UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________.
Commission file No. 0-14651
MILLER BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3228778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
58120 County Road 3 South
Elkhart, Indiana 46517
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 295-1214
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (x) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (x)
Aggregate market value of voting stock held by nonaffiliates of the registrant,
based on the closing price of the stock as reported by the National Association
of Securities Dealers' Automated Quotation Systems, on August 30, 1996:
$15,795,901.
As of August 30, 1996, the Registrant had 3,102,963 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into this Annual Report on
Form 10-K:
Portions of Registrant's Proxy Statement for its 1996 Annual Meeting of
Stockholders (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission no later than 120 days after the end of
the Registrant's fiscal year, are incorporated into Part III.
PART I
ITEM 1. BUSINESS
The Company
Miller Building Systems, Inc. ("Miller") is the parent of Miller
Structures, Inc. ("Structures") and Miller Telecom Services, Inc. ("Telecom").
All operations of Miller are conducted through its two wholly-owned
subsidiaries which design, manufacture, and market factory-built buildings.
Miller originally was organized as an Indiana corporation in November 1982
under the name of "Graylyon Corp." and then merged, effective April 1983, into
a Delaware corporation named "Gray Lyon Company". In November 1986, the
Company amended its Certificate of Incorporation to change its name to "Modular
Technology, Inc." In November 1988, the Company again amended its Certificate
of Incorporation to change its name to "Miller Building Systems, Inc." All
references to Miller herein refer to Miller Building Systems, Inc., a Delaware
corporation, and its predecessor Indiana corporation.
Miller maintains its Executive Offices at 58120 County Road 3 South,
Elkhart, Indiana 46517; telephone number (219) 295-1214. The Executive Office
is Miller's principal operating office from which it manages and coordinates
the activities of Structures and Telecom.
STRUCTURES
Structures is headquartered in Elkhart, Indiana and operates all
administrative, sales, and production from that location. The Structures
office controls manufacturing facilities in Bennington, Vermont; Elkhart,
Indiana; Leola, Pennsylvania; Sioux Falls, South Dakota and Patterson,
California.
Structures - Modular and Mobile Office Buildings
Products
The buildings produced by Structures are generally movable or relocatable
and are composed of either single or multiple units often referred to as
modular units. Individual units are either 8, 10, 12, or 14 feet in width and
up to 80 feet in length. These individual units can be combined into
buildings varying in size from several hundred to several thousand square feet.
Although most buildings are one story, they can be built to be two or three
stories high depending on user requirements.
The factory-built buildings produced by Structures meet the specialized
needs of users, which include architectural and engineering firms, churches,
construction companies, correctional or prison authorities, educational and
financial institutions, libraries, medical and dental facilities, military
installations, post offices, real estate firms, restaurants and retail
businesses. The cost of the building varies depending on its application or
its specifications and may, in certain instances, be less expensive than a
comparable conventional site-built building. Structures' cost portion of a
completed building does not include transportation, site preparation,
foundation and other installation work which is the responsibility of the user
and is often provided and charged to the user by Structures' customer. In
addition to all the aforementioned costs, the price charged to the user by
Structures' customer will reflect a "mark-up" which is determined by
Structures' customer and not by Structures.
Buildings or units (modules) of buildings produced by Structures are
usually built on a steel frame. Attached to the frame, customarily, is a
chassis with wheels and axles. This chassis will either become a permanent
portion of the building, permitting it to be easily transported to another
site, or be removed at the building installation site. The chassis facilitates
the transportation of the individual units over the highways from Structures'
factory to either its customer's facilities or the user's installation site.
The floor, roof and walls of any building are constructed of conventional
building materials, primarily wood or comparable materials. The building or
module is fabricated in a process similar to conventional site-built
construction with appropriate variations. Structures also produces building
utilizing non-combustible materials. For these types of buildings, the floor
is made of concrete. The wall studs and roof frame are made of steel and other
components. The buildings utilize various other non-combustible materials.
Interiors and exteriors of the buildings are completed to customer
specifications. Finished buildings or modules include required electrical
wiring, plumbing, heating and air conditioning, and floor coverings. Exteriors
are constructed of wood, aluminum or other specified exterior materials such as
brick facing, etc.
Buildings produced by Structures are designed and engineered before
production. Detailed plans and other documentation prepared by Structures are
submitted to its customers and users as well as to various regulatory agencies
for approval prior to commencement of construction. Structures maintains its
own engineering and design staff which is capable of handling virtually all
types of building orders. On occasion, however, Structures may retain the
services of outside engineering and design firms.
Marketing
Structures does not sell its buildings directly to ultimate users of the
buildings. Structures' customers do not represent Structures on an exclusive
basis. Structures competes for customer orders based on price, quality, timely
delivery, engineering capability and general reputation for reliability.
Structures sells its products to approximately 75 customers. Customers may be
national, regional or local in nature. Customers will sell, rent or lease the
buildings purchased from Structures to the users. Structures believes a
significant portion of its product is either rented or leased by the users from
its customers.
Structures' sales staff calls on prospective customers in addition to
maintaining continuing contact with existing customers. The sales staff
assists its customers and their prospective customers in developing building
specifications in order to facilitate the preparation by Structures of a
quotation. The sales staff, in conjunction with the engineering staff,
maintains ongoing contact with the customer base.
Certain customers maintain rental fleets of standardized units such as
construction-site buildings or buildings for general office space requirements.
These buildings are generally rented or leased for a specific requirement, and
when the requirement has been satisfied, the buildings are returned to
Structures' customer for re-renting or leasing to other users. Other buildings
are produced to a specific user's requirements and Structures' customer will
either lease it to its customer or sell it outright. As a result of
transportation costs, the effective distribution range of buildings produced by
Structures is limited to an area within 400-600 miles from each manufacturing
facility.
Structures believes that the various leasing plans offered to the users by
its customers are a significant benefit of factory-built buildings over similar
conventional site-built buildings. Other significant benefits to the customer
are the speed with which a factory-built building can be made available for use
compared to on-site construction and the ability to relocate the building to
another site if the customer's utilization requirements change.
Certain companies within the industry served by Structures, including some
who are customers of Structures, have their own manufacturing facilities to
provide all or a portion of their building requirements. Structures does not
believe there is any specific identifiable industry trend or direction of its
customers having their own captive manufacturing capabilities. Certain
customers have acquired or started their own manufacturing facilities and other
customers have closed or reduced their manufacturing capability. Structures
believes that its customers are best served by having the flexibility of
outside product sources and avoiding the possible inefficiencies of captive
manufacturing facilities.
Structures is highly dependent on a limited number of customers, the loss
of which could have a material adverse effect on the operations of Miller.
For the fiscal years ended June 29, 1996 and July 1, 1995, the following
customer represented 10% or more of net sales of Miller: Transport
International Pool, Inc. d/b/a GE Capital Modular Space, a division of General
Electric Capital Corporation ("GE Capital"), represented 13% and 23%
respectively. An expanding customer base at Structures and the increased sales
volume at Telecom, coupled with a decline in sales from GE Capital, caused the
decrease in percentage of net sales from fiscal 1995.
Competition
Competition in the factory-built building industry is intense and
Structures competes with a number of entities, some of which may have greater
financial resources than Miller and Structures. To the extent that factory-
built buildings become more widely accepted as an alternative to conventional
on-site construction, competition from local contractors and manufacturers of
other pre-engineered building systems may increase. In addition to competition
from firms designing and constructing on-site buildings, Structures competes
with numerous factory-built building manufacturers that operate in particular
geographical regions.
Structures competes for orders from its customers primarily on the basis
of price, quality, timely delivery, engineering capability and reliability.
Structures believes that the principal basis on which it competes with on-site
construction is the combination of the timeliness of factory versus on-site
construction, the cost of its products relative to on-site construction, the
quality and appearance of its buildings, its ability to design and engineer
buildings to meet unique customer requirements (including local and state
regulatory compliance), and reliability in terms of completion time. The
manufacturing efficiencies and generally lower wage rates of factory
construction, even with the added transportation expense, in many instances
result in the cost of factory-built buildings being equal to or lower than the
cost of on-site construction of comparable quality. Quality, reliability and
the ability to comply with regulatory requirements in a large number of states
and localities depend upon the engineering and manufacturing expertise of the
management and staff of Structures. The relative importance of these factors
varies from customer to customer. Most of Structures' orders are awarded by
its customers on the basis of competitive bidding.
TELECOM
Telecom is located in Elkhart, Indiana and operates all administrative,
sales and manufacturing activities from that location. Telecom manufactures
specialized buildings which utilize modular construction techniques.
Products
Telecom manufactures modular factory-built buildings using pre-cast
concrete, steel, wood or fiberglass construction. Each building is custom-
built to the end users specifications and is typically finished to include
electrical, grounding, sensing alarm, mechanical and air conditioning systems.
The pre-cast concrete technology available through Telecom allows for
vandal-proof and environmental protection necessary for the telecommunication
industry. Telecom produces single and multiple module buildings with modules
ranging in size from 8' x 10' to modules as large as 14' x 30'. Telecom has
provided buildings, when assembled, consisting of a single module of 80 square
feet to multiple module buildings ranging up to 1,440 square feet. Multiple
story technology is currently being developed by Telecom. Telecom can provide
building transportation and complete site installation of the building and
equipment, if required by the customer specifications. Opportunities in pre-
cast concrete also exist for the containment of hazardous material in
specialized shelters and in correctional facilities requiring pre-cast modular
cells. Thelatter product can be provided to existing customers of Structures.
Telecom has complemented the traditional pre-cast concrete technology
with a lightweight concrete/steel building which will reduce the overall
building weight by 40%. A Com-Lock series of buildings has been developed
which allows speedy installation of interlocking steel and foam panels for
difficult site placement, such as rooftops, mountaintop, or inside an existing
building. A recently developed exportable Containerized Shelter, transforms a
standard 20' and 40' steel shipping container into a virtually indestructible
completely outfitted telecommunication shelter. Also, mobile shelters have
been developed which meet the challenge of light weight, portable shelters for
emergency communications, starter or test sites, temporary facilities or for
special events broadcasting.
Marketing
Telecom participates in an expanding market for telecommunication shelters
which service the cellular and personal communication industries. Telecom
expects the growth in these markets to continue. Telecom sells its product
directly to the end users of the buildings, which have been principally
telecommunication and utility companies, military bases and municipalities.
Telecom competes for orders by providing a quotation developed from
specifications received from the potential customer. While price is often a
key factor in the potential customer's purchase decision, other factors may
also apply, including delivery time, quality and prior experience with a
certain manufacturer. Several customers have designated Telecom as their
nationwide supplier. Telecom is prepared, if necessary, to provide a potential
customer a bid or performance bond to ensure Telecom's performance.
The potential shipping radius of these type of buildings is not as restrictive
as that of Modular and Mobile Office buildings; however, Telecom has
concentrated its marketing efforts in geographic areas where, Telecom
believes, it has a freight advantage over a significant portion of its
competitors.
Competition
Telecom competes with a number of national and regional firms. Some of
these competitor companies may have greater financial strength or capabilities
than Miller and Telecom; however, Telecom believes Miller's financial
strength, engineering capabilities and experience in producing other types of
factory-built structures are key elements in providing a competitive advantage
to Telecom.
General
(Applicable to all of Miller's principal markets)
Backlog
The backlog of orders by market at August 31, 1996 and 1995 was as follows:
1996 1995
Structures $11,488,000 $4,791,000
Telecom 2,847,000 1,895,000
Backlog is broadly defined as firm order commitments not yet produced into
a final building product. The backlog at Structures has more than doubled
from last year as the result of strong business activity, particularly in the
East and Northwest. The backlog will provide full production into our second
fiscal quarter, however, management believes it is to early to determine
whether this current business activity will extend to the second half of fiscal
1997.
Telecom's backlog increased 33% as this subsidiary has become a competitive
force in the telecommunication shelter industry. The management of Telecom
believes that their backlogs will continue to increase with the ongoing
development of their customer bases.
Regulation
Customers of Miller's factory-built buildings, or Miller's subsidiaries if
they complete the on-site work, are generally required to obtain building
installation permits from applicable governmental agencies. In certain cases,
however, conditional use permits may be obtained in lieu of building
installation permits. Conditional use permits usually are granted for a stated
period and may be renewable. Buildings completed by Miller's subsidiaries are
manufactured and installed in accordance with applicable building codes set
forth by the applicable state or local regulatory agencies.
State building code regulations applicable to factory-built buildings vary
from state to state. Many states have adopted codes that apply to the design
and manufacture of factory-built buildings, such as those manufactured by
Miller's subsidiaries, even if the units are manufactured outside the state
and delivered to a site within that state's boundaries. Generally, obtaining
state approvals is the responsibility of the manufacturer. Some states require
certain customers to be licensed in order to sell or lease factory-built
buildings. Additionally, certain states require a contractor's license from
customers for the construction of the foundation, building installation, and
other on-site work when this work is completed by the customer.
On occasion, Miller's subsidiaries have experienced regulatory delays in
obtaining the various required building plan approvals. In addition to some of
its customers, Miller's subsidiaries actively seek assistance from various
regulatory agencies in order to facilitate the approval process and reduce the
regulatory delays.
Raw Materials
Raw materials for products of Miller's subsidiaries are readily available
from multiple sources and the subsidiaries have not experienced any difficulty
in obtaining materials on a timely basis and in adequate quality and quantity.
Miller's subsidiaries, in certain instances, have entered into national
purchase arrangements with various suppliers. The benefit to Miller's
subsidiaries of these type of arrangements is often lower material costs and a
higher level of service and commitment.
Patents and Trademarks
Miller has a patent for non-combustible modular buildings.
Seasonality
Historically, Miller's subsidiaries have experienced greater sales during
the first and fourth fiscal quarters with lesser sales during the second and
third fiscal quarters. This reflects the seasonality of sales for products
used in various applications, including classrooms and other educational
buildings, and also the impact of weather on general construction related
activities. See unaudited interim financial information contained in Note H of
Notes to Consolidated Financial Statements.
Employees
As of August 31, 1996, Miller and its subsidiaries had approximately 370
employees of which approximately 285 were direct production employees.
Engineering and Design
Miller's subsidiaries engage in extensive engineering and design work to
meet customers' requirements, as well as to prepare bid proposals for new
projects. Engineering and design functions include structural, electrical, and
mechanical design and specifications work.
ITEM 2. PROPERTIES
The principal office and production facilities of Miller and its
subsidiaries consist of the following:
Approximate Square Footage
Location Total Production Office Owned or Leased
Elkhart, IN 77,500 61,500 16,000 Owned (1)
Elkhart, IN 54,800 50,600 4,200 Owned (2)
Leola, PA 61,900 58,900 3,000 Owned
Sioux Falls, SD 36,100 34,200 1,900 Leased (3)
Patterson, CA 44,600 41,400 3,200 Owned
Bennington, VT 28,900 27,000 1,900 Owned
_________________ _______ _______ ______
Total approximate
square footage 303,800 273,600 30,200
(1) Structures' administrative, sales, engineering and manufacturing facility.
The Executive offices of Miller are also at this location.
(2) Telecom administrative, sales and manufacturing facility.
(3) Leased until April 15, 1998 with a two-year renewal option.
ITEM 3. LEGAL PROCEEDINGS
Neither Miller, Structures, nor Telecom is subject to any material
pending litigation other than ordinary routine litigation incidental to the
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS
Steven F. Graver (age 44) has been a Director of Miller since April
1991 and was elected Chairman of the Board of Directors on August 11, 1994.
Effective July 1, 1995, Graver, Bokhof & Goodwin ("GraverBokhof") became
Graver, Bokhof, Goodwin & Sullivan ("GBGS"). GBGS is a subsidiary of the
Optimum Group which has over $800 million in assets under management. Mr.
Graver is President and Chief Portfolio Manager of the Optimum Group. In July
1991, GraverReich & Company ("GraverReich"), merged with GraverBokhof, an
investment management firm, and Mr. Graver became a General Partner of
GraverBokhof. From December 1986 until July 1991, Mr. Graver was the President
and Chief Executive Officer, and Executive Vice President from February 1981
until November 1986, of GraverReich.
Edward C. Craig (age 61) became the Chief Executive Officer of Miller
and Vice Chairman of the Board of Directors of Miller effective on July 3,
1994. Mr. Craig was elected President of Miller on August 11, 1994. From July
1991 until April 1994, Mr. Craig was President and Chief Executive Officer of
IBG, a mobular housing company. From April 1986 to July 1991, Mr. Craig was
President of Ryland Building Systems, a division of Ryland Homes, Inc. Mr.
Craig is a Director of Regional Building Systems.
Thomas J. Martini (age 48) became the Vice President of Finance of
Miller in July 1994. Mr. Martini was elected Secretary and Treasurer of Miller
on April 28, 1992 and has been the Chief Financial Officer of Miller since
February 1991.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Miller's Common Stock is quoted on the National Association of
Securities Dealers' Automated Quotation (NASDAQ) system under the ticker symbol
"MTIK". The following table sets forth the quarterly range of high and low
quotations for these securities as reported on the NASDAQ National Market
System for the two most recent fiscal years.
Fiscal 1996 Fiscal 1995
High Low High Low
1st Quarter 3 1/4 2 1/4 4 3
2nd Quarter 3 1/2 2 4 3
3rd Quarter 5 3 4 1/4 3 1/4
4th Quarter 6 4 1/4 4 2
As of August 30, 1996, Miller estimates there were approximately 1,600
stockholders of Miller's Common Stock. Of this total, approximately 250 were
stockholders of record and shares for approximately 1,350 stockholders were
held in street name. Harris Trust & Savings Bank, Chicago, is Miller's
Transfer Agent and Registrar.
Miller did not pay cash dividends on its Common Stock in fiscal 1996,
fiscal 1995, or fiscal 1994 as the Board of Directors ceased the payment of
dividends in the third fiscal quarter of 1993. Miller does not intend to pay
cash dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included elsewhere herein.
Years Ended
June 29, July 1, July 2, June 30, June 30,
1996 1995 1994 1993 1992
(In thousands, except per share data)
Net sales $37,858 $41,455 $38,569 $40,623 $40,757
Net income (loss) 486(A) 320(A) 312(A) (2,014)(A) (224)
Net income (loss)
per share .16 .10 .10 (.61) (.06)
Cash dividends per
share - - - .075 .10
Total assets 16,920 16,522 15,308 16,411 17,954
Long-term debt, less
current maturities 1,270 1,385 110 210 302
(A) Miller's operating results for fiscal years 1996, 1995, 1994 and 1993 were
adversely impacted by nonrecurring items of $358,180, $361,123, $159,252
and $2,345,363, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Fiscal 1996 Compared to Fiscal 1995
Net sales decreased $3.6 million or approximately 9% in fiscal 1996
from the corresponding period in fiscal 1995. Structures reported a $6.1
million, or approximately a 19% decrease in net sales during fiscal 1996. All
Structures' plants, except Sioux Falls, South Dakota which remained flat,
experienced net sales declines. The markets that Structures serves were very
soft especially in the second and third fiscal quarters. With a $5.5 million
increase in its net sales during fiscal 1996, Telecom more than doubled in net
sales from the previous year. Telecom has become a competitive force in the
telecommunication shelter industry. There were no net sales at the closed
Residential division of Structures during fiscal 1996, compared to $3.0 million
in fiscal 1995.
Miller's gross profit during the 1996 fiscal year approximated 18% of
net sales compared to approximately 15% of net sales in fiscal 1995. During
fiscal 1996, net sales from Telecom were nearly a third of Miller's total net
sales. The telecommunication business provides a higher gross profit than the
modular units produced by Structures, which caused the increase in gross profit
during the current fiscal year. Miller expects the expansion of the
telecommunication shelter business to continue during the next fiscal year.
Selling, general and administrative expenses increased $.5 million in
fiscal 1996. These expenses were 15% of net sales in fiscal 1996 compared to
12% of net sales in fiscal 1995. The increase in administrative expense was
primarily the result of higher payroll and other administrative expenses
related to the growth of Telecom.
During fiscal 1996, Miller recorded nonrecurring items of $358,180.
These nonrecurring items consisted primarily of $256,792 of costs associated
with the terminated acquisition of Whitley Manufacturing Company, Inc., $76,613
in additional costs associated with the closed Residential division and $15,703
in warranty costs at the closed PME operations.
The decrease in interest expense in fiscal 1996 compared to fiscal
1995 of $2,688 was primarily the result of a $28,442 decrease in interest paid
on the revolving line of credit related to lower debt outstanding, partially
offset by a $25,687 increase in interest expense for the industrial revenue
bond which was outstanding for the full fiscal year during 1996.
During fiscal 1996, Miller recorded an income tax provision of
$334,000 or 41% of pre-tax profit compared to an income tax provision of
$189,000 or 37% of pre-tax profit in fiscal 1995. The increase in the current
year's effective tax rate is attributable to increased state income taxes which
result from the expansion and profitability of the Telecom subsidiary.
Fiscal 1995 Compared to Fiscal 1994
Net sales increased $2.9 million or approximately 7% in fiscal 1995
from the corresponding amount in fiscal 1994. Structures reported a $3.4
million or approximately an 11% increase in net sales. Net sales in the
Eastern plants of Structures increased $4.4 million or approximately 20%, while
net sales in the West decreased $1.0 million or approximately 14%. All
Structures' Eastern plants experienced net sales growth as the economy in these
markets remained strong. The decline in net sales in the West was the result
of continued sluggishness in the California economy. Telecom recorded a $1.0
million or approximately 23% increase in net sales, as this subsidiary
continued to build its reputation and customer base. Net sales at the closed
Residential division of Structures was virtually unchanged.
Miller's gross profit during the 1995 fiscal year approximated 15% of
net sales compared to approximately 12% of net sales in fiscal 1994. During
fiscal 1995 Miller was able to shift a portion of the sales from the low end
fleet business to the more profitable technical and specific use applications.
Selling, general and administrative expenses increased $.7 million in
fiscal 1995. These expenses were 12% of net sales in fiscal 1995 compared to
11% of net sales in fiscal 1994. The increase in administrative expenses was
primarily the result of higher payroll and other administrative expenses
related to the growth at both Structures and Telecom.
During the year, Miller recorded nonrecurring items of $361,123. These
nonrecurring items consisted primarily of a $265,514 charge which resulted from
the final resolution of disputed warranty issues with a customer, a charge of
$186,198 for exit costs associated with the closing of the Residential
division, and the reversal of $90,589 of certain restructuring charges recorded
in fiscal 1993. The earlier than anticipated exit from the lease at the
Fontana plant, a favorable arbitration settlement and the reversal of warranty
reserves at the closed PME operations, partially offset by additional interest
expense for an IRS audit, were the principal causes for the reversal of
restructuring costs.
The increase in interest expense in fiscal 1995 compared to fiscal
1994 of $42,808 was the result of a $55,349 increase in interest expense for
the industrial revenue bond issued to finance the plant expansion at Telecom.
Lower debt outstanding on the revolving line of credit was the principal cause
for a $12,541 offsetting decrease in interest expense.
During fiscal 1995 Miller recorded an income tax provision of
$189,000 or 37% of pre-tax profit. In fiscal 1994, Miller recorded an income
tax credit of $66,000. A provision of $91,000 or 37% of the pre-tax profit was
offset by a Reversal of $157,000 for a provision of federal and state income
taxes related to an Internal Revenue Service audit settled favorably by Miller.
Liquidity and Capital Resources
Miller's working capital as of June 29, 1996 was $5,942,053 compared
to $5,254,456 as of July 1, 1995. The working capital ratio as of June 29,
1996 and July 1, 1995 was 2.2 and 2.0 to 1, respectively.
During fiscal 1996, operations provided cash flows of $378,193
consisting primarily of net income and certain noncash charges offset by
increases in receivables and refundable income taxes and payments of accrued
nonrecurring items. Miller utilized cash of $289,799 in investing activities,
consisting primarily of purchases of plant and equipment. Miller utilized cash
of $224,925 in the reduction of long-term debt.
An unsecured revolving credit agreement with a bank makes available
advances up to $5,000,000 through November 30, 1996. There was $1,500,000
outstanding on the revolving credit line at June 29, 1996 and $1,550,000 at
July 1, 1995.
Miller believes it has adequate resources available to fund the
continuation of its internal growth during the coming fiscal year. The
unsecured revolving credit line assures that resources will be available for
future growth.
Impact of Inflation
Inflation has not had an identifiable effect on Miller's operating
margins during the last three fiscal years. Product selling prices are quoted
reflecting current material prices and other related costs and expenses.
Accordingly, any impact of inflation is reflected in the product selling
prices.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 of Part II is incorporated herein
by reference to the Consolidated Financial Statements filed with this report;
see Item 14 of Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Information with respect to the Directors of Miller is set forth in
the Election of Directors section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
(b) Executive Officers
Information regarding the Executive Officers of Miller is set forth in
Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Compensation
of Executive Officers section of the Proxy Statement to be filed pursuant to
Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Ownership of
Miller Building Systems, Inc. Common Stock section of the Proxy Statement to be
filed pursuant to Regulation 14A and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Certain
Relationships and Related Transactions section of the Proxy Statement to be
filed pursuant to Regulation 14A and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Consolidated Financial Statements of Miller Building Systems,
Inc. and Subsidiaries
Report of Independent Accountants . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets as of June 29, 1996 and July 1, 1995. . F-2
Consolidated Statements of Income for the years ended June 29,1996,
July 1, 1995 and July 2,1994. . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Stockholders' Equity for the years
ended June 29, 1996, July 1, 1995 and July 2, 1994. . . . . . . . . F-4
Consolidated Statements of Cash Flows for the years ended
June 29, 1996, July 1, 1995 and July 2, 1994. . . . . . . . . . . . F-5
Notes to Consolidated Financial Statements. . . . . . . . . . . . . F-6
(2) Financial Statement Schedule
II - Valuation and Qualifying Accounts. . . . . . . . . . . . . . F-15
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
(3) See Index to Exhibits
(b) Reports on Form 8-K filed:
No reports on Form 8-K were filed by the registrant in the last
quarter of the 1996 fiscal year.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MILLER BUILDING SYSTEMS, INC.
September 16, 1996 \Edward C. Craig
Edward C. Craig
President and Chief
Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
\Edward C. Craig President, Chief September 16, 1996
Edward C. Craig Executive Officer
and Director
(Principal Executive
Officer)
\Thomas J. Martini Secretary and September 16, 1996
Thomas J. Martini Treasurer (Principal
Financial and
Accounting Officer)
\Ronald L. Chez Director September 16, 1996
Ronald L. Chez
\David E. Downen Director September 16, 1996
David E. Downen
\Steven F. Graver Director September 16, 1996
Steven F. Graver
\William P. Hall Director September 16, 1996
William P. Hall
\Myron C. Noble Director September 16, 1996
Myron C. Noble
\David H. Padden Director September 16, 1996
David H. Padden
\Jeffrey C. Rubenstein Director September 16, 1996
Jeffrey C. Rubenstein
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of Miller Building Systems, Inc.:
We have audited the consolidated financial statements and the financial
statement schedule of Miller Building Systems, Inc. and subsidiaries listed in
Item 14(a) of this Form 10-K. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Miller Buildings
Systems, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995, and the
consolidated results of their operations and their cash flows for the years
ended June 29, 1996, July 1, 1995 and July 2, 1994, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the financial information required to be included therein.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
August 6, 1996, except as to the information
presented in Note I for which the date is
August 12, 1996
F-1
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 29, July 1,
1996 1995
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $ 165,329 $ 351,860
Receivables, less allowance for doubtful
receivables of $54,000 in 1996 and
$59,000 in 1995 6,749,230 5,960,110
Refundable income taxes 241,158 -
Inventories:
Raw materials 2,875,527 2,945,366
Work in process 612,016 441,366
Finished goods 53,457 146,887
3,541,000 3,533,619
Deferred income taxes 252,000 320,000
Other current assets 83,087 126,752
TOTAL CURRENT ASSETS 11,031,804 10,292,341
PROPERTY, PLANT AND EQUIPMENT
Land 835,421 847,336
Buildings and leasehold improvements 5,497,359 5,357,144
Machinery and equipment 4,068,357 3,906,285
10,401,137 10,110,765
Less, Accumulated depreciation
and amortization 4,627,438 4,083,640
PROPERTY, PLANT AND EQUIPMENT, NET 5,773,699 6,027,125
OTHER ASSETS 114,855 202,166
TOTAL ASSETS $16,920,358 $16,521,632
The accompanying notes are a part of the consolidated financial statements.
F-2<PAGE>
June 29, July 1,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 1,500,000 $ 1,550,000
Current maturities of long-term debt 115,000 224,925
Accounts payable 2,291,448 2,074,510
Accrued income taxes 79,438 89,827
Accrued expenses and other 974,698 904,766
Accrued nonrecurring items 129,167 193,857
TOTAL CURRENT LIABILITIES 5,089,751 5,037,885
LONG-TERM DEBT, less current maturities 1,270,000 1,385,000
DEFERRED INCOME TAXES 136,000 134,000
OTHER 20,019 45,782
TOTAL LIABILITIES 6,515,770 6,602,667
COMMITMENTS AND CONTINGENCIES - Notes C and G
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, issued
4,023,548 shares 40,235 40,235
Additional paid-in capital 11,454,903 11,454,903
Retained earnings 2,048,824 1,563,201
13,543,962 13,058,339
Less, Treasury stock, at cost 3,139,374 3,139,374
TOTAL STOCKHOLDERS' EQUITY 10,404,588 9,918,965
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $16,920,358 $16,521,632
F-2
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<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
June 29, July 1, July 2,
1996 1995 1994
Net sales $37,857,968 $41,454,500 $38,568,812
Costs and expenses:
Cost of products sold 31,002,433 35,373,322 33,791,773
Selling, general and
administrative 5,558,322 5,018,490 4,362,530
Nonrecurring items 358,180 361,123 159,252
Provision for doubtful receivables 1,287 67,528 120,220
(Gain) loss on sale of property
and equipment (12,323) 3,379 (183,910)
Interest expense 132,145 134,833 92,025
Interest income ( 1,699) (13,087) (18,938)
INCOME BEFORE
INCOME TAX (CREDIT) 819,623 508,912 245,860
Income tax (credit) 334,000 189,000 (66,000)
NET INCOME $ 485,623 $ 319,912 $ 311,860
Earnings per share of common stock:
Primary $ .16 $ .10 $ .10
Fully diluted $ .15 $ .10 $ .10
Weighted average number of shares of common
stock and common stock equivalents:
Primary 3,128,693 3,130,207 3,197,421
Fully diluted 3,290,453 3,130,207 3,197,421
The accompanying notes are a part of the consolidated financial statements.
F-3
<PAGE>
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Issued
(Authorized - Additional Total
7,500,000 shares) Paid-In Retained Treasury Stock Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1993 4,023,548 $40,235 $11,454,903 $ 938,574 774,470 $(2,681,591) $ 9,752,121
Treasury stock acquired - - - - 90,500 (274,179) (274,179)
Net income - - - 311,860 - - 311,860
BALANCE, JULY 2, 1994 4,023,548 40,235 11,454,903 1,250,434 864,970 (2,955,770) 9,789,802
Treasury stock acquired - - - - 80,000 (260,000) (260,000)
Treasury stock sold - - - (2,572) (15,385) 52,573 50,001
Exercise of stock options using
treasury stock - - - (4,573) (7,000) 23,823 19,250
Net income - - - 319,912 - - 319,912
BALANCE, JULY 1, 1995 4,023,548 40,235 11,454,903 1,563,201 922,585 (3,139,374) 9,918,965
Net income - - - 485,623 - - 485,623
BALANCE, JUNE 29, 1996 4,023,548 $40,235 $11,454,903 $2,048,824 922,585 $(3,139,374) $10,404,588
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
F-4
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
June 29, July 1, July 2,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 485,623 $ 319,912 $ 311,860
Adjustments to reconcile net income
to net cash provided by operating
activities:
Nonrecurring items 358,180 361,123 159,252
Depreciation and amortization 632,277 612,359 574,243
Amortization of other assets 10,582 17,886 1,944
Deferred income taxes 70,000 67,000 (44,000)
(Gain) loss on sale of property
and equipment (12,323) 3,379 (183,910)
Changes in certain assets and
liabilities:
Receivables (789,120) 226,710 (528,709)
Refundable income taxes (241,158) - 684,000
Inventories (7,381) (161,215) 20,835
Other current assets 43,665 274,074 (138,791)
Accounts payable 216,938 (1,128,428) 297,474
Accrued income taxes (10,389) (50,715) (145,394)
Accrued expenses and other 69,932 224,021 18,735
Accrued nonrecurring items (448,633) (699,771) (456,033)
Net cash provided by
operating activities 378,193 66,335 571,506
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 28,998 51,268 1,155,412
Purchase of property, plant
and equipment (395,526) (1,934,432) (394,918)
Unexpended industrial revenue
bond proceeds 76,729 (76,729) -
Net cash provided by (used in)
investing activities (289,799) (1,959,893) 760,494
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 10,440,000 19,838,000 18,772,000
Reduction of short-term borrowings (10,490,000) (18,813,000) (19,649,000)
Proceeds from long-term debt - 1,500,000 -
Bond issuance costs - (120,436) -
Payments of long-term debt (224,925) (100,481) (91,849)
Purchase of treasury stock - (260,000) (274,179)
Proceeds from sale of treasury stock - 50,001 -
Proceeds from exercise of
stock options - 19,250 -
Net cash provided by (used in)
financing activities (274,925) 2,113,334 (1,243,028)
Increase (decrease) in cash and
temporary cash investments (186,531) 219,776 88,972
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of year 351,860 132,084 43,112
End of year $ 165,329 $ 351,860 $ 132,084
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 127,246 $ 113,167 $ 87,664
Income taxes (net of refunds) 515,547 172,715 (560,606)
The accompanying notes are a part of the consolidated financial statements.
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Miller Building Systems, Inc. is the parent of Miller Structures, Inc.
and Miller Telecom Services, Inc. (individually and collectively
referred to herein as "Miller"). Established in 1982, Miller designs,
manufactures and markets factory-built buildings.
The following is a summary of the significant accounting policies used
in the preparation of the accompanying consolidated financial
statements.
Principles of Consolidation - The consolidated financial statements
include the accounts of Miller Building Systems, Inc. and its two
subsidiaries, both of which are wholly owned.
Fiscal Year - Miller's fiscal year is a 52 or 53 week period ending on
the Saturday closest to June 30.
Revenue Recognition - Miller generally recognizes revenues from the
sales of its products upon the completion of manufacturing and the
transfer of title.
Inventories - Inventories are stated at the lower of cost or market,
with cost determined under the first-in, first-out method.
Property, Plant and Equipment - Property, plant and equipment are
carried at cost less accumulated depreciation and amortization.
Depreciation and amortization of plant and equipment are computed using
the straight-line method over the estimated useful lives of the assets.
Costs of purchased software and, under certain conditions, internal
software development costs are capitalized and are amortized using the
straight-line method over sixty months. As of June 29, 1996 and July 1,
1995, capitalized software costs, included with machinery and equipment,
(and the related accumulated amortization) aggregated $233,025 (47,334),
and $199,007 ($8,251), respectively.
Bond Issuance Costs - Bond issuance costs aggregating $120,436, which
related to issuance of the industrial revenue bond, are being amortized
using the straight-line method over the term of the bond.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued.
Income Taxes - Deferred income taxes are determined using the liability
method.
Employee Benefit Plan - Miller maintains a simplified 401(k) savings
plan (the "Plan") for eligible participating employees of Miller. The
Plan is a defined contribution plan under which employees may
voluntarily contribute a percentage of their compensation. The Plan
allows Miller to make discretionary matching contributions before the
end of the Plan's calendar year-end. During the years ended June 29,
1996, July 1, 1995 and July 2, 1994, Miller expensed $22,560, $17,237
and $17,017 respectively, under this Plan.
Earnings Per Share - Per share amounts are based upon the weighted
average number of common shares outstanding and common equivalent shares
(dilutive stock options) assumed outstanding during each period.
Consolidated Statements of Cash Flows - Miller considers all highly
liquid investments purchased with an original maturity of three months
or less to be temporary cash investments for purposes of the
consolidated statements of cash flows.
Use of Estimates in the Preparation of Financial Statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial Instruments - The carrying amounts of cash and
temporary cash investments, receivables, short-term borrowings and
accounts payable approximated their fair value as of June 29, 1996
because of the relatively short maturities of these instruments. The
carrying amount of long-term debt, including current maturities,
approximated fair value as of June 29, 1996 based upon terms and
conditions currently available to Miller in comparison to the terms and
conditions of the outstanding long-term debt.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note B: NONRECURRING ITEMS.
Nonrecurring items consist of the following:
Years Ended
June 29, July 1, July 2,
1996 1995 1994
Costs associated with
terminated acquisition $256,792 $ - $ -
Settled warranty issues - 265,514 -
Residential exit costs 76,613 186,198 -
Severance agreement - - 264,150
Other nonrecurring
charges (credits) 24,775 (90,589) (104,898)
$358,180 $361,123 $ 159,252
During the fiscal year ended June 29, 1996, Miller recorded a pre-tax
charge of $256,792 related to costs associated with the terminated
acquisition of Whitley Manufacturing Company, Inc. In addition, during
fiscal 1996, Miller recorded $76,613 of additional exit costs associated
with the closing of its Residential Division.
During the fiscal year ended July 1, 1995, Miller recorded a pre-tax
charge of $265,514 which resulted from the final resolution of disputed
warranty issues with a customer. Also, Miller recorded a pre-tax charge
of $186,198 for exit costs associated with the closing of its residential
division, which manufactured factory-built modular residential housing.
During the fourth quarter of fiscal year ended July 2, 1994, Miller
recorded a severance agreement with a former officer which consisted of
seventeen months compensation and certain benefits. The agreement was
payable monthly through December 31, 1995.
At June 29, 1996, $20,019 ($45,782 at July 1, 1995) of the accrual for
liabilities and costs associated with the nonrecurring items is reflected
as a long-term liability and the remaining accrual is classified as a
current liability.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note C: DEBT.
Short-term borrowings
Miller maintains an unsecured revolving line of credit with a bank. The
loan agreement makes available up to $5 million through November 30,
1996. Interest is payable monthly at prime or a margin over the London
Interbank Offering Rate, depending on the pricing option selected by
Miller. At June 29, 1996 and July 1, 1995, the weighted average interest
rate on outstanding borrowings was 8.25% and 8.68%, respectively. As of
June 29, 1996 and July 1, 1995, outstanding borrowings under the loan
agreement aggregated $1,500,000 and $1,550,000, respectively. The loan
agreement contains, among other provisions, certain covenants including:
maintenance of a required current ratio, tangible net worth and
liabilities to tangible net worth ratio.
Long-term debt
Long-term debt consists of the following:
June 29, July 1,
1996 1995
Industrial revenue bond, variable rate
(3.55% at June 29, 1996), payable
in annual installments of $115,000,
with an installment of $120,000
at final maturity in November 2007 $1,385,000 $1,500,000
Obligation payable to a former officer - 109,925
Total 1,385,000 1,609,925
Less, Current maturities 115,000 224,925
Long-term debt $1,270,000 $1,385,000
Aggregate annual maturities of long-term debt are $115,000 for each of
the next five years.
In connection with the industrial revenue bond obligation, Miller
obtained, as a credit enhancement for the bondholders, an irrevocable
letter of credit in favor of the bond trustee. Miller, at its
discretion, can convert the industrial revenue bond from a variable rate
to a fixed rate. The fixed rate would be determined contemporaneously
with the decision to convert. Miller may redeem the bonds at any time in
increments of $100,000. In the event the bonds have been converted to a
fixed rate, such redemtion is at a premium determined by the number of
years from conversion to original maturity.
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note D: STOCKHOLDERS' EQUITY.
On June 30, 1994, the Board of Directors adopted the Miller Building
Systems, Inc. 1994 Stock Option Plan (the "1994 Plan") under which
300,000 shares of common stock were reserved for future grant. The 1994
Plan expires June 30, 2004. On August 26, 1991, the Board of Directors
adopted the Miller Building Systems, Inc. 1991 Stock Option Plan (the
"1991 Plan") under which 250,000 shares of common stock were reserved for
future grant. The 1991 Plan expires August 26, 2001. The 1994 Plan and
1991 Plan provide that options can be granted by Miller at a price not
less than 100% of fair market value (or 110% of fair market value if the
optionee owns 10% or more of Miller's common stock). The term of an
option granted under the 1994 Plan and 1991 Plan cannot exceed ten years,
and options are either exercisable upon grant or contain a specific
vesting schedule, except in the event of a change of control, as defined,
at which time all outstanding options become fully exercisable by the
optionee.
Changes in options are summarized as follows:
Number Per Share
Of Shares Option Price
Outstanding at July 1, 1993 201,500 $2.50 - $4.63
Canceled (41,500) 3.00 - 4.25
Outstanding at July 2, 1994 160,000 2.50 - 4.63
Granted 329,000 3.25 - 6.00
Exercised (7,000) 2.75
Canceled (88,000) 2.75 - 4.63
Outstanding at July 1, 1995 394,000 2.50 - 6.00
Granted 215,000 4.00 - 6.13
Cancelled (126,000) 3.25 - 6.00
Outstanding at June 29, 1996 483,000 $2.50 - $6.13
Exercisable at June 29, 1996 241,200
In October 1995, Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-based Compensation," was issued. This
Statement requires the fair value of stock options and other stock-based
compensation issued to employees to either be included as compensation
expense in the statement of income, or the pro forma effect on net income
and earnings per share of such compensation expense to be disclosed in
the notes to the financial statements. Miller expects to adopt SFAS
No. 123 on a disclosure basis only, and the disclosure requirements are
effective for fiscal years beginning after December 15, 1995. As such,
implementation of SFAF No. 123 is not expected to impact Miller's
consolidated balance sheet or statement of income.
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note D: STOCKHOLDERS EQUITY, Continued
The Company has an employee stock purchase plan under which a total of
500,000 shares of the Company's common stock are reserved for purchase by
full-time employees through payroll deductions at a price equal to 85% of
the fair market value on the purchase date. Certain restrictions in the
plan limit the amount of payroll deductions and the amount of ownership
in the Company an employee may acquire under the plan. As of June 29,
1996, the Company has not implemented the employee stock purchase plan.
Note E: INCOME TAXES.
The provision (credit) for income taxes is summarized as follows:
Years Ended
June 29, July 1, July 2,
1996 1995 1994
Current:
Federal $185,000 $ 72,000 $(18,000)
State 79,000 50,000 (4,000)
264,000 122,000 (22,000)
Deferred tax (credit) 70,000 67,000 (44,000)
Total $334,000 $189,000 $(66,000)
The provision (credit) for income taxes included in the consolidated
statements of income differs from that computed by applying the federal
statutory tax rate (34%) to income before income tax as follows:
Years Ended
June 29, July 1, July 2,
1996 1995 1994
Computed federal income
tax $279,000 $173,000 $ 83,600
Increase (decrease)
resulting from:
Federal income taxes
reversed for Internal
Revenue Service examination - - (120,400)
State income taxes, net
of federal income tax
impact 59,000 33,000 (2,600)
Other, net ( 4,000) (17,000) (26,600)
Total $334,000 $189,000 $ (66,000)
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note E: INCOME TAXES, Continued.
Deferred income taxes reflect the estimated future net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes. The components of the net deferred tax asset and
liabilities at June 29, 1996 and July 1, 1995 are as follows:
June 29, July 1,
1996 1995
Current deferred tax asset:
Inventories $ 138,000 $ 140,000
Accrued warranty 33,000 59,000
Accrued nonrecurring items 53,000 76,000
Allowance for doubtful
receivables 22,000 24,000
Other 6,000 21,000
Total $ 252,000 $ 320,000
Long-term deferred tax asset (liability):
Property, plant and equipment $(144,000) $(149,000)
Accrued nonrecurring items 8,000 15,000
Total $(136,000) $(134,000)
Note F: MAJOR CUSTOMERS.
Miller's primary business involves the design and manufacture of factory-
built buildings. Miller sells its commercial modular and mobile office
products to independent customers who, in turn, sell or lease to the end
users. The telecommunication products are sold directly to the end user.
One customer individually accounted for 13% of net sales in fiscal 1996,
23% of net sales in fiscal 1995 and 21% of net sales in fiscal 1994. At
June 29, 1996, 16% of receivables are concentrated with one customer and
40% concentrated in five other customers. At July 1, 1995, 15% of
receivables was concentrated with one customer and 37% was concentrated
with five other customers.
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note G: COMMITMENTS AND CONTINGENCIES.
Lease Commitments
Miller leases certain real estate under a noncancellable operating lease
expiring April 1998. The lease may be extended at Miller's option.
Miller generally is responsible for utilities, taxes and insurance on the
leased facility. Future minimum lease payments under this noncancellable
lease are as follows: 1997 - $50,404 and 1998 - $43,237.
Rental expense under all operating leases aggregated $70,691, $159,225
and $179,620 for the years ended June 29, 1996, July 1, 1995 and July 2,
1994, respectively.
Self-Insurance
Miller is self-insured for the portion of its employee health care costs
not covered by insurance. Miller is liable for medical claims up to
$40,000 per eligible employee annually, and aggregate annual claims up to
approximately $658,000. The aggregate annual deductible is determined by
the number of eligible covered employees during the year and the coverage
they elect. Miller accrues for the estimated losses occurring from both
asserted and unasserted claims. The estimate of the liability for
unasserted claims arising from incurred, but not reported, claims is
based on analysis of historical claims data.
Note H: UNAUDITED INTERIM FINANCIAL INFORMATION.
Presented below is certain selected unaudited quarterly financial
information for the years ended June 29, 1996 and July 1, 1995:
Earnings
Net Gross Net Income (Loss)
Sales Profit (Loss) Per Share
1996:
Fourth $11,945,282 $2,373,716 $ 393,701 $ .12
Third 8,170,244 1,338,187 (180,265) (.06)
Second 7,670,294 1,275,392 19,001 .01
First 10,072,148 1,868,240 253,186 .08
$37,857,968 $6,855,535 $ 485,623 $ .16
1995:
Fourth $11,298,949 $1,899,047 $ 263,885 $ .08
Third 9,225,932 1,131,982 (370,960) (.12)
Second 9,691,497 1,440,865 118,817 .04
First 11,238,122 1,609,284 308,170 .10
Total $41,454,500 $6,081,178 $ 319,912 $ .10
The sum of quarterly earnings (loss) per share for the four quarters may
not equal annual earnings per share due to changes in the average common
equivalent shares.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Concluded
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994
Note I: SUBSEQUENT EVENTS.
On August 12, 1996, Miller entered into a ten-year lease agreement with
the Board of County Commissioners of Coffey County, Kansas to lease a
155,000 square foot manufacturing facility. The lease agreement provides
for payments of $2,500 per month with an option to purchase the building
at the end of the lease for a balloon payment of $250,000. The balloon
payment can be reduced if certain full-time employee levels are attained
during the term of the lease. In connection with the lease agreement,
Miller entered into an agreement with the current tenant of the property,
whereby Miller agreed to pay the tenant $800,000, in two equal
installments, to vacate the leased premises. Miller paid the tenant
$400,000 on August 12, 1996, and will pay the remaining $400,000 after
the tenant vacates the leased premises, which is scheduled to be on or
before November 1, 1996. Miller intends to use its existing line of
credit for the cash to pay the tenant.
The lease agreement will be accounted for as a capitalized lease
obligation whereby Miller will reflect the leased property under the
capitalized lease and the related obligations on its balance sheet. If
the lease agreement and related agreement with the current tenant had
been consummated on June 29, 1996, Miller's consolidated balance sheet
at that date would have reflected land and building under capital lease
of $1,029,000, the $800,000 obligation to the current tenant and a
$229,000 capital lease obligation, discounted using a 9% incremental
borrowing rate.
F-14
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Col. A Col. B Col. C Col. D Col. E
Additions Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expenses Accounts Deductions of Period
Year ended June 29, 1996:
Allowance for
doubtful
receivables $ 59,024 $ 1,287 $ - $ 6,706 (A) $ 53,605
Year ended July 1, 1995:
Allowance for
doubtful
receivables $120,220 $ 67,528 $ - $128,724 (A) $ 59,024
Year ended July 2, 1994:
Allowance for
doubtful
receivables $ 49,361 $120,220 $ - $ 49,361 (A) $120,220
Property held
for sale $153,259 $ - $ - $153,259 (B) $ -
(A) Uncollectible accounts written off.
(B) Valuation allowance originally established in fiscal year 1993 to reflect
"Property held for sale" at its net realizable value was utilized when
the property was disposed of in fiscal year 1994.
F-15
MILLER BUILDING SYSTEMS, INC., AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
10.57 Employment agreement between Registrant and Edward C. Craig, dated
February 29, 1996 (I)
10.58 Lease agreement between the Board of County Commissioners of Coffey
County, Kansas dated August 12, 1996 with respect to property
located in Burlington, Kansas
10.59 Agreement between Registrant and American Quality Manufacturing,
Inc. dated July 25, 1996, to vacate the leased property located in
Burlington, Kansas
10.60 Lease agreement between Toboll Property Limited Partnership and
Miller Structures, Inc. dated May 21, 1996, with respect to the
lease of land in Sioux Falls, South Dakota
11 Statement regarding computation of per share earnings
23.3 Consent of Independent Accountants
The exhibits listed below are filed as part of this report and incorporated by
reference as indicated.
3.1 Certificate of Incorporation, as amended (a)
3.2 By-Laws, as amended (a) (c) (e) (h) (j) (k) (m)
4.1 Specimen Common Stock Certificate (d)
4.2 Certificate of Incorporation, Articles Fourth, Eighth, and Tenth;
By-Laws, Articles II, VII, and IX (a)
10.11 Lease Agreement between Sioux Falls Structures, Inc. (now known as
Miller Structures, Inc.), a South Dakota corporation, and Toboll
Corporation dated April 15, 1985 with respect to property located
in Sioux Falls, South Dakota (a) and Amendments thereto dated
February 3, 1988 and December 31, 1989 (g)
10.14 Lease between Miller Structures, Inc.), a California corporation,
and C&W dated as of March 20, 1985 with respect to property located
in Fontana, California (a)
10.44 Employment Agreement between Registrant and John M. Davis, dated
March 16, 1990 and effective as of February 1, 1990 (f) (I)
10.47 Agreement between Registrant and Frederick H. Goldberger, dated May
6, 1991, which replaces an employment agreement dated April 26,
1988 and amendments thereto which was to expire on June 30, 1995
(i)
10.48 1991 Stock Option Plan adopted by the Registrant's stockholders on
October 30, 1991 and Form of Option Agreement (l)
10.49 Miller Building Systems, Inc. 401(k) Plan (n)
10.50 Letter to Frederick H. Goldberger, dated April 28, 1993, declaring
the non-competition covenant, of the Agreement of May 6, 1991, to
have no value (n)
10.51 First amendment to employment agreement between Registrant and John
M. Davis, dated March 16, 1994 (p) (I)
10.52 Commercial Lease and Option to Purchase between Miller Structures,
Inc., and Indiana corporation, and Malcolm O. Koons dated March 2,
1993 with respect to property located at Elkhart, Indiana (p)
10.53 1994 Stock Option Plan adopted by the Registrant's stockholders on
October 25, 1994 and For of Option Agreement (o)
10.54 Agreement between Registrant and Ronald L. Chez, dated September 9,
1994 (q) (I)
10.55 Agreement to Terminate Lease between Miller Structures, Inc., an
Indiana corporation, and Malcolm O. Koons dated June 12, 1995 with
respect to property located at Elkhart, Indiana (q)
10.56 Employment agreement between Registrant and Edward C. Craig, dated
July 1, 1994 (q) (I)
21.1 Subsidiaries of the Registrant (n)
(a) Registration Statement on Form S-1, as amended (File No. 0-14651)
(b) Form S-8, Date of Report - October 28, 1987
(c) Form 8-K, Date of Report - July 20, 1989
(d) Form 10-K for year ended June 30, 1989
(e) Form 8-K, Date of Report - January 31, 1990
(f) Form 8-K, Date of Report - March 16, 1990
(g) Form 10-K for year ended June 30, 1990
(h) Form 8-K, Date of Report - April 23, 1991
(i) Form 8-K, Date of Report - May 6, 1991
(j) Form 8-K, Date of Report - July 25, 1991
(k) Form 8-K, Date of Report - August 26, 1991
(l) Form S-8, Date of Report - July 31,1992
(m) Form 8-K, Date of Report - April 22, 1993
(n) Form 10-K for year ended June 30, 1993
(o) Form S-8, Date of Report - Dated December 30, 1994
(p) Form 10-K, for year ended July 2, 1994
(q) Form 10-K, for year ended July 1, 1995
(I) Indicates a management contract or compensation plan or arrangement.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> JUN-29-1996
<CASH> 165,329
<SECURITIES> 0
<RECEIVABLES> 6,803,230
<ALLOWANCES> (54,000)
<INVENTORY> 3,541,000
<CURRENT-ASSETS> 11,031,804
<PP&E> 10,401,137
<DEPRECIATION> 4,627,438
<TOTAL-ASSETS> 16,920,358
<CURRENT-LIABILITIES> 5,089,751
<BONDS> 1,270,000
0
0
<COMMON> 40,235
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,920,358
<SALES> 37,857,968
<TOTAL-REVENUES> 37,857,968
<CGS> 31,002,433
<TOTAL-COSTS> 36,560,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,145
<INCOME-PRETAX> 819,623
<INCOME-TAX> 334,000
<INCOME-CONTINUING> 485,623
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,623
<EPS-PRIMARY> .16
<EPS-DILUTED> .15
</TABLE>
EXHIBIT 10.57
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of February
29, 1996 (the "Effective Date"), between Miller Building Systems, Inc., a
Delaware corporation (the "Company") and Edward Craig (the "Employee").
RECITALS
A. The Company's primary business is manufacturing and distributing
factory built buildings having various commercial, governmental, and
telecommunication applications and uses (the "Business").
B. The Company desires to hire the employee as its Chief Executive
Officer and President, and the Employee desires to perform such services for
the Company.
CLAUSES
In consideration of the foregoing, and the covenants, duties, rights and
obligations set forth below, the parties agree as follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
1.1 Duties. Subject to the terms and conditions of this Agreement, the
Company employs the Employee as its Chief Executive Officer and President,
located in Elkhart, Indiana, to perform the usual duties of such offices as
described in the Company's by-laws. The Employee accepts such employment with
the Company. The Employee shall devote his exclusive and full-time attention
and best efforts to the Company s Business as is necessary for him to perform
his duties.
1.2 Term.
(a) Scheduled Term. The term of the Employee s employment under
this Agreement shall be for a period of three (3) years, commencing on July 1,
1996, and continuing through June 30, 1999 (the "Term"), unless terminated
sooner for "Cause" under subsection 1.2(b) below.
(b) Termination for Cause. The Company shall have the right, at
any time during the Term of this Agreement, to terminate the Employee's
employment under this Agreement without prior notice, if such termination is
for "Cause". For purposes of this Agreement, "Cause" shall mean dishonesty,
fraud, conviction of a felony or of any crime involving moral turpitude,
willful refusal to perform the material duties under this Agreement, gross
dereliction or gross neglect of duty, or material breach of the restrictive
covenants set forth in Section 6 of this Agreement.
ARTICLE 2
COMPENSATION
2.1 Base Salary. In consideration of the services to be rendered
by the Employee to the Company under this Agreement, the Company shall
pay the Employee an annual base salary (the "Base Salary") in the amount
of one hundred seventy-five thousand dollars ($175,000). The Company
shall pay the Base salary to the Employee in equal installments in
accordance with the Company's standard payroll practices, less all
applicable payroll, FICA, withholding and other taxes.
2.2 Incentive Bonus. In addition to all other compensation
payable to the Employee under this agreement, for each fiscal year during
the Term, the Company shall pay a bonus (the "Bonus") to the Employee,
predicated on the Company's consolidated publicly reported pre-tax profits
generated from continuing operations (and excluding non-recurring gains,
profits and losses) ("Pre-Tax Profits"), as shown on the audited financial
statements prepared by the Company's independent certified public
accountants. Such determination of Pre-Tax Profits shall be final,
conclusive and binding upon the parties. The Bonus shall be computed
each fiscal year as part of the Executive Bonus Program.
The Bonus awarded to the Employee shall be paid within seventy-five
(75) days after the end of each fiscal year.
2.3 Expense Reimbursement. The Company shall reimburse the
Employee for those out-of-pocket expenses the Employee incurs while
performing his obligations under this Agreement, including without
limitation a car allowance for the use of his car in the performance of his
duties as an employee of the Company, which: (i) are reasonable; (ii)
conform with all applicable policies of the Company and (iii) are evidenced
by appropriate documentation.
2.4 Benefit Plans. During the Term of This Agreement, the
Company shall provide the Employee and immediate family with all
medical and life, including accidental death and dismemberment coverage,
insurance coverage under the Company s benefit programs or plans of any
type or nature which the Company has in effect from time to time, in
accordance with the provisions of such programs or plans. In addition,
the Employee shall be included in any other benefit programs awarded to
senior executives of the Company.
2.5 Vacation. The Employee shall be entitled to four (4) weeks
of paid vacation.
Article 3
Certain Stock Matters
3.1 Option Plan. The company will issue to the Employee stock
options to purchase a total of 150,000 shares of the Company s stock
pursuant to the Company's 1994 Option Plan (the "1996 Stock Options").
The 1996 Stock Options shall be in addition to the stock options to
purchase 50,000 shares at an exercise price of $3.50 per share which were
granted to the Employee pursuant to Mr. Craig s employment agreement
dated July 3, 1994 (the "1994 Agreement") and have previously vested.
The terms of the 1996 Stock Options shall be substantially as follows:
(a) The Employee shall have the right to purchase 150,000
shares at an exercise price which shall be equal to $4.00 per share. The
vesting of the foregoing shares shall be as follows:
(1) 15,000 shares will vest as of February 29,1996.
(2) 55,000 shares shall vest as of July 1,1996.
(3) 50,000 shares shall vest as of July 1,1997.
(4) 30,000 shares shall vest as of July 1,1998.
All outstanding 1996 Stock Options shall immediately vest upon
the sale of the Company or of substantially all of the Company s assets or
upon a change in control of the Company. A "change in control of the
Company" shall be deemed to have occurred on the date that a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended, occurs.
(b) The 1996 Stock Options shall replace the stock options
to purchase (i) 15,000 shares at $4.50 per share which vested July 3,1995;
(ii) 55,000 shares at $4.50 per share vesting July 3,1996; and (iii) 50,000
shares at $6.00 per share vesting July 3, 1997 (the "1994 Stock Options")
previously granted to the Employee pursuant to the 1994 Agreement. The
Employee hereby agrees that the 1994 stock options are terminated and are
no longer outstanding.
Article 4
Disability
4.1 Disability. If the Employee becomes disabled during the
Term, this Agreement shall terminate; provided, however, that the
Employee shall continue to be compensated at his then existing Base salary
for a period of twelve (12) months after inception of the Employee's
"Disability" (as that term is defined below) or the expiration of the Term,
whichever is earlier. For purposes of this Agreement, "Disability" shall
mean that the Employee shall, because of mental or physical condition that
has existed for a period of at least thirty (30) consecutive days, be
incapable of satisfactorily discharging his regular duties as required under
this Agreement. The determination, from time to time, of whether the
employee has become disabled or is no longer disabled, shall be made by
agreement of the parties, or if no agreement can be reached, the Employee
shall, upon ten (10) days written notice from the Company, choose a
physician, and the Company shall also choose a physician and each such
physician shall, within five(5) days thereafter, agree on the appointment of
a third physician who shall examine the Employee and determine from said
examination if he has a Disability. The decision of such physician shall be
binding on all parties. The physician so chosen shall be a licensed physician
in the State of Indiana.
Article 5
Death
5.1 Death. If the Employee dies during the term, this Agreement
shall terminate; provided however that the Employee s estate, or
designated beneficiary, shall be paid his then existing monthly base salary
for a period of twelve (12) months from the date of his death, or the
balance of the Term, whichever is earlier.
Article 6
Restrictive Covenants
6.1 Confidentiality. The Employee acknowledges that during the
course of his association and employment with the Company, he will be in
contact with suppliers and customers of the Company and will have access
to trade secrets and other confidential and proprietary information with
respect to the business and affairs of the Company and its affiliates and
their respective operations, including without limitation, their properties,
research and development, accounts, books and records, sales know-how,
techniques, profits, products, customers lists, requirements, suppliers, cost
data, memoranda, devices, processes, methods, procedures, formulas,
contract prices, pricing and other corporate activities ( collectively,
"Confidential Information"). Recognizing that the disclosure or
improper use of such Confidential Information will cause serious and
irreparable injury to the Company, the Employee agrees that he will not at
any time, directly or indirectly, disclose Confidential Information to any
third party or otherwise use Confidential Information for his own benefit
or the benefit of others unless authorized by the Company.
The restrictions set forth in this paragraph shall not apply to information
known to the general public or reasonably ascertainable through general
public knowledge.
6.2 Damages.
(a) Money Damages. If the employee breaches the restrictive
covenants contained in this Agreement, the Employee shall pay the
Company s actual, direct, indirect and consequential damages which arise
from or are associated with such breach.
(b) Continuing Nature of Damages. The Employee acknowledges
that upon breaching the restrictive covenants contained in this Agreement,
the Employee will cause damages of an irreparable and continuing nature
to the Company, for which money damages will not provide adequate
relief. Therefore, the Employee agrees that in addition to money damages,
the Company is also entitled to obtain an injunction (including but not
limited to temporary restraining order) for the remainder of the period
specified in the restrictive covenant which the employee breached. The
Company shall have the right to obtain such injunctive relief with out
having to post any bond or prove any specific damages.
6.3 Cumulative Remedies. The remedies contained in this
Agreement are in addition to and not to the exclusion of any other
remedies whether specified in this Agreement, available at law, in equity
or otherwise.
6.4 Survival of Covenants. The Employees' duties and obligations
under this Agreement shall survive the termination of this Agreement or
any of its provisions.
6.5 Return of Material. Upon the termination of the Employees
employment with the company for any reason, with or without cause, the
Employee immediately shall deliver to the Company all documents,
instruments and/or electronic, magnetic or other media which in any way
contain any information involving the Confidential Information, or other
information, materials, equipment or items of the Company. The
Employee shall not retain any copies of the preceding.
Article 7
General
7.1 Termination of Agreement. This agreement shall terminate
pursuant to Sections 1.2(b), 4.1 or 5.1, or upon the execution of any
instrument which both the parties sign that specifically terminates this
Agreement.
Nothing contained in this Section shall affect or impair any rights or
obligations which arise prior to or at the time this Agreement terminates,
or which may arise due to any event which causes this Agreement to
terminate.
7.2 Notices. All notices concerning this Agreement shall be given
in writing, as follows: (i) by actual delivery of the notice into the hands of
the party entitled to receive it, in which case such notice shall be effective
upon such delivery; (ii) by mailing such notice by registered or certified
mail, return receipt requested, in which case the notice shall be deemed
given four (4) days from the date of its mailing; (iii) by Federal Express or
any other overnight carrier, in which case the notice shall be deemed to be
given on the date next succeeding the date of its transmission; or (iv) by
Facsimile, in which case the notice shall be deemed given as of the date it
is sent.
All notices which concern this Agreement shall be addressed as follows:
If to the Company: If to the Employee:
Miller Building Systems, Inc. Edward Craig
58120 County Road 3 South Miller Building Systems, Inc.
Elkhart, IN 46517 58120 County Road 3 South
Attn.: Steven F.Graver Elkhart, IN 46517
with a copy to:
Jeffrey C. Rubenstein
Much, Shelist, Freed,
Denenberg, Ament, & Rubenstein, P.C.
200 N. LaSalle St.
Suite 2100
Chicago, IL 60601-1095
7.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and its respective successors and
assigns and the Employee and his respective heirs, personal representatives
and assigns.
7.4 Complete and Understanding. This Agreement constitutes
the complete understanding between the parties. No alteration or
modification of any of this Agreement's provisions shall be valid unless
made in writing and signed by the parties to this Agreement.
7.5 Applicable Law. The laws of the State of Indiana shall govern
all aspects of this Agreement, irrespective of the fact that one or more of
the parties now is or may become a resident of a different state, or that the
Company relocates its principal office outside the state of Indiana.
7.6 Descriptive Headings. All section headings, titles and subtitles
are inserted in this Agreement for the convenience of reference only, and
are to be ignored in any construction of this Agreements provisions.
7.7 Severability. If a court of competent jurisdiction rules that any
one or more of this Agreement s provisions are invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any of this Agreement s other provisions, and this
Agreement shall be construed as if it had never contained such invalid,
illegal or unenforceable provision.
7.8 Prior Agreements Superseded. This Agreement supersedes
any prior understandings, written agreements or oral arrangements among
the parties respecting the subject matter of those Agreement.
The parties have executed this Agreement as of the Effective date.
The Employee: The Company:
Miller Building Systems, Inc.
a Delaware Corporation
\Edward C. Craig \Steven F. Graver
PRES/CEO Chariman of the Board
EXHIBIT 10.58
LEASE AGREEMENT
COME NOW, the parties to this Agreement, Board of County
Commissioners of Coffey County, Kansas (County) and Miller
Building Systems of Kansas, Inc. (Miller), in exchange of the
mutual promises contained herein do hereby agree as follows:
1. Miller wishes to lease, and County desires to lease
a certain tract of real property, referred to hereinafter as
"Property" and more fully described in the legal description set
forth in Exhibit A attached hereto and incorporated herein by
reference.
2. Representations and Covenants by County. County
makes the following representations and covenants as the basis
for the undertaking of its part of the Lease contained herein:
A. That Coffey County is a
county governmental unit
existing under and pursuant
to the laws and constitution
of the State of Kansas.
Under the statutes of the
State of Kansas, County has
the power to enter into and
perform the transactions
contemplated by this Lease
and to carry out its
obligations hereunder.
B. That County has fee simple
title to the Property
subject only to easements
and restrictions of record
and apparent, none of which
will interfere with or
prevent Miller's use of the
property as a manufacturing
facility, subject only to a
current lease with American
Quality Manufacturing, Inc.
(AQM), a Delaware
corporation. Simultaneous
with this Lease Agreement,
American Quality
Manufacturing, Inc. is
entering into a Termination
of Lease Agreement which
will allow Miller to take
possession of this property.
C. County has not, in whole or
in part, assigned, leased,
hypothecated or otherwise
created any other interest
in, or disposed of, or
caused or permitted any
lien, claim, or encumbrance
to be placed against the
property leased hereunder,
except for and subject to
the Lease as set forth in
this instant document.
D. Except as otherwise provided
herein, County will not
during the basic term of
this Lease, in whole or in
part, assign, lease,
hypothecate or otherwise
create any other interest
in, or dispose of, or cause
or permit any lien, claim or
encumbrance to be placed
against the property leased
herein. This provision is
subject to the current lease
as described in sub-
paragraph A.
E. County has duly authorized
the execution of this Lease
pursuant to a formal action
of the Board of County
Commissioners, Coffey
County, Kansas.
3. Representations and Covenants by Miller. Miller makes
the following representations and covenants as the basis for
undertaking its part of the Lease contained herein.
A. Miller is a duly qualified and
existing corporation under the laws
of the State of Kansas and will be
duly authorized and qualified to do
business in the State of Kansas prior
to the commencement date of this
Lease, with lawful power and
authority to enter into this Lease,
acting by and through its duly
authorized officers and has received
its authority by its Board of
Directors and officers to authorize
Edward Craig, President, to sign this
Lease.
B. Miller shall:
(1) maintain and preserve its
existence and organization
as a corporation and its
authority to do business in
the State of Kansas and;
(2) not initiate any proceedings
of any kind whatsoever to
dissolve or liquidate
without first securing the
prior written consent of
County and making provision
for the payment in full of
the basic rent and to comply
with all other obligations
for this lease as they
apply.
C. Neither the execution or delivery of
this Lease, the consummation of the
transaction contemplated herein, nor
the fulfillment of any compliance
with the terms and conditions of this
Lease contravenes any provisions of
Miller's Articles of Incorporations
or Bylaws, nor does anything
contained herein conflict with or
result in a breach of the terms,
conditions or provisions of any
mortgage, debt, agreement, indenture,
or instrument to which Miller is a
party or by which Miller is bound, or
to which Miller or any of the
properties of Miller is subject, or
would constitute a default (without
regard to any required notice or the
passage of any period of time) under
any of the following, or would result
in a creation or imposition of any
lien, charge or encumbrance,
whatsoever, upon any of the property
or assets of Miller under the terms
of any mortgage, debt, agreement,
indenture or instrument, or violate
any existing law, administrative
regulation or court order including
consent decrees to which Miller is
subject.
D. This Lease constitutes a valid and
legal binding obligation on Miller
enforceable in accordance with its
terms.
E. That Miller has obtained or will
obtain if it becomes necessary in the
future, any and all permits,
authorizations, licenses and
franchises to enable Miller to
operate and utilize the property for
the purposes for which the property
is being leased to Miller under the
terms of this Lease and that Miller
will operate in accordance with all
local, state and federal laws to
insure compliance with any licensing,
permit, authorization or franchise
requirement.
4. Term. The initial term of this Lease shall be ten (10)
years commencing November 1, 1996 and ending October 31, 2006.
As used herein the expression "term hereof" refers to this
initial term. If on or before November 1, 1996, AQM does not
vacate the Property and County does not deliver the Property and
all systems, equipment, fixtures, structural components, the
roof and foundation in good operating condition, ordinary wear
and tear excepted, then the commencement date shall be postponed
until such conditions are satisfied (but in no event later than
April 1, 1997).
5. Basic Rent. County reserves and Miller agrees to pay
in the manner herein after specified to County without demand,
the rent on the property in the amount of $300,000 for the term
of this Lease. The payments shall be made at the rate of Two
Thousand Five Hundred Dollars ($2,500) per month for One Hundred
Twenty (120) months. Rent shall be paid to County in advance on
the first day of the month in which the rent shall become due
without deduction or offset at a place or places as may be
designated from time to time by County. In the event that
Miller should fail to make a payment by the fifteenth of any
given month, interest shall attach to the given monthly payment
at the rate of 1.5 percent (1.5%) per month or eighteen percent
(18%) per annum. Additionally, as allowed by law, County
reserves the right to advance all payments, including balloon
payments, due in the event that Miller should fail or refuse to
make payment under the terms of this Lease within Thirty (30)
days after a given payment is due. Further, County reserves the
right to waive any one payment, without being subject to or
stopped from enforcing these remedies should a future monthly
payment be delayed for more than thirty (30) days. In other
words, if County does not instigate advancement and liquidation
of this Lease in a month in which Miller is more than Thirty
(30) days late, this does not preclude County from asserting the
same rights as to a future month. This right to advance
payments should Miller be more than Thirty (30) days late shall
not be implicitly waived by the County, unless both parties
agree to a waiver of this provision in writing. This paragraph
shall be governed by sections 27 and 28 of this Agreement.
6. Building Purchase. At the end of the term hereof,
Miller shall have the option to pay the County the sum of Two
Hundred Fifty Thousand Dollars ($250,000) hereinafter referred
to as the Balloon Payment, and accept ownership of the property.
If Miller tenders the Balloon Payment, County shall deed the
property to Miller in Fee Simple by Warranty Deed subject only
to easements and restrictions of record as of the date hereof
and free and clear of all liens and encumbrances (except as
caused or permitted by Miller). If Miller declines to take
ownership of the property, any subsequent lease between the
parties shall be at fair market value rate. The Balloon Payment
shall be reduced by Full-Time Employee Reduction (FTE) in
accordance with a yearly FTE schedule as shown herein. The
Balloon Payment shall be divided into ten (10) parts of
$25,000.00 for each year, however, payment will be due only at
the conclusion of the ten (10) year lease. For each given year,
the payment due shall be reduced as provided herein. In other
words, for each year that the FTE is met in full, a $25,000.00
reduction shall be made to the Balloon Payment. If the entire
FTE number is not met such representative portion of the Balloon
Payment for that given year shall be reduced by the applicable
percentage. The FTE reductions shall be computed by taking the
total number of hours worked (includes paid holiday, vacation,
personal days and sick days) at the property by employees of
Miller during the preceding twelve months and dividing by two
thousand eighty (2,080). The FTE shall be computed on the
anniversary date of Miller taking possession of the property,
and computed for the preceding twelve months. Miller shall
submit to County a certified statement of employment not more
than thirty days after the anniversary date of Miller taking
possession of the property. The statement shall be provided to
County by Miller and shall be certified by an independent
accounting firm authorized to make such certification for Miller
in accordance with the Generally Accepted Rules of Accounting to
the extent they apply. The FTE shall be as follows:
Reduction 100% 90% 80% 70% 60%
Year Concluding FTE FTE FTE FTE FTE
1st year 14 12-13 10-11 8-9 6-7
2nd year 30 26-29 22-25 17-21 14-16
3rd year 50 44-49 37-43 29-36 23-28
4th-10th years 60 52-59 44-51 34-43 28-33
7. Uses Prohibited. Miller shall not use, or permit the
leased premises, or any part thereof, to be used, for any
purpose or purposes other than those allowed by the laws of
Coffey County, the State of Kansas, the Environmental Protection
Agency, or the United States of America and no use shall be made
or permitted to be made of the Leased premises, or acts done,
which will cause the cancellation of any insurance policy
covering the building located on the premises, or any part
thereof, or any other portion of the leased premises, any act
which may be prohibited by the applicable fire insurance
policies or other terms of insurance hereon. Miller shall, at
its sole cost, comply with all requirements, pertaining to the
Leased premises, of any insurance organization or company,
necessary for the maintenance of insurance, as herein provided,
covering any building or appurtenances at any time located on
the Leased premises. Miller shall prevent any activity which
produces substantial hazardous waste, emissions or odors in
violation of the rules and regulations of the Environmental
Protection Agency and any other local, state, or federal law and
hold County harmless and indemnify County for any violation of
such rules, regulations or laws.
8. Uses Permitted. Miller shall use this facility for the
manufacture and shipping of prefabricated buildings and uses
associated therewith. Other uses may be agreed to by the
parties, in writing signed by both parties, and the County's
consent thereto will not be unreasonably withheld.
9. General Accident and Liability Insurance. Miller shall,
at all times after acceptance of possession of the Leased
premises under the terms and conditions as contained herein, and
at all times during the term of the Lease thereafter, at
Miller's sole expense, keep all improvements which are now or
hereafter a part of the premises insured against loss or damage
by fire and the extended coverage hazards for one hundred
percent (100%) of the full replacement value of such
improvements as established by yearly review with a company
authorized to do business and authorized to sell insurance in
the State of Kansas, with loss payable to County and Miller as
their interests may appear. Any loss adjustment shall require
the written consent of both County and Miller. The cost of full
replacement will be reviewed annually by the parties hereto.
10. Personal Injury Liability Insurance. Miller shall
maintain in effect throughout the term of this Lease personal
injury liability insurance covering the Leased premises and its
appurtenances, sidewalks and parking lot thereon in an amount
not less than the maximum liability of a governmental entity for
claims arising out of a single occurrence as provided by the
Kansas Tort Claims Act or other supplemental laws; which policy
shall provide that such insurance may not be canceled by the
issuer thereof without at least thirty (30) days advance written
notice to Miller and County. Such insurance to be maintained
throughout the life of this Lease and will be obtained through
a company authorized to do business in the State of Kansas.
11. County's Right to Pay Premiums on Behalf of Miller. All
of the policies of insurance referred to in this section shall
be written in form satisfactory to County. Miller shall pay all
of the premiums therefore during the term of this Lease and
deliver such policies, or certificates thereof, to County, and
in the event of the failure of Miller, either to effect such
insurance in the names herein called for or to pay the premiums
therefore, or to deliver such policies, or certificates thereof,
to County, said action shall be a default of this Lease and
County shall be entitled, but shall have no obligation, to
effect such insurance and pay the premiums therefore, which
premiums shall be repayable to County with the next installment
of rent and/or County may proceed with all available remedies
under the default provisions herein.
12. Cost of Insurance Deemed Additional Rent. The cost of
insurance required to be carried by Miller in this section shall
be deemed to be additional rent hereunder. Each insurer
mentioned in this section shall agree, by endorsement on the
policy or policies issued by it, or by independent instrument
furnished to County, that it will give to County thirty (30)
days written notice before the policy or policies in question
shall be altered or canceled. County agrees it will not
unreasonably withhold its approval as to the form or to the
insurance companies selected by Miller.
13. Taxes and Assessments. The parties agree that the
Property has been and will continue to be deemed to be exempt
from state, county and/or municipal real property taxes by the
Board of Tax Appeals of the State of Kansas. County agrees to
take reasonable action to ensure that the property remains
exempt during the terms of this Lease. If the Property shall
nevertheless become subject to real property taxes, then Miller
shall, during the life of this Lease, bear, pay and discharge,
before the delinquency thereof, any and all taxes and
assessments. In the event any taxes and assessments may be
lawfully paid in installments, Miller shall be required to pay
only such installment thereof as becomes due and payable during
the life of this Lease, as and when the same becomes due and
payable. County covenants that without Miller's written consent
it will not, unless required by law, take any action which may
reasonably be construed as tending to cause or induce the
levying of any tax or assessment (other than special assessments
levied on account of special benefits or other taxes or
assessments for benefits or service uniformly imposed) which
Miller would be required to pay under this section and that
should any such tax or assessment be threatened or occur, County
shall, at Miller's request, fully cooperate with Miller in all
reasonable ways to prevent any such tax or assessment. In the
event that either the Federal government or the State of Kansas
determines that the demised property is not exempt from taxation
by the tax guidelines of either agency, because the leased
property is not meeting requirements for non-taxability then and
in that event, all tax assessments shall be the sole and
separate liability of Miller upon possession by Miller as set
forth herein.
14. Receipted Statements. Unless Miller exercises its right
to contest any tax or assessment in accordance with the
following paragraph hereof, Miller shall deliver to County a
photostatic or other suitable copy of the statement issued
therefore duly receipted to show the payment of taxes within
thirty (30) days after the last date for payment.
15. Contesting Taxes and Assessments. If Miller shall in
good faith desire to contest the validity or amount of any tax,
assessment, levy, or other governmental charge herein agreed to
be paid by Miller, Miller shall be permitted to do so in
accordance with established legal procedures. Miller shall give
County fifteen (15) days written notice of its intent to contest
the charge prior to its delinquency date and post a surety bond
covering any such tax levy or assessment of damage arising
therefrom prior to the delinquency date.
16. Quiet Enjoyment and Possession. So long as Miller shall
not be in default under the terms of this Lease, Miller shall
and may peaceably and quietly have, hold, and enjoy the leased
premises. County shall deliver all systems, equipment,
fixtures, structural components, the roof and foundation to
Miller in good operating condition, ordinary wear and tear
excepted.
17. County's Right of Entry. County, its agents and
employees shall have the right to enter into and upon the Leased
premises as is necessary at reasonable times and upon reasonable
notice for the purpose of inspecting the premises. County's
right of entry on the premises shall be subject to maintaining
any confidentiality requirement that Miller may reasonably
request of County.
18. Alteration of Leased premises. Miller shall have and
is hereby given the right, at its sole cost and expense, to make
such additions, improvements, changes and alterations in and to
any part of the Leased premises as Miller from time to time may
deem necessary or advisable; provided, however, Miller shall not
make any major addition, improvement, change or alteration which
will adversely affect the intended use of or the structural
strength of any part of the Leased premises. All such major
changes, alterations, improvements and additions shall require
the prior written consent of the County. County shall not
unreasonably withhold such consent. All additions,
improvements, changes and alterations made by Miller pursuant to
the authority of this section shall (a) be made in a workmanlike
manner and in strict compliance with all laws and ordinances
applicable thereto, (b) when commenced, be prosecuted to
completion with due diligence, and (c) when completed, shall be
deemed a part of the Leased premises; provided, however, that
additions of machinery, equipment and/or personal property of
Miller, shall remain the separate property of Miller and may be
removed by Miller prior to expiration of the term of this Lease;
provided further, however, that all such additional machinery,
equipment and/or personal property which remain on the Leased
premises after the termination of this Lease for any cause other
than the purchase of the premises pursuant to section 6 hereof
shall, if not removed within thirty (30) days after request by
County, upon and in the event of such termination, become the
separate and absolute property of County.
19. County Purchase of Scales/Heating Modification Loan.
County shall purchase certifiable scales for the Property in an
amount not to exceed Twenty Thousand Dollars ($20,000). The
scales to be purchased shall be mutually agreed upon by County
and Miller. County is responsible for the purchase and delivery
of the scales. County shall take reasonable measures to secure
the purchase and delivery of the scales within sixty (60) days
of Miller taking possession of the Property. Miller is
responsible for the installation and maintenance of the scales.
Once installed, the scales shall be deemed a fixture of the
Property, and shall not be removed by Miller unless and until
Miller becomes the owner of the Property or Miller and County
agreed in writing to the disposal or removal of the scales.
Further, upon Miller's request, County will make a loan to
Miller from County's Revolving Loan Fund in an amount not to
exceed Seventy-Five Thousand Dollars ($75,000) for heating
conversion, should Miller determine that a modification in the
heating system in the facility should be necessary. In no event
should the County make a loan to Miller for an amount in excess
of the cost of the heating conversion. This loan shall have a
term of not more than five (5) years, and an interest rate of
not more than 7.5 percent (7.5%). Miller shall repay County in
monthly installments beginning the first day of the month after
any payments are made to Miller under the terms of the loan.
Miller may request this loan within the first five (5) years of
this Lease. Miller shall provide corporate guarantees on the
loan. At the time that Miller requests such loan, documentation
shall be prepared and executed by the parties evidencing the
loan in more complete terms as fully set out at the time of the
loan.
20. Maintenance of Improvements. Miller shall, throughout
the term of this Lease, at its own cost, and without any expense
to County, keep and maintain the Leased premises, including all
buildings and improvements of every kind or nature including
equipment which may be a part thereof, and all appurtenances in
good sanitary and neat order, condition and repair. Miller is
expressly prohibited from selling, mortgaging, encumbering,
hypothecating or disposing of this property in any way except as
authorized by County and except in the ordinary course of
business. Miller may sell or otherwise dispose of such property
when obsolete, worn out, inadequate, unserviceable or
unnecessary in the operation of the Property, and Miller may
replace such property with other property at least equal in
value to that disposed of. County shall not be obligated to
make any repairs, replacements, or renewals of any kind, nature
or description, whatsoever to the Leased premises, including
buildings or equipment. Miller shall also comply with and abide
by all federal, state, county, municipal, and other governmental
statutes, ordinances, laws and regulations affecting the leased
premises, the improvements thereon, or any activity or condition
on or in such premises. County shall have the right to repair
and maintain the improvements and in the event of failure to do
so by Miller, reasonable wear and tear excepted, and all charges
for repair and maintenance shall be chargeable to Miller and be
promptly paid by Miller to County upon submission or
verification of such repair or maintenance charges, and all such
charges shall be deemed additional rent payable without regard
to any other provisions or requirements herein, on the part of
Miller. Miller may not dispose of, sell, encumber or remove any
of the improvements attached to the building or that reasonably
becomes a fixture without written approval of County. It is
understood that due to normal and reasonable wear and tear on
the improvements or fixtures, said improvements and fixtures may
wear out and the cost of repair of refurbishing will exceed the
cost of replacing the improvement or fixture, and in that event,
if not replaced with an improvement or a fixture of equal or
greater value, then Miller will provide a notice of said intent
to dispose of worn out or unrepairable improvements or fixtures
to County and only upon written consent by County, may said
property be disposed of or removed.
21. Damage to and Destruction of Improvements. The damage,
destruction, or partial destruction of any building or other
improvements or fixtures which are part of the premises
shall not release Miller from any obligation hereunder, and in
case of damage to or destruction of any such building,
improvement or fixtures, Miller shall, at its own expense,
promptly repair and restore the same to a condition as good or
better than that which existed prior to such damage or
destruction. Without limiting such obligations of Miller, it is
agreed that the proceeds of any insurance covering such damage
or destruction shall be made available to Miller for such repair
or replacement. Miller shall have the right to purchase
business interruption insurance to insure itself against loss
due to substantial damage or destruction of the demised
premises. The parties shall mutually cooperate on adjusting any
loss or damage on the demised premises with the insurance
carrier. All costs in excess of insurance proceeds necessary to
restore the premises to good or better condition than existed at
the time of such damage or destruction, shall be borne by
Miller. All building plans for restoration shall be by mutual
agreement of the parties hereto.
22. Utilities. Miller shall fully and promptly pay for all
water, gas, heat, light, power, telephone service, and other
public utilities of every kind furnished to the leased premises
throughout the term hereof, and all other costs and expenses of
every kind whatsoever of or in connection with the use,
operation and maintenance of the premises including deposits,
and all activities conducted thereon, and County shall have no
responsibility of any kind for any portion thereof. All future
expansion, alteration or change of utility services shall be at
expense of Miller.
23. Mechanic's Liens. Miller shall keep all of the Leased
premises and every part thereof and all buildings and other
improvements at any time located thereon free and clear of any
and all mechanic's or other similar lien. Whenever and so often
as any mechanic's or other similar lien is filed against the
Leased premises, or any part thereof, Miller shall discharge the
same of record within thirty (30) days after the date of filing.
Notice is hereby given that County does not authorize or consent
to and shall not be liable for any labor or materials furnished
to Miller or anyone claiming by, through or under Miller, upon
credit, and that no mechanic's or other similar lien for any
such labor, services or materials shall attach to or take effect
through reversionary or other estate of County in and to the
Leased premises, or any part thereof. Miller shall give County
written notice no less than thirty (30) days in advance of the
commencement of any construction, alteration, addition,
improvement, or repair estimated to cost in excess of Thirty
Thousand Dollars ($30,000) in order that County may post
appropriate notices of County's non-responsibility. County
shall have the right but will not be required to pay any
uncontested liens and charge all payments so made to Miller, to
be paid in the next monthly rental payment due from Miller.
24. Contesting Liens. Miller, notwithstanding the above,
shall have the right to contest any such mechanic's or other
similar lien if within thirty (30) days of filing, it (i)
notifies County in writing of its intention to do so, and if
requested by County, deposits with County a surety bond issued
by a surety company acceptable to County as surety, in favor of
County or cash, in the amount of lien claimed so contested,
indemnifying and protecting County from and against any
liability, loss, damage, cost and expense of whatever kind of
nature growing out of or in any way connected with said asserted
lien and the contest thereof, and (ii) diligently prosecutes
such contest, at all times effectively staying or preventing any
official or judicial sale of the premises or any part thereof or
interest therein, under execution or otherwise, and (iii)
promptly pays or otherwise satisfies any judgment adjudging or
enforcing such contested lien claim and thereafter promptly
procures record release or satisfaction thereof.
25. Indemnification. Miller shall and hereby covenants and
agrees to indemnify, protect, defend and save County harmless
from and against any and all claims, demands, litigation and
liabilities of any nature, costs, including reasonable
attorneys' fees and discovery expense arising from damage or
injury, factual or claimed, of whatsoever kind of character, to
property or persons, occurring in, on or about the premises
during the term hereof, and upon timely written notice from
County, Miller shall defend County in any action or proceeding
brought thereon; provided, however, that nothing contained in
this section shall be construed as requiring Miller to indemnify
County for any claim resulting from any act or omission of
County, or County's agents or employees.
26. Default by Involuntary Assignment. Neither this Lease
nor the leasehold estate of Miller nor any interest of Miller
hereunder in the Leased premises or in the building or
improvements or equipment therein shall be subject to
involuntary assignment, transfer, or sale, or to assignment,
transfer, or sale by operation of law in any manner whatsoever
and any such attempt at involuntary assignment, transfer, or
sale without the consent of County shall be void and of no
effect, such consent will not be unreasonably withheld.
27. Actions Constituting Default. The following shall be
considered a substantial or material breach of the terms and
conditions of this Lease and constitute a default and entitle
County to elect and pursue all remedies pursuant to sections 29
through 32 of this Lease.
A. Voluntary bankruptcy
B. Failure to name Miller Building Systems of
Kansas, Inc., as a qualified and existing
corporation under the laws of the State of
Kansas or under the ownership of its heirs and
assigns.
C. Non-payment of rent pursuant to this Agreement
within fifteen (15) days of the date due.
D. Failure to maintain accident and liability
insurance.
E. Failure to maintain fire and casualty
insurance.
F. Failure to maintain personal injury liability
insurance.
G. Failure to pay taxes and assessments.
28. Other Actions Constituting Default. Any breach of the
following terms or conditions shall constitute a non-material
default and upon non-compliance by Miller after notice pursuant
to section 33 by County, County shall have the right to pursue
all remedies pursuant to sections 29 through 32 of this Lease.
Non-material breach conditions are as follows:
A. Any breach of any term or condition of this
Lease.
B. Duty to maintain and repair demised property
as provided in section 20.
C. Failure to allow access to County at
reasonable times and places pursuant to
section 17 of this Lease.
D. Engaging in a prohibited use pursuant to
section 7 of this Lease.
E. Failure to secure County's consent to changes.
F. Failure to pay utility bills.
G. Failure to pay mechanic liens pursuant to
section 24.
H. Attempting to sublet demised premises without
consent of County, which consent shall not be
unreasonably withheld.
I. Any attempted assignment of Leased premises
without express written consent of County,
which consent shall not be unreasonably
withheld.
J. The failure to discharge or pay any mechanic
or artisan lien within thirty (30) days of the
filing thereof, pursuant to section 24.
29. Remedies on Default. Whenever any substantial or
material event of default shall have happened or be continuing,
County may take any one or more of the following remedial
actions.
A. Give Miller written notice of
intention to terminate this Lease on
the date specified therein, which
date shall not be earlier than thirty
(30) days after such notice is given,
and, if all defaults have not then
been cured on the date so specified
(except that this thirty (30) day
period shall be extended for a
reasonable period of time if the
alleged default is not reasonably
capable of cure within said thirty
(30) day period), Miller's right to
possession of the Leased premises
shall cease, and this Lease shall
thereupon be terminated and County
shall reenter and take possession of
the premises and all personalty
therein. County shall be entitled to
immediate possession after Miller has
failed to cure such default within
the period herein provided, without
the necessity to resort to legal
process.
B. Whenever any non-material event of
default shall have happened or be
continuing, County shall give Miller
written notice of intention to
terminate this Lease on the date
specified (except that this sixty
(60) day period shall be extended for
a reasonable period of time if the
alleged default is not reasonably
capable of cure within said sixty
(60) day period) therein, which date
shall not be earlier than sixty (60)
days after such notice is given, and,
if all defaults have not been cured
on the date so specified, Miller's
right to possession of the Leased
premises shall cease, and this Lease
shall thereupon be terminated, and
County shall re-enter and take
possession of the premises and all
personalty therein. Any costs for
repair of equipment necessitated by
other than reasonable wear shall be
chargeable to Miller and shall be in
addition to the liquidated damages as
set forth herein.
30. No Remedy Exclusive. No remedy herein conferred upon
or reserved to County is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy
shall be cumulative and shall be in addition to every other
remedy given under this Lease or now or hereafter existing at
law or in equity or in statute. No delay or omission to
exercise any right or power accruing upon any event of default
shall impair any such right or power, or shall be construed to
be a waiver thereof, but any such right or power may be
exercised from time to time and as often as may be deemed to be
expedient. In order to entitle County to exercise any remedy
referred to in sections 29 through 32, it shall not be necessary
to give any notice, other than notice required herein. Any cost
of litigation necessitated under this Lease including reasonable
attorney fees shall be at the expense of Miller and shall be the
responsibility of Miller. This provision shall not apply if the
litigation is caused by the action of County, unless said action
is for default against Miller. Conversely, Miller shall be
entitled to any cost of litigation necessitated if County should
violate the provisions of this Lease including but not limited
to reasonable attorney fees.
31. Rights and Remedies. The rights and remedies reserved
by County and Miller hereunder and those provided by law shall
be construed as cumulative and continuing rights. No right or
remedy shall be exhausted by the exercise thereof on one or more
occasions. County and Miller shall each be entitled to specific
performance and injunctive or other equitable relief for any
breach or threatened breach of any of the provisions of this
Lease, notwithstanding the availability of an adequate remedy at
law, and each party hereby waives the right to raise such
defense in any proceeding in equity.
32. Waiver of Breach. No waiver shall be effective unless
in writing. The waiver of, or the failure to take action with
respect to any breach of any term, covenant, or condition herein
contained shall not be deemed to be a waiver of such term,
covenant, or condition or subsequent breach of the same, or any
other term, covenant, or condition herein contained. Payment or
payments or performance may be accepted hereunder without in any
way waiving the right to exercise any rights or remedies
provided for herein or otherwise with respect to any breach
which was in existence at the time such payment or payments or
performance was accepted.
33. Notice. All notice required or desired to be given
hereunder shall be in writing and shall be delivered in person
or mailed by registered or certified mail to:
COUNTY: Vernon Birk
County Clerk
County County Courthouse
110 S. 6th
Burlington, KS 66839
MILLER: Ed Craig
President
Miller Building Systems of Kansas, Inc.
P.O. Box 1283
Elkhart, IN 46515
Jeff Rubenstein
Much Shelist Freed Denenbert
Ament Bell & Rubenstein, P.C.
200 N. LaSalle Street, Suite 2100
Chicago, IL 60601-1095
All notices given by certified or registered mail as
aforesaid shall be deemed duly given as of the date they are so
mailed.
34. Construction and Enforcement. This Lease shall be
construed and enforced in accordance with the laws of the State
of Kansas. Wherever in this Lease it is provided that either
party shall or will make any payment or perform or refrain from
performing any act or obligation, each such provision shall,
even though not so expressed, be construed as an express
covenant to make such payment or to perform, or not to perform,
as the case may be, such act or obligation.
35. Sublease. Miller agrees that it will in no way
sublease, or attempt to sublease the demised premises, including
equipment without the express written consent of County, such
consent shall not be unreasonably withheld. The final terms and
conditions of any sublease agreement must be approved in writing
by both County and Miller. In the event of any such subleasing,
Miller shall remain fully liable for the performance of its
duties and obligations hereunder, and no such subleasing and no
dealings or transactions between County and any such sublessee
shall relieve Miller of any of its duties and obligations
hereunder.
36. Voluntary Assignment. Miller agrees that it will in no
way assign, or attempt to assign, the leased premises, including
equipment, without the express written consent of County, which
consent County shall not unreasonably withhold. In the event of
any such assignment Miller shall remain fully liable for the
performance of its duties and obligations hereunder.
37. Amendments. Amendments of the term hereon, the basic
rental payments, or of any and all other provisions of this
Lease may be made only pursuant to the express written consent
of County and Miller. The language of this contract is
controlling and supersedes all oral agreements and
representations of the parties hereto. All prior agreements by
and between the parties hereto are hereby merged within the
terms and conditions of this Lease and this Lease represents the
complete agreement of the parties hereto and shall be binding
upon all parties.
38. Net Lease. The parties hereto agree that this lease is
intended to be a triple net lease.
39. Invalidity of Provisions of Lease. If, for any reason,
any provision of this Lease shall be deemed to be invalid or
unenforceable, the validity and effect of the remaining
provisions hereof shall not be affected thereby.
40. Covenants Binding on Successors and Assigns. The
covenants, agreements and conditions herein contained shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors, assigns, devisees, heirs, legatees,
and beneficiaries.
41. Section Captions. The section captions appearing with
the section numbered designations of this Lease are for
convenience purposes only and are not a part of this Lease and
do not in any way limit or amplify the terms and provisions of
this Lease.
42. Filing of Lease Memo. The parties hereto agree that a
Memorandum of this Lease will be filed with the Register of
Deeds of County County, Kansas.
IN WITNESS WHEREOF, the parties have executed this Lease on
this 12 day of August , 1996.
BOARD OF COUNTY COMMISSIONERS MILLER BUILDING SYSTEMS
COFFEY COUNTY, KANSAS OF KANSAS, INC.
By: \William Knapp By: \Edward C. Craig
William Knapp, Chairman Edward C. Craig
President
ATTEST:
\Sharon Reynolds, Deputy
Vernon Birk, County Clerk
APPROVED:
\James Campbell
James Campbell, County Attorney
EXHIBIT 10.59
AGREEMENT
THIS AGREEMENT ("Agreement") entered into the 25th day of July 1996, by and
between:
American Quality Manufacturing, Inc. d/b/a American Cabinet, Inc. a Delaware
Corporation, (hereinafter referred to as "American"), and Miller Building
Systems, Inc. an Indiana Corporation (hereinafter referred to as "Miller").
RECITALS
WHEREAS American is currently leasing a certain real property ("Property") from
the Board of County Commissioners, Coffey County, Kansas ("County"):
WHEREAS Miller wants to cause American to cancel its lease with the County so
that it may enter into a lease arrangement of its own with the County:
TERMS OF AGREEMENT
NOW THEREFORE, for valuable consideration, the parties hereto agree as follows:
1. Payment.
Miller agrees to pay to American, Eight Hundred Thousand dollars
($800,000) as follows:
a. Four Hundred Thousand dollars ($400,000) at date of signing of
agreements between American and Miller and County (on or about
August 5, 1996).
b. The balance of Four Hundred Thousand dollars ($400,000) to be
paid within five (5) days after American vacates the leased
premises and receives signed acceptance and release agreements
from the County accepting same for lease to Miller.
2. Miscellaneous.
a. Amendment. This Agreement may be amended, modified, or
supplemented only by an instrument in writing executed by all
the parties hereto.
b. Assignment. Neither this Agreement nor any right created hereby
or in any agreement entered into in connection with the
transaction contemplated hereby shall be assignable by any party
hereto without the written consent of the party not seeking
assignment.
c. Parties In Interest: No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective heirs, legal representatives, successors and assigns
of the parties hereto. Neither this Agreement nor any other
Agreement contemplated hereby shall be deemed to confer upon any
person not a party hereto or thereto any rights or remedies
hereunder or thereunder.
d. Entire Agreement. This Agreement hereby constitutes the entire
agreement of the parties regarding the subject matter hereof,
and supersedes all prior agreements and understandings, both
written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
e. Notice. Any notice of communication hereunder or in any
agreement entered into in connection with the transactions
contemplated hereby must be in writing and shall be sufficiently
made and given only when it is mailed by certified mail, return
receipt requested, with proper postage affixed, or by Federal
Express with proof of receipt, or by fax transmission which is
confirmed to have been received and followed by hard copy
addressed as follows:
If to American:
American Quality Manufacturing, Inc.
1655 Amity Road
Conway, Arkansas 72032
Attention: Clifford E. Patton
If to Miller:
Miller Building Systems, Inc.
P.O. Box 1283
Elkhart, IN 46515
Attention: Edward C. Craig
AMERICAN QUALITY MANUFACTURING, INC.
\CLIFFORD E. PATTON
CLIFFORD E. PATTON - PRESIDENT/CEO
MILLER BUILDING SYSTEMS, INC.
\EDWARD C. CRAIG
EDWARD C. CRAIG - PRESIDENT/CEO
EXHIBIT 10.60
LEASE AGREEMENT
THIS AGREEMENT made and entered into this 21st day of
May, 1996, by and between Toboll Properties Limited Partnership, a
South Dakota limited partnership ("Lessor"), and Miller Structures,
Inc., an Indiana corporation ("Lessee");
WITNESSETH:
1. Description, Inspection and Possession of Leased
Premises.
1.1 Lessor does hereby lease to Lessee the following de-
scribed real property (the "Leased Premises"), located in Minnehaha
County, South Dakota, to-wit:
Lot 5 of Northwest Industrial Park in the West Half of
the North Half of the Northwest Quarter of Section 18,
Township 102 North, Range 49 West;
Together with a right of ingress and egress to and from
Lot 5 over and across a triangular portion of Lot 6, the
northeast boundary of which is a line beginning at a
point 25' east of the southwest corner of Lot 6 and
extending northwest to a point 60' north of the south
west corner of Lot 6.
1.2 Lessee acknowledges that it has inspected and
accepts the Leased Premises in its current condition, subject to
construction by Lessor of a rock/gravel area shown on Exhibit A
attached hereto, which shall be completed by Lessor within 45 days of
the execution of this Lease by Lessee.
1.3 Should Lessee pay the rent due hereunder and
observe and perform all the terms, covenants and conditions on its part
to be observed and performed, Lessee may peaceably and quietly enjoy
the Leased Premises subject to the terms and conditions of this Lease;
provided, however, that Lessee shall not occupy the Leased Premises
until the construction described in 1.2 is completed. Lessor shall pay
when due all payments on any and all existing and future mortgages to
which Lessor is party as mortgagor.
1.4 Upon expiration or earlier termination of the Lease
Term, Lessee shall surrender the Leased Premises (with any permitted
alterations, additions and improvements) in the same condition as
existed on the Commencement Date (or upon completion of alterations,
additions and improvements, if applicable), normal wear and tear and
damage from the elements excepted; provided that all equipment,
alterations, additions, improvements and systems shall be in working
order.
2. Term.
2.1 The term of this Lease (the "Lease Term") shall
commence on July 1, 1996 or, if sooner, upon notice from Lessor to
Lessee of completion of the improvements described in 1.2 (the
"Commencement Date").
2.2 The Lease Term shall be for four years ending on
the fourth anniversary of the Commencement Date at 11:59 o'clock
p.m.
2.3 Lessee may terminate this Lease at any time after
the twenty-fourth month following the Commencement Date, upon 60
days prior written notice and upon payment of the early termination fee
according to attached Exhibit B.
3. Rent.
3.1 In addition to compliance with other terms and
conditions hereinafter contained and subject to 3.2, Lessee shall pay
as base rent the sum of $29,616.00 for the Lease Term payable in equal
consecutive installments of $617.00 per month, in advance, on the
Commencement Date and on the 1st day of each calendar month during
the Lease Term; provided, however, that if the first calendar month of
the Lease Term is a partial month, Lessee shall pay on the Commence
ment Date a rental amount prorated for the number of days Lessee
occupies the Leased Premises for that partial month.
3.2 As additional rental, Lessee shall pay (i) all utilities,
snow removal, mowing and garbage service for the Leased Premises;
(ii) premiums when due for such insurance as Lessee is required to
maintain hereunder; (iii) annual real estate taxes and assessments on the
Leased Premises payable during the calendar year which includes the
Lease Term, subject to adjustment as such taxes increase or decrease
payable in April and October of each year upon invoice from Lessor
(subject to proration for partial years); (iv) any new tax or assessment
of a nature not presently in effect but which may hereafter be levied,
assessed or imposed upon Lessor or the Leased Premises, if such a tax
shall be based on or arise out of the ownership, use or operation of the
Leased Premises, regardless of whether denominated as a "tax", "fee",
"assessment" or otherwise.
3.3 If in the event of expiration or earlier termination of
this Lease, Lessee wrongfully remains in the possession of the Leased
Premises, then Lessee shall be liable to Lessor in an amount equal to
triple the amount of rent specified in this Lease Agreement. This
provision shall be cumulative with all other rights and remedies Lessor
shall have under this Lease and shall not be construed to create a valid
extension or renewal of any term of this Lease or to imply Lessor's
consent to such hold-over possession.
3.4 All amounts payable to Lessor under this Lease shall
bear interest at the rate of 12% per annum after their respective due
dates.
4. Pollution and Toxic and Hazardous Substances.
4.1 Subject to 4.2, Lessee shall keep and maintain the
Leased Premises and the waters or any waste on, under or discharged
from the Leased Premises in compliance with, and shall not cause or
permit the Leased Premises to be in violation of, any federal, state or
local laws, ordinances or regulations now or hereafter in effect, related
to environmental conditions, air, water and land pollution or the storage
or disposition of hazardous or toxic materials on, under or about the
Leased Premises.
4.2 Lessee shall not use, discharge, release, dispose of
or allow to exist on, under or about the Leased Premises any radioac
tive materials, asbestos, organic compounds known as polychlorinated
biphenyls or chemicals known to cause cancer or reproductive toxicity,
pollutants, contaminants, hazardous wastes, toxic substances or related
materials, including without limitation, any substances defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", or "toxic substances" under any of the
foregoing laws, ordinances or regulations.
4.3 Lessee shall obtain and maintain, to the extent
available or required by applicable law, all permits, opinions, approv
als, licenses, certificates and statements relating to compliance with all
such enactments and shall furnish copies of them to Lessor upon
request.
4.4 Lessee shall immediately advise Lessor in writing of:
(a) discovery of any occurrence or condition on
the Leased Premises or any real property adjoining or in the vicinity of
the Leased Premises which could subject Lessee or the Leased Premises
to any restrictions on ownership, occupancy, transferability or use of
the Leased Premises under any of the foregoing laws, ordinances or
regulations;
(b) any and all enforcement, clean-up, removal,
mitigation or other governmental or regulatory actions instituted,
contemplated, or threatened pursuant to any such laws, ordinances or
regulations; and
(c) all claims made or threatened by any third
party against Lessee, Lessor or the Leased Premises relating to damage,
contribution, cost, recovery, compensation, loss or injury resulting
from any of the above-described materials or substances.
4.5 In the event of discovery of a violation of this
section by Lessee or any of its employees, agents, invitees or
permittees, regardless of when discovered, Lessor may cause to be
undertaken and completed such tests, monitoring and remediation as
may be required under the circumstances or by applicable law or
regulation; and Lessee shall pay Lessor's costs and expenses, including
attorney's fees and expenses, within 10 days of written notice, and in
addition shall indemnify, defend and hold Lessor harmless as provided
in 9.
5. Use of Premises. The Leased Premises shall be used by
Lessee for storage of mobile or modular structures, vehicles or
materials and for no other purposes without Lessor's consent, which
shall not be unreasonably withheld. Lessee shall in all respects comply
with all codes, ordinances, statutes, rules and regulations of any
governmental authority having jurisdiction over the Leased Premises or
its use and shall not cause or permit use of the Leased Premises in
violation of any of the foregoing. Lessee shall not obstruct, interfere
with or otherwise disturb the lawful use and occupancy of other
property in the same development.
6. Alterations, Additions and Improvements.
6.1 Lessee may not make any alterations, additions or
improvements to the Leased Premises without the prior express written
consent of Lessor. Lessee may at its discretion, or at Lessor's
insistence shall, remove any alterations, additions or improvements
made by Lessee subject to the following conditions: (a) the Leased
Premises are, before expiration or earlier termination of this Lease,
restored to the condition existing at the Commencement Date; and (b)
Lessee shall not have such discretion during any period when Lessee is
in default as to any alterations, additions or improvements that Lessee
has not paid for.
6.2 Lessee shall not cause, suffer or permit, and shall
fully indemnify, defend and protect Lessor from and against, any
mechanic's liens or other claims by reason of the foregoing alterations,
additions, improvements or otherwise.
7. Maintenance, Damage and Destruction.
7.1 Lessee shall be responsible for maintaining the
Leased Premises in good condition, repair and functioning order during
the Lease Term, and shall pay the cost thereof. Lessee shall assume all
risk of and hold Lessor harmless from all damage to property of Lessee
stored, kept or used in or around the Leased Premises.
7.2 If the Leased Premises or any portion thereof is
damaged or destroyed to an extent wholly preventing Lessee's use and
enjoyment of the Leased Premises, Lessee may terminate this Lease
upon sixty (60) days written notice to Lessor, but only if all the
following conditions are present: no act or omission of Lessee, its
agents, employees or invitees caused or materially contributed to the
damage or destruction; insurance proceeds are insufficient to cover the
cost of repair of such damage or destruction; and Lessee is not
otherwise in default under the Lease at the time of the notice of
termination. If Lessee elects to terminate the Lease, such a termination
shall be the sole remedy against Lessor on account of such damage or
destruction and all insurance proceeds payable on account of such
damage or destruction shall be the sole property of Lessor.
7.3 In the event of any damage or destruction not
entitling Lessee to terminate this Lease, Lessee shall be obligated to
repair and restore the Leased Premises to their condition immediately
preceding such damage or destruction.
7.4 All repairs, maintenance and restoration undertaken
by or required of Lessee shall be accomplished promptly, with
reasonable diligence and completed within a reasonable period of time
after the necessitating occurrence. All methods of repair and
restoration, design, contractor selection and disbursement of insurance
proceeds shall be subject to Lessor's approval, which will not be
unreasonably withheld. In the event Lessee fails to perform its
obligation hereunder, Lessor may effect such repairs and charge the
cost of the same to Lessee, which costs Lessee hereby agrees to pay.
8. Eminent Domain. If any authority proceeds to acquire the
whole of the Leased Premises under power of eminent domain, Lessor
may terminate this Lease and Lessee shall surrender possession of the
Leased Premises as of the date the Leased Premises is legally acquired
by such authority. Upon termination by Lessor, Lessee shall have no
claim against Lessor for the value of any unexpired term of the Lease,
but shall have the right to make a tenant's claim for the value of
Lessee's leasehold interest and improvements made to the Leased
Premises or the cost of removal and relocation of such improvements
and Lessee's personal property. In the event a portion of the Leased
Premises is taken, this Lease shall remain in effect except that Lessee
may elect to terminate if 50% or more of the useable square footage of
the Leased Premises is taken, and shall notify Lessor within thirty (30)
days of the date of the taking of Lessee's election. If Lessee is entitled
to terminate, but does not so elect, the rent shall abate proportionately
to the square footage taken as of the date of the taking.
9. Indemnity and Defense.
9.1 Lessee shall hold Lessor, its successors, assigns,
officers, directors and employees harmless from and indemnify and
defend each of them against any and all claims, demands, actions and
suits and all costs, loss, damage, liability, expense (including attorneys'
fees), penalties and fines which may arise from or be claimed against
Lessor or the Leased Premises arising directly or indirectly from (a) the
use or occupancy of the Leased Premises by Lessee, or (b) failure of
Lessee to comply with any and all laws, statutes, ordinances, rules or
regulations applicable to the Leased Premises, or (c) Lessee's breach of
any warranty, covenants, liability or obligation under this Lease.
9.2 Lessee shall not be obligated to indemnify Lessor
under this section for any judgment or order if it is ultimately and
finally determined that Lessor's active fault was the sole cause of the
occurrence, condition or damage for which the indemnitee would
otherwise be entitled to indemnity. This paragraph shall not apply if
the fault of Lessor arises from any act or omission in supervising or
inspecting the Leased Premises, Lessee's business or from any act or
omission of Lessor with respect to notice, detection, prevention or
correction of any breach by Lessee of its warranties, covenants,
liabilities or obligations under this Lease.
9.3 Unless any claim, counterclaim, cross-claim or third
party claim, other than by Lessee, alleges that Lessor's active (and not
vicarious or passive) fault is the sole cause of the injuries or damages,
Lessee shall defend Lessor by counsel selected by Lessor, or reimburse
Lessor for costs, fees and expenses incurred in defense in any action,
demand, suit or other proceeding actually or allegedly arising from any
of the circumstances described in this section, even though it may be
alleged that Lessor was negligent or otherwise liable.
10. Insurance.
10.1 Lessee shall obtain and maintain at its sole expense
during all terms of this Lease premises or renter's liability insurance
and such other insurance as is necessary to cover Lessee's obligations
under the immediately preceding section and all necessary casualty
insurance on Lessee's contents, property, and property of others in
Lessee's possession.
10.2 Coverages to be maintained by Lessee shall insure
both Lessee and Lessor, as their interests may appear, shall be with
such companies and in such amounts as are reasonably satisfactory to
Lessor; and Lessee shall furnish written certificates of such insurance
satisfactory to Lessor.
10.3 Lessor shall not be responsible to Lessee for any
loss arising from damage to or destruction of the Leased Premises or
any contents, regardless of fault of Lessor or its agents or employees,
when such loss is covered by the standard form of insurance for fire and
extended coverage. This provision is intended to fully bind any such
insurance carrier. Lessor and Lessee shall execute all documents
necessary or convenient to implement this paragraph.
11. Re-Entry and Inspection. Lessor and its agents shall have
the right to enter upon the Leased Premises at reasonable times to
inspect the same on reasonable notice to Lessee, but nothing contained
in this paragraph shall be deemed to impose upon Lessor any
obligation, responsibility or liability whatsoever, for the care,
supervision or repair of the Leased Premises or any portion thereof.
12. Default and Remedies.
12.1 The occurrence of any of the following shall be
deemed an event of Lessee's default under this Lease: (a) Lessee's
failure to pay any rental when due if the failure continues for ten (10)
days after written notice to Lessee; (b) Lessee's breach of any other
terms and conditions of this Lease to be performed or observed by
Lessee if the breach continues for thirty (30) days after written notice
to Lessee; (c) Commencement of any bankruptcy, insolvency or
receivership proceedings under state or federal law by or against
Lessee.
12.2 Upon occurrence of any event of default and upon
expiration of the applicable notice period without cure of such default
or defaults, then Lessor may, without any further notice or demand,
exercise all or any one or more of the following rights and remedies:
(a) terminate this Lease without affecting Lessee's obligation to pay
rent; (b) enter into, take possession of and eject Lessee from, by force
or otherwise, the Leased Premises without being deemed guilty of
trespass; (c) declare the entire amount of unpaid rent due and payable,
and sue for and collect such accelerated rentals; (d) clean, refurbish,
remodel, improve for other uses and/or relet the Leased Premises or
any portion thereof and credit unpaid rentals due from Lessee with
amounts received upon reletting less all fees, costs and expenses
incurred in connection therewith; (e) pursue any other right or remedy
available under law or equity; (f) exercise any of the foregoing
remedies alone or in combination with any one or more other of such
remedies, all of which shall be deemed cumulative and not exclusive;
(g) recover from Lessee all attorneys fees and expenses incurred in
enforcing the terms of this Lease or exercising the foregoing rights and
remedies, as additional damages for loss of benefit of bargain.
12.3 Lessor shall be in default hereunder if it fails or
refuses to perform any provision of this Lease which it is obligated to
perform and Lessor has not cured such failure within thirty (30) days
after notice of default has been given to Lessor or has not commenced
in good faith to cure a condition which by its nature is not curable
within such 30 days.
12.4 At any time after Lessor's default, Lessee may cure
Lessor's default at Lessor's expense. Lessee may elect: (a) to set off
any sum expended against any unpaid outstanding amount due to Lessee
by Lessor; (b) to withhold future rent due to Lessor until Lessee is
reimbursed in full; or (c) to declare such sum immediately due and
payable from Lessor, which sum shall bear interest at a rate of 12%
percent per annum from the date of Lessee's payment.
13. General Provisions.
13.1 Any notice or communication under this Agree-
ment shall be in writing and delivered (by hand, telecopy, telegraph,
telex or courier) or deposited in the United States mail (first class,
registered or certified), postage fully prepaid and addressed as stated
below. Either party may, from time to time, specify as its address for
purposes of this Agreement any other address upon the giving of ten
days notice thereof to the other party in the manner required by this
paragraph. This paragraph shall not prevent the giving of written notice
in any other manner, but such notice shall be deemed effective only
when and as of its actual receipt at the proper address and by the proper
addressee.
13.2 Lessee shall not sublet the Leased Premises nor
assign its interests in this Lease. Subject to that restriction, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns and legal representatives.
13.3 This Agreement is intended solely for the benefit
of Lessor and Lessee and shall not be enforceable by or create any
claim or right of action in favor of any other party.
13.4 This Agreement represents the entire and integrated
agreement between Lessor and Lessee with respect to the subjects
described herein and supersedes all prior negotiations, representations
or agreements, oral or written. This Agreement may be amended only
in writing signed by the party to be bound by such amendment and
stating that it is intended as an amendment of this Agreement.
13.5 If any one or more of the provisions of this
Agreement shall be determined to be invalid, illegal or unenforceable
in any respect for any reason, the validity, legality or enforceability of
such provision in every other respect and the remaining provisions of
this Agreement shall not be in any way impaired.
13.6 Failure of a party to insist upon adherence to any
term of this Agreement on any occasion shall not be considered a
waiver or deprive that party of the right thereafter to insist upon
adherence to that term or any other term of this Agreement.
13.7 This Agreement shall be governed by and interpret-
ed under the substantive laws of the State of South Dakota without
regard to principles of conflicts of law.
13.8 The section headings to this Agreement are intend-
ed solely for the parties' convenience and shall not affect the
interpretation or construction of any portion or provision of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above-written.
Address for Notices: TOBOLL PROPERTIES LIMITED
2001 Crestwood Road PARTNERSHIP, a South Dakota
Sioux Falls, SD 57105 limited partnership
Attn: Jack Toboll
By \John F. Toboll
One of its General Partners
Address for Notices: MILLER STRUCTURES, INC., a
P. O. Box 1283 (46515) Indiana corporation
58120 County Road 3 South
Elkhart, Indiana 46517
By \Edward C. Craig
Its President/Chief Executive Officer
REVISED PROPOSAL 04/16/96
Miller Storage Parking
Early Property
Monthly Terminate Tax Effective
No. Site Term Rent Fee (*) Rent
4 Lot #5 4 Years $617 N/A $54.00 $671
w/early
exit fee
Month 48 $617 0 $54.00 $671
47 $617 $1,590.00 $54.00 $708
46 $617 $1,590.00 $54.00 $708
45 $617 $1,590.00 $54.00 $708
44 $617 $1,590.00 $54.00 $708
43 $617 $1,590.00 $54.00 $708
42 $617 $1,590.00 $54.00 $708
41 $617 $3,180.00 $54.00 $759
40 $617 $3,180.00 $54.00 $759
39 $617 $3,180.00 $54.00 $759
38 $617 $3,180.00 $54.00 $759
37 $617 $3,180.00 $54.00 $759
36 $617 $3,180.00 $54.00 $759
35 $617 $4,770.00 $54.00 $830
34 $617 $4,770.00 $54.00 $830
33 $617 $4,770.00 $54.00 $830
32 $617 $4,770.00 $54.00 $830
31 $617 $4,770.00 $54.00 $830
30 $617 $4,770.00 $54.00 $830
29 $617 $6,408.00 $54.00 $938
28 $617 $6,408.00 $54.00 $938
27 $617 $6,408.00 $54.00 $938
26 $617 $6,408.00 $54.00 $938
25 $617 $6,408.00 $54.00 $938
24 $617 $6,408.00 $54.00 $938
(*) Taxes will be invoiced separately in two payments according to tax bill.
EXHIBIT B
EXHIBIT 11
MILLER BUILDING SYSTEMS, INC.
AND SUBSIDIARIES
Statement Regarding Computation of Per Share Earnings
Years Ended
June 29, July 1, July 2,
1996 1995 1994
Primary earnings per common share:
Net income $ 485,623 $ 319,912 $ 311,860
Shares outstanding, net of
treasury shares, at beginning of
period 3,100,963 3,158,578 3,249,078
Weighted average number of shares arising
from the exercise of stock options - 4,507 -
Additional shares assuming
exercise as of the beginning of
the fiscal year of dilutive stock
options, based on the treasury
stock method using the average
market price for the period 27,730 19,868 18,214
Weighted average number of shares from
the sale of treasury stock - 13,446 -
Weighted average number of shares
purchased as treasury stock - (66,192) (69,871)
Weighted average shares and
equivalent shares outstanding 3,128,693 3,130,207 3,197,421
Primary earnings per share $ .16 $ .10 $ .10
Fully diluted earnings per common share:
Net income $ 485,623 $ 319,912 $ 311,860
Shares outstanding, net of
treasury shares, at beginning of
period 3,100,963
Weighted average number of shares arising
from the exercise of stock options -
Additional shares assuming
exercise as of the beginning of
the fiscal year of dilutive stock
options, based on the treasury
stock method using the ending
market price for the period 189,490
Weighted average number of shares from
the sale of treasury stock -
Weighted average number of shares
purchased as treasury stock -
Weighted average shares and
equivalent shares outstanding 3,290,453
Fully diluted earnings per share $ .15 $ .10* $ .10*
* Fully-diluted earnings per share did not differ materially from primary
earnings per share.
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Miller Building Systems, Inc. on Form S-8 (File Nos. 33-88158 and 33-50512), and
in the related Prospectus, of our report dated August 6, 1996, (except as to the
information presented in Note I for which the date is August 12, 1996), on our
audits of the consolidated financial statements and financial statement schedule
of Miller Building Systems, Inc. and subsidiaries as of June 29, 1996 and July
1, 1995, and for the years ended June 29, 1996, July 1, 1995 and July 2, 1994,
which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
South Bend, Indiana
September 20, 1996
