, an unincorporated organization, a group or a
government or other department or agency thereof.
(ao) "Plans" has the meaning set forth in Section 6.8(a).
(ap) "Price Waterhouse" means Price Waterhouse LLP, as independent
certified public accountants for the Buyer.
(aq) "Principles and Procedures" means the principles and procedures set
forth on EXHIBIT A.
(ar) "Product" has the meaning set forth in Section 6.29.
(as) "Purchase Price Escrow Fund" has the meaning set forth in Section 3.2.
(at) "Purchased Assets" has the meaning set forth in Section 2.1.(a).
(au) "Real Property" has the meaning set forth in Section 6.19(a).
(av) "Second Anniversary Date" means the date two years from the date
hereof.
(aw) "Sellers' Agents" has the meaning set forth in Section 11.6.
(ax) "Stock Option Plan" means the Lull Industries, Inc. stock option plan
adopted January 5, 1994.
(ay) "Tax" has the meaning set forth in Section 6.23(n).
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(az) "Taxing Authority" has the meaning set forth in Section 6.23(o).
(ba) "Tax Return" has the meaning set forth in Section 6.23(o).
(bb) "Working Capital" means the excess as of the Closing Date of (i) the
Company's current assets (excluding cash) over (ii) the Company's non-interest
bearing current liabilities, each as determined in accordance with the
Principles and Procedures.
(bc) "Working Capital Statement" has the meaning set forth in Section
3.3(a).
SECTION 1.2 INTERPRETIVE RULES. For purposes of this Agreement, except
as otherwise expressly provided herein or unless the context otherwise requires:
(a) defined terms include the plural as well as the singular and the use of any
gender shall be deemed to include the other gender; (b) references to
"Articles," "Sections" and other subdivisions and to "Schedules" and "Exhibits"
without reference to a document, are to designated Articles, Sections and other
subdivisions of, and to Schedules and Exhibits to, this Agreement; (c) the use
of the term "including" means "including but not limited to"; and (d) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision.
ARTICLE II
SALE AND PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 2.1 THE PURCHASE AND SALE.
(a) Upon the terms and subject to all of the conditions set forth herein,
on the Closing Date, the Company agrees to sell to the Buyer and the Buyer shall
purchase from the Company, free and clear of all liens, restrictions, leases,
security interests, claims, charges or encumbrances whatsoever, the Business as
a going concern and all of the right, title and interest of the Company in and
to all of the assets and property, tangible and intangible, except for the
Excluded Assets, owned by the Company (the "Purchased Assets"). The Purchased
Assets shall include but not be limited to the following:
(i) all tangible personal property owned by the Company,
including all machinery, equipment, vehicles, supplies, furniture,
furnishings, office equipment, tools, racks, displays, fixtures and other
tangible personal property listed or described on SCHEDULE 6.18a, or not so
described;
(ii) all customer and supplier lists, sales data, catalogs,
brochures, literature, forms, mailing lists, art work, photographs and
advertising material, in whatever form or media;
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(iii) all inventory, work in process, raw materials, finished
products, supplies, packaging, spare parts and shipping containers and
materials;
(iv) all accounts receivable;
(v) all prepaid expenses, deposits and credits;
(vi) all telephone, telex, e-mail, Internet, post office box and
other numbers and addresses used by the Company;
(vii) all goodwill of the Business and the Company;
(viii) all orders, contracts, and commitments for the purchase of
goods and/or services, including, without limitation, all such items
relating to the purchase of capital, tooling, products, supplies, and
services;
(ix) all orders, contracts, and commitments for the sale of
products, including, without limitation, all such items relating to
distribution, dealership, and similar arrangements;
(x) all other orders, contracts, commitments, leases and
licenses;
(xi) all rights to use the names "Lull", "Dyna Lugger", and
"Highlander" and any other trade names or trademarks previously used by the
Company and any logo or mark, whether or not registered, used by the
Company;
(xii) all Intellectual Property;
(xiii) all permits, approvals, qualifications, and the like issued
by any government or governmental unit, agency, board, body, or
instrumentality, whether federal, state or local, and all applications
therefor;
(xiv) all books and records of the Company, including all
property, records, personnel records, accounting records and all original
applications and files correspondence with the U.S. Patent and Trademark
Office which relate to patent and trademark applications held by the
Company and its agents; all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind in favor of the
Company, and pertaining to, or arising out of, the Purchased Assets or
offsetting any Assumed Liabilities;
(xv) all Real Property; and
(xvi) all Leased Property.
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To the extent that any asset otherwise described above is not assignable to
the Buyer, the Company shall use its reasonable efforts to provide the Buyer
with all of the benefits of such asset. To the extent that any asset described
above is not assignable to the Buyer without the consent of a third party, which
consent has not been obtained as of the Closing Date, if the Closing occurs
prior to obtaining of such consent, then (x) such asset shall not be assigned to
the Buyer until the consent has been obtained; (y) the Company shall use its
reasonable efforts to obtain the consent; and (z) until the consent is obtained
the Company shall use its reasonable efforts to provide the Buyer with all of
the benefits of such asset.
(b) The Purchased Assets shall not include the following assets and
properties (collectively, the "Excluded Assets"):
(i) cash and cash equivalents of the Company as of the Closing
Date;
(ii) the Company's franchise as a corporation, its minute books,
stock transfer records and similar records relating to the Company's
organization, existence or capitalization, and the capital stock of the
Company;
(iii) the rights of the Sellers under this Agreement and the
instruments and certificates delivered in connection with this Agreement;
(iv) any of the Company's existing insurance policies, including
environmental, product liability, workmen's compensation, and key man life
insurance policies; and
(v) the Company's lease-purchase orders on equipment with Hertz
Equipment Rental Corporation ("Hertz"), the equipment so leased, and the
purchase orders issued by Hertz for the purchase of such equipment, all as
set forth on SCHEDULE 2.1(v).
SECTION 2.2 ASSUMPTION OF LIABILITIES. Subject to the conditions herein
set forth, upon the transfer of the Purchased Assets on the Closing Date, the
Buyer shall assume and discharge the following liabilities and obligations of
the Company (the "Assumed Liabilities"):
(a) those liabilities of the Company, set forth on SCHEDULE 2.2, for
accrued current liabilities (excluding income tax payables and accrued interest
attributable to the Company) and accounts payable relating to the Business, to
the extent, and only to the extent, of the dollar amount reflected as a
liability or reserve on the Working Capital Statement, as of the close of
business on the Closing Date, remaining unpaid or unperformed as of the Closing
Date;
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(b) all liabilities and obligations of the Company arising after the
Closing Date under any contract, lease or other agreement assigned to the Buyer
pursuant to Section 2.1 which, unless otherwise indicated thereon, is set forth
in any Schedule to this Agreement (or which is not required to be set forth
thereon), or which was entered into after the date hereof and prior to the
Closing Date in accordance with the provisions of this Agreement or to which the
Buyer otherwise specifically consents in writing;
(c) all liabilities and obligations relating to product liability claims
for use of goods or products manufactured, sold, tested, handled or distributed
by the Company, or any of its subsidiaries or Affiliates, or by the Buyer or any
of its subsidiaries or Affiliates which causes or caused, allegedly causes or
caused or is deemed to cause or have caused personal injury or property damage
taking place with respect to all injured persons and damaged property subsequent
to the Closing Date;
(d) to the extent, and only to the extent, of the dollar amount reflected
as a liability or reserve on the Working Capital Statement, any liabilities or
obligations relating to warranty claims for products manufactured by the
Company; and
(e) all Boom Recall Costs up to the amount of $2,000,000.
SECTION 2.3 LIABILITIES NOT ASSUMED. The Buyer shall assume no debts,
obligations, contracts, leases or liabilities of the Company, except for the
Assumed Liabilities. The Company shall pay and be responsible for all debts
(including all amounts owed pursuant to the Lease Contract - Security Agreements
with Deere Credit, Inc., as set forth on SCHEDULE 2.1(v)), obligations,
contracts, leases or liabilities of the Company which are not Assumed
Liabilities.
SECTION 2.4 FMV SCHEDULE. The Buyer and the Sellers have determined the
fair market value of the various classes of the Purchased Assets, and the other
rights and benefits conferred hereunder, which fair market values are set forth
on SCHEDULE 2.4. Such values shall be adjusted as of the Closing Date by the
parties subsequent to the delivery of the Working Capital Statement and as so
adjusted shall be referred to as the "FMV Schedule." If the Sellers and the
Buyer are unable to agree on such adjustments to the FMV Schedule within thirty
(30) days after the Working Capital Statement has been approved by the parties
or the Arbitrator, as the case may be, then the FMV Schedule shall be based upon
the appraised values of such Purchased Assets as established by an appraisal
obtained at the Buyer's expense from a nationally recognized independent
appraisal firm (the "Appraiser") mutually agreed upon by the Sellers and the
Buyer. If the parties cannot agree on the determination of the Appraiser for
purposes hereof, the Buyer shall instruct Price Waterhouse to make a mutual
determination with the Accountants regarding a nationally recognized independent
appraisal firm to serve as the Appraiser; provided, however, if the parties
cannot agree on the determination of the Appraiser, all fees and expenses
incurred in connection with the appraisal conducted by the Appraiser selected by
Price Waterhouse and the Accountants shall be borne one-half by the Sellers and
one-half by the Buyer. The parties agree that the consideration
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described in Section 3.1 of this Agreement (taking into account transaction
costs paid by such party) shall be allocated, for tax purposes, among the
Purchased Assets in a manner consistent with the FMV Schedule and the provisions
of Section 1060 of the Code and all regulations promulgated thereunder. Each of
the parties hereto agrees to report this transaction for federal tax purposes in
accordance with the provisions of this Section 2.4 and the FMV Schedule, and
shall not take any position or action inconsistent therewith upon examination of
any tax return, in any refund claim, in any litigation, investigation or
otherwise; PROVIDED, HOWEVER, that if, in any audit of any Tax Return of the
Company or the Buyer by a Taxing Authority, the fair market values are finally
determined to be different from the FMV Schedule, as adjusted, the Buyer and the
Company may (but shall not be obligated to) take any position or action
consistent with the fair market values as finally determined in such audit.
ARTICLE III
PURCHASE PRICE
SECTION 3.1 PURCHASE PRICE DETERMINATION.
(a) Subject to adjustment pursuant to Section 3.3, the aggregate purchase
price (the "Purchase Price") to be paid by the Buyer to the Company for the
Purchased Assets, and the rights and benefits conferred hereunder, shall be
Sixty-Three Million Two Hundred Sixty Thousand Dollars ($63,260,000), plus the
assumption and discharge of the Assumed Liabilities by the Buyer.
(b) The Company, at its expense, shall prepare, in accordance with the
Principles and Procedures, an estimated statement of working capital of the
Business as of the close of business on the Closing Date (the "Estimated Working
Capital Statement"). Prior to issuance of the Estimated Working Capital
Statement, the Company shall consult with the Buyer as to the contents of such
statement. Not later than three (3) business days prior to the Closing Date,
the Company shall deliver to the Buyer (i) the Estimated Working Capital
Statement and (ii) its estimate of the amount of the Purchase Price, taking into
account any adjustment pursuant to Section 3.3(b) , based on the Estimated
Working Capital Statement (such estimate is referred to herein as the "Estimated
Purchase Price").
SECTION 3.2 PAYMENT. On the Closing Date, the Buyer shall, by wire
transfer or bank check of immediately available funds, pay to the Company an
amount equal to the Estimated Purchase Price less Four Million Five Hundred
Thousand Dollars ($4,500,000) (the "Escrow Amount") to be deposited with the
Escrow Agent pursuant to the terms of the Escrow Agreement. The Escrow Amount
shall be divided into two accounts, a Purchase Price Escrow Fund in the amount
of $1,000,000 and a Claims Amount Escrow Fund in the amount of $3,500,000.
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SECTION 3.3 WORKING CAPITAL STATEMENT; ADJUSTMENTS.
(a) As promptly as practicable following the Closing Date, the Buyer, at
its expense, shall cause to be prepared in accordance with the Principles and
Procedures, a statement of the Working Capital of the Company as of the Closing
Date. This statement of Working Capital (the "Working Capital Statement") shall
be prepared by the Buyer and examined in accordance with the Principles and
Procedures by Price Waterhouse as soon after the Closing Date as possible, but
in no event later than sixty (60) days after the Closing Date, and shall be
accompanied by a report to the Buyer and the Sellers prepared by Price
Waterhouse setting forth the Working Capital of the Company as of the Closing
Date (the "Closing Report"). A physical inventory having been taken, the
Accountants shall have the opportunity to review such of the worksheets and
other documents created or utilized by the Buyer in connection with the
preparation of the Working Capital Statement as the Accountants shall from time
to time request. The Accountants shall also have the opportunity to review the
draft of the Working Capital Statement and the Closing Report (each of which
Price Waterhouse shall be directed by the Buyer to prepare and deliver to the
Company not later than 10 days prior to the issuance of the Working Capital
Statement and the Closing Report), and related work papers of Price Waterhouse
with respect to such documents. The Buyer shall direct Price Waterhouse to
review the draft of the Working Capital Statement and the Closing Report and
related methodology with the Accountants prior to the issuance thereof.
Promptly after the Buyer's receipt from Price Waterhouse of the Working Capital
Statement and the Closing Report, the Buyer shall deliver a copy of each of the
same to the Company.
(b) If the Working Capital of the Company on the Closing Date, as
determined in accordance with the Working Capital Statement and the Closing
Report, is less than Eight Million Two Hundred Fifty Thousand Dollars
($8,250,000) and if such difference is not disputed pursuant to Section 3.3(d),
the Purchase Price shall be decreased by the amount by which $8,250,000 exceeds
the Working Capital of the Company on the Closing Date. If the Working Capital
of the Company on the Closing Date, as determined in accordance with the Working
Capital Statement and the Closing Report, is greater than or equal to Eight
Million Two Hundred Fifty Thousand Dollars ($8,250,000), and if such difference
is not disputed pursuant to Section 3.3(d), the Purchase Price shall not be
adjusted pursuant to this Section 3.3(b).
(c) If the Purchase Price, as adjusted pursuant to Section 3.3(b) ,
exceeds the Estimated Purchase Price, (i) the Buyer shall pay the Company the
amount of such excess effective within 30 days of the delivery of the Working
Capital Statement and the Closing Report and (ii) the funds in the Purchase
Price Escrow Fund shall be released to the Company pursuant to the terms of the
Escrow Agreement. If the Purchase Price, as adjusted, is less than the
Estimated Purchase Price, the Company shall pay to the Buyer the amount of such
deficit, in immediately available funds, within 30 days after delivery of the
Working Capital Statement and the Closing Report to the Buyer and Price
Waterhouse. Any amounts payable by the Company to the Buyer pursuant to this
Section 3.3(c) shall be paid first from the funds in the Purchase Price Escrow
Fund and
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thereafter directly from the Company. If the total sum payable by the Company
pursuant to this Section 3.3(c) is less than the Purchase Price Escrow Fund, the
balance of the Purchase Price Escrow Fund shall thereupon be paid to the
Company.
(d) If the Company disputes any items shown on the Working Capital
Statement or the Closing Report, the Company shall give written notice to the
Buyer within 30 days after the Company's receipt of the Working Capital
Statement and the Closing Report, which written notice shall specify the
rationale for such disagreement and the amount in dispute. The Buyer shall
cause Price Waterhouse to notify the Company and the Accountants within 30 days
of receipt of the notice of dispute whether or not it acquiesces in the
exceptions taken. If Price Waterhouse and the Company are unable to resolve the
matters outstanding within 60 days after delivery of the Working Capital
Statement and the Closing Report to the Company, payment shall be made by the
Buyer or the Company, if appropriate, as to all "agreed upon" issues on said
sixtieth day and all matters not so resolved shall be submitted to the
Arbitrator in accordance with the procedures set forth in Section 11.7.
(e) All sums to be paid subsequent to the Closing Date pursuant to this
Section 3.3 shall bear interest from and after the Closing Date, until so paid,
at the rate which is equal to the interest rate then earned on the Escrow Amount
during such period, computed on the basis of a 365-day year and paid for the
actual number of days elapsed. Interest calculated in accordance with this
Section 3.3(e) shall be due and payable on the date on which the corresponding
payment is due.
SECTION 3.4 ADDITIONAL PURCHASE PRICE. If on the Second Anniversary
Date the sum of the Boom Recall Costs incurred as of such date and the Boom
Recall Costs reasonably expected by the Buyer to be incurred after such date is
less than $2,000,000, then the Buyer shall pay to the Company or its designees
the amount by which $2,000,000 exceeds such sum (the "Additional Purchase
Price"). Within thirty (30) days following the Second Anniversary Date, the
Buyer shall provide to the Sellers a certificate of an officer of the Buyer that
shall set forth the Additional Purchase Price, if any (the "Boom Recall
Certificate"). If within fifteen (15) days of receipt of the Boom Recall
Certificate the Sellers fail to object to the Buyer's calculation of the
Additional Purchase Price, then the Buyer shall pay the Additional Purchase
Price, if any, to the Company or its designees. If the Sellers object to the
calculation of the Additional Purchase Price set forth in the Boom Recall
Certificate, the Buyer and the Sellers will attempt to resolve such dispute in
good faith. If resolution cannot be reached within thirty (30) days of the
receipt of the Boom Recall Certificate by the Sellers, then the unresolved
disputed items will be resolved by the Arbitrator in accordance with the
procedures set forth in Section 11.7.
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ARTICLE IV
CLOSING
SECTION 4.1 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of Leonard, Street
and Deinard, 150 South Fifth Street, Minneapolis, Minnesota at 10:00 a.m. on
August ___, 1996 or on such other date as may be agreed upon by the parties
hereto, and shall be effective as of the close of business on such date (the
"Closing Date").
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 EXPENSES. Except as otherwise stated herein, the Buyer and
the Company will pay their own expenses incident to the preparation and carrying
out of this Agreement and the expenses and fees involved in the preparation and
delivery of all documents, reports and opinions required to be delivered by or
on behalf of it hereunder. The Buyer and the Company shall pay equally any
transfer or recordation taxes, if any, incurred as a result of the consummation
of the transactions contemplated by this Agreement.
SECTION 5.2 ESCROW AGREEMENT. At the Closing, the Buyer, the Sellers
and the Escrow Agent will enter into the Escrow Agreement, pursuant to which the
Buyer shall deliver to the Escrow Agent the Escrow Amount, to be held in escrow
as provided in the Escrow Agreement.
SECTION 5.3 NONCOMPETITION AGREEMENTS. At the Closing, in order to
protect the Buyer's investment in the Business: (i) Badger R. Bazen and Charles
H. Powers each shall execute and deliver an agreement not to compete with the
Buyer substantially in the form attached hereto as EXHIBIT D-1; and (ii) the
remaining Sellers shall each execute an agreement not to compete with the Buyer
substantially in the form attached hereto as EXHIBIT D-2.
SECTION 5.4 EMPLOYMENT AND CONSULTING AGREEMENT. At the Closing, Badger
R. Bazen and the Buyer will enter into an employment and consulting agreement
substantially in the form attached hereto as EXHIBIT D-3.
SECTION 5.5 EMPLOYEE BENEFIT MATTERS. The Company has terminated the
Lull Industries Retirement Savings Plan prior to Closing. In addition, the
Company shall promptly after the Closing, at its expense, seek a determination
letter from the IRS relating to the termination of such plan. Upon the Buyer's
receipt from the Company of such determination letter, the Buyer shall use its
reasonable efforts to cause the acceptance of any eligible rollover
distributions from former employees of the Company employed by the Buyer into
any plan maintained by the Buyer. The Sellers acknowledge
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and agree that the Buyer shall not assume any liabilities or obligations
relating to any Plans of the Company. Without limiting any of the foregoing,
the Buyer will not adopt or sponsor such plans and no assets or liabilities of
any such plans will be transferred to or assumed by the Buyer or any plan or
trust maintained by the Buyer.
SECTION 5.6 CERTAIN INSURANCE COVERAGE. The Buyer agrees to obtain a
"claims-made" insurance policy for occurrences on or prior to the date of the
acquisition of the Business by the Company, in the coverages set forth on
SCHEDULE 7.6. The Buyer shall name the Company as an additional insured for such
policy. The Company shall pay the premiums for such policy on the Closing Date.
SECTION 5.7 CERTAIN SOFTWARE LICENSES. The Company shall pay all fees
and any related expenses and execute all documentation required to (i) comply
with the terms of the software licenses referenced on SCHEDULE 5.7, (ii) ensure
that any copies of the software referenced on SCHEDULE 5.7 have been made in
accordance with the licenses referenced therein, and (iii) transfer such
licenses to the Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The individual Sellers, individually and not jointly, and the Company
represent and warrant to the Buyer, and the Buyer in agreeing to consummate the
transactions contemplated by this Agreement has relied upon such representations
and warranties, that:
SECTION 6.1 TITLE TO THE PURCHASED ASSETS. Except as set forth on
SCHEDULE 6.1 and for assets which are currently being leased, the Company has
good and marketable title to all of the Purchased Assets, and on the Closing
Date will have complete and unrestricted power and the unqualified right to
sell, assign, transfer, convey and deliver to the Buyer, and will transfer and
convey to the Buyer at the Closing, and the Buyer will acquire at the Closing,
good, valid and marketable title to the Purchased Assets free and clear of any
lease, lien, security interest, claim, charge, or encumbrance whatsoever.
SECTION 6.2 VALID AND BINDING AGREEMENT. The Sellers have taken all
necessary action, corporate or otherwise, to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of the Sellers and constitutes a
valid and binding agreement of each of the Sellers, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization or similar
laws relating to creditors' rights generally.
SECTION 6.3 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the requisite power and authority to carry on the Business as
currently
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conducted and to own the properties and assets it now owns. The Company is
licensed or qualified and is in good standing to do business as a foreign
corporation in those jurisdictions listed on SCHEDULE 6.3. The operation of the
Business or use and ownership of the Purchased Assets in any other jurisdictions
does not require such license or qualification in any such other jurisdiction.
SECTION 6.4 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by each of the Sellers with any of the provisions hereof will
(i) violate or conflict with any provisions of the Certificate of Incorporation
or By-Laws of the Company, or any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Sellers, or
(ii) violate, or conflict with, or result in a breach in any provision of, or
constitute a default (or any event that, with or without due notice or lapse of
time, or both, would constitute such a default) under, or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of the Company under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation of which the Company is a
party or by which any of the Company's assets are bound.
SECTION 6.5 CONSENTS AND APPROVALS. Except as set forth on
SCHEDULE 6.5, no permit, application, notice, transfer, consent, approval,
order, qualification, waiver from, or authorization of, or declaration, filing
or registration with, any governmental authority is necessary in connection with
the execution and delivery by any of the Sellers of this Agreement or the
consummation by any of the Sellers of the transactions contemplated hereby and
no consent of any third party is required to consummate any of the transactions
contemplated hereby.
SECTION 6.6 FINANCIAL STATEMENTS. The audited financial statements of
the Company for the fiscal years ended December 31, 1994 and 1995 (the
"Financial Statements"), copies of which are attached hereto on SCHEDULE 6.6A,
(i) present fairly the financial position, results of operations and cash flows
of the Company, as of the statement dates and for the periods indicated, and
(ii) have been prepared in accordance with the income-tax basis of accounting
consistently applied throughout and among the periods indicated. The unaudited
financial statements of the Company for the period ending June 30, 1996, copies
of which are attached hereto on SCHEDULE 6.6B (the "Interim Financial
Statements") (i) present fairly the financial position, results of operations
and cash flows of the Company, as of the statement dates and for the periods
indicated, and (ii) have been prepared in accordance with the income-tax basis
of accounting consistently applied throughout and among the periods indicated
and are consistent with the Financial Statements subject to year-end audit and
other normal or recurring year-end adjustments (made in the ordinary course of
business and consistent with prior year-end accounting principles and
adjustments) as set forth on SCHEDULE 6.6B.
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SECTION 6.7 INTERIM OPERATIONS AND ABSENCE OF CERTAIN CHANGES. Since
December 31, 1995, except as set forth on EXHIBIT G and SCHEDULE 6.7, the
Company has conducted the Business only in the ordinary course and consistent
with past practice and the Company did not :
(i) suffer any damage, destruction or loss of tangible assets,
whether or not covered by insurance, in excess of $10,000;
(ii) suffer any change in its financial condition, assets,
liabilities or business or suffer any other event or condition of any
character which individually or in the aggregate had or has a Material
Adverse Effect on the financial condition or earnings of the Business, or
materially diminishes the value of the assets used in or relating to the
Business;
(iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) of or relating to
the Business except in each case in the ordinary course of business;
(iv) waive any claims or rights of substantial value of or
relating to the Business, except in each case in the ordinary course of
business;
(v) pledge or permit the imposition of any lien on or sell,
assign, transfer or otherwise dispose of any of its tangible assets used in
or relating to the Business, except the sale of inventory in the ordinary
course of business;
(vi) sell, assign, encumber, license, pledge, abandon or
otherwise transfer any patents, applications for patent, trademarks, trade
names, copyrights, licenses or other intangible assets used in or relating
to the Business;
(vii) make any change in any method of accounting or accounting
principle or practice;
(viii) except for DE MINIMUS adjustments, write up or down the
value of the inventory of the Business or determine as collectible any
notes or accounts receivable of or arising out of the Business that were
previously considered to be uncollectible, except for write-ups or
write-downs and other determinations in the ordinary course of business and
consistent with past practice;
(ix) grant any general increase in the compensation payable or to
become payable to its officers or employees, engaged in or relating to the
Business, or otherwise designated as officers or employees of the Business
(including any such increase pursuant to any bonus, pension, profit-sharing
or
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other plan or commitment) or any special increase in the compensation
payable or to become payable to any such officer or employee, or make any
bonus payments to any such officer or employee, except for normal merit and
cost of living increases in the ordinary course of business and in
accordance with past practice;
(x) lose or learn of the prospective loss of any customer or
vendor listed on SCHEDULE 6.24;
(xi) make capital commitments on behalf of or relating to the
Company in excess of $100,000 in the aggregate;
(xii) fail to maintain accounts receivable, inventory, accounts
payable and other tangible capital accounts and make contributions to the
Lull Industries Retirement Savings Plan; or
(xiii) agree, whether in writing or otherwise, to take any action
described in this Section 6.7.
SECTION 6.8 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 6.8 is a true and complete list, exclusive of the benefits
and plans provided by RJ Associates to the Company's leased employees, of all
written and oral, formal and, to the knowledge of the Sellers, informal annuity,
bonus, cafeteria, stock option, stock purchase, profit sharing, savings,
pension, retirement, incentive, group insurance, disability, employee welfare,
prepaid legal, non-qualified deferred compensation including, without
limitation, excess benefit plans, top-hat plans, deferred bonuses, rabbi trusts,
secular trusts, non-qualified annuity contracts, insurance arrangements,
non-qualified stock options, phantom stock plans, or golden parachute payments,
or other similar fringe benefit plans, and all other employee benefit funds or
programs (within the meaning of Section 3(3) of ERISA), covering employees or
former employees of the Company (including leased employees) (the "Plans").
Except as set forth on SCHEDULE 6.8, the Company is not a party to any employee
agreement, understanding, plan, policy, procedure or arrangement, whether
written or oral, which provides compensation or fringe benefits to their
employees engaged or formerly engaged in the operation of the Business or which
applies to former employees of the Company who were engaged in the Business, and
the Company is in compliance with its obligations under all such Plans. Except
for changes required by applicable law, there are no negotiations, demands,
commitments or proposals that are pending or that have been made that concern
matters now covered, or that would be covered by the type of agreements
described on SCHEDULE 6.8 or this Section 6.8(a). The Company has no direct or
indirect, actual or contingent liability for any Plan, other than to make
payments for contributions, premiums or benefits when due, all of which payments
have been timely made. None of the Purchased Assets are subject to any existing
lien or security interest
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under Section 302(f), 306(a), 307(a) or 4068 of ERISA or Section 401(a)(29),
412(n) or 6321 of the Code.
(b) With respect to each employee benefit plan listed on SCHEDULE 6.8,
true and complete copies of (i) all Plan documents (including all amendments and
modifications thereof), and related agreements including without limitation, the
trust agreement and amendments thereto, insurance contracts and investment
management agreements; (ii) the last three filed Form 5500 series and Schedules
A, B, P and/or SSA, as applicable, and Forms PBGC-1, if any; (iii) summary plan
descriptions; (iv) summary of material modifications, if any; (v) the most
recent auditor's report, and copies of any and all tax qualification
correspondence including without limitation, private letter rulings,
applications for determination and determination letters issued with respect to
the Plans; and (vi) the most recent annual and periodic accounting of related
Plan assets, have also been delivered to the Buyer.
(c) With respect to the Plans listed on SCHEDULE 6.8 which are subject to
ERISA:
(i) The Plans are in material compliance with the applicable
provisions of ERISA and each of the employee pension benefit plans, within
the meaning of Section 3(2) of ERISA (the "Pension Plans"), which are
intended to be qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified or a request for such
determination has been timely filed with the IRS (and to the knowledge of
the Sellers, nothing has occurred to cause the IRS to revoke such
determination and the IRS has not indicated any disapproval of any request
for such a determination);
(ii) Each Plan has been operated materially in accordance with
its terms and all required filings that are due prior to the date hereof,
including without limitation, the Forms 5500, for all Plans have been
made;
(iii) No prohibited transactions, as defined by Section 406 of
ERISA or Section 4975 of the Code, for which exemptions are not available,
have occurred with respect to any of the Plans;
(iv) The Company has not engaged in any transaction in connection
with which the Company could be subjected to a criminal or civil penalty
under ERISA;
(v) None of the Plans, nor any trust which serves as a funding
medium for any of such Plans, nor any issue relating thereto is currently
under examination by or pending before the IRS, the Department of Labor,
the PBGC or any court, other than applications for determinations pending
before the IRS;
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(vi) Except as set forth on SCHEDULE 6.8, none of the Pension
Plans is a defined benefit plan within the meaning of Section 414(j) of the
Code;
(vii) None of the Plans is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA and Section 411(f) of the Code, nor a
plan maintained by more than one employer (hereinafter referred to as an
"multiple employer plan"), nor a single employer plan under a multiple
controlled group within the meaning of Section 4063 of ERISA, and neither
the Company nor any entity required to be aggregated with the Company under
Section 414(b), (c), (m), or (o) of the Code has incurred any withdrawal
liability with respect to any single plan, multiemployer or multiple
employer plan, which liability could constitute a liability of the Buyer;
(viii) No benefit claims (except those submitted in the ordinary
course of administration of such Plan) are currently pending against any
Plan;
(ix) Except as set forth on SCHEDULE 6.8, no Plan provides for
retiree medical or retiree life insurance benefits for former employees of
the Company and there is no liability for Taxes with respect to
disqualified benefits under Section 4976 of the Code; and
(x) Except as set forth on SCHEDULE 6.8, no Pension Plan has
been terminated by the Company and there is no liability for Taxes with
respect to a reversion of qualified plan assets under Section 4980 of
the Code.
(d) To the knowledge of the Sellers, there have been no failures
to comply with the continuation coverage provisions required by Sections
601-608 of ERISA and Section 4980B of the Code under any Plan.
(e) There are no employee benefit plans which cover employees of the
Company which are required to comply with the provisions of any foreign law.
(f) All excess contributions, if any (together with any income allocable
thereto), have been distributed (or, if forfeitable, forfeited) before the close
of the first two and one half (2 1/2) months of the following plan year; and
there is no liability for excise tax under Section 4979 of the Code with respect
to such excess contributions, if any, for any Plan.
(g) There is no liability for Taxes with respect to: (i) an accumulated
funding deficiency under Section 4971 of the Code; and/or (ii) nondeductible
contributions under Section 4972 of the Code.
SECTION 6.9 COMPLIANCE WITH LAW. The Company has been, is and on the
Closing Date will continue to be, in compliance in all respects with all
applicable laws
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(including duties imposed by common law), rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (federal,
state, local and foreign) having jurisdiction over, applicable to or otherwise
concerning the Business, the Purchased Assets and the products and employees of
the Company.
SECTION 6.10 LITIGATION, CLAIMS. EXHIBIT G and SCHEDULE 6.10 hereto
contain a complete and accurate list of (a) all actions, suits, material claims,
proceedings and investigations pending or threatened by or against the Company,
and (b) all judgments, decrees, arbitration awards, agreements or orders binding
upon the Company. To the knowledge of the Sellers, there is no basis for any
claim, action or proceeding which could have a Material Adverse Effect on the
Company other than as set forth on SCHEDULE 6.10.
SECTION 6.11 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 6.11 contains a complete and accurate list of all contracts,
agreements and commitments (other than the agreements or arrangements set forth
on SCHEDULES 6.8, 6.12, 6.14, 6.18B, 6.19B, 6.20, 6.24 and 6.25), whether
written or oral, of the Company relating to the Business that involve
commitments in excess of $10,000, have a term of six (6) months or more or that
are not in the ordinary course of business.
(b) The agreements set forth on SCHEDULES 6.8, 6.11, 6.12, 6.14, 6.18B,
6.19B, 6.20, 6.24 and 6.25 are hereinafter referred to collectively as the
"Operating Agreements." Except as otherwise set forth on SCHEDULE 6.11, none of
the Operating Agreements has been assigned or is the subject of any security
agreement. Except as otherwise set forth in SCHEDULE 6.11, (i) each of the
Operating Agreements is a valid and binding obligation of the Company and, to
the knowledge of the Sellers, of the other party or parties thereto, enforceable
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws or equitable principles
relating to creditors' rights generally; (ii) neither the Company nor any other
party thereto has terminated, canceled, modified or waived in any material
respect any term or condition of any Operating Agreement; and (iii) neither the
Company nor, to the knowledge of the Sellers, any other party to any Operating
Agreement is in default in any material respect under any Operating Agreement
and there exists no event, condition or occurrence that, after notice or lapse
of time, or both, would constitute such a default either by the Company or, to
the knowledge of the Sellers, by any party to any such Operating Agreement.
Except as set forth on SCHEDULE 6.11, none of the Operating Agreements contains
any covenant or other restriction preventing or limiting the consummation of the
transactions contemplated hereby. The Company has delivered to the Buyer a copy
of each of the written Operating Agreements and a description of the terms and
conditions of any oral Operating Agreements.
SECTION 6.12 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 6.12 contains a
correct and complete list of the following assets and related matters: (a) all
patents and applications for patents, all Marks and registration of Marks and
applications for
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registration of Marks, all copyright registrations and applications for
copyright registration, and all trade names, owned or used (pursuant to license
agreements or otherwise) by the Company, and in the case of any such
Intellectual Property that is so owned, the jurisdictions in or by which such
assets or any of them have been registered, filed or issued and (b) to the
extent not listed on SCHEDULE 6.11, all contracts, agreements or understandings
pursuant to which the Company has authorized any Person to use any of the
Intellectual Property which is so owned. The Company owns, possesses, or
licenses and as of the Closing Date will own, possess or license, all right,
title and interest in and to the items of Intellectual Property that are
required to conduct their businesses as now conducted without conflict with the
rights of others. Except as set forth in SCHEDULE 6.12: (i) the Company has
the right to use, and to the knowledge of the Sellers, the sole and exclusive
right to use, the Intellectual Property (including applications for any of the
foregoing) used in connection with the Business, and none of the past or present
employees, officers, directors or stockholders of the Company, or anyone else,
has any rights with respect thereto; (ii) the consummation of the transactions
contemplated hereby will not alter or impair any such rights; (iii) the Company
has not received any notice or claim of infringement or any claim challenging or
questioning the validity or effectiveness of any of the items of Intellectual
Property, and there is no valid basis for any such claim; and (iv) the Company
is not liable, nor has it made any contract or arrangement whereby it may become
liable, to any Person for any royalty or other compensation for use of any of
the items of Intellectual Property.
SECTION 6.13 LIENS. Except as set forth on SCHEDULE 6.13, none of the
Purchased Assets are subject to any mortgage, lien, encumbrance or other
security interest.
SECTION 6.14 INSURANCE. All insurance policies and fidelity bonds
relating to the Business or the Purchased Assets, including summary descriptions
and the termination dates thereof, are set forth on SCHEDULE 6.14. Except as
set forth on SCHEDULE 6.14, the Company has not been refused any insurance with
respect to the Business or any of the Purchased Assets, nor has coverage been
limited by any insurance carrier to which it has applied for insurance or with
which it has carried insurance, during the last two years.
SECTION 6.15 DISCLOSURE. No representation or warranty by the Sellers to
the Buyer contained in this Agreement, and no statement contained in the
Schedules hereto or any certificate furnished to the Buyer pursuant to the
provisions hereof, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
the statements herein or therein not misleading in light of the circumstances in
which they are or will be made.
SECTION 6.16 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. All accounts
receivable of the Company, whether reflected on the Financial Statements and/or
the Interim Financial Statements, or to be reflected on the Working Capital
Statement, represent sales actually made in the ordinary course of business or
valid claims as to which full performance has been rendered. Except to the
extent reserved against the
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accounts receivable, and as set forth on EXHIBIT G and SCHEDULE 6.10, no
counterclaims or offsetting claims with respect to the accounts receivable are
pending or, to the knowledge of the Sellers, threatened. The accounts payable
of the Company reflected on the Financial Statements and the Interim Financial
Statements and to be reflected on the Working Capital Statement arose, or will
arise, from BONA FIDE transactions in the ordinary course of business, and all
such accounts payable have been paid, are not yet due and payable under the
Company's payment policies and procedures or are being contested by the Company
in good faith.
SECTION 6.17 INVENTORY AND BACKLOG. The inventories of the Company as of
the date hereof consist of raw materials, parts, goods in process and finished
goods salable or usable in the normal course of the Business, and such
inventories are at levels consistent with past practices of the Business. All
such inventories are carried on the books of the Company pursuant to the normal
inventory valuation policies of the Company, as reflected in the Company's
Financial Statements and Interim Financial Statements. SCHEDULE 6.17 sets forth
the locations of all inventories of the Company. Except as set forth on
SCHEDULE 6.17, no items included in inventories of the Company are or will be
pledged as collateral or held by the Company on consignment from others. The
Company is not committed to purchase inventories in amounts greater than are
reasonably expected to be usable in the ordinary course of business as presently
conducted. With respect to inventories in the hands of suppliers for which the
Company will be committed on the Closing Date, such inventories on the Closing
Date will be reasonably expected to be usable in the ordinary course of business
as presently being conducted. Subject to the qualifications set forth in
SCHEDULE 6.17, at August 3, 1996, the backlog of firm orders for the Company was
$25,576,471.
SECTION 6.18 TANGIBLE PERSONAL PROPERTY. SCHEDULE 6.18a includes all of
the fixed assets of the Company included within the Purchased Assets and each
item of tangible personal property other than inventory and supplies (whether
finished goods or raw materials) having a book value in excess of $25,000, and
the location thereof, including all such furniture, furnishings, office
equipment, machinery, tools and other equipment. The Company has good and
marketable title to all of the items listed on or referred to in SCHEDULE 6.18a,
free and clear of all liens, claims and encumbrances except as set forth thereon
or on SCHEDULE 6.13. SCHEDULE 6.18b lists all leases of tangible personal
property leased by the Company in connection with the operation of the Business
and the location thereof. Except as set forth on SCHEDULE 6.18b, none of such
leases contains any covenant or restriction preventing or limiting the
consummation of the transactions contemplated hereunder. All of the personal
property listed in SCHEDULE 6.18a and the assets leased pursuant to the leases
listed on SCHEDULE 6.18b are in reasonable operating condition and repair,
subject to ordinary wear and tear.
SECTION 6.19 REAL PROPERTY.
(a) SCHEDULE 6.19a contains a correct and complete list of all the real
property (including a general description of the improvements thereon) that is
owned by
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the Company or that the Company has agreed (or has an option) to purchase, sell
or lease, or may be obligated to purchase, sell or lease to a third party in
connection with the conduct of the Business and any title insurance or guarantee
policies with respect thereto. Such real property is hereinafter referred to as
the "Real Property," and the improvements and fixtures thereon are hereinafter
referred to as the "Improvements."
(b) SCHEDULE 6.19b identifies all of the real property that the Company
leases (as lessee), has agreed to lease or has an obligation to lease in
connection with the Business (including a general description of the
improvements thereon). Such leased real property is hereinafter referred to as
the "Leased Property," and the improvements and fixtures thereon are hereinafter
referred to as the "Leased Improvements."
(c) Except as set forth on SCHEDULE 6.19a, the Company is the sole legal
and equitable owner of the Real Property, the Improvements and all interests
therein and possesses good and marketable, indefeasible fee simple title to the
Real Property and the Improvements, good of record and in fact, free and clear
of all conditions, exceptions, reservations, liens, restrictions, rights-of-way,
easements, encumbrances and other matters affecting title except such matters
which do not adversely affect the present use of the Real Property.
(d) There are no adverse or other parties in possession of the Real
Property, the Improvements, the Leased Property, the Leased Improvements or any
portion or portions thereof, and on the Closing Date the Real Property, the
Improvements and the leasehold interest in the Leased Property and the Leased
Improvements will be free and clear of any and all leases, licensees, occupants
or tenants except as set forth on SCHEDULE 6.19a and SCHEDULE 6.19b. To the
knowledge of the Sellers, there are no pending or threatened condemnation,
eminent domain or similar proceedings, or litigation or other proceedings
affecting the Real Property, the Improvements, the Leased Property, the Leased
Improvements or any portion or portions thereof. To the knowledge of the
Sellers, there are no pending requests, applications or proceedings to alter or
restrict any zoning or other use restrictions applicable to the Real Property,
the Improvements, the Leased Property or the Leased Improvements that would
interfere with the conduct of the Business or the use of the Purchased Assets
consistent with past practice, which interference would have a Material Adverse
Effect on the Business. Except as set forth on SCHEDULE 6.19a, to the knowledge
of the Sellers, all water, sewer, gas, electric, telephone, drainage and other
utility equipment, facilities and services required by law or necessary for the
operation of the Improvements or the Leased Improvements are installed and
connected pursuant to valid permits and no notice has been received by the
Company regarding the termination or material impairment of any such service.
All necessary easements exist and are in full force and effect. The Real
Property and the Leased Property have access, in accordance with past practice,
to and from a public right of way or road dedicated for public use and no notice
has been received by the Company relating to the termination or impairment of
such access (including applicable parking requirements).
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SECTION 6.20 EMPLOYEES. SCHEDULE 6.20 sets forth a complete and
accurate list of all employees (including leased employees) of the Business,
showing for each: name, hire date, current job title or description, current
salary level (including any bonus or deferred compensation arrangements) and
any bonus, commission or other remuneration paid during the most recently
completed fiscal year, and describing any existing contractual arrangement.
Except as set forth on SCHEDULE 6.20, and except pursuant to or in
consideration of options granted under the Stock Option Plan, no employee
(including leased employees) of the Business shall receive any compensation
as a result of the consummation of the transaction contemplated by this
Agreement. Except as set forth on SCHEDULE 6.20, none of the employees
(including leased employees) of the Business is currently on short-term or
long-term disability. Except as set forth on SCHEDULE 6.20, since December
31, 1994 no salaried employee (including leased employees) of the Business
who has been compensated at an annual rate in excess of $50,000 has
terminated his or her employment or had such employment terminated for any
reason or for no reason; no such employee has given notice of his or her
intent to terminate such employment; and no notice of termination has been
given to any such employee by the Company.
SECTION 6.21 LABOR DISAGREEMENTS. Within the last three (3) years, the
Company has not experienced any labor disputes or any work stoppage or slowdowns
due to labor disagreements. Except as set forth on SCHEDULE 6.21, to the
knowledge of the Sellers, (a) each of the Company and RJ Associates (with
respect to the employees leased to the Company) is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice charge or complaint
against either the Company or RJ Associates (with respect to the employees
leased to the Company), or threatened before the National Labor Relations Board
or any foreign authority; (c) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting either the Company or RJ Associates (with respect to the employees
leased to the Company); (d) no question concerning representation has been
raised or is threatened respecting the employees of either the Company or RJ
Associates (with respect to the employees leased to the Company); (e) no
grievance that might have a Material Adverse Effect on the Company, nor any
arbitration proceeding arising out of or under any collective bargaining
agreement, is pending and no claims therefor exist; and (f) no collective
bargaining agreement that is binding on the Company restricts it from
relocating, closing or subcontracting any of its operations.
SECTION 6.22 GOVERNMENTAL AUTHORIZATIONS. The Company has all licenses,
permits or other authorizations from governmental, regulatory or administrative
agencies or authorities required for the operation of the Business in the manner
presently conducted, each of which will be in full force and effect on the
Closing Date. A list of all such material governmental authorizations is set
forth on SCHEDULE 6.22. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other actions
of any kind are required by virtue of the execution and delivery of this
Agreement or the consummation of the transactions
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contemplated hereby to enable the Buyer to continue the operation of the
Business as presently conducted in all respects.
SECTION 6.23 TAX MATTERS.
(a) There have been timely filed by the Company with the appropriate
Taxing Authority all Tax Returns relating to the Business required to be filed
on or before the Closing Date, and all such Tax Returns were materially correct
and complete in all respects. An extension of time within which to file any Tax
Return which has not been filed has not been requested or granted.
(b) The Company has paid in full all Taxes, if any, shown to be due on
such Tax Returns, or otherwise has reserved for or paid all other Taxes due for
all periods up to and including the date hereof, and at the Closing Date shall
have paid or reserved for all Taxes allocable to periods or portions thereof
ending on or before the Closing Date. All Taxes for the periods covered by the
Tax Returns filed or to be filed by the Company, or if not covered by a Tax
Return but required to be paid, have been or will be paid when due whether to a
Taxing Authority or to other persons or entities (as, for example, under tax
allocation agreements).
(c) The representations and warranties set forth in subsections (a) and
(b) of this Section 6.23 are not applicable to the extent the Purchased Assets
and the Business cannot be made subject to tax liens and the Buyer cannot be
made liable for Taxes relating to the matters constituting breaches of such
representations and warranties.
(d) There are no liens for Taxes upon the Business or any of the Purchased
Assets except liens for current Taxes not yet due.
(e) None of the Purchased Assets is property which is required to be
treated as being owned by any other person pursuant to the so-called "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
(f) None of the Purchased Assets have been financed directly or indirectly
by any tax exempt bonds.
(g) None of the Purchased Assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(h) The Company is not a person other than a United States person within
the meaning of Section 7701(a)(30) of the Code.
(i) No state of facts exist to the Sellers' knowledge which would
constitute grounds for the assessment of any additional Taxes by any Taxing
Authority against the
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Company or the Buyer with respect to the Purchased Assets or the Business other
than sales, use, transfer, recording or similar fees and taxes which may arise
from the transactions contemplated by this Agreement. No state of facts exist
to the Sellers' knowledge which would constitute grounds for the assessment of
any liability for Taxes with respect to the Purchased Assets or the Business for
the periods which have not been audited by the Internal Revenue Service or any
other Taxing Authority.
(j) The Company has not granted any waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any Taxes
which relate to the Business.
(k) There is no material action, suit, proceeding, investigation, audit or
claim now pending against the Company with respect to the Business or any of the
Purchased Assets in respect of any Tax, and no matter under discussion with any
Taxing Authority relating to any material Tax or assessment or any claim for
additional Tax, asserted by any such Authority against the Company with respect
to the Business or any of the Purchased Assets.
(l) All Taxes with respect to the Purchased Assets and the Business that
are required to be withheld or collected have been duly withheld and collected
and, to the extent required, have been paid to the proper Taxing Authority,
person, or entity to have been properly deposited as required by applicable
laws.
(m) SCHEDULE 6.23 lists each jurisdiction in which the Company is required
to file Tax Returns or pay Taxes with respect to which no returns are required
to be filed with respect to the Purchased Assets and the Business for each
period or portion thereof ending on or before the Closing Date. No claim has
ever been made by any Taxing Authority in a jurisdiction where the Company does
not file Tax Returns that they are or may be subject to taxation by that
jurisdiction with respect to the Purchased Assets or the Business.
(n) As used in this Agreement, "Tax" means any of the Taxes and "Taxes"
means (i) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts,
estimated, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, environment, alternative or add-on minimum taxes, custom
duties or other taxes of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any Taxing
Authority and (ii) any liability for the payment of any amount of the Tax
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable law) of another person or successor, by contract, or otherwise, or a
member of an affiliated, consolidated, or combined group.
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(o) As used in this Agreement, "Tax Return" is defined as any return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any federal, state,
local or foreign governmental entity or other authority (individually or
collectively a "Taxing Authority") in connection with the determination,
assessment or collection of any Tax (whether or not such Tax is imposed on the
Company) or the administration of any laws, regulations or administrative
requirements relating to any Tax.
(p) The Company is not a party to any tax allocation or sharing agreement.
(q) The Company has had in effect at all times valid elections under
Section 1362 of the Code (or its equivalent) and similar provisions of the
applicable state laws (where required or allowed) to be taxed as an "S"
corporation for all tax years beginning after December 31, 1993.
SECTION 6.24 CUSTOMERS AND VENDORS. SCHEDULE 6.24 sets forth correct and
complete lists of the twenty-five (25) largest (by dollar volume) customers and
vendors of the Business during the most recently completed fiscal year,
indicating the existing contractual arrangements, if any, with each such
customer or vendor. Except as set forth in SCHEDULE 6.24, there are no
outstanding disputes with any customer or vendor listed thereon and no customer
or vendor listed thereon has refused to continue to do business with the Company
or has stated its intention not to continue to do business with the Company.
Since December 31, 1995, there has not been any material shortage or
unavailability of the raw materials necessary to manufacture the products sold
by the Business, and, to the knowledge of the Sellers, there is no current
shortage or unavailability which leads it to believe that any such shortages
will occur.
SECTION 6.25 DISTRIBUTORS AND REPRESENTATIVES. SCHEDULE 6.25 sets forth
a correct and complete list of the twenty-five (25) largest (by dollar volume)
distributors, representatives and agents for the sale of the products of the
Company during the two most recently completed fiscal years and all
distributors, representatives and agents to whom the Company has given any
exclusive rights with respect to territories or products. Since December 31,
1995, there has been no termination of any independent distributor, wholesaler,
sales representative or agent relationship, nor, to the knowledge of the
Sellers, has any present independent distributor, wholesaler, sales
representative or agent indicated any intention to terminate or materially
change the terms of its relationship with the Company.
SECTION 6.26 ADEQUACY AND SUFFICIENCY OF ASSETS. The Purchased Assets
are substantially all of the assets and properties used by the Company in
connection with its conduct of the Business and are sufficient to operate the
Business as presently operated.
SECTION 6.27 ENVIRONMENTAL MATTERS. As used in this Agreement "Hazardous
Material" shall mean: (i) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
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("CERCLA"), 42 U.S.C. Section 9601(14), or any substance listed or identified
by any characteristic in any regulation adopted pursuant to any statute referred
to or incorporated into such definition, all as in effect on the date hereof;
(ii) any petroleum, including crude oil and any fraction thereof; (iii) natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel; (iv) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910;
and (v) any asbestos, polychlorinated biphenyl ("PCB"), or isomer of dioxin.
(a) Except as set forth on SCHEDULE 6.27(a), there is no Hazardous
Material within, under, originating from or relating to any real property
interest or other location contiguous and adjacent to such properties owned,
operated or controlled by the Company that is used in connection with the
Business.
(b) Except as set forth on SCHEDULE 6.27(b), the Company has no liability,
matured or not matured, absolute or contingent, assessed or unassessed, imposed
or based upon any provision under any federal, state or local law, rule, or
regulation or common law, or under any code, order, decree, judgment or
injunction applicable to the Company in connection with the Business, nor in
connection with the Business has the Company received any notice, or request for
information issued, promulgated, approved or entered thereunder, or under the
common law, or any tort, nuisance or absolute liability theory, relating to
public health or safety, or pollution, damage to or protection of the
environment including without limitation, laws relating to emissions,
discharges, releases or threatened releases of Hazardous Material into the
environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material (hereinafter
collectively referred to as "Environmental Laws").
(c) The Company possesses and is in compliance in all material respects
with all permits, licenses, certificates, franchises and other authorizations
relating to the Environmental Laws necessary to conduct the Business or
otherwise required by environmental regulations in connection with the Business.
(d) The Company has not, in connection with the Business during the past
five (5) years, been subject to any civil, criminal or administrative action,
suit, claim, hearing, notice of violation, investigation, inquiry or proceeding
for failure to comply with, or received notice of any violation or potential
liability under the Environmental Laws, nor is the Company aware of any
information, whether or not confirmed or reported, which could give rise to any
such potential liability.
(e) No real property, site or facility (as defined in CERCLA, 42 U.S.C.
Section 9601(9)) owned or operated by the Company in connection with the
Business is (i) listed or proposed for listing on the National Priority List or
(ii) listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List ("CERCLIS")
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promulgated pursuant to CERCLA, or any comparable list maintained by any
foreign, state or local government authority.
(f) Except as set forth on SCHEDULE 6.27(b), there are no underground
storage tanks owned or operated by the Company in connection with the Business,
and any prior use and operation of underground storage tanks owned or operated
by the Company in connection with the Business has been in compliance with all
Environmental Laws.
(g) The Company has provided to the Buyer an opportunity to inspect its
facilities, review and copy documents, and the Company has delivered to the
Buyer true, complete and correct copies of any reports, together with supporting
studies, analyses and tests in the possession of or initiated by the Company
pertaining to the existence of Hazardous Material and any other environmental
concerns relating to any of their facilities, or sites or real property owned,
leased, operated, used or controlled by the Company in connection with the
Business, or concerning compliance with or liability under the Environmental
Laws.
(h) Except as set forth on SCHEDULE 6.27(a), there are no PCBs in or at
any premises owned, leased, operated or controlled by the Company in connection
with the Business. The Company's prior use, handling, storage, transport or
disposal of PCBs has been in compliance with all then-applicable Environmental
Laws.
(i) Except as set forth on SCHEDULE 6.27(a), there is no friable asbestos
or asbestos containing materials on or in the properties and assets owned,
leased, operated or controlled by the Company in connection with the Business
and the facilities on such properties comply with the Environmental Laws
including but not limited to, Occupational Safety and Health Act regulations
with respect to ambient air exposure to asbestos.
(j) The Company has not, by contract, agreed to assume the liability of
any other person or entity pursuant to any of the Environmental Laws.
SECTION 6.28 GOVERNMENT CONTRACTS. The Company is not a party to, or
bound by the provisions of, any contract (including purchase orders, blanket
purchase orders and agreements and delivery orders) with the United States
Government or any department, agency, or instrumentality thereof or any state or
local governmental agency or authority.
SECTION 6.29 DEFECTS IN PRODUCTS OR DESIGNS; PRODUCT SAFETY.
(a) Except as set forth on EXHIBIT G and SCHEDULE 6.29, there has been no
pattern of defects in any product line in the design, construction,
manufacturing or installation of any material product ("Product") made,
manufactured, constructed,
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distributed, sold, leased or installed by the Company that would adversely
affect the performance or quality of such Product. Each Product has been
designed, manufactured, packaged and labelled in compliance with all regulatory,
engineering, industrial and other codes applicable thereto and the Company has
not received notice of any alleged noncompliance with any such code. The
Company does not advertise any Product as being commercially rated.
(b) The Company has not been required to file, and has not filed, a
notification or other report with the United States Consumer Product Safety
Commission concerning actual or potential hazards with respect to any Product
manufactured or sold by the Company.
SECTION 6.30 PRODUCT WARRANTIES. True and correct copies of all written
warranties and guaranties applicable to the Company and its products and
services have been provided to the Buyer. The amounts reflected as warranty
reserves in the Financial Statements and/or Interim Financial Statements, and to
be reflected in the Working Capital Statement are or will be commercially
reasonable.
SECTION 6.31 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
6.31, no agent, broker, investment banker, person or firm acting on behalf of
the Company or under the authority of the Company is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any of the
transactions contemplated hereby.
SECTION 6.32 RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE
6.32, neither the Company, nor any director or officer of the Company is
currently a party to any transaction with the Company (other than for services
as employees, officers and directors), including without limitation any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from, the Company in connection with the
operation of the Business, any employee, officer or director of the Company, or
to or from any corporation, partnership, trust or other entity in which any such
person, or group of such persons, owns in excess of 5% of the outstanding equity
interest.
SECTION 6.33 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor
any of its respective directors, officers, agents, employees or any other
persons acting on its behalf has, in connection with the operation of the
Business (i) used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 104 of the
Foreign Corrupt Practices Act (15 U.S.C. 78dd-2), as amended, or any other
applicable foreign, federal or state law; or (ii) accepted or received any
unlawful contributions, payments, expenditures or gifts.
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SECTION 6.34 BOOM RECALL MACHINES. The rough terrain telescopic boom
forklifts subject to the Boom Recall have the model and serial numbers set forth
in Section 1(c) of EXHIBIT G. Except for the machines referenced in the
previous sentence, the Company did not sell or ship any additional machines
containing the defect associated with the Boom Recall as described on EXHIBIT G.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers, and the Sellers in
agreeing to consummate the transactions contemplated by this Agreement have
relied upon such representations and warranties, that:
SECTION 7.1 ORGANIZATION, STANDING AND POWER. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite power and authority (corporate
and other) to own, lease and operate its properties, to carry on its business as
now being conducted and to enter into this Agreement and consummate the
transactions contemplated hereby.
SECTION 7.2 VALID AND BINDING AGREEMENTS. All necessary action on the
part of the Buyer has been taken to authorize and approve the execution and
delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer and constitutes a valid and
binding agreement of the Buyer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or similar laws or equitable
principles relating to creditors' rights generally.
SECTION 7.3 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof will (i) violate or conflict with
the Certificate of Incorporation or the By-Laws of the Buyer or any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Buyer, or (ii) violate or conflict with, or result in a breach
of any of the provisions of, or constitute a default (or any event which, with
or without due notice or lapse of time, or both, would constitute such a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon the stock or any of the properties or assets of the Buyer
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument of which
the Buyer is a party or by which it or any of its assets is bound.
SECTION 7.4 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE
7.4, no permit, consent, approval or authorization of, or declaration, filing
or registration
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with, any governmental authority is necessary in connection with the execution
and delivery of this Agreement by the Buyer or the consummation by the Buyer of
the transactions contemplated hereby and no consent of any third party is
required to consummate any of the transactions contemplated hereby.
SECTION 7.5 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
7.5, no agent, broker, investment banker, person or firm acting on behalf of the
Buyer or under the authority of the Buyer is or will be entitled to any broker's
or finder's fee or any other commission or similar fee directly or indirectly
from any of the parties hereto in connection with any of the transactions
contemplated hereby.
SECTION 7.6 INSURANCE. The Buyer has obtained policies of insurance in the
coverages set forth on SCHEDULE 7.6 hereto, all of which policies shall be in
full force and effect as of the Closing Date. The Buyer has named the Company as
an additional insured on its occurrence-based products liability insurance
policy and shall maintain such insurance (or similar insurance) for a period of
four (4) years from the Closing Date.
ARTICLE VIII
COVENANTS
SECTION 8.1 COMPLIANCE WITH LAW. The Sellers will promptly comply in
all material respects with all laws and regulations applicable to the Business
and the Purchased Assets and all laws and regulations with which compliance is
required by the Sellers for the valid consummation of the transactions
contemplated hereby and will promptly notify the Buyer of any legal,
administrative or other proceedings, investigations, inquiries, complaints,
notices of violation or other asserted claims, judgments, injunctions or
restrictions, pending, outstanding or threatened or contemplated, which could
affect the Business or any of the Purchased Assets.
SECTION 8.2 OPERATION OF BUSINESS PRIOR TO CLOSING. Prior to the
Closing Date, and except as otherwise contemplated by this Agreement or with the
specific prior written consent of the Buyer, the Sellers covenant and agree
that:
(a) the Company shall conduct the Business in the ordinary course,
consistent with past practices;
(b) except as disclosed on SCHEDULE 8.2(b), the Company shall not enter
into any contract or commitment entailing a commitment, or make any expenditures
for, property, plant or equipment in excess of $100,000 in the aggregate without
obtaining the prior written consent of the Buyer;
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(c) except as disclosed on SCHEDULE 8.2(c), the Company shall not enter
into any new employment agreement, sales agency agreement or other contract for
the performance of personal services which is not terminable without liability
upon no more than thirty (30) days' notice or grant any general increase in the
compensation payable or to become payable to any officers or employees engaged
in or relating to the Business (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or commitment), saving and
excepting the exercise, purchase or exchange of options issued pursuant to the
Stock Option Plan, or any special increase in the compensation payable or to
become payable to any such officer or employee, or make any bonus payments to
any such officer or employee, except for normal merit and cost of living
increases in the ordinary course of business and in accordance with past
practice;
(d) the Company will use its best efforts to preserve the Business intact
and the goodwill of customers and others having business relations on behalf of
or relating to the Business and to keep available the employees of the Company
for employment by the Buyer;
(e) the Company will maintain its real and personal properties used in
connection with the Business in as good as a state of operating condition and
repair as they are on the date of this Agreement, except for ordinary wear and
tear;
(f) the Company will not terminate or modify any leases, contracts,
governmental licenses, permits, or other authorizations or agreements affecting
its real and/or personal properties used in connection with the Business or the
operation thereof or any additional lease or contract of any nature affecting
such properties or the operation thereof;
(g) the Company will keep in force all policies of insurance covering or
relating to the real and personal property used in the operation of the Business
to the Closing Date;
(h) the Company will not do or omit to do any act, or permit any act or
omission to act, which may cause a breach of any Operating Agreement or a breach
of any representation, warranty, covenant or agreement made by the Company
herein;
(i) the Company will not enter into any contract or commitment on behalf
of or relating to the Business, and no purchase of raw materials or supplies and
no sales of any of its assets will be made on behalf of or in relation to the
Business, except (i) normal contracts or commitments for the purchase of, and
normal purchases of, raw materials and supplies made in the ordinary course of
business and consistent with past practice, and (ii) normal contracts or
commitments for the sale of, and normal sales of, product or inventory in the
ordinary course of business and consistent with past practice;
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(j) except as set forth on SCHEDULE 8.2(j), no obligations or liabilities
of or relating to the Business, whether absolute or contingent (including
litigation claims), shall be discharged, satisfied or paid, other than
liabilities shown on the Financial Statements and/or Interim Financial
Statements and liabilities incurred after the date thereof in the ordinary
course of business and in normal amounts, and no such discharge, satisfaction or
payment shall be effected other than in accordance with the ordinary payment
terms relating to the liability discharged, satisfied or paid;
(k) no debts of or claims against others arising out of or relating to the
Business held by the Company shall be canceled or released and no rights
relating to the Business shall be waived, except in the ordinary course of
business;
(l) the Company will not write up the value of any inventory of or
relating to the Business, determine as collectible any notes or accounts
receivable of or arising out of the Business which were previously considered to
be uncollectible, except for adjustments and changes in the ordinary course of
business and consistent with past practice;
(m) except for the changes set forth in the Principles and Procedures, the
Company will not make any change in any method of accounting principles or
practices;
(n) the Company will maintain accounts receivable, inventory, accounts
payable and other tangible capital accounts relating to the Business at levels
consistent with their normal business practices; and
(o) the Company will not incur any indebtedness or other liabilities
(whether absolute, accrued, contingent or otherwise) or guarantee any such
indebtedness relating to the Business, except in the ordinary course of its
business.
SECTION 8.3 ACCESS. At all times prior to the Closing Date, the Sellers
shall provide the Buyer and its representatives with reasonable access to, and
will make available for inspection and review, all properties, personnel, books,
records and accounts of the Company in order that the Buyer may have a
reasonable opportunity to make such investigation as it shall desire to make of
the Business during normal business hours. It is understood that the Buyer
shall be permitted to maintain personnel on the premises of the Company during
normal business hours to observe all aspects of the operations of the Business
and to confer with the Company's management, attorneys, accountants and other
third parties reasonably requested for verification of any information obtained
pursuant to such observations. The Sellers also consent to the examination by
Price Waterhouse of work papers and other records of the Accountants pertaining
to the Business and will cooperate with Buyer to obtain such access and related
information from the Accountants.
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SECTION 8.4 ENVIRONMENTAL MATTERS. The Sellers covenant and agree to
undertake and, to the extent reasonably possible, complete prior to the Closing
Date the evaluation and correction of the environmental matters set forth in
this Section 8.4. Notwithstanding anything to the contrary in this Agreement,
the Sellers' performance of the covenants in this Section 8.4 (or the
qualifications set forth in Section 8.4(f)) shall not excuse or mitigate any
breach of the Sellers' representations and warranties under Article VI hereof or
relieve the Sellers of their indemnification obligations set forth in Section
11.2.
(a) Sellers shall remove from all Real Property and all Leased Property
all trash, empty drums, and other discarded materials, other than such materials
which are removed by vendors under contracts requiring removal no less
frequently than one time per month.
(b) Sellers shall either (i) obtain all required permits to construct air
pollution sources which are required under Environmental Laws, obtain all
permits to operate air pollution sources currently required under Environmental
Laws, and file a complete application for all permits or exemptions from
permitting which will be required under Title V of the federal Clean Air Act and
applicable state laws implementing Title V or (ii) obtain the opinion of a
reputable environmental consultant that any such permit(s) is not required or
will not be required under Environmental Laws, including Title V.
(c) Sellers shall evaluate the need to file and, as appropriate, file Form
R's as required under the federal Emergency Planning and Community Right-to-Know
Act, for all years during which the Sellers operated any Real Property or Leased
Property which is or was a facility under such Act.
(d) Sellers shall obtain a SPCC plan in compliance with the requirements
of 40 CFR Part 112 for the Eagen, MN property, and shall obtain a stormwater
permit for the Oaks, ND property.
(e) Sellers shall comply with all requirements of 40 CFR Parts 403 and 433
relating to discharges of wastewater from the Oaks, ND property.
(f) The Sellers shall fulfill all of the Sellers' obligations under
Section 8.4(b), (c), (d) and (e) by agreeing to employ, at Sellers' own cost and
expense, ENSR Consultants, Inc. ("ENSR") to perform the services as detailed in
SCHEDULE 8.4(f), irrespective of whether, for any reason other than non-payment
by Sellers of ENSR's fees and expenses, ENSR fails to obtain any or all of the
permits, forms and plans otherwise required under said Sections 8.4(b), (c), (d)
and (e).
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
All obligations of the Buyer that are to be discharged under this Agreement
at the Closing are subject to the fulfillment, at Closing or effective as of
the Closing Date, of each of the following conditions (unless expressly waived
in writing by the Buyer at any time at or prior to the Closing) and the Sellers
shall use their reasonable efforts to cause each of such conditions to be
satisfied:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date, the
representations and warranties of the Sellers set forth in Article VI of this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date, and the Buyer shall have
received at the Closing a certificate, dated the Closing Date, signed by the
President or Vice President of the Company and by each of the Stockholders to
such effect.
SECTION 9.2 COVENANTS, AGREEMENTS AND CONDITIONS. The Sellers shall
have performed and complied with all covenants, agreements and conditions
contained in this Agreement required to be performed by them on or prior to the
Closing Date, and the Buyer shall have received at the Closing a certificate,
dated the Closing Date, signed by the President or Vice President of the Company
and each of the Stockholders to such effect.
SECTION 9.3 NO MATERIAL ADVERSE CHANGE. During the period from the date
hereof to the Closing Date, there shall not have been any material adverse
change in the condition (financial or otherwise) or earnings of the Business.
SECTION 9.4 CORPORATE PROCEEDINGS; CONSENTS AND APPROVALS. All
corporate and other proceedings to be taken and all consents to be obtained in
connection with the transactions contemplated by this Agreement by the Sellers
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Buyer and its counsel, Dickstein Shapiro Morin & Oshinsky LLP,
each of whom shall have received all such originals or certified or other copies
of such documents as either may reasonably request.
SECTION 9.5 PROCEEDINGS. No action or proceeding shall be pending or
threatened to restrain or prevent the consummation of the transactions
contemplated hereby.
SECTION 9.6 GOVERNMENTAL APPROVALS. There shall have been received all
necessary governmental consents or authorizations required in connection with
the transactions contemplated hereby.
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SECTION 9.7 INSURANCE. The Company shall have maintained in full force
and effect the insurance coverage described in SCHEDULE 6.14 hereto or policies
providing substantially equivalent coverage to the Closing Date.
SECTION 9.8 DELIVERIES. The Sellers shall have delivered to the Buyer
the following items:
(a) certified resolutions of the Board of Directors and stockholders of
the Company authorizing the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein;
(b) executed documents of transfer and assignment required to transfer
title to the Purchased Assets to the Buyer, including without limitation (i) the
Bill of Sale, Assignment and Assumption Agreement; and (ii) such other deeds,
bills of sale, endorsements, assignments and other good and sufficient
instruments of conveyance and delivery as the Buyer may reasonably request;
(c) applications for such tax clearance certificates as may be required by
the Buyer to evidence payment of any outstanding tax obligations of the Company;
(d) except as set forth on SCHEDULE 6.3, certificates from appropriate
authorities, dated as of the Closing Date, as to the good standing and
qualification to do business of, and payment of franchise taxes by the Company
in each jurisdiction where it operates the Business;
(e) a joint notice by the Company and the Buyer regarding disposition of
funds deposited subsequent to the Closing Date in the Company's lockbox and with
each of the Company's other bank accounts;
(f) an executed assignable agreement between Lull Industries, Inc. and
Marlow Fabrication, Inc. in form satisfactory to the Buyer; and
(g) all other previously undelivered items required to be delivered by the
Sellers to the Buyer at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith unless waived in writing by the Buyer.
SECTION 9.9 RELEASES OF LIENS. The Sellers shall have delivered to the
Buyer releases of all liens and encumbrances of record on the Purchased Assets
other than the liens and encumbrances set forth on SCHEDULE 9.9.
SECTION 9.10 CUSTOMER RELATIONSHIPS. The Buyer shall be reasonably
satisfied with the Company's relationship with its customers listed on SCHEDULE
6.24.
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SECTION 9.11 CONSENTS OF THIRD PARTIES. There shall have been received
all necessary consents from third parties to the assignment and conveyance of
the Purchased Assets to the Buyer, including those set forth on SCHEDULE 9.11.
SECTION 9.12 OPINION OF COUNSEL. The Buyer shall have received a written
opinion dated as of the Closing Date from Leonard, Street and Deinard, counsel
to the Company, in the form attached hereto as EXHIBIT E.
SECTION 9.13 PAYMENT OF EXPENSES. The Buyer shall have received payment
for or evidence of payment by the Company of all fees and expenses required to
be paid by the Company pursuant to Sections 5.1, 5.6 and 5.7. In addition, the
Buyer shall have received payment of the cash surrender value, as of the Closing
Date, of the key man insurance policies set forth on SCHEDULE 6.8.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
All obligations of the Sellers that are to be discharged under this
Agreement at the Closing are subject to the fulfillment at the Closing or
effective as of the Closing Date of each of the following conditions (unless
expressly waived in writing by the Sellers at any time at or prior to the
Closing) and the Buyer shall use its reasonable efforts to cause each of such
conditions to be satisfied:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date, the
representations and warranties of the Buyer set forth in Article VII of this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date, and the Sellers shall
have received at the Closing a certificate, dated the Closing Date, signed by
the President or a Vice President of the Buyer to such effect.
SECTION 10.2 COVENANTS, AGREEMENTS AND CONDITIONS. The Buyer shall have
performed and complied with all covenants, agreements and conditions contained
in this Agreement required to be performed by it on or prior to the Closing
Date, and the Sellers shall have received at the Closing a certificate, dated
the Closing Date, signed by the President or a Vice President of the Buyer to
such effect.
SECTION 10.3 PROCEEDINGS. No action or proceeding shall be pending or
threatened to restrain or prevent the consummation of the transactions
contemplated hereby.
SECTION 10.4 CORPORATE PROCEEDINGS; CONSENTS AND APPROVALS. All
corporate and other proceedings to be taken and all consents to be obtained in
connection with the
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transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Company and its
counsel, Leonard, Street and Deinard, each of whom shall have received all such
originals or certified or other copies of such documents as either may
reasonably request.
SECTION 10.5 GOVERNMENTAL APPROVALS. There shall have been received all
necessary governmental consents or authorizations required in connection with
the transactions contemplated hereby.
SECTION 10.6 DELIVERIES. The Buyer shall have delivered to the Sellers,
and Escrow Agent as applicable, the following items:
(a) the Estimated Purchase Price as required under Section 3.2;
(b) certified resolutions of the Board of Directors of the Buyer
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein;
(c) executed documents reasonably requested by the Sellers providing for
the assumption of obligations in accordance with Section 2.2, including without
limitation, the Bill of Sale, Assignment and Assumption Agreement; and
(d) all other previously undelivered items required to be delivered by the
Buyer at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith unless waived in writing by the Sellers.
SECTION 10.7 OPINION OF COUNSEL. The Sellers shall have received a
written opinion dated as of the Closing Date from Dickstein Shapiro Morin &
Oshinsky LLP, counsel to the Buyer, in the form attached hereto as EXHIBIT F.
SECTION 10.8 INSURANCE. The Buyer shall have obtained the insurance
coverage described in SCHEDULE 7.6 hereto, and said insurance coverage shall be
in full force and effect as of the Closing Date.
ARTICLE XI
POST-CLOSING MATTERS
SECTION 11.1 INDEMNIFICATION.
(a) The individual Sellers, individually and not jointly, and the Company
shall protect, defend, hold harmless and indemnify the Buyer, its officers,
directors, employees and agents, and their respective successors and assigns
from, against and in
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respect of any and all losses, liabilities, deficiencies, penalties, fines,
costs, damages and expenses (including without limitation, reasonable
professional fees and costs of investigation, litigation, settlement, and
judgment and interest awarded) (collectively, "Losses") that may be suffered or
incurred by any of them arising from or by reason of any of the following:
(i) Any breach of any representation, warranty, covenant or
agreement made by the Sellers in this Agreement or contained in any
certificate executed by the Sellers and delivered to the Buyer in
connection with this Agreement;
(ii) Any liability of the Company which is not an Assumed
Liability;
(iii) Any Boom Recall Costs in excess of $2,000,000;
(iv) Any liability and obligations relating to product liability
claims for the use of goods or products manufactured, sold, tested, handled
or distributed by the Company, Lull Corporation ("Lull Corp."), Lull
Engineering Co. ("Lull Engineering"), or any of their subsidiaries or
Affiliates which causes or caused, allegedly causes or caused or is deemed
to cause or have caused personal injury or property damage taking place
with respect to all injured persons and damaged property prior to the
Closing Date (including without limitation the existing litigation listed
on SCHEDULE 6.10), and, with respect to Lull Corp., Lull Engineering or any
of their subsidiaries or Affiliates, personal injury or property damage
taking place with respect to all injured persons and damaged property on or
subsequent to the Closing Date; provided, however, that, the Buyer shall
pay one-half of any insurance retention or deductible with respect to a
personal injury or property damage claim which was incurred prior to the
Company's acquisition of the Business but not reported until after the
Closing Date; and
(v) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.1 or
Section 11.2.
(b) The Buyer shall protect, defend, hold harmless and indemnify the
Sellers, their officers, directors, employees and agents, and their respective
successors and assigns from, against and in respect of any and all Losses that
may be suffered or incurred by any of them arising from or by reason of any of
the following:
(i) Any breach of any representation, warranty, covenant or
agreement made by the Buyer in this Agreement or contained in any
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certificate executed by the Buyer and delivered to the Sellers in
connection with this Agreement;
(ii) Any failure by the Buyer to perform, pay or discharge any of
the Assumed Liabilities;
(iii) Except as otherwise provided for herein, any and all
Losses incurred in connection with the Buyer's operation of the Business
(A) occurring after the Closing Date, and (B) caused by the Buyer or by any
act or omission of a third party or parties after the Closing Date; and
(iv) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.1.
(c) The Sellers and the Buyer shall not be responsible to each other for
any Losses arising under this Section 11.1 (except for (i) any Losses caused by
any breach of the representations and warranties set forth in Sections 6.1,
6.31, 6.34 and 7.5; (ii) any Losses arising under Section 11.1(a)(iii) and under
Section 11.1(a)(v) to the extent incurred in connection with the enforcement of
Section 11.1(a)(iii); (iii) any Losses arising under Section 11.1(a)(iv) or
under Section 11.1(a)(v) to the extent incurred in connection with Section
11.1(a)(iv); (iv) any amounts owed to the Buyer by the Company pursuant to
Section 3.3(c) in excess of the Purchase Price Escrow Fund and (v) any Losses
caused by any breach of the post-Closing covenants and agreements set forth in
Sections 11.8, 11.9, 11.10, 11.11, 11.12, 11.13, 11.14 and 11.15) unless and
until such Losses exceed $350,000, and then only to the extent of such excess.
The maximum aggregate amount which the Buyer shall be entitled to recover from
the Sellers under Article XI shall not exceed $3,500,000. The maximum aggregate
amount which the Sellers shall be entitled to recover from the Buyer under
Article XI shall not exceed $3,500,000.
(d) In the event the Buyer seeks indemnification for any Losses arising
under Section 11.1(a)(iv), the Buyer shall first seek to obtain recovery
pursuant to the applicable insurance coverage listed on SCHEDULE 7.6; provided
however this Section 11.1(d) shall in no way limit the ability of the Buyer to
seek recovery under Section 11.1(a)(iv) from the Sellers for amounts not covered
by such insurance, including any deductibles or coverage limits or limitations
thereunder.
(e) For purposes of this Section 11.1 and Section 11.2, any assertion of
fact and/or law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make operational
an indemnification obligation hereunder, shall, on the date that such assertion
is made, immediately invoke that party's obligation to protect, defend, hold
harmless and indemnify the other party to this Agreement pursuant to this
Section 11.1 and Section 11.2.
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SECTION 11.2 COMPLIANCE WITH ENVIRONMENTAL REGULATORY REQUIREMENTS AND
ENVIRONMENTAL INDEMNIFICATION.
(a) Except as set forth in Section 11.2(c) hereunder, the Sellers shall be
responsible for, and shall indemnify and defend the Buyer against and save it
harmless from, against, and in respect of, and covenants not to sue the Buyer,
its officers, directors, shareholders and agents, and their respective
successors and assigns for, any and all Losses incurred with regard to the
matters set forth in Section 6.27 or SCHEDULE 6.27 hereof or based upon the
presence of or any release of any Hazardous Material occurring prior to the
Closing Date whether caused by any act or omission of a third party or parties
or by virtue of any condition or use of the properties owned, leased, operated
or controlled by the Company or the previous owners of the business acquired by
the Company.
(b) Except as set forth in Section 11.2(c) hereunder, the indemnification
of this Section 11.2 shall include any and all Losses relating to or arising out
of any claim, order or requirement by any Person or regulatory agency arising
out of, related to or in connection with (i) any violation or alleged violation
attributable to circumstances or events arising or occurring prior to the
Closing Date, of any federal, state, local or foreign license, permit or other
government approval, authorization, order, decree, judgment, injunction, notice,
or request for information pertaining to any environmental matter; (ii) the
generation, transport, treatment, recycling, storage or disposal of Hazardous
Material, or arrangement therefor, prior to the Closing Date, at or from any
facility owned, leased, controlled or operated by the Company or the previous
owners of the business acquired by the Company; and (iii) the disposal,
discharge, migration, emission or release of any Hazardous Material in or on any
facility owned, leased, controlled or operated by the Company or the previous
owners of the business acquired by the Company.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Sellers shall not be responsible for, and shall not indemnify the Buyer against,
any and all Losses incurred in connection with Item 6 set forth on SCHEDULE 6.27
hereto.
(d) In the event that liabilities and costs result from circumstances or
events arising or occurring both before and after the Closing Date, the Sellers
shall be liable under this Section 11.2 only for those liabilities and costs
attributable to circumstances or events arising or occurring prior to the
Closing Date. If costs and liabilities are not clearly allocable to
circumstances or events arising or occurring either before or after the Closing
Date, such allocation shall be made in an equitable manner.
(e) The indemnification of this Section 11.2 shall also include any Losses
relating to or arising out of any claim of injury to employees of the Company
caused by the Company's use of asbestos in any manner provided that this
indemnification shall only be applicable to the extent such injury results from
asbestos which was present in any product or asset of the Company on or prior to
the Closing.
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SECTION 11.3 INDEMNIFICATION PROCEDURES.
All claims for indemnification under this Agreement shall be asserted and
resolved as follows:
(a) A party claiming indemnification under this Agreement (an "Indemnified
Party") shall promptly (i) notify the party from whom indemnification is sought
(the "Indemnifying Party") of any third-party claim or claims ("Third Party
Claim") asserted against the Indemnified Party which could give rise to a right
of indemnification under this Agreement and (ii) transmit to the Indemnifying
Party a written notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), an estimate of the amount of damages attributable to the
Third Party Claim, if reasonably possible, and the basis of the Indemnified
Party's request for indemnification under this Agreement.
(b) Within 30 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party (i) whether
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article XI with respect to such Third Party Claim and (ii) whether
the Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim. If the
Indemnifying Party does not dispute the Third Party Claim and does not dispute
the estimate of damages, and if the Indemnifying Party is the Sellers, the
Sellers shall join with the Buyer in signing a certificate to such damages and
in presenting the same to the Escrow Agent under the Escrow Agreement. In the
event either (or both) of the Indemnifying Party and the Indemnified Party elect
to defend against a Third Party Claim, the Indemnified Party shall give notice
of the same, and the estimate of the amount of damages attributable to the same,
to the Escrow Agent under the Escrow Agreement.
(c) If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party does not dispute its potential
liability to the Indemnified Party under this Article XI and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 11.3. The Indemnifying Party shall have full control of such
defense and proceedings including any compromise or settlement thereof; provided
that any non-monetary aspect of any settlement shall require the consent of the
Buyer, which consent shall not be unreasonably withheld or delayed. The
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party. If requested by the Indemnifying Party, the Indemnified Party shall, at
the sole
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cost and expense of the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim which the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 11.3 and, except as permitted above,
shall bear its own costs and expenses with respect to such participation.
(d) If the Indemnifying Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to this Section 11.3, or if the Indemnifying Party elects to
defend the Indemnified Party pursuant to this Section 11.3 but fails to
diligently and promptly prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim by all appropriate proceedings.
The Indemnified Party shall have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into, without the
Indemnifying Party's consent, which shall not be unreasonably withheld or
delayed, any compromise or settlement of such Third Party Claim. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 11.3,
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(e) In the event an Indemnified Party should have a claim against an
Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If
the Indemnifying Party does not dispute the Indemnity Notice, and if the
Indemnity Party is the Sellers, the Sellers shall join with the Buyer in signing
a certificate to such damages and in presenting the same to the Escrow Agent
under the Escrow Agreement. In the event that the Indemnifying Party disputes
such claim, the Indemnifying Party and the Indemnified Party shall within 30
days of the Indemnity Notice attempt to settle the same by mutual agreement. If
the dispute is not resolved within said thirty-day period, such dispute shall be
resolved by the arbitration procedure specified in Section 11.7 herein. In the
event the dispute is submitted to arbitration, the Indemnified Party shall give
notice of the same, and the amount of the disputed claim, to the Escrow Agent
under the Escrow Agreement.
(f) Payments of all amounts owing by the Indemnifying Party pursuant to
Sections 11.3(b), (c) and (d) shall be made (aa) if owed by Sellers, by the
Sellers and Buyer signing a certificate to such claims and presenting the same
to the Escrow Agent under the Escrow Agreement, or (bb) if owed by Buyer, by
Buyer making payment of the same to the Sellers, all within thirty (30) days
after the latest of (i) the settlement of the Third Party Claim, or (ii) the
expiration of the period for appeal of a final adjudication of such Third Party
Claim. Payments of all amounts owing by the Indemnifying Party pursuant to
Section 11.3(e) shall be made (aa) if owed by Sellers, by the Sellers and
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Buyer signing a certificate to such claims and presenting the same to the Escrow
Agent under the Escrow Agreement, or (bb) if owed by Buyer, by Buyer making
payment of the same to the Sellers, all within thirty (30) days after the later
of the date of settlement by mutual agreement, or the arbitration decision.
(g) The failure to provide notice as provided in this Section 11.3 shall
not excuse any party from its continuing obligations hereunder; however, any
claim shall be reduced by the damages resulting from such party's delay or
failure to provide notice as provided in this Section 11.3.
(h) In the event the Indemnified Party provides to the Escrow Agent a
Claims Notice or an Indemnity Notice which estimates the damages grossly in
excess of the damages actually settled, adjudicated or arbitrated, as the case
may be, the Indemnifying Party may assert its expenses so incurred in a claim
against the Indemnified Party under the arbitration procedure specified in
Section 11.7 herein.
SECTION 11.4 LIMITATIONS ON BUYER'S REMEDIES.
Notwithstanding any provision in this Agreement to the contrary, (i) the
Buyer's sole and exclusive remedy for any and all Losses under this Agreement
shall be to make a claim for the same against the Escrow Amount in accordance
with the procedures set forth in this Agreement and pursuant to the terms of the
Escrow Agreement; provided however, nothing herein shall prevent the Buyer from
seeking an injunction or other non-monetary or equitable remedy from the
Arbitrator; (ii) in no event shall the Sellers be liable to indemnify the Buyer
in an aggregate amount exceeding the Escrow Amount; and (iii) except as set
forth in Section 11.5, no claims for Losses will be recognized unless the event
giving rise to such claim occurred on or before February 15, 1998 and the Buyer
has so notified the Sellers and the Escrow Agent of the existence of such claim
on or before February 15, 1998.
SECTION 11.5 SPECIAL BOOM RECALL PROVISIONS.
(a) The Buyer may make claims for indemnification against the Escrow
Amount pursuant to the terms of this Agreement and the Escrow Agreement for
Losses arising under Section 11.1(a)(iii) and under Section 11.1(a)(v) to the
extent incurred in connection with the enforcement of Section 11.1(a)(iii) until
the Second Anniversary Date.
(b) Without limiting the right of the Buyer to make claims for Losses
arising under Section 11.1(a)(iii) and under Section 11.1(a)(v) to the extent
incurred in connection with the enforcement of Section 11.1(a)(iii) and which
are incurred prior to or on the Second Anniversary Date, the Buyer may on the
Second Anniversary Date make the following claims for indemnification:
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(i) if on the Second Anniversary Date any of the Original Boom
Recall Machines have not been repaired in accordance with the Boom Recall,
then a claim for one hundred fifty percent (150%) of the Boom Recall Costs
required for each such unrepaired Original Boom Recall Machine, based on
the average of the actual per machine Boom Recall Costs for the last ten
(10) Original Boom Recall Machines repaired in accordance with the Boom
Recall; and
(ii) if on the Second Anniversary Date any of the Original Boom
Recall Machines that have been repaired in accordance with the Boom Recall
require additional repairs in connection with the Boom Recall, or if the
Buyer reasonably anticipates such repairs will be necessary, then a claim
for (A) if such additional repairs have previously been performed on any of
the Original Boom Recall Machines, then a claim for one hundred fifty
percent (150%) of the costs for the additional repairs to each such
Original Boom Recall Machine, based on the average of the actual costs per
machine for all Original Boom Recall Machines requiring such additional
repair and (B) if such additional repair had not been previously performed
on any of the Original Boom Recall Machines, then one hundred fifty percent
(150%) of the costs reasonably anticipated by the Buyer for such additional
repairs.
(c) Upon the reasonable determination by the Buyer that it no longer
requires the use of the Boom Recall Vehicles described in EXHIBIT G for the Boom
Recall (which determination shall be made promptly after the completion of the
Boom Recall), the Buyer shall make a good faith effort to sell the Boom Recall
Vehicles for a price at or near their then fair market value. Any such sale
shall be conducted with the cooperation and assistance, if promptly given
following notice, of Badger R. Bazen or his designee. The proceeds from such
sale shall be distributed as follows:
(i) if proceeds from the sale are received by the Buyer prior to
the Second Anniversary Date, the funds shall be added to the Claims Amount
Escrow Fund;
(ii) if proceeds from the sale are received by the Buyer on or
subsequent to the Second Anniversary Date and there are no outstanding
claims by the Buyer for Losses arising under Section 11.1(a)(iii) or under
Section 11.1(a)(v) incurred in connection with the enforcement of Section
11.1(a)(iii) on the date such proceeds are received, the Buyer shall
disburse the funds to the Sellers' Agents; and
(iii) if proceeds from the sale are received by the Buyer on or
subsequent to the Second Anniversary Date, and if there are outstanding
claims by the Buyer for Losses arising under Section 11.1(a)(iii) or under
Section 11.1(a)(v) incurred in connection with the enforcement of Section
11.1(a)(iii), then:
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(A) if at the time the claim(s) was made, the amount of such
claim(s) was limited by a shortfall in the funds available for such
claim(s) in the Claims Amount Escrow Fund (whether such shortfall was
caused by a previous distribution of funds or any previous claims
made), then the Buyer shall deposit that portion of the proceeds from
the sale required to fund such shortfall into the Claims Amount Escrow
Fund and shall pay the remainder of such proceeds, if any, to the
Sellers' Agents; or
(B) if at the time the claim(s) was made, the amount of such
claim(s) was not limited by funds available for such claim(s) in the
Claims Amount Escrow Fund, then the proceeds from the sale shall be
paid to the Sellers' Agents.
SECTION 11.6 SELLERS' AGENTS.
(a) The Sellers hereby designate Badger R. Bazen ("Bazen") and Wilbur F.
Sharpe, Jr. ("Sharpe") as the Sellers' agents ("Sellers' Agents") for the
purposes of (i) giving and receiving Claim Notices and Indemnity Notices, (ii)
executing and delivering certificates and notices to the Escrow Agent under the
Escrow Agreement, (iii) representing the Sellers in the defense of any Third
Party Claim, and (iv) negotiating, settling and arbitrating Third Party Claims
and claims for other Losses under this Agreement. All notices to and
communications with the Sellers by the Buyer after the Closing Date shall be
made to Sellers' Agents, and all notices and communications by Sellers' Agents
to Buyer after the Closing Date on behalf of the Sellers shall be deemed to be
on behalf of all of the Sellers. Buyer shall be entitled to rely upon a
certificate, notice or communication executed by Sellers' Agents as being made
on behalf of all of the Sellers, and such certificate, notice or communication
will be binding upon all of the Sellers, as though executed by each and all of
the same.
(b) In the event either Bazen or Sharpe dies, or becomes disabled from
serving as one of Sellers' Agents hereunder, the survivor or the non-disabled
person of the aforesaid two individuals shall serve as the sole Sellers' Agent
hereunder. If both Bazen and Sharpe die or are disabled from serving as
Sellers' Agents hereunder, two successor Sellers' Agents will be designated by a
written notice to Buyer executed by at least six of the Sellers. Buyer shall be
entitled to rely upon such notice, and the same shall be binding on all of the
Sellers as though executed by each and all of the same.
(c) Each of the Sellers hereby individually waives any and all claims such
Sellers may now or at any time in the future have as a result of Buyer's proper
delivery hereunder of notices, certificates or communications to Sellers under
this Agreement, and/or arising out of Buyer's relying upon any notices,
certificates or communications properly made to Buyer by Sellers' Agents under
this Agreement.
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SECTION 11.7 DISPUTE RESOLUTION BY ARBITRATION.
(a) In the event any dispute arises out of or relates to this Agreement,
or arises out of or relates to the Escrow Agreement, and is unable to be
resolved by mutual agreement of the parties hereto, including specifically, but
without limitation thereto, in the event the Sellers and the Buyer are unable to
resolve matters outstanding with regard to the Working Capital Statement
adjustments under Section 3.3, or claims for indemnification under Article XI
herein, all matters so disputed shall be submitted to one of the six largest
public accounting firms mutually acceptable to the Sellers and the Buyer, or if
the Sellers and Buyer cannot agree upon such firm within ten business days of
the date the matter or matters are to be submitted to arbitration, then all
matters so disputed shall be submitted to one of the six largest public
accounting firms selected by the presiding officer of the American Arbitration
Association in Minneapolis, Minnesota (the accounting firm so selected being
referred to herein as the "Arbitrator") for resolution in accordance with the
terms, where applicable, of this Agreement, the Escrow Agreement, and the
Principles and Procedures, and otherwise in accordance with the Rules of the
American Arbitration Association, such arbitration to take place in Minneapolis,
Minnesota.
(b) The Arbitrator shall be requested by the Sellers and the Buyer to make
its determination as soon as possible after the matter or matters in dispute are
submitted to the same, and such determination shall be final and binding upon
all of the parties hereto. All fees and disbursements of the Arbitrator shall
be paid in accordance with the decision of the Arbitrator. Any payment required
to be made as a consequence of the decision of the Arbitrator shall be made by
the party hereto then obligated to pay the same, not later than thirty days
after the receipt of such decision.
(c) The Arbitrator shall have the authority to award any remedy or relief
that a court of the State of Minnesota could order or grant, including, without
limitation, equitable remedies, rescission, or specific performance of any
obligation created under this Agreement, the issuance of an injunction, or the
imposition of sanctions for abuse or frustration of the arbitration process,
provided, however, that punitive or exemplary damages shall not be awarded by
the Arbitrator or by any court.
(d) Nothing in this Section 11.7 shall prevent the Buyer from joining or
asserting a cross-claim or third-party claim against the Sellers in connection
with a suit brought by a third party against the Buyer.
SECTION 11.8 CONFIDENTIALITY.
(a) Each party hereto and its respective accountants, attorneys, employees
and other agents, will keep confidential all information, oral and written,
obtained from any other party hereto or its affiliates and refrain from using in
any manner all information set forth above not otherwise publicly available
notwithstanding the termination of this Agreement.
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(b) The Sellers agree that, at all times from and after the Closing Date,
they shall keep secret and retain in strictest confidence, and shall not use for
its benefit or for the benefit of others, confidential information with respect
to the Business, including, but not limited to, know-how, trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans other than any of the foregoing which are in the public
domain (except through conduct of the Sellers which violate this Section 11.8)
prior to any disclosure by the Sellers.
SECTION 11.9 NONCOMPETITION. The Company agrees that for the period
commencing on the Closing Date and terminating five (5) years from the Closing
Date, it will not directly or indirectly (A) engage in the business of
manufacturing, marketing, selling or distributing products of the kind
manufactured, sold or distributed by the Business on the date of this Agreement
anywhere in the world; (B) solicit the employment of or hire any person while
such person is in the employ of the Buyer; or (C) induce or attempt to induce
any individual, business, corporation, firm, partnership or other business
entity that is a customer of supplier to the Buyer or any distributor or seller
of products of the Buyer, or that otherwise is a contracting party with the
Buyer, to terminate or otherwise adversely change or to cancel any written or
oral agreement with the Buyer; PROVIDED, that if the Company shall breach any
covenant of this Section 11.9, the periods specified in this Section 11.9 shall
be extended by the number of days during which the Company is in breach of such
covenant. The Company acknowledges that the periods of restriction, the
geographical areas of restriction and the restraints imposed by the provisions
of this Section 11.9 and Section 11.8 are fair and reasonably required for the
protection of the Buyer. In the event that any of the provisions of this
Section 11.9 relating to the geographic areas of restriction or the periods of
restriction shall be deemed to exceed the maximum area or period of time which a
court of competent jurisdiction would deem enforceable, the geographic areas and
times shall, for the purposes of this Agreement, be deemed to be the maximum
areas or time periods which a court of competent jurisdiction would deem valid
and enforceable in any state in which such court of competent jurisdiction shall
be convened. The Company agrees that any violation of the covenants contained
in this Section 11.9 and Section 11.8 is likely to cause irreparable damage to
the Buyer and may, as a matter of course, be restrained by process issued out of
a court of competent jurisdiction, in addition to any other remedies provided by
law.
SECTION 11.10 FURTHER ASSURANCES. Each party hereto shall cooperate with
the other, and execute and deliver, or cause to be executed and delivered, all
such other instruments, including instruments of conveyance, assignment and
transfer, and take all such other actions as may be reasonably requested by the
other party hereto from time to time, consistent with the terms of this
Agreement, to effectuate the purposes and provisions of this Agreement.
SECTION 11.11 ACCOUNTS RECEIVABLE. The Sellers shall furnish to the Buyer
at the Closing a detailed listing of the accounts receivable of the Company
which are included in the Purchased Assets (the "Accounts Receivable"), which
listing shall have
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been updated within five (5) business days of the close of business on the
Closing Date. The Sellers shall provide to the Buyer any and all information
pertinent to collection of the Accounts Receivable remaining outstanding on the
Closing Date, promptly as such information shall from time to time come to the
knowledge of the Sellers. After the Closing Date, the Buyer shall have the
right and authority to collect, for the account of the Buyer, all Accounts
Receivable and to endorse with the name of the Company any checks, drafts or
other items of payment received on account of the Accounts Receivable. The
Company shall promptly transfer and deliver to the Buyer any cash, checks,
drafts, other items of payment or other property that it may receive in respect
of the Accounts Receivable after the Closing Date. The Sellers acknowledge and
agree that any such cash, checks, drafts, other items of payment or other
property, while in the possession of the Company shall be held in trust for the
Buyer until transferred and delivered to the Buyer.
SECTION 11.12 PRO-RATING OF EXPENSES. After the Closing Date, any bills
or requests for payment received by the Company or the Buyer in connection with
the Business which reflect in whole or part liabilities retained or assumed,
respectively, by the Company on the one hand, or the Buyer, on the other
(excluding any federal, state, or local income taxes), and which are not
reflected in the Working Capital Statement, shall be allocated between the
Company and the Buyer on the basis of the amount of time covered by such bill or
request that the Business was owned by the Company or by the Buyer, or as
otherwise appropriate under the terms of this Agreement; provided, however, that
neither party shall pay such bill or request for payment without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed. If one party fails to obtain such written consent, the
other party shall be released from any liability with respect to such bill or
request for payment.
SECTION 11.13 USE OF NAME. The Company agrees that, as of the Closing
Date, it will cease to use the name "Lull Industries, Inc." and any derivative
or combination thereof in connection with its business activities, it being
understood however that the Company can continue to use such name in connection
with the preparation and filing of its financial, tax and similar reports and/or
returns which relate to the Company as of the Closing Date. Immediately after
the Closing, the Company shall, at its expense, take all action required to
change the name of the Company in all jurisdictions in which it is registered or
qualified to do business.
SECTION 11.14 MAINTENANCE OF CORPORATE EXISTENCE. Until the earlier of
(i) December 31, 1996, or (ii) such time as the adjustments to the Purchase
Price, if any, are finally determined and paid pursuant to Section 3.3, the
Sellers shall (a) maintain the corporate existence and good standing of the
Company in the State of Minnesota and (b) cause the Company to retain for its
own account at least $500,000 of the proceeds received hereunder.
SECTION 11.15 SELLERS' ACCESS TO TAX INFORMATION. Buyer agrees to allow
Sellers and their authorized representatives reasonable access during normal
business hours to the financial books and records relating to the Company's
business for any
49
<PAGE>
matter relating to any tax or tax return of the Company or of a Seller (insofar
as the Seller's tax or tax return is based on the Company's income or other tax
items), for the period ending on or prior to the Closing Date, and Buyer agrees
that it shall not dispose of such financial books and records for a period of at
least seven (7) years from the Closing Date.
ARTICLE XII
TERMINATION
SECTION 12.1 METHODS OF TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual consent of the Buyer and the Sellers;
(b) by the Buyer at any time after August 31, 1996 if any of the
conditions provided for in Article IX of this Agreement shall not have been met
prior to such date; or
(c) by the Sellers at any time after August 31, 1996 if any of the
conditions provided for in Article X of this Agreement shall not have been met
prior to such date.
SECTION 12.2 PROCEDURE UPON TERMINATION. In the event of termination by
the Buyer, the Sellers, or both, pursuant to this Article XII, written notice
thereof shall promptly be given to the other party and the obligations of the
Buyer and the Sellers under this Agreement shall, except as set forth below,
terminate without further action. Upon any such termination:
(a) each party will redeliver all documents, work papers and other
materials of the other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
(b) all information received by either party shall be held in accordance
with Section 11.8; and
(c) neither party shall have any liability or further obligation to the
other party, except for such legal and equitable rights and remedies as such
party may have under this Agreement or otherwise, by reason of any breach or
violation of this Agreement by the other party.
50
<PAGE>
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Buyer and the Sellers contained in this
Agreement and in any certificate executed and delivered by any of them in
connection with this Agreement, shall survive the Closing Date and shall
terminate and expire eighteen (18) months thereafter.
SECTION 13.2 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and may be delivered personally
(including by courier) or by first class registered or certified mail, postage
prepaid, addressed to the following addresses or to other such addresses as may
be furnished in writing by one party to the others:
(a) if to the Sellers:
Lull Industries, Inc.
3045 Highway 13
St. Paul, Minnesota 55121
Attention: Badger R. Bazen
with a copy to:
Leonard, Street and Deinard
150 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
Attention: Stephen R. Pflaum, Esquire
(b) if to the Buyer:
c/o Uniquip Corporation
369 West Western Avenue
Port Washington, WI 53074
Attention: Chief Executive Officer
with a copy to:
Harbour Group Industries, Inc.
7701 Forsyth Boulevard, Suite 600
St. Louis, Missouri 63105
Attention: Chief Financial Officer
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<PAGE>
and a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Attention: Ira H. Polon, Esquire
Service of any such notice or other communication so made by mail shall be
deemed complete on the day of actual delivery thereof as shown by the
addressee's registry or certification receipt.
SECTION 13.3 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Minnesota, without regard
to such jurisdiction's conflicts of laws principles. The parties agree that
venue for any suit, action, proceeding or litigation arising out of or in
relation to this Agreement shall be in any federal or state court in the State
of Minnesota having subject matter jurisdiction.
SECTION 13.4 MODIFICATION; WAIVER. This Agreement shall not be altered
or otherwise amended except pursuant to an instrument in writing signed by the
Buyer and the Sellers. Either party may waive any misrepresentation by the
other party, or any breach of warranty by, or failure to perform any covenant,
obligation or agreement of, the other party, PROVIDED that mere inaction or
failure to exercise any right, remedy or option under this Agreement, or
delaying in exercising the same, will not operate as nor shall be construed as a
waiver, and no waiver will be effective unless set forth in writing and only to
the extent specifically stated therein.
SECTION 13.5 ENTIRE AGREEMENT. This Agreement, the schedules and
exhibits hereto and any other agreements or certificates delivered pursuant
hereto constitute the entire agreement of the parties hereto with respect to the
matters contemplated hereby and supersede all previous written or oral
negotiations, commitments, representations and agreements.
SECTION 13.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement may not
be assigned by the Sellers without the prior written consent of the Buyer. The
Buyer may assign this Agreement to an affiliated entity of the Buyer or any of
its lenders without the prior written consent of any other party. Subject to
Section 13.1, all covenants, representations, warranties and agreements of the
parties contained herein shall be binding upon and inure to the benefit of their
respective successors and permitted assigns. No assignment will constitute a
release of the assigning party without the other party's written consent.
SECTION 13.7 PUBLIC ANNOUNCEMENTS. No public announcement of the
transactions contemplated hereby prior to the Closing or of the terms hereof at
any time shall be made by any party without the prior written consent of the
other parties, such consent not to be unreasonably withheld or delayed, except
to the extent as may be required by law in the opinion of counsel to the Buyer
or counsel to the Sellers.
52
<PAGE>
SECTION 13.8 SEVERABILITY. The provisions of this Agreement are
severable, and in the event that any one or more provisions are deemed illegal
or unenforceable, the remaining provisions shall remain in full force and
effect.
SECTION 13.9 NO THIRD PARTY BENEFICIARY. This Agreement is intended and
agreed to be solely for the benefit of the parties hereto, and no third party
shall accrue any benefit, claim or right of any kind whatsoever pursuant to,
under, by or through this Agreement.
SECTION 13.10 EXECUTION IN COUNTERPART. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
53
<PAGE>
WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first written above.
LULL LIFT CORPORATION
By:/s/ P. Enoch Stiff
-------------------------------------
Name: P. Enoch Stiff
Title: President and Chief
Executive Officer
LULL INDUSTRIES, INC.
By:/s/ Badger R. Bazen
-------------------------------------
Name:
Title: President
STOCKHOLDERS:
/s/ Badger R. Bazen
----------------------------------------
Badger R. Bazen
/s/ Charles H. Powers
----------------------------------------
Charles H. Powers
/s/ Wilbur F. Sharpe, Jr.
----------------------------------------
Wilbur F. Sharpe, Jr.
/s/ Richard B. Baxter
----------------------------------------
Richard B. Baxter
<PAGE>
/s/ James R. Wisnoski
----------------------------------------
James R. Wisnoski
/s/ James E. Hoogervorst
----------------------------------------
James E. Hoogervorst
/s/ David P. Tonia
----------------------------------------
David P. Tonia
/s/ Glenn B. Bazen
----------------------------------------
Glenn B. Bazen
/s/ Jeffrey R. Bazen
----------------------------------------
Jeffrey R. Bazen
<PAGE>
[TRAK LOGO]
LABOR AGREEMENT
Entered into by:
TRAK International, Inc.
369 W. Western Avenue
Port Washington, WI 53074
and
Local 1430
District No. 10
International Association of Machinist and Aerospace Workers
November 1, 1994
to
October 31, 1998
[HANDSHAKE LOGO]
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
RECOGNITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
MANAGEMENT CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
GRIEVANCE PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . . . 2/3
SENIORITY
Temporary Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . 4
Job Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Loss of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Temporary Transfers . . . . . . . . . . . . . . . . . . . . . . . . 7
VACATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
HOURS & OVERTIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Double Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Shift Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PAY PROVISIONS
Jury Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Funeral/Bereavement . . . . . . . . . . . . . . . . . . . . . . . . 14
SAFETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
BENEFITS
Group Insurance (Health, Life, S&A, etc.) . . . . . . . . . . . . . 16
401(k) Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . 17
NO STRIKE -- NO LOCKOUT . . . . . . . . . . . . . . . . . . . . . . . . . 18
PLANT CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
AGREEMENT
This Agreement made and entered into this lst day of November, 1994 by and
between TRAK International, Inc. plant located at 369 West Western Avenue,
Port Washington, Wisconsin, hereinafter referred to as the "Company" and
District 10 of the International Association of Machinists and Aerospace
Workers, Milwaukee, Wisconsin, hereinafter referred to as the "Union" is set
forth to establish prin ciples and harmonious labor relations for the
exclusive use of the contracting parties.
ARTICLE I
RECOGNITION
1.00 The Company hereby recognizes District No. 10 of the
International Association of Machinists and Aerospace Workers as
the exclusive bargaining agent for all production and maintenance
employees of the Company's plants in the Port Washington, Wisconsin
area and in the Milwaukee Wisconsin area, but excluding office and
clerical employees, guards, professional employees, and supervisors
as defined in the National Labor Relations Act as amended.
Supervisors must have full authority to hire, fire and recommend
wage increases subject to the regular Company policies, and shall
not work on the jobs normally performed by production employees,
except to the extent necessary in instructing employees during job
runs, provided, however, that any such overall work performed shall
not exceed 20% of the normal work week. If development of prototype
parts or machines is performed on site, bargaining unit employees
will be used for the majority of the activities. Salaried
personnel will participate as needed up to 20% of the work to
assist training bargaining unit employees, performing sample
trials, and evaluations including test.
1.01 As a condition of employment, all employees covered by
this Agreement shall, no later than the 61st work day after the
date of the execution of this Agreement or in the case of new
employees, no later than the 61st work day after the date of
hiring, become members of the Union and remain members of the Union
in good standing during the term of this Agreement.
1.02 Checkoff. For the duration of this Agreement, the
Company agrees to deduct the regular monthly Union dues and/or
initiation fee from the pay of each employee who executes and
delivers to the Company a written authorization for such
deductions, which authorization shall be in a form acceptable to
the Company and such authorization shall be irrevocable for the
period of one (1) year, or until the termination of the Agreement,
whichever occurs sooner; such authorization shall be automatically
renewed and shall be irrevocable for successive periods of one (1)
year each or for the period of each succeeding applicable
collective agreement between the Company and the Union, whichever
<PAGE>
occurs sooner, unless written notice is given by the employee to
the Company and the Union at least thirty (30) days prior to the
expiration of each period of one (1) year, or of each applicable
collective bargaining agreement between the Company and the Union,
whichever occurs sooner. All deductions shall be made from the
second pay check to be delivered to the employee each month,
beginning with the month following receipt by the Company of his
authorization. All amounts deducted each month shall be paid by the
Company to the Union official certified by the Union as authorized
to receive them on the Union's behalf.
1.03 The Union agrees to indemnify and hold the Company
harmless against any and all claims, suits, orders or judgments
brought or issued against the Company as a result of any action
taken or not taken by the Company under the provisions of Section
1.02.
1.04 The parties mutually agree that there will be no
discrimination to any employee or applicant for employment based on
race, creed, color, religion, sex, age, national origin,
disability, disabled veteran and Vietnam era veterans, or other
area of prohibitive discrimination. Throughout this agreement, a
masculine pronoun shall be deemed to include the feminine. All
employment decisions shall be based on the principles of equal
opportunity and affirmative action. All acts of discrimination
and/or harassment (including sexual harassment) shall be subject to
disciplinary action up to and including discharge.
ARTICLE II
MANAGEMENT CLAUSE
2.00 Except as otherwise expressly limited by this Agreement,
the management of the Company's plant and business and the
direction of the working force, including the rights to plan,
direct, and control operations in the use of all equipment and
other property of the Company are vested exclusively in the Company
and include, but are not limited to: hiring, suspending, or
discharging of employees for proper cause; transferring or
relieving employees from duty for lack of work or other legitimate
reasons, right to study or introduce improved production methods,
facilities, and the right to establish reasonable rules. Such
rights shall be exercised in accordance with the terms of this
Agreement, subject to the grievance procedure. The Company shall
have the sole right to make such technical and other changes in
operations as it deems necessary and as a result of
the introduction of new work or the installation of new machinery or
processing or for any other reason. All functions of management not
herein relinquished or limited shall remain vested in the Company.
2
<PAGE>
ARTICLE III
GRIEVANCE PROCEDURE
3.00 Should differences arise between the Company and its
employees either individually or collectively as to the meaning and
application of the provisions of this Agreement, or should
differences arise about matters within the framework of this
Agreement, an earnest effort shall be made to settle such
differences at the earliest possible time by use of the following
procedures.
3.01 Step #1. An aggrieved employee or employees shall present
his or their grievances to his or their department foreman
accompanied if the employee or employees so desire by a committee
person within two (2) working days of union knowledge of the event
causing the grievance. The supervisor shall respond with an answer
within two (2) working days during the regular work week.
3.02 Step #2. If not settled at Step #1, the grievance shall
be presented in writing and signed by the aggrieved employee(s) to
a member of the Committee, who will in turn present two copies of
the grievance to the Director of Manufacturing, Human Resources
Manager or a duly appointed company representative within three (3)
working days following Step #1 .
Grievances will be dated and should refer to a specific article and
section number and the corrective action desired.
Management will have three (3) working days to write an answer to
the grievance and return it to the Union Committee.
The final disposition will be written in the place provided on the
front of the grievance form.
3.03 Step #3. If the grievance is not settled in the second
step, the grievance shall then be taken up by the Shop Committee
and a representative of the Union and a designated representative
or representatives of the Company, within thirty (30) calendar days
of the second step response.
3.04 Step #4. In the event the parties cannot agree in the
third step, the dispute may then be referred to arbitration. This
must be done within twenty (20) working days from the completion of
Step #3 or the grievance will be deemed resolved.
3
<PAGE>
The arbitration procedure shall be as follows:
(a) The party raising the issue shall notify the
other party by certified mail, return receipt requested,
informing them that they are carrying the grievance to
arbitration. The notification shall include the identity of
the grievant(s), the identification of the issue(s), the
remedy desired, and the claimed violation(s), if any, of the
Labor Agreement.
(b) The party desiring arbitration shall request the Federal
Mediation and Conciliation Service to submit to the parties a
panel. Within ten (10) working days after receipt of such
panel the parties shall meet for the purpose of selecting an
arbitrator from such panel. Each of the parties shall
alternately strike one name from the panel until the name of
only one person remains and such person shall be the
arbitrator. The determination of the party to strike the
first name shall be made by the flip of a coin. The foregoing
procedure for the selection of an arbitrator may be waived if
the parties mutually agree upon an arbitrator.
(c) The arbitrator's decision shall be rendered in
writing and shall be final and binding upon the Company and
the Union.
(d) The arbitrator shall not have the power to add
to, modify, or change any of the provisions of the Agreement.
(e) Each party will bear its cost of the
arbitration. The expenses and fee of the arbitrator will be
shared equally by the Union and the Company.
All time limits set forth in the foregoing steps may be
extended by mutual agreement of the parties.
3.05 Any employee facing suspension or discharge will be
granted Union Representation with management prior to the
suspension or discharge being effected. Should a grievance result
from a suspension or discharge, it will be introduced at and as
provided in Step #3 of the Grievance Procedure.
3.06 Grievances involving disciplinary action against employees
that result in loss of work or disqualification for job opportunity
resulting in loss of pay or benefits shall not be initiated more
than six (6) working days from the date the action first became the
Union's knowledge.
3.07 General wage negotiations, agreement negotiations and
including amendments to the Agreement are excluded from the
grievance procedure above set forth and, therefore, are not
arbitrable. Arbitration is not intended and shall not be
4
<PAGE>
construed in any way so as to qualify or change any of the terms
or provisions of this Agreement.
ARTICLE IV
SENIORITY
4.00 An employee's seniority is based upon the length of
continuous employment both with the Company and the predecessor
company, shall begin from the date of hiring after completion of
sixty (60) working days, which shall constitute the probationary
period. Seniority includes the accumulated time an employee is on
the payroll of the Company whether working or laid off, for a
period of absence due the injury or illness and for period of
approved leaves of absence, all subject to the other provisions of
the seniority clause. Seniority for employees with the identical
dates of hire will be determined through the use of the last six
digits of their social security number. Comparison of those
numbers will produce a lowest sequential number and that employee
will be senior. Seniority will apply on a plant-wide basis for the
unit covered by this Agreement and will govern the process of
layoff and recall only provided the senior employee possesses the
necessary qualifications as experience and ability to do the
available job in an efficient manner. Employees, if transferred
from this bargaining unit to jobs outside the bargaining unit,
shall have his or her accumulated seniority frozen as of the date
of transfer for one year, and may return to the bargaining unit one
time to any available job. For the purpose of promotions,
transfers, and job posting, seniority will apply on a plant-wide
basis for the unit covered by this Agreement provided the senior
employee possesses the necessary qualifications with due regard to:
(a) Experience and ability to do the available job
in an efficient manner. The company will provide a minimal
training period provided the employee has the work history
and/or education that will enable the employee to learn the
new skill in a minimum amount of time.
4.01 Layoffs. In the reduction of the working force, the
following procedure will be followed:
(a) The Company and Union will discuss pending layoff/recalls
before notification.
(b) Temporary Layoffs. Temporary layoffs of five
(5) days (Monday thru Friday inclusive) are allowed within
department and classification without plant wide seniority or
notice restrictions provided:
5
<PAGE>
(1) Employees affected are notified and given the option
to volunteer for temporary layoff and/or:
(2) That in the event the volunteer option above
does not satisfy the reduction requirement, seniority shall
be honored but only within the departments and
classifications affected after all possible temporary
transfers are filled.
(3) This provision does not exceed three (3)
occurrences per year per department and classification.
(4) Temporary layoff will not be applied in any way to affect
the employees benefit and holidays otherwise set forth in
this Agreement.
(c) Indefinite Layoff
(1) Before laying off any employee, the Committee and
affected employees will be given two (2) working days
notice of a forthcoming layoff.
(2) Senior employees will be transferred or moved from
one job classification to another consistent with the
employee's ability, skill and qualifications provided:
(a) The employee has successfully performed
the job in the past, and the Company has
determined the employee can do the job after a
maximum of one (1) day of training and evaluation, or
(b) The job is a lower labor grade within the
employee's classification, or
(c) The job is in labor grade 8 or 9.
(d) The applicable job rate will apply
with first Monday of job change, due to force
reduction.
(e) An employee may refuse a transfer to a
job two or more labor grades lower than his home
base labor grade and upon layoff shall retain his
seniority, but must report as provided in 4.05 (c)
below upon recall to a job within one (1) labor
grade of his home base grade.
6
<PAGE>
4.02 Recall. In the event of an increase in the work force,
the Company shall follow the procedures listed in Section 4.01 in
reverse. Thereafter new employees may be hired.
4.03 Job Posting. All job vacancies, including new jobs, will
be posted for two (2) working days. Bids for these jobs will be on
a plant-wide basis. Job posting bid sheets shall indicate the
maximum number of job openings. Any jobs not awarded or filled by
new hire thirty (30) days from the date of posting shall be
reposted. The following procedure will be observed:
(a) Employees may make an application stating why they
want to change and state their qualifications as to experience and
ability. The Company agrees to give such applicant careful
consideration and to make such changes provided the employee
possesses the necessary qualifications as to skill and ability to
do the job in an efficient manner.
(b) When qualifications, skill and ability are relatively
equal, seniority will prevail subject to provisions of the
seniority article.
(c) In the event the employee does not qualify during the
trial period of ten (10) working days, he shall be returned to the
former job he bid from provided he possesses more seniority than
an employee in that former classification. If not, the employee
may exercise his seniority within the plant on existing vacancies
subject to the provisions of the qualifications. The employee
shall not be allowed to bid on any other job for six (6) months
following disqualification of himself or three (3) months if the
Company disqualifies the employee.
(d) Two (2) weeks after job bidding, the selected
employee and union will be advised as to his/her selection for
the job. Every effort will be made to move the successful
bidder to the new position within sixty (60) days. This does
not guarantee a job or job rate until such job is available.
(e) When employees bid down, said employees cannot
bid for six (6) months, unless movement is within the same job
classification.
(f) Employees shall be limited to one successful job
bid in any six (6) month period, unless movement is within the
same job classification.
4.04 The above sections shall be administered by the following rules:
(a) In downgrading, the affected employee will retain
his relative position in the new rate schedule.
7
<PAGE>
(b) In upgrading or lateral movement, the affected
employee's base hourly wage will be reduced by twenty-five
($.25) for a period of thirty (30) days, unless the movement is
within the same job classification. During this period, the
employee will improve his skill and knowledge in his new
classification. After thirty (30) days, the employee will move
to the next level in the wage matrix for that labor grade.
4.05 Seniority shall cease upon:
(a) Justifiable discharge.
(b) Voluntary quitting.
(c) Failure to comply with recall policy.
(1) It is the obligation of every employee,
including those on layoff, to keep the Company informed in
writing of their correct home address and telephone number.
The Company's obligation in connection with recall shall end
with a notice of recall sent by the Company by certified mail
to the employees current address as shown on the records of
the Company.
(2) Employees on layoff must report within three
(3) working days, to their regular job of any job in the next
lower labor grade compared to their home base labor grade,
after receiving written notice by certified mail, receipt
requested. This does not apply to an employee, who by reason
of illness or other good cause, is not able to report and so
advises the Company within the three (3) day period.
(3) Employees on layoff who are offered
employment and not working elsewhere, on jobs other than
regular or within one (1) labor grade of his home base grade
shall be given three (3) work days to accept such job. If
the employee is not working elsewhere and such job offer
is not accepted, the employee will be denied Unemployment
Compensation benefits by TRAK International, Inc.
(4) In contrast to number 3 above, if the
employee is working elsewhere, and such job offer (other than
regular or within one (1) labor grade of his home base) is
refused, the employee will retain his seniority and
Unemployment Compensation benefit rights.
(d) Absence from work for three (3) consecutive days
without notifying the Company.
8
<PAGE>
(e) For failure to return to work after a Leave of
Absence has expired unless proper notification to the Company
has been made and an extension granted subject to Section 11.00.
4.06 Employees shall retain seniority for recall from layoff
based upon their seniority at time of layoffs as follows:
(a) 170 hours to one year seniority: One year seniority for recall.
(b) One year to five years seniority: Equal to seniority time for
recall.
(c) Five years or more seniority: One-half (1/2) of seniority
time -- minimum five years for recall.
4.07 Shop Committeemen shall head the seniority list. Their
employment in their respective classification, department, and
plant shall remain in effect so long as their classification,
department, and the plant is in operation. These employees shall
be compensated at their earned hourly rate for all time consumed
(up to a maximum of their scheduled shift hours) in Union activity
with the Company or its representatives during the regular work
schedule at the plant.
Should the Committeeman be required to leave his department, their
supervisor will be notified accordingly, as to where he is going,
who he is going to see, and why. Upon arrival the employee(s)
involved will also receive an appropriate card on which shall be
noted the time started Union activity. When the Committeeman and
employee are finished, their time of return to work shall be noted
on the card. Such time charged for Union activity shall continue
until the card is returned to the supervisor.
4.08 Employees returning from military service shall be
reinstated under Government rules and regulations.
4.09 When necessary to either downgrade or remove an employee
from the job due to some physical impairment, both parties to this
Agreement shall decide this issue as favorable as is possible for
the individual through the terms of the Labor Agreement.
4.10 Temporary transfers shall not exceed three (3) terms of
thirty (30) days each or one (1) term of ninety (90) consecutive
days. If the job then appears to be permanent, it shall be posted
in accordance with Section 4.03 of this Agreement. The term,
temporary transfer, does not apply where employees are absent, on
vacation, or out of work in the employees' classification.
Temporary transfer pay will be handled as follows: When an employee
is assigned work in a higher paying classification, the employee
will immediately be paid the higher rate of
9
<PAGE>
pay. However, should an employee be assigned to a lower rated
classification, the employee would retain his present rate of pay.
ARTICLE V
VACATIONS
5.00 Subject to the following requirements, each of the
Company's employees to whom this Agreement is applicable shall be
granted a vacation with pay, including night shift premium.
Earned Vacation Schedule:
<TABLE>
<CAPTION>
Minimum Percent Minimum
Length of Employee's Number of Vacation Pay Vacation
Seniority to Vacation Days of All Hours
Anniversary Date Earned Earnings Earned
- ---------------------- --------------- ------------ ---------
<S> <C> <C> <C>
0 but less than 1 year 5 days 2.10% 0.00
1 but less than 2 years 5 days 2.10% 40.00
2 but less than 3 years 6 days 2.52% 48.00
3 but less than 4 years 7 days 2.94% 56.00
4 but less than 7 years 10 days 4.20% 80.00
7 but less than 8 years 11 days 4.62% 88.00
8 but less than 10 years 12 days 5.04% 96.00
10 but less than 16 years 15 days 6.30% 120.00
16 but less than 17 years 16 days 6.72% 128.00
17 but less than 18 years 17 days 7.14% 136.00
18 but less than 19 years 20 days 8.40% 160.00
19 but less than 20 years 21 days 8.82% 168.00
20 but less than 21 years 22 days 9.24% 176.00
21 but less than 22 years 23 days 9.66% 184.00
22 years or more 25 days 10.50% 200.00
</TABLE>
5.01 Employees may arrange for prepaid vacations which are five
(5) days or longer by completing a "Request for Prepaid Vacation"
form and submitting it to their supervisor at least seven (7) days
prior to the Monday of the vacation period.
10
<PAGE>
5.02 The employee's W-2 form last issued by the Company with
the Federal Government, shall be used in computing the employee's
vacation benefits in accordance with the above schedule. Employees
shall be paid the amount of the percent vacation pay of all
earnings or the minimum vacation hours paid, whichever is greater
as provided in this Article.
5.03 An employee's "Percentage Vacation Pay" as provided for
above shall be derived by computing his total earnings together
with any bonus, vacation pay, and holiday pay granted. Time lost
due to illness of one (1) week or more duration but not more than
ten (10) weeks in any anniversary year and time lost due to a
compensable accident, shall be counted as time worked in computing
vacation pay on the basis of eight (8) hours per day and forty (40)
hours per week.
5.04 An employee who is laid off indefinitely shall be paid
vacation pay at the appropriate percentage of his previous year's
W-2 form. Employees will not be paid the minimum hours. Employees
who were laid off have the option to take pro-rata vacation or not
after recall. Employees not recalled during the year may request
their vacation pay.
5.05 In the event the Company designates a specific week(s) as
a general vacation shutdown, notice will be posted as soon as
possible or a minimum of three (3) months advance notice will be
given.
5.06 All employees must take one (1) week of their vacation
during the designated shutdown week(s) unless they have scheduled
their vacation in accordance with Section 5.08 and the Company has
not already notified the employees in accordance with Section 5.05.
Employees eligible will receive holiday pay for any holiday that
occurs therein.
5.07 Vacation shall be granted at such time during the year as
the Management finds most suitable, considering both the wishes of
the employee and the efficient operation of the department
concerned. Insofar as practical, employees with the highest
seniority shall be given preference of date.
5.08 Vacation Choice Slips will be distributed to employees the
first (lst) Monday in February of the vacation year.
By the third (3rd) Monday in February, all employees shall select,
by seniority, up to two (2) weeks of their vacation, for approval,
after which the selection of the third (3rd) and fourth (4th) weeks
shall be in the same manner.
Employees who do not respond with vacation choices by the third
(3rd) Monday in February loose their right of exercising seniority
preference for vacation time
11
<PAGE>
off for the rest of the vacation year.
Management will inform employees by the fourth (4th) Monday in
February as to the status of their vacation requests. Should
employees' original requests be denied, they will be allowed other
choices providing their first requests were filed timely.
5.09 Vacations should be taken in multiples of five (5)
consecutive working days. Employees with more than one (1) week
may take odd days at a time other than the full week period.
However, employees shall be allowed to schedule single days of
vacation up to a maximum of ten (10) days. Up to four (4) half-days
may be taken, using the same criteria as single days in 5.09.
Whenever possible, three (3) days advance notice should be given.
Single vacation days will be granted in accordance with Section
5.07 above and Section 7.04, maintaining the efficient operation of
the department concerned.
(a) In cases of absence due to emergency, the employee will
report his absence and request one (1) day vacation from his
foreman.
(b) When the Foreman can spare the employee with no
upset to production, the employee and Foreman may agree to less
than three (3) days advance notice.
5.10 No employee shall be required to work on the Saturday or
Sunday prior to his vacation nor on the Saturday or Sunday
immediately following his vacation
5.11 Armed Services. Any employee who is drafted or enlists
for military duty by the United States Government shall be paid
such vacation pay as he is entitled to at the time of leaving the
employment of the Company to enter such service. Such employees
returning from the Armed Forces within ninety (90) days after
honorable discharge shall be given their vacation in the year that
they return to work and accorded their accumulated seniority while
they were in the service.
5.12 Any employee who has completed one or more years service
with the Company who is terminated for any reason whatsoever, such
employee shall be paid any vacation benefits due such employee.
In the case of death, the vacation pay will be paid to the
employee's lawful heir or beneficiary.
12
<PAGE>
ARTICLE VI
HOURS AND OVER TIME
6.00 Eight (8) consecutive hours with an assigned lapse period
for lunch shall constitute a normal day's work. Lunch periods
shall be determined by mutual agreement between the parties.
6.01 Five (5) days, Monday through Friday inclusive, shall
constitute a normal weeks work.
6.02 The normal shift hours will be as follows, except when
overtime requires departure therefrom:
One and/or two shift operation
------------------------------
lst Shift -- 7:00 a.m. to 3:30 p.m.
2nd Shift -- 3:30 p.m. to 12:00 Midnight
Included in this schedule is a thirty (30) minute unpaid lunch period
STATED TIMES MAY BE ADJUSTED TO ACCOMMODATE CHANGES IN PRODUCTION SCHEDULES
WHEN MUTUALLY AGREED UPON.
Three shift operation
---------------------
lst Shift -- 7:00 a.m. to 3:30 p.m.
2nd Shift -- 3:30 p.m. to 12:00 Midnight
3rd Shift -- 11:30 p.m. to 7:30 a.m. (starts Sunday evening)
Included in this schedule is a thirty (30) minute unpaid lunch
period for the lst and 2nd shifts and a 15 minute paid lunch period
for the 3rd shift. The paid lunch period is at the employee's
personal hourly rate for the job in which he is working immediately
prior to the designated lunch period.
STATED TIMES MAY BE ADJUSTED TO ACCOMMODATE CHANGES IN PRODUCTION SCHEDULES
WHEN MUTUALLY AGREED UPON.
6.03 In the event a second and/or third shift operation is
created, employees with the most seniority within their
classification will have the preference of shift.
6.04 All hours worked in excess or outside of the standard
scheduled eight (8) hour shift, or the standard schedule forty (40)
hour work week shall be paid for at the rate of time and one-half
(1-1/2) the regular hourly rate of the employee.
13
<PAGE>
6.05 All employees shall be allowed a three (3) minute washup
time before their assigned mid-day lunch period and at the end of
each shift, except for employees in classifications granted
additional time due to the nature of their work.
Break periods will be as follows: A ten (10) minute break for
regular eight (8) hour shifts and Saturdays. A five (5) minute
break to be taken during the ninth (9th) hour of a ten (10) hour or
more shift.
6.06 Double time (2x) the rate shall be paid for all hours worked:
(a) Over ten (10) hours in any twenty-four (24) hour
period (except as it applies to second shift employees working
Saturday overtime commencing at 11:00 a.m. or third shift
employees starting at 11:30 p.m.).
(b) Over five (5) hours on Saturday.
(c) Sunday.
(d) Designated Holidays (in addition employees working
on such Holiday shall receive Holiday pay).
6.07 An employee reporting for work on a regularly scheduled
work day or as instructed shall be guaranteed a minimum of four (4)
hours work and/or four (4) hours pay at their regular rate with
overtime provisions stated above applying for Saturdays, Sundays
and Holidays, unless notified not to report, at least twelve (12)
hours in advance of the shift start time. The provisions of the
Section shall not apply to acts of God, during inventory, or any
act beyond the Company's control.
6.08 Insofar as is practical without reducing the efficiency of
the plant, all overtime worked in each classification within a
department shall be divided as equally as possible among the
employees within the classification within the department.*
Employees entering a classification in a department by hire, bid or
other means will be credited with the maximum amount of overtime
hours worked by an incumbent employee in that classification and
department.
*Overtime records of work performed or refused shall be kept to
maintain such division and made available to the Union Committee.
6.09 Schedule overtime shall be when the Company notifies the
employees within one hour after lunch break of any day prior to
daily overtime, or within one hour after lunch break on Thursday
preceding weekend overtime. A minimum work force of 66-2/3% of the
employees in the classification, department, and shift shall work
to assure efficient operation during scheduled overtime. On full
14
<PAGE>
department work scheduled other than the standard work week, a
minimum of 66-2/3% of the overtime in a normal week (Monday-Friday)
must be worked by each employee in the department. If an employee
agrees to work overtime and then fails to report for such overtime
work, such failure shall be treated as an unexcused absence.
6.10 All non-scheduled daily or weekend overtime shall be
optional with the individual employee.
6.11 A minimum premium rate per hour above the employee's
regular hourly rate will be paid to second and third shift workers
according to the following schedule:
Second Shift (Cents per Hour) .45
Third Shift (Cents per Hour) .50
6.12 Labor Agreement provisions regarding hours and overtime
will apply for all time worked (including minimum hours pay) for
employees agreeing to offsite work.
6.13 When overtime is scheduled, the first (lst) shift starting
time will 6:00 a.m. The second (2nd) shift starting time will be
4:30 p.m. when a ten (10) hour shift is scheduled.
6.14 On operations involving continuous processes or critical
work center, the Company may assign someone to that operation on a
staggered time basis to cover for breaks and lunch time, with at
least 24 hours notice or by mutual agreement.
ARTICLE VII
HOLIDAYS
7.00 Holidays will be celebrated according to the attached
schedule, Exhibit D.
7.01 All eligible employees covered by this Agreement,
except those on non-emergency Leave of Absence or Military
Service and Layoff shall received Holiday Pay including shift
premium, if applicable.
7.02 Employees on a bona-fide Sick Leave and Absence and
drawing disability compensation during the period in which a
Holiday occurs will be paid Holiday pay which will be reported as
income to the payer of the disability benefit.
7.03 The Company will not schedule layoffs prior to Holidays to
avoid payment of Holiday pay. Any employee laid off two (2) weeks
prior to a Holiday will receive Holiday pay.
15
<PAGE>
7.04 To receive Holiday pay, an employee must have
completed 340 hours of employment and must have worked the
regularly scheduled hours on the work day immediately preceding
and following the Holiday except when absent because of an
excused absence, excused tardiness, scheduled vacation
(including 1 day call in), jury service, being subpoenaed as a
witness, due to a death in the family or documented
circumstances and/or circumstances reasonably acceptable to
Management. Tardiness equal to 1-1/2 hours or less will not
affect eligibility for Holiday Pay.
7.05 When Holidays occur consecutively and an employee fails
either the day before and/or the day after eligibility
requirements, as provided for in 7.04 above, he shall lose the
holiday pay which corresponds to the day of absence.
ARTICLE VIII
PAY PROVISIONS
8.00 The classification of any job existing as of the date of
execution of this Agreement, or established during the term of this
Agreement as provided in 8.01, shall remain unchanged for the
duration of this Agreement unless the job content is changed. No
one shall be downgraded during the term of this Agreement subject
to Section 4.09 except for just cause.
8.01 When the need for a new job occurs or an existing job is
changed, the job content/description will be the sole
responsibility of the Company not subject to the Grievance
procedure or bargaining.
In the event a new job is created or an existing job is changed,
the Union shall be notified of same and the Company may operate
same with a temporary classification and rate. As soon as
practical, but in no event more than thirty (30) days thereafter,
the Company shall prepare a description for the job and a
permanent classification and rate, which shall be submitted to the
Union. In the event such classification and rate are not acceptable
to the Union, they may be placed in effect, but this shall be a
matter for the grievance and arbitration procedure. When the
classification and rate are finalized, either by agreement between
the parties or through the grievance and arbitration procedure,
they shall be incorporated in the job classification manual and
the rate shall be made retroactive to the date the new or changed
job was first placed in effect.
8.02 Should a machine operator be required to operate more than
one machine simultaneously.
16
<PAGE>
<TABLE>
<CAPTION>
No of Machines Operated Increase in Rate While Operating
----------------------- ---------------------------------
<S> <C>
2 $ .75
3 $1.00
4 $1.25
</TABLE>
8.03 The Company will pay its employees on a weekly basis on
the regular designated pay day, unless mutually agreed to otherwise.
8.04 Job and wage rate classifications shall be attached
hereto and marked "Exhibit A" and shall by this reference become
part of this Agreement.
8.05 The Company and Union will form a joint committee to
develop and implement a Gainsharing Program no later than 6-1-95.
This Gainsharing Program shall be a document separate from, but
subject to the collective bargaining process inherent in this
agreement.
ARTICLE IX
JURY DUTY - MAKE UP PAY AND FUNERAL PAY
9.00 When an employee is selected to serve on a local or
community jury panel, the Company will make up a portion of the
wages according to certain conditions as follows:
(a) To qualify for make-up wages, an employee must either have
served on a trial or consumed more than a half day in court
before dismissal which would make it impractical to return to
work.
(b) Make-up wages will be based upon a maximum of
eight (8) hours of total wages less jury panel daily fee in any
one day, Saturday, Sundays and Holidays to be excluded. The
plant must be operating in whole or part and the employee
regularly at work to be paid make-up wages
(c) A form provided by the Company with signature
affixed by an official of the court will be necessary before
make-up wages can be granted.
9.01 Funeral Pay. In the event of the death of an employee's
relative, such employees shall be permitted to take time off as
necessary according to the following schedule:
17
<PAGE>
(a) Employee's Mother, Father, Brother, Sister,
Spouse, or Children, or Step-Children - eight (8) hours at
regular straight time rate not to exceed three (3) consecutive
days of work.
(b) Employee's Grandparents, Grandchildren,
Step-Mother, Step-Father, Step-Brother, Step-Sister,
Mother-in-Law, Father-in-Law, Sister-in-Law, Brother-in-Law,
Son-in-Law, and Daughter-in-Law eight (8) hours at regular
straight time rate not to exceed two (2) consecutive days of
work.
(c) Employees' vacation will be extended equal to
appropriate days when a relative (above) dies during his
vacation.
ARTICLE X
SAFETY AND HEALTH
10.00 There shall not be less than two (2) employees working in
a facility at a time.
10.01 The Company will furnish gloves to Plate and Weld shop
personnel for their use in normal day-to-day functions.
Replacement new gloves will be issued upon return of the used, worn
gloves to the Tool Room attendant.
10.02 The wearing of safety shoes shall be mandatory for all
employees covered by this Agreement. The Company will pay fifty
percent (50%) towards the cost of two (2) pair of safety shoes per
year to be worn at and for work, and $40.00 for prescription exam
for first or changed prescription for safety glasses.
ARTICLE XI
LEAVE OF ABSENCE
11.00 Leave of absence may be applied for by filing out a leave
of absence form as provided by management.
Leaves of Absence may be granted upon the mutual agreement between
the Company and the Employee for a period not exceeding sixty (60)
working days except for Union activity. Leave of Absence shall be
granted for full time Union activity for a two (2) year renewal
upon thirty (30) days written notice. Union Leave of Absences, not
to exceed one (1) employee at a time (for Union schools,
conventions, etc.) except for a three (3) day overlap shall be
granted for a maximum of thirty (30) working days per calendar
year. Company agrees to notify the Union of all granted leaves.
18
<PAGE>
11.01 All Leaves of Absence shall be without pay. All employees
granted Leaves of Absence shall be returned to work with full
retention of their seniority rights and at the prevailing rate of
pay at the time of their return consistent with the other
provisions of this Agreement.
11.02 Employees returning from Sick Leave of Absence wherein
surgery or serious illness was involved are to advise the Company
with a written release from their physician at least three (3)
working days in advance of their intended return day. This will
allow scheduling within the department and review, if necessary, of
the employee's condition by a physician(s) of the Company's choice,
at the Company's expense.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.00 The authorized representative or his duly appointed
substitute of the Union, shall have access to the Company's
plant, buildings, and grounds during business hours upon approval
of Management or its duly appointed representative.
12.01 The Company will furnish chronological seniority listings
showing clock number, name, birthdate, seniority date, job
title, and shift every three (3) months to the Committee.
12.02 When hiring new employees, the Company agrees to notify
the Shop Committee Chairman with the name of each employee, wage
rate, and classification before or no later than the first day of
employment.
12.03 Bulletin boards shall be made available by the Company at
convenient places as near as possible to the time clock for the
posting of Union notices approved by Management.
12.04 The Union Bargaining Committee shall be made up of no more
than four (4) employees, five (5) if there is a satellite
operation.
12.05 The Union Grievance committee shall be made up of not more
than four (4) employees on first (lst) shift, two (2) employees on
second (2nd) shift, and one (1) employee on third (3rd) shift.
Four (4) of these employees would be the same as in 12.04 above.
12.06 Representatives of the Company and the Union will meet
within five (5) working days of receipt of a written (verbal by
mutual agreement) request
19
<PAGE>
by either party. The request to include the agenda to
be discussed and such meetings not to exceed one (1) per month
unless mutually agreed otherwise.
12.07 Should any State of Federal Court decide that any given
clause of this Agreement is not in accordance with a State or
Federal Statute, this shall not nullify the remaining clauses of
this Agreement.
12.08 Credit Union deductions will be implemented when requested.
12.09 Any assignment to new start times other than those worked
by the majority of employees the following prorated premium
allowance will be paid. This does not supersede Section 6.04.
One hour after shift start time .10/Hr.
Two hours after shift start time .10/Hr.
Three hours after shift start time .12/Hr.
Four hours after shift start time .16/Hr.
Five hours after shift start time .20/Hr.
ARTICLE XIII
GROUP INSURANCE
13.00 Health Insurance. The Company shall provide to all active
employees a Group Comprehensive Health Plan which applies to
covered medical expenses.
The employee shall pay:
<TABLE>
<CAPTION>
PPO
In Network Out of Network
Single Family Single Family
------ ------ ------ ------
<S> <C> <C> <C> <C>
Payroll Deduction 0.00 0.00 0.00 0.00
Deductible $100 $300 $200 $600
Co-Insurance 90/10 90/10 75/25 75/25
Maximum Out of Pocket $350 $800 $1,200 $2,600
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
In and Out of Network
---------------------
<S> <C> <C>
Co-Pays: Drugs $5 Generic/$10 Branded
Office Visit $10 per occurrence
Emergency Room $25 per occurrence
</TABLE>
Participants enrolled in this PPO plan may move in and out of
network throughout the enrollment period. Complete details are
available in the insurance booklet.
13.01 Life Insurance
(a) Life -- $17,000 Year 1; $18,000 Year 2; $19,000
Year 3; $20,000 Year 4
(b) AD&D -- one half to full amount of life insurance
as specified in insurance handbook.
(c) Life insurance and AD&D will be reduced 8% per
year beginning at age 65 for employees who elect to continue
working.
13.02 Accident and Sickness. The Company will provide accident
and sickness insurance of $225.00 Year 1 ($235.00 in Year 2);
($245.00 in Year 3) and ($255.00 in Year 4) to a maximum of 26
weeks for regular active employees with eligibility for benefits,
beginning the first day of disability caused by an accident or
hospitalization (as defined within the policy) and the fourth day
for illness not requiring hospitalization as certified by his
physician. Weekly accident and sickness benefits will continue to
be provided for actively working employees over the age of 65 until
retirement.
An employee unable to work due to sickness or accident will be
granted a Leave of Absence upon presentation of medical
documentation. Such leave is subject to extension based on medical
reports submitted but not to exceed time of employment with the
Company or eighteen (18) months, whichever is greater. Group
insurance coverage will continue to be provided to the employee
while drawing A & S benefits up to twenty-six (26) weeks. At the
expiration of the employee's A & S benefits (26 weeks), the
employee can remain in the Group Health, Dental and Prescription
Drug Plan for another eighteen (18) months (COBRA coverage) by
paying advance monthly premiums to the Company for such coverage
except weekly A & S benefits.
13.03 The Company will provide Dental Insurance (Comprehensive Plan).
21
<PAGE>
13.04 The Group Insurance Plan shall be continued for employees
laid off for a period of time equal to the employee's active
employment during the six (6) months prior to layoff provided the
employee pays one-half (1/2) the cost of insurance during the first
three (3) months and full premium during the next fifteen (15)
months, excluding A & S weekly benefits, and life insurance
benefits.
Agreed upon principles concerning group insurance coverage:
(1) General Rules:
(a) Group Insurance coverage becomes effective
on the first day of the month in which the employee
completes their probationary period.
(b) All group insurance coverage ceases on the last day of
the month an individual's employment terminates
with the exception of laid off employees covered as above.
(2) Specific Applications:
(a) Employees laid off during a month, lose
coverage at the end of that month unless they elect to
continue coverage under COBRA.
(b) Employees recalled from layoff during the first fifteen
(15) days of a month will be covered by group insurance
from the first (lst) day of that month.
(1) Those employees who paid their share of the premiums
coverage during layoff and are recalled during the
first fifteen (15) days of a month shall have that
month's COBRA premium refunded.
(c) Employees recalled from layoff after the fifteenth (15th)
day of the month will be covered beginning the first (lst)
day of the succeeding/following month.
(1) Those employees who paid their share of the COBRA
premium during layoff and are recalled after the
fifteenth (15th) day of the month will continue to be
covered by group insurance with no premium refund.
22
<PAGE>
1.401K SAVINGS PLAN
14.00 The Company will maintain a 401K Savings Plan for employee
participation on an elective salary deferral basis. Furthermore,
the Company will contribute, to each eligible employee's account,
cents per hour worked up to a maximum of 2,080 hours in a calendar
year per the following schedule:
<TABLE>
<S> <C>
Contract Year 1 $.26 cents
Contract Year 2 $.28 cents
Contract Year 3 $.30 cents
Contract Year 4 $.32 cents
</TABLE>
ARTICLE XV
NO STRIKE -- NO LOCKOUT
15.00 The Union agrees that during the life of this
Agreement there shall be no strike or slowdown on the part of
the employees represented by it, and the Company agrees that
during the life of this Agreements there shall be no lockout.
It is understood, however, that all provisions of this
Agreement which in any way restrict the Union's right to strike
or the Company's right to lockout shall cease to be binding
upon parties sixty (60) days after notice has been served upon
the other party for any of the following:
(a) Notice has been served requesting negotiations for general
wage rates in accordance with the terms of this Agreement and
no agreement has been reached.
(b) Notice has been served requesting negotiations for modification
and/or termination or renewal of this Agreement and no agreement
has been reached.
(c) Notice has been served requesting arbitration or
the stipulation to arbitrate a grievance according to the
procedure in Paragraph 3.00. The party upon whom notice was
served has refused either to arbitrate and/or to stipulate, or
has refused to abide by the decision of the arbitration board.
15.01 Should a strike or concerted slowdown or stoppage of work
by employees of the Company occur which is in violation of 15.00
above, during the term of this
23
<PAGE>
Agreement, the Union before the next scheduled work
day after receipt of the written notice from the Company shall
be obligated to the following things only:
(a) Advise the Company in writing that the strike or
stoppage has not been called or sanctioned by the Union.
(b) Post copies of the following notice on bulletin
boards in the plant or use other acceptable methods of
notification:
"We have been advised by TRAK International, Inc. that a
strike, or stoppage or slowdown has occurred in the plant.
Inasmuch as no strike, slowdown or stoppage has been called by
the Union,
IF YOU ARE ENGAGED IN ANY SUCH STRIKE, SLOWDOWN OR STOPPAGE,
YOU ARE HEREBY INSTRUCTED TO RETURN TO WORK IMMEDIATELY.
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS,
DISTRICT NO. 10.
THIS NOTICE IS POSTED IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT BETWEEN THE COMPANY AND THE UNION."
15.02 The obligation of the Union shall be limited to the
performance of the acts required by Paragraph 15.01 of this
Article, and upon compliance by the Union with the provisions of
Paragraph 15.01 of this Article, the Union and its officers and
members shall have no further liability during the term of this
Agreement or thereafter, for any damage suffered by the Company
arising from or out of any stoppage or strike.
15.03 Should Management comply with the terms and conditions of
this Agreement, its officers and representatives shall have no
further liability during the term of this Agreement or thereafter,
for any losses suffered by the Union or employees arising from any
unauthorized strike or work stoppage.
15.04 The Company shall have the right to discipline any or all
employees engaged in an unauthorized strike, slowdown, or stoppage
of work during the life of this Agreement by suspension or
discharge provided there is no discrimination.
24
<PAGE>
15.05 In the event an employee believes he has been unjustly
discharged from employment, the said employee may request the
difference be resolved under the grievance procedure as long as the
grievance is submitted within ten (10) working days from date of
discharge.
ARTICLE XVI
PAST PRACTICE
16.01 TRAK International, Inc. hereby agrees that all past
practices initiated, or followed by it since its acquisition and
not specifically mentioned in this Agreement shall nevertheless be
binding upon both parties during the term of this Agreement. This
Agreement does not include various past practices initiated by any
predecessor companies, if these practices are not followed by TRAK
International, Inc.
ARTICLE XVII
PLANT CLOSING
In the event of a plant closing that gives rise to a permanent
layoff/termination of all bargaining unit personnel, the Company and the
Union will promptly meet to discuss the impact of the closing upon the
effected employees. The parties shall negotiate over the effects of such
closing in an effort to establish severance pay and benefit allowances based
on seniority.
Nothing in this section shall obligate either party to arbitrate any dispute
over severance pay or severance benefits in accordance with our grievance
provisions.
ARTICLE XVIII
TERMINATION
17.01 During the period of this Agreement, if both of the
parties agree to bargain collectively with regard to any of the
provisions of this Agreement, or any other matter not contained in
this Agreement then any Agreement reached as a result of such
bargaining shall be reduced to writing and be signed by the parties
hereto, and only thereupon shall become a part of this Agreement as
an amendment thereof.
17.02 This Agreement becomes effective on November 1, 1994 and
remains in effect until midnight, October 31, 1998 unless notice in
writing is filed by either the Company or the Union of a desire for
change, modification, or termination, thereof at least sixty (60)
days prior to, but not more than ninety (90) days prior
25
<PAGE>
to the expiration of any said period. The parties agree that
negotiations for modification of change in this Agreement will be
undertaken once the above notice has been served.
<TABLE>
<CAPTION>
For the Union: District No. 10 For the Company:
International Association of TRAK International, Inc.
Machinists & Aerospace Workers: Port Washington, WI
<S> <C>
By: /s/ Joseph Develice By: /s/ Thomas Rice
----------------------------- ----------------------------------
Joseph F. Develice, Bus. Rep. Thomas Rice, Dir. Human Resources
By: /s/ Calvin James By: /s/ Terrence Hernesman
-------------------------- ------------------------------------
Calvin James, Chairman Terrence Hernesman, Dir. Operations
By: /s/ James Fitzpatrick By: /s/ James H. Hook
-------------------------- ------------------------------------
James Fitzpatrick, Committeeman James Hook, Chief Financial Officer
By: /s/ Alan G. Probelski By: /s/ Dennis R. Cherne
-------------------------- ------------------------------------
Alan Probelski, Committeeman Dennis Cherne, Mgr. Operations
By: /s/ Jerome Steilen
----------------------------
Jerome Steilen, Committeeman
</TABLE>
26
<PAGE>
AGREEMENT
between
RJ ASSOCIATES
and
LULL INDUSTRIES, INC.
RECITALS
1. RJ Associates ("RJA") is in the business of leasing employees to
various organizations to perform certain tasks essential to the
organization's business and, thereby, of assisting the organization to
contain personnel-related costs.
2. Lull Industries, Inc. ("Client") is a business seeking to reorganize
the use of labor and to enhance the level, while reducing the burden, of
compliance with regulations affecting employees and the workplace.
3. Client desires to increase efficiency and productivity by increasing
the use of self-insurance and return-to-work programs.
4. Client desires to utilize personnel and personnel management systems
provided by RJA.
5. RJA desires to supply Client with RJA's employees and to provide
Client with information and assistance designed to promote Client's
objectives as recited herein.
NOW, Therefore, RJA and Client agree as follows in recognition of their
mutual interests and in consideration for their mutual undertakings:
AGREEMENT
1. SERVICES: RJA will employ and manage a number of
qualified employees ("Employees"), who will perform tasks for the benefit of
Client ("Services").
2. PAYMENT OF WAGES AND BENEFITS. RJA shall be responsible for paying
the Employees all wages, compensation, fringe benefits, unemployment
compensation expenses, worker's compensation, bonds, and other expenses that
are normally associated with or incidental to the employment of personnel and
for which the Employees are eligible below.
3. DETERMINATION OF WAGES AND BENEFITS. RJA shall determine the wage
scales for Employees after consultation with Client. RJA shall select from a
limited list of non-wage benefits for Employees in order to approximate, as
nearly as possible from the
1
<PAGE>
limited list, the non-wage benefits that Employees received prior to the
effective date of this Agreement. Wage scales for the Employees shall be as
negotiated by the parties to this Agreement. RJA shall determine the
non-wage employment benefits, if any, to be offered to the Employees.
4. MANAGEMENT FEE. Client shall pay RJA a management fee and other
amounts as formulated on Exhibit A ("Proposal"), which is an integral part of
this Agreement.
5. PAYMENT OF PAYROLL EXPENSES. Client shall transfer funds on a
periodic and timely basis to the Advance Deposit Account in an amount equal
to RJA's gross payroll costs, corresponding insurance costs, benefits
associated with the Employees provided to Client, and the management fees and
other amounts due RJA pursuant to the terms of this Agreement. Funding of
this Advance Deposit Account shall be either (a) by wire transfer to RJA
designated bank account, or (b) by certified funds or cashier's check issued
to the order of R.J. Associates. Client shall transfer these funds every pay
period on an agreed-upon date, as specified in Exhibit A. In the event
Client fails to fund the Advance Deposit Account on or before the agreed upon
date, RJA may terminate this Agreement effective immediately upon written
notice to Client. Funds paid pursuant to this paragraph are the property of
RJA upon collection and are not intended to be held in trust.
6. NUMBER AND QUALIFICATIONS OF EMPLOYEES. Client shall determine the
number and qualifications of the Employees, and it may do so from time to
time by providing written notice to RJA's Operations Manager. RJA shall
conduct all Employee hiring. If Client substantially changes its
specification for the number or qualifications of the Employees, to be
determined solely at RJA's discretion, then RJA may elect to continue or to
terminate this Agreement. Such election shall be made within thirty days of
Client's notification to RJA of the change(s). Unless RJA otherwise notifies
Client, this Agreement shall continue until terminated as otherwise provided
herein.
7. EVALUATION OF PERFORMANCE. Client shall assign its own employee(s)
to evaluate the services performed by Employees provided pursuant to this
Agreement. Client shall advise RJA of personnel-related matters that, in
Client's opinion, warrant attention or correction. All notifications from
Client to RJA of such personnel-related matters shall be in writing on a
specific Response Form, to be provided by RJA, and directed to RJA's
management. Client shall have no authority to discipline, discharge, or
assign Employees without consultation and involvement of RJA.
8. MEASUREMENT OF PERFORMANCE. Client will provide RJA with written
criteria by which to measure the quality of the Employees' performance.
9. EMPLOYEES MANAGED BY RJA. The parties agree that RJA shall be
responsible for directly managing Employees. Client shall participate in
such management
2
<PAGE>
by advising RJA of the need, if any, to modify the consulting or Services
provided under this Agreement. Client shall not directly manage the
Employees.
In particular, RJA undertakes the following duties, and Client agrees to take
whatever actions are reasonably necessary in order to allow RJA to perform
the following duties:
A. Reserves a right of direction and control over its employees
assigned to Client's location;
B. Assumes responsibility for the payment of wages and other
benefits as agreed herein to its employees without regard to payments by
Client to RJA;
C. Assumes full responsibility for the payment of payroll taxes and
collection of taxes from payroll on its employees;
D. Reserves authority to hire, fire, discipline, reward, promote
and reassign its employees; and
E. Provide written notice of the relationship between RJA and
Client to each Employee.
10. HEALTH, SAFETY AND WORKPLACE HAZARDS.
(A) RJA reserves a right of direction and control over management
of safety, risk, and hazard control at the worksite(s) affecting its
employees, including:
(i) Performing safety inspections of Client equipment and
premises;
(ii) Promulgating and administering employment and safety
policies; and
(iii) Managing worker's compensation claims, claims filing, and
related procedures.
(B) Client is responsible for submitting to RJA all reports of
accidents and injuries within twenty-four hours of occurrence and for
implementing all changes that RJA might recommend to minimize workplace
hazards (including not only physical hazards but also other matters of
regulatory compliance, such as workplace harassment) and to reduce health-
and safety-related risks and costs (including without limitation
return-to-work programs and modified duty positions).
3
<PAGE>
(C) Client shall add CBM Industries, Inc., d/b/a/ RJA, as an
additional named insured on all applicable policies of general liability and
automobile insurance.
11. RELATIONSHIP OF PARTIES. The relationship of RJA and Client under
this Agreement shall be that of independent contractors acting as joint
employers. Each party shall be responsible for the services or other
obligations set forth in this Agreement. Under no circumstances shall the
relationship of the parties be deemed to be that of partners or joint
venturers (except in their capacity as joint employers), employer/employee,
or principal and agent, and neither party shall hold itself out or make any
representation to any third party to the contrary. Neither party shall have
the power or authority to bind the other party to any obligation or liability
of any kind (except in their capacity as a joint employers).
12. NONDISCRIMINATION. RJA and Client shall comply fully, and assist
the other in complying, with all applicable provisions of federal, state, and
local laws prohibiting discrimination on the basis of a protected class.
13. PAST PRACTICES. RJA shall consult with Client about Client's
personnel policies and procedures and about hiring those individuals who had
previously been employed by Client alone. RJA, however, shall be under no
obligation to hire any of Client's employees, or to continue any of Client's
policies or practices with regard to terms or conditions of employment. Any
actual continuation by RJA of an employee relations policy or practice of
Client shall not constitute a waiver of the rights otherwise set forth in
this paragraph.
14. CLIENT INFORMATION WARRANTY. Client warrants and represents that
any information provided RJA in connection with this Agreement, whether
written or oral, and any information otherwise furnished by Client to RJA
with respect to any matter within the scope of this Agreement is
substantially accurate and that RJA may rely upon the accuracy thereof
without independent investigation. Client will defend, indemnify and hold
harmless RJA against any claims or litigation, including any damages,
liability, costs and attorneys fees with respect thereto, resulting from
RJA's use of any information or materials furnished by Client to RJA and
Client will be responsible to RJA for any damages suffered by RJA as a result
of any material misstatements or misrepresentations by Client in the
aforementioned information.
15. DISCLAIMER OF CLIENT'S UNDISCLOSED OBLIGATIONS. Client represents
that it has informed RJA of all known actual or contingent liabilities,
whether arising from judicial or administrative settlements or orders, or
from private agreements, or from other sources, or from conduct of any
person, that pertains in any way to Client's employee relations.
16. WAIVER AND RELEASE. ("RJA" includes all parent, subsidiary, or
affiliated organizations and all controlling persons, officers, and
directors.)
4
<PAGE>
A. It is the general intent and agreement of the parties that RJA
should assume the risks associated with RJA's duties and with its employees'
execution of their duties and that Client should assume the risks associated
with Client's duties and with its employees' execution of their duties.
B. RJA agrees to hold Client harmless, and to defend and indemnify
Client, in connection with any claims of any kind that arise from an action
or omission by RJA in the course of executing RJA's obligations under this
Agreement.
C. Client agrees to hold RJA harmless and to defend and indemnify
RJA in connection with any claims of any kind that arise from an action or
omission of Client's agents, representatives, employees, contractors,
subcontractors, agents, guests, customers, invitees, trespassers,
predecessors in interest, successors in interest, affiliated companies,
shareholders, directors, and employee pension benefit plans, whether such
claims seek compensation, damages, performance, fines, or any other right or
remedy whatsoever, whether judicial, administrative, or other. Among other
types of claims, this paragraph refers to hazards, or circumstances
reasonably likely to create a hazard, of which Client is aware; and hazards
of which RJA has put Client on notice, but Client has failed to remedy.
17. LIMITATION OF RJA'S LIABILITY. ("RJA" includes all parent,
subsidiary, or affiliated organizations and all controlling persons,
officers, and directors.) RJA shall have no liability for the following
claims or types of damages:
A. Any implied warranty, whether statutory or otherwise, as to the
quality of work performed by any RJA employee for Client under this Agreement;
B. Any speculative or consequential damages of any nature
whatsoever, including damages to property and injuries to individuals arising
because of or resulting from the nonperformance or breach of the duties of
RJA, its employees or its authorized representatives under this Agreement;
C. Alleged breach of Section 10(A)(i-iii) of this Agreement
(pertaining to safety and risk control) if Client is aware of the material
hazard, or of circumstances reasonably likely to create the hazard;
5
<PAGE>
D. Client's noncompliance with, or liability under, provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
the Internal Revenue Code ("I.R.C."), including without limitation (a) the
requirements for any employee benefit plan to be "qualified" under the I.R.C.
or (b) withdrawal liability under ERISA. RJA expressly disclaims any
fiduciary responsibilities in connection with such plans.
18. CONFIDENTIALITY. RJA shall take reasonable measures intended to
ensure the confidentiality of any information it obtains, in the course of
executing its responsibilities under this Agreement, that pertains to
Client's accounts, business practices, and employee data. This paragraph is
not intended to impose on RJA a general responsibility for reviewing or
safeguarding the integrity of Client's data or business.
19. BENEFIT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective heirs,
representatives, successors and assigns.
20. TERMINATION.
A. Either party to this Agreement may terminate it at will, for
any cause or for no cause, upon fourteen days' notice to the other party.
B. RJA may terminate this Agreement immediately, notwithstanding
the previous paragraph, if Client or its agents fail to transfer, in a timely
manner, such amounts to RJA as are required by other provision or exhibits of
this Agreement, or if Client or its agents engage in any misrepresentation,
whether by action or omission, materially pertaining to the terms,
conditions, or performance of this Agreement. Such misrepresentation
includes without limitation payroll records and worker's compensation rates.
C. If the Client terminates this Agreement for any reason other
than Client's cessation of the operations in which the Employees are engaged,
then Client shall offer, to each Employee affected by the cancellation, a
position having equivalent compensation and requiring equivalent degrees of
skill, effort, and responsibility as the position held most recently under
the employment of RJA.
21. CREDIT APPROVAL. This contract is subject to RJA's approval of
client's credit. In the event that RJA does not approve client's credit, and
if services have commenced, client shall be liable to RJA for the value of
any services rendered or good supplied, and such value shall be computed on
the basis of the terms of this conditional
6
<PAGE>
contract. The preceding sentence is not intended to preclude other types of
liability that may be incurred.
22. RESOLUTION OF DISPUTES. The parties agree that all disputes
concerning the interpretation or application of this Agreement shall be
decided in arbitration before the American Arbitration Association. Any
awards by the arbitrator or panel of arbitrators shall be final, subject to
the Uniform Arbitration Act as enacted in Minnesota. The parties further
agree that any dispute concerning the interpretation or application of this
Agreement must be presented to the other party within six months of the time
that the dispute arose, or it is waived and all related and otherwise
actionable claims are released.
23. COMPLETE AGREEMENT. This writing constitutes the full and complete
agreement of the parties, superseding all other agreements, representations,
or inducements.
Signed at Eagan, Minnesota.
JANUARY 19, 1995 LULL INDUSTRIES, INC.
- --------------------- --------------------------
Date Client
/S/ WILBUR F. SHARPE, JR.
--------------------------
By: Wilbur F. Sharpe, Jr.
Title: CFO
1/19/95 RJ ASSOCIATES
- ---------------------
Date
/S/ KELLY S. BRENNA
--------------------------
By: Kelly S. Brenna
Title: General Manager
CBM Industries, Inc.
7
<PAGE>
INDUSTRIAL PARK LEASE
THIS LEASE, made and entered into this 1st day of April, 1995, by and
between the City of Oakes, a municipal corporation, Oakes, North Dakota, first
party, hereinafter called Lessor, and Lull Industries, Inc. a manufacturing
corporation located in St. Paul, Minnesota, hereinafter called Lessee.
I.
PREMISES
The Lessor has agreed to demise and let to the Lessee and Lessee has agreed
to lease and take, and does hereby lease and take from Lessor those certain
premises as same are situated in the City of Oakes, Dickey County, North
Dakota, and described as follows:
Lot 1, Oakes Industrial Park, Oakes, North Dakota,
located in Section 21, Township 131 North, Range 59
West:
Lessor does hereby lease, rent and let unto Lessee for the period of time
hereinafter stated and upon the terms and conditions hereinafter set out and
enumerated the premises described hereinabove together with all and singular
improvements, appurtenances, easements, rights of way, rights of ingress and
egress to and from the leased premises.
II.
PURPOSE
Lessee is authorized to use the said premises for manufacturing purposes in
general and for Lull Industrial uses in particular. Lessee shall not, however
use the said premises nor permit the same to be used for any unlawful business
or purposes whatsoever.
<PAGE>
Lessee has the right to conduct office and storage
operations related to its manufacturing activities. The property is located
in the Oakes Industrial Park and is zoned for manufacturing purposes.
III.
TERM -- OPTION TO PURCHASE
The term of this lease shall be for a period of five (5) years beginning
with the first day of April, 1995, and ending with the first day of April,
2000. It is further agreed between the Lessor and the Lessee that the
Lessee has at its option, the right to purchase the real property and building
after the initial five (5) year period has expired. Said notice to be given in
writing by the Lessee to the Lessor 30 days prior to the expiration of the
initial five (5) year period and upon receipt of said notice by the Lessor.
If the purchase option is exercised as set out in this lease, and Lessee
exercises the purchase option on or before March 1, 2000, the purchase price
will be $60,000.00. If Lessee purchases the property it will be given a quit
claim deed to the property, which is the same deed the Lessor received from the
Trustee Assignee of Mahto Industries, Inc., a Minnesota Corporation.
Said purchase option may be exercised up until March 1, 2000. After this
date this option is void.
If Lessee determines it will not purchase the property by March 1, 2000,
Lessee has the option to extend the term of the lease for an additional
30 months from and after
<PAGE>
April 1, 2000 through September 30th, 2002. If Lessee
extends the lease period for the additional 30 months the following terms
apply:
Lessee will pay as cash rent the sum of $2,000.00 per month beginning
April 1, 2000. In addition to the $2,000.00 cash rent, the Lessee will also
pay the real estate taxes associated with the leased premises for the year
2000 and thereafter as long as they continue to lease the property. The
$2,000.00 monthly rental payments will be applied to the purchase of the
building. If Lessee pays $60,000.00 in rent over those 30 months the City
will quit claim deed the property to Lessee. The 30 month lease period begins
April 1, 2000 and ends on September 30, 2002.
IV.
DECORATION AND REMODELING
1. Lessee, its heirs and assigns, shall have the right, and the privilege
is hereby given them at their expense, to decorate and remodel the interior of
the same demised premises from time to time as Lessee shall see fit. Lessee
shall also be given the right to make structual changes to the building and
property subject to Lessor's consent, which consent shall not unreasonably be
witheld.
LESSEE'S INSTALLATIONS
2. Lessee, its heirs and assigns, shall have the right from time to time
to erect and install such machinery and equipment, counters, shelving, light
fixtures, partitions, fixtures and signs in, upon and about said premises as in
the conduct of the
<PAGE>
business to be carried on in said premises, and to change
the same in its discretion.
REMOVALS BY LESSEE
3. Lessee shall have the right to remove all his machinery, equipment,
counters, shelving, light fixtures and signs installed and other equipment and
personal property owned by at the end of the term of this lease or any
extension thereof.
RESTORATION OF PREMISES
4. Lessee agrees to restore the leased premises at the end of the term
of this lease, or any extension thereof, to the condition they were in at the
beginning of the term thereof, destruction by fire, reasonable use, ordinary
wear and tear, casualty and the effects of time excepted.
V.
RENTAL
As rental for the use and occupancy of the said premises, Lessee binds
itself, its heirs and assigns to pay said Lessor's rent at the following rate,
which shall be payable on the first day of each month, in advance, and for each
and every month of the term of this lease rent at the following rate:
From April 1, 1995 to April 1, 2000, rent at the rate of
$1.00 per year. Thereafter for a period of 30 months
beginning April 1, 2000 to October 1, 2002, Lessee to
pay rent at the rate of $2,000.00 per month, which applies
towards purchase price of $60,000.00.
<PAGE>
VI.
QUIET ENJOYMENT OF LEASED PREMISES AND TITLE
Lessor hereby covenants that it has full authority to execute this lease,
and further agrees that Lessee, upon paying the rent provided for herein and
performing the covenants of this lease, shall have, hold and enjoy the leased
premises during the term hereof. At or before closing, Oakes will provide
documentation of its ownership of the Mahto property identified in the
draft lease.
VII.
REPAIRS
1. Lessee at its sole expense, shall keep in adequate repair and
maintain the exterior and structural portions of said building. Lessee shall
at its sole expense, maintain the heating plant and other utilities connected
with the operation of the manufacturing plant. Lessee, at his expense, shall
maintain and make such interior repairs as it shall deem necessary from time to
time. Lessee shall pay the cost of electricity and heat and cooling used on
the premises by Lessee.
2. Lessee may erect its standard signs on the exterior of the leased
premises and may install and affix banners and other advertisements from time
to time on the interior of the leased portion of the building without consent
of Lessor.
3. Lessee will be responsible for providing adequate hazard and liability
insurance that provides a loss payable clause to the City of Oakes, for the
recovery of the $60,000.00 it has invested in the building site being leased.
Lessee shall be deemed to
<PAGE>
have provided adequate hazard and liability insurance
hereunder if such insurance covers a value of the building in the amount of
$250,000.00.
4. Lessor and Lessee will jointly proceed to obtain a Phase I
environmental report for the property. Lessor and Lessee shall each pay fifty
percent (50%) of the cost this Phase I environmental report. In the event
this lease is consummated and the Phase I report shows no environmental
contamination, from and after the date of the Phase I report, Lessee shall be
responsible for the environmental condition of the property. Lessee shall not
be responsible for any environmental contamination identified in the Phase I
report to be obtained hereunder.
VIII.
OPTION TO PURCHASE ADDITIONAL INDUSTRIAL PARK PROPERTY
The Lessor acknowledges it owns additional Industrial Park property to the
east and southeast of the leased premises. Lessor hereby agrees to give Lessee
a first option to purchase additional Industrial Park property the Lessor owns
for $2,000.00 an acre. Said additional purchase of Industrial Park property
may be exercised by Lessees only if Lessee purchases the leased premises from
Lessor at the same time or prior to the purchase of additional Industrial Park
Property. The offer for the sale of additional property at the price of
$2,000.00 an acre shall be void after October 1, 2002.
IX.
DESTRUCTION
1. In the event said building or any part thereof shall be destroyed or
damaged by fire or other unavoidable casualty, so that such building cannot
be occupied
<PAGE>
and used, then the rents hereby reserved shall be suspended during
such time as said premises are unfit for occupancy and use.
IMPRACTICABLE USAGE
2. Should the leased premises be damaged to such an extent that use of
said premises for the purposes for which leased is impracticable, the rents
provided herein shall cease from the time of said damage until said premises
are restored.
LESSOR'S OPTIONS
3. In the case of the damage or destruction specified and described in
numerical subparagraph 2 immediately hereinabove, Lessor shall have an option
or right to election as to whether Lessor will rebuild and restore said
building and the demises premises. If said Lessor elects not to rebuild or
restore said building and/or said demised premises, he shall notify Lessee to
that effect within 60 days.
TIME OF REPAIR
4. If Lessor elects not to rebuild or restore said premises, then Lessee
shall be given the option to rebuild or restore the premises. If Lessee
decides not to rebuild or restore premises then this lease shall be ended and
terminated as of the date of said loss or destruction, but if Lessor does elect
to restore or rebuild within the time aforesaid, Lessor shall commence in good
faith and repair, rebuilding and restoration of said building and said
premises within a reasonable time from date of such destruction or damage.
Lessor shall have sixty (60) days following the date of said loss or destruction
to advise Lessee, in
<PAGE>
writing, of its election to restore or rebuild. Said
restoration and/or rebuilding shall be fully completed and fit for use and
occupancy in not more than 180 days following the event of loss or destruction
or as soon thereafter as practicable under the circumstances. If Lessee elects
to repair the property, it should be entitled to use the insurance proceeds to
do so and have the power to adjust all insurance claims.
X.
LESSEE'S INDEMNITY
Lessee agrees during the term of this lease hereof to indemnify and save
harmless the Lessor from any and all claims for damages to property of for
death or claims of injury to persons or property and from and against any suits
and any orders, decrees or judgments which may be entered because, thereof
arising out of, or caused by Lessee occupancy and use of the demises premises
and not proximately caused by negligence of Lessor, his agents, servants or
Lessor's failure to perform its covenants herein. In this regard, Lessee
agrees that at all times during the terms hereof it will procure, pay for and
keep in force and effect public liability insurance in and with a reputable
insurance company.
XI.
BUILDING INSURANCE
1. At all times during the term hereof Lessee, at its own expense and
sole cost, shall procure, keep in force and maintain full and complete
insurance to cover all the personal property in or about the premises leased
and to insure the building in which they are contained and covering and
insuring the same.
<PAGE>
XII.
TAXES
Lessor covenants that at all times herein all advalorem taxes, special
assessments or any other taxes levied or assessed against the leased premises
or any part thereof by reason of the ownership of said property shall be paid
and discharged by Lessor before becoming delinquent.
XIII.
Lessee will, at the termination of this lease, peacefully quit and deliver
the leased premises to Lessor in good condition, with the exception of usual
wear and tear, fire, elements, civil riot, war or other unavoidable casualty.
XIV.
LESSEE'S DEFAULT.
1. Should Lessee be guilty of failure to do what is required of Lessee
under this lease sufficient to entitle Lessor to declare a termination of the
lease, Lessor may give written notice of such default to Lessee at his place of
business at Oakes, North Dakota, and if such default continues for a period of
more than thirty (30) days after such notice is received by Lessee in the event
of any failure to make any payment required of Lessee hereunder, or for a
period of more than thirty (30) days after such notice is received by Lessee
in the event of any other default hereunder, Lessor may declare this lease
terminated.
2. Likewise, any material and substantial breach or default by Lessor
sufficient to entitle Lessee to declare this lease breached or terminated shall
vest in Lessee
<PAGE>
the same rights, insofar as they are practicable, under the same
conditions and procedure outlined above for Lessor. All remedies provided for
herein shall be cumulative and shall not restrict or exclude any other remedies
available by law or equity to either of the parties. The laws of the state of
North Dakota shall apply to dispute that may arise between the parties.
XV.
ASSIGNMENT AND SUBLEASING
Lessee shall not assign this lease, or in turn sublease any part of the
leased premises without Lessor's written consent and only for the specific
purposes of continuing the manufacturing operation of Lessee and for no other
purpose.
XVI.
RENTAL PAYMENTS
All rental payments shall be made on the 1st day of April each year from
April 1, 1995 to April 1, 2000 and thereafter on a monthly basis until
October 1, 2002 to the Lessor or its agents in Oakes, North Dakota.
XVII.
HEIRS AND ASSIGNS
The terms conditions and covenants hereof shall be binding alike upon the
heirs, executors administrators and assigns of the respective parties hereto.
All notices to be sent by certified mail. Time is of the essence to this
contract.
XVIII.
LESSOR'S OPTION
If Lull Industries, Inc. purchases the leased premises, it agrees to
execute with the City of Oakes, a first option to purchase agreement allowing
the City to repurchase the
<PAGE>
building. The first option agreement is contingent
upon Lull Industries selling the building to a non-manufacturing entity.
IN WITNESS WHEREOF, the said Lessor and Lessee have executed and delivered
these presents all the day and year first above written.
City of Oakes, N.D. Lull Industries, Inc.
By \S\ DAVE ROSS By \S\ BADGER R. BAZEN
------------------- ----------------------
Dave Ross, Mayor It's President
City of Oakes, N.D.
ATTEST
\S\ ETHEL DAY
- ------------------------
Ethel Day, City Auditor
City of Oakes, N.D.
STATE OF NORTH DAKOTA )
) ss.
COUNTY OF DICKEY )
On this 4th day of April, 1995, before me a notary public, personally
appeared Dave Ross and Ethel Day, the Mayor and City Auditor, City of Oakes,
North Dakota known to be the persons who are described in and who executed
this lease and acknowledged to me that they executed the same.
(SEAL) /S/ STEPHEN M. MCLEAN
--------------------------
Stephen M. McLean,
Notary Public
Dickey County, N.D.
My commission expires:
1/22/98
----------------------------
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF )
On this 10th day of April, 1995, before me a Notary Public, personally
appeared President of Lull Industries, Inc., known to be the
person who is described in and who executed this lease and acknowledged to
me that he executed the same.
(SEAL) /S/ ANN M. EVANS
------------------------
Notary Public, MN
My commission expires:
1-31-2000
------------------------
<PAGE>
EXHIBIT 21.0
SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARY JURISDICTION OF INCORPORATION
- ---------- -----------------------------
TRAK International, Inc. Delaware
Lull Lift Corporation Delaware
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 23, 1996,
except as to Note 15 which is as of September 30, 1996, relating to the
consolidated financial statements of Omniquip International, Inc., which
appears in such Prospectus. We also consent to the application of such report
to the Financial Statement Schedules for the period August 17, 1995 to
September 30, 1995 and for the period October 1, 1995 to June 30, 1996 listed
under Item 16(b) of this Registration Statement when such schedules are read
in conjunction with the financial statements referred to in our report. The
audits referred to in such report also included these schedules. We also
consent to the references to us under the headings "Experts" and "Selected
Consolidated Financial Data" in such Prospectus. However, it should be noted
that Price Waterhouse LLP has not prepared or certified such "Selected
Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
September 30, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated July 15, 1996, relating
to the financial statements of TRAK International, Inc., which appears in such
Prospectus. We also consent to the application of such report to the
Financial Statement Schedules for the period October 1, 1994 to August 16,
1995 and for the fiscal years ended September 30, 1994 and 1993,
respectively, listed under Item 16(b) of this Registration Statement when
such schedules are read in conjunction with the financial statements referred
to in our report. The audits referred to in such report also included these
schedules. We also consent to the references to us under the headings
"Experts" and "Selected Consolidated Financial Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
September 30, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 30, 1996,
relating to the financial statements of Lull Industries, Inc., which appears
in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
September 30, 1996
<PAGE>
EXHIBIT 23.3
October 1, 1996
Board of Directors
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Gentlemen:
I hereby consent to be named as a director nominee in the Registration
Statement on Form S-1 pertaining to the proposed initial public offering of
shares of common stock, par value $.01 per share, of Omniquip International,
Inc.
Very truly yours,
/s/ Paul W. Jones
Paul W. Jones
<PAGE>
EXHIBIT 23.4
September 30, 1996
Board of Directors
Uniquip Corporation
369 West Western Avenue
Port Washington, Wisconsin 53074
Gentlemen:
I hereby consent to be named as a director nominee in the Registration
Statement on Form S-1 pertaining to the proposed initial public offering of
shares of common stock, par value $.01 per share, of Uniquip Corporation.
Very truly yours,
/s/ Jerry E. Ritter
Jerry E. Ritter
<PAGE>
EXHIBIT 23.5
October 1, 1996
Board of Directors
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Gentlemen:
I hereby consent to be named as a director nominee in the Registration
Statement on Form S-1 pertaining to the proposed initial public offering of
shares of common stock, par value $.01 per share, of Omniquip International,
Inc.
Very truly yours,
/s/ Joseph F. Shaughnessy
Joseph F. Shaughnessy
<PAGE>
EXHIBIT 23.6
October 1, 1996
Board of Directors
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Gentlemen:
I hereby consent to be named as a director nominee in the Registration
Statement on Form S-1 pertaining to the proposed initial public offering of
shares of common stock, par value $.01 per share, of Omniquip International,
Inc.
Very truly yours,
/s/ Robert L. Virgil
Robert L. Virgil
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ Philip G. Franklin
-------------------------------------
Philip G. Franklin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ P. Enoch Stiff
-------------------------------------
P. Enoch Stiff
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ Jeffrey L. Fox
-------------------------------------
Jeffrey L. Fox
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ Samuel A. Hamacher
-------------------------------------
Samuel A. Hamacher
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ Donald E. Nickelson
-------------------------------------
Donald E. Nickelson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: October 1, 1996
/s/ Peter S. Finley
-------------------------------------
Peter S. Finley
