FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission File Number: 0-21461
OMNIQUIP INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 43-1721419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
369 West Western Avenue, Port Washington, Wisconsin 53074
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(Address of principal executive offices)
(Zip Code)
(414) 284-5571
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(registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------ ------
The number of shares of Common Stock, $0.01 par value, of
the registrant outstanding as of May 8, 1997 was 14,250,000.
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Index
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Page
Part I Financial Information Number
Item 1. Financial Statements (Unaudited, except as noted)
Consolidated Balance Sheet at March 31, 1997
and September 30, 1996 (Audited) 3
Consolidated Statement of Income for the
three and six months ended March 31, 1997
and March 31, 1996 4
Consolidated Statement of Changes in
Stockholders' Equity for the six months
ended March 31, 1997 5
Consolidated Statement of Cash Flows for the
six months ended March 31, 1997 and
March 31, 1996 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11-15
Part II Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures
Page 2
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Balance Sheet
(Dollars in Thousands Except Per Share Data)
<TABLE>
March 31, 1997 September 30, 1996
Assets (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $5 $53
Accounts receivable, net 25,019 21,678
Inventories 30,234 27,540
Prepaid expenses and other current ass 5,538 5,534
-------- --------
Total current assets 60,796 54,805
Property, plant and equipment, net 16,031 16,490
Goodwill, net 65,694 65,571
Other assets, net 1,811 2,714
-------- --------
$144,332 $139,580
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $5,600 $3,875
Accounts payable 21,134 20,895
Accrued liabilities 13,878 16,642
-------- --------
Total current liabilities 40,612 41,412
Long-term debt 44,610 84,566
Other noncurrent liabilities, net 422 422
Deferred income taxes 756 755
Commitments and contingencies (Note 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; 14,250,000 and 11,250,000 shares
issued and outstanding at March 31, 1997 and
September 30, 1996, respectively 143 113
Additional paid-in capital 43,724 6,240
Notes receivable from stockholders (352) (352)
Retained earnings 14,417 6,424
-------- --------
Total stockholders' equity 57,932 12,425
-------- --------
$144,332 $139,580
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Income
(Unaudited)
(Amounts in Thousands Except Per Share Data)
<TABLE>
Three months ended March 31, Six months ended March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $63,452 $27,579 $122,618 $51,066
Cost of sales 46,345 20,345 90,232 37,675
-------------------- -------------------
Gross profit 17,107 7,234 32,386 13,391
Selling, general and administrative 6,719 3,908 12,474 7,331
-------------------- -------------------
Operating profit 10,388 3,326 19,912 6,060
Other expenses:
Interest on indebtedness 1,883 651 4,182 1,317
Other finance charges 467 477 1,001 1,003
Other, net (25) 13 (86) 16
-------------------- -------------------
2,325 1,141 5,097 2,336
-------------------- -------------------
Income before income taxes and
extraordinary item 8,063 2,185 14,815 3,724
Provision for income taxes 3,266 833 6,040 1,409
-------------------- -------------------
Income before extraordinary item 4,797 1,352 8,775 2,315
Extraordinary item--loss on repayment of
long-term debt, net of income tax benefit
of $521 (782) (782)
-------------------- -------------------
Net income $4,015 $1,352 $7,993 $2,315
==================== ===================
Earnings per share:
Income before extraordinary item $0.41 $0.12 $0.77 $0.21
Extraordinary item (0.06) (0.07)
-------------------- -------------------
Net income $0.35 $0.12 $0.70 $0.21
==================== ===================
Weighted average shares 11,618 11,250 11,432 11,250
==================== ===================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
(Dollars in thousands)
<TABLE>
Notes
Additional receivable
Common paid-in from Retained
stock capital stockholders earnings Total
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1996 $113 $6,240 ($352) $6,424 $12,425
Net income 7,993 7,993
Proceeds from initial public offering 30 37,484 37,514
------ --------- ----------- ------- -------
Balance, March 31, 1997 $143 $43,724 ($352) $14,417 $57,932
====== ========= =========== ======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Note 1. Financial Statements
Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
Six months ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $7,993 $2,315
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,048 477
Amortization 991 194
Loss on repayment of long-term debt 1,303 --
(Increase) decrease in current assets:
Accounts receivable, net (3,341) 881
Inventories (2,694) 114
Prepaid expenses and other current assets (46) 222
Increase (decrease) in current liabilities:
Accounts payable 239 (3,058)
Other current liabilities (2,764) 152
Other (22) (1)
-----------------
Net cash provided by operating activities 2,707 1,296
-----------------
Cash flows from investing activities:
Capital expenditures, net (589) (820)
Payments to former TRAK shareholders for ATLAS (838) --
Other 356 (119)
-----------------
Net cash used in investing activities (1,071) (939)
-----------------
Cash flows from financing activities:
Proceeds from initial public offering 37,557 --
Net payments on revolver (831) (87)
Payments on long-term debt (37,400) (270)
Debt prepayment fees (1,010) --
-----------------
Net cash used in financing activities (1,684) (357)
-----------------
Net change in cash (48) 0
Cash beginning of period 53 1
-----------------
Cash at end of period $5 $1
=================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of Omniquip
International, Inc. (Omniquip or the Company) have been prepared in
accordance with the instructions for Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. However, in the opinion of
management, such information includes all adjustments, which consist only
of normal and recurring adjustments, necessary for a fair presentation of
the results of operations for the periods presented. Operating results for
any quarter are not necessarily indicative of the results for any other
quarter or for the full year. These statements should be read in
conjunction with the consolidated financial statements and notes to the
consolidated financial statements included in the Company's Amendment No. 2
to Form S-1 filed on February 20, 1997 with the Securities and Exchange
Commission.
2. Organization
Omniquip owns 100% of the outstanding common stock of its subsidiaries,
TRAK International, Inc. (TRAK) and Lull International, Inc. (Lull). The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany transactions
and balances have been eliminated.
3. Lull acquisition
For further detailed information regarding the August 1996 acquisition of
Lull, see Note 2 to the consolidated financial statements of the Company
included in the Company's Amendment No. 2 to Form S-1 filed on February 20,
1997 with the Securities and Exchange Commission.
The following table sets forth the pro forma information for Omniquip as if
the Lull acquisition had occurred on October 1, 1995. No pro forma
adjustments have been reflected for the effects of the Company's March 1997
initial public offering of common stock and the application of proceeds
therefrom or for the additional costs associated with being a publicly held
company. 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.
Pro forma information (unaudited)
For the three months For the six months
ended March 31, 1996 ended March 31, 1996
-------------------- --------------------
Net sales $53,425 $97,393
Net income 2,411 1,707
4. Initial public offering
On March 20, 1997, the Company completed its initial public offering of
common stock, selling 3 million primary and 6.2 million secondary shares
(including the overallotment option) for $14 per share. The proceeds to the
Company and the application of such proceeds are as follows:
Page 7
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Price to public $42,000
Less: underwriting discounts and commissions (2,730)
--------
Company proceeds $39,270
========
Payment of subordinated debt as follows:
Note payable to a financial institution $14,000
Note payable to a insurance company 5,000
Note payable to HGI III, L.P. 2,000
Interest 547
Prepayment fees 1,010
-------
22,557
Payment on Bank Term Debt 15,000
Expenses of offering 1,713
-------
Total application of Company proceeds $39,270
=======
In conjunction with the repayment of certain debt, the Company has
recognized a $782 after-tax extraordinary loss resulting from prepayment
fees paid to the insurance company and the financial institution and
write-off of applicable capitalized deferred financing costs.
5. U.S. Government Contract
On February 28, 1997, TRAK received delivery order number 5 on the
Company's ATLAS contract for 157 units. This order resulted in a payment to
the former TRAK shareholders of $838, which is reflected as additional
goodwill related to the TRAK acquisition in the accompanying financial
statements.
6. Inventories
Inventories consist of the following:
March 31, September 30,
1997 1996
---- ----
Raw material and purchased components $17,431 $15,614
Work-in-process 3,481 4,302
Finished goods 7,765 7,094
Unbilled government contract costs 1,557 530
----------------------
$30,234 $27,540
======================
7. Boom warranty program
During 1995, prior to its acquisition by the Company, Lull had determined
that a specific warranty obligation had been incurred on certain
manufactured boom units. At the acquisition date, the estimated cost to
complete the boom warranty program amounted to $2,000. A reserve for this
amount was recorded in purchase accounting by the Company. At March 31,
1997, and September 30, 1996, a corresponding liability of $512 and $1,557,
respectively, is reflected as a component of other current liabilities in
the accompanying balance sheet. This program is expected to be completed in
fiscal 1997, and costs are not expected to exceed the current reserve.
Page 8
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
8. Stock Options
On March 20, 1997, the Company granted options to purchase 357,750 shares
of the Company's stock at an exercise price of $14 per share to officers
and employees under the 1996 Long-Term Incentive Plan and options to
purchase 45,000 shares of the Company's common stock at an exercise price
of $14 per share to directors under the Directors Non-Qualified Stock
Option Plan. No options had been granted prior to this date under either
plan. At March 31, 1997, no options were exercisable under either plan.
9. Earnings Per Share
The computation of primary earnings per share is based on the weighted
average number of outstanding common shares during the period plus, when
the effect was dilutive, common stock equivalents consisting of certain
shares subject to stock options. The common equivalent shares arising from
the effect of outstanding stock options was computed using the treasury
stock method, if dilutive. As all potentially dilutive securities are
considered common stock equivalents, there was not a difference between
primary and fully diluted earnings per share.
10. New accounting standard
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share," issued in February 1997 and effective for the Company in fiscal
1998, requires presentation in the income statement of basic and diluted
earnings per share, calculated as defined by SFAS 128, rather than primary
and fully diluted earnings per share as defined in APB 15 "Earnings per
Share." Earnings per share calculated in accordance with SFAS 128 is not
expected to differ materially from earnings per share as calculated by the
Company under APB 15.
11. Commitments and 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.
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 aggregate outstanding loan balance on a
consolidated basis under these agreements was $69.4 million at March 31,
1997. Under TRAK's agreements, TRAK either provides a back-up guarantee of
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 the TRAK agreements was $59.6 million at
March 31, 1997. TRAK'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 or 5% of the loan
balance at the previous calendar year end (approximately $2.5 million for
1997).
Lull is also a party to a retail finance agreement with a financing
company, which provides Lull distributors with financing for equipment
purchases from Lull. The financing company has also agreed to
Page 9
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
provide financing for distributors' purchases of Lull-produced equipment
used as rental inventory by the distributors. Such contracts are arranged
on an installment 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, Lull 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 March 31, 1997 were approximately $9.8
million. This contingency would be reduced by proceeds from the sales of
the equipment financed.
Page 10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Overview
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of Omniquip
International, Inc. (Omniquip or the Company) for the three and six months ended
March 31, 1997 compared to the three and six months ended March 31, 1996. The
discussion should be read in conjunction with the consolidated financial
statements, notes to consolidated financial statements and management's
discussion and analysis of results of operations and financial condition in the
Company's Amendment No. 2 to Form S-1 filed with the Securities and Exchange
Commission on February 20, 1997.
Certain statements included herein are forward-looking statements concerning the
Company's operations, economic performance and financial condition. 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 cyclical fluctuation in demand, loss of, or reduced orders under, the
Company's contract for the sale of ATLAS vehicles, the inability to make
complementary acquisitions, or to integrate any such acquisition, and risks
associated with the substantial borrowings that may be necessary to finance
acquisitions.
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 consolidated
statement of income:
<TABLE>
Three months ended March 31, Six months ended March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 73.0% 73.8% 73.6% 73.8%
------ ------ ------ ------
Gross profit 27.0% 26.2% 26.4% 26.2%
Selling, general and administrative
expenses 10.6% 14.2% 10.2% 14.3%
------ ------ ------ ------
Operating income 16.4% 12.0% 16.2% 11.9%
Interest expense 3.0% 2.4% 3.4% 2.6%
Other finance charges 0.7% 1.7% 0.8% 2.0%
------ ------ ------ ------
Income before income taxes and
extraordinary item 12.7% 7.9% 12.0% 7.3%
Provision for income taxes 5.2% 3.0% 4.9% 2.8%
------ ------ ------ ------
Income before income taxes 7.5% 4.9% 7.1% 4.5%
Extraordinary item -1.2% 0.0% -0.6% 0.0%
------ ------ ------ ------
Net income 6.3% 4.9% 6.5% 4.5%
====== ====== ====== ======
</TABLE>
Page 11
<PAGE>
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Net sales for the three months ended March 31, 1997 were $63.5 million, an
increase of $35.9 million over net sales of $27.6 million for the three months
ended March 31, 1996. Sales of telescopic material handlers for the three months
ended March 31, 1997 were $53.1 million, an increase of $32.5 million over the
1996 period. Sales of skid steer loaders for the three months ended March 31,
1997 were $4.3 million, which was essentially unchanged from the 1996 period.
Sales of parts and attachments for the three months ended March 31, 1997 were
$6.1 million, an increase of $3.3 million over the 1996 period. Of the $32.5
million increase in telescopic material handlers, $24.6 million was due to the
acquisition of Lull International, Inc. (Lull) and the remaining $7.9 million
reflected continued strong growth in the existing TRAK International, Inc.
(TRAK) telescopic business. The flat net sales for skid steer loaders reflected
increased domestic demand offset by reduced international shipments due to the
Company's European distributor being acquired by a competitor. Of the $3.3
million increase in parts and attachments, $2.4 million resulted from the
acquisition of Lull and the remaining $0.9 million primarily reflected
increased demand for parts driven by the increased population of TRAK units
operating in the field.
Gross profit for the three months ended March 31, 1997 was $17.1 million, an
increase of $9.9 million over gross profit of $7.2 million for the three months
ended March 31, 1996. The increase in gross profit primarily reflected the
increase in net sales discussed above. The gross margin increased to 27.0% for
the three months ended March 31, 1997 from 26.2% for the three months ended
March 31, 1996. The improvement in gross margin was due to improved
manufacturing efficiencies at all three plants, price increases that were
implemented during the current quarter, economies due to higher volumes and
increased mix of telescopic material handlers which carry higher margins than
other products. Partially offsetting these improvements was the acquisition of
Lull, whose gross margin has historically been lower than that of TRAK.
Selling, general and administrative (SG&A) expenses for the three months ended
March 31, 1997 were $6.7 million, an increase of $2.8 million over SG&A expenses
of $3.9 million for the three months ended March 31, 1996. Of the $2.8 million
increase, $2.1 million resulted from the acquisition of Lull including $0.4
million of goodwill amortization. SG&A expenses as a percentage of net sales
decreased to 10.6% for the three months ended March 31, 1997 from 14.2% for the
three months ended March 31, 1996. This decrease in the SG&A percentage
reflected the acquisition of Lull, whose SG&A percentage has historically been
lower than that of TRAK, as well as effective control of SG&A expenses and the
relatively fixed nature of certain of these expenses.
Operating income for the three months ended March 31, 1997 was $10.4 million, an
increase of $7.1 million over operating income of $3.3 million for the three
months ended March 31, 1996. Operating margins increased to 16.4% for the three
months ended March 31, 1997 from 12.0% for the 1996 period. The improvements in
operating income and operating margins reflected the factors described above.
Interest expense for the three months ended March 31, 1997 was $1.9 million, an
increase of $1.2 million over interest expense of $0.7 million for the three
months ended March 31, 1996. Interest expense as a percentage of net sales
increased to 3.0% for the three months ended March 31, 1997 from 2.4% for the
1996 period. The increase in interest expenses was due primarily to the
increased debt incurred to finance the August 1996 acquisition of Lull.
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $0.5 million for the three months ended March 31, 1997, relatively
unchanged from the three months ended March 31, 1996. Other finance charges as a
percentage of net sales decreased from 1.7% to 0.7%. The reduction in finance
charges as a percentage of sales reflected the fact that Lull has not
historically incurred such charges as well as a reduction in the percentage of
TRAK business being financed in the current quarter.
Provision for income taxes for the three months ended March 31, 1997 was $3.3
million compared to $0.8 million for the three months ended March 31, 1996. The
increase reflected the increase in income before income taxes of $5.9 million as
well as an increase in the effective tax rates between these periods. The
Company's effective tax rate was 40.5% for the three months ended March 31, 1997
compared to 38.1% for the three months ended March 31, 1996.
Page 12
<PAGE>
Income from continuing operations for the three months ended March 31, 1997 was
$4.8 million, an increase of $3.4 million, or 254.8%, over income from
continuing operations of $1.4 million for the three months ended March 31, 1996,
as a result of the factors described above.
In March 1997, in connection with the initial public offering and the
application of the proceeds therefrom to repay indebtedness, the Company
incurred an extraordinary charge of $0.8 million, net of $0.5 million of income
tax benefits, or $.06 per share, related to prepayment penalties and write-off
of deferred financing charges.
Net income for the three months ended March 31, 1997 was $4.0 million, an
increase of $2.7 million, or 197.0%, from net income for the same period in 1996
as a result of the factors described above.
Earnings per share for the three months ended March 31, 1997 was $0.35, an
increase of $0.23 from earnings per share of $0.12 for the three months ended
March 31, 1996 as a result of the increase in net income described above
partially offset by an increase in the weighted average shares outstanding from
11.3 million to 11.6 million.
Six Months Ended March 31, 1997 Compared to Six Months Ended March 31, 1996
Net sales for the six months ended March 31, 1997 were $122.6 million, an
increase of $71.5 million over net sales of $51.1 million for the six months
ended March 31, 1996. Sales of telescopic material handlers for the six months
ended March 31, 1997 were $102.6 million, an increase of $64.5 million over the
1996 period. Sales of skid steer loaders for the six months ended March 31, 1997
were $8.3 million, an increase of $0.8 million or 10.8% from the 1996 period.
Sales of parts and attachments for the six months ended March 31, 1997 were
$11.7 million, an increase of $6.2 million over the 1996 period. Of the $64.2
million increase in telescopic material handlers, $50.1 million was due to the
acquisition of Lull and the remaining $14.1 million reflected continued strong
growth in the existing TRAK telescopic business. Increased skid steer loader
sales reflected increased domestic demand partially offset by reduced
international shipments due to the Company's European distributor being acquired
by a competitor. Of the $6.2 million increase in parts and attachments, $4.4
million resulted from the acquisition of Lull and the remaining $1.8 million
primarily reflected increased demand for parts driven by the increased
population of TRAK units operating in the field.
Gross profit for the six months ended March 31, 1997 was $32.4 million, an
increase of $19.0 million over gross profit of $13.4 million for the six months
ended March 31, 1996. The increase in gross profit primarily reflected the
increase in net sales discussed above. The gross margin increased to 26.4% for
the six months ended March 31, 1997 from 26.2% for the six months ended March
31, 1996. The improvement in gross margin was due to improved manufacturing
efficiencies at all three plants, price increases that were implemented during
the second fiscal quarter and economies due to higher volumes. Partially
offsetting these improvements was the acquisition of Lull, whose gross margin
has historically been lower than that of TRAK.
SG&A expenses for the six months ended March 31, 1997 were $12.5 million, an
increase of $5.1 million over SG&A expenses of $7.3 million for the six months
ended March 31, 1996. Of the $5.1 million increase, $4.2 million resulted from
the acquisition of Lull, including $0.8 million of goodwill amortization. SG&A
expenses as a percentage of net sales decreased to 10.2% for the six months
ended March 31, 1997 from 14.3% for the six months ended March 31, 1996. This
decrease in the SG&A percentage reflected the acquisition of Lull, whose SG&A
percentage has historically been lower than that of TRAK, as well as effective
control of SG&A expenses and the relatively fixed nature of certain of these
expenses.
Operating income for the six months ended March 31, 1997 was $19.9 million, an
increase of $13.9 million over operating income of $6.1 million for the six
months ended March 31, 1996. Operating margins increased to 16.2% for the six
months ended March 31, 1997 from 11.9% for the 1996 period. The improvements in
operating income and operating margins reflected the factors described above.
Interest expense for the six months ended March 31, 1997 was $4.2 million, an
increase of $2.9 million over interest expense of $1.3 million for the six
months ended March 31, 1996. Interest expense as a percentage of net sales
increased to 3.4% for the six months ended March 31, 1997 from 2.6% for the
1996 period. The increase in interest expenses was due primarily to the
increased debt incurred to finance the August 1996 acquisition of Lull.
Page 13
<PAGE>
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $1.0 million for the six months ended March 31, 1997, relatively
unchanged from the six months ended March 31, 1996. Other finance charges as a
percentage of net sales decreased from 2.0% to 0.8%. The reduction in finance
charges as a percentage of net sales primarily reflected the fact that Lull has
not historically incurred such charges.
Provision for income taxes for the six months ended March 31, 1997 was $6.0
million compared to $1.4 million for the six months ended March 31, 1996. The
increase reflected the increase in income before income taxes of $11.1 million
as well as an increase in the effective tax rates between these periods. The
Company's effective tax rate was 40.8% for the six months ended March 31, 1997
compared to 37.8% for the six months ended March 31, 1996.
Income from continuing operations for the six months ended March 31, 1997 was
$8.8 million, an increase of $6.5 million, or 279.0%, over income from
continuing operations of $2.3 million for the six months ended March 31, 1996,
as a result of the factors described above.
In March 1997, in connection with the initial public offering and the
application of the proceeds therefrom to repay indebtedness, the Company
incurred an extraordinary charge of $0.8 million, net of $0.5 million of income
tax benefits, or $.07 per share, related to prepayment penalties and write-off
of deferred financing charges.
Net income for the six months ended March 31, 1997 was $8.0 million, an increase
of $5.7 million, or 245.3%, from net income for the same period in 1996 as a
result of the factors described above.
Earnings per share for the six months ended March 31, 1997 was $0.70, an
increase of $0.49 from earnings per share of $0.21 for the six months ended
March 31, 1996 as a result of the increase in net income described above
partially offset by an increase in the weighted average shares outstanding from
11.3 million to 11.4 million.
Capital Resources and Liquidity
Net cash provided by operating activities of the Company was $2.7 million for
the six months ended March 31, 1997. Working capital (excluding the effects of
changes in cash and current portions of long-term debt) increased by $8.6
million in the period reflecting increases in accounts receivable and
inventories to support higher sales levels and reduced accrued liabilities
resulting primarily from volume rebates applied to customer accounts during the
second fiscal quarter. Cash provided by operating activities of the Company for
the period was used primarily to finance capital expenditures of $0.6 million,
payments to former TRAK shareholders of $0.8 million tied to receipt of orders
under contracts with the U.S. Army and repayment of existing indebtedness.
Net cash provided by operating activities of the Company was $1.3 million for
the six months ended March 31, 1996. Working capital increased by $1.7 million
in the period reflecting a decrease in accounts payable from unusually high
levels in the first fiscal quarter of 1996. Cash provided by operating
activities of the Company for the period was used primarily to finance capital
expenditures of $0.8 million and repayment of $0.4 million of existing
indebtedness.
On March 20, 1997, the Company completed its initial public offering of common
stock, selling 3 million primary and 6.2 million secondary shares (including the
overallotment option) for $14 per share. Proceeds to the Company from the
offering of $37.6 million (net of expenses of the offering of $1. 7 million)
were used to repay $22.6 million of subordinated debt (including accrued
interest and prepayment fees) and $15.0 million of bank term debt.
The Company has borrowings under a revolving line of credit facility and two
term loans. The revolving line of credit facility provides for borrowings of up
to the lesser of $25.0 million or a borrowing base calculated on a percentage of
eligible receivables and inventories. Borrowings under this facility are due
August 16, 2003 and bear interest either at the bank's corporate base rate plus
1.5% (10.0% at March 31, 1997) or LIBOR plus 2.75% (8.4% at March 31, 1997). The
Company may elect to convert outstanding line of credit balances between
interest types at its discretion. Amounts outstanding under the revolving line
of credit facility totaled $6.3 million at March 31, 1997. In addition, the
Company had $0.3 million in outstanding letters of credit under the revolving
line of credit facility. At March 31, 1997, the Company had unused borrowing
capacity of $18.4 million under this facility.
Page 14
<PAGE>
Borrowings under the term loans ($43.6 million at March 31, 1997) are due in
quarterly installments ranging from $0.5 million to $3.1 million, which
commenced in October 1996 with a final payment in August 2003. The term loans
bear interest either at the bank's corporate base rate plus 1.75% (10.2 5% at
March 31, 1997) or LIBOR plus 3% (8.7% at March 31, 1997). The Company may elect
to convert outstanding term loan balances between interest types at its
discretion.
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 it will have sufficient funds available to meet its
currently anticipated operating and capital expenditure requirements for its
existing operations.
Backlog
The Company's backlog as of March 31, 1997 was $115.8 million, of which $37.5
million relates to the ATLAS military contract It is expected that substantially
all of the commercial backlog and approximately one-half of the military backlog
will be shipped before March 31, 1998.
Page 15
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
PART II. Other Information
- -------------------------------------------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
On March 17, 1997, the security holders of Omniquip, by unanimous
written consent in lieu of an annual meeting, re-elected P. Enoch
Stiff and Donald E. Nickelson to the Board of Directors. The terms of
offices of Peter S. Finley, Jeffrey L. Fox and Samuel A. Hamacher as
directors of Omniquip continued after the meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Underwriting Agreement, dated March 20, 1997, by
and among Morgan Stanley & Co. Incorporated, Credit Suisse First
Boston Corporation, Schroder Wertheim & Co. Incorporated and
Robert W. Baird & Co. Incorporated, as representatives of the
several U.S. underwriters, and Morgan Stanley & Co. International
Limited, Credit Suisse First Boston (Europe) Limited, J. Henry
Schroder & Co. Limited and Robert W. Baird & Co. Incorporated, as
representatives of the several international underwriters
Exhibit 10.2 - Indemnification Agreement, dated March 20, 1997,
by and among Omniquip International, Inc., Harbour Group
Investments III, L.P. and Uniquip - HGI Associates, L.P.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
Not applicable.
Page 16
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMNIQUIP INTERNATIONAL, INC.
Date: May 15, 1997 /s/ Philip G. Franklin
-----------------------------------------
Philip G. Franklin
Vice President - Finance, Chief Financial
Officer, Treasurer and Secretary
(Principal financial and accounting
officer)
<PAGE>
EXHIBIT INDEX
Page No. in Sequential
Exhibit No. Description Numbering System
- ----------- ----------- ----------------
10.1 Underwriting Agreement, dated March 20, 1997, by
and among Morgan Stanley & Co. Incorporated,
Credit Suisse First Boston Corporation, Schroder
Wertheim & Co. Incorporated and Robert W. Baird
& Co. Incorporated, as representatives of
the several U.S. underwriters, and Morgan Stanley
& Co. International Limited, Credit Suisse First
Boston (Europe) Limited, J. Henry Schroder & Co.
Limited and Robert W. Baird & Co. Incorporated,
as representatives of the several international
underwriters
10.2 Indemnification Agreement, dated March 20, 1997, by
and among Omniquip International, Inc., Harbour Group
Investments, III, L.P. and Uniquip-HGI Associates, L.P.
27 Financial Data Schedule
8,000,000 Shares
OMNIQUIP INTERNATIONAL, INC.
(Common Stock, $.01 par value)
UNDERWRITING AGREEMENT
March 20,1997
<PAGE>
March 20, 1997
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
Omniquip International, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below), and
certain stockholders of the Company (the "Selling Shareholders") named in
Schedule I hereto propose to sell to the several Underwriters, an aggregate of
8,000,000 shares of its Common Stock, par value $.01 (the "Firm Shares"), of
which 3,000,000 shares are to be issued and sold by the Company and 5,000,000
shares are to be sold by the Selling Shareholders, each Selling Shareholder
selling the amount set forth opposite such Selling Shareholder's name in
Schedule I hereto. As part of the offering contemplated by this Agreement,
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has agreed to reserve out
of the Shares set forth opposite its name on Schedule II to this Agreement, up
to 175,000 shares, for sale to the Company's employees, officers, and directors
(collectively, "Participants"), as set forth in the Prospectus under the heading
"Underwriters" (the "Directed Share Program"). The Shares to be sold by Morgan
Stanley pursuant to the Directed Share Program (the "Directed Shares") will be
sold by Morgan Stanley pursuant to this Agreement at the public offering price.
Any Directed Shares not orally confirmed for purchase by any Participants by the
end of the first business day after the date on which this Agreement is executed
will be offered to the public by Morgan Stanley as set forth in the Prospectus.
It is understood that, subject to the conditions hereinafter stated,
6,400,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule
<PAGE>
II hereto (the "U.S. Underwriters") in connection with the offering and
sale of such U.S. Firm Shares in the United States and Canada to United States
and Canadian Persons (as such terms are defined in the Agreement Between U.S.
and International Underwriters of even date herewith), and 1,600,000 Firm Shares
(the "International Shares") will be sold to the several International
Underwriters named in Schedule III hereto (the "International Underwriters") in
connection with the offering and sale of such International Shares outside the
United States and Canada to persons other than United States and Canadian
Persons. Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, Schroder Wertheim & Co. Incorporated and Robert W. Baird & Co.
Incorporated shall act as representatives (the "U.S. Representatives") of the
several U.S. Underwriters, and Morgan Stanley & Co. International Limited,
Credit Suisse First Boston (Europe) Limited, J. Henry Schroder & Co. Limited and
Robert W. Baird & Co. Incorporated shall act as representatives (the
"International Representatives") of the several International Underwriters. The
U.S. Underwriters and the International Underwriters are hereinafter
collectively referred to as the Underwriters.
The Selling Shareholders also propose to sell to the several U.S.
Underwriters not more than an additional 1,200,000 shares of the Company's
Common Stock, par value $.01 (the "Additional Shares")(each such Selling
Shareholder selling the amount set forth opposite such Selling Shareholder's
name in Schedule I hereto), if and to the extent that U.S. Representatives,
shall have determined to exercise, on behalf of the U.S. Underwriters, the right
to purchase such shares of common stock granted to the Underwriters in Section 3
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares." The shares of Common Stock, par value $.01, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "Common Stock." The Company and the Selling
Shareholders are hereinafter sometimes collectively referred to as the
"Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian Persons, and the international prospectus, to be used in connection
with the offering and sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "Prospectus." If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
<PAGE>
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to
the Company's knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and
(iii) the Prospectus does not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph 1(b) do not apply to statements or omissions
in the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
<PAGE>
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold
by the Selling Shareholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument (after giving effect to any written waiver of a default or
written consent to such agreement or instrument) binding upon the
Company or any of its subsidiaries that is material to the Company and
its subsidiaries, taken as a whole, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under
this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states or the securities laws of non-U.S.
jurisdictions in connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) the Company and its
subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in
the ordinary course of business; (ii) the Company has not purchased
any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries,
except in each case as described in or contemplated by the Prospectus.
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a
<PAGE>
party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds as
described in the Prospectus, will not be an "investment company," as
such term is defined in the Investment Company Act of 1940, as
amended.
(n) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety
(including occupational health and safety), the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business, prospects or operations of
the Company and its subsidiaries, taken as a whole.
(p) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
<PAGE>
(q) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries, in each case except as described in or contemplated by
the Prospectus.
(r) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business
now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(s) No material labor dispute with the employees of the Company
or any of its subsidiaries exists, except as described in or
contemplated by the Prospectus, or, to the knowledge of the Company,
is imminent; and the Company is not aware of any existing, threatened
or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could result in any
material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(t) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary (but with respect to any period prior to the time such
subsidiary become a subsidiary of the Company, only with respect to
periods after January 1, 1992 and then only to the knowledge of the
Company) has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
<PAGE>
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus.
(u) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit, except
for failures to possess and proceedings which, singly and in the
aggregate, would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accounting for assets is compared
with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(w) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
Furthermore, the Company represents and warrants to Morgan Stanley that (i)
the Registration Statement, the Prospectus and any preliminary prospectus
comply, and any further amendments or supplements thereto will comply, with any
applicable laws or regulations of foreign jurisdictions in which the Prospectus
or any preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and that (ii) no
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other than
such as have been obtained, is necessary under the securities laws and
regulations of foreign jurisdictions in which the Directed Shares are offered
outside the United States.
2. Representations and Warranties of the Selling Shareholders. Each Selling
Shareholder represents and warrants to and agrees with each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
<PAGE>
(b) The execution and delivery by such Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement will not contravene any provision of applicable
law, or the agreement or certificate of limited partnership of such
Selling Shareholder; or any agreement or other instrument binding upon
such Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Shareholder of its obligations
under this Agreement, except such as may be required by the securities
or Blue Sky laws of the various states or the securities laws of
non-U.S. jurisdictions in connection with the offer and sale of the
Firm Shares.
(c) Such Selling Shareholder has, and on the Closing Date and the
Option Closing Date will have, valid title to the Shares to be sold by
such Selling Shareholder and the legal right and power, and all
authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder.
(d) The Shares to be sold by such Selling Shareholder pursuant to
this Agreement have been duly authorized and are validly issued, fully
paid and non-assessable.
(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will pass title to such Shares free and
clear of any security interests, claims, liens, equities and other
encumbrances.
(f) All information furnished by or on behalf of such Selling
Shareholder for use in the Registration Statement and Prospectus is,
and on the Closing Date and on the Option Closing Date will be, true,
correct, and complete, and does not, and on the Closing Date and on
the Option Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make
such information not misleading.
3. Agreements to Sell and Purchase. Each Seller, severally and not jointly,
hereby agrees to sell to the several Underwriters, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from such Seller at U.S. $13.09 a share (the "Purchase Price") the
number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the number of
Firm Shares to be sold by such Seller as the number of Firm Shares set forth in
Schedules II and III hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
<PAGE>
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholders
agree to sell to the U.S. Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 1,200,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives, shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the U.S. Underwriters and the
date on which such shares are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of Firm Shares set forth in Schedule II
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares. The Additional Shares to be purchased by the U.S. Underwriters
and the U.S. Firm Shares are hereinafter collectively referred to as the "U.S.
Shares."
Each Seller hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 180 days after the date of the Prospectus, (i) 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 (ii) 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, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to
be sold hereunder or (B) the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing. In addition, the Selling Shareholders agree that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public
<PAGE>
initially at U.S. $14.00 a share (the "Public Offering Price") and to
certain dealers selected by you at a price that represents a concession not in
excess of U.S. $0.55 a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of U.S. $0.10 a share, to any Underwriter or to certain other dealers.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
and sixth paragraphs of Article III of the Agreement Between U.S. and
International Underwriters of even date herewith. Each International Underwriter
hereby makes to and with the Company the representations and agreements of such
International Underwriter contained in the seventh, eighth, ninth and tenth
paragraphs of Article III of such Agreement.
5. Payment and Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in Chicago, Illinois,
against delivery of the Firm Shares for the respective accounts of the several
Underwriters at the office of Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603 at 9:00 a.m., local time, on March 26, 1997, or at such
other time on the same or such other date, not later than April 2, 1997, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Selling Shareholders
in Federal or other funds immediately available in Chicago, Illinois against
delivery of the Additional Shares for the respective accounts of the several
U.S. Underwriters at the office of Sidley & Austin at 9:00 a.m., local time, on
the date specified in the notice described in Section 3 or on such other date,
in any event not later than April 30, 1997, as shall be designated in writing by
the U.S. Representatives, on behalf of the U.S. Underwriters. The time and date
of such payment are hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 3:00 p.m. (New York time) on the date hereof.
<PAGE>
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2)under the Securities Act;
and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the
Shares on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing
Date and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Dickstein Shapiro Morin & Oshinsky LLP, outside counsel for
the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would
<PAGE>
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms
as to legal matters to the description thereof contained in the
Prospectus;
(iv) the shares of Common Stock (including the Additional
Shares to be sold by the Selling Shareholders) outstanding prior
to the issuance of the Shares to be sold by the Company have been
duly authorized and are validly issued, fully paid and
non-assessable;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement will not contravene any provision of applicable law or
the certificate of incorporation or by-laws of the Company or, to
the best of such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a
whole, or, to the best of such counsel's knowledge, any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except such
as may be required by the securities or Blue Sky laws of the
various states or the securities laws of non-U.S. jurisdictions
in connection with the offer and sale of the Shares;
<PAGE>
(viii) the statements (A) in the Prospectus under the
captions "Management," "Principal and Selling Stockholders,"
"Certain Transactions," "Description of Capital Stock" and
"Underwriters" (only with respect to this Agreement) and (B) in
the Registration Statement in Items 14 and 15, in each case
insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the
matters referred to therein;
(ix) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries is a party or to which any
of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(x) the Company is not an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended;
(xi) Nothing has come to such counsel's attention that the
Company or any of its subsidiaries (A) are not in compliance with
any and all applicable Environmental Laws, (B) have not received
all permits, licenses or other approvals required of any of them
under applicable Environmental Laws to conduct their respective
businesses and (C) are not in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a
whole; and
(xii) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules and other financial and statistical data
included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (C) has no
reason to
<PAGE>
believe that (except for financial statements and schedules and
other financial and statistical data as to which such counsel
need not express any belief) the Prospectus contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an opinion of
Dickstein Shapiro Morin & Oshinsky LLP, counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Shareholder;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by each Selling Shareholder of its obligations
under, this Agreement will not contravene any provision of applicable
law, or the certificate or agreement of limited partnership of such
Selling Shareholder, or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Shareholder, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states or the
securities laws of non-U.S. jurisdictions in connection with offer and
sale of the Shares;
(iii) each Selling Shareholder has the legal right and power, and
all authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder;
(iv) each Selling Shareholder has record ownership and, to such
counsel's knowledge, beneficial ownership of the Shares to be sold by
it to the Underwriters pursuant to the Underwriting Agreement, and,
assuming that the Underwriters are "bona fide purchasers" (as defined
under Section 8-302 of the New York Uniform Commercial Code), upon
delivery of the certificates for any Shares to be sold by such Selling
Shareholder against payment therefor on the Option Closing Date the
Underwriters will acquire valid title to such Shares, free and clear
of any security interest or "adverse claims" within the meaning of
section 8-302 of the New York Uniform Commercial Code; and
(v) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial
<PAGE>
and statistical data included therein as to which such counsel need
not express any opinion) comply as to form in all material respects
with the Securities Act and the applicable rules and regulations of
the Commission thereunder, (B) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Registration Statement and the prospectus included therein at the
time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(e) The Underwriters shall have received on the Closing Date an
opinion of Sidley & Austin, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (v), (vi), (viii)
(but only as to the statements in the Prospectus under "Description of
Capital Stock" and "Underwriters") and (xii) of paragraph (c) above.
With respect to subparagraph (xii) of paragraph (c) and subparagraph
(v) of paragraph (d) above, Dickstein Shapiro Morin & Oshinsky LLP and
Sidley & Austin may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified. With respect to paragraph (d) above,
Dickstein Shapiro Morin & Oshinsky LLP may rely upon, with respect to
factual matters and to the extent such counsel deems appropriate, upon the
representations of the Selling Shareholders contained herein.
The opinions of Dickstein Shapiro Morin & Oshinsky LLP described in
paragraphs (c) and (d) above shall be rendered to the Underwriters at the
request of the Company or the Selling Shareholders, as the case may be, and
shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Price Waterhouse LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
<PAGE>
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
(h) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by a general partner of each
of the Selling Shareholders, to the effect that the representations and
warranties of the such Selling Shareholder contained in this Agreement are
true and correct as of the Closing Date and that such Selling Shareholder
has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before the Closing
Date.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives on the
Option Closing Date of such documents as you may reasonably request with respect
to the good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. local time on the business day next succeeding
the date of this Agreement and during the period mentioned in paragraph (c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel
<PAGE>
for the Underwriters, it is necessary to amend or supplement the Prospectus
to comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 1998, that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky
memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in
Section 7(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky, (iv) all filing fees and
disbursements of counsel to the Underwriters incurred in connection with
the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in
connection with the preparation and filing of the registration statement on
Form 8-A relating to the Common Stock and all costs and expenses incident
to listing the Shares on the Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges
of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
<PAGE>
Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 9 entitled "Indemnity and Contribution", and the last
paragraph of Section 11 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
(g) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required
by the National Association of Securities Dealers, Inc. (the "NASD") or the
NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement. Morgan Stanley will notify the Company as to which
Participants will need to be so restricted. At the request of Morgan
Stanley, the Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
(h) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with Morgan Stanley that the Company
will comply with all applicable securities and other applicable laws, rules and
regulations in each foreign jurisdiction in which the Directed Shares are
offered in connection with the Directed Share Program.
8. Expenses of Selling Shareholders. To the extent not paid by the Company,
each Selling Shareholder agrees to pay or cause to be paid (i) all taxes, if
any, on the transfer and sale of the Shares being sold by such Selling
Shareholder and (ii) such Selling Shareholder's pro rata share (determined by
dividing the number of Shares sold by such Selling Shareholder by the total
number of Shares sold by all Sellers) of all costs and expenses incident to the
performance of the obligations of the Selling Shareholders and the Company under
this Agreement, including, but not limited to, all expenses enumerated in
Section 7(f) above and the fees, disbursements and expenses of counsel for the
Selling Shareholders.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter
<PAGE>
within the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) The Company agrees to indemnify and hold harmless Morgan Stanley
and each person, if any, who controls Morgan Stanley within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("Morgan Stanley Entities"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged
untrue statement of a material fact contained in the prospectus wrapper
material prepared by or with the consent of the Company for distribution in
foreign jurisdictions in connection with the Directed Share Program
attached to the Prospectus or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading; (ii) caused by the failure of any Participant
to pay for and accept delivery of the shares which, immediately following
the effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, provided that, the Company
shall not be responsible under this subparagraph (iii) for any losses,
claim, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Morgan Stanley Entities.
(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and the Company, its
directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in
<PAGE>
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only with reference to information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through you expressly for use
in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(e) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraph (a), (b), (c) or (d) of this Section 9,
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood
<PAGE>
that the indemnifying party shall not, in respect of the legal expenses of
any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses
of more than one separate firm (in addition to any local counsel) for (i)
all Underwriters and all persons, if any, who control any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, (ii) the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (iii) the Selling
Shareholders and all persons, if any, who control any Selling Shareholder
within the meaning of either such Section, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of the
Underwriters, such firm shall be designated in writing by Morgan Stanley.
In the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be designated
in writing by the Company. In the case of any such separate firm for the
Selling Shareholders and such controlling persons of any Selling
Shareholder, such firm shall be designated in writing by the Selling
Shareholders. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding. Notwithstanding anything contained herein to the
contrary, if indemnity may be sought pursuant to Section 9(b) hereof in
respect of such action or proceeding, then in addition to such separate
firm for the indemnified parties, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for Morgan Stanley for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program, and all persons, if any, who control Morgan Stanley within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act.
(f) To the extent the indemnification provided for in paragraph (a),
(b), (c) or (d) of this Section 9 is unavailable to an indemnified party or
insufficient in respect of
<PAGE>
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand
in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on
the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by each Sellers and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table (and footnotes thereto) on the cover of the Prospectus,
bear to the aggregate Public Offering Price of the Shares. The relative
fault of the Sellers on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relate to information supplied by the
Sellers or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(g) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (f) of
this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent
<PAGE>
misrepresentation. The remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Selling
Shareholders or any person controlling any Selling Shareholder, or the
Company, its officers or directors or any person controlling the Company
and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II or Schedule III bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares
<PAGE>
without the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the
aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you, the Company and the Selling Shareholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders. In any such
case either you or the relevant Sellers shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased, the non-defaulting Underwriters shall have
the option to (i) terminate their obligation hereunder to purchase Additional
Shares or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
<PAGE>
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
OMNIQUIP INTERNATIONAL, INC.
By: /s/ P. ENOCH STIFF
---------------------
Name: P. Enoch Stiff
Title: President and Chief Executive Officer
HARBOUR GROUP INVESTMENTS III, L.P.
By: Harbour Group III Management Co., L.P.,
General Partner
By: /s/ OFFICER OF HGM III CO. (SEE BELOW)
--------------------------------------
HGM III Co., General Partner
By: /s/ WILLIAM A. SCHMALZ
--------------------------
Name: William A. Schmalz
Title: Vice Chairman & Secretary
UNIQUIP-HGI ASSOCIATES, L.P.
By: /s/ OFFICER OF HARBOUR GROUP
INDUSTRIES, INC. (SEE BELOW)
--------------------------------
Harbour Group Industries, Inc.,
General Partner
By: /s/ WILLIAM A. SCHMALZ
--------------------------
Name: William A. Schmalz
Title: Asst. Secretary
<PAGE>
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
Acting severally on behalf
of themselves and the
several U.S. Underwriters
named herein.
By: Morgan Stanley & Co.
Incorporated
By: /s/ JOHN F. SPENCE
-----------------------
Name: John F. Spence
Title: Principal
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird Incorporated
Acting severally on behalf
of themselves and the
several International
Underwriters named herein.
By: Morgan Stanley & Co.
International Limited
By: /s/ JOHN F. SPENCE
------------------------
Name: John F. Spence
Title: Attorney-in-fact
<PAGE>
SCHEDULE I
FIRM SHARES
Harbour Group Investments III, L.P. ............ 4,455,000
Uniquip-HG Associates, L.P. ..................... 545,000
---------
Total 5,000,000
=========
ADDITIONAL SHARES
Harbour Group Investments III, L.P. ............. 1,069,200
Uniquip-HG Associates, L.P. ..................... 130,800
---------
Total 1,200,000
=========
.
<PAGE>
SCHEDULE II
U.S. Underwriters
-----------------
Number of
Firm Shares
U.S. Underwriter to be Purchased
- ---------------- ---------------
Morgan Stanley & Co. Incorporated ................. 1,230,000
Credit Suisse First Boston Corporation ............ 1,230,000
Schroder Wertheim & Co. Incorporated .............. 1,230,000
Robert W. Baird & Co. Incorporated ................ 1,230,000
Sanford C. Bernstein & Co., Inc. .................. 60,000
Alex. Brown & Sons Incorporated ................... 100,000
Dain Bosworth Incorporated ........................ 60,000
Dean Witter Reynolds Inc. ......................... 100,000
Dillon, Read & Co. Inc. ........................... 100,000
Donaldson, Lufkin & Jenrette Securities
Corporation .................................. 100,000
A.G. Edwards & Sons, Inc. ......................... 100,000
Everen Securities, Inc. ........................... 60,000
Goldman, Sachs & Co. .............................. 100,000
GS2 Securities, Inc. .............................. 60,000
Edward D. Jones & Co., L.P. ....................... 60,000
Legg Mason Wood Walker,
Incorporated ................................. 60,000
McDonald & Company Securities, Inc. ............... 60,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ................................ 100,000
Oppenheimer & Co., Inc. ........................... 100,000
Paine Webber Incorporated ......................... 100,000
Rauscher Pierce Refsnes, Inc. ..................... 60,000
Smith Barney Inc. ................................. 100,000
---------
Total U.S. Firm Shares ............................ 6,400,000
=========
<PAGE>
SCHEDULE III
International Underwriters
--------------------------
Number of
Firm Shares
International Underwriter to be Purchased
- ------------------------- ---------------
Morgan Stanley & Co. International
Limited ......................................... 400,000
Credit Suisse First Boston (Europe) Limited ...... 400,000
J. Henry Schroder & Co. Limited .................. 400,000
Robert W. Baird & Co. Incorporated ............... 400,000
---------
Total International Firm Shares .................. 1,600,000
=========
<PAGE>
EXHIBIT A
, 1997
-----------------
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs:
The undersigned understands that Morgan Stanley & Co. Incorporated ("Morgan
Stanley"), as a Representative of the several U.S. Underwriters, and Morgan
Stanley & Co. International Limited, as a Representative of the International
Underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Omniquip International, Inc., a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
several U.S. Underwriters and International Underwriters, including Morgan
Stanley (collectively, the "Underwriters"), of 8,000,000 shares (plus 1,200,000
shares subject to the Underwriter's over-allotment option) (the "Shares") of the
Common Stock, $.01 par value, of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) 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
<PAGE>
convertible into or exercisable or exchangeable for Common Stock (provided that
such shares or securities are either now owned by the undersigned or are
hereafter acquired prior to or in connection with the Public Offering), or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the sale of any Shares to
the Underwriters pursuant to the Underwriting Agreement, the grant by the
Company of any options to purchase Shares to the undersigned under any benefit
plan of the Company described in the Prospectus or the exercise by the
undersigned of any option granted by the Company under any benefit plan of the
Company described in the Prospectus. In addition, the undersigned agrees that,
without the prior written consent of Morgan Stanley on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company, any selling stockholders and the Underwriters.
By:
---------------------------
Name:
-------------------------
------------------------------
------------------------------
(Address)
OMNIQUIP INTERNATIONAL, INC.
Common Stock
($0.01 Par Value Per Share)
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT made this 20th day of March, 1997, by and
among Omniquip International, Inc., a Delaware corporation (the "Company"), and
Harbour Group Investments III, L.P., a Delaware limited partnership, and
Uniquip-HGI Associates, L.P., a Delaware limited partnership (collectively, the
"Selling Stockholders").
WHEREAS, the Company has filed with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Act of 1933, as amended (the
"Act"), a Registration Statement (as finally declared effective, the
"Registration Statement") on Form S-1 (File No. 333-13181) pursuant to which the
Company and the Selling Stockholders propose to sell to the public an aggregate
of 8,000,000 shares of the Company's Common Stock through several underwriters
led by Morgan Stanley & Co. Incorporated, CS First Boston Corporation, Schroder
Wertheim & Co. Incorporated and Robert W. Baird & Co. Incorporated and certain
of their respective affiliates (collectively the "Underwriters"), in connection
with an offering pursuant to an underwriting agreement (the "Underwriting
Agreement") to be entered into by the Company, the Selling Stockholders and the
Underwriters. In addition, the Selling Stockholders propose to grant the
Underwriters an option to purchase up to an additional 1,200,000 shares of the
Company's Common Stock solely to cover over-allotments.
<PAGE>
WHEREAS, the Underwriting Agreement contains certain provisions with
respect to the obligations and liabilities between the Company and the Selling
Stockholders on the one hand and the Underwriters on the other.
WHEREAS, the Underwriters require the Selling Stockholders to agree to
indemnify the Company and the Underwriters for certain liabilities.
WHEREAS, that certain Letter Agreement dated September 30, 1996 (the
"Registration Rights Agreement") between the Company and the Selling
Stockholders requires the Company and the Selling Stockholders to indemnify each
other for certain liabilities.
WHEREAS, the Company and the Selling Stockholders desire to set forth the
obligations and liabilities between and among each other arising out of their
respective obligations and liabilities under the Underwriting Agreement and the
Registration Rights Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Company agrees to indemnify and hold harmless the Selling
Stockholders and each person, if any, who controls each Selling Stockholder
within the meaning of the Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), against any losses, claims, damages or liabilities, joint
or several, to which any such person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the forms of prospectus first filed with the Commission pursuant to
Page 2
<PAGE>
and in accordance with Rule 424(b) under the Act or (if no such filing is
required) the prospectus contained in the Registration Statement, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; and the Company will reimburse each Selling Stockholder
and each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Selling Stockholder or any
controlling person thereof specifically for use therein; and provided further
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this Section 1 shall not inure to the benefit of any
entity or firm or any controlling person thereof from whom the person asserting
such losses, claims, damages or liabilities purchased the shares of Common Stock
concerned, to the extent that any such loss, claim, damage or liability of such
entity, firm or controlling person results from the fact that there was not sent
or given to such person, at or prior to the written confirmation of the sale of
such shares of Common Stock to such person, a copy of the Prospectus, if
required by the Act.
2. Each Selling Stockholder agrees, severally and not jointly, to indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act against any losses,
claims, damages or liabilities,
Page 3
<PAGE>
joint or several, to which any such person may become subject, under the Act or
otherwise insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, the
forms of prospectus first filed with the Commission pursuant to and in
accordance with Rule 424(b) under the Act or (if no such filing is required) the
prospectus contained in the Registration Statement, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by the Selling Stockholder specifically for use therein; and the Selling
Stockholder will reimburse any legal and other expenses reasonably incurred by
the Company, any such director, officer or controlling person thereof in
connection with investigating or defending any such loss, claim, damage or
liability or action as such expenses are incurred; provided, however, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, the indemnity agreement contained
in this Section 2 shall not inure to the benefit of any entity or firm or any
controlling person thereof from whom the person asserting such losses, claims,
damages or liabilities purchased the shares of Common Stock concerned, to the
extent that any such loss, claim, damage or liability of such entity, firm or
controlling person results from the fact that there was not sent or given to
such person, at or prior to the written confirmation of the sale of such shares
of Common Stock to such person, a copy of the Prospectus, if required by the
Act.
3. Promptly after receipt by an indemnified party under this Agreement of
notice of the commencement of any action, such indemnified party will, if a
claim in respect
Page 4
<PAGE>
thereof is to be made against any indemnifying party under this Agreement,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from liability which it may
have to any indemnified party pursuant to Sections 1 or 2 of this Agreement,
except to the extent that it was unaware of such action and has been materially
prejudiced by such failure, or from any liability which it may have to any
indemnified party otherwise than pursuant to Sections 1 and 2 of this Agreement.
In case any such action is brought against any indemnified party and it notifies
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and, to the extent the indemnifying party
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying party be liable for
the fees and expenses of more than one counsel (in addition to any local
counsel) for all such indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
Page 5
<PAGE>
4. If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under Sections 1 or 2 above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section 1 or 2 above (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other from the offering of the Common Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party on the one hand and the indemnified party on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the indemnifying party and the indemnified party. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omissions or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by any
party as a result of the losses, claims, damages, or liabilities referred to in
the first sentence of this Section shall be deemed to include any legal or other
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim which is the subject of this Section. No person
guilty of fraudulent misrepresentation (within the meaning of
Page 6
<PAGE>
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
5. The obligations of the Company and the Selling Stockholders under this
Agreement shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have.
6. It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth herein, including the amounts of
any requested reimbursement payments and the method of determining such amounts,
shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock Exchange,
Inc. or pursuant to the Code of Arbitration Procedure of the NASD or, if any
such arbitration procedure is unavailable, pursuant to the rules of the American
Arbitration Association. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Section 3 hereof and would not
resolve the ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Section 3 hereof.
7. In the event the Company and the Selling Stockholders shall be liable to
reimburse the Underwriters for out-of-pocket expenses incurred by the
Underwriters as a consequence of the refusal, failure or inability by the
Company or any Selling Stockholder to perform any undertaking or obligation
required to be performed by the Underwriting Agreement, the Company and each of
the Selling Stockholders agree that the person who
Page 7
<PAGE>
fails to perform its respective obligations shall be liable to the party who has
not defaulted in its obligations under the Underwriting Agreement for all
amounts required to be paid by the Company and the Selling Stockholders pursuant
to the Underwriting Agreement.
8. Any notice, claim or demand hereunder shall be made in writing and shall
be sufficient if given as provided in the Underwriting Agreement.
9. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
10. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to such jurisdiction's
conflicts of laws principles.
11. This Agreement may be executed by one or more parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall be deemed to be one and the same instrument.
12. Except as otherwise specifically defined herein, all capitalized terms
used in this Agreement shall have the meanings assigned such terms in the
Underwriting Agreement.
Page 8
<PAGE>
IN WITNESS WHEREOF, the parties below have caused the foregoing to be
executed on their behalf this 20th day of March, 1997.
OMNIQUIP INTERNATIONAL, INC.
By: /s/ Philip G. Franklin
-------------------------------------
Name: Philip G. Franklin
Title: Vice President - Finance and
Chief Financial Officer
HARBOUR GROUP INVESTMENTS III, L.P.
By: HARBOUR GROUP III MANAGEMENT
CO., L.P., General Partner
By: HGM III CO., General Partner
By: /s/ William A. Schmalz
--------------------------------
Name: William A. Schmalz
Title: Vice Chairman & Secretary
UNIQUIP-HGI ASSOCIATES, L.P.
By: HARBOUR GROUP INDUSTRIES, INC.
General Partner
By: /s/ William A. Schmalz
--------------------------------
Name: William A. Schmalz
Title: Asst. Secretary
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ATTACHED
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 25,403
<ALLOWANCES> 384
<INVENTORY> 30,234
<CURRENT-ASSETS> 60,796
<PP&E> 18,857
<DEPRECIATION> 2,826
<TOTAL-ASSETS> 144,332
<CURRENT-LIABILITIES> 40,612
<BONDS> 44,610
0
0
<COMMON> 143
<OTHER-SE> 57,789
<TOTAL-LIABILITY-AND-EQUITY> 144,332
<SALES> 63,452
<TOTAL-REVENUES> 63,452
<CGS> 46,345
<TOTAL-COSTS> 53,064
<OTHER-EXPENSES> 442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,883
<INCOME-PRETAX> 8,063
<INCOME-TAX> 3,266
<INCOME-CONTINUING> 4,797
<DISCONTINUED> 0
<EXTRAORDINARY> (782)
<CHANGES> 0
<NET-INCOME> 4,015
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
