<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 1995
REGISTRATION NO. 33-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROBBINS & MYERS, INC.
Ohio
(STATE OF INCORPORATION)
31-424220
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
1400 Kettering Tower, Dayton, Ohio 45423
(513) 222-2610
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
Joseph M. Rigot
Thompson, Hine and Flory
2000 Courthouse Plaza, N.E.
Dayton, Ohio 45402
(513) 443-6586
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copy to:
W. Brinkley Dickerson, Jr.
Schiff Hardin & Waite
7200 Sears Tower
Chicago, IL 60606
(312) 876-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Shares, without par
value....................... 1,265,000(2) $32.00 $40,480,000 $13,959
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and low
prices reported on the Nasdaq National Market on December 8, 1995.
(2) Includes up to 165,000 shares which may be purchased by the Underwriters to
cover over-allotments, if any.
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 13, 1995
PROSPECTUS
1,100,000 SHARES
ROBBINS & MYERS, INC.
COMMON SHARES
---------------------------
All of the 1,100,000 Common Shares offered hereby are being sold by Robbins
& Myers, Inc. (the "Company").
The Common Shares of the Company are traded on the Nasdaq National Market
under the symbol "ROBN." On December 12, 1995, the last reported sale price of
the Company's Common Shares on the Nasdaq National Market was $31.00 per share.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share.......................... $ $ $
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Total(3)........................... $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $ payable by the Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
165,000 additional Common Shares on the same terms and conditions as set
forth above, to cover over-allotments, if any. If such option is exercised
in full, the total Price to Public, Underwriting Discounts and Commissions,
and Proceeds to the Company will be $ , $ , and
$ , respectively. See "Underwriting."
---------------------------
The Common Shares offered by this Prospectus are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the Common
Shares will be made at the offices of Lehman Brothers Inc., New York, New York
on or about January , 1996.
---------------------------
LEHMAN BROTHERS SCHRODER WERTHEIM & CO.
January , 1996
<PAGE> 3
This diagram, prepared by Robbins & Myers, Inc., depicts the sectors of the
process industries served by the Company, fundamental processes of fluids
management systems, and the range of products utilized in these systems.
[Description of Chart for EDGAR filing only.]
LOGO
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such materials also can be obtained from the Public Reference Branch of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-288) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1995 filed pursuant to Section 13 of the Exchange Act (the "Form
10-K").
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1995 filed pursuant to Section 13 of the Exchange Act (the
"Form 10-Q").
3. The description of the Company's Common Shares contained in its
Registration Statement on Form 10 filed with the Commission on April 19,
1965, as amended by Form 10/A-2, filed on December 13, 1995.
4. All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering. Any
statement incorporated herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, in a Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents which are
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such document).
Requests for such documents should be directed to the principal executive
offices of Robbins & Myers, Inc., 1400 Kettering Tower, Dayton, Ohio 45423,
(513)222-2610.
---------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
SHARES OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE
10b-6A UNDER THE EXCHANGE ACT. SEE "UNDERWRITING."
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere, or incorporated by reference, in this Prospectus. Unless
otherwise indicated, all information in this Prospectus is based on the
assumption that the Underwriters' over-allotment option is not exercised.
THE COMPANY
The Company designs, manufactures and markets highly-engineered fluids
management products for the process industries on a global basis. The Company's
four product lines are glass-lined storage and reactor vessels (38% of fiscal
1995 sales), progressing cavity products (30%), mixing and turbine agitation
equipment (22%), and related products such as engineered systems, fluoropolymer
linings, and valves (10%). The Company's customers include the chemical,
pharmaceutical, oil and gas, wastewater treatment, pulp and paper, food and
beverage, and mining industries.
The Company has achieved leading market shares in each of its main product
lines: first worldwide in glass-lined storage and reactor vessels, first
domestically in progressing cavity products and second worldwide in mixing and
turbine agitation equipment. Its principal brandnames -- Pfaudler, Moyno, and
Chemineer -- are well-recognized in the marketplace and are associated with
quality products and extensive customer support, including product application
engineering, state-of-the-art customer test facilities, and strong aftermarket
service and support.
Since February 1992, the Company has completed six acquisitions as part of
a strategy to leverage its fluids management expertise, its leadership in
progressing cavity technology, and its operating capabilities into a portfolio
of highly-engineered, fluids management products and services. The most
significant of these acquisitions occurred in June 1994 when the Company
acquired its Pfaudler, Chemineer and Edlon business units. These acquisitions
tripled the sales of the Company and provided leading worldwide positions in two
additional core product lines for served markets.
The Company seeks consistent operating performance by offering a portfolio
of brandname products to diverse sectors of the process industries, both
domestically and internationally, and by maintaining a strong aftermarket (parts
and service) business. The Company has a strong presence throughout the process
industries and is not significantly dependent on any one sector. It also has
achieved a balance of domestic and international sales, with international sales
accounting for approximately 45% of sales in fiscal 1995. The Company's large
base of installed equipment, coupled with its emphasis on customer service and
global presence, has resulted in a strong aftermarket business (which accounted
for approximately 38% of sales in fiscal 1995).
The Company's strategy for future growth and improved profitability is to
capitalize on its competitive strengths to take advantage of the increasing
desire of customers for a limited number of preferred suppliers serving their
worldwide needs. Elements of this strategy include continued focus on
responsiveness to customers, further geographic expansion, product line
extension through internal growth, strategic acquisitions and alliances,
implementation of ongoing operational improvements, and leveraging internal
cross-selling opportunities.
THE OFFERING
<TABLE>
<S> <C>
Common Shares offered by the Company............................ 1,100,000
Common Shares to be outstanding after the Offering (1).......... 6,322,571
Use of Proceeds................................................. To repay certain bank
indebtedness incurred in
connection with acquisitions.
Nasdaq Symbol................................................... ROBN
</TABLE>
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(1) Based on actual shares outstanding as of December 12, 1995, excluding
399,350 shares issuable after December 12, 1995 upon exercise of options
granted under employee benefit plans, with an average exercise price of
$16.50 per share.
3
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS ENDED
AT OR FOR THE YEAR ENDED AUGUST 31, NOVEMBER 30,
------------------------------------------------- -------------------
1991 1992 1993 1994(1) 1995(1) 1994 1995
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................ $78,662 $75,588 $85,057 $121,647 $302,952 $ 68,628 $ 81,212
Gross profit......................... 29,247 30,080 32,761 44,981 101,304 23,041 27,103
Operating income(2).................. 10,915 10,715 10,590 16,248 27,070 6,054 7,967
Income before income taxes........... 9,711 9,832 9,746 10,645 19,033 4,331 6,664
Net income (loss)(3)................. 5,012 7,873 (1,840) 6,355 13,157 2,915 4,098
Net income (loss) per share, fully
diluted(3)......................... $.96 $1.50 $(.35) $1.21 $2.42 $.55 $.75
Dividends declared per share......... .1375 .1875 .2375 .2875 .30 .075 .075
BALANCE SHEET DATA:
Total assets......................... $69,258 $74,318 $84,636 $258,130 $270,407 $260,611 $300,136
Long-term debt....................... 879 906 0 80,290 61,834 80,618 80,510
Total debt........................... 1,094 939 971 83,790 67,901 84,118 92,590
Shareholders' equity................. 49,232 56,310 52,342 57,039 69,939 59,801 73,755
Total debt to total
capitalization(4).................. 2.2% 1.6% 1.8% 59.5% 49.3% 58.4% 55.7%
OTHER DATA:
EBITDA............................... $11,771 $12,335 $12,660 $ 16,482 $ 37,576 $ 8,887 $ 11,534
Capital expenditures................. 4,240 4,749 2,579 6,798 10,133 1,867 4,147
Backlog at period-end................ 17,762 12,210 20,248 73,944 107,423 77,552 109,684
Return on average common equity(5)... 18.5% 14.9% 11.4% 11.6% 18.6% 20.0% 22.8%
</TABLE>
- ---------------
(1) Results for Pfaudler, Chemineer, and Edlon, which were acquired on June 30,
1994, are included for two months in fiscal 1994 and 12 months in fiscal
1995.
(2) Represents earnings before taxes, interest, restructuring charges of $950 in
1993 and $2,551 in 1994 and other income or expenses. See "Selected
Consolidated Financial Data."
(3) Includes aftertax (charges) of $(3,658), $(.71) per share, in 1991 for
discontinued operation and $(8,018), $(1.52) per share, in 1993 for
cumulative effect of accounting changes and an aftertax gain of $1,332, $.25
per share, in 1995 for early extinguishment of debt.
(4) Total capitalization consists of short-term debt, long-term debt and
shareholders' equity.
(5) Annualized for the three month periods.
4
<PAGE> 7
USE OF PROCEEDS
The net proceeds to the Company from the sale of Common Shares in the
Offering are estimated to be $ ($ if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use such net proceeds to repay certain outstanding bank indebtedness that was
incurred in connection with acquisitions.
As of November 30, 1995, the outstanding indebtedness under the Company's
bank credit agreement was comprised of a $36,500,000 term loan and $28,300,000
related to a revolving credit facility. The principal of the term loan is
payable in quarterly installments through 2001. Interest rates on both the term
loan and revolving credit facility are, at the Company's option, based upon
prime rates or a formula tied to LIBOR rates. The effective annual interest rate
on the loans was 7.85% at November 30, 1995 and was 7.87% at November 30, 1994.
CAPITALIZATION
The following table sets forth the capitalization of the Company at
November 30, 1995 and as adjusted to reflect the issuance and sale of 1,100,000
Common Shares by the Company in the Offering and the anticipated use of the
estimated net proceeds therefrom.
<TABLE>
<CAPTION>
NOVEMBER 30, 1995
-----------------------
AS
ACTUAL ADJUSTED
--------- ---------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
SHORT-TERM DEBT:
Current portion of long-term debt......................... $ 12,080 $
LONG-TERM DEBT (LESS CURRENT PORTION):
Senior debt............................................... 54,213
Subordinated debt......................................... 26,297
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Total long-term debt................................... 80,510
--------- ---------
TOTAL DEBT........................................ 92,590
SHAREHOLDERS' EQUITY:
Common shares
Authorized shares--25,000,000
Outstanding shares--5,222,571 (6,322,571 as
adjusted)(1)........................................... 21,471
Retained earnings......................................... 52,957
Equity adjustment for foreign currency translation........ 101
Equity adjustment to recognize minimum pension
liability.............................................. (774) ()
--------- ---------
TOTAL SHAREHOLDERS' EQUITY........................ 73,755
--------- ---------
TOTAL CAPITALIZATION(2)......................... $ 166,345 $
======== ========
</TABLE>
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(1) Excludes 399,350 Common Shares issuable upon exercise of options granted
under employee benefit plans, with an average exercise price of $16.50 per
share.
(2) Total capitalization consists of short-term debt, long-term debt and
shareholders' equity.
5
<PAGE> 8
PRICE RANGE OF COMMON SHARES AND DIVIDENDS
The Common Shares of the Company are traded on the Nasdaq National Market
under the symbol ROBN. The following table sets forth the high and low sale
prices of the Common Shares, as reported on the Nasdaq National Market, and
dividends paid per share for the periods presented.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
---- ---- ---------
<S> <C> <C> <C>
FISCAL 1994
Quarter Ended:
November 30, 1993............................................. $20 3/4 $15 1/2 6 1/4 cents
February 28, 1994............................................. 19 15 1/2 7 1/2 cents
May 31, 1994.................................................. 20 1/2 17 7 1/2 cents
August 31, 1994............................................... 20 1/4 18 7 1/2 cents
FISCAL 1995
Quarter Ended:
November 30, 1994............................................. $20 1/5 $16 3/4 7 1/2 cents
February 28, 1995............................................. 22 3/4 16 1/2 7 1/2 cents
May 31, 1995.................................................. 28 1/2 20 3/4 7 1/2 cents
August 31, 1995............................................... 28 3/4 25 7 1/2 cents
FISCAL 1996
Quarter Ended:
November 30, 1995............................................. $35 $27 1/4 7 1/2 cents
2nd Quarter through December 12, 1995......................... 33 29 1/2 --
</TABLE>
On December 12, 1995, the last reported sale price for the Common Shares on
the Nasdaq National Market was $31.00 per share.
6
<PAGE> 9
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The following table presents selected consolidated financial data of the
Company for the last five fiscal years ended August 31 and for the three-month
periods ended November 30, 1994 and 1995. The selected consolidated financial
data for the full year periods has been derived from audited consolidated
financial statements of the Company. Such selected financial data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included herein and the consolidated financial
statements of the Company and the notes thereto included in the Company's Form
10-K and Form 10-Q, which are incorporated herein by reference.
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS ENDED
AT OR FOR THE YEAR ENDED AUGUST 31, NOVEMBER 30,
--------------------------------------------------------- ----------------------
1991 1992 1993 1994(1) 1995(1) 1994 1995
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................. $78,662 $75,588 $85,057 $121,647 $302,952 $ 68,628 $ 81,212
Cost of sales......................... 49,415 45,508 52,296 76,666 201,648 45,587 54,109
------- ------- ------- -------- -------- -------- --------
Gross profit.......................... 29,247 30,080 32,761 44,981 101,304 23,041 27,103
Engineering and development, selling
and administrative expenses......... 18,332 19,365 22,171 28,733 74,234 16,987 19,136
------- ------- ------- -------- -------- -------- --------
Operating income...................... 10,915 10,715 10,590 16,248 27,070 6,054 7,967
Interest.............................. 88 61 116 1,457 7,287 1,795 1,670
Other(2).............................. 1,116 822 728 4,146 750 (72) (367)
------- ------- ------- -------- -------- -------- --------
Income before income taxes............ 9,711 9,832 9,746 10,645 19,033 4,331 6,664
Income taxes.......................... 1,041 1,959 3,568 4,290 7,208 1,416 2,566
------- ------- ------- -------- -------- -------- --------
Income before special items........... 8,670 7,873 6,178 6,355 11,825 2,915 4,098
Special items, net of tax(3).......... (3,658) -- (8,018) -- 1,332 -- --
------- ------- ------- -------- -------- -------- --------
Net income (loss)..................... $ 5,012 $ 7,873 $(1,840) $ 6,355 $ 13,157 $ 2,915 $ 4,098
======= ======= ======= ======== ======== ======== ========
Income per share, fully diluted,
before special items................ $ 1.67 $ 1.50 $ 1.17 $ 1.21 $ 2.17 $ .55 $ .75
Special items, net of tax, per share,
fully diluted(3).................... (.71) -- (1.52) -- .25 -- --
------- ------- ------- -------- -------- -------- --------
Net income (loss) per share, fully
diluted............................. $ .96 $ 1.50 $ (.35) $ 1.21 $ 2.42 $ .55 $ .75
======= ======= ======= ======== ======== ======== ========
Dividends declared per share.......... $ .1375 $ .1875 $ .2375 $ .2875 $ .30 $ .075 $ .075
Weighted average number of common
shares outstanding, fully diluted... 5,221 5,249 5,257 5,252 5,437 5,276 5,486
BALANCE SHEET DATA:
Total assets.......................... $69,258 $74,318 $84,636 $258,130 $270,407 $260,611 $300,136
Long-term debt........................ 879 906 0 80,290 61,834 80,618 80,510
Total debt............................ 1,094 939 971 83,790 67,901 84,118 92,590
Shareholders' equity.................. 49,232 56,310 52,342 57,039 69,939 59,801 73,755
Total debt to total
capitalization(4)................... 2.2% 1.6% 1.8% 59.5% 49.3% 58.4% 55.7%
OTHER DATA:
EBITDA................................ $11,771 $12,335 $12,660 $ 16,482 $ 37,576 $ 8,887 $ 11,534
Capital expenditures.................. 4,240 4,749 2,579 6,798 10,133 1,867 4,147
Backlog at period-end................. 17,762 12,210 20,248 73,944 107,423 77,552 109,684
Return on average common equity(5).... 18.5% 14.9% 11.4% 11.6% 18.6% 20.0% 22.8%
</TABLE>
- ---------------
(1) Results of Pfaudler, Chemineer, and Edlon, which were acquired on June 30,
1994, are included for two months in 1994 and 12 months in 1995.
(2) Includes restructuring charges of $950 in 1993 and $2,551 in 1994.
(3) Special items are: 1991 -- discontinued operation, 1993 -- cumulative effect
of accounting changes, and 1995 -- extraordinary gain on debt
extinguishment.
(4) Total capitalization consists of short-term debt, long-term debt and
shareholders' equity.
(5) Annualized for the three month periods.
7
<PAGE> 10
BUSINESS
The Company designs, manufactures and markets highly-engineered fluids
management products for the process industries on a global basis. The Company's
four product lines are glass-lined storage and reactor vessels (38% of fiscal
1995 sales), progressing cavity products (30%), mixing and turbine agitation
equipment (22%), and related products, such as engineered systems, fluoropolymer
linings, and valves (10%). The Company's customers include the chemical,
pharmaceutical, oil and gas, wastewater treatment, pulp and paper, food and
beverage, and mining industries.
The Company has achieved leading market shares in each of its main product
lines: first worldwide in glass-lined storage and reactor vessels, first
domestically in progressing cavity products, and second worldwide in mixing and
turbine agitation equipment. Its principal brandnames -- Pfaudler, Moyno, and
Chemineer -- are well-known in the marketplace and are associated with quality
products and extensive customer support, including product application
engineering, state-of-the-art customer test facilities, and strong aftermarket
service and support.
The Company has manufacturing facilities in the United States, Germany,
Scotland, England, Mexico, Brazil, Belgium, and, through a 40%-owned affiliate,
in India.
DEVELOPMENT OF FLUIDS MANAGEMENT BUSINESS
The Company has capitalized on its fluids management expertise, its leading
domestic market position in progressing cavity technology, and its operating
strengths to build, through acquisitions and internal development, a business
committed to serving the fluids management needs of the process industries on a
worldwide basis. A critical component of this process was the completion by the
Company of six acquisitions since February 1992, which tripled the Company's
sales. As a result, the Company believes it has achieved the critical mass and
competitive profile necessary to serve its customers successfully in world
markets.
FLUIDS MANAGEMENT EXPERTISE. As an industry leader in glass-lined reactor
vessels, progressing cavity technology, and industrial mixers, the Company has a
broad understanding of fluid dynamics and its application to the process
industries. The Company can offer its customers state-of-the-art test
facilities, extensive application engineering expertise, and strong aftermarket
support and service capabilities.
LEADING MARKET POSITIONS. The Company has achieved leading market shares
in glass-lined vessels, progressing cavity products and industrial mixers. This
product portfolio offers more opportunities to enter new geographic markets,
provides an installed base of products to support and build the Company's
aftermarket business, and facilitates expansion of business with existing
customers through cross-selling and the development of preferred supplier
relationships.
GLOBAL PRESENCE. The Company has manufacturing facilities in eight
countries and distributors and representatives throughout the world. This
presence enables the Company to respond to customers' desires to establish, on a
global basis, continuing relationships with a limited number of preferred
suppliers who offer quality products and service on a timely and cost-effective
basis.
DIVERSIFIED REVENUE BASE. The Company has a balance in its business as a
result of selling a diverse portfolio of products, serving various sectors of
the process industries, having an almost equal mix between domestic and
international sales, and emphasizing its aftermarket business. This diversity
lessens the impact on the Company of adverse general economic conditions and
business cycles in individual sectors within the process industries.
OPERATING PERFORMANCE. The Company has a demonstrated ability to
effectively operate its existing businesses and has been able to improve the
profitability of acquired businesses. For example, the operating margins of
Pfaudler, Chemineer and Edlon, combined, improved from 6.4% for the three month
period ended November 30, 1994 (the first full fiscal quarter following
acquisition by the Company) to 9.6% for the three month period ended November
30, 1995.
8
<PAGE> 11
STRATEGY
The Company's strategy for future growth and improved profitability is to
capitalize on its competitive strengths to take advantage of the increasing
desire of customers for a limited number of preferred suppliers serving their
needs on a global basis. Elements of this strategy include continued focus on
responsiveness to customers, further geographic expansion, product line
extension through internal growth, strategic acquisitions and alliances,
implementation of ongoing operational improvements, and leveraging internal
cross-selling opportunities.
CUSTOMER RESPONSIVENESS. Customers increasingly are seeking to establish
continuing relationships with a reduced number of preferred suppliers which
offer timely and cost effective delivery of high quality products, application
engineering expertise and service on a global basis. To capitalize on this
demand, the Company is expanding its customer service network and reducing
response time for product design, fabrication and delivery through the use of
new computer-based business systems, concurrent design and manufacturing
methods, a decentralized organizational structure and an expanded manufacturing
capability.
GEOGRAPHIC EXPANSION. The Company intends to expand its operations through
acquisitions, strategic alliances, and internal growth in geographic areas in
which it has a limited presence. Several of the Company's key customers, seeking
to serve emerging economies with a local presence, are expanding their
operations in less developed regions. The Company intends to focus significant
efforts in these areas, particularly the Pacific Rim. The Company believes its
expertise in international operations, portfolio of brandname products, and
existing customer base will provide important competitive advantages in this
effort.
PRODUCT LINE EXTENSIONS. The Company has development programs underway to
adapt its products for applications in additional markets. These programs
include the redesign and expansion of its portable mixer line, modification of
its progressing cavity oilfield products to expand their capability in oil and
gas recovery and drilling, and the development of a new industrial progressing
cavity product line to better compete in international and positive displacement
markets not currently served.
STRATEGIC ACQUISITIONS. Strategic acquisitions have been, and management
believes will continue to be, an important element of the Company's growth
strategy. Any such acquisitions are expected to complement the Company's
existing capabilities. Through its recent acquisitions, the Company has
demonstrated its ability to integrate and improve the operations of acquired
businesses.
OPERATIONAL IMPROVEMENTS. As part of a continuous improvement objective,
the Company is in the process of a comprehensive review of the operations of its
acquired businesses. As a result of these initiatives the Company has achieved
and expects future additional operating improvements from such items as the
implementation of re-engineered business methods and related organizational
structure, the installation of new computer-based business systems at several
key facilities, consolidation of operations at lower cost facilities, and
broader implementation of alternative manufacturing strategies, such as cell
manufacturing. These programs have been beneficial for existing businesses and
the Company intends to execute similar improvements with any additional
businesses it acquires.
CROSS-SELLING OPPORTUNITIES. The Company's operating units currently
market their product lines through different distribution channels, with varying
emphasis on particular sectors of the process industries. In 1995, the Company
initiated programs to cross sell products to sectors of the process industries
which are currently underserved by a particular product line's existing
distribution system.
COMPANY PRODUCTS
Glass-Lined Storage and Reactor Vessels
The Company's Pfaudler unit manufactures and sells glass-lined storage and
reactor vessels and related equipment for use in the chemical, pharmaceutical,
and petrochemical industries. Reactor vessels perform critical functions in the
production process by providing a temperature, agitation and pressure controlled
environment for often complex chemical reactions.
9
<PAGE> 12
The Pfaudler unit fabricates steel vessels and bonds glass to the interior
of vessels to form a fused composite, referred to as Glasteel(R),
which provides a vessel in which materials can be processed or stored in an
inert, nonsticking, corrosion-resistant environment. Reactor vessels range in
capacities from one to 15,000 gallons, are generally custom-ordered and
designed and can be equipped with various accessories, such as agitators,
instrumentation and baffles. Storage vessels have capacities up to 25,000
gallons.
Progressing Cavity Products
Progressing cavity technology is used in pump products sold to industrial
markets, principally the waste-water, pulp and paper, food and beverage,
pharmaceutical and chemical markets, and pumps and power sections for the oil
and gas recovery and drilling markets. A progressing cavity pump consists of a
high strength, single helix steel rod (called the rotor) which rotates in a
double helix elastomer-lined steel tube (called the stator). The rotor generates
positive displacement in the stator to deliver uniform fluid flow, at rates
proportional to the rotational speed of the rotor.
For industrial markets, the Company markets a wide range of progressing
cavity pumps under the brand names Moyno(R) and R&M(R). Progressing cavity
pumps are versatile as they can be positioned at any angle and can deliver
flow in either direction, without modification or accessories. These pumps are
able to handle fluids ranging from high pressure water and shear sensitive
materials to heavy, viscous, abrasive, solid-laden slurries and sludges.
For oil and gas markets, the Company manufactures and sells down-hole pumps
and power sections used to drive the drilling element in the drilling of wells.
The ability of the progressing cavity technology to be used in severe pumping
applications and also as a hydraulic motor has enabled the Company to become a
leader in the development of pumping and directional drilling products. Moyno
down-hole pumps are used primarily to pump heavy crude oil to the surface and
for dewatering gas wells. Moyno down-hole power elements utilize progressing
cavity technology to drive the drilling element in oil and gas well drilling.
Mixing and Turbine Agitation Equipment
The Company's industrial mixers and turbine agitation equipment are used in
a variety of applications, ranging from simple storage tank agitation to
critical applications in polymerization and fermentation processes. Industrial
mixers are sold under the Chemineer(R), Prochem(R), and Kenics(R) brandnames.
Chemineer products include a line of high-quality turbine agitators. These
gear-driven agitators are available in various sizes, a wide selection of
mounting methods, and drive ranges from one to 1,000 horsepower. The Chemineer
line also includes top-entry turbine agitators with drive ranges from one-half
to five horsepower, designed for less demanding applications, and a line of
portable gear-driven and direct drive mixers which can be clamp mounted to tanks
to handle batch mixing needs. The principal markets for Chemineer products are
the chemical, pharmaceutical, petrochemical, food processing and wastewater
treatment industries.
Prochem industrial mixers are principally belt-driven, side-entry mixers
used primarily in the pulp and paper, mining, and mineral processing industries.
Kenics mixers are continuous mixing and processing devices, with no moving
parts, which are used in specialized static mixing and heat transfer
applications.
Related Products
The Company also manufactures and markets to the process industries several
products which compliment its principal products. These related products include
engineered systems, fluoropolymer linings, and valves.
The Company's engineered systems group designs and sells fluid
heating/cooling systems used with reactor vessels to control fluid temperature
in the manufacture and processing of pharmaceuticals and specialty chemicals.
The engineered systems group also designs and sells fluid separators, known as
wiped film evaporators. The Company maintains a computer controlled pilot plant
test facility for use by Company and
10
<PAGE> 13
customer engineers to determine and evaluate operating parameters in the
production and processing of pharmaceuticals, specialty chemicals, and other
products.
The Company's Edlon unit manufactures and markets fluoropolymer roll covers
and liners for process equipment, isostatically molded liners for pipe and
flowmeters, and vessel and piping accessories. Its products are principally used
in the chemical industry to provide corrosion-resistant environments and in the
paper industry for release applications.
FACILITIES
The Company's executive offices are located in Dayton, Ohio. Set forth
below is certain information relating to the Company's principal facilities.
<TABLE>
<CAPTION>
SQUARE PRODUCTS MANUFACTURED
LOCATION FOOTAGE OR OTHER USE OF FACILITY
- ----------------------------------- ------- -----------------------------------------
<S> <C> <C>
NORTH AND SOUTH AMERICA:
Avondale, Pennsylvania 50,000 Roll covers and liners
Dayton, Ohio 160,000(1) Turbine agitators and mixers
Fairfield, California 60,000 Progressing cavity pumps and power
sections
North Andover, Massachusetts 30,000(1) Static mixers and heat exchangers
Rochester, New York 500,000 Glass-lined vessels
Rochester, New York 10,000(1) Parts and field service for glass-lined
vessels
Springfield, Ohio 272,800 Progressing cavity pumps and pinch valves
Mexico City, Mexico 110,000 Glass-lined vessels
Sao Jose Dos Campos, Brazil 30,000(1) Air handlers
Taubate, Brazil 100,000 Glass-lined vessels
EUROPE:
Schwetzingen, Germany 400,000 Glass-lined vessels
Leven, Scotland 240,000 Glass-lined vessels, roll covers and
liners
Bilston, England 50,000 Parts and reglassing for glass-lined
vessels
Bolton, England 10,000 Gaskets for glass-lined vessels
Derby, England 20,000(1) Turbine agitators and mixers
Kearsley, England 14,000 Parts and field service for glass-lined
vessels
Southhampton, England 10,000(1) Assembly operation for progressing cavity
pumps
Petit-Rechain, Belgium 15,000 Progressing cavity products
ASIA:
Gujurat, India 350,000(2) Glass-lined vessels
Singapore 5,000(1) Assembly operation for progressing cavity
pumps
</TABLE>
- ---------------
(1) Leased facility.
(2) Facility of a 40% owned affiliate
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT ACQUISITIONS
The purchase of Pfaudler, Chemineer and Edlon (the "acquired companies") in
June of 1994, significantly changed the business and financial profile of the
Company. As a result of the acquisitions, critical elements of the Company's
strategy to expand its capabilities to serve the fluids management needs of the
process industries, to offer a balanced portfolio of products with brand-name
recognition, and to have a strong presence in global markets were achieved.
The acquisitions allowed the Company to almost triple its total sales and
to increase its international sales to approximately 45% of consolidated sales.
The results of the acquired companies are included for 12 months in fiscal 1995
and for two months in the prior year, which significantly impacts year-to-year
comparisons. First quarter fiscal 1995 and 1996 are periods that include
comparable operations.
RESULTS OF OPERATIONS
FIRST QUARTER FISCAL 1996 -- Net income of $4.1 million was 40.6% higher
than in the first quarter of 1995. Earnings per share of $.75, fully diluted,
increased 36.4% from the first quarter of 1995. These increases are primarily
the result of volume increases, as discussed below.
Net sales for the first quarter of 1996 were $81.2 million, an increase of
18.3% over the same period of the prior year. This increase was primarily driven
by strong market demand for the Company's mixing and turbine agitation equipment
and glass-lined storage and reactor vessels. These products are primarily sold
to the pharmaceutical, chemical, and petrochemical markets, which are expected
to remain strong at least through 1996. In addition, the Company expanded its
aftermarket business from the prior year, resulting in increased sales. Company
backlog is at a record level of $110 million at the end of the quarter, $3
million higher than at August 31, 1995, and $32 million higher than at November
30, 1994.
The gross profit percentage of 33.4% for the first quarter of 1996 was
relatively constant with the 33.6% for the first quarter of 1995, despite the
higher sales levels in 1996. This relationship is a result of product mix, as
the margins for the products with the greatest sales increases, industrial
mixers and reactor vessels, are traditionally lower than the Company's
progressing cavity pump products. Margins for industrial mixers and reactor
vessels, however, have improved over the prior year as a result of higher volume
and profitability improvement measures, including restructuring, implemented by
the Company.
Engineering and development, selling and administrative expenses decreased
as a percentage of sales from 24.7% in the first quarter of 1995 to 23.6% in the
first quarter 1996. This decrease results from the higher sales volume and the
fixed nature of certain of these expenses.
Interest expense decreased to $1.7 million in the current quarter from $1.8
million in the same quarter of the prior year. Midway through the first quarter
of 1996, 1.85 million stock appreciation rights were retired for $18 million,
which was financed through senior debt. However, average debt levels were
approximately $4 million lower in the first quarter of 1996 than in the first
quarter of 1995, which was the primary reason for the decrease in interest
expense.
The effective tax rate increased from 32.7% in the first quarter of 1995 to
38.5% in 1996. The tax rate for the first quarter of 1995 reflected utilization
of some foreign net operating loss carryforwards. The 1996 tax rate is more
reflective of ongoing operations and comparable to 1995's overall rate of 37.9%.
FISCAL 1995 -- Sales reached $303.0 million and net income rose to $13.2
million or $2.42 per share, assuming full dilution. This compares to sales of
$121.6 million and net income of $6.4 million or $1.21 per share for 1994. The
increase in both sales and net income is due primarily to the acquired
companies. However, it should be noted that the Company's traditional businesses
also experienced a good year with sales reaching $102.5 million, an 11%
increase. Operating income of these businesses, which excludes corporate,
interest and amortization expense, reached $19.4 million, a 10% increase.
12
<PAGE> 15
The rate of profitability as measured by operating income to sales
relationships declined for domestic operations in both 1994 and 1995. This is
due to the rate for the acquired businesses being lower than that enjoyed by the
Company's historic businesses.
Profitability is further impacted by the fact that the foreign businesses
are currently less profitable than domestic businesses. For 1995, the European
businesses are impacted primarily by the German operation which accounts for 52%
of European sales but is only nominally profitable. An important program for
changing how the Company conducts business in Germany and the related cost
structure is underway and progress is expected in 1996. The Company believes
that the European businesses have an operating profit potential of 10% which
could be attained in three to five years. The lower rate of profitability for
the other foreign businesses is due in part to their being start-up operations.
Operating income also includes a pre-tax write off of $1.6 million
representing the value of the Company's remaining investment in Hazleton
Environmental. The partnership was liquidated in 1995 which terminated the
Company's relationship with the venture.
Finally, during the year, the Company negotiated the repurchase of $25
million of subordinated debt issued as a part of the consideration for the
acquired companies. The transaction generated an after-tax extraordinary gain of
$1.3 million and is so reflected in the results for the year.
Approximately 870 of the Company's 2,400 employees are covered by three
collective bargaining agreements. Two of these agreements were entered into in
1995 for three-year terms. The third agreement, covering approximately 260
employees at the Company's Springfield, Ohio facility, expires on January 31,
1996.
FISCAL 1994 -- The acquisitions and related restructure transactions had a
significant impact on 1994 operating results. Aided by the inclusion of the
acquired businesses for July and August, sales increased to $121.6 million or
43% and net income to $6.4 million or 3% greater than income before cumulative
effect of accounting changes earned for 1993. For the period owned, the acquired
businesses accounted for $29.3 million in sales and provided sufficient income
before tax to cover the additional interest and amortization expense incurred as
a result of the transaction.
The Company's traditional businesses enjoyed a good year in 1994. Sales
increased 8.5% and net income, before considering the restructure provision for
the year, increased 28%. Improved sales were seen for products to the oilfield
and industrial mixer markets. In addition, improved operating results were seen
in Europe related to the restructuring process that took place there during the
year. Recent orders improved for all traditional products with year end backlogs
having increased 5% over those of the prior year.
The Pfaudler business unit had been in the process of restructuring its
operations prior to being acquired by the Company. The provisions were primarily
for employee termination costs and related to the Rochester, N.Y., Mexico and
German operations. The actions in Rochester, N.Y. and the curtailment of new
product manufacturing operations in Mexico were completed as planned in 1995 and
the reorganization of the German facility is continuing and is expected to be
substantially completed in fiscal year 1996. This reorganization of the German
facility is the the most important phase of a longer term profitability
improvement plan at the European locations.
In addition to the restructure process taking place at Pfaudler, the
acquisition of the Chemineer industrial mixer business offered the opportunity
to integrate Chemineer with the Company's Prochem mixer operation. This action
is expected to be completed by the end of the second quarter of fiscal year
1996.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, 1.85 million of outstanding stock
appreciation rights were retired for $18 million. Also, capital expenditures,
debt repayments and uses for working capital needs (exclusive of cash) required
$4.1 million, $5.9 million and $9.5 million in cash for the quarter,
respectively. These uses of cash were financed through funds generated from
operations (exclusive of working capital increases) of $8.3 million and senior
debt borrowings of $30.4 million.
13
<PAGE> 16
As discussed in "Use of Proceeds," the Company will repay certain bank
indebtedness with the proceeds from this Offering. Notwithstanding the Offering,
the Company expects operating cash flow to be adequate for the remainder of
fiscal year 1996's needs, including scheduled debt service and shareholder
dividend requirements. Major cash requirements for the remainder of 1996 are
planned capital expenditures of $12 million. Capital expenditures include both
cost reductions and replacement items and exceed expected depreciation of $7.5
million for the same period.
At November 30, 1995, the Company has approximately $10 million available
under its current bank credit agreements, which management believes is adequate
to meet its needs.
Given the high levels of debt at the end of fiscal 1994, the Company placed
a strong emphasis on debt reduction for 1995. While the effort was successful,
funding of programs with long term importance was continued. The best evidence
of this is the $12.9 million investment to purchase Pharaoh Corp. and Cannon
Process Equipment, Ltd. which enhanced the service component of the reactor
vessel business. In addition, $10.7 million was spent during 1995 for capital
expenditures as the Company continued to modernize production capability. The
result of the debt reduction emphasis was a decrease of $15.9 million in total
debt by year end. These uses of cash were financed by cash flow from operations
of $32.4 million and the reduction of cash balances during the year.
Cash and cash equivalents decreased $5.9 million in 1995. The decline is
primarily the result of a continuing foreign cash management program. It is the
Company's general intention to repatriate cash from foreign business units in
excess of operating requirements and no significant restrictions are known which
would preclude accomplishing this objective. This program is expected to result
in an additional cash reduction of $3-$5 million during 1996. The rates used to
record income tax expense have been adjusted to provide for taxes associated
with the plan.
PRINCIPAL SHAREHOLDER
Set forth below is certain information about the only person known by the
Board of Directors of the Company to be a beneficial owner of more than 5% of
the outstanding common shares of the Company as of December 12, 1995.
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF 12/12/95 % OF CLASS
- ------------------------------ -------------------- ----------
<S> <C> <C>
M.H.M. & Co., Ltd.
830 Hanna Building
Cleveland, Ohio 44115 1,459,866 28.0%(1)
</TABLE>
- ---------------
(1) M.H.M. & Co., Ltd. is an Ohio limited partnership (the "Partnership").
Maynard H. Murch Co., Inc. is the managing general partner, and Thomas P.
Loftis is the other general partner, of the Partnership. Partnership
decisions with respect to the voting and disposition of Company shares are
determined by Maynard H. Murch Co., Inc., whose board of directors is
comprised of Maynard H. Murch IV and Robert B. Murch, who are brothers, and
Creighton B. Murch, who is their first cousin. Maynard H. Murch IV is
Chairman of the Company.
DESCRIPTION OF CAPITAL SHARES
The Company has one class of shares, namely Common Shares, without par
value. The Company is authorized to issue 25,000,000 Common Shares; and at
December 12, 1995, there were 5,222,571 Common Shares outstanding. All of the
outstanding Common Shares are fully paid and nonassessable, and all of the
Common Shares offered by the Company will be, upon issuance, fully paid and
non-assessable. Shareholders do not have pre-emptive rights to purchase any
securities of the Company.
Holders of Common Shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The ability of the Company to pay dividends is subject to
certain contractual limitations in its credit agreements. Upon liquidation,
holders of Common Shares are entitled to receive a pro rata share of all assets
available to shareholders.
14
<PAGE> 17
Key Corp Shareholder Services is transfer agent and registrar of the Common
Shares.
Holders of Common Shares are entitled to one vote per share upon all
matters presented to shareholders. Shareholders do, however, have cumulative
voting rights in the election of directors.
Article II of the Company's Code of Regulations divides the Board of
Directors of the Company into two classes, one class comprised of four directors
and one class of three directors. One class of directors is elected each year to
serve for a two-year term. Directors may not be removed from office without the
affirmative vote of the holders of at least two-thirds of the outstanding voting
power of the Company. Article II of the Code of Regulations provides that only
persons who are nominated in accordance with a specified procedure are eligible
for election as directors. The procedure requires that notice of the nomination,
together with the specified information concerning the nominee, must be given to
the Company not less than 50 nor more than 75 days prior to the meeting at which
directors are to be elected. Article II may not be amended or repealed without
the affirmative vote of the holders of at least two-thirds of the voting power
of the Company.
CERTAIN OHIO LEGISLATION
Ohio's "Control Share Acquisition Act" generally requires shareholder
approval of any acquisition of shares of an Ohio corporation which would result
in the acquiring person first reaching or exceeding ownership of one-fifth,
one-third or a majority of the total voting power of the corporation. Any such
control share acquisition cannot be consummated unless authorized by the holders
of: (i) a majority of the voting power of the corporation present at a meeting
of shareholders, and (ii) a majority of such voting power other than shares held
by the acquiring person or an officer or employee who is a director of the
corporation, and other than shares acquired by a person or group after
announcement of the proposed control share acquisition if the amount so acquired
exceeds 1/2% of the outstanding voting shares or was acquired for a
consideration exceeding $250,000.
Ohio's "Merger Moratorium Act" prohibits an Ohio corporation from engaging
in specified transactions such as merger, certain asset sales, certain issuances
of shares, a liquidation or the like with a beneficial owner of 10% or more of
the outstanding voting power of the corporation during the three-year period
following the date the person became the owner of the 10% interest, unless prior
to such date the transaction or the acquisition of shares was approved by the
directors of the corporation. After the three-year period, such transactions may
be entered into if approved by the holders of at least two-thirds of the voting
power of the corporation (including by the holders of at least a majority of the
shares held by persons other than an interested person, as defined in the
statute) or if the consideration to be paid in the transaction is at least equal
to certain specified amounts.
15
<PAGE> 18
UNDERWRITING
The Underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions of the Underwriting Agreement (the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part), to purchase from the Company, and the Company has agreed
to sell to each Underwriter, the aggregate number of Common Shares set forth
opposite their respective names below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------- ---------
<S> <C>
Lehman Brothers Inc..........................................
Schroder Wertheim & Co. Incorporated.........................
---------
Total..............................................
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase Common Shares are subject to certain conditions, and
that if any of the foregoing Common Shares are purchased by the Underwriters
pursuant to the Underwriting Agreement, all Common Shares agreed to be purchased
by the Underwriters pursuant to the Underwriting Agreement must be so purchased.
The Company has been advised that the Underwriters propose to offer the
Common Shares directly to the public initially at the public offering price set
forth on the cover page of this Prospectus, and to certain selected dealers (who
may include the Underwriters) at such public offering price less a concession
not in excess of $ per share. The Underwriters may allow and the selected
dealers may reallow a concession not in excess of $ per share to certain
other brokers and dealers. After the public offering, the public offering price,
the concession to selected dealers and the reallowance to other dealers may be
changed by the Underwriters.
The Company has granted to the Underwriters an option to purchase up to an
additional 165,000 Common Shares at the public offering price, less the
aggregate underwriting discounts and commissions, shown on the cover page of
this Prospectus, solely to cover over-allotments, if any. The option may be
exercised at any time up to 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Company has agreed that without the written consent of the
Underwriters, it will not offer, sell, contract to sell or otherwise dispose of
any Common Shares or any securities, convertible or exchangeable therefor, for a
period of 90 days from the date of this Prospectus, subject to limited
exceptions.
M.H.M. & Co., Ltd. and the Company's directors and executive officers, who
collectively held as of December 12, 1995 an aggregate of 1,842,869 Common
Shares and options to purchase Common Shares, have agreed that without the
consent of the Underwriters they will not offer, sell, contract to sell or
otherwise
16
<PAGE> 19
dispose of any Common Shares or any securities convertible into or exchangeable
therefor for a period of 90 days from the date of this Prospectus.
Certain of the Underwriters and selling group members (if any) that
currently act as market makers for the Common Shares may engage in "passive
market making" in the Common Shares on the Nasdaq in accordance with Rule 10b-6A
under the Exchange Act. Rule 10b-6A permits, upon the satisfaction of certain
conditions, underwriters and selling group members participating in a
distribution that are also Nasdaq market makers in the security being
distributed to engage in limited market making transactions during the period
when Rule 10b-6 under the Exchange Act would otherwise prohibit such activity.
Rule 10b-6A prohibits underwriters and selling group members engaged in passive
market making generally from entering a bid or effecting a purchase at a price
that exceeds the highest bid for those securities displayed on the Nasdaq by a
market marker that is not participating in the distribution. Under Rule 10b-6A,
each underwriter or selling group member engaged in passive market making is
subject to a daily net purchase limitation equal to 30% of such entity's average
daily trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.
From time to time, certain of the Underwriters or their affiliates have
provided, and may continue to provide, investment banking services to the
Company.
LEGAL MATTERS
The validity of the issuance of the Common Shares being offered hereby will
be passed upon for the Company by Thompson, Hine and Flory, Dayton, Ohio,
counsel for the Company. Certain legal matters in connection with the issuance
of the Common Shares will be passed upon for the Underwriters by Schiff Hardin &
Waite, Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company appearing in the Form
10-K for the year ended August 31, 1995 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
17
<PAGE> 20
<TABLE>
<S> <C>
[PICTURE] [PICTURE]
PFAUDLER(R) GLASS-LINED REACTOR VESSEL PFAUDLER(R) GLASS-LINED STEEL REACTOR VESSEL
[PICTURE]
PFAUDLER OPERATES THE LARGEST VERTICAL
LOAD FURNACE IN THE NORTHERN HEMISPHERE
[PICTURE] [PICTURE]
MOYNO(R) PROGRESSING CAVITY PUMP MOYNO(R) SANITARY PUMP
[PICTURE] [PICTURE]
CHEMINEER(R) TURBINE AGITATOR PROCHEM(R) MIXER
</TABLE>
<PAGE> 21
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.................. 2
Information Incorporated by
Reference............................ 2
Prospectus Summary..................... 3
Use of Proceeds........................ 5
Capitalization......................... 5
Price Range of Common Shares and
Dividends............................ 6
Selected Consolidated Financial Data... 7
Business............................... 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 12
Principal Shareholder.................. 14
Description of Capital Shares.......... 14
Underwriting........................... 16
Legal Matters.......................... 17
Experts................................ 17
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,100,000 SHARES
LOGO
COMMON SHARES
---------------------------
PROSPECTUS
JANUARY , 1996
---------------------------
LEHMAN BROTHERS
SCHRODER WERTHEIM & CO.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (TO BE COMPLETED BY
AMENDMENT).
The following is an itemized statement of the expenses (all but the SEC
Registration fees and NASD fees are estimates) in connection with the issuance
of the Common Shares being registered hereunder.
<TABLE>
<S> <C>
SEC Registration fees......................................................... $ 13,959
Transfer agent fees........................................................... $ 5,000
Blue Sky fees and expenses.................................................... $ 20,000
Printing and engraving expenses............................................... $ 65,000
Legal fees and expenses....................................................... $ 75,000
Accounting fees and expenses.................................................. $ 30,000
NASD fees..................................................................... $
Miscellaneous................................................................. $
----------
TOTAL.................................................................... $
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 2 of Article V of the Code of Regulations of the Company sets forth
certain rights of directors and officers of the Company to indemnification. Such
rights provide indemnification by the Company to the extent permitted by Ohio
law. The liabilities against which a director and officer may be indemnified and
factors employed to determine whether a director and officer is entitled to
indemnification in a particular instance depend on whether the proceedings in
which the claim for indemnification arises were brought (a) other than by and in
the right of the Company ("Third Party Actions") or (b) by and in the right of
the Company ("Company Actions").
In Third Party Actions, the Company will indemnify each director and
officer against expenses, including attorneys' fees, judgments, decrees, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with any threatened or actual proceeding in which he may be
involved by reason of his having acted in such capacity, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and with respect to any matter the subject of a
criminal proceeding, he had no reasonable cause to believe that his conduct was
unlawful.
In Company Actions, the Company will indemnify each director and officer
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense or settlement of any such proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification is
permitted with respect to (i) any matter as to which such person has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Company unless a court determines such person is entitled to
indemnification and (ii) any liability asserted in connection with unlawful
loans, dividends, distribution, distribution of assets and repurchase of Company
shares under Section 1701.95 of the Ohio Revised Code.
Unless indemnification is ordered by a court, the determination as to
whether or not an individual has satisfied the applicable standards of conduct
(and therefore may be indemnified) is made by the Board of Directors of the
Company by a majority vote of a quorum consisting of directors of the Company
who were not parties to the action; or if such a quorum is not obtainable, or if
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion; or by shareholders of the corporation.
Section 2 of Article V of the Company's Code of Regulations does not limit
in any way other indemnification rights to which those seeking indemnification
may be entitled. The Company has entered into an indemnification agreement with
each director of the Company, the form of which was approved by the shareholders
of the Company. A copy of such agreement was filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended August 31, 1993.
II-1
<PAGE> 23
The Company maintains insurance policies which presently provide
protection, within the maximum liability limits of the policies and subject to a
deductible amount for each claim, to the Company under its indemnification
obligations and to the directors and officers with respect to certain matters
which are not covered by the Company's indemnification obligations.
ITEM 16. EXHIBITS
Each of the following Exhibits is filed or incorporated by reference in
this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------------------
<S> <C>
1 Form of Underwriting Agreement
4.1 Articles of Incorporation+
4.2 Code of Regulations+
5 Opinion of Thompson, Hine and Flory, counsel to the Registrant
23.1 Consent of Thompson, Hine and Flory, counsel to the Registrant
23.2 Consent of Ernst & Young LLP
24 Powers of Attorney*
</TABLE>
- ---------------
+ Incorporated by reference
* A power of attorney whereby various individuals authorize the signing of their
names to any and all amendments to this Registration Statement and other
documents submitted in connection therewith is contained on the signature page
following Part II of this Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling person of the Registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time if was declared effective; and (2) For the
purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE> 24
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DAYTON, STATE OF OHIO, ON THE 13TH DAY OF DECEMBER,
1995.
ROBBINS & MYERS, INC.
By:
-------------------------------
Daniel W. Duval, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Director, President and Chief Executive December 13, 1995
- ------------------------- Officer (principal executive officer)
Daniel W. Duval
Vice President and Chief Financial December 13, 1995
- ------------------------- Officer (principal financial officer)
George M. Walker
Controller (principal accounting officer) December 13, 1995
- -------------------------
Kevin J. Brown
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Daniel W. Duval, George M. Walker
and Joseph M. Rigot his true and lawful attorneys-in-fact and agent, with full
power of substitution, and each with power to act alone, to sign and execute on
behalf of the undersigned any amendment or amendments to this Registration
Statement on Form S-3, and to perform any acts necessary to be done in order to
file such amendment with exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, and each of the
undersigned does hereby ratify and confirm all that said attorneys-in-fact and
agents, or their substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
- ------------------------ Director December 13, 1995
Robert J. Kegerreis
- ------------------------ Director December 13, 1995
Thomas P. Loftis
- ------------------------ Director December 13, 1995
Maynard H. Murch, IV
- ------------------------ Director December 13, 1995
William D. Manning, Jr.
- ------------------------ Director December 13, 1995
John N. Taylor, Jr.
- ------------------------ Director December 13, 1995
Jerome F. Tatar
</TABLE>
II-3
<PAGE> 25
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- --------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Form of Underwriting Agreement.............................................. 1
(4.1) Amended Articles of Incorporation of Robbins & Myers, Inc. were filed as
Exhibit 3.1 to the Company's Report on Form 10-Q for the quarter ended
February 28, 1995........................................................... 2
(4.2) Code of Regulations of Robbins & Myers, Inc. was filed as Exhibit 3.2 to the
Company's Report on Form 10-Q for the quarter ended February 28, 1995....... 2
(5) Opinion of Thompson, Hine and Flory, counsel to the Registrant.............. 3
(23.1) Consent of Thompson, Hine and Flory, counsel to the Registrant (to be
contained in its opinion)................................................... 3
(23.2) Consent of Ernst & Young LLP................................................ 1
(24) Powers of Attorney (set forth at signature page to this Registration
Statement)
</TABLE>
- ---------------
1 -- Filed herewith
2 -- Incorporated by reference
3 -- To be filed by Amendment
<PAGE> 1
Exhibit 1
ROBBINS & MYERS, INC.
COMMON SHARES
UNDERWRITING AGREEMENT
----------------------
January __, 1996
Lehman Brothers Inc.
Schroder Wertheim & Co. Incorporated
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Robbins & Myers, Inc., an Ohio corporation (the "Company"), proposes to sell
1,100,000 shares (the "Firm Stock") of the Company's Common Shares, no par
value (the "Common Stock"). In addition, the Company proposes to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 165,000 shares of the Common Stock on the terms
and for the purposes set forth in Section 2 (the "Option Stock"). The Firm
Stock and the Option Stock, if purchased, are hereinafter collectively called
the "Stock." This is to confirm the agreement concerning the purchase of the
Stock from the Company by the Underwriters named in Schedule 1 hereto (the
"Underwriters").
1. Representations, Warranties and Agreements of the Company. The Company
represents, warrants and agrees that:
(a) A registration statement on Form S-3 (No. 33-____) [and an amendment
thereto,] with respect to the Stock has (i) been prepared by the Company in
conformity with the requirements of the United States Securities Act of 1933
(the "Securities Act") and the rules and regulations (the "Rule and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies
of such registration statement [and the amendment thereto] have been
delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus included in
such registration statement, or amendments thereof, before it became
effective under the
<PAGE> 2
Securities Act and any prospectus filed with the Commission by the Company
with the consent of the Representatives pursuant to Rule 424(a) of the Rules
and Regulations; "Registration Statement" means such registration statement,
as amended at the Effective Time, including any documents incorporated by
reference therein at such time and all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations in accordance with Section 5 hereof and deemed to be a part
of the registration statement as of the Effective Time pursuant to paragraph
(b) of Rule 430A of the Rules and Regulations; and "Prospectus" means such
final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations. Reference made
herein to any Preliminary Prospectus or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of
such Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any document filed
under the United States Securities Exchange Act of 1934 (the "Exchange Act")
after the date of such Preliminary Prospectus or the Prospectus, as the case
may be, and incorporated by reference in such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the
Company filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in
the Registration Statement]. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the requirements
of the Securities Act and the Rules and Regulations and do not and will not,
as of the applicable effective date (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an 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;
provided that no representation or warranty is made as to information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
-2-
<PAGE> 3
(c) The documents incorporated by reference in the Prospectus, when they
were filed with the Commission conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, and none of such documents contained an 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 any further documents so filed and incorporated by reference
in the Prospectus, when such documents are filed with Commission will
conform in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and will not contain
an 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.
(d) The Company and each of its subsidiaries (as defined in Section 18)
have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation,
are duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, and have all corporate power and authority necessary to
own or hold their respective properties and to conduct the businesses in
which they are engaged.
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(f) The unissued shares of the Stock to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and non- assessable; and the Stock
will conform to the description thereof contained in the Prospectus.
(g) This Agreement has been duly authorized, executed and delivered by
the Company.
-3-
<PAGE> 4
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the Articles of Incorporation
or Code of Regulations of the Company or the comparable documents of any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets; and except for
the registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby.
(i) 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 owned or to be owned by such person or to
require the Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the
Securities Act, except _______________.
(j) Except as described in the Prospectus, the Company has not sold or
issued any shares of Common Stock during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than shares issued pursuant
to employee benefit plans, qualified stock options plans or other employee
or director compensation plans.
(k) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included or incorporated
by reference in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
-4-
<PAGE> 5
Prospectus; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or, to the knowledge of the
Company, any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting
the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than as
set forth or contemplated in the Prospectus.
(l) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
condition and results of operations of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis (except as set forth in the accompanying notes) throughout
the periods involved.
(m) Ernst & Young LLP, who have certified certain financial statements of
the Company, whose report is incorporated by reference in the Prospectus and
who have delivered the initial letter referred to in Section 7(g) hereof,
are independent public accountants as required by the Securities Act and the
Rules and Regulations.
(n) The Company and each of 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, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus, (including in the financial statements incorporated by reference
int he Prospectus) or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries; and all 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.
(o) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries.
-5-
<PAGE> 6
(p) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective
businesses and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others.
(q) There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might have a
material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries; and to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(r) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus which is not so described.
(u) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, other than as described in the Prospectus, is
imminent which might be expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(v) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
-6-
<PAGE> 7
ERISA) for which the Company would have any future liability; the Company
has not incurred and does not expect to incur liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(w) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries which has had (nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of its subsidiaries, might have) a material
adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole.
(x) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted options or any
securities, (ii) incurred any liability or obligation, direct or contingent,
other than liabilities and obligations which were incurred in the ordinary
course of business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any dividend on its capital
stock other than its regular quarterly cash dividend on its Common Stock.
(y) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its
assets is compared with existing assets at reasonable intervals.
(z) Neither the Company nor any of its subsidiaries (i) is in violation
of its Articles of Incorporation or Code of Regulations or comparable
documents, (ii) is in default in any material respect, and to the knowledge
of the Company, no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or
-7-
<PAGE> 8
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of
its properties or assets is subject or (iii) is in violation in any material
respect of any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject or has failed to obtain
any material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the
conduct of its business.
(aa) Neither the Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on behalf
of the Company or any of its subsidiaries, has, to the knowledge of the
Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(ab) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
its subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or its subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgment, decree
or permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; there has
been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company or
any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or
would not be reasonably likely to have, singularly or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes, dumpings
and releases, a material adverse
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<PAGE> 9
effect on the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries; and the
terms "hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to environmental
protection.
(ac) Neither the Company nor any subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell the Firm Stock to the
several Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the number of shares of the Firm Stock set opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations
of the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase up
to 165,000 shares of Option Stock. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriter
with respect to the Option Stock shall be adjusted by the Representatives so
that no Underwriter shall be obligated to purchase Option Stock other than in
100 share amounts. The price of both the Firm Stock and any Option Stock shall
be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters.
Upon authorization by the Representative of the release of the Firm Stock,
the several Underwriters propose to offer the Firm Stock for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and payment for the
Firm Stock shall be made at the office of ____________________,
________________________, ________, ________ _____, at 10:00 A.M., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Representatives and the
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<PAGE> 10
Company. This date and time are sometimes referred to as the "First Delivery
Date." On the First Delivery Date, the Company shall deliver or cause to be
delivered certificates representing the Firm Stock to the Representatives for
the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by certified or official bank check or checks
payable in New York Clearing House (next-day) funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names and
in such denominations as the Representatives shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose
of expediting the checking and packaging of the certificates for the Firm
Stock, the Company shall make the certificates representing the Firm Stock
available for inspection by the Representatives in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to the
First Delivery Date.
At any time on or before the thirtieth day after the date of this Agreement
the option granted in Section 2 may be exercised by written notice being given
to the Company by the Representatives. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business
day after the date on which the option shall have been exercised nor later than
the fifth business day after the date on which the option shall have been
exercised. The date and time the shares of Option Stock are delivered are
sometimes referred to as the "Second Delivery Date" and the First Delivery Date
and the Second Delivery Date are sometimes each referred to as a "Delivery
Date").
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by certified or official bank
check or checks payable in New York Clearing House (next-day) funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names
and in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of
the certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representatives
in New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Second Delivery Date.
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<PAGE> 11
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the Securities
Act; to make no further amendment or any supplement to the Registration
Statement or to the Prospectus prior to the last Delivery Date except as
permitted herein; to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the Representatives
with copies thereof; to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required in connection with the offering or sale of the
Stock; to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for offering
or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel for
the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement), (ii) each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus and (iii) any document incorporated
by reference in the Prospectus (excluding exhibits thereto); and, if the
delivery of a prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Stock or any other securities
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<PAGE> 12
relating thereto and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend
or supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Representatives and, upon
their request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as
the Representatives may from time to time reasonably request of an amended
or supplemented Prospectus which will correct such statement or omission or
effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required
by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus, any document incorporated by
reference in the Prospectus or any Prospectus pursuant to Rule 424 of the
Rules and Regulations, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and obtain the consent of the Representatives
to the filing;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the Company,
Rule 158);
(g) For a period of five years following the Effective Date, to furnish
to the Representatives copies of all materials furnished by the Company to
its shareholders generally and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
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<PAGE> 13
(h) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify the Stock for offering and sale under the
securities laws of such jurisdictions as the Representatives may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, offer for sale, sell or otherwise dispose of (or
enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (other than the Stock and shares
issued pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans existing on the date hereof or pursuant to
currently outstanding options or director), or sell or grant options, rights
or warrants with respect to any shares of Common Stock (other than the grant
of options pursuant to option plans existing on the date hereof), without
the prior written consent of Lehman Brothers Inc.; and to cause each officer
and director of the Company and M.H.M. & Co., Ltd. to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters, in
form and substance satisfactory to counsel for the Underwriters, pursuant to
which each such person (or M.H.M. & Co., Ltd.) shall agree not to, directly
or indirectly, offer for sale, sell or otherwise dispose of (or enter into
any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any
shares of Common Stock for a period of 90 days (180 days in the case of
M.H.M. & Co., Ltd.) from the date of the Prospectus, without the prior
written consent of Lehman Brothers Inc.;
(j) Prior to the Effective Date, to apply for the inclusion of the Stock
on the National Market System and to use its best efforts to complete that
listing, subject only to official notice of issuance prior to the First
Delivery Date;
(k) Prior to filing with the Commission any reports on Form SR pursuant
to Rule 463 of the Rules and Regulations, to furnish a copy thereof to the
counsel for the Underwriters and receive and consider its comments thereon,
and to deliver promptly to the Representatives a signed copy of each report
on Form SR filed by it with the Commission;
(l) To apply the net proceeds from the sale of the Stock being sold by
the Company as set forth in the Prospectus; and
(m) To take such steps as shall be necessary to ensure that neither the
Company nor any subsidiary shall become an "investment company" within
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<PAGE> 14
the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing to the
Underwriters the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and any other related documents in connection with the offering,
purchase, sale and delivery of the stock; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of sale of the Stock; (f) any applicable listing or other
fees; (g) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters); and (h) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; provided that, except as provided in this Section 6 and in Section
11 the Underwriters shall pay their own costs and expenses, including the costs
and expenses of their counsel, any transfer taxes on the Stock which they may
sell and the expenses of advertising or prospective purchaser meetings or
presentations relating to any offering of the Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective obligations of
the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company on
or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of Schiff Hardin & Waite, counsel
for the Underwriters, is material or omits to state a fact which, in the
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<PAGE> 15
opinion of such counsel, is material and is required to be stated therein or
is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(d) Thompson Hine and Flory shall have furnished to the Representatives
their written opinion, as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company, each of its domestic subsidiaries, _______________ and
_______________ have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, other than in
jurisdictions in which the failure to so qualify would not have a
materially adverse effect on the Company and its subsidiaries taken as a
whole and have all corporate power and authority necessary to own or hold
their respective properties and conduct the businesses as described in the
Prospectus in which they are engaged;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on such Delivery Date) have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each domestic
subsidiary of the Company, _______________ and _______________ have been
duly and validly authorized and issued and are fully paid, non-assessable
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of any perfected security
interests and, to the knowledge of such counsel, any other security
interests, claims, liens and encumbrances except for those disclosed in
the Prospectus;
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<PAGE> 16
(iii) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares
of the Stock pursuant to the Company's Articles of Incorporation and Code
of Regulations or any agreement or other instrument known to such counsel;
(iv) To such counsel's knowledge the Company and each of its
subsidiaries have good and marketable title in fee simple to all real
property owned by them, 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
materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and all 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;
(v) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations or
business of the Company and its subsidiaries; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such opinion on the
date specified therein and no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of such
counsel, no proceeding for that purpose is pending or threatened by the
Commission;
(vii) The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related schedules
and other financial and statistical data therein, as to
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<PAGE> 17
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and the
Rules and Regulations; the documents incorporated by reference in the
Prospectus and any further amendment or supplement to any such
incorporated document made by the Company prior to such Delivery Date
(other than the financial statements and related schedules therein, as to
which such counsel need express no opinion), when they were filed with the
Commission complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder;
(viii) To such counsel's knowledge, there are no contracts or other
documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the
Rules and Regulations which have not been described or filed as exhibits
to the Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(ix) This Agreement has been duly authorized, executed and delivered by
the Company;
(x) The issue and sale of the shares of Stock being delivered on such
Delivery Date by the Company and the compliance by the Company with all of
the provisions of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the Articles of Incorporation
or Code of Regulations of the Company or the comparable documents of any
of its subsidiaries or any statute or any order, rule or regulation known
to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets; and, except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws and qualification for issuance with
the National Association of Securities Dealers, Inc. in connection with
the purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any
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<PAGE> 18
such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby; and
(xi) To such counsel's knowledge, except for _______________,
_______________ and _______________ 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 owned or to
be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
In rendering such opinion, such counsel may (i) state that their opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of Ohio and the General Corporation Law of
the State of Delaware; (ii) rely (to the extent such counsel deems proper
and specifies in their opinion), as to matters involving the application of
the laws of the applicable foreign jurisdiction upon the opinion of other
counsel of good standing, provided that such other counsel is satisfactory
to counsel for the Underwriters and furnishes a copy of its opinion to the
Representatives; and (iii) in giving the opinion referred to in Section
7(d)(v), state that no examination of record titles for the purpose of such
opinion has been made, and that they are relying upon a general review of
the titles of the Company and its subsidiaries, upon opinions of local
counsel and abstracts, reports and policies of title companies rendered or
issued at or subsequent to the time of acquisition of such property by the
Company or its subsidiaries, and, in respect of matters of fact, upon
certificates of officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both the Underwriters and
they are justified in relying upon such opinions, abstracts, reports,
policies and certificates. Such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and dated
such Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel to
the Company on a regular basis and has acted as counsel to the Company in
connection with the preparation of the Registration Statement, and (y) based
on the foregoing, no facts have come to the attention of such counsel which
lead them to believe that (I) the Registration Statement, as of the
Effective Date, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that
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<PAGE> 19
the Prospectus contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (II) any document incorporated by reference in
the Prospectus or any further amendment or supplement to any such
incorporated document made by the Company prior to such Delivery Date, when
they were filed with the Commission contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) The Representative[s] shall have received from Schiff Hardin & Waite,
counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the Representatives
may reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them
to pass upon such matters.
(f) At the time of execution of this Agreement, the Representatives shall
have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated
the date hereof (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(g) With respect to the letter of Ernst & Young LLP referred to in the
preceding paragraph and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall
have furnished to the Representatives a letter (the "bring-down letter") of
such accountants, addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given
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in the Prospectus, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(h) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the Company in
Section 1 are true and correct as of such Delivery Date; the Company has
complied with all its agreements contained herein; and the conditions set
forth in Sections 7(a) and 7(i) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(i) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall not have been any change in
the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii), is,
in the judgment of the Representatives, so material and adverse as to make
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on the terms and
in the manner contemplated in the Prospectus.
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<PAGE> 21
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the Company
on any exchange or in the over-the-counter market, shall have been suspended
or minimum prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as
to make it, in the judgment of a majority in interest of the several
Underwriters, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on
the terms and in the manner contemplated in the Prospectus.
(k) The National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (B) in
any blue sky application or other document prepared or executed by the Company
(or based upon any written information furnished by the Company) specifically
for the purpose of qualifying any or all of the Stock under the securities laws
of any state or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the
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<PAGE> 22
Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or omitted
to be taken by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse each Underwriter and each such officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing
to defend against 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, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of any Underwriter specifically for
inclusion therein. Provided, however, that the indemnity agreement contained
in this subsection (a) with respect to any Preliminary Prospectus or amended
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the person
asserting any such loss, expense, liability or claim purchased the shares of
stock which is the subject thereof if the Prospectus corrected any such alleged
untrue statement or omission and if such Underwriter failed to send or give a
copy of the Prospectus to such person at or prior to the written confirmation
of the sale of such shares of stock to such person. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise have
to any Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers and employees, each of its directors, and
each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated
-22-
<PAGE> 23
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of that Underwriter specifically
for inclusion therein, and shall reimburse the Company and any such director,
officer, employee or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any liability which
it may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those
Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Company. No indemnifying party
shall (i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable
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<PAGE> 24
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with the
consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the 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 Company on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Stock under
this Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
shall be deemed to include, for purposes of this Section 8(d), 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 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No
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<PAGE> 25
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 misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non- defaulting
Underwriters shall be obligated to purchase the Stock which the defaulting
Underwriter agreed but failed to purchase on such Delivery Date in the
respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non- defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9.09% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date.
If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 6 and
11. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
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<PAGE> 26
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel
for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(i) or 7(j), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred
by the Underwriters in connection with this Agreement and the proposed purchase
of the Stock, and upon demand the Company shall pay the full amount thereof to
the Representative(s). If this Agreement is terminated pursuant to Section 9
by reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Lehman Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant to Section
8(c), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: President (Fax: 513-225-3355);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by
the Representatives upon request. Any such statements, requests,
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<PAGE> 27
notices or agreements shall take effect at the time of receipt thereof. The
Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by Lehman Brothers Inc.
on behalf of the Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 7(b) of this Agreement shall be deemed to be
for the benefit of directors of the Company, officers, employees of the Company
who have signed the Registration Statement and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein.
14. Survival. The respective indemnities, representations, warranties and
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Stock and shall remain in full
force and effect, regardless of any investigation made by or on behalf of any
of them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For purposes
of this Agreement, (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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<PAGE> 28
If the foregoing correctly sets forth the agreement between the Company and
the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ROBBINS & MYERS, INC.
By
____________________________________
Daniel W. Doral
President and Chief Executive
Officer
Accepted:
LEHMAN BROTHERS INC.
SCHRODER WERTHEIM & CO. INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By ______________________
Authorized Representative
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<PAGE> 29
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ---------
<S> <C>
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schroder Wertheim & Co. Incorporated . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
=========
</TABLE>
CHI3:19393.2 12.13.95 2.42
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Robbins & Myers,
Inc. for the registration of 1,265,000 shares of its common stock, and to the
incorporation by reference therein of our report dated October 3, 1995, except
for Subsequent Event note, as to which the date is October 24, 1995, with
respect to the consolidated financial statements and schedule of Robbins &
Myers, Inc. included in its Annual Report (Form 10-K) for the year ended August
31, 1995, filed with the Securities and Exchange Commission.
Ernst & Young LLP
December 11, 1995
