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 July 3, 1999
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. ( )
Aggregate market value of voting stock held by nonaffiliated 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 27, 1999:
$20,589,883.
As of August 27, 1999, the Registrant had 3,358,393 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 1999 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.
This Report contains certain statements that are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, as amended. Those statements are
dependent on certain risks and uncertainties. Such factors, among others, are
the mix between products with varying profit margins, the ability to achieve
forecasted production levels through the second quarter of fiscal 2000 with
the current backlog of orders, the strength of the economy in the various
sections of the country served by the Company, the impact of our competitors
on the profitability of our products, the future availability of raw materials,
the anticipated adequacy of the Company's operating cash flows and credit
facilities to finance operations, capital expenditures and other needs of its
business and the ability of the Company, its suppliers and its customers to be
year 2000 compliant. Readers are cautioned that reliance on any forward-looking
statement involves risks and uncertainties. Forward-looking statements
contained herein are based on reasonable assumptions, any of which could prove
to be inaccurate given the inherent uncertainties as to the occurrence or
nonoccurrence of future events. There can be no assurance that the forward-
looking statements contained in this Report will prove to be accurate. The
inclusion of a forward-looking statement herein should not be regarded as a
representation by the Company that the Company's objectives will be achieved.
PART I
ITEM 1. BUSINESS
The Company
Miller Building Systems, Inc. ("Miller") is the parent of Miller Building
Systems of Indiana, Inc., Miller Building Systems of Pennsylvania, Inc., Miller
Building Systems of Kansas, Inc., United Structures, Inc.("United"), and Miller
Construction Services, Inc. ("Construction Services"). All operations of Miller
are conducted through its five wholly owned subsidiaries which design,
manufacture, market and service factory-built buildings. Miller has three
product lines, Structures, Telecom and Construction Services. The factory-built
buildings produced by Structures are modular and mobile buildings, which are
generally movable and relocatable, and designed to meet the specialized needs of
a wide variety of users. Structures products are sold to independent customers
who, in turn, sell or lease to the end users. The Structures division has
manufacturing facilities in Elkhart, Indiana; Leola, Pennsylvania; Sioux Falls,
South Dakota and Bennington, Vermont. The Telecom division manufactures
specialized buildings, which utilize modular construction techniques and pre-
cast concrete technology, and are designed principally for customers in the
telecommunications industry. Telecom's products are sold directly to the end
user. Telecom has manufacturing facilities in Elkhart, Indiana; Binghamton, New
York and Leola, Pennsylvania. Miller's Structures and Telecom products are sold
throughout the United States. Construction Services provides complete turnkey
services from site preparation through setting and installation.
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.
On August 20, 1999, Miller entered into an Asset Purchase Agreement with
Andrew Corporation to sell certain assets and the business operations of the
Burlington, Kansas facility and assign a lease agreement for the Kansas facility
to Andrew Corporation (See Note J of the Notes to Consolidated Financial
Statements).
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 their wholly owned subsidiaries.
STRUCTURES PRODUCT LINE
Sales and engineering for the Structures product line are headquartered in
Elkhart, Indiana. The sales and engineering staff support the manufacturing
facilities in Elkhart, Indiana; Leola, Pennsylvania; Sioux Falls, South Dakota
and Bennington, Vermont.
Structures - Modular and Mobile Office Buildings
Products
The buildings sold 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 sold 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 sold 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 sells buildings
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 sold 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 sold 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 sold 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 27, 1998 and June 28, 1997, the following customers
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% of Miller's net sales for the fiscal
year ended June 27, 1998 and In-Roads, Inc. represented 15% for the fiscal year
ended June 28, 1997. There was no Structures customer that represented more
than 10% of Miller's net sales for the fiscal year ended July 3, 1999.
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 Miller. 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 PRODUCT LINE
Sales and engineering for the Telecom product line are located in Elkhart,
Indiana. Telecom provides all administrative, sales and production services
from that location. The sales and engineering staff support manufacturing
facilities in Elkhart, Indiana; Binghamton, New York and Leola, Pennsylvania.
Products
Telecom manufactures modular factory-built buildings using pre-cast
concrete, steel and concrete, 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. The latter 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 Cam-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. An
exportable Containerized Shelter, transforms a standard 20' and 40' steel
shipping container into a virtually indestructible completely outfitted
telecommunication shelter. Also, mobile shelters 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.
Telecom 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 July 3, 1999 and June 27, 1998, the following customer
represented 10% or more of net sales of Miller: Nextel Communication, Inc.,
represented 13% of Miller's net sales in each of the fiscal years ended July 3,
1999 and June 27, 1998. There was no Telecom customer that represented more
than 10% of Miller's net sales for the fiscal year ended June 28, 1997.
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.
Construction Services
Construction Services is located in Elkhart, Indiana and operates all
administrative, sales and service activities from that location. This office
manages the service crews that support the Telecom facilities in Elkhart,
Indiana; Leola, Pennsylvania and to some extent Binghamton, New York.
Services
Construction Services provides one contact point for complete turnkey
services for telecommunication site construction. These services include the
management and execution of the entire construction process, from site
preparation, equipment transportation, through building and tower setting and
installation, or any combination thereof.
The service crews are fully outfitted with service trucks and equipment to
handle any site construction, even in remote locations. The crews are highly
trained in all phases of construction and have experience with heavy equipment,
site civil work and permitting, steel fabrication, concrete and Cam-Lock
building installations, electrical and electronic hookups, tower erection,
antenna sets and fencing. Construction Services specializes in completing sites
in difficult remote locations or sites which must be completed in a short time
frame. The service crews can "quick turn" a building, principally Cam-Lock
buildings, in five days from the initiation of the field work. The traditional
concrete shelter can also be assembled and finished in remote locations where
the site is inaccessible to a building fully completed in the factory.
In addition to site preparation and installation, Construction Services is
developing a full maintenance program, not only for buildings supplied by Miller
but any building, whether site built or modular. These maintenance projects,
which include roof and fencing repair, have also been completed for businesses
outside the customary telecommunication industry, such as buildings utilized by
pipelines and power companies. The major maintenance projects are also
complemented by a general maintenance program. These programs allow a customer
to have routine maintenance and general preventive maintenance on equipment
performed by Construction Services while they concentrate on building new sites
and servicing their own customers needs.
Marketing
Construction Services primarily markets its services to the cellular and
personal communications industry. They contract directly with the end user of
the construction services being supplied. Most of Construction Services sales
contacts come from existing telecommunications' customers and the group competes
for projects by providing a quotation developed from specifications supplied by
the potential customer. Quality and speed are most often the prime
considerations of their customers. This allows Construction Services to obtain
a better margin on their projects than is customarily obtainable in the general
marketplace. The group has developed several close relationships with Telecom's
customers to supply site construction services.
Competition
Construction Services competes with national design-build firms which use
third-party subcontractors for the completion of turnkey service projects and
with various local contractors when bidding on specific portions of a site
project. The relationships and contacts that both the Structures and Telecom
divisions have developed with customers, while supplying buildings, has provided
Construction Services with key contacts and competitive advantages. In addition,
support from Miller's corporate engineering department also provides
Construction Services with in-house engineering specifications and state and
local code requirements.
General
(Applicable to all of Miller's principal markets)
Business Segment
Miller has one reportable segment, designing, manufacturing, marketing and
servicing factory-built buildings which includes three product lines:
Structures, Telecom and Construction services.
Sales
Net sales by product line are as follows:
Years Ended
July 3, June 27, June 28,
1999 1998 1997
Structures $29,434,708 $31,826,019 $32,144,884
Telecom 33,807,292 21,086,105 13,406,757
Construction Services 2,395,040 1,787,536 735,129
$65,637,040 $54,699,660 $46,286,770
Backlog
The backlog of orders by market at August 31, 1999 and 1998 was as follows:
1999 1998
Structures $10,551,000 $ 5,877,000
Telecom 9,749,000 9,794,000
Construction Services 697,000 232,000
Total $20,997,000 $15,903,000
The increase in the Structures' backlog is the result of an order for
approximately $4,050,000 from a customer to build portable hospitality suites.
These suites will be built in the Elkhart, Indiana facility during the second
and third quarters of Miller's fiscal year 2000. The slight decline in the
Telecom backlog relates to a slow order rate during the third and fourth
quarters of Miller's last fiscal year, as consolidation within the industry
caused a delay in orders with several of our customers. The $21 million backlog
level is the highest in Miller's history and should provide the basis to achieve
forecasted production levels through the second quarter of fiscal 2000; however,
management believes it is too early to determine whether this current business
activity will extend to the second half of fiscal 2000.
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.
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 K of Notes to
Consolidated Financial Statements.
Employees
As of August 31, 1999, Miller and its subsidiaries had approximately 442
employees of which approximately 337 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 132,300 112,100 20,200 Owned (1)
Burlington, KS 155,000 150,000 5,000 Capital Lease (2)
Binghamton, NY 55,900 52,400 3,500 Leased (3)
Leola, PA 113,100 103,400 9,700 Owned
Sioux Falls, SD 36,100 34,200 1,900 Leased (4)
Bennington, VT 28,900 27,000 1,900 Owned
________________ _______ _______ ______
Total approximate
square footage 521,300 479,100 42,200
(1) Structures and Telecom administrative, sales, engineering and
manufacturing facilities. The Executive offices of Miller are also at
this location.
(2) On August 20, 1999, Miller entered into an Asset Purchase Agreement
with Andrew Corporation to sell certain assets and the business
operations of the Burlington, Kansas facility and assign a lease
agreement for the Kansas facility to Andrew Corporation (See Note J of
the Notes to Consolidated Financial Statements).
(3) Leased until December 31, 2002 with a five-year renewal option and an
option to purchase the facility after February 28, 2000.
(4) Leased until April 15, 2000 with a three-year renewal option.
ITEM 3. LEGAL PROCEEDINGS
Neither Miller or its operating subsidiaries are 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
Edward C. Craig (age 64) became the Chief Executive Officer of Miller
effective on July 3, 1994, was elected President of Miller on August 11, 1994
and on July 1, 1999 was elected Chairman of the Board of Directors of Miller.
From July 1991 until April 1994, Mr. Craig was President and Chief Executive
Officer of IBG, a modular housing company. From April 1986 to July 1991, Mr.
Craig was President of Ryland Building Systems, a division of Ryland Homes,
Inc.
Rick J. Bedell (age 47) became the Executive Vice President of Miller
effective July 1, 1998. Mr. Bedell joined Miller in January 1989 as a Corporate
Sales Manager and became Vice President and General Manager of the Western
Division in February 1990. In November 1996, he became Vice President of
Miller's Kansas operation. Previously, Mr. Bedell worked for Modulaire
Industries, PBS Building Systems, Inc. and Meridian Corporation in various
management positions.
Thomas J. Martini (age 51) 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
"MBSI." The following table sets forth the quarterly range of high and low
sales prices for these securities as reported on the NASDAQ National Market
System for the two most recent fiscal years.
Fiscal 1999 Fiscal 1998
High Low High Low
1st Quarter 10 1/16 6 1/2 10 1/16 5 1/2
2nd Quarter 8 1/2 5 1/8 9 3/4 8 1/4
3rd Quarter 8 3/4 6 10 3/4 9
4th Quarter 8 3/4 5 1/8 10 3/4 9 5/8
As of August 27, 1999, Miller estimates there were approximately 1,300
stockholders of Miller's Common Stock. Of this total, approximately 130 were
stockholders of record and shares for approximately 1,170 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 from fiscal 1994
through fiscal 1999 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
July 3, June 27, June 28, June 29, July 1,
1999 1998 1997 1996 1995
(In thousands,
except per share data)
Net sales $65,637 $54,700 $46,287 $37,858 $41,455
Net income 2,548 2,140 1,574 486 320
Earnings per common share:
Basic .72 .65 .50 .16 .10
Diluted .71 .62 .47 .16 .10
Total assets 32,775 30,478 19,813 16,920 16,522
Long-term debt, less
current maturities 5,277 6,094 1,357 1,270 1,385
(A) Net sales (in thousands) for fiscal years 1999 and 1998 include $15,440
and $7,523, respectively, for United, which was acquired January 1,
1998 (see Note I of Notes to Consolidated Financial Statements). Net
sales (in thousands) for fiscal years ended 1997, 1996 and 1995 include
$1,636, $5,787 and $6,414, respectively, of Miller's California
subsidiary which was sold on October 21, 1996. Net sales
(in thousands) for fiscal 1997 include $2,139 for the Kansas facility
which commenced operations in January 1997.
(B) Miller's operating results for fiscal years 1999, 1996 and 1995 were
adversely impacted by nonrecurring items (in thousands) of $107, $358
and $361, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Fiscal 1999 Compared to Fiscal 1998
Net sales increased $10.9 million, or 20%, in fiscal 1999 from the
corresponding period in fiscal 1998. Structures reported a $2.4 million, or a
7.5%, decrease in net sales during fiscal 1999. This decrease in net sales was
primarily the result of increased product complexity, poor weather conditions,
spotty backlogs and difficulty in hiring qualified personnel at the Indiana
plant. In addition, the decision to build only Telecom units at the Kansas plant
and softness in the markets served by the Vermont plant also contributed to the
decline in Structures' net sales. Telecom's net sales increased $12.7 million,
or 60%, during fiscal 1999. This increase was primarily the result of sales at
the acquired United operation, Telecom sales at the new expanded Pennsylvania
plant facilities and increased Telecom sales at the Kansas plant.
Miller's gross profit during the 1999 fiscal year was 18.3% of net
sales as compared to 18.8% in fiscal 1998. The decline in gross profit is
primarily the result of generally higher overhead costs, costs related to the
start-up operation at the Pennsylvania plant and higher overhead costs at the
Indiana plant.
Selling, general and administrative expenses increased $.6 million in
fiscal 1999. These expenses were 10.9% of net sales in fiscal 1999 compared to
12% of net sales in fiscal 1998. The increase in selling, general and
administrative expense was primarily the result of the addition of
administrative expense at the United and Pennsylvania operations and higher
overall staffing levels. These were partially offset by lower performance-based
compensation.
The increase in interest expense in fiscal 1999 compared to fiscal 1998
of $281,645 was primarily the result of higher levels of outstanding debt, which
was principally the result of the construction of an expansion of the
Pennsylvania plant facilities and debt incurred to finance the acquisition of
United.
During the fiscal year ended July 3, 1999, Miller recognized
nonrecurring expenses of $107,366 which related to costs associated with the
terminated efforts to explore possible merger and acquisition opportunities.
After careful review of several opportunities, the Board of Directors concluded
that the best options for Miller's stockholders was for Miller to remain focused
on its operations with the intent of continuing the profitable growth exhibited
by the past several years, while remaining open to an attractive merger
opportunity.
During fiscal 1999, Miller recorded an income tax provision of
$1,634,000 or 39% of pre-tax income compared to an income tax provision of
$1,306,000 or 38% of pre-tax income in fiscal 1998. The effective tax rate
varies from year to year depending on the levels of income in states where
Miller is subject to state income tax.
Fiscal 1998 Compared to Fiscal 1997
Net sales increased $8.4 million or 18.2% in fiscal 1998 from the
corresponding period in fiscal 1997. Structures reported a $.3 million, or
approximately a 1% decrease in net sales during fiscal 1998. The decrease in
net sales was primarily the result of lower sales in the Eastern markets which
were bolstered in the prior year by several large contracts, and the decline in
sales related to the California plant which was closed after the first quarter
of fiscal 1997. The California operation had net sales of $1.6 million in
fiscal 1997. Telecom's net sales increased $7.7 million, or nearly 57% during
fiscal 1998. Nearly all of the net sales gain in Telecom related to sales from
United which was acquired January 1, 1998. Net sales for United for the six
months ended June 27, 1998 were $7.5 million. During fiscal 1998, Telecom's
business was soft as the telecommunications industry slowed their shelter
orders. The industry concentrated on generating revenue by placing existing
infrastructure in service. These factors led to the small increase in Telecom
sales, excluding United for fiscal 1998.
Miller's gross profit during the 1998 fiscal year was 18.8% of net
sales which was a slight decrease from the 19.4% in fiscal 1997. During fiscal
1998, improved margins from United's lightweight, rooftop telecommunications
shelters, partially offset a decline in Structures' gross profit related to the
decline in higher margin custom projects. The gross profit from Telecom's
concrete shelter business in fiscal 1998 remained relatively unchanged from
fiscal 1997.
Selling, general and administrative expenses increased $.3 million in
fiscal 1998. These expenses were 12% of net sales in fiscal 1998 compared to
13.6% of net sales in fiscal 1997. The increase in administrative expense was
primarily the result of the addition of administrative expense at United. The
increased administrative expenses at United were partially offset by lower
administrative expenses at the closed California operation and lower
performance-based compensation.
The increase in interest expense in fiscal 1998 compared to fiscal 1997
of $134,771 was primarily the result of higher interest rates and higher debt
outstanding on the revolving line of credit. The Company funded the
construction of the Pennsylvania plant and the acquisition of United through its
line of credit until permanent long-term financing was put in place.
During fiscal 1998, Miller recorded an income tax provision of
$1,306,000 or 38% of pre-tax income compared to an income tax provision of
$1,006,000 or 39% of pre-tax income in fiscal 1997. The effective tax rate
varies from year to year depending on the levels of income in states where
Miller is subject to state income tax.
Liquidity and Capital Resources
Miller's working capital at July 3, 1999 was $10,472,268 compared to
$8,610,205 at June 27, 1998. The working capital ratio at July 3, 1999 and June
27, 1998 was 2.3 to 1 and 1.9 to 1, respectively.
For the fiscal year ended July 3, 1999, Miller's operating activities
provided net cash of $3,426,796. Increases in cash from operating activities
consisted primarily of net income, depreciation and amortization, decreases in
inventories and an increase in accounts payable. These increases were primarily
offset by the $1.7 million increase in receivables. Miller's investing
activities used net cash of $236,104. Capital expenditures of $1.2 million
consisted principally of the Pennsylvania plant addition which was financed with
the $1.1 million in unexpended industrial revenue bond proceeds obtained for the
project. Miller's financing activities used net cash of $3,246,809. Financing
cash flows consisted of $774,316 in payments on long-term debt, $1,550,000 in
net payments on the line of credit and $994,243 cash expended for the purchase
of treasury stock. The net decrease in cash and cash equivalents for the
fiscal year ended July 3, 1999 was $56,117 which resulted in cash and cash
equivalents at the end of the year of $55,503.
An unsecured revolving credit agreement with a bank makes available
advances up to $7,000,000 through November 30, 1999. Miller expects to renew
this credit facility. There was $2,000,000 outstanding on the revolving credit
line at July 3, 1999 and $3,550,000 at June 27, 1998.
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.
Year 2000 Compliance
Miller is continuing the process of identifying, evaluating, and
implementing changes to computer programs necessary to address the Year 2000
issue. This issue affects computer systems that have date-sensitive programs
that may not properly recognize the Year 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail, resulting in business interruption. Miller believes its current computer
hardware and software programs are Year 2000 compliant and, therefore, does not
believe the cost of converting all internal systems to be Year 2000 compliant
will be material to its consolidated financial condition or results of
operations. Costs related to the Year 2000 issue are being expensed as incurred.
Costs incurred to date have been less than $50,000 and management does not
believe any material additional costs will be incurred.
Management has initiated a program to prepare Miller's manufacturing
and facility systems for the Year 2000. Miller is actively engaged in testing
and fixing applications such as security, environmental, desktop computers and
production equipment to ensure they are Year 2000 ready. Miller currently does
not expect remediation costs to be material nor does it expect any significant
interruption to its operations because of Year 2000 problems. Miller's products
do not have Year 2000 readiness issues because they do not contain date-
sensitive functions.
Miller is in the process of contacting all third parties with which it
has significant relationships, to determine the extent to which Miller could be
vulnerable to failure by any of them to obtain Year 2000 compliance. Some of
Miller's major suppliers, customers and financial institutions have confirmed
that they anticipate being Year 2000 compliant on or before December 31, 1999,
although many have only indicated that they have Year 2000 readiness programs.
To date, Miller is not aware of any significant third parties with a Year 2000
issue that could materially impact Miller's operations, liquidity or capital
resources. However, Miller has no means of ensuring that third parties will be
Year 2000 ready and the potential effect of third-party non-compliance is
currently not determinable.
Miller will continue to devote the resources necessary to ensure that
all Year 2000 issues are properly addressed. However, there can be no assurance
that all Year 2000 problems are detected. Further, there can be no assurance
that Miller's assessment of its third party vendors and suppliers will be
accurate. Some of the potential worst-case scenarios that could occur include:
(1) corruption of data in Miller's internal systems; (2) failure of
infrastructure services provided by government agencies; and (3) health,
environmental and safety issues relating to Miller's facilities. If any of
these situations were to occur, Miller's operations in certain areas could be
temporarily interrupted. Miller intends to develop Year 2000 contingency plans
for continuing operations in the event such problems arise. Miller has
operations around the country and is considering shifting operations to
different facilities if there are interruptions to operations in a particular
region.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
1. Financial Statements:
Report of Independent Accountants .................................. 14
Consolidated Balance Sheets at July 3, 1999 and June 27, 1998 ...... 15
Consolidated Statements of Income for the years ended
July 3, 1999, June 27, 1998 and June 28, 1997 .................... 17
Consolidated Statements of Stockholders' Equity for the years
ended July 3, 1999, June 27, 1998 and June 28, 1997 .............. 18
Consolidated Statements of Cash Flows for the years ended
July 3, 1999, June 27, 1998 and June 28, 1997 .................... 20
Notes to Consolidated Financial Statements ......................... 21
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts for the years
ended July 3, 1999, June 27, 1998 and June 28, 1997 .............. 33
Schedules other than those listed above are omitted because
they are not applicable or the required information is shown
in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Miller Building Systems, Inc.:
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Miller
Building Systems, Inc. and its subsidiaries at July 3, 1999 and June 27, 1998,
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended July 3, 1999 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. 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 of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
South Bend, Indiana
July 30, 1999, except as to the information
presented in Notes C and J for which the date is
August 20, 1999
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 3, June 27,
1999 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 55,503 $ 111,620
Receivables, less allowance for doubtful
receivables of $48,000 in 1999 and
$50,000 in 1998 12,837,571 11,126,444
Refundable income taxes 16,200 20,000
Inventories 5,502,052 6,140,647
Deferred income taxes 218,000 230,000
Other current assets 143,984 204,107
TOTAL CURRENT ASSETS 18,773,310 17,832,818
PROPERTY, PLANT AND EQUIPMENT
Land 1,106,156 1,106,156
Buildings and leasehold improvements 8,429,844 7,962,454
Machinery and equipment 5,426,620 5,084,595
14,962,620 14,153,205
Less, Accumulated depreciation
and amortization 5,731,885 5,141,452
PROPERTY, PLANT AND EQUIPMENT, NET 9,230,735 9,011,753
Unexpended industrial revenue bond proceeds - 1,115,854
Deferred compensation plan investments 417,143 248,537
Excess acquisition costs over fair value of acquired
net assets, net of accumulated amortization of
$210,879 in 1999 and $63,446 in 1998 4,159,600 2,058,409
Other assets 194,398 210,754
TOTAL ASSETS $32,775,186 $30,478,125
The accompanying notes are a part of the consolidated financial statements.
July 3, June 27,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 2,000,000 $ 3,550,000
Current maturities of long-term debt 806,119 762,900
Accounts payable 3,954,923 3,246,373
Accrued income taxes 132,635 17,469
Accrued expenses and other 1,407,365 1,645,871
TOTAL CURRENT LIABILITIES 8,301,042 9,222,613
Long-term debt, less current maturities 5,276,854 6,094,389
Deferred compensation liability 417,143 248,537
Deferred income taxes 310,000 316,000
Other 13,300 15,276
TOTAL LIABILITIES 14,318,339 15,896,815
COMMITMENTS AND CONTINGENCIES - Note H
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value,
50,000 shares authorized, none issued - -
Common stock, $.01 par value, 7,500,000 shares
authorized, 4,250,630 and 4,023,548 shares
issued in 1999 and 1998, respectively 42,506 40,235
Additional paid-in capital 13,847,920 11,600,191
Retained earnings 8,325,154 5,770,243
22,215,580 17,410,669
Less, Treasury stock, at cost 3,758,733 2,829,359
TOTAL STOCKHOLDERS' EQUITY 18,456,847 14,581,310
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $32,775,186 $30,478,125
(This page intentionally left blank.)
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
July 3, June 27, June 28,
1999 1998 1997
NET SALES $65,637,040 $54,699,660 $46,286,770
Costs and expenses:
Cost of products sold 53,655,356 44,434,537 37,323,073
Selling, general and
administrative 7,139,735 6,568,481 6,286,184
Provision for doubtful receivables 7,656 54,881 51,293
Gain on sale of property
and equipment (4,402) (63,628) (3,667)
Interest expense 571,701 290,056 155,285
Interest income (22,402) (30,719) (105,226)
Nonrecurring item 107,366 - -
INCOME BEFORE
INCOME TAXES 4,182,030 3,446,052 2,579,828
Income taxes 1,634,000 1,306,000 1,006,000
NET INCOME $ 2,548,030 $ 2,140,052 $ 1,573,828
Earnings per share of common stock:
Basic $ .72 $ .65 $ .50
Diluted $ .71 $ .62 $ .47
Shares used in the computation of
earnings per share:
Basic 3,535,435 3,268,344 3,157,706
Diluted 3,610,082 3,474,706 3,316,132
The accompanying notes are a part of the consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid -in Retained Treasury Stock Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1996 4,023,548 $ 40,235 $11,454,903 $2,048,824 922,585 $(3,139,374) $10,404,588
Treasury stock acquired - - - - 45,730 (351,063) (351,063)
Exercise of stock options using
treasury stock - - - (26,063) (162,200) 576,403 549,800
Net income - - - 1,573,828 - - 1,573,828
BALANCE, JUNE 28, 1997 4,023,548 40,235 11,454,903 3,596,049 806,115 (2,914,034) 12,177,153
Treasury stock acquired - - - - 39,312 (381,967) (381,967)
Exercise of stock options using
treasury stock - - - 34,142 (125,100) 466,642 500,784
Tax benefit arising from exercise
of stock options - - 145,288 - - - 145,288
Net income - - - 2,140,052 - - 2,140,052
BALANCE, JUNE 27, 1998 4,023,548 40,235 11,600,191 5,770,243 720,327 (2,829,359) 14,581,310
Issuance of common stock in connection
with business acquisition 227,082 2,271 2,247,729 - - - 2,250,000
Treasury stock acquired - - - - 178,410 (994,243) (994,243)
Exercise of stock options using
treasury stock - - - 6,881 (16,500) 64,869 71,750
Net income - - - 2,548,030 - - 2,548,030
BALANCE, JULY 3, 1999 4,250,630 $ 42,506 $13,847,920 $8,325,154 882,237 $(3,758,733) $18,456,847
</TABLE>
The accompanying notes are a part of the consolidated financial statements.
MILLER BUILDING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
July 3, June 27, June 28,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,548,030 $ 2,140,052 $ 1,573,828
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization of
plant and equipment 968,772 769,186 636,287
Amortization of intangible assets
and deferred bond issuance costs 225,602 51,983 10,293
Deferred compensation 168,606 203,790 44,747
Deferred income taxes 6,000 294,000 (92,000)
Other (4,402) (24,040) (6,612)
Changes in certain assets and
liabilities, net of effect of
acquisition and disposition
of businesses:
Receivables (1,711,127) 831,920 (2,591,757)
Refundable income taxes 3,800 (20,000) 241,158
Inventories 638,595 (1,258,521) (991,266)
Other assets (314) (341,184) (33,196)
Accounts payable 708,550 299,813 (431,901)
Accrued income taxes 115,166 (947,995) 886,026
Accrued expenses and other (240,482) (1,284,907) 552,530
Net cash provided by (used in)
operating activities 3,426,796 714,097 (201,863)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 23,584 457,700 7,250
Purchase of property, plant
and equipment (1,206,936) (3,023,732) (1,123,324)
Acquisition of business, net of
$294,576 cash acquired - (2,710,734) -
Proceeds from sale of subsidiary - - 1,516,390
Increase in deferred compensation
plan investments (168,606) (203,790) (44,747)
Unexpended industrial revenue
bond proceeds 1,115,854 (1,115,854) -
Net cash provided by (used in)
investing activities (236,104) (6,596,410) 355,569
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 28,305,000 26,860,000 14,695,000
Reduction of short-term borrowings (29,855,000) (26,280,000) (14,325,000)
Proceeds from long-term debt - 5,500,000 -
Payments of long-term debt (774,316) (300,635) (798,655)
Bond issuance costs - (138,654) -
Purchase of treasury stock (994,243) (381,967) (351,063)
Proceeds from exercise of stock options 71,750 500,784 549,800
Tax benefit from stock options
exercised - 145,288 -
Net cash provided by (used in)
financing activities (3,246,809) 5,904,816 (229,918)
Increase (decrease) in cash and
cash equivalents (56,117) 22,503 (76,212)
CASH AND CASH EQUIVALENTS
Beginning of year 111,620 89,117 165,329
End of year $ 55,503 $ 111,620 $ 89,117
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest, net of capitalized
interest in 1998 $ 506,416 $ 198,435 $ 151,783
Income taxes (net of refunds) 1,509,034 1,839,254 (29,184)
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of United
Structures, Inc.:
Liabilities assumed - 4,108,000 -
Unpaid cash portion of
purchase price - 125,000 -
Issuance of common stock 2,250,000
Building capitalized under capital
lease and related capital
lease obligation - - 979,000
The accompanying notes are a part of the consolidated financial statements.
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Miller Building Systems, Inc. ("Miller") is the parent of Miller Building
Systems of Indiana, Inc., Miller Building Systems of Pennsylvania, Inc.,
Miller Building Systems of Kansas, Inc., United Structures, Inc., and
Miller Construction Services, Inc. All operations of Miller are
conducted through its five wholly owned subsidiaries which design,
manufacture, market and service factory-built buildings. Miller has
three product lines, Structures, Telecom and Construction Services. The
factory-built buildings produced by Structures are modular and mobile
buildings, which are generally movable and relocatable, and designed to
meet the specialized needs of a wide variety of users. Structures'
products are sold to independent customers who, in turn, sell or lease
to the end users. The Structures division has manufacturing facilities
in Elkhart, Indiana; Leola, Pennsylvania; Sioux Falls, South Dakota and
Bennington, Vermont. The Telecom division manufactures specialized
buildings, which utilize modular construction techniques and pre-cast
concrete technology, and are designed principally for customers in the
telecommunications industry. Telecom's products are sold directly to the
end user. Telecom has manufacturing facilities in Elkhart, Indiana;
Burlington, Kansas; Leola, Pennsylvania and Binghamton, New York.
Miller's Structures and Telecom products are sold throughout the United
States. Miller Construction Services, Inc. provides complete turnkey
services from site preparation through setting and installation.
The following is a summary of the significant accounting policies used
in the preparation of the accompanying consolidated financial statements.
Fiscal Year - Miller's fiscal year is a 52 or 53 week period ending on
the Saturday closest to June 30. Fiscal year 1999 included 53 weeks
whereas fiscal years 1998 and 1997 each consisted of 52 weeks.
Principles of Consolidation - The consolidated financial statements
include the accounts of Miller Building Systems, Inc. and its wholly
owned subsidiaries.
Business Segments - Miller has adopted Statement of Financial Accounting
Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise
and Related Information", which revises reporting and disclosure
requirements for operating segments. Miller has one reportable segment,
designing, manufacturing, marketing and servicing factory-built
buildings, which includes three product lines: Structures, Telecom and
Construction Services. Net sales by product line are as follows:
Years Ended
July 3, June 27, June 28,
1999 1998 1997
Structures $29,434,708 $31,826,019 $32,144,884
Telecom 33,807,292 21,086,105 13,406,757
Construction Services 2,395,040 1,787,536 735,129
$65,637,040 $54,699,660 $46,286,770
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
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued.
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition and Concentration of Credit Risk - Miller recognizes
revenues from the sales of its products upon the completion of
manufacturing and the transfer of title. One customer individually
accounted for 13% of net sales in fiscal 1999, two customers, including
the one above, each accounted for 13% of net sales in fiscal 1998 and a
third customer accounted for 15% of net sales in fiscal 1997. At July
3, 1999, 24% of receivables is concentrated with Miller's largest
customer and at June 27, 1998, 20% of receivables was concentrated with
Miller's largest customer.
Cash and Cash Equivalents - Miller considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
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 July 3, 1999 and June 27, 1998, capitalized
software costs, included with machinery and equipment, (and the related
accumulated amortization) aggregated $345,921 ($204,319), and $265,587
($148,766), respectively. Interest is capitalized in connection with the
construction of major facilities. The capitalized interest is recorded
as part of the asset to which it relates and is amortized over the
asset's estimated useful life. Capitalized interest costs were $63,933
during the year ended June 27, 1998. No interest was capitalized in
fiscal years 1999 and 1997.
Excess Acquisition Costs over Fair Value of Acquired Net Assets - Excess
acquisition costs over fair value of acquired net assets (goodwill) are
amortized using the straight-line method over periods ranging from 20 to
30 years. The carrying value of goodwill is reviewed, as circumstances
warrant, by Miller based on the expected future undiscounted operating
cash flows of the related business unit. Miller believes no material
impairment of goodwill exists at July 3, 1999.
Bond Issuance Costs - Bond issuance costs aggregating $230,389, which
related to issuance of the industrial revenue bonds, are being amortized
using the straight-line method over the terms of the bonds.
Income Taxes - Deferred income taxes are determined using the liability
method.
Earnings Per Share - Basic earnings per share is computed by dividing net
income by the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per share is computed
by dividing net income by the weighted average number of shares of common
stock outstanding plus the effect of potential dilutive common shares
outstanding during the reporting period. Shares used in the computation
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Concluded.
of basic and diluted earnings per share ("EPS") are as follows:
1999 1998 1997
Weighted average number of common
shares (used for basic EPS) 3,535,435 3,268,344 3,157,706
Effect of dilutive securities:
Stock options 74,647 138,022 158,426
Contingently issuable
shares (see Note I) - 68,340 -
Shares used for diluted EPS 3,610,082 3,474,706 3,316,132
Fair Value of Financial Instruments - The carrying amounts of cash and
cash equivalents, receivables, short-term borrowings and accounts payable
approximated their fair value as of July 3, 1999 and June 27, 1998
because of the relatively short maturities of these instruments. The
carrying amount of long-term debt, including current maturities,
approximated fair value as of July 3, 1999 and June 27, 1998 based upon
terms and conditions currently available to Miller in comparison to the
terms and conditions of the outstanding long-term debt. Miller has
investments in life insurance contracts to fund obligations under
deferred compensation agreements (see Note D). At July 3, 1999 and June
27, 1998, the carrying amount of these policies, which equaled their fair
value, was $417,143 and $248,537 respectively.
Reclassification - Miller's obligations under deferred compensation
agreements were previously netted against the related investments used
to fund these obligations (see Note D). The consolidated balance sheet
at June 27, 1998 and the consolidated statements of cash flows for the
years ended June 27, 1998 and June 28, 1997 have been restated to present
the investment in life insurance contracts, the obligation under deferred
compensation agreements and the related cash flows.
Note B: INVENTORIES.
Inventories consist of the following:
July 3, June 27,
1999 1998
Raw materials $4,369,472 $4,604,615
Work in process 885,957 1,215,552
Finished goods 246,623 320,480
Total $5,502,052 $6,140,647
Note C: DEBT.
Short-Term Borrowings
Miller maintains an unsecured revolving line of credit with a bank. The
loan agreement makes available up to $7 million through November 30,
1999. As of July 3, 1999 and June 27, 1998, outstanding borrowings under
the loan agreement aggregated $2,000,000 and $3,550,000, respectively.
Interest is payable monthly at prime or a margin over the London
Interbank Offering Rate ("LIBOR"), depending on the pricing option
selected by Miller. At July 3, 1999 and June 27, 1998, the weighted
Note C: Debt, Continued.
average interest rate on outstanding borrowings was 8.00% and 7.47%,
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: July 3, June 27,
1999 1998
Bank term note, payable in monthly installments
of $50,000 including interest at a variable
rate, as determined by prime or a margin over
LIBOR (6.89% at July 3, 1999), final maturity
in June 2003, unsecured $2,059,784 $2,500,000
Industrial revenue bond, variable rate (3.65%
at July 3, 1999), principal payable in annual
installments of $200,000 through June 2004
and $300,000 thereafter until final maturity
in June 2010 2,800,000 3,000,000
Industrial revenue bond, variable rate
(3.65% at July 3, 1999), principal
payable in annual installments of
$115,000 with an installment of $120,000
at final maturity in November 2007 1,040,000 1,155,000
Capitalized lease, interest imputed at
5.63%, payable monthly through
December 2006 183,189 202,289
Total 6,082,973 6,857,289
Less, Current maturities 806,119 762,900
Long-term debt $5,276,854 $6,094,389
In connection with the industrial revenue bond obligations, Miller
obtained, as a credit enhancement for the bondholders, irrevocable letters
of credit in favor of the bond trustees. Miller, at its discretion, can
convert the industrial revenue bonds from a variable rate, as determined
by the current market rate for this type of debt instrument, 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 redemption is at a premium determined by the number of
years from conversion to original maturity.
On August 12, 1996, Miller entered into a ten-year lease agreement with
the Board of County Commissioners of Coffey County, Kansas ("Coffey
County") to lease a 155,000 square foot manufacturing facility (the
"Kansas 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 is reduced if
certain full-time employee levels are attained during the term of the
lease. In connection with the lease agreement, Miller also entered into
an agreement with the then current tenant of the property, whereby Miller
paid the tenant $750,000 to obtain the property. Miller accounted for
Note C: Debt, Concluded.
this lease transaction as a capital lease whereby Miller recorded the
leased property under the capital lease and the related obligation on its
balance sheet. At July 3, 1999 and June 27, 1998, the cost of the
capitalized lease property was $979,000 and the accumulated amortization
was $77,707 in 1999 and $46,230 in 1998.
At July 3, 1999, the future minimum lease payments under the capitalized
lease obligation are as follows:
Fiscal Years Capitalized
Ending Lease
2000 $ 30,000
2001 30,000
2002 30,000
2003 30,000
2004 30,000
Thereafter 75,000
225,000
Less: Amount representing interest 41,811
$183,189
In August 1999, in connection with Miller's sale of certain assets of its
Kansas facility and the assignment of the lease agreement for the Kansas
facility to the buyer (see Note J), Miller and Coffey County entered into
two new lease agreements for the Kansas facility. The first lease
agreement, which has a five-year term, provides for the same monthly rent
payments and contains five renewal options for additional five-year terms
at the same monthly rent. The second lease agreement, which also has a
five-year term and provides for the same amount of monthly rent payments,
includes a new purchase option (balloon payment) of $175,000 which is
reduced up to a maximum of $35,000 per year based upon the attainment of
certain annual full-time employee levels. The second lease agreement,
which includes the purchase option, is subject to the approval of the
Board of Directors of Coffey County. Upon approval of the second lease
agreement, the first lease agreement will terminate. At July 3, 1999, the
obligation under the capital lease and the related leased asset have not
been adjusted for the effect of the new leases and the effect will be
recognized in the gain on the sale of the Kansas facility.
At July 3, 1999, the annual maturities of long-term debt, excluding
payments under the capitalized lease, for each of the next five fiscal
years are as follows: 2000 - $785,917; 2001 - $819,887; 2002 - $856,309;
2003 - $857,671 and 2004 - $315,000.
Note D: EMPLOYEE BENEFIT PLANS.
401(k)Savings 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
Note D: EMPLOYEE BENEFIT PLANS, Concluded.
discretionary matching contributions before the end of the Plan's calendar
year-end. During the years ended July 3, 1999, June 27, 1998 and June 28,
1997, Miller expensed $72,560, $64,408 and $70,796, respectively, under
this Plan.
Non-Qualified Deferred Compensation Plan
In September 1996, Miller established a non-qualified deferred
compensation plan for the benefit of certain of its officers and salaried
employees. Miller's obligation under the deferred compensation plan is
equal to compensation amounts deferred by employees, employer
contributions and investment earnings on such amounts. Miller has
established a trust, which is the property of Miller, to fund the
obligations under the deferred compensation contracts. The trust has
invested the employee deferred amounts and Miller's employer contributions
in life insurance contracts. Miller's investment in such insurance
contracts is valued using the cash surrender value method and the value
of these insurance contracts approximates Miller's obligations under the
deferred compensation contracts. Deferred compensation expense aggregated
$20,119, $25,557 and $3,229 for fiscal years 1999, 1998 and 1997,
respectively.
Note E: STOCK COMPENSATION PLANS.
Stock Option Plans
On November 5, 1997, Miller's stockholders approved the Miller Building
Systems, Inc. 1997 Stock Option Plan under which 500,000 shares of common
stock were reserved for future grant. The 1997 Plan expires February 20,
2007. On June 30, 1994, the Board of Directors adopted the Miller
Building Systems, Inc. 1994 Stock Option 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 under which 250,000
shares of common stock were reserved for future grant. The 1991 Plan
expires August 26, 2001.
Miller's stock option plans 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 stock option plans 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.
The following table summarizes stock option activity:
Number Weighted Average
of Shares Exercise Price
Outstanding at June 30, 1996 483,000 $3.87
Granted 58,000 6.29
Exercised (162,200) 3.39
Outstanding at June 28, 1997 378,800 4.45
Granted 291,500 9.95
Canceled (15,200) 5.00
Exercised (125,100) 4.00
Note E: STOCK COMPENSATION PLANS, Continued.
Outstanding at June 27, 1998 530,000 7.56
Granted 69,500 7.50
Canceled (71,000) 9.77
Exercised (16,500) 4.35
Outstanding at July 3, 1999 512,000 7.35
Exercisable at July 3, 1999 316,700 6.59
Options outstanding at July 3, 1999 are exercisable at prices ranging from
$2.50 to $11.25 per share and have a weighted average remaining
contractual life of 6.20 years. The following table summarizes
information about stock options outstanding at July 3, 1999.
Outstanding Exercisable
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise July 3, Contractual Exercise July 3, Exercise
Price 1999 Life Price 1999 Price
$2.50 - $4.00 121,000 4.92 $3.42 113,800 $3.43
4.01 - 5.50 5,000 3.27 5.38 2,000 5.38
5.51 - 7.00 98,000 3.99 6.24 56,800 6.25
7.01 - 8.50 95,000 5.92 7.70 26,100 7.45
8.51 - 10.00 68,000 8.33 9.18 68,000 9.18
10.01 - 11.25 125,000 8.32 10.85 50,000 10.25
512,000 316,700
At June 27, 1998 and June 28, 1997, there were exercisable options to
purchase 150,100 and 180,600 shares at weighted average exercise prices
of $4.85 and $4.00 per share, respectively. The weighted average grant
date fair value of options granted during the years ended July 3, 1999,
June 27, 1998 and June 28, 1997 were $3.46, $3.53 and $2.89, respectively.
As of July 3, 1999, 227,200 shares were reserved for the granting of
future stock options, compared with 225,700 shares at June 27, 1998. Had
Miller adopted the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," Miller's net income and earnings per share would have been:
July 3, June 27, June 28,
1999 1998 1997
Pro forma net income $2,307,878 $1,881,853 $1,458,654
Pro forma diluted earnings
per share .66 .56 .44
The pro forma amounts shown above and the weighted-average grant-date fair
value of options granted are estimated using the Black-Scholes option-
pricing model with the following assumptions:
Risk free interest rate 4.68% 5.64% 6.30%
Expected life 4.0 years 3.4 years 3.3 years
Expected volatility 53% 50% 50%
Note E: STOCK COMPENSATION PLANS, Concluded.
Stock Purchase Plan
Miller has an employee stock purchase plan under which a total of 500,000
shares of Miller'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 Miller an
employee may acquire under the plan. At July 3, 1999, Miller has not
implemented the employee stock purchase plan.
Note F: INCOME TAXES
The provision for income taxes is summarized as follows:
Years Ended
July 3, June 27, June 28,
1999 1998 1997
Federal:
Current $1,335,000 $ 833,000 $ 934,000
Deferred tax (credit) 5,000 239,000 (71,000)
1,340,000 1,072,000 863,000
State:
Current 293,000 179,000 164,000
Deferred tax (credit) 1,000 55,000 (21,000)
294,000 234,000 143,000
Total $1,634,000 $1,306,000 $1,006,000
The provision 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 taxes as follows:
Years Ended
July 3, June 27, June 28,
1999 1998 1997
Computed federal income
tax $1,422,000 $1,172,000 $ 877,000
Increase (decrease)
resulting from:
State income taxes, net
of federal income tax
benefit 194,000 154,000 94,000
Other, net 18,000 (20,000) 35,000
Total $1,634,000 $1,306,000 $1,006,000
Deferred income taxes reflect the estimated future net tax effects of
temporary differences between the carrying amounts of assets and liabili-
ties for financial reporting purposes and the amounts used for income tax
purposes. The components of the net deferred tax asset and liability at
July 3, 1999 and June 27, 1998 are as follows:
Note F: INCOME TAXES, Concluded.
July 3, June 27,
1999 1998
Current deferred tax asset (liability):
Receivables $ (22,000) $ (20,000)
Inventories 106,000 110,000
Accrued warranty 52,000 42,000
Other accrued liabilities 82,000 98,000
Total $ 218,000 $ 230,000
Long-term deferred tax asset (liability):
Receivables $(112,000) $(168,000)
Property, plant and equipment (129,000) (150,000)
Goodwill (75,000) (14,000)
Other 6,000 16,000
Total $(310,000) $(316,000)
Note G: NONRECURRING ITEM.
During the fiscal year ended July 3, 1999, Miller recognized nonrecurring
expenses of $107,366 which related to costs associated with the terminated
efforts to explore possible merger and acquisition opportunities.
Note H: COMMITMENTS AND CONTINGENCIES.
Share Repurchase Program
On June 8, 1999, the Board of Directors authorized the repurchase of up to
$2 million of Miller's outstanding common stock. Shares may be purchased
from time to time, depending on market conditions and other factors, on
the open market or through privately negotiated transactions. As of July
3, 1999, Miller has acquired 177,000 shares under the share repurchase
program.
Lease Commitments
Miller leases two of its manufacturing facilities under noncancellable
operating leases expiring through December 2002. The lease for the Sioux
Falls, South Dakota facility may be extended at Miller's option. The
lease for the Kirkwood, New York facility has an option to renew for an
additional five-year term and contains an option to purchase the facility
after February 28, 2000. Miller generally is responsible for utilities,
taxes and insurance on the leased facilities. Future minimum lease
payments under these noncancellable leases aggregate $816,055 and are
payable as follows: 2000 - $264,042; 2001 - $220,805; 2002 - $220,805 and
2003 - $110,403.
Rental expense under all operating leases aggregated $338,951, $196,277
and $97,654 for the years ended July 3, 1999, June 27, 1998 and June 28,
1997, respectively.
Note H: COMMITMENTS AND CONTINGENCIES, Concluded.
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 $1,169,000. 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 an analysis of historical claims data.
Note I: ACQUISITION AND DISPOSITION OF BUSINESSES.
Acquisition of New York Operation
Effective January 1, 1998, Miller acquired all of the issued and
outstanding shares of common stock of United Structures, Inc. ("United"),
a New York corporation. United is engaged in the business of designing,
manufacturing and marketing factory-built structures primarily for the
telecommunications industry. The purchase price (the "minimum purchase
price"), including direct acquisition costs, consisted of cash of $3.1
million and assumed liabilities of $4.1 million. The excess of the
minimum purchase price over the fair value of acquired tangible assets
aggregated $2.1 million and was allocated to goodwill and is being
amortized on a straight-line basis over 30 years. In addition to the
minimum purchase price, Miller agreed to pay the seller a contingent
purchase price ("contingent purchase price"), which was payable in shares
of Miller's common stock, based on United's earnings exceeding a targeted
amount for the six-month period ended June 27, 1998. United's earnings
for the six-month period ended June 27, 1998 exceeded the targeted amount
and, accordingly, on September 4, 1998, Miller paid the maximum
additional contingent purchase price of $2,250,000 (227,082 shares of
Miller's common stock). The contingent purchase price was recorded as
goodwill. The acquisition of United was accounted for using the purchase
method and United's operating results have been included in Miller's
consolidated financial statements since the acquisition date of January
1, 1998. The following unaudited pro forma financial information for the
years ended June 27, 1998 and June 28, 1997 were developed assuming
United had been acquired at the beginning of each of the respective
fiscal years. The unaudited pro forma earnings per share (basic and
diluted) reflect the issuance of 227,082 additional shares issued as
contingent purchase price, as though these shares were issued and
outstanding during each of the periods presented.
Years Ended
June 27, 1998 June 28, 1997
Net sales $61,547,000 $52,882,000
Net income 2,493,000 1,733,000
Earnings per share:
Basic .71 .51
Diluted .69 .49
Note I: ACQUISITION AND DISPOSITION OF BUSINESSES, Concluded.
The unaudited pro forma financial information is not necessarily
indicative of what actually would have occurred if the acquisition had
been completed as of the beginning of each of the respective fiscal
periods presented, nor is it indicative of future operating results.
Disposition of California Operation
On October 21, 1996, Miller sold all of the issued and outstanding stock
of its wholly owned California subsidiary, to MODTECH, Inc. ("Buyer").
The California subsidiary manufactured modular and mobile buildings in
Patterson, California. The consideration paid by the Buyer to Miller
consisted of a cash purchase price of $1,516,390, which approximated the
carrying value of the underlying net assets and, accordingly, there was
no gain or loss on the sale. Miller and the Buyer also entered into a
three-year lease obligation for certain real property (the "Patterson
Property") which lease agreement required the Buyer, as lessee, to pay
Miller rental payments of $4,500 per month. On January 16, 1998, with
the issuance of an acceptable expanded environmental report on the
Patterson Property, Miller and Buyer mutually agreed to cancel the lease
agreement, and the Buyer acquired the Patterson Property from Miller for
a cash purchase price of $450,000, which resulted in a $37,894 gain on
sale of property held for sale.
In connection with this sale transaction, Miller entered into a non-
competition agreement with the Buyer which provides that Miller will
not, at any time within a five-year period following closing, engage in
any business that manufactures and markets the products which were
previously manufactured by Miller's former California subsidiary in the
states of California, Nevada and Arizona.
Note J: SUBSEQUENT EVENTS.
On August 20, 1999, Miller entered an Asset Purchase Agreement with
Andrew Corporation (the "Buyer") to sell certain assets used in the
business operations of its Kansas facility. The Asset Purchase
Agreement also provides for the assignment of Miller's lease of its
Kansas facility (see Note C). The purchase price consisted of $3.5
million from the Buyer plus the Buyer's assumption of certain
liabilities of the Kansas operation. The $3.5 million consisted of a
$1.0 million base purchase price, which was paid at closing on August
20, 1999, and a contingent purchase price of $2.5 million to be paid by
the Buyer to Miller upon the assignment and transfer of a lease
agreement for the Kansas facility. The assignment and transfer of the
lease agreement for the Kansas facility by Miller to the Buyer is
subject to approval by the lessor, Coffey County. The assignment and
transfer must occur no later than May 31, 2000. Miller expects to
report a pre-tax gain on the sale of the Kansas business operations and
assets of approximately $1.8 million in fiscal 2000.
Note K: UNAUDITED INTERIM FINANCIAL INFORMATION.
Presented below is certain selected unaudited quarterly financial
information for the years ended July 3, 1999 and June 27, 1998:
Net Gross Net Earnings Per Share
Sales Profit Income Basic Diluted
1999:
Fourth $17,694,243 $3,613,760 $834,796 $.24 $.23
Third 14,325,764 2,489,854 490,507 .14 .14
Second 16,400,935 2,806,420 545,163 .15 .15
First 17,216,098 3,071,650 677,564 .19 .19
1998:
Fourth $16,528,679 $3,312,056 $919,497 $.28 $.25
Third 14,449,832 2,368,307 278,980 .08 .08
Second 10,405,750 1,956,890 315,351 .10 .09
First 13,315,399 2,627,870 626,224 .19 .18
The sum of quarterly diluted earnings per share for the four quarters of
fiscal 1998 may not equal annual diluted earnings per share due to the
effect of dilutive securities.
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 July 3, 1999:
Allowance for
doubtful receivables $ 50,394 $ 7,656 $ - $ 10,048(A) $ 48,002
Year ended June 27, 1998:
Allowance for
doubtful receivables $ 48,239 $ 54,881 $ - $ 52,726(A) $ 50,394
Year ended June 28, 1997:
Allowance for
doubtful receivables $ 53,605 $ 51,293 $ - $ 56,659(A) $ 48,239
(A) Uncollectible accounts written off.
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) The following consolidated financial statements and financial statement
schedule are included in Item 8 herein.
(1) Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheets at July 3, 1999 and June 27, 1998
Consolidated Statements of Income for the years ended July 3, 1999,
June 27, 1998 and June 28, 1997
Consolidated Statements of Stockholders' Equity for the years
ended July 3, 1999, June 27, 1998 and June 28, 1997
Consolidated Statements of Cash Flows for the years ended
July 3, 1999, June 27, 1998 and June 28, 1997
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule:
II - Valuation and Qualifying Accounts
(3) Exhibits - 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 1999 fiscal year.
MILLER BUILDING SYSTEMS, INC., AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
10.70 Second Amendment to Employment Agreement between Registrant and Edward
C. Craig, dated September 22, 1998.
10.71 Asset Purchase Agreement between Registrant and Andrew Corporation,
dated August 20, 1999.
10.72 Trust Agreement for the Executive Deferred Compensation Plan, dated
September 12, 1996.
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedule
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) (b) (d) (f) (h) (I) (k)
4.1 Specimen Common Stock Certificate
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 (f)
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 (h)
10.48 1991 Stock Option Plan adopted by the Registrant's stockholders on
October 30, 1991 and Form of Option Agreement (k)
10.49 Miller Building Systems, Inc. 401(k) Plan (m)
10.53 1994 Stock Option Plan adopted by the Registrant's stockholders on
October 25, 1994 and Form of Option Agreement (n)
10.57 Employment agreement between Registrant and Edward C. Craig, dated
February 29, 1996 (p) (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 (p)
10.59 Agreement between Registrant and American Quality Manufacturing, Inc.
dated July 25, 1996, to vacate the leased property located in
Burlington, Kansas (p)
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 (p)
10.64 Stock Purchase Agreement, dated February 27, 1998, between Registrant
and David Newman and Marc Newman to purchase all of the issued and
outstanding shares of capital stock of United Structures, Inc., a New
York Corporation (q)
10.65 1997 Stock Option Plan adopted by the Registrant's stockholders on
November 5, 1997 (r)
10.66 Registration Statement to register 227,082 shares of the Registrants
common stock owned by David and Marc Newman (s)
10.67 Third Amendment to Lease Agreement between Toboll Properties Limited
Partnership and Sioux Fall Structures, Inc. (now known as Miller
Building Systems of South Dakota, Inc.) dated August 20, 1997, with
respect to the leased property at Sioux Falls, South Dakota. (t)
10.68 First Amendment to Employment Agreement between Registrant and Edward
C. Craig, dated October 22, 1997. (t)(I)
10.69 Lease agreement between United Kirkwood, L.L.C. and United Structures,
Inc., with respect to the leased property at Kirkwood, New York. (t)
(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 10-K for year ended June 30, 1990
(g) Form 8-K, Date of Report - April 23, 1991
(h) Form 8-K, Date of Report - May 6, 1991
(i) Form 8-K, Date of Report - July 25, 1991
(j) Form 8-K, Date of Report - August 26, 1991
(k) Form S-8, Date of Report - July 31,1992
(l) Form 8-K, Date of Report - April 22, 1993
(m) Form 10-K for year ended June 30, 1993
(n) Form S-8, Date of Report - Dated December 30, 1994
(o) Form 10-K, for year ended July 1, 1995
(p) Form 10-K, for year ended June 29, 1996
(q) Form 8-K/A-1, Date of Report - February 27, 1998
(r) Form S-8, Date of Report - March 20, 1998
(s) Form S-3, Date of Report - August 5, 1998
(t) Form 10-K, for year ended June 27, 1998
(I) Indicates a management contract or compensation plan or arrangement.
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 20, 1999 \Edward C. Craig
Edward C. Craig
Chariman, 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 Chairman, President, September 13, 1999
Edward C. Craig Chief Executive Officer
and Director
(Principal Executive
Officer)
\Thomas J. Martini Secretary and September 13, 1999
Thomas J. Martini Treasurer (Principal
Financial and
Accounting Officer)
\David E. Downen Director September 13, 1999
David E. Downen
\Steven F. Graver Director September 13, 1999
Steven F. Graver
\William P. Hall Director September 13, 1999
William P. Hall
\Kenneth H. Granat Director September 13, 1999
Kenneth H. Granat
\David H. Padden Director September 13, 1999
David H. Padden
\Jeffrey C. Rubenstein Director September 13, 1999
Jeffrey C. Rubenstein
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.70
This Second Amendment to Employment Agreement (this "Second Amendment") is
made as of September 22, 1998 (the "Amendment Date"), by and between Miller
Building Systems, Inc., a Delaware corporation (the"Company") and Edward C.
Craig (the"Employee").
RECITALS
A. Pursuant to that certain Employment Agreement dated February 29, 1996 (the
"Agreement"), the Company hired the Employee to serve as it's Chief
Executive Officer and President.
B. Since the date of the execution of the Agreement, certain changes have
occurred in the market and the performance of the Company.
C. The Company, on behalf of it's shareholders, employees and the Board of
Directors, desires to recognize the Employee's excellent work, importance
to the Company and continued contribution to the Company.
D. The Company and the Employee desire to amend certain provisions of the
Agreement to account for such changes, in accordance with the terms and
provisions of this First Amendment.
CLAUSES
In consideration of the preceding, and the obligations, covenants and
duties identified below, the parties amend the Agreement as follows:
1. Delete existing Sections 1.1c, and 2.1e of The First Amendment in their
entirety, and substitute the following in their place.
1.1C For a period of three (3) years, commencing not later than July 1,
2001, and continuing through June 30, 2004, the Employee shall be available
to serve as an independent consultant to the Company. As such, Employee
shall be available to perform such duties as may be requested by the Board
of Directors, provided that such duties are consistent with Employee's
other commitments, responsibilities, and plans. During such period
Employee will also be entitled to participate in all Company health
benefits on terms that are substantially the same as are then in effect for
full time executive employees of the Company.
2.1E During each of the following (1) the period commencing on July 1,
2001, and continuing through June 30, 2002, and (ii) the period commencing
July 1, 2002, and continuing through June 30, 2003, Employee shall be paid
an amount equal to one hundred fifteen thousand dollars ($115,000.00) per
period. For the period commencing July 1, 2003, and continuing through
June 30, 2004, Employee shall be paid an amount equal to fifty thousand
dollars ($50,000.00). Said sums are to be payable in equal consecutive
monthly (weekly) installments as salary in exchange for Employee's
agreement in Section 1.1C (as amended hereinabove) to be available for c
consulting duties. However, said sums are guaranteed by the Company, and
will be payable to Employee (or his estate) even if Employee is not able to
perform consulting duties for any reason (including due to death or
incapacity).
2. The terms and provisions of this Second Amendment shall prevail if there is
any conflict between the terms of the First or Second Amendments and the terms
of the Agreement. However, except as the First or Second Amendments
specifically provided, all terms of the Agreement shall remain in full force and
effect without change, modification or deletion.
3. The laws of the State of Indiana shall govern the terms and provisions of
this Second Amendment.
The parties have executed this Second Amendment as of the Amendment Date.
EMPLOYEE: THE COMPANY:
Miller Building Services, a Delaware Corporation
\Edward C. Craig By: \Steven F. Graver
Edward C. Craig, Individually
Its: \Chairman of the Board
\Thomas J. Martini
Secretary/Treasurer
ASSET PURCHASE AGREEMENT EXHIBIT 10.71
ASSET PURCHASE AGREEMENT, dated as of August 20, 1999 (the "Agreement"), by
and among ANDREW CORPORATION, a Delaware corporation ("Andrew"), MILLER
BUILDING SYSTEMS, INC., a Delaware corporation ("Miller"), and MILLER BUILDING
SYSTEMS OF KANSAS, INC., a Kansas corporation and a wholly owned subsidiary of
Miller ("MBSK").
MBSK is a wholly-owned subsidiary of Miller and is engaged in the engineering,
design, manufacturing and sale of concrete shelters (the "Business"). Andrew,
MBSK and Miller have determined that it is in their respective best interests to
consummate the purchase and sale provided for in this Agreement, in which Andrew
shall purchase from MBSK, and MBSK shall sell to Andrew, certain assets used in
the Business, on the terms and subject to the conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1. Purchase and Sale of Assets; Excluded Assets.
(a) On the terms and subject to the conditions of this Agreement, at the
Closing (as hereinafter defined), MBSK shall sell, convey, transfer, assign and
deliver to Andrew, and Andrew shall acquire from MBSK, all of the right, title
and interest in and to the assets listed below free and clear of all Liens (as
hereinafter defined), other than Permitted Liens (as hereinafter defined)
(collectively, the "Acquired Assets"): (i) all of the machinery, equipment,
furniture, tangible personal property and other fixed assets owned by MBSK and
located at the Burlington Facility (as defined in Section 2.18), substantially
all of which are listed on Schedule 2.14 (the "Fixed Assets"), except the two
forklifts located at the Burlington Facility; (ii) all raw materials of MBSK
located at the Burlington Facility (the "Raw Materials"); (iii) all books and
records of MBSK relating solely to the Fixed Assets, Raw Materials or
Burlington Facility; (iv) all permits and licenses of MBSK, if any, related to
the Burlington Facility, to the extent assignable to Andrew; (v) all of MBSK's
rights to the Revised Burlington Lease (as defined in Section 2.18) and, subject
to Section 4.6, the Burlington Purchase Option Lease (as defined in Section
2.18); (vi) any office supplies, inventory (other than work-in-process or
finished goods inventory), wrapping, packaging or other similar items located at
the Burlington Facility; (vii) all of MBSK's rights under the Assumed Contracts
(as defined in Section 1.3).
(b) Notwithstanding any other provision of this Agreement, MBSK's rights
in and to the following assets (collectively, the "Excluded Assets"), although
they may relate to the Business, are to be retained by MBSK and are not to be
sold, conveyed, assigned or transferred to Andrew: (i) this Agreement and all
rights of MBSK hereunder; (ii) the capital stock of MBSK; (iii) all assets of
Employee Benefit Plans; (iv) the corporate charter of MBSK and all
qualifications to conduct business as a foreign corporation, taxpayer
identification numbers, seals, and original minute books, stock record and
transfer books, and other documents relating to the organization, maintenance,
and existence of MBSK as acorporation; (v) all work-in-process and finished
goods inventory of MBSK as of the Closing Date; (vi) all cash, cash equivalents
and accounts receivable of MBSK; (vii) the "Miller Building Systems" name;
(viii) all other assets of MBSK that are not Acquired Assets hereunder; and
(ix) all designs, patents, trademarks, service marks, copyrights, software
and systems and all other intellectual property or proprietary rights of MBSK
or Miller; provided, however, that to the extent that any software or source
code owned by MBSK or Miller is required to operate any of the Fixed Assets,
Miller agrees to grant to Andrew, without payment of additional consideration
or royalty, a perpetual license, in a form mutually acceptable to the parties,
to use such software or source code to operate the Fixed Asset. MBSK agrees,
at its expense, to promptly, but in any event by not later than 30 days
following the Closing Date, remove from the Burlington Facility all tangible
assets and properties of MBSK constituting Excluded Assets. In effecting such
removal, MBSK agrees not to unreasonably interfere with the operations of
Andrew and agrees to repair any damage caused by such removal.
1.2. Purchase Price; Allocation.
(a) The aggregate purchase price (the "Purchase Price") for the Acquired Assets
and the other obligations of MBSK and Miller hereunder shall be $3,500,000.00,
which Purchase Price consists of the Base Purchase Price (as defined below) and
Contingent Purchase Price (as defined below). At the Closing, upon the terms
and subject to the conditions set forth herein, Andrew shall pay and deliver to
MBSK $1,000,000 (the "Base Purchase Price"), by wire transfer of immediately
available funds to an account designated in writing by Miller. Upon the terms
and subject to the conditions set forth in Section 5.4, Andrew shall pay and
deliver to MBSK, $2,500,000 (the "Contingent Purchase Price"), by wire transfer
of immediately available funds to an account designated in writing by Miller.
(b) The parties agree (i) to determine prior to Closing an allocation of
the Purchase Price among the Acquired Assets to be used by the parties for all
purposes (including financial accounting and tax purposes) consistent with the
requirements of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and attach such allocation to this Agreement as the "Allocation
Schedule", and (ii) to jointly complete and separately file in a timely
manner Internal Revenue Service Form 8594 with their respective federal income
tax returns for the tax year in which the Closing Date occurs.
1.3. Assumption of Liabilities. Upon the terms and subject to the conditions
contained herein, at the Closing or the Effective Time (as defined below), as
the case may be, Andrew shall assume (the "Assumed Liabilities"): (a) the
payment and performance obligations arising from and after the Closing Date
under the contracts listed on Schedule 1.3 (the "Assumed Contracts"); (b) the
payment and performance obligations arising from and after the Closing Date
under the Revised Burlington Lease; (c) the payment and performance obligations
under the Burlington Purchase Option Lease arising from and after the effective
time (the "Effective Time") of the assignment of the Burlington Purchase Option
Lease to Andrew; (d) as set forth in Section 4.5; (e) as provided in Section 4.8
(d). Andrew agrees to pay, discharge and perform all such Assumed Liabilities
promptly as and when due.
1.4. Excluded Liabilities. Subject to the indemnification provisions of
Section 6.2, other than the Assumed Liabilities, Andrew shall not retain or
assume or be obligated to pay, perform, discharge, or otherwise be responsible
for, any liabilities or obligations of MBSK or Miller with respect to MBSK,
whether actual or contingent, direct or indirect, matured or unmatured,
liquidated or unliquidated, or known or unknown, whether arising out of
occurrences prior to, at or after the date hereof (collectively, the "Excluded
Liabilities"). Miller acknowledges and agrees that it is retaining the Excluded
Liabilities, and Miller agrees to pay, discharge and perform all such
liabilities and obligations promptly as and when due. Without limiting the
generality of the foregoing, Andrew shall not assume or be obligated to pay,
perform or discharge any liabilities, obligations or commitments of MBSK or
Miller with respect to MBSK relating to or arising out of any of the following:
(a) accounts or notes payable or purchase orders; (b) any liability or
obligation of MBSK for fees, costs and expenses of attorneys; (c) all
liabilities or obligations of MBSK for any Taxes, workers' compensation
liabilities, payroll, consulting fees or for fees or other expenses of MBSK;
(d) any claims by any present or former MBSK employee to any Employee Benefit
Plan or other employee benefits of MBSK or Miller; and (e) all liabilities and
obligations, if any, under the Original Burlington Lease (as defined in
Section 2.18) or under the Revised Burlington Lease relating to the period
ending on or before the Closing Date or under the Burlington Purchase Option
Lease relating to the period ending on or before the Effective Time.
1.5. Closing Costs; Transfer Taxes and Fees. Notwithstanding any other
provision herein, any documentary and transfer Taxes and any sales, use or other
Taxes imposed on the seller by reason of the sale, assignment and/or transfer of
Acquired Assets or the Assumed Liabilities provided hereunder and any
deficiency, interest or penalty asserted with respect thereto shall be borne
by MBSK, and any documentary and transfer Taxes and any sales, use or other
Taxes imposed on the buyer by reason of the sale, assignment and/or transfer of
Acquired Assets or the Assumed Liabilities provided hereunder and any
deficiency, interest or penalty asserted with respect thereto shall be borne
by Andrew.
1.6. Closing. (a) The closing of the transactions contemplated herein,
except the assignment and transfer of the Burlington Purchase Option Lease
which will occur subsequent to the closing (the "Closing"), will take place
on Friday, August 20, 1999, at 10:00 a.m., local time, at the offices of
Gardner, Carton & Douglas, 321 North Clark Street, Chicago, Illinois or at such
other time and place as the parties may mutually determine. The parties will
execute and deliver this Agreement at the Closing. The actual date on which
the Closing occurs is referred to herein as the "Closing Date," and the
Closing shall be deemed effective as of 12:01 a.m. on the Closing Date. The
assignment and transfer of the Burlington Purchase Option Lease will occur
subsequent to the Closing at the offices of Gardner, Carton & Douglas within
5 days after the satisfaction (or waiver) of the conditions set forth in
Sections 5.4 and 5.5 or at such other time and place as the parties may
mutually determine.
(b) At the Closing, MBSK shall deliver to Andrew good and sufficient bills
of sale, assignments, release of liens and other instruments to convey to Andrew
good and valid title to the Acquired Assets, free and clear of all Liens, except
the Permitted Liens, together with the other documents, agreements, opinions,
instruments and certificates contemplated by this Agreement.
(c) At the Closing, Andrew shall pay the Base Purchase Price to MBSK by
wire transfer of immediately available funds to an account designated by Miller
in writing to Andrew.
(d) Upon the satisfaction (or waiver) of the conditions set forth in
Sections 5.4 and 5.5, MBSK shall deliver to Andrew such documents, assignments,
agreements, opinions, instruments and certificates as may be reasonably
necessary or advisable in order to consummate the transactions contemplated in
respect to the Burlington Purchase Option Lease, and Andrew shall pay the
Contingent Purchase Price to MBSK by wire transfer of immediately available
funds to an account designated by Miller in writing to Andrew.
1.7. Fixed Assets. On Thursday, August 19, 1999, the parties shall
conduct a physical walk-through of the Burlington Facility for the purpose of
confirming the existence of substantially all of the Fixed Assets.
1.8. Raw Materials. Miller agrees to deliver Raw Materials to Andrew at
the Closing with a net book value of approximately $380,000 or more. On
Thursday, August 19, 1999, the parties shall conduct a physical walk-through of
the Burlington Facility for the purpose of confirming that the Raw Materials
located at the Burlington Facility have a net book value of approximately
$380,000 or more.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF MILLER
Miller represents and warrants to Andrew as follows:
2.1. Authorization of MBSK; Approvals. The execution, delivery and
performance by each of MBSK and Miller of this Agreement and each of the other
agreements, documents and instruments (the "Ancillary Documents") to be executed
and delivered by each of MBSK and Miller in connection with the transactions
contemplated by this Agreement have been duly authorized. Each of Miller and
MBSK has all necessary corporate power and authority to consummate the
transactions contemplated by this Agreement. This Agreement constitutes, and
each of the Ancillary Documents to be executed by MBSK or Miller will
constitute, the valid and binding obligations of MBSK and Miller, as the case
may be, enforceable against MBSK and Miller, as the case may be, in accordance
with their respective terms. Each of Miller and MBSK has obtained all
consents, authorizations and approvals of, and has made all declarations and
filings with, all federal and state governmental authorities required on the
part of Miller or MBSK in connection with the consummation of the transactions
contemplated by this Agreement, except to the extent that the lack of any such
consent, authorization or approvals, individually or in the aggregate, will not
have a Material Adverse Effect (as defined in Section 2.2) on MBSK or Miller.
2.2. Organization, Standing, Qualification and Ownership of MBSK. MBSK is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Kansas and has full power and authority to own, lease and
operate its properties and assets and to conduct its business as presently
conducted. MBSK is duly qualified to do business as a foreign corporation and
in good standing in the state of Texas, and there is no other jurisdiction in
which the failure to so qualify and be in good standing could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business, results of operations, prospects, assets, properties,
liabilities or operations ("Material Adverse Effect") of MBSK. Miller owns all
of the outstanding capital stock of MBSK.
2.3. Capitalization of MBSK. The authorized capital stock of MBSK consists
of 1,000 shares of common stock, par value $0.01 per share (the "MBSK Common
Stock"), of which 1,000 shares are issued and outstanding. Miller is the record
owner and beneficial owner of all of the issued and outstanding shares of MBSK
Common Stock. MBSK has no (and has never had any) subsidiaries and does not own
any interest in or control, directly or indirectly, any other corporation,
limited liability company, trust, partnership, association or other entity.
2.4. No Conflict or Violations; Consents. The execution, delivery and
performance by each of MBSK and Miller of this Agreement and each of the
Ancillary Documents, the consummation of the transactions contemplated hereby
and the compliance by MBSK and Miller with any of the provisions hereof or
thereof, will not (a) violate any provision of the Certificate of Incorporation
(or Articles of Incorporation) or Bylaws of Miller or MBSK, (b) to Miller's
knowledge, upon obtaining the Coffey County Consents (as defined below), violate
or result in a material breach of any provision of, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
materially increase the amount payable by Miller or MBSK under, or result in the
creation of any Lien upon any of the assets or properties of Miller or MBSK
under, any of the terms, conditions or provisions of any material contract or
lease (i) to which Miller or MBSK is a party or (ii) by which Miller or MBSK is
bound, or (c) to Miller's knowledge, violate in any material respect any
statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award by which Miller or MBSK is bound. Coffey County (as
hereinafter defined) has consented to the assignment and transfer of the Revised
Burlington Lease to Andrew, as evidenced by the minutes of the meeting of Coffey
County to be provided to Andrew within ten days after the Closing Date and,
subject to Section 4.6, will have consented to the assignment and transfer of
the Burlington Purchase Option Lease to Andrew at or prior to the Effective Time
(collectively, the "Coffey County Consents").
2.5. Financial Statements. Miller has previously provided to Andrew
complete and correct copy of the unaudited interim balance sheet of MBSK as of
May 22, 1999 (the "Interim Balance Sheet"). The Interim Balance Sheet is in
accordance with the books and records of MBSK and fairly presents in all
material respects the financial position of MBSK as of the date thereof. The
Interim Balance Sheet, including any notes thereto, has been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, subject to normal year-end adjustment,
inventory verification and absence of footnote disclosure. The books and
records of MBSK have been, and are being, maintained in all material respects
in accordance with all applicable legal requirements and GAAP.
2.6. Labor Agreement and Actions. MBSK is not bound by or subject to any
contract with any labor union and, to the knowledge of Miller, no labor union
has requested or has sought to represent any of the employees of MBSK. There is
no strike or other labor dispute involving MBSK pending, or to the knowledge of
Miller threatened, and MBSK is not aware of any labor organization activity
involving its employees.
2.7. Undisclosed Liabilities. MBSK has no material liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) reflected on the
Interim Balance Sheet, or (b) incurred since the date of the Interim Balance
Sheet, in the ordinary course of business consistent with past practice, which
are of the same nature as those set forth on the Interim Balance Sheet (other
than any liabilities resulting from, arising out of, relating to, in the nature
of, or caused by any breach of contract, breach of warranty, tort, infringement
or violation of law).
2.8. Compliance With Law; Permits. To Miller's knowledge, neither MBSK nor
Miller with respect to MBSK has materially violated, and MBSK and Miller with
respect to MBSK are in material compliance with, all laws, statutes, ordinances,
regulations, rules, licenses, permits, franchises, approvals and consents and
orders of any foreign, federal, state or local governmental authority. Miller
has previously provided to Andrew a complete and correct list of all material
governmental licenses, permits, franchises, approvals and consents (the
"Permits") which are, to Miller's knowledge, required to be received or obtained
by MBSK (or by Miller with respect to MBSK) to conduct its business. The
Permits are in full force and effect as of the date hereof and, to the extent
assignable to Andrew, to Miller's knowledge, will be in full force and effect
with respect to Andrew immediately after the Closing, except to the extent that
the failure of any such Permit to be in full force and effect will not,
individually or in the aggregate, have a Material Adverse Effect on the
Business.
2.9. Taxes.
(a) MBSK (or Miller with respect to MBSK) has timely filed all Tax Returns
(as defined below) that are required by it and all such Tax Returns are correct
and complete in all material respects. To Miller's knowledge, MBSK (or Miller
with respect to MBSK) has paid or made provision for the payment of all Taxes
due from MBSK. The assessment of any additional Taxes for periods for which Tax
Returns have been filed by MBSK (or by Miller with respect to MBSK) shall not
exceed the recorded liability therefor on the Interim Balance Sheet. The Tax
Returns of MBSK (and Miller with respect to MBSK) have not been audited by any
taxing authority, and there are no waivers in effect of the applicable statute
of limitations for any period. No examination or audit of any Tax Return or
report of MBSK (or Miller with respect to MBSK) by any applicable taxing
authority is currently in progress. No deficiency assessment or proposed
adjustment of Taxes of MBSK (or Miller with respect to MBSK) is pending, and
Miller has no knowledge of any proposed liability for any Tax to be imposed on
MBSK (or Miller with respect to MBSK), except in the ordinary course of
business. To Miller's knowledge, MSBK (or Miller with respect to MBSK) has
withheld and paid all Taxes required to have been withheld in connection with
amounts paid to any employee, independent contractors, creditors, or other third
parties.
(b) MBSK (nor Miller with respect to MBSK) is not obligated to make
payments, and is not a party to an agreement that could obligate it to make any
payments, that would not be deductible under Section 280G of the Code. No claim
has ever been made in writing to Miller or MBSK by a taxing authority in a
jurisdiction where MBSK does not file Tax Returns that MBSK is or may be subject
to Taxes assessed by such jurisdiction. There are no Liens for Taxes (other
than for current Taxes not yet due and payable) upon the assets of MBSK. MBSK
has not been a member of an Affiliated Group (as defined below) other than the
one of which Miller was the common parent, or filed or been included in a
combined, consolidated or unitary income Tax Return, other than one filed by
Miller or MBSK. MBSK has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code within the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Andrew
will not be required to deduct and withhold any amount pursuant to Section
1445(a) of the Code upon the transfer of the Acquired Assets to Andrew.
(c) For purposes of this Agreement: (i) "Affiliated Group" means any
affiliated group of corporations within the meaning of Section 1504 of the Code
(and any corresponding provision of state, local or foreign income Tax law);
(ii) "Tax" or "Taxes" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; and (iii) "Tax Returns" means
returns, declarations, reports, claims for refund, information returns or other
documents (including any related or supporting schedules, statement or
information) filed or required to be filed in connection with the determination,
assessment or collection of Taxes of any party or the administration of any
laws, regulations or administrative requirements related to Taxes.
2.10. Contracts and Commitments. Except for the Assumed Contracts, the
Assumed Liabilities do not consist of any written or oral contract, agreement
or arrangement (a) involving any annual expenditure of more than $15,000 or
$15,000 in the aggregate, (b) involving a term of more than 6 months that is
not terminable by MBSK upon 30 days prior notice to the other party thereto at
any time for any reason, without payment of additional consideration, (c)
involving employment of persons as employees or consultants, (d) prohibiting or
restricting MBSK from freely engaging in any business or competing anywhere in
the world, or (e) involving indebtedness of or a guaranty by MBSK in favor of
any person or entity, except in the case of clauses (a) and (b) above in respect
to the Revised Burlington Lease and the Burlington Purchase Option Lease.
Neither MBSK nor, to Miller's knowledge, the other party to the Assumed
Liabilities is in material breach or default and no event has occurred which
with notice or lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under the Assumed
Liabilities.
2.11. Litigation. No action, suit, proceeding or governmental inquiry or
investigation ("Action') is pending or, to the knowledge of Miller, threatened
against MBSK or Miller with respect to MBSK or any of MBSK's officers, directors
or employees (in their capacity as such) before any court, arbitration board or
tribunal or administrative or other governmental agency, nor is Miller aware of
any facts or circumstances that could reasonably be expected to give rise to any
such Action.
2.12. Fees and Commissions. No person or entity will be entitled to any
brokerage commissions, finder's fees or similar compensation arising out of or
due to any act of Miller or MBSK (including their officers, directors, employees
and agents) in connection with the transactions contemplated by this Agreement.
2.13. ERISA. Except as disclosed on Schedule 2.13, neither Miller nor
MBSK maintains, sponsors, or contributes (or has during the last 5 years been
obligated to maintain, sponsor or contribute) to, or has any liability with
respect to, any program or arrangement that is an "employee pension benefit
plan", an "employee welfare benefit plan", or a "multi-employer plan", as
those terms are defined in Sections 3(1), 3(2) or 3(37) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any deferred
compensation, bonus, incentive compensation, savings, stock option or fringe
benefit plan or arrangement with respect to any employee of MBSK who will be
employed by Andrew following the Closing. The plans, programs and arrangements
referred to in the preceding sentence are collectively called "Employee
Benefit Plans". Neither Miller nor MBSK nor any person that is a member of
MBSK's controlled group of corporations or a trade or business under common
control with MBSK as defined in Section 414 of the Code has, maintains, sponsors
or contributes or has during the last 5 years been obligated to maintain,
sponsor or contribute) to any benefit plan subject to Title IV of ERISA or a
multi-employer plan. With respect to the Employee Benefit Plans, individually
and in the aggregate, to the knowledge of Miller, all such plans have been
maintained and operated in accordance with their terms and applicable laws,
including compliance with all material reporting and disclosure requirements
(except to the extent that any failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect on MBSK or Miller) and no event
has occurred, and, to the knowledge of Miller, there exists no condition or
set of circumstances in connection with which MBSK could be subject to any
material liability under ERISA, the Code (including Consolidated and Omnibus
Recovery Act ("COBRA")) or any other applicable law or to any person. With
respect to the Employee Benefit Plans, individually and in the aggregate, to
Miller's knowledge, there are no material benefit obligations for which
contributions have not been made or properly accrued in accordance with GAAP,
on the Interim Balance Sheet, and accounted for by reserves if unfunded. Each
Employee Benefit Plan that is intended to be tax qualified, other than a plan
that is a standardized prototype plan, has received an Internal Revenue Service
determination letter covering all Code requirements for which the remedial
amendment period has expired. Neither Miller nor MBSK has any liability to
provide post-retirement welfare benefits to any former or current employee of
MBSK.
2.14. Title to Properties; Encumbrances. MBSK owns no real property.
MBSK has good and valid title to all assets reflected on the Interim Balance
Sheet and to be reflected on the Closing Schedule, free and clear of all
encumbrances, liens, security interests, claims, charges or other restrictions
of any nature or kind (collectively, "Liens"), other than (collectively,
"Permitted Liens"): (a) Liens for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent; and (b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other similar person or entities. To the knowledge of Miller, no Liens
have been filed against the assets or properties of MBSK other than Liens that,
in the aggregate, do not materially affect the Acquired Assets. To the
knowledge of Miller, the assets and properties owned or used by MBSK are in
reasonably good working order and condition, ordinary wear and tear excepted.
Schedule 2.14 contains a complete and correct list of all of the Fixed Assets,
which Schedule 2.14 contains substantially the same Fixed Assets as the list
provided to Andrew on June 21, 1999 and is substantially representative of the
fixed assets located at the Burlington Facility.
2.15. Environmental Liability.
(a) To Miller's knowledge, at all times prior to the Closing, MBSK has
complied in all material respects with all Environmental Laws (as defined
below). MBSK has not received any notice, report, or information (including
information that any Action of any kind is pending or threatened) regarding
any liabilities (whether accrued, absolute, contingent, unliquidated, or
otherwise), or any corrective, investigatory, or remedial obligations,
arising under Environmental Law relating to MBSK or the occupation or use of
any of its assets or real properties currently or formerly owned or leased by
MBSK. To Miller's knowledge, MBSK holds all licenses, consents and permits
under Environmental Laws necessary for the conduct of its business as presently
being conducted, and such licenses, consents and permits are valid and in full
force and effect, except to the extent that the failure to have or maintain in
full force and effect any such licenses, consents, or permits would not,
individually or in the aggregate, have a Material Adverse Effect on MBSK or
Miller. "Environmental Laws" means any and all federal, state, county, local
and foreign laws, statutes, codes, ordinances, rules, regulations, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems; and
(b) To Miller's knowledge, no Hazardous Materials (as defined below) have
been, or are currently, located at, in, or under or emanating from the assets or
properties currently or formerly owned or operated by MBSK at the Burlington
Facility in a manner which: (i) violates in any material respect any applicable
Environmental Laws, or (ii) requires response, remedial, corrective action or
cleanup of any kind under any applicable Environmental Laws. "Hazardous
Material" means any and all pollutants, toxic or hazardous wastes or any other
substances that might pose a hazard to health or safety, the removal of which
may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable Environmental Law
(including asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
2.16. Books and Records. To Miller's knowledge, the books and records of
MBSK are complete and correct in all material respects and accurately and fairly
reflect all material information relating to its business, the nature,
acquisition, maintenance, location and character of its assets, and the
nature of all transactions giving rise to its balance sheet assets and
liabilities.
2.17. Employees. To the knowledge of Miller, no executive or key employee
of MBSK and no group of MBSK employees has any plans to terminate employment
with MBSK, with the exception of John Catalino and Neal Moss who will become
employees of Miller or an affiliate thereof, prior to the Closing. Miller has
previously provided to Andrew a complete and correct list as of the date of this
Agreement of all employees of MBSK and their current compensation (salary and
bonus and other compensation) and compensation for the calendar year 1998.
2.18. Leases. The Lease Agreement dated August 12, 1996 (the "Original
Burlington Lease") between Board of County Commissioners of Coffey County,
Kansas ("Coffey County"), as landlord, and MBSK, as tenant, has been superceded
in its entirety by the Lease Agreement dated August 6, 1999 between Coffey
County and MBSK, a correct and complete copy of which is attached as Schedule
2.18-A (the "Revised Burlington Lease"). The Revised Burlington Lease is the
only lease or sublease of real property to which MBSK is a party or bound.
Attached as Schedule 2.18-B is a true and correct copy of the form of Lease
Agreement between Coffey County and MBSK containing a purchase option for the
premises (the "Burlington Purchase Option Lease") that Miller will use its
reasonable best efforts to cause to supercede in its entirety the Revised
Burlington Lease upon, and only in the event of, its authorization and approval
by Coffey County in accordance with the provisions of Section 19-211 of the
Kansas Statutes ("Section 19-211") and any other applicable legal requirements
and its execution and delivery by the parties thereto. The Revised Burlington
Lease is the legal, valid, binding obligation of MBSK and, to Miller's
knowledge, of Coffey County, enforceable against MBSK and, to Miller's
knowledge, Coffey County in accordance with its terms, and is in full force and
effect. If the Burlington Purchase Option Lease is assigned by MBSK to Andrew
in accordance with this Agreement, then the Burlington Purchase Option Lease
will be at or before the Effective Time the legal, valid, binding obligation of
MBSK and, to Miller's knowledge, of Coffey County, enforceable against MBSK and,
to Miller's knowledge, Coffey County in accordance with its terms, and in full
force and effect. As of the Closing Date, the Revised Burlington Lease will be
assigned and transferred by MBSK to Andrew in accordance with this Agreement and
will be, to Miller's knowledge, the legal, valid and binding obligations of
Coffey County, enforceable against Coffey County by Andrew in accordance with
its terms and will be in full force and effect. If the Burlington Purchase
Option Lease is assigned by MBSK to Andrew in accordance with this Agreement,
then as of the Effective Time the Burlington Purchase Option Lease will be,
to Miller's knowledge, the legal, valid and binding obligations of Coffey
County, enforceable against Coffey County by Andrew in accordance with its
terms and will be in full force and effect. Except in respect to the survival
of certain rights of MBSK as provided in the Original Burlington Lease and
reflected in the Revised Burlington Lease, neither party to the Revised
Burlington Lease is (and neither party to the Burlington Purchase Option Lease
will be) in material breach or default and no event has occurred (or will have
occurred in respect to the Burlington Purchase Option Lease) which with notice
or lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the Revised Burlington Lease or Burlington
Purchase Option Lease, as the case may be. The real property and premises
subject to the Revised Burlington Lease and the Burlington Purchase Option
Lease are referred to herein as the "Burlington Facility."
2.19. Disclosure. The representations and warranties of Miller in this
Agreement do not include any untrue statement of a material fact nor do they
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ANDREW
Andrew represents and warrants to Miller and MBSK as follows:
3.1. Authorization of Andrew; Approvals. The execution, delivery and
performance by Andrew of this Agreement and each of the Ancillary Documents to
be executed and delivered by Andrew in connection with the transactions
contemplated by this Agreement have been duly authorized. Andrew has all
necessary corporate power and authority to consummate the transactions
contemplated by this Agreement. This Agreement constitutes, and each of the
Ancillary Documents to be executed and delivered by Andrew in connection with
the transactions contemplated by this Agreement will constitute, the valid and
binding obligations of Andrew, enforceable against Andrew in accordance with
their respective terms. Andrew has obtained all consents, authorizations and
approvals of, and has made all declarations and filings with, all federal and
state governmental authorities required on the part of Andrew in connection with
the consummation of the transactions contemplated by this Agreement, except to
the extent that the lack of any such consent, authorization or approvals,
individually or in the aggregate, will not have a Material Adverse Effect on
Andrew.
3.2. No Conflict or Violations; Consents. The execution, delivery and
performance by Andrew of this Agreement and each of the Ancillary Documents to
which Andrew is a party, the consummation of the transactions contemplated
hereby and the compliance by Andrew with any of the provisions hereof or
thereof, will not (a) violate any provision of the Certificate of Incorporation
or Bylaws of Andrew, (b) to Andrew's knowledge, violate or result in a material
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or increase the amount payable by
Andrew under, or result in the creation of any Lien upon any of the assets or
properties of Andrew under, any of the terms, conditions or provisions of any
material contract or lease (i) to which Andrew is a party or (ii) by which
Andrew is bound, or (c) to Andrew's knowledge, violate in any material respect
any statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award by which Andrew is bound.
3.3. Fees and Commissions. No person or entity will be entitled to any
brokerage commissions, finder's fees or similar compensation arising out of or
due to any act of Andrew (including its officers, directors, employees and
agents) in connection with the transactions contemplated by this Agreement.
3.4. Financial Resources. Andrew has reasonably sufficient financial
resources to perform its obligations under this Agreement and the documents to
be executed and delivered in connection with this Agreement.
3.5. Disclosure. The representations and warranties of Andrew in this
Agreement do not include any untrue statement of a material fact nor do they
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
ARTICLE IV.
ADDITIONAL AGREEMENTS
4.1. Closing Efforts; Additional Agreements. Each of the parties will use
its reasonable best efforts to take all action and to do all things necessary,
proper or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including the satisfaction, but not waiver of
the Closing conditions set forth in this Article V). In case at any time after
the Closing any further action is necessary or desirable (a) to carry out the
intents and purposes of this Agreement or (b) to vest Andrew with full title to
the Acquired Assets, the proper officers and directors of each party to this
Agreement shall take all such reasonably necessary or advisable action.
4.2. Non-Solicitation. For a period of 3 years, neither Miller nor MBSK
shall directly, or indirectly through another entity, (1) induce or attempt to
induce any employee providing services at the Burlington Facility to leave the
employ of Andrew, or in any way interfere with the relationship between Andrew
and any such employee thereof, or (2) hire any person to provide services within
a 100 mile radius of the Burlington Facility who was an employee of Andrew
providing services relating to the Burlington Facility at any time during the 6
month period immediately prior to the date on which such hiring would take place
(it being conclusively presumed by the parties so as to avoid any disputes under
this Section 4.2 that any such hiring within such 6 month period is in
violation of clause (1) above).
4.3. Certain Tax Matters.
(a) Tax Returns. Miller shall prepare or cause to be prepared in a manner
consistent with past practice (unless otherwise required to comply with
applicable law) and timely file or cause to be filed with the appropriate
taxing authorities all Tax Returns of MBSK required to be filed for all taxable
years or periods ending on, before or after the Closing Date and with respect to
the tax matters described in Section 1.5.
(b) Cooperation Regarding Tax Matters. The parties hereto shall provide
such necessary information as any other party hereto may reasonably request in
connection with the preparation of such party's Tax Returns related to the
transactions contemplated by this Agreement, or to respond to or contest any
audit, litigation or other proceeding, prosecute any claim for refund or credit
or otherwise satisfy any legal requirement relating to taxes of each party
hereto or their respective affiliates relating to the transactions contemplated
by this Agreement. Until the expiration of the applicable statute of
limitations and any extensions thereof, Miller shall, and shall cause MBSK to,
retain, and neither destroy nor dispose of, all Tax Returns, books and records
(including computer files) of, or with respect to, the activities of MBSK for
all taxable periods ending prior to the Closing Date and to make such books and
records available to Andrew on a reasonable basis.
4.4. Survey; Title Insurance.
(a) Miller, at its expense, has delivered to Andrew a survey (the
"Survey") of the Burlington Facility made by a State of Kansas licensed
surveyor. The Survey shall set forth (i) the boundaries of the Burlington
Facility, (ii) the square footage of and/or acreage of the Burlington Facility,
(iii) all improvements (including the square footage thereof) located on the
Burlington Facility, (iv) any encroachments onto the Burlington Facility and any
encroachments by improvements on the Burlington Facility onto adjoining real
property, and (v) a metes and bounds legal description of the Burlington
Facility.
(b) Miller, at its expense, has delivered to Andrew a title search report
for the Burlington Facility from the Coffey County Land Title Company or its
successor (the "Title Company") bearing a date later than August 10, 1999.
At least ten days before the Effective Time, Miller, at its expense, shall
deliver to Andrew a commitment for a leasehold title insurance policy for the
Burlington Purchase Option Lease (the "Title Commitment") bearing a date
after the Closing Date issued by the Title Company in such amount as is agreed
upon by the parties, on its standard ALTA form, and containing extended coverage
over the general exceptions, a 3.0 zoning endorsement, an access endorsement,
and, at Andrew's sole expense, such other endorsements as Andrew shall
reasonably require. The Title Commitment shall show the leasehold interest
in Andrew in the condition required herein as of the Effective Time, as the case
may be. Miller shall cause to be issued to Andrew an updated Title Commitment
not later than 1 day prior to the Effective Time, and at the Effective Time, a
policy of the required title insurance (the "Title Policy") pursuant to the
Title Commitment, all at Miller's expense.
4.5. Prorations. In order to facilitate the allocation of certain
ongoing expenses and liabilities of MBSK related solely to the Burlington
Facility (e.g., utilities), Miller shall pay to Andrew within 30 days after the
Closing an amount in cash equal to the net pro rata portion of all accruing
expenses and liabilities ("Accrual Liabilities") listed on Schedule 4.5, which
are incurred in the ordinary course of business by MBSK for the billing period
prior to the Closing Date based on the amounts of such expenses incurred during
the billing period immediately prior to the billing period in which the Closing
Date occurs. Such payment by Miller shall fully discharge Miller's liability
for the Accrual Liabilities.
4.6. Burlington Purchase Option Lease. As soon as reasonably practicable
after the Closing, but in any event no later than May 31, 2000, Miller, at its
expense, shall use its reasonable best efforts to (a) cause the Burlington
Purchase Option Lease to be duly authorized and approved by Coffey County in
accordance with Section 19-211 and any other applicable legal requirements, and
(b) cause the assignment of the Burlington Purchase Option Lease from MBSK to
Andrew to be duly authorized and approved by Coffey County in accordance with
any applicable legal requirements. At the Effective Time, Miller agrees to
duly assign and transfer all of its right, title and interest in and to the
Burlington Purchase Option Lease to Andrew, on the term and subject to the
conditions of this Agreement. Andrew will reasonably cooperate with Miller's
efforts toward causing the authorization, approval and assignment to Andrew of
the Burlington Purchase Option Lease.
4.7. Bulk Transfer Laws. The parties agree to waive compliance with the
requirements of any applicable bulk sales law provisions of the uniform
commercial codes of the states in which the Acquired Assets are situated or
which may otherwise be applicable to the transactions contemplated hereby;
provided, however, that Miller shall be liable for and shall pay and discharge
any amount (including Taxes) owed under or as a result of such laws, whether as
a result of waiving such compliance or otherwise.
4.8. Employees and Employee Benefit Plans.
(a) Andrew shall extend offers of employment, to be effective immediately
upon the Closing, to all current employees of MBSK, except John Catalino and
Neal Moss, (such employees who accept such offers of employment are hereinafter
referred to as "Rehired Employees"); provided, however, that any such offer
of employment shall not be construed to limit the ability of Andrew to terminate
any such employee following the Closing Date for any reason at any time. MBSK
shall terminate the employment of all Rehired Employees immediately prior to the
Closing and any cost, expense or liability resulting from, or incurred in
connection with, such terminations accrued on or prior to the Closing Date,
shall be the sole responsibility of Miller.
(b) Andrew agrees that service with MBSK by each Rehired Employee prior to
the Closing Date shall be treated as service with Andrew for purposes of
determining such employee's eligibility for and determining the amount of
benefit entitlement for holidays, sick days, vacations and also for purposes
of determining eligibility (including waiting periods under group health plans),
vesting and benefits provided under any other employee benefit plan, program,
policy or other arrangement of Andrew covering such Rehired Employee after the
Closing Date; provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of any such benefit for any
such period of service and shall be granted to Rehired Employees only
to the extent permissible under the applicable plan of Andrew.
(c) With respect to the 401(k) plan of Miller, the parties hereto agree
that MBSK shall offer each employee of MBSK on the date hereof the option to
(i) transfer his or her 401(k) account to an Individual Retirement Account;
(ii) take a lump sum distribution of such account or (iii) take a lump sum
distribution of such account and roll the distribution to Andrew's 401(k) plan.
(d) Miller shall provide COBRA health insurance coverage to the Rehired
Employees until January 1, 2000; provided, however, that, during the above time
period, Andrew shall fully reimburse Miller for all out-of-pocket expenses
incurred by Miller as a result of providing such COBRA health insurance to the
Rehired Employees who are not covered by Andrew's own health coverage plan(s),
including, without limitation, all premiums, claims and third party
administrative and processing fees, notwithstanding any termination of
employment of any Rehired Employee for any reason. The parties acknowledge and
agree that Andrew may, at its option, enroll the Rehired Employees into its own
health coverage plan(s), in lieu of the above COBRA health insurance coverage,
at any time prior to January 1, 2000. Andrew shall provide health coverage to
each Rehired Employees under its health plan(s) no later than January 1, 2000,
provided that each Rehired Employee elects such coverage in accordance with
Andrew's normal election procedures, with no liability to Miller whatsoever.
4.9. Legal Opinion for Burlington Purchase Option Lease. Prior to the
Effective Time, Miller agrees to use its reasonable efforts to obtain an opinion
of legal counsel to Coffey County, upon which Andrew may rely upon, as to due
authorization, execution and delivery and validity of the Burlington Purchase
Option Lease.
4.10. MBSK Work-in-Progress. For period not to exceed 45 days after the
Closing Date, Andrew agrees to provide Miller reasonable access during normal
business hours to the Burlington Facility, its employees, equipment and raw
materials for the purposes of completing the production and shipment of the
approximately ten shelters of MBSK that are in-process. In completing such
production and shipment, Miller will not unreasonably interfere with Andrew's
operations at the Burlington Facility, will complete such production and
shipment as soon as reasonably practicable and will reimburse Andrew for its
costs, including labor, as mutually agreed among the parties.
ARTICLE V.
CONDITIONS PRECEDENT
5.1. Conditions to Each Party's Obligation To Effect the Transactions. The
respective obligation of each party to consummate the Closing or the subsequent
assignment and transfer of the Burlington Purchase Option Lease shall be subject
to the satisfaction at or prior to the Closing or the Effective Time, as the
case may be, of the following conditions:
(a) No Proceedings, Injunctions or Restraints; Illegality. No Action by
any governmental authority or other third person or entity shall have been
commenced that challenges the validity or legality of the transactions
contemplated by this Agreement. No judgment, order, injunction or decree issued
by any governmental authority or other legal restraint or prohibition preventing
the consummation of the transactions contemplated by this Agreement shall be in
effect. No law, statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any governmental
authority which prohibits, materially restricts or makes illegal the
consummation of the transactions contemplated by this Agreement.
5.2. Conditions to Obligations of Andrew to the Closing. The obligation of
Andrew to effect the Closing is also subject to the satisfaction of or waiver by
Andrew at or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Miller set forth in this Agreement that are qualified with reference to a
Material Adverse Effect or materiality shall be true and correct, and the
representations and warranties of Miller that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement (except to the extent such representations and warranties speak as of
an earlier date).
(b) Performance of Obligations of MBSK/Miller. Miller and MBSK shall have
performed in all material respects all its obligations required to be performed
by it under this Agreement at or prior to the Closing.
(c) Legal Opinion; Closing Certificates and Documents. Andrew shall have
received from Much Shelist Freed Denenberg Ament & Rubenstein, P.C., counsel to
MBSK, an opinion as to due authorization, execution and delivery of MBSK, in a
form mutually agreed upon by counsel to the parties. In addition, Miller shall
provide Andrew with such customary closing documents and certificates as Andrew
or its counsel shall reasonably request.
(d) Transfer of Revised Burlington Lease. Coffey County shall have duly
consented to the assignment and transfer of the Revised Burlington Lease from
MBSK to Andrew in a form reasonably acceptable to Andrew.
(e) Material Adverse Change. There shall not have occurred any Material
Adverse Effect on the Acquired Assets or the Burlington Facility.
(f) Raw Materials. Andrew shall be satisfied that the Raw Materials
located at the Burlington Facility on the Closing Date have a net book value of
approximately $380,000 or more.
5.3. Conditions to Obligations of Miller and MBSK to the Closing. The
obligation of Miller and MBSK to effect the Closing is also subject to the
satisfaction of or waiver by Miller and MBSK at or prior to the Closing of the
following conditions:
(a) Representations and Warranties. The representations and warranties of
Andrew set forth in this Agreement that are qualified with a reference to a
Material Adverse Effect or materiality shall be true and correct, and the
representations and warranties of Andrew that are not so qualified shall be
true and correct in all material respects, in each case, as of the date of this
Agreement (except to the extent such representations and warranties speak as of
an earlier date).
(b) Performance of Obligations of Andrew. Andrew shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.
(c) Legal Opinion; Closing Certificates and Documents. Miller shall have
received from Gardner, Carton & Douglas, counsel to Andrew, an opinion as to due
authorization, execution and delivery of Andrew, in a form mutually agreed upon
by counsel to the parties. In addition, Andrew shall provide Miller with such
customary closing documents and certificates as Miller or its counsel shall
reasonably request.
5.4. Conditions to Obligations of Andrew with respect the Burlington
Purchase Option Lease. The obligation of Andrew to effect the assignment and
transfer of the Burlington Purchase Option Lease is also subject to the
satisfaction of or waiver by Andrew at or prior to the Effective Time of the
following conditions:
(a) Closing. The Closing shall have occurred.
(b) Representations and Warranties. The representations and warranties of
Miller set forth in Sections 2.1, 2.2, 2.4, 2.12, 2.18, 2.19 of this Agreement
that are qualified with reference to a Material Adverse Effect or materiality
shall be true and correct, and the representations and warranties of Miller that
are not so qualified shall be true and correct in all material respects, in each
case as of the Effective Time (except to the extent such representations and
warranties speak as of an earlier date).
(c) Performance of Obligations of MBSK/Miller. Miller and MBSK shall have
performed in all material respects all its obligations required to be performed
by it under this Agreement at or prior to the Effective Time.
(d) Closing Certificates and Documents. Miller shall provide Andrew with
such customary closing documents and certificates as Andrew or its counsel shall
reasonably request.
(e) Approval and Transfer of Burlington Purchase Option Lease. On or
before May 31, 2000, Coffey County shall have duly authorized and approved the
Burlington Purchase Option Lease in accordance with Section 19-211 and
applicable law, and Coffey County shall have duly consented to the assignment
and transfer of the Burlington Purchase Burlington Lease from MBSK to Andrew in
a form reasonably acceptable to Andrew. In addition, the Burlington Purchase
Option Lease shall be in full force and effect.
5.5. Conditions to Obligations of Miller and MBSK with respect the
Burlington Purchase Option Lease. The obligation of MBSK and Miller to
effect the assignment and transfer of the Burlington Purchase Option Lease is
also subject to the satisfaction of or waiver by MBSK and Miller at or prior
to the Effective Time of the following conditions:
(a) Closing. The Closing shall have occurred.
(b) Representations and Warranties. The representations and warranties
of Andrew set forth in Sections 3.1, 3.2, 3.3, 3.4 and 3.5 of this Agreement
that are qualified with a reference to a Material Adverse Effect or materiality
shall be true and correct, and the representations and warranties of Andrew
that are not so qualified shall be true and correct in all material respects, in
each case, as of the Effective Time (except to the extent such representations
and warranties speak as of an earlier date).
(c) Performance of Obligations of Andrew. Andrew shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
(d) Approval and Transfer of Burlington Purchase Option Lease. Coffey
County shall have duly authorized and approved the Burlington Purchase Option
Lease in accordance with Section 19-211 and applicable law, and Coffey County
shall have duly consented to the assignment and transfer of the Burlington
Purchase Burlington Lease from MBSK to Andrew. In addition, the Burlington
Purchase Option Lease shall be in full force and effect.
ARTICLE VI.
INDEMNIFICATION
6.1. Indemnification by Miller.
(a) On the terms and subject to the conditions of this Agreement, Miller
shall indemnify and hold harmless Andrew and its affiliates, and their
respective stockholders, officers, directors, employees and agents
(collectively, the "Andrew Indemnitees"), from and against, and will pay them
the amount of, any and all losses, costs, claims, liabilities, damages,
penalties and expenses (including reasonable attorneys' and auditors' fees and
the costs of investigation and defense) (collectively, the "Losses"), incurred
or suffered by the Andrew Indemnitees relating to or arising out of or in
connection with any of the following: (i) any breach or inaccuracy as of the
Closing Date or Effective Time in any representation or warranty made by Miller
in this Agreement (except Section 2.12 (commissions)) or any Ancillary Document;
(ii) any breach or nonfulfillment by Miller or MBSK of any of its covenants, or
agreements or other obligations in this Agreement or any Ancillary Document;
(iii) any breach or inaccuracy of the representations and warranties contain in
Section 2.12(commissions); (iv) any claims or liabilities relating to periods
prior to the Closing Date with respect to any Employee Benefit Plan or any
termination of any employee benefits or Employee Benefit Plan or the termination
of employment of any employee of the MBSK prior to the Closing Date; and (v) any
claims relating to Miller's or MBSK's ownership, use or operation of the
Acquired Assets or the Burlington Facility and any product manufactured or
service provided by Miller or MBSK prior to the Closing at the Burlington
Facility, including, claims of injuries to persons or property, product
liability, warranty claims (whether arising under contract or tort law), and
recalls of products ordered by governmental authorities. For the purpose of
calculating the aggregate amount of Losses incurred or suffered by the Andrew
Indemnitees, the representations and warranties contained in Sections 2.4(b),
2.4(c), 2.8, 2.9 and 2.15 will be read without regard to any "knowledge"
qualifier in any such representations or warranties.
(b) Notwithstanding anything to the contrary contained in this Article VI,
no claim or claims shall be made for payment by Miller pursuant to Section
6.1(a)(i) above, unless and until the aggregate amount of all claims for payment
by Miller pursuant to this Section 6.1 (excluding claims based on Sections
6.1(a)(ii), (iii), (iv) and (v)) exceeds $50,000, whereupon all such claims for
payment by Miller pursuant to Section 6.1(a)(i) above such amount may be
asserted and pursued; provided, however, that in respect to the second to the
last sentence in Section 2.14, no claim or claims shall be made for payment by
Miller pursuant to Section 6.1(a)(i) above, unless and until the aggregate
amount of all claims for payment by Miller in respect to the second to the last
sentence in Section 2.14 exceeds $25,000, whereupon all such claims for payment
by Miller in respect to the second to the last sentence in Section 2.14 above
such amount may be asserted and pursued in accordance with the terms of this
Agreement.
6.2. Indemnification by Andrew.
(a) On the terms and subject to the conditions of this Agreement, Andrew
shall indemnify and hold harmless Miller and its affiliates, and their
respective stockholders, officers, directors, employees and agents
(collectively, the "Miller Indemnitees"), from and against, and will pay them
the amount of, any and all Losses, incurred or suffered by the Miller
Indemnitees relating to or arising out of or in connection with any of the
following: (i) any breach or inaccuracy as of the Closing Date or Effective
Time in any representation or warranty made by Andrew in this Agreement (except
Section 3.3(commissions)) or any Ancillary Document; (ii) any breach or
nonfulfillment by Andrew of any of its covenants, or agreements or other
obligations in this Agreement or any Ancillary Document; (iii) any breach or
inaccuracy of the representations and warranties contain in Section 3.3
(commissions); (iv) any claims or liabilities relating to periods after the
Closing Date with respect to any Employee Benefit Plan of Andrew or any
termination of any employee benefits or Employee Benefit Plan of Andrew or the
termination of employment of any employee by Andrew who was an employee of MBSK
prior to the Closing Date which takes place after the Closing Date; and (v)
any claims relating to Andrew's ownership, use or operation of the Burlington
Facility and any product manufactured or service provided by Andrew at the
Burlington Facility after the Closing, including, claims of injuries to persons
or property, product liability, warranty claims (whether arising under contract
or tort law), and recalls of products ordered by governmental authorities.
(b) Notwithstanding anything to the contrary contained in this Article VI,
no claim or claims shall be made for payment by Andrew pursuant to Section
6.2(a)(i) above, unless and until the aggregate amount of all claims for payment
by Andrew pursuant to this Section 6.2 (excluding claims based on Sections
6.2(a)(ii), (iii) and (v)) exceeds $50,000, whereupon all such claims for
payment by Andrew pursuant to Section 6.2(a)(i) above such amount may be
asserted and pursued.
6.3. Claims. If a claim for indemnification is to be made by an
indemnified party, the indemnified party shall promptly give notice to the
indemnifying party of such claim, including the amount the indemnified party
will be entitled to receive hereunder from the indemnifying party; provided,
however, that the failure of the indemnified party to promptly give notice shall
not relieve the indemnifying party of its obligations under this Article VI,
except to the extent of actual prejudice to the indemnifying party. If the
indemnifying party does not object in writing to such claim within 20 days
after receiving notice thereof, the indemnified party shall be entitled to
recover, on the 21st day after such notice was given, from the indemnifying
party the amount of such claim, and no later objection by indemnifying party
shall be permitted or effective. If the indemnifying party agrees that it has
an indemnification obligation under this Article VI with respect to such claim,
but timely objects as to the amount of such claim, the indemnified party
shall nevertheless be entitled to recover, on the 21st day after such notice
was given, from the indemnifying party the undisputed lesser or liquidated
amount of such claim, without prejudice to the indemnified party's claim for
the difference. In addition to the amounts recoverable by the indemnified
party from the indemnifying party pursuant to this Article VI, the indemnified
party shall also be entitled to recover from indemnifying party interest on
such amounts at the rate of 10% per annum from, and including, the 21st day
after such notice of an indemnification claim is given, but not including the
date such recovery is actually made by the indemnified party.
6.4. Survival. All representations, warranties, covenants and agreements
contained in this Agreement and the Ancillary Documents shall survive the
Closing and shall be deemed to have been relied upon and shall not be affected
in any respect by the Closing, any investigation conducted by any party or by
any information which any party may receive. Notwithstanding the foregoing
provision, the representations and warranties contained in this Agreement (other
than Sections 2.9(taxes) and 2.14(title)(as to title only) and 2.15
(environmental)) and Ancillary Documents shall terminate one year after the
Effective Time; the representations and warranties contained in Sections 2.9
(taxes) shall survive until the expiration of the applicable statute of
limitations; the representations and warranties contained in Sections 2.15
(environmental) shall survive for a period of three years after the Closing
Date.; and the representations and warranties in Section 2.14(title)(as to title
only) shall survive without limitation as to time.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. Termination. At any time before the Closing, this Agreement may be
terminated (a) by mutual written consent of the parties; (b) by either Andrew or
Miller (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein),
if there shall have been a material breach of any of the representations or
warranties or any of the covenants or agreements set forth in this Agreement
on the part of the other party, which breach is not cured within 15 days
following written notice to the party committing such breach, or which breach,
by its nature or timing, cannot be cured prior to September 30, 1999; or (c)
by Andrew or Miller, if the Closing shall not occur on or before September 30,
1999, unless the failure of the Closing to occur by such date shall be due to
the action or failure to act of the party seeking to terminate this Agreement,
which action or fail ure to act constitutes a breach of this Agreement.
7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, written notice thereof shall forthwith be
given to the other party specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void and of no further force or effect, and no party (or any of its affiliates,
directors, officers, agents or representatives) shall have any liability or
obligation hereunder (except for any liability of any party then in breach);
provided, however, that the provisions of Sections 8.2 (notice) and 8.6
(expenses) shall survive any such termination.
ARTICLE VIII.
MISCELLANEOUS
8.1. Assignment; No Third Parties. Neither this Agreement nor any of the
rights, interests or obligations set forth herein shall be assigned by either of
the parties (whether by operation of law or otherwise) without the prior written
consent of the other party. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and permitted assigns. This Agreement and the Ancillary Documents (including
the disclosure schedules, exhibits, documents and instruments referred to
herein) are not intended to confer upon any person or entity other than the
parties any rights or remedies hereunder.
8.2. Notices. All notices, requests, demands and other communications that
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received, if personally delivered; when
transmitted, if transmitted, by telecopy; the next business day after it is
sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice
shall be sent to:
If to Miller,
addressed to: Miller Building Systems, Inc.
58120 C.R. 3 South
P.O. Box 1283/46515
Elkhart, Indiana 46517
Attention: Edward Craig
Fax No.: 219-295-2232
With a copy to: Much Shelist Freed Denenberg Ament &
Rubenstein, P.C.
200 North LaSalle Street, Suite 2100
Chicago, Illinois 60601
Attention: Jeffrey Rubenstein
Fax No.: 312-621-1750
If to any Andrew,
addressed to: Andrew Corporation
10500 West 153rd Street
Orland Park, Illinois 60462
Attention: General Attorney, Legal Department
Fax No.: 708-873-2571
With a copy to: Gardner, Carton & Douglas
321 North Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Dewey B. Crawford
Fax No: 312-644-3381
or to such other place and with such other copy as either party may designate
as to itself by written notice to the others, which notice shall be effective
only upon receipt.
8.3. Choice of Law. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the State of
Illinois (without reference to the choice of law provisions).
8.4. Entire Agreement; Amendments and Waivers. This Agreement and the
Ancillary Documents, together with all exhibits and schedules hereto and
thereto, constitute the entire agreement between the parties pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties. No amendment, supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
8.5. Counterparts; Facsimile. This Agreement may be executed and delivered
in counterparts, all of which shall be considered one and the same agreement.
This Agreement may be executed and delivered by facsimile transmission, and a
facsimile of this Agreement or of a signature of a party thereto shall be as
effective as an original.
8.6. Expenses. Except as set forth in Article VI, and regardless of
whether the Closing shall occur, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
8.7. Invalidity. In the event that any one or more of the provisions
contained in this Agreement or the Ancillary Documents for any reason, be held
to be invalid, illegal or unenforceable in any respect, then to the maximum
extent permitted by law, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or Ancillary Documents.
8.8. Publicity. Except as otherwise required by applicable law or the
rules of The Nasdaq Stock Market, Inc., National Market, neither Miller nor
Andrew shall, or shall permit any of their respective affiliates to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the prior consent of the other party,
which consent shall not be unreasonably withheld.
8.9. Knowledge. As used in this Agreement, "knowledge" or "awareness" of
any entity means the actual knowledge or awareness of such entity's officers.
8.10. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and the Ancillary Documents. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement and Ancillary Documents shall be construed as if drafted jointly by
the parties and no presumptions or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or the Ancillary Documents. Any reference to any federal, state,
county, local or foreign law or statute shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
8.11. Interpretation. When a reference is made in this Agreement to
sections, schedules or exhibits, such reference shall be to a section of or
schedule or exhibit to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." No provision of this
Agreement or the Ancillary Documents shall be construed to require Andrew or
Miller or any of their respective affiliates to take any action which would
violate any applicable law, rule or regulation.
8.12. Cumulative Remedies. All rights and remedies of either party are
cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise
of other rights or remedies.
8.13. Confidentiality. For a period of two years after the date of this
Agreement, Miller and Andrew shall maintain in confidence, and shall cause their
respective directors, officers, employees, agents and advisors to maintain in
confidence, any confidential or proprietary information obtained from the other
party in connection with this Agreement unless (a) such information is already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required pursuant to the terms of this
Agreement or (c) the furnishing or use of such information is necessary or
appropriate in connection with any law, regulation or legal proceedings. If the
transactions contemplated by this Agreement are not consummated, each party will
return or destroy any such information as the other party may request.
[SIGNATURE PAGE FOLLOWS]
[THE NEXT PAGE IS PAGE NUMBER 26]
IN WITNESS WHEREOF, Andrew, Miller and MBSK have caused this ASSET
PURCHASE AGREEMENT to be duly executed as of the date first above written.
ANDREW CORPORATION MILLER BUILDING SYSTEMS, INC.
By: \Thomas E. Charlton By: \Thomas J. Martini
Name: Thomas E. Charlton Name: Thomas J. Martini
Title: Group President Title: Secretary/Treasurer
MILLER BUILDING SYSTEMS OF KANSAS, INC.
By: \Thomas J. Martini
Name: Thomas J. Martini
Title: Secretary/Treasurer
Allocation Schedule
[Intentionally Omitted]
Schedule 4.5
Monthly Expenses to be Pro Rated
1. Electricity
2. Water
3. Gas
4. Telephone
5. Garbage disposal
6. Cleaning Service
7. Revised Burlington Lease Rental
8. Health Insurance Claims, Premiums and Fees
9. Payroll Taxes
Schedule 1.3
Assumed Contracts
1. Equipment Lease Agreement dated November 27, 1996 between Miller and GE
Capital.
2. Smart Business Lease dated December 28, 1996 between Miller and Pitney
Bowes Credit.
3. Contract dated August 1, 1999 between Miller and Jem LP Gas.
Schedule 2.13
ERISA
1. 401(k) plan
2. Medical insurance
3. Life insurance
4. Long-term disability
Schedule 2.14
Fixed Assets
[See Attached List]
Schedule 2.18 B
Form of Burlington Purchase Option Lease
LEASE AGREEMENT
This Lease Agreement ("Lease") is entered into on this __16th__ day of
August, 1999, between, Board of County Commissioners of Coffey County, Kansas
(County) and Miller Building Systems of Kansas, Inc. (Miller), of Elkhart,
Indiana. In consideration of the mutual covenants, representations, warranties
and agreements contained herein, the parties agree as follows:
1. Lease of Property. 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.
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 and that certain lease
with Miller dated the _____day of August, 1999.
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.
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 or 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 five (5) years
commencing on the effective date and ending five (5) year from the date of the
lease. As used herein the expression "term hereof" refers to this initial term.
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 $100,000 the term of this Lease. The payments shall be made at the
rate of Two Thousand Five Hundred and 00/100 Dollars ($2500.00) per month for
sixty (60) 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 Lease.
6. Building Purchase. During the term hereof, Miller shall have the
option to purchase the Property (the "Option"). This purchase Option will be
contingent upon the County complying with Kansas law for such a purchase,
including K.S.A. 19-211. Upon successful completion of the requirements of
Kansas law and K.S.A. 19-211, (the "Statutory Requirements") and if Miller is
the successful bidder, Miller shall have the option to pay the County the sum
of One Hundred Seventy-Five Thousand an 00/100 Dollars ($175,000.00) 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). Provided 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 five (5) parts of $35,000.00 for each
year, however, payment will be due only at the conclusion of the initial term.
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 $35,000.00 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 eight (2,080). The FTE
shall be computed on the anniversary date of this Lease being executed and
binding in accordance with the Statutory Requirements (the "Effective Date"),
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 the Effective Date of this Lease. 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-5th 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 themanufacture
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 shall 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 term 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 necessaryat
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 to 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 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 will
purchase or provide proof of purchase of certifiable scales for 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 agree 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 net 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 liability 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, 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 properly 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 23 and 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 23 and 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
Coffey County Courthouse
110 S. 6th
Burlington, KS 66839
MILLER: Edward C. Craig
President
Miller Building Systems of Kansas, Inc.
P.O. Box 1283
Elkhart, IN 46515
Jeffrey C. Rubenstein
Much Shelist Freed Denenberg
Ament & 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 of 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 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 end 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 Coffey County, Kansas.
43. Termination. Any lease of the property in existence with Miller
upon the delivery, by the County, of an executed, binding lease with the Option
in accordance with the statutory requirements shall be deemed terminated when
and if Miller exercises the option herein and Miller or its permitted assignees
has a binding legal interest in said property. Lease may be terminated by
Miller when and if Miller exercises its option to purchase herein and said
purchase is completed.
IN WITNESS WHEREOF, the parties have executed this Lease on the date first
above written.
BOARD OF COUNTY COMMISSIONERS MILLER BUILDING SYSTEMS OF KANSAS, INC.
COFFEY COUNTY, KANSAS
By: \Timothy A. Sipe BY: \Edward C. Craig PRES
ATTEST: \Vernon Birks
APPROVED: \Larry J. Hendricks
Schedule 2.18 A
Revised Burlington Lease
LEASE AGREEMENT
This Lease Agreement ("Lease") is entered into on this __6th__ day of
August, 1999, between, Board of County Commissioners of Coffey County, Kansas
(County) and Miller Building Systems of Kansas, Inc. (Miller), of Elkhart,
Indiana.
RECITALS
The parties recite and declare:
A. County and Miller entered into that certain Lease Agreement dated
August 12, 1996, amended December 30, 1996 ("Original Lease") whereby Miller
leased from the County the Property (defined in Section 1. below).
B. The County in the Original Lease represented and covenanted that under
the statutes of the State of Kansas, it had the power to enter into and perform
the transactions contemplated by the Original Lease and to carry out its
obligations under that Original Lease.
C. The County has determined that K.S.A. 19-211 does not allow the County
to comply with all of the terms of the Original Lease including Paragraph 6.
D. The parties desire to terminate the Original Lease except for Paragraph
2.A., and 30 through 32 which survive and the rights with respect to Paragraph 6
and enter into this new Lease. It is understood that Miller by entering into
the new Lease does not waive any legal rights it might have had in Paragraph
2.A., 6, and 30 - 32 of the Original Lease and specifically reserves those
rights herein.
NOW THEREFORE in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties agree as follows:
1. Lease of Property. 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.
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.
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 or
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 five (5) years
commencing August 1, 1999 and ending July 31, 2004. As used herein the
expression "term hereof" refers to this initial term and any renewal term.
Miller shall have five (5) options to renew the Lease of the Property each for
an additional five (5) year term if Miller is in material compliance with all
the terms of the Lease and upon written notice to County of intent to renew
sixty (60) days prior to the expiration of the current term.
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 $150,000 for each five (5) year term of this Lease. The payments
shall be made at the rate of Two Thousand Five Hundred and 00/100 Dollars
($2500.00) per month for sixty (60) 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, 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 Lease.
6. Intentionally Deleted.
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 shall 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 Propertyhas 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 to
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
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 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 will
purchase or provide proof of purchase of certifiable scales for 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 agree 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 net 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 liability 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, 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 conditionsshall 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 properly 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 23 and 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 23 and 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
Coffey County Courthouse
110 S. 6th
Burlington, KS 66839
MILLER: Edward C. Craig
President
Miller Building Systems of Kansas, Inc.
P.O. Box 1283
Elkhart, IN 46515
Jeffrey C. Rubenstein
Much Shelist Freed Denenberg
Ament & 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 of 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 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 end 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 Coffey County, Kansas.
43. Incorporation of Recitals. The Recitals to this Lease are hereby
incorporated in this Lease by this reference.
44. Termination. This Lease will automatically terminate upon the parties
entering into a new binding lease with an option to purchase in accordance with
Section 19-211 of the Kansas Statutes, a copy of such lease to be attached as
Exhibit "B" upon finalizing the terms of such Lease.
IN WITNESS WHEREOF, the parties have executed this Lease on the date first
above written.
BOARD OF COUNTY COMMISSIONERS MILLER BUILDING SYSTEMS OF KANSAS, INC.
COFFEY COUNTY, KANSAS
By: \Timothy A. Sipe By: \Edward C. Craig
PRES/CEO
ATTEST: \Vernon Birk by
Rose Yoder Chief Deputy
APPROVED: \Larry J. Hendricks
TRUST AGREEMENT EXHIBIT 10.72
THIS AGREEMENT, made as of the 12th day of September , 1996,
by and between Miller Building Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), and Thomas J.
Martini (the "Trustee").
W I T N E S S E T H :
WHEREAS, Company has incurred and expects to continue to incur certain
unfunded retirement income and death benefit liability to or with respect to
certain key management employees pursuant to the terms of the Executive Deferred
Compensation Plan of Miller Building Systems, Inc., and any such other plan or
plans of the Company, as the Company may decide to cover under the Trust,
(hereinafter collectively referred to as the "Plan", or individually as a
"plan"), the Plan is intended to be a nonqualified deferred compensation plan
for highly compensated employees as described under the Employee Retirement
Income Security Act of 1974 ("ERISA"); and
Whereas, Company wishes to establish a trust (the "Trust") and to
contribute to the Trust certain funds and assets to be held, administered and
distributed pursuant to the terms hereof; and
WHEREAS, the Company desires to provide additional assurance to some or all
such key management employees (the "Participants") and their surviving spouses,
dependent children, beneficiaries or estates under the Plan (collectively, the
"Beneficiaries") that their unfunded retirement benefits and death benefits
under the Plan will in the future be met or substantially met by the application
of the procedures set forth herein; and
WHEREAS, the Company intends the Trust to be an irrevocable grantor trust
which is not qualified under Sections 401 (a) and 501 (a) of the Internal
Revenue Code, as amended, in order to provide a source of the payments required
under the terms of the Plan; and
WHEREAS, the Company wishes to establish separate accounts (hereinafter the
"Accounts") under the Trust with respect to some or all of the Participants in
each Plan in order to provide a source of the payments required under the terms
of such Plan; and
WHEREAS, amounts transferred to each separate Account, as determined by the
Company from time to time in its sole discretion, and the earnings thereon,
shall be used by the Trustee solely in satisfaction of the liabilities of the
Company with respect to the Participant in each plan for whom such separate
Account has been established and such utilization shall be in accordance with
the procedures set forth herein; and
WHEREAS, any amount transferred by the Company to each separate Account and
the earnings thereon shall revert to the Company only upon satisfaction of all
liabilities of the Company under the Plan with respect to the Plan Participant
in respect of whom such separate Account has been established, except that all
such amounts held at any time under this Agreement shall be subject to the
claims of creditors of the Company as herein provided;
NOW, THEREFORE, in consideration of the premises and mutual and independent
promises herein, the parties hereto covenant and agree as follows:
ARTICLE I
1.1 The Company hereby establishes with the Trustee a Trust consisting of
such sums of money, and other property, including Company stock and insurance
policies, acceptable to the Trustee as shall from time to time be paid or
delivered to the Trustee by the Company, and the earnings and profits thereon.
All such money and property, all investments made therewith and proceeds
thereof, less the payments or other distributions which, at the time of
reference, shall have been made by the Trustee, as authorized herein, are
referred to herein as the "Fund" and shall be held by the Trustee, IN TRUST, in
accordance with the provisions of this Agreement. Except as otherwise expressly
provided herein, this Trust shall be irrevocable and no part of the Fund shall
revert, or be paid to, the Company.
1.2 The Trustee shall hold, manage, invest and otherwise administer the
Fund pursuant to the terms of this Agreement. The Trustee shall be responsible
only for contributions actually received by the Trustee hereunder and the
earnings on such contributions. The amount of each contribution by the Company
to the Fund shall be determined in the sole discretion of the Company, and the
Trustee and the Trustee's Agent shall have no duty or responsibility with
respect thereto, except as otherwise expressly agreed to by the Trustee.
1.3 The Trustee's Agent, as described herein, shall maintain in an
equitable manner a separate Account for each Participant under each plan in
which the Trustee shall keep a separate record of the share of such Participant
under such plan in the Fund. The Company shall certify to the Trustee and the
Trustee's Agent at the time of each contribution to the Fund the amount of
such contribution being made in respect of each Participant under each plan.
The Fund shall be revalued by the Trustee as of the last business day of each
calendar year at current market values, as determined by the Trustee. Each
Participant in each Plan or Beneficiary of such Participant with respect to
whom an Account has been established shall receive from the Trustee's Agent
an annual statement of the value of such Account as of the last business day of
the calendar year.
ARTICLE II
2.1 If, at any time while the Trust is still in existence, the Company
becomes bankrupt or insolvent (as herein defined) the Trustee upon written
notice and proper substantiation thereof shall pay or transfer to the Company,
or the Company's estate in bankruptcy, all cash and other assets then held in
the Fund, after deduction of the Trustee's fees and expenses and any other
expenses of the Trust, including taxes accrued and unpaid at the time. The
Company shall be considered to be bankrupt or insolvent only upon the entry
of an order, judgment or decree under the Bankruptcy Act of the United
States or the bankruptcy laws of any state adjudicating the Company to be
bankrupt or insolvent, regardless of whether such proceedings were initiated by
the Company, its creditors or any third party. It is expressly understood by the
parties hereto that this Article II is intended to subject any and all property
held by the Trustee under this Agreement to the claims of creditors of the
Company in the event the Company is adjudicated to be bankrupt or insolvent.
2.2 The Company represents and agrees that the Trust established under
this Agreement does not fund and is not intended to fund any or all of the Plan
or any other employee benefit plan or program of the Company. The Trust is, and
is intended to be, a depository arrangement with the Trustee for the setting
aside of cash and other assets of the Company as and when the Company
determines, in its sole discretion, for the meeting of part or all of its future
retirement and death benefit obligations to some or all of the Participants and
their Beneficiaries under the Plan. Contributions by the Company to the Trust
shall be in amounts determined solely by the Company. The Company further
represents that the Plan is a deferred compensation plan for a select group of
management and highly compensated employees and as such is exempt from the
application of the Employee Retirement Income Security Act of 1974 ("ERISA"),
except for the disclosure requirements applicable to such plans for which the
Company bears full responsibility as to compliance. The Company further
represents that the Plan is not qualified under Section 401 of the United States
Internal Revenue Code requirements and therefore is not subject to any of the
Code requirements applicable to tax-qualified plans.
ARTICLE III
3.1 By its acceptance of this Trust, the Trustee hereby agrees to the
designation by the Company of Compass Financial Corporation as the Trustee's
agent ("Trustee's Agent") under this Agreement. The Trustee shall have no
responsibility for the performance of the duties of the Trustee's Agent.
3.2 The "Executive Benefits Committee" of the Company for purposes hereof
shall be the persons holding the positions with the Company of (1) President/
Chief Executive Officer, (2) any Vice President, (3) Secretary, (4) Treasurer,
(5) Chief Financial Officer and (6) Human Resources Director. In the event any
person ceases to hold any of said positions with the Company, said person shall
immediately cease to be a member of the Executive Benefits Committee. A person
being elected or appointed to any of said positions with Company shall
immediately become a member of the Executive Benefits Committee, and shall
remain a member of the Executive Benefits Committee so long as such person
remains in that position with the Company.
3.3 The Trustee's Agent may resign at any time by delivery of written
notice of resignation to the Trustee and the Company. Also, the Trustee's Agent
may be removed by the Trustee at any time by delivery of written notice of such
removal to the Trustee's Agent and the Company. Any such resignation or removal
shall take effect as of a future date specified in the notice of same, which
date shall not be earlier than the date 60 days after the day on which the
notice is sent, or such earlier date as may be agreed to by the Trustee's Agent
and the Trustee. Upon such resignation or removal, the Trustee shall appoint a
successor Trustee's Agent. As soon as practicable after a Trustee's Agent has
resigned or has been removed hereunder, it shall deliver to the successor
Trustee's Agent all reports, records, documents and other written information
in Trustee's Agent's possession regarding the Plan, the Fund and the
Participants in the Plan, and thereupon shall be entitled to all unpaid fees,
compensation and reimbursements to which it is entitled under this Agreement
and shall be relieved of all responsibilities and duties under this Agreement.
3.4 The Trustee's Agent shall maintain or cause to be maintained all the
Plan Participant records contemplated by this Agreement. The Trustee's Agent
shall also prepare and distribute Participant's statements which shall include
income tax information, if that information is supplied to the Trustee's Agent
by the Company or its delegate, with respect to payments to Participants and
their Beneficiaries and shall perform such other duties and responsibilities as
the Trustee determines is necessary or advisable to achieve the objectives of
this Agreement. Any tax information applicable to a Participant or Beneficiary,
including any required tax withholding, shall be supplied to the Trustee's Agent
by the Company and the Trustee's Agent shall have no responsibilities for the
accuracy of such information.
3.5 Upon the establishment of this Trust, or as soon thereafter as
practicable, the Company shall furnish to the Trustee's Agent copies of each
plan and all the information necessary to determine the benefits payable to
or with respect to each Participant in the Plan, including any benefits payable
after the Participant's death and the recipient of same. The Company shall
regularly, at least annually, or promptly on the request of the Trustee's
Agent, furnish to the Trustee's Agent revised updated information including
copies of any plan amendment. Based on the foregoing information the Trustee's
Agent shall prepare an annual benefits statement with respect to each
Participant and shall furnish a copy of the same to the Participant or his
Beneficiary and to the Company. In the event the Company refuses or neglects
to provide updated participant information as contemplated herein, the
Trustee's Agent shall be entitled to rely upon the most recent information
furnished to it by the Company. The Trustee's Agent has no responsibility to
verify information provided to it by the Company.
3.6 Upon the direction of the Company or upon the proper application of a
Participant, or Beneficiary of a deceased Participant, the Trustee's Agent shall
prepare a certification to the Trustee that a Participant's benefits under the
Plan have become payable. Such certification shall include the amount of such
benefits, the terms of payment, the amount of any taxes required to be withheld
from such amount, if such information is supplied to the Trustee's Agent by the
Company or its delegate, and the name, address and social security number of
the recipient. Upon the receipt of such certified statement the Trustee shall
commence cash distributions from the Trust Fund in accordance therewith to the
person or persons so indicated and to the Company with respect to taxes
required to be withheld, and the Trustee's Agent shall charge the payments
against the Participant's or Beneficiary's benefits. The Trustee's Agent shall
also furnish a copy of such certification to the Participant or to the
Beneficiary of a deceased Participant. The Company shall have full
responsibility for the payment of all withholding taxes to the appropriate
taxing authority and shall furnish each Participant or Beneficiary with the
appropriate tax information form evidencing such payment and the amount thereof.
3.7 No further benefits shall be payable from the Fund with respect to any
Participant from and after the date the Trustee's Agent determines that each
Account of a Participant has been reduced to a zero balance; provided, however,
no such determination shall eliminate the Company's remaining liability, if any,
under the Plan with respect to such Participant. Upon the death of a Participant
and the Beneficiary, if any, of any deceased Participant entitled to benefits
under this Agreement, or in the event a Participant's rights under the terms
of the Plan are forfeited, the Trustee's Agent shall thereupon prepare a
certification to the Trustee and to the Company showing the balance,if any,
remaining in such Participant's Account(s) and upon receipt of same, the
Trustee's Agent shall reallocate the forfeited amount to the Account of other
Participants and Beneficiaries. Any such allocation to an Account shall be made
in the ratio that the balance in such Account bears to the balances in the
Accounts of all Participants and Beneficiaries. The Trustee and the Trustee's
Agent shall have no responsibility for determining whether any Participant or
Beneficiary has died or whether any Participant's rights under the terms of
the Plan have been forfeited and shall be entitled to rely upon information
furnished by the Company.
3.8 Nothing provided in this Agreement shall relieve the Company of its
liabilities to pay the retirement benefits provided under the Plan except to the
extent such liabilities are met by application of Fund assets. It is the intent
of the Company to have each Account established hereunder treated as a
separate account designed to satisfy in whole or in part the Company's legal
liability under each Plan in respect of the Participant for whom such Account
has been established and to have the balance in the Account of the last
remaining Participant or Beneficiary under the Plan revert to the Company, but
only after the Company's legal liability to such person has been met. The
Company, therefore, agrees that all income, deductions and credits of each
Account belong to it as owner for income tax purposes and will be included on
the Company's income tax returns.
3.9 Any benefit required to be paid out of the trust under the
Supplemental Life Plan shall be limited to the amount of proceeds received on
any policy of insurance held by the Trust on the life of the Participant whose
death gave rise to the benefit payment.
ARTICLE IV
4.1 The Company shall provide the Trustee's Agent with a certified copy
of the Plan and all amendments thereto and of the resolutions of the Board of
Directors of the Company approving the Plan and all amendments thereto, promptly
upon their adoption. After the execution of this Agreement, the Company shall
promptly file with the Trustee and the Trustee's Agent a certified list of the
names and specimen signatures of the officers of the Company, the members of the
Executive Benefits Committee and any person authorized to act for them. The
Company shall promptly notify the Trustee and the Trustee's Agent of the
addition or deletion of any person's name to or from such list, respectively.
Until receipt by the Trustee and/or the Trustee's Agent of notice that any
person is no longer authorized so to act, the Trustee or the Trustee's Agent may
continue to rely on the authority of the person. All certifications, notices and
directions by any such authorized person or persons to the Trustee or the
Trustee's Agent shall be in writing signed by such person or persons. The
Trustee and the Trustee's Agent may rely on such certification, notice or
direction purporting to have been signed by or on behalf of such person or
persons that the Trustee or the Trustee's Agent reasonably believes to have
been signed thereby. The Trustee and the Trustee's Agent may rely on any
certification, notice or direction of the Company that the Trustee or the
Trustee's Agent reasonably believes to have been signed by a duly authorized
officer or agent of the Company. The Trustee and the Trustee's Agent shall
have no responsibility for acting in reliance upon any notification believed
by the Trustee or the Trustee's Agent to have been so signed by a duly
authorized officer or agent of the Company. The Company shall be responsible for
keeping accurate books and records with respect to the employees of the Company,
their compensation and their rights and interests in the Fund under the Plan.
4.2 The Company shall make its contributions to the Trust in accordance
with appropriate corporate actions and the Trustee shall have no responsibility
with respect thereto, except to add such contributions to the Fund; provided
that the Executive Benefits Committee under each plan my undertake on the behalf
of the Participants such action as is necessary to compel the Company to meet
its legal obligations under the Plan.
4.3 The Company shall indemnify and hold harmless the Trustee, the
Trustee's Agent, and members of the Executive Benefits Committee under the Plan
for any liability or expenses, including without limitation reasonable
attorney's fees, incurred by the Trustee, the Trustee's Agent or the Executive
Benefits Committee under the Plan with respect to holding, managing, investing
or otherwise administering the Trust and/or the Fund, other than by such
person's or entity's negligence or willful misconduct.
ARTICLE V
5.1 The Trustee and the Trustee's Agent shall not be liable in discharging
their duties hereunder, including without limitation in the case of the Trustee
its duty to invest and reinvest the Fund, if the Trustee and the Trustee's Agent
act in good faith and in accordance with the terms of this Agreement and any
applicable Federal or state laws, rules or regulations.
5.2 Subject to investment guidelines agreed to in writing from time to
time by the Company and the Trustee, the Trustee shall have the power in
investing and reinvesting the Fund in its sole discretion:
(a) To invest and reinvest in any property, real, personal or mixed,
wherever situated and whether or not productive of income or
consisting of wasting assets, including without limitation,
common and preferred stocks, bonds, notes, debentures (including
convertible stocks and securities but not including any stock
or security of the Trustee, or any affiliate thereof),
leaseholds, mortgages, certificates of deposit or demand or
time deposits (including any such deposits with the Trustee),
shares of investment companies and mutual funds, interests in
partnerships and trusts, insurance policies and annuity
contracts, and oil, mineral or gas properties, royalties,
interests or rights, without being limited to the classes of
property in which trustees are authorized to invest by any law
or any rule of court of any state and without regard to the
proportion any such property may bear to the entire amount of
the Fund;
(b) To invest and reinvest all or any portion of the Fund
collectively through the medium of any common, collective or
commingled trust fund that may be established and maintained by
the Trustee for plans or programs which are not tax qualified,
subject to the instrument or instruments establishing such trust
fund or funds and with the terms of such instrument or
instruments, as from time to time amended, being incorporated
into this Agreement to the extent of the equitable share of the
Fund in any such common collective or commingled trust fund;
(c) To retain any property at any time received by the Trustee;
(d) To sell or exchange any property held by it at public or private
sale, for cash or on credit, to grant and exercise options for
the purchase or exchange thereof, to exercise all conversion or
subscription rights pertaining to any such property and to enter
into any covenant or agreement to purchase any property in the
future;
(e) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating
to property held by the Trust and to consent to or oppose any
such plan or any action thereunder or any contract, lease,
mortgage, purchase, sale or other action by any person;
(f) To deposit any property held by the Trustee with any protective,
reorganization or similar committee, to delegate discretionary
power thereto, and to pay part of the expenses and compensation
thereof and any assessments levied with respect to any such
property so deposited;
(g) To extend the time of payment of any obligation held by the
Trustee;
(h) To hold uninvested any moneys received by the Trustee, without
liability for interest thereon, until such moneys shall be
invested, reinvested or disbursed;
(i) To exercise all voting or other rights with respect to any
property held by the Trustee and to grant proxies, discretionary
or otherwise;
(j) For the purposes of the Trust, to borrow money from others, to
issue its promissory note or notes therefor, and to secure the
repayment thereof by pledging any property held by the Trustee;
(k) To manage, administer, operate, insure, repair, improve, develop,
preserve, mortgage, lease or otherwise deal with, for any period,
any real property or any oil, mineral or gas properties,
royalties, interests or rights held by the Trustee directly or
through any corporation or partnership, either alone or by
joining with others, using other Trust assets for any such
purposes, to modify, extend, renew, waive or otherwise adjust any
provision of any such mortgage or lease and to make provision for
amortization of the investment in or depreciation of the value of
such property;
(l) To employ suitable agents and counsel, who may be counsel to the
Company or the Trustee, and to pay their reasonable expenses and
compensation from the Fund to the extent not paid by the Company;
(m) To cause any property held by the Trustee to be registered and
held in the name of one or more nominees, with or without the
addition of words indicating that such securities are held in a
fiduciary capacity, and to hold securities in bearer form;
(n) To settle, compromise or submit to arbitration any claims, debts
or damages due or owing to or from the Trust, respectively, to
commence or defend suits or legal proceedings to protect any
interest of the Trust, and to represent the Trust in all suits
or legal proceedings in any court or before any other body or
tribunal; provided, however, that the Trustee shall not be
required to take any such action unless the Trustee and the Trust
shall have been indemnified by the Company to the Trustee's
reasonable satisfaction against liability or expenses the Trust
and the Trustee might incur therefrom;
(o) To organize under the laws of any state a corporation or trust
for the purpose of acquiring and holding title to any property
which the Trust is authorized to acquire hereunder and to
exercise with respect thereto any or all of the powers set
forth herein;
(p) To pay premiums on any insurance policy, or annuity policy, at
the direction of the Executive Benefits Committee under the Plan,
in order to safeguard the benefits payable to the Participant and
Beneficiary under the Plan or to borrow against the cash value of
any insurance or annuity policy or policies held by the Trustee,
only if the Trustee is directed to do so by the Executive
Benefits Committee under the Plan;
(q) To change the insured individual of any insurance policy held by
the Trustee, if the insured ceases to be entitled to benefits
under the Plan, to another employee entitled to benefits under
the Plan, as directed by the Executive Benefits Committee under
the Plan;
(r) To change the terms of any policies of insurance, as directed by
the Executive Benefits Committee under the Plan and as agreed to
by the insurance carrier; and
(s) Generally, to do all acts, whether or not expressly authorized,
that the Trustee may deem necessary or desirable for the
protection of the Fund.
5.3 No person dealing with the Trustee shall be under any obligation to
see to the proper application of any money paid or property delivered to the
Trustee or to inquire into the Trustee's authority as to any transaction.
5.4 The Trustee shall distribute cash or property from the Fund in
accordance with Article III hereof. The Trustee may make any distribution
required hereunder by mailing a check for the specified amount, or delivering
the specified property, to the person to whom such distribution or payment is to
be made, at such address as may have been last furnished to the Trustee, or if
no such address shall have been so furnished, to such person in care of the
Company, or (if so directed by the Company) by crediting the account of such
person or by transferring funds to such person's account by bank or wire
transfer.
5.5 If any life insurance premiums cannot be paid from the Fund, the
Trustee shall elect the policy option which, in the written opinion of the
insurance company issuing such policy, is the policy option which will extend
the current amount of life insurance protection for the longest period.
5.6 If at any time there is no person authorized to act under this
Agreement on behalf of the Company, the Board of Directors of the Company shall
have the authority to act hereunder.
5.7 Notwithstanding any other contrary provision, any shares of stock of
the Company held by the Trustee may be sold only pursuant to the written
direction of the Executive Benefits Committee under the Plan.
ARTICLE VI
6.1 The Company shall pay any Federal, state and local taxes on the Fund,
or any part thereof, and on the income therefrom.
6.2 The Trustee shall not be entitled to compensation and fees for his
services under this Agreement. The Trustee's Agent shall be entitled to such
compensation for its services under this Agreement as is agreeable to the
Company, the Trustee and the Trustee's Agent. Such expenses and compensation
shall be a charge on the Fund. Such compensation, fees and reimbursement for
expenses and liability described in Section 4.3 above, shall be paid to the
Trustee or the Trustee's Agent by the Company directly; but if the Company
shall fail to do so, the Trustee shall be entitled to withdraw all amounts to
which it is entitled from the Fund, to the extent the Fund is sufficient, and to
the extent the Fund is not sufficient, the additional amounts due shall
constitute a lien against the Fund. If the Trustee is paid from the Fund, the
Company shall reimburse the Fund for any such payments.
ARTICLE VII
7.1 The Trustee shall maintain records with respect to the Fund that show
all the Trustee's receipts and disbursements hereunder. The records of the
Trustee with respect to the Fund shall be open to inspection by the Company and
Plan Participants, or their representatives, at all reasonable times during
normal business hours and may be audited not more frequently than once each
fiscal year by an independent certified public accountant engaged by the
Company.
7.2 Within a reasonable time after the close of each fiscal year of the
Company (or, in the Trustee's discretion, at more frequent intervals), or of any
termination of the duties of the Trustee hereunder, the Trustee shall prepare
and deliver to the Company and the Trustee's Agent a statement of transactions
reflecting Trustee's acts and transactions as Trustee during such fiscal year,
portion thereof or during such period from the close of the last fiscal year
or last statement period to the termination of the Trustee's duties,
respectively, including a statement of the then current value of the Fund. Any
such statement shall be deemed an account stated and accepted and approved by
the Company, and the Trustee shall be relieved and discharged, as if such
account had been settled and allowed by a judgment or decree of a court or
competent jurisdiction, unless protested by written notice to the Trustee
within sixty (60) days of receipt thereof by the Company. The Trustee shall
have the right to apply at any time to a court of competent jurisdiction for
judicial settlement of any account of the Trustee not previously settled as
herein provided or for the determination of any question of construction or for
instructions. In any such action or proceeding it shall be necessary to join as
parties only the Trustee and the Company (although the Trustee may also join
such other parties as the Trustee may deem appropriate), and any judgment or
decree entered therein shall be conclusive.
ARTICLE VIII
8.1 The Trustee may resign at any time by delivering written notice
thereof to the Company; provided, however, that no such resignation shall take
effect until the earlier of (i) thirty (30) days from the date of delivery of
such notice to the Company or (ii) the appointment of a successor trustee.
8.2 The Trustee may be removed at any time by the Company, pursuant to a
resolution of the Board of Directors of the Company, upon delivery to the
Trustee of a certified copy of such resolution and thirty (30) days written
notice, unless such notice period is waived in whole or in part by the Trustee,
of (i) such removal and (ii) the appointment of a successor trustee.
8.3 Upon the resignation or removal of the Trustee, a successor trustee
shall be appointed by the Company. Such appointment shall take effect upon the
delivery to the Trustee of (a) a written appointment of such successor trustee,
duly executed by the Company, and (b) a written acceptance by such successor
trustee, duly executed thereby. Any successor trustee shall have all the
rights, powers and duties granted the Trustee hereunder.
8.4 If, within thirty (30) days of the delivery of the Trustee's written
notice of resignation, a successor trustee shall not have been appointed, the
Trustee may apply to any court of competent jurisdiction for the appointment of
a successor trustee.
8.5 Upon the resignation or removal of the Trustee and the appointment of
a successor trustee, and after the acceptance and approval of the Trustee's
account, the Trustee shall transfer and deliver the Fund to such successor.
ARTICLE IX
9.1 The Trust may be terminated at any time by the Company, pursuant to a
resolution of the Board of Directors thereof, with the written consent of a
majority of the then Plan Participants (excluding beneficiaries), upon delivery
to the Trustee of a certified copy of such resolution and a written instrument
of termination duly executed and acknowledged in the same form as this
Agreement, together with a certification, in such form as the Trustee may
require, that the consent of Plan Participants has been obtained. However,
the Trust may not be terminated and no distributions other than normal benefit
payments may be made in the event that any bankruptcy or other judicial
proceeding is pending that could result in the Company being determined bankrupt
or insolvent within the meaning of Article 2.1.
9.2 Upon the termination of the Trust, the Trustee shall, after the
acceptance and approval of its account, distribute in accordance with the
written directions of the Trustee's Agent the amount to the credit of each
Account in the Fund to the Plan Participants or, if any Participant is dead
or incompetent, to his Beneficiary; provided, however, that after satisfaction
of all liabilities with respect to all Participants in the Plan and their
Beneficiaries as certified to by the Trustee's Agent, the Trustee shall
distribute the Fund to the Company upon its written direction. Upon completing
such distribution, the Trustee shall be relieved and discharged. The powers of
the Trustee shall continue as long as any part of the Fund remains in its
possession.
ARTICLE X
10.1 This Agreement may be amended, in whole or in part, at any time and
from time to time, by the Company, pursuant to a resolution of the Board of
Directors thereof, by delivery to the Trustee of a certified copy of such
resolution and a written instrument duly executed and acknowledged in the form
as this Agreement, except that the duties and responsibilities of the Trustee
shall not be increased without the Trustee's written consent; provided, however,
any such amendment adversely affecting any benefit due a Participant or his
Beneficiary, or the procedures for distribution thereof, shall not become
effective unless such Participant or Beneficiary consents thereto in writing.
ARTICLE XI
11.1 This Agreement shall be construed and interpreted under, and the Trust
hereby created shall be governed by, the laws of the state of Indiana, insofar
as such laws do not contravene any applicable Federal laws, rules or
regulations.
11.2 Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude gender or number when a different gender or number
would be appropriate.
11.3 No right or interest of any Participant under any Plan under the Trust
shall be transferable or shall be subject to alienation, anticipation or
encumbrance, and no right or interest of any Participant or Beneficiary in any
such Plan shall be subject to any garnishment, attachment or execution.
Notwithstanding anything to the contrary, the Fund shall at all times remain
subject to claims of creditors of the Company in the event the Company is
adjudicated to be bankrupt or insolvent as provided herein.
11.4 The Company agrees that by the establishment of this Trust it hereby
foregoes any judicial review certification by the Trustee's Agent as to the
benefit payable to any persons hereunder. If a dispute arises as to the amounts
or timing of any such benefits or the persons entitled thereto under the Plan or
this Agreement, the Company agrees that such dispute shall be resolved by
binding arbitration proceedings initiated in Elkhart, Indiana , in accordance
with the rules of the American Arbitration Association, and that the results
of such proceedings shall be conclusive and shall not be subject to judicial
review. It is expressly understood that pending the resolution of any such
dispute, payment of benefits shall be made and continued by the Trustee in
accordance with the certification of the Trustee's Agent and that the Trustee
and the Trustee's Agent shall have no liability with respect to such payments.
The Company also agrees to pay the entire cost of any arbitration or legal
proceeding initiated by it or by the Trustee's Agent or by any Plan Participant
or Beneficiary, including the legal fees of the Trustee and the Trustee's Agent,
regardless of the outcome of any such proceeding, and until so paid the expenses
thereof shall be a charge on and lien against the Fund.
11.5 This Agreement shall be binding upon and inure to the benefit of any
successor to the Company or business as the result or merger, consolidation,
reorganization, transfer of assets or otherwise and any subsequent successor
thereto. In the event of any such merger, consolidation, reorganization,
transfer of assets or other similar transaction, the successor to the Company or
its business or any subsequent successor thereto shall promptly notify the
Trustee in writing of its successorship and furnish the Trustee and the
Trustee's Agent with the information specified in Section 4.1 of this
Agreement. In no event shall any such transaction described herein suspend or
delay the rights of Plan Participants or the Beneficiaries of deceased
participants to received benefits hereunder.
11.6 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to an original, but all of which shall together constitute
only one Agreement.
11.7 Notwithstanding any other provision of this Agreement, the Trustee
shall automatically and immediately terminate the Trust and distribute the Fund
to the Participants in the amount of their respective Account(s), upon the
occurrence of any one or more of the following events:
(a) any of the Company's usual lines of credit become
terminated, accelerated and/or unavailable and cannot be
replaced within 120 days;
(b) the Company's debt to net worth ratio exceeds 3:1;
(c) there is a hostile takeover that results in a change in more
than five (5) of the seats on the board of directors of the
Company during any twelve (12) month period; or
(d) the majority of the Executive Benefits Committee agree that
certain situations exist or actions have been taken that
jeopardize the continuance of the Plan.
(signatures on following page)
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed in Elkhart, Indiana, on the day and year first above written.
"COMPANY"
Miller Building Systems, Inc.
By: \Edward C. Craig
Edward C. Craig
"TRUSTEE"
\Thomas J. Martini
Thomas J. Martini
MILLER BUILDING SYSTEMS, INC. EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
JUly 3, 1999
The subsidiaries of the Registrant are as follows:
Percentage of Voting
Name Incorporated Securities Owned By
Under Law Of: Immediate Parent
Miller Building Systems
of Indiana, Inc. Indiana 100%
Miller Building Systems
of Pennsylvania, Inc. Indiana 100%
Miller Building Systems
of Kansas, Inc. Kansas 100%
Miller Building Systems
of South Dakota,Inc. South Dakota 100% (1)
Miller Construction
Services, Inc. Indiana 100%
United Structures, Inc. New York 100%
PME Pacific Systems, Inc. California 100% (2)
(1) Wholly-owned subsidiary of Miller Building Systems of Kansas, Inc.
(2) Inactive Corporation with no assets.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Miller Building Systems, Inc. on Form S-3 (File No.333-60747 and Form S-8
(File No. 33-88158 and 33-50512), and in the related Prospectus, of our report
dated July 30, 1999, (except as to the information presented in Notes C and J
for which the date is August 20, 1999), on our audits of the consolidated
financial statements and financial statement schedule of Miller Building
Systems, Inc. and subsidiaries as of July 3, 1999 and June 27, 1998, and for
each of the three fiscal years in the period ended July 3, 1999, which report
is included in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
South Bend, Indiana
September 17, 1999
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<ARTICLE> 5
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-3-1999
<PERIOD-END> JUL-3-1999
<CASH> 55,503
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<RECEIVABLES> 12,885,571
<ALLOWANCES> (48,000)
<INVENTORY> 5,502,052
<CURRENT-ASSETS> 18,773,310
<PP&E> 14,962,620
<DEPRECIATION> 5,731,885
<TOTAL-ASSETS> 32,775,186
<CURRENT-LIABILITIES> 8,301,042
<BONDS> 0
0
0
<COMMON> 42,506
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<TOTAL-LIABILITY-AND-EQUITY> 32,775,186
<SALES> 65,637,040
<TOTAL-REVENUES> 65,637,040
<CGS> 53,655,356
<TOTAL-COSTS> 60,795,091
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<INCOME-CONTINUING> 0
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<NET-INCOME> 2,548,030
<EPS-BASIC> .72
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