FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File Number 0-23400
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DT INDUSTRIES, INC.
[Exact name of registrant as specified in its charter]
DELAWARE 44-0537828
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Corporate Centre, Suite 2-300
1949 E. Sunshine 65804
Springfield, MO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (417) 890-0102
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
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None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
(Title of each class)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes. X No.
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K X .
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As of September 16, 1996, the aggregate market value of the voting stock
held by non-affiliates (5,521,104 shares) of the registrant was $179,435,880
(based on the closing sales price, on such date, of $32.50 per share).
As of September 16, 1996, there were 9,009,250 shares of common stock,
$0.01 par value outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement Dated October 1, 1996 (portion) (Part III).
Annual Report to Shareholders for the Fiscal Year
Ended June 30, 1996 (portion) (Parts I, II and IV).
<PAGE>
DT INDUSTRIES, INC.
INDEX TO FORM 10-K
Page
Part I
Item 1. Business................................................... 1
Item 2. Properties................................................. 12
Item 3. Legal Proceedings.......................................... 13
Item 4. Submission of Matters to a Vote of Security Holders........ 13
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.................................................... 14
Item 6. Selected Financial Data.................................... 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 15
Item 8. Financial Statements and Supplementary Data................ 25
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 25
Part III
Item 10. Directors and Executive Officers of the Registrant......... 26
Item 11. Executive Compensation..................................... 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 26
Item 13. Certain Relationships and Related Transactions............. 26
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................... 27
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
DT Industries, Inc. ("DTI", the "Registrant" or the "Company") is an
engineering-driven designer, manufacturer and integrator of automated production
equipment and systems used to manufacture, test or package a variety of
industrial and consumer products. In addition, the Company produces precision
metal components and wear parts for a broad range of industrial applications.
The Company operates in two business segments: Special Machines and Components:
- The Special Machines segment, which accounts for approximately
80% of the Company's consolidated net sales, consists of two core
groups: DTI Automation and DTI Packaging. DTI Automation designs
and builds a complete line of integrated automated assembly and
testing systems. Integrated systems combine a variety of
manufacturing technologies into a complete automated manufacturing
system. Core capabilities of the Automation Group include the
design and manufacture of small to large automated assembly
systems, high-speed precision assembly systems, flexible assembly
systems, automated resistance and arc welding systems and RIGO
thermoforming systems. The Automation Group also designs and builds
a variety of custom equipment, special machines and tools and dies.
DTI Packaging designs and builds proprietary machines and
integrated systems used to perform processing and packaging tasks.
Core capabilities of the Packaging Group include the design and
manufacture of thermoforming, blister packaging and foam extrusion
systems, and a complete line of tablet processing and packaging
systems. The Special Machines segment's products are used
principally in the electronics, automotive, pharmaceutical,
nutritional and food processing, consumer products, appliance and
tire industries. Sales of products by the Company's Special
Machines segment also produce a stream of recurring revenues from
replacement parts and service as the Company's substantial
installed base of equipment is maintained and upgraded over time.
Each group is made up of a class of products and services that
complement one another in terms of markets, engineering
requirements, product needs and systems capabilities.
- The Components segment, which accounts for approximately 20% of
consolidated net sales, stamps and fabricates a range of standard
and custom metal components for the transportation, appliance,
heavy equipment, agricultural equipment and electrical industries
as well as wear parts for the textile industry.
The Company is a Delaware corporation organized in January 1993 and the
successor to Peer Corporation, Detroit Tool Group, Inc. ("DTG") and Detroit Tool
and Engineering Company ("DTE"). Peer Corporation was organized in June 1992 to
acquire the business and assets of the Peer Division of Teledyne, Inc. ("Peer")
and the stock of DTG, the sole stockholder of DTE and Detroit Tool Metal
Products Co. ("DTMP"). Through acquisition and product development, the Company
has grown from net sales of $50.6 million in the fiscal year ended June 30, 1993
to fiscal 1996 consolidated net sales of $235.9 million.
On July 19, 1996, following the end of the Company's fiscal year, the
Company acquired the issued and outstanding stock of Mid-West Automation
Enterprises, Inc. ("Mid-West"), a designer and manufacturer of integrated
precision assembly systems. Mid-West's revenues for its fiscal year ended May
26, 1996 were approximately $88 million.
1
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The following table summarizes all the acquisitions made by the
Company, segregated by business segment and core business group:
<TABLE>
<CAPTION>
ACQUISITION DATE BUSINESS
<S> <C> <C>
SPECIAL MACHINES SEGMENT
DTI AUTOMATION:
Peer Division of Teledyne, July 1992 Designer and manufacturer of resistance
Inc. welding equipment and related parts
Detroit Tool and Engineering August 1992 Designer and manufacturer of integrated
Company manufacturing systems and custom equipment,
including tools and dies
Advanced Assembly August 1994 Designer, manufacturer and integrator of
Automation, Inc. ("AAA") automated production and testing equipment
Assembly Machines, Inc. January 1996 Manufacturer of high-speed assembly systems
("AMI")
Mid-West Automation July 1996 Designer and manufacturer of integrated
Enterprises, Inc. precision assembly systems
DTI PACKAGING:
Sencorp Systems, Inc. August 1993 Designer and manufacturer of plastics
("Sencorp") processing and packaging equipment, systems
and related parts
Stokes-Merrill, Inc. December 1993 Designer and manufacturer of rotary
("Stokes-Merrill") presses, tablet counting equipment and
related parts
Lakso Division of Package February 1995 Designer and manufacturer of automated
Machinery Company ("Lakso") packaging machinery, systems and related
parts
Armac Industries, Ltd. February 1995 Designer and manufacturer of plastics
("Armac") processing and packaging equipment
H.G. Kalish, Inc. ("Kalish") August 1995 Designer, manufacturer and integrator of
liquid filling and tablet packaging
equipment
Swiftpack Automation November 1995 Designer and manufacturer of packaging
Limited ("Swiftpack") equipment primarily for the pharmaceutical
market
COMPONENTS SEGMENT
Detroit Tool Metal Products Co. August 1992 Manufacturer of custom stamped metal
products
Fred J. Potter Co., Inc. December 1992 Manufacturer of precision wear parts for
("Potter") industrial knitting machines
Arrow Precision Elements, September 1995 Manufacturer and distributor of a line of
Inc. ("Arrow") knitting elements
</TABLE>
Financial information about the Company's industry segments is included
in Note 15 to the Consolidated Financial Statements of the Company.
The Company's principal executive offices are located at 1949 E.
Sunshine, Suite 2-300, Springfield, Missouri 65804 and its telephone number is
(417) 890-0102.
2
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BUSINESS STRATEGY
The goal of DT Industries, Inc. is to provide, develop or acquire
complementary technologies and capabilities to supply customers with integrated
processing, assembly, testing and packaging systems for their products. The
Company believes certain trends in today's economic environment will provide it
with substantial growth opportunities. These trends among its customer base
include increased productivity and quality focus, flexibility, globalization,
outsourcing, downsizing, and vendor rationalization. The Company believes its
special machines business has greater versatility in manufacturing and
engineering than smaller, less integrated competitors and combining this
versatility with proprietary branded technology will result in greater
opportunities for internal growth. As an element of this operating strategy, DTI
seeks to improve profitability through control of overhead costs and capital
programs to reduce manufacturing costs.
Key elements of the Company's strategy include the following:
ACQUISITIONS. The markets for the Company's products are fragmented.
Special machines, for example, are characterized by a number of industry niches
in which few manufacturers compete. The Special Machines segment has established
its presence in particular niches through acquisitions, and the Company intends
to pursue additional acquisitions, or strategic alliances with, companies which
are established technical and market leaders. The Company can provide its
customers more complete integrated automation systems by continuing to expand
the breadth of its products and engineering expertise, a capability the Company
believes will enable it to benefit from its customers' increasing demand for
complete systems. Additionally, the Company will pursue acquisitions, or
strategic alliances with, companies which provide significant potential for
cross-selling among the various product lines, margin improvement through
greater use of in-house manufacturing and cost savings through more efficient
utilization of manufacturing capacity.
CROSS-SELLING. The Company works closely with its customers to provide
products which meet their evolving needs and it seeks to differentiate itself
from its competitors by emphasizing product quality, service and single source
project management. The Company's sales force capitalizes upon its technical
expertise in Company products and particular industry niches in which the
Company competes. As the Company implements its acquisition strategy and
integrates acquired operations, it is able to expand the range of products it
can offer to its customers. The Company believes substantial cross-selling
opportunities exist across the product lines of the Special Machines segment.
For example, the combined marketing efforts and engineering capabilities of AAA
and AMI were successful in obtaining an $8 million project from a significant
customer that might have gone to a competitor. While AAA had established a
strong customer relationship, the project required certain technologies provided
by AMI.
ENGINEERING EXPERTISE. The Company's engineering strategy is to satisfy
the growing demand for small, medium and large complex, integrated automation
solutions by utilizing the versatile engineering expertise of its special
machines businesses. Additionally, the custom tool and die engineering expertise
of the Company's Special Machines segment provides the Components segment with
the ability to offer customers complex precision stamping solutions. The Company
expects to continue to acquire engineering and design expertise through
acquisitions and licensing arrangements.
MANUFACTURING SYNERGIES. The Company intends to utilize its
manufacturing capacity and engineering capabilities fully by directing work to
facilities with specific capabilities and manufacturing strengths.
3
<PAGE>
PRODUCT LINE EXPANSION. Through acquisitions, product license
arrangement and strategic alliances, the Company has increased its engineering
capabilities and product offerings. DTI Packaging now has the capability to
provide customers with fully integrated tablet processing and packaging systems.
DTI Automation has increased its assembly systems capabilities as more fully
described in Markets and Products below. The Company's objective is to provide
customers with integrated automation solutions rather than single use equipment.
The Company also uses its engineering expertise and manufacturing capability to
develop new products and technology for existing markets the Company serves and
to provide entree into new markets.
INTERNATIONAL. Although less than 15% of the Company's consolidated net
sales has been attributable to international sales, the Company seeks to
increase its international sales through strategic alliances, international
agents, foreign offices and acquisitions. The Company acquired Canadian-based
Kalish and the U.K.-based Swiftpack during fiscal 1996 significantly enhancing
its international packaging presence. Also, continued international sales growth
by DTI Packaging has resulted from the strategic alliance with David Standard
Corporation for the sales of foam extrusion systems. DTI Automation continued to
expand its international presence by forming an alliance with a subsidiary of
Claas KGaA to open a sales and service office in Beelen, Germany. This alliance
also makes it possible to market the automation systems of one of Europe's
finest manufacturers to the Company's customer base.
MARKETS AND PRODUCTS
SPECIAL MACHINES. The Special Machines segment designs and builds a
complete line of automated production systems used to manufacture, test and/or
package products for a range of industries, including electronics, automotive,
pharmaceutical, nutritional and food processing, consumer products, appliance
and tires. The Company also manufactures custom production equipment for
specific customer applications, proprietary machines for specific industrial
applications and integrated systems which may combine features of custom and
proprietary equipment. The Special Machines segment consists of two core
business groups: DTI Automation and DTI Packaging.
DTI AUTOMATION. The DTI Automation group designs and builds a complete
line of automated assembly and test systems, special machines and large complex
dies. The Group is ideally suited for fast-paced, concurrent engineering
projects where changes in tooling and processes can occur in an advanced stage
of system design. Sales from DTI Automation accounted for approximately 45%, 45%
and 47% of consolidated net sales for fiscal 1996, 1995 and 1994, respectively.
INTEGRATED SYSTEMS. Integrated systems combine a wide variety of
manufacturing technologies into a complete automated manufacturing system.
Utilizing advanced computers, robotics, vision systems and other technologies,
the Company provides small to large automated assembly systems, high-speed
precision assembly systems, flexible assembly systems, automated resistance and
arc welding systems for the electronics, automotive, appliance, electrical, and
hardware industries. The Company's expansion in providing a full range of
integrated, automated systems was enhanced during fiscal 1996 by the acquisition
of Assembly Machines, Inc. and has been further accelerated with the recent
acquisition of Mid-West Automation Enterprises, Inc. Mid-West offers a variety
of precision assembly equipment to industry, utilizing proprietary modular
building blocks and standardized components in carousel, in-line and rotary
assembly systems.
4
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CUSTOM MACHINES. The Company's custom machine building capabilities
include: engineering, project management, machining and fabrication of
components, installation of electrical controls, final assembly and testing. A
customer will usually approach the Company with a manufacturing objective, and
DTI will work with the customer to design, engineer, assemble, test and install
a machine to meet the objective. The customer often retains rights to the design
after delivery of the machine since the purchase contract typically includes the
design of the machine, however, the engineering and manufacturing expertise
gained in designing and building the machine is often reapplied by the Company
in projects for other customers.
RIGO THERMOFORMERS. Under a license agreement with RIGO Group, S.r.l.,
COMI S.r.l. and PMM S.R.l., the Company has the rights to use certain deep-draw
thermoforming technology. The Company is utilizing the RIGO technology in a line
of machines designed to produce the inner liners for refrigerators ("RIGO
Systems"). The Company believes the RIGO technology provides significant
advantages over competing technology, such as quicker changeover of tooling,
lower material costs, higher productivity and greater end product efficiency.
The license agreement continues until terminated in accordance with its
provisions and may be terminated by either party upon 90 days' notice to the
other.
TOOLING AND DIES. The Company possesses considerable expertise in the
design, engineering and production of precision tools and dies. The Company
utilizes its precision machining capability and skilled work force to produce a
variety of precision dies including single stage, progressive and transfer dies.
Progressive and transfer dies are designed to perform multiple functions as the
piece of metal proceeds through the press. The Company is often able to design a
die that minimizes the amount of scrap produced in the stamping process, which
lowers the overall production costs associated with the die. The Company
currently employs approximately 50 tool and die makers and trains them through a
federally-certified apprenticeship program. Personnel trained as tool and die
makers often apply their skills to the manufacture of the Company's special
machines. The Company maintains sophisticated networked CAD/CAM technology which
improves its tool and die production capabilities, lowers costs, increases
flexibility and reduces production time. The Special Machines segment's tool and
die operations also provide marketing opportunities to the Components segment
because the Components Group is often used to test a die and obtain the initial
opportunity to pursue the stamping business.
AUTOMATED RESISTANCE AND ARC WELDING SYSTEMS. The Company manufactures
and sells a line of standard resistance welding equipment as well as special
automated welding systems designed and built for specific applications. Marketed
under the brand name Peer(TM), the Company's products are used in the
automotive, appliance and electrical industries to fabricate and assemble
components and subassemblies. The Company's resistance welding equipment is also
used in the manufacture of file cabinets, school and athletic lockers, store
display shelves, metal furniture and material storage products.
DTI PACKAGING. The DTI Packaging group designs and builds proprietary
machines and integrated systems which are marketed under individual brand names
and manufactured for specific industrial applications using designs owned or
licensed by the Company. Although these machines are generally cataloged as
specific models, they are usually modified for specific customer requirements
and often combined with other machines into integrated systems. Many customers
also request additional accessories and features which typically generate higher
revenues and enhanced profit opportunities. DTI Packaging products include
thermoformers, blister packaging systems, extrusion systems, rotary presses and
complete packaging systems. Packaging systems include: bottle unscrambling,
tablet counting, filling, cottoning, capping, labeling, collating, cartoning and
liquid filling, electronic filling and tube filling, many of which have been
added during fiscal 1996. The Company believes this equipment maintains a strong
reputation among its customers for quality, reliability and ease of operation
and maintenance. The Company also sells replacement parts and accessories for
its substantial installed base of machines. Sales from DTI Packaging accounted
for approximately 37%, 31% and 24% of consolidated net sales for fiscal 1996,
1995 and 1994, respectively.
5
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THERMOFORMERS. A thermoformer is a machine which heats plastic material
and uses pressure and/or vacuum to force it into a mold to form a product.
Marketed under the brand names Sencorp(R) and Armac(TM), the Company's
thermoformers are used by customers in North America, Europe and Asia to form a
variety of products including: specialized cups, plates and food containers,
trays for food and medical products and other plastic applications.
The Company's thermoformers are sold primarily to custom formers who
use the machines to create thermoformed items which are sold to a variety of end
users. The Company also sells thermoformers directly to end users, including
large producers of electrical and healthcare products, cosmetics, hardware, and
other consumer products.
The Company's thermoformers can be used to form all thermoplastic
materials which are fed into the machines from rolls. The Company produces a
line of thermoformers of different sizes, heating ovens, maximum draw depths and
press capacities. Certain thermoformers produced by the Company feature a fully
integrated process control system to regulate the thermoformer's functions.
Depending upon the customer's requirements, the control system is capable of
networking with, or downloading to, the customer's computers or other equipment
and the Company's service center. This on-line diagnostic capability allows the
Company to provide real-time service and support to its customers. The Company
believes it is the only thermoformer manufacturer offering such a service.
BLISTER PACKAGING SYSTEMS. Blister packaging is an increasingly common
method of displaying consumer products for sale in hardware stores, convenience
stores, warehouse stores, drug stores and similar retail outlets. Batteries,
cosmetics, hardware items, electrical components, razor blades and toys are
among the large variety of products sold in a clear plastic blister or two-sided
package. The Company designs and manufactures machinery marketed under the brand
names Sencorp(R) and Armac(TM) which performs blister packaging by heat-sealing
a clear plastic bubble, or blister, onto coated paperboard, or by sealing
two-sided packages using heat or microwave technology.
The Company's blister packaging systems are primarily sold to
manufacturers of the end products. These customers, with higher volume
production requirements, may use a thermoformer in-line with a blister sealer to
form blisters, insert their product and seal the package in one continuous
process, referred to as a form/fill/seal configuration. Customers having
relatively low volume production often use a stand-alone blister sealing machine
to seal products in a package using blisters purchased from a custom former.
EXTRUDERS. An extrusion process is used to convert plastic resin and
additives into a continuous melt and force such melt through a die to produce a
desired shape that is then cooled. Marketed under the brand name Sencorp(R), the
Company's foam extruders are used to produce products such as building
insulation, display board, meat trays, bottle wrap protection labels and egg
cartons. The Company's foam extruders are primarily sold to large plastics
companies that use the machines to create end products and sheet products. The
Company also manufactures reclaim extruders which process a variety of plastic
materials from ground form to finished pellet form.
ROTARY PRESSES. The Company believes it is the largest U.S. designer
and manufacturer of rotary presses. The Company designs and manufactures rotary
presses used by customers in the airbag, candy, food supplement, ceramic,
ordnance, specialty chemical, and pharmaceutical industries to produce tablets.
Marketed under the brand name Stokes(TM), the Company's line of rotary presses
includes machines capable of producing 17,000 tablets per minute and other
machines capable of applying up to 40 tons of pressure for large compacts.
Products produced on the Company's rotary presses include Lifesavers(R), and
Breathsavers(R) brand mints, Centrum(R) brand vitamins and inflation pellets for
automotive airbags.
6
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During fiscal 1996, the Company established a business alliance with
Horn & Noack Pharmatechnick GmbH, for the purpose of licensing German rotary
press technology designed primarily for the pharmaceutical and nutritional
markets. The agreement gives the Company the exclusive right to manufacture and
market this press technology under the Stokes(TM) brand in North and Central
America and non-exclusively in the rest of the world excluding Europe. The
Company plans to market the pharmaceutical press through DTI Packaging, one of
the world's leaders in pharmaceutical filling and packaging systems.
PACKAGING SYSTEMS. The Company's expansion in providing integrated
packaging lines was accelerated by the acquisition of Kalish in August 1995 and
Swiftpack in November 1995. The Company designs, manufactures or distributes a
complete line of products utilized for packaging, liquid filling or tube filling
applications. The equipment manufactured by the Company, which includes: bottle
unscramblers, slat tablet counters, electronic counters, liquid fillers,
cottoners, cappers and labelers, collators and cartoners, can be sold as an
integrated system or individual units. These machines are marketed under the
brand names of Kalish(TM), Lakso(R), Merrill(R), and Swiftpack(TM) and are
primarily delivered to customers in the pharmaceutical, nutritional, food,
cosmetic, toy and chemical industries.
The Company benefits from a substantial installed base of Lakso(R) and
Merrill(R) slat counters in the aftermarket sale of slats. Slat counting
machines use a set of slats to meter the number of tablets or capsules to be
inserted into bottles. Each size or shape of tablet or capsule requires a
different set of slats. In addition, the practice in the pharmaceutical industry
is to use a different set of slats for each product, even if the tablets are the
same size.
LABORATORY MACHINES, TOOLING, PARTS AND ACCESSORIES. The Company sells
parts and accessories for all of its proprietary machines. The Company also
produces a line of small scale blister sealers and a line of tablet pressing
equipment used to test new materials and techniques for quality control,
laboratory or other small run uses. The Company also designs and builds special
tools and dies used in custom applications of its thermoforming systems, rotary
presses and slat counters.
COMPONENTS. The Company's Components segment produces custom and
precision components for the transportation, agricultural equipment, appliance,
heavy equipment and electrical industries, as well as wear parts for the textile
industry. Sales from Components accounted for approximately 18%, 24% and 29% of
consolidated net sales for fiscal 1996, 1995 and 1994, respectively.
CUSTOM STAMPING AND FABRICATION. The Company produces precision-stamped
steel and aluminum components through its stamping and fabrication operations.
The Company believes it has a reputation with its customers for high quality
metal products, service and delivery. Sales of custom stampings and related
products and services accounted for approximately 15%, 21% and 24% of
consolidated net sales for fiscal 1996, 1995 and 1994, respectively.
STAMPING. Stamping is a process in which steel or aluminum is placed
through dies in a press to blank and/or form the metal into three-dimensional
parts. The Company's presses range in size from 32 tons to 1,500 tons, giving
the Company the flexibility to stamp flat rolled metal ranging in thickness from
.015 inches to .750 inches. Certain of the Company's presses can accommodate
dies up to 190 inches in length to perform several stamping functions in a
single press. The Company produces stamped parts using precision single stage,
progressive and transfer dies, which in some cases are designed and manufactured
by the Company's Special Machines segment. The Company's stamping presses are
capable of handling large coils and sheet sizes for blanking, deep draw and
progressive die-produced parts. Operations such as coining, deep drawing,
extruding, blanking, forming and bending are accomplished through the use of the
Company's range of equipment capabilities. The Company also possesses an Amada
Turret Press, two Trumpf(R) Plasma Presses and a laser cutter which punch,
nibble and cut parts without the need for blanking dies, which is especially
cost effective for fabricating prototype and short- to medium-quantity component
parts.
7
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Through its Special Machines segment, the Company possesses
considerable expertise in the design, engineering and production of precision
tools and dies. The Company produces tools and dies for use in its own blanking
and stamping operations as well as for sale to other industrial customers. The
Company's expertise in the design and engineering of tools and dies enhances its
blanking and stamping operations. The Company is often able to design a die that
minimizes the amount of scrap produced in the stamping process which lowers the
overall cost of the product. The Company believes its tool and die design and
engineering capability gives it an important competitive advantage in its
Components segment.
SECONDARY SERVICES. The secondary value-added services provided by the
Company are an important element of its marketing strength and competitive
position. The Company provides production welding, metal finishing, painting
preparation and painting services for its stamped components to its customers.
This vertically integrated production capability allows the Company to deliver
completed sub-assemblies directly to the customer's assembly line with single
source reliability.
The Company possesses a complete welding shop with American Welding
Society-certified welders capable of welding a variety of metals including
carbon steel, stainless steel and aluminum. The Company's skilled workers employ
a variety of techniques including spot, Mig, Heli-arc and stick welding as
determined by the requirements of the project. The Company has developed
improved processes of painting and drying parts to increase productivity and the
quality of the finish. The Company has the capability to apply most paint
finishes including pre-mixed paints, powder paint, epoxy based primers,
polyurethane finish coats and other two-part paints requiring a catalyst.
WEAR PARTS. The Company is the only full-line U.S. manufacturer of
precision wear parts for industrial knitting machines. Marketed under the brand
names Potter(TM), Arrow(R), S&W(TM) and DURA-TECH(TM), these products are
components of circular knitting machines which produce tee shirts, socks,
pantyhose and other knit fabrics. The Company's branded products, which are
included as original equipment in certain circular industrial knitting machines
sold in the United States, are consumed in use and must be regularly replaced.
The Company believes that its Potter(TM), Arrow(R), S&W(TM) and DURA-TECH(TM)
products have a reputation for high quality.
MARKETING AND DISTRIBUTION
SPECIAL MACHINES. The Company's special machines and systems are sold
primarily through the Company's direct sales force which numbers approximately
60 and to a lesser extent through manufacturers' representatives and agents.
Sales of special machines and integrated systems require the Company's sales
personnel to have a high degree of technical expertise and extensive knowledge
of the industry served. The Company's sales force consists of specialists in
each primary market in which the Company's special machines are sold. Each of
DTE, Peer, Sencorp, Stokes, Merrill, AAA, Lakso, Armac, Kalish, AMI, Swiftpack
and Mid-West has a sales force experienced in the marketing of the equipment
historically produced by each respective business. The Company believes that
cross-selling among the members of the Special Machines segment and integration
of proprietary technology and custom equipment into total production automation
systems for selected industries provide the Company with expanded sales
opportunities.
The Company's special machines are sold throughout the world by more
than 60 manufacturers' representatives and sales agents in nearly 50 countries.
The Company has sales and service offices in China and in fiscal 1996 added
offices in Canada, England and Germany. Export sales continue to grow as the
business grows and more resources are focused in the international arena. While
export sales were approximately 10% and 8% of consolidated net sales in fiscal
1995 and fiscal 1994, respectively, they were approximately 15% of consolidated
net sales for fiscal 1996.
COMPONENTS. The Company's custom stamping products are sold by the
Company's direct sales force. The Company's wear parts are sold to original
equipment manufacturers directly and to the textile industry directly and
through independent domestic distributors.
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MANUFACTURING AND RAW MATERIALS
SPECIAL MACHINES SEGMENT. The principal raw materials and components
used in the manufacturing of the Company's special machines include carbon
steel, stainless steel, aluminum, electronic components, pumps and compressors,
programmable logic controls, hydraulic components, conveyor systems, visual and
mechanical sensors, precision bearings and lasers. The Company is not dependent
upon any one supplier for raw materials or components used in the manufacture of
special machines. Certain customers specify sole source suppliers for components
of custom machines or systems. The Company believes there are adequate
alternative sources of raw materials and components of sufficient quantity and
quality.
DTI AUTOMATION GROUP. Recent building expansions have been made to
increase manufacturing capacity at the Company's-owned facilities in Missouri,
Michigan and Pennsylvania and the Company's leased facility in Ohio. Integrated
systems to assemble and test various products are designed and manufactured at
the Company's facilities in Illinois, Ohio and Pennsylvania where manufacturing
activity primarily consists of fabrication and assembly and, to a lesser extent,
machining. The facilities in Missouri house the machining, assembly and test
operations primarily used in the manufacture of tools and dies, custom special
machines, RIGO Systems and certain other integrated systems. The facility in
Michigan houses the machining, assembly and test operations used in the
manufacture of resistance welding equipment and systems. A number of
manufacturing technologies are employed at these facilities including:
fabrication of stainless steel, direct numerically controlled machinery,
computer generated surface modeling of contoured components and fully networked
CAD/CAM capabilities.
DTI PACKAGING GROUP. Special machines, integrated systems and related
parts for the Company's tablet packaging and liquid-filling equipment are
designed and assembled at the Company's facilities in Canada, Massachusetts,
Illinois and the United Kingdom from components made to the Company's
specifications by unaffiliated vendors. Rotary presses are assembled at the
Company's leased facility in Pennsylvania. Special machines and integrated
systems for the plastics packaging industry are primarily manufactured at the
two Company manufacturing facilities in Massachusetts which include machining,
fabrication and assembly.
COMPONENTS SEGMENT. The principal raw materials used in the Company's
components manufacturing processes include carbon steel, aluminum, stainless
steel, copper and other metals in coil or sheet form. The Company is not
dependent upon any one supplier for raw materials used in the manufacture of its
metal products. The Company believes there are adequate alternative sources of
raw materials of sufficient quantity and quality.
The Company's components manufacturing operations are primarily located
at the Company's recently expanded facilities in Missouri. Operations conducted
at that facility include blanking, heavy and precision stamping using precision
single stage, progressive and transfer dies, cutting, punching, forming,
welding, cleaning, bonderizing and painting. With the addition in fiscal 1996 of
a Metalsoft(R) FabriVision optical scanning system, the Company's quality focus
and prototyping capabilities were greatly enhanced. At the Company's Connecticut
and North Carolina facilities, manufacturing processes include precision
stamping of wear parts, heat treating, drawing, tumbling, casting, straightening
and grinding.
FINANCIAL INFORMATION RELATING TO BUSINESS SEGMENTS, FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT SALES
The Company operates predominantly in the business segments classified
as Special Machines and Components.
The Company's principal foreign operations consist of manufacturing,
sales and service operations in Canada and the United Kingdom.
For certain other financial information concerning the Company's
business segments, foreign and domestic operations and export sales, see Note 15
of the Notes to Consolidated Financial Statements in the Company's Annual Report
to Shareholders, which is incorporated herein by reference.
9
<PAGE>
CUSTOMERS
The majority of the Company's sales is attributable to repeat
customers, some of which have been customers of the Company or its acquired
businesses for over twenty years. The Company believes such repeat business is
indicative of the Company's engineering capabilities, the quality of its
products and overall customer satisfaction.
The Goodyear Tire & Rubber Company, a customer of the Company's Special
Machines segment, accounted for over 10% of the Company's consolidated net sales
in fiscal 1996 and 1994. PACCAR, Inc., a customer of the Company's Components
segment, accounted for over 10% of the Company's consolidated net sales in
fiscal 1995 and 1994. The Company's five largest customers during fiscal 1996
accounted for 32% of the Company's consolidated net sales.
Purchasers of the Company's special machines typically make advance and
progress payments to the Company in connection with the manufacture of the
equipment. Sales of the Company's components are typically made without advance
or progress payments.
BACKLOG
The Company's backlog is based upon customer purchase orders that the
Company believes are firm. As of June 30, 1996, the Company had $112.2 million
of backlog orders, which compares to a backlog of approximately $83.6 million as
of June 25, 1995. The $28.6 million increase was due to the acquisitions of AMI,
Swiftpack, Arrow and Kalish. Excluding the effects of acquisitions, backlog was
comparable to the prior year. The backlog for the Special Machines segment at
the end of the 1996 fiscal year was $106.0 million which increased $27.4 million
from a year ago. Backlog for the Components segment increased $1.2 million to
$6.2 million during fiscal 1996. The level of backlog at any particular time is
not necessarily indicative of the future operating performance of the Company.
Certain purchase orders are also subject to cancellation by the customer upon
notification. The Company believes most of the orders in the backlog will be
recognized as sales within one year. The Company's backlog at June 30, 1996 does
not include the backlog of Mid-West.
COMPETITION
The market for the Company's special machines is highly competitive,
with a large number of companies advertising the sale of production machines.
However, the market for special machines is fragmented and characterized by a
number of industry niches in which few manufacturers compete. The market for the
Company's components is also highly regionally competitive and fragmented. The
Company's competitors vary in size and resources; most are smaller privately
held companies or subsidiaries of larger companies, some of which are larger
than the Company; and none competes with the Company in all product lines. In
addition, the Company may encounter competition from new market entrants. The
Company believes that the principal competitive factors in the sale of the
Company's special machines are quality, technology, price, engineering
expertise, project management, delivery and service. The Company believes that
the principal competitive factors in the sale of the Company's components are
price, technical capability, quality and delivery. The Company believes that it
competes favorably with respect to each of these factors.
10
<PAGE>
ENGINEERING; RESEARCH AND DEVELOPMENT
The Company maintains research and engineering departments at all its
manufacturing locations. The Company employs more than 250 people with
experience in the design of production equipment. In addition to design work
relating to specific customer projects, the Company's engineers develop new
products and product improvements designed to address the needs of the Company's
target market niches and to enhance the reliability, efficiency, ease of
operation and safety of its proprietary machines.
TRADEMARKS AND PATENTS
The Company owns and maintains the registered trademarks Sencorp(R),
Merrill(R) and Lakso(R). The Company's use of the registered trademark Arrow(R)
is under a license and the licensor has agreed to assign ownership of the mark
for such use to the Company. Registrations for Company trademarks are also owned
and maintained in countries where such products are sold and such registrations
are considered necessary to preserve the Company's proprietary rights therein.
The Company also has the rights to use the unregistered trademarks Kalish(TM),
Armac(TM), Stokes(TM), Potter(TM) and Peer(TM). The trademarks Kalish(TM),
Armac(TM), Sencorp(R), Merrill(R), Peer(TM), Lakso(R) and Stokes(TM) are used in
connection with the machines and systems marketed by the Special Machines
Segment. The trademarks Arrow(R) and Potter(TM) are used in connection with the
products of the Components segment.
The Company applies for and maintains patents where the Company
believes such patents are necessary to maintain the Company's interest in its
inventions. The Company does not believe that any single patent or group of
patents is material to either its special machines business or its metal
products business, nor does it believe that the expiration of any one or a group
of its patents would have a material adverse effect upon its business or ability
to compete in either line of business. The Company believes that its existing
patent and trademark protection, however, provides it with a modest competitive
advantage in the marketing and sale of its proprietary products.
ENVIRONMENTAL AND SAFETY REGULATION
The Company is subject to federal, state and local environmental laws
and regulations that impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage and disposal of
toxic and hazardous wastes. The Company is also subject to the federal
Occupational Safety and Health Act and other state statutes. Except for costs
incurred in connection with the environmental cleanup of its property in
Lebanon, Missouri, as discussed below, costs of compliance with environmental,
health and safety requirements have not been material to the Company.
The Company notified the Environmental Protection Agency (EPA) and the
Missouri Department of Natural Resources (MDNR) of environmental contamination
at its property in Lebanon, MO and filed a work plan for site remediation in
1989. The Company entered into a Consent Agreement with the MDNR on September
11, 1990, to conduct remediation on its property. An addendum to the work plan
was submitted to, and approved by, MDNR in 1992. Remediation work was completed
in November 1993. Required groundwater monitoring was completed in January 1995.
The Closure Report was submitted to MDNR; MDNR responded with minimal comments
in April 1995, and in August 1995, accepted the Closure Report as being complete
and final. The Company received a release from the Consent Agreement by the
Missouri Attorney General's office in October 1995. The Company does not expect
any further significant remediation costs to be incurred related to this
property.
The Company believes it is in material compliance with all applicable
environmental laws and regulations.
EMPLOYEES
At the end of August 1996, the Company had approximately 2,200
employees, including those employed by Mid-West. None of the Company's employees
are covered under collective bargaining agreements. The Company has not
experienced any work stoppages in the last five years and considers its
relations with employees to be good.
11
<PAGE>
ITEM 2. PROPERTIES
The Company's administrative headquarters are located in Springfield,
Missouri. Set forth below is certain information with respect to the Company's
significant manufacturing facilities.
<TABLE>
<CAPTION>
SQUARE
FOOTAGE OWNED/
LOCATION (approximate) LEASED PRODUCTS
<S> <C> <C> <C>
SPECIAL MACHINES SEGMENT
DTI Automation Group:
Lebanon, Missouri 300,000 Owned Special machines, integrated systems,
tools and dies
Dayton, Ohio 160,000 Leased Integrated systems, special machines
Benton Harbor, Michigan 43,000 Owned Resistance arc welding equipment and
systems
Erie, Pennsylvania 56,000 Owned High-speed assembly systems
Buffalo Grove, Illinois 260,000 Leased Integrated precision assembly systems
DTI Packaging Group:
Montreal, Quebec 66,000(1) Leased Tablet packaging, liquid filling and
tube filling equipment and systems
Leominster, Massachusetts 60,000 Owned Tablet packaging equipment
Niles, Illinois 30,000 Leased Tablet counters
Bristol, Pennsylvania 43,000 Leased Rotary presses
Hyannis, Massachusetts 98,000 Leased Plastics processing and packaging
equipment
Fall River, Massachusetts 37,000 Leased Plastics processing and packaging
equipment
Alcester, United Kingdom 22,000 Owned Electronic counters
COMPONENTS SEGMENT
Lebanon, Missouri 171,000 Owned Metal products
Winsted, Connecticut 28,000 Leased Wear parts
Asheboro, North Carolina 15,000 Leased Wear parts
</TABLE>
(1) Two adjacent buildings of approximately 40,000 square feet and 26,000
square feet respectively.
12
<PAGE>
Set forth below is certain information with respect to the
Company's leased manufacturing facilities:
<TABLE>
<CAPTION>
LOCATION LEASE EXPIRATION DATE RENEWAL OPTION
<S> <C> <C>
Dayton, Ohio July 1, 2016 Two additional terms of five years
Buffalo Grove, Illinois July 31, 2003 One additional five year term
Montreal, Quebec January 31, 1997 One additional one year term
Montreal, Quebec July 31, 1997 One additional one year term
Niles, Illinois July 15, 1997 Two additional five year terms
Bristol, Pennsylvania April 30, 2000 One additional five year term
Hyannis, Massachusetts December 31, 1997 One additional five year term
Fall River, Massachusetts January 31, 2000 One additional five year term
Winsted, Connecticut December 31, 1997 One additional five year term
Asheboro, North Carolina September 26, 2000 Three additional five year terms
</TABLE>
The Company also leases other office, warehouse and service facilities
in Missouri, New Jersey, Canada, the United Kingdom and China. The Company
anticipates no significant difficulty in connection with leasing alternate space
at reasonable rates in the event of the expiration, cancellation or termination
of a lease relating to any of the Company's leased properties.
Expansion projects begun in fiscal 1995 and 1996 are substantially
completed at several of the Company's owned and leased facilities. The expansion
projects increased Special Machines and Components manufacturing and office
space by approximately 200,000 square feet and 54,000 square feet, respectively.
The building expansions reflect the growth occurring at these locations.
Subsequent to the completion of the building expansion programs, the Company
believes that its principal manufacturing facilities will have sufficient
capacity to accommodate future internal growth.
ITEM 3. lEGAL PROCEEDINGS
Product liability claims are asserted against the Company from time to
time for various injuries alleged to have resulted from defects in the
manufacture and/or design of the Company's products. At June 30, 1996, there
were twenty-five such claims pending. The Company does not believe that the
resolution of such suits, either individually or in the aggregate, will have a
material adverse effect on the Company's results of operations or financial
condition. Product liability claims are covered by the Company's comprehensive
general liability insurance policies, subject to certain deductible amounts. The
Company has established reserves for such deductible amounts, which it believes
to be adequate based on its previous claims experience. However, there can be no
assurance that resolution of product liability claims in the future will not
have a material adverse effect on the Company.
In addition to product liability claims, from time to time, the Company
is the subject of legal proceedings, including claims involving employee
matters, commercial matters and similar claims. There are no material claims
currently pending. The Company maintains comprehensive general liability
insurance which it believes to be adequate for the continued operation of its
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
13
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "DTII". As of September 16, 1996, the number of record holders
of common stock was 80. Such record holders include several holders who are
nominees for an undetermined number of beneficial owners. The Company believes
that the number of beneficial owners of the shares of common stock issued and
outstanding at such date was in excess of 400.
The following table sets forth, for the quarters indicated, the high
and low sales prices for the Common Stock as reported by the Nasdaq National
Market since April 15, 1994, the effective date of the Company's initial public
offering, and the cash dividends per share declared during such periods.
<TABLE>
<CAPTION>
Sales Quarterly
Prices Cash
High Low Dividends
<S> <C> <C> <C>
1996
Fourth Quarter $23 1/4 $18 1/4 $0.02
Third Quarter 19 13 0.02
Second Quarter 14 12 3/4 0.02
First Quarter 14 10 1/2 0.02
1995
Fourth Quarter $12 1/4 $10 1/4 $0.02
Third Quarter 11 1/2 8 9/16 0.02
Second Quarter 15 1/2 10 7/8 0.02
First Quarter 17 1/2 14 3/4 0.02
1994
Fourth Quarter
(beginning April 15, 1994) $16 $13 1/2 $0.02
</TABLE>
14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Predecessor1
Company1 fiscal year
fiscal year ended ended
June 30, June 25, June 26, June 30, June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales $ 235,946 $ 147,369 $ 107,499 $ 50,628 $ 59,130
Cost of sales 172,568 109,678 79,555 40,066 46,018
---------- ---------- ---------- ---------- ----------
Gross profit 63,378 37,691 27,944 10,562 13,112
Selling, general and
administrative expenses 35,445 21,428 13,875 6,147 8,758
----------- ----------- ----------- ----------- ----------
Operating income 27,933 16,263 14,069 4,415 4,354
Interest expense, net 4,799 1,849 3,506 2,583 3,295
----------- ----------- ----------- ----------- ----------
Income before income taxes
and extraordinary loss 23,134 14,414 10,563 1,832 1,059
Provision for income taxes 9,643 5,964 4,570 1,000 611
----------- ----------- ----------- ----------- ----------
Income before
extraordinary loss 13,491 8,450 5,993 832 448
Extraordinary loss, net2 (179) (428)
----------- ----------- ----------- ----------- ----------
Net income $ 13,491 $ 8,450 $ 5,814 $ 404 $ 448
----------- ----------- ----------- ----------- ----------
Earnings per share
before extraordinary
loss $ 1.50 $ 0.94 $ 1.10 $ 0.19 (3)
----------- ----------- ----------- ----------- ----------
Earnings per share $ 1.50 $ 0.94 $ 1.07 $ 0.09 (3)
----------- ----------- ----------- ----------- ----------
BALANCE SHEET DATA
Working capital (deficit) $ 26,161 $ 16,791 $ 8,846 $ 464 $ (8,219)
Total assets 233,843 159,263 97,628 62,779 44,032
Short-term debt 8,481 6,448 206 2,271 2,490
Long-term debt 70,846 30,905 226 28,776 21,125
Stockholders' equity (deficit) 87,884 75,020 67,234 6,054 (2,834)
</TABLE>
1 DT Industries, Inc. (DTI or the Company) was organized in July 1992 for the
purpose of acquiring Detroit Tool Group, Inc. (DTG), the predecessor company to
DTI, in August 1992 and the Peer Division of Teledyne, Inc. (Peer) in July 1992.
2 Reflects costs incurred by the Company of $314, less applicable income tax
benefits of $135, in the fiscal year ended June 26, 1994 and costs of $684, less
applicable income tax benefits of $256, in the fiscal year ended June 30, 1993,
related to the extinguishment and refinancing of debt, respectively.
3 Given the historical organization and capital structure of the predecessor,
earnings per share information is not considered meaningful for the predecessor.
15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company was formed through a series of acquisitions beginning with the
initial acquisitions of DTG and Peer in 1992. Subsequent to those transactions,
the Company or its subsidiaries made a number of acquisitions for the Special
Machines and Components segments. The acquisitions are elements of a strategic
plan to acquire companies with proprietary products and manufacturing
capabilities which have strong market and technological positions in the niche
markets they serve and to accelerate the Company's goal of providing customers
with a full range of integrated automated systems. The Company believes that
emphasis on complementary acquisitions of companies serving target markets will
allow it to broaden its product offerings and to provide customers with a single
source for complete integrated automation systems. The acquisitions also expand
the Company's base of customers, creating greater opportunities for
cross-selling among the various divisions of the Company.
During fiscal 1994, the Company completed the acquisitions of Sencorp
Systems, Inc. (Sencorp) in August 1993 and Stokes-Merrill, Inc. (Stokes-Merrill)
in December 1993. During fiscal 1995, the Company completed the acquisitions of
Advanced Assembly Automation, Inc. (AAA) in August 1994 and the Lakso Division
of Package Machinery Company (Lakso) and Armac Industries, Ltd. (Armac) in
February 1995. During fiscal 1996, the Company completed the acquisitions of
H.G. Kalish Inc. (Kalish) in August 1995, Arrow Precision Elements, Inc. (Arrow)
in September 1995, Swiftpack Automation Limited (Swiftpack) in November 1995
and Assembly Machines, Inc. (AMI) in January 1996.
All of the acquisitions were accounted for under the purchase method of
accounting, with the purchase prices allocated to the estimated fair market
value of the assets acquired and liabilities assumed. In each of the
acquisitions, the excess purchase price paid over the estimated fair value of
the net assets acquired was allocated to goodwill, which resulted in the
recording of an aggregate of approximately $107 million of goodwill. Subsequent
to the acquisition of Mid-West Automation Enterprises, Inc. (Mid-West) in July
1996, as discussed further below, goodwill recorded will approximate $165
million. The amortization of goodwill recorded will result in a non-cash charge
to future operations of approximately $4.2 million per year, including the
effect of the Mid-West acquisition. The following discussion of the consolidated
financial statements includes the results of operations from the acquisition
date of each acquired company.
On July 19, 1996, after the end of fiscal 1996, the Company acquired the
issued and outstanding stock of Mid-West for approximately $77 million, net of
cash acquired. Mid-West is a Chicago-area designer and manufacturer of
integrated precision assembly systems. For the year ended May 26, 1996,
Mid-West had net sales of $88 million. The results of operations of Mid-West
will be included with those of the Company for periods subsequent to the date
of acquisition.
The Company operates in two business segments, Special Machines, including
the Automation and Packaging Groups, and Components. The Special Machines
segment designs and builds custom equipment, proprietary machines and integrated
systems. The Components segment stamps and fabricates a range of standard and
custom metal components for the transportation, appliance, heavy equipment,
agricultural equipment and electrical industries as well as wear parts for the
textile industry.
16
<PAGE>
Set forth below is certain financial data relating to each business
segment.
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
NET SALES
Special Machines1
DTI Automation $ 106,217 $ 67,119 $ 51,112
DTI Packaging 87,667 45,051 25,666
---------- ---------- ----------
Total Special Machines 193,884 112,170 76,778
Components 42,062 35,199 30,721
---------- ---------- ----------
Total $ 235,946 $ 147,369 $ 107,499
---------- ---------- ----------
GROSS PROFIT
Special Machines1 $ 53,299 $ 29,015 $ 20,293
Gross margin 27.5% 25.9% 26.4%
Components 10,079 8,676 7,651
Gross margin 24.0% 24.6% 24.9%
---------- ---------- ----------
Total gross profit $ 63,378 $ 37,691 $ 27,944
Total gross margin 26.9% 25.6% 26.0%
---------- ---------- ----------
OPERATING INCOME
Special Machines1 $ 26,557 $ 13,857 $ 11,506
Operating margin 13.7% 12.4% 15.0%
Components 6,934 6,676 5,789
Operating margin 16.5% 19.0% 18.8%
Corporate (5,558) (4,270) (3,226)
---------- ---------- ----------
Total operating income $ 27,933 $ 16,263 $ 14,069
Total operating margin 11.8% 11.0% 13.1%
---------- ---------- ----------
DEPRECIATION AND AMORTIZATION EXPENSE
Special Machines1 $ 4,683 $ 3,452 $ 2,299
Components 1,038 837 771
Corporate 395 272 287
---------- ---------- ----------
Total $ 6,116 $ 4,561 $ 3,357
---------- ---------- ----------
CAPITAL EXPENDITURES
Special Machines1 $ 6,145 $ 4,127 $ 750
Components 2,138 3,043 1,392
Corporate 1,966 548 130
---------- ---------- ----------
Total $ 10,249 $ 7,718 $ 2,272
---------- ---------- ----------
IDENTIFIABLE ASSETS
Special Machines1 $ 203,210 $ 135,328 $ 74,376
Components 28,528 23,061 22,251
Corporate 2,105 874 1,001
---------- ---------- ----------
Total $ 233,843 $ 159,263 $ 97,628
---------- ---------- ----------
</TABLE>
1 Excludes operations data for Mid-West, acquired in July 1996.
17
<PAGE>
Gross margins of the Special Machines segment may vary from year to year
as a result of the variations in profitability of contracts for large orders
of special machines. In addition, changes in the product mix in a given period
affect gross margins for the Special Machines segment. Historically, gross
margins for the Components segment have not fluctuated significantly between
periods.
Operating margins for the Special Machines segment differ from the
Components segment.
Higher operating expenses for the Special Machines segment result from
the following: additional staffing required for sales support and the costs
associated with the technical expertise required of the sales and support
staff; research and development activities; higher levels of goodwill
amortization and greater investment in sales and marketing programs.
The percentage of completion method of accounting is used by the Company's
Special Machines segment to recognize revenues and related costs. Under the
percentage of completion method, revenues are measured based on the ratio of
engineering and manufacturing labor hours incurred to date compared to total
estimated engineering and manufacturing labor hours for each customer contract.
Any revisions in the estimated total costs or values of the contracts during the
course of the work are reflected when the facts that require the revisions
become known. Revenue from the sale of products manufactured by the Company's
Components segment is recognized upon shipment to the customer.
Prior to June 26, 1995, revenues from certain customer contracts of the
Special Machines segment were recognized upon shipment, utilizing the "units of
delivery" modification of the percentage of completion method. The change in
accounting method in fiscal 1996 reflects the trend in the Company's Special
Machines business for increasing engineering services provided on customer
contracts and did not have a material impact on the Company's financial position
and results of operations.
Costs and related expenses to manufacture the products are recorded as cost
of sales when the related revenue is recognized. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined.
Certain statements contained herein are forward-looking statements subject
to risks and uncertainties. The Company's actual results could differ materially
from the expected results if the Company experiences delays or cancellations of
customer orders, delays in shipping dates of products, cost overruns on certain
projects and currency exchange fluctuations. The Company may also be adversely
affected by downturns in the economy in general or in markets served by
substantial customers. Shareholders should also consider other risks and
uncertainties discussed in documents previously filed by the Company with the
Securities and Exchange Commission.
18
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items reflected in the Company's
consolidated statement of operations.
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 73.1 74.4 74.0
------- ------- -------
Gross profit 26.9 25.6 26.0
Selling, general and administrative
expenses 15.1 14.6 12.9
------- ------- -------
Operating income 11.8 11.0 13.1
Interest expense 2.0 1.2 3.3
------- ------- -------
Income before provision for income
taxes and extraordinary loss 9.8 9.8 9.8
Provision for income taxes 4.1 4.1 4.2
------- ------- -------
Income before extraordinary loss 5.7 5.7 5.6
Extraordinary loss on debt refinancing 0.2
------- ------- -------
Net income 5.7% 5.7% 5.4%
------- ------- -------
</TABLE>
FISCAL 1996 COMPARED TO FISCAL 1995
NET SALES
Consolidated net sales increased $88.5 million, or 60.1%, to $235.9
million for the year ended June 30, 1996, from $147.4 million for the year ended
June 25, 1995. The increase in consolidated net sales was a result of a $81.7
million, or 72.8%, increase in sales by the Special Machines segment and a $6.8
million, or 19.5%, increase in sales by the Components segment.
The increase in sales by the Special Machines segment resulted from the
incremental effects of the acquisitions of AAA in August 1994, Armac and Lakso
in February 1995, Kalish in August 1995, Swiftpack in November 1995 and AMI in
January 1996, totalling $46.5 million, with the remaining $35.2 million, or
31.4%, increase relating to sales from existing businesses. Sales from existing
businesses were up substantially, primarily due to increased sales of custom
automated production equipment and packaging equipment. Approximately one-half
of this increase can be attributed to the increase in machine sales to a
significant customer. The remaining increase is a result of several new
substantial projects with customers for integrated production systems. These
increases reflect international expansion projects by certain customers,
increased penetration into new markets and benefits achieved from the Company's
cross-selling program.
19
<PAGE>
The increase in sales by the Components segment is due to an increase in
sales from existing businesses of $4.4 million, or 12.5%, over the year ended
June 25, 1995 and $2.4 million in sales from the Arrow acquisition. The increase
in sales by Components was primarily the result of a new customer outside the
transportation industry obtained in the latter part of fiscal 1995. The new
business has offset the recent reduction in sales resulting from a slowdown in
demand for products provided to the transportation industry. This new business
was made possible through capital investments to expand stamping capacity and
capabilities.
GROSS PROFIT
Gross profit increased $25.7 million, or 68.2%, to $63.4 million for the
year ended June 30, 1996, from $37.7 million for the year ended June 25, 1995,
as a result of the sales increases discussed above and gross profit margin
improvement. Gross profit increased $16.2 million as a result of acquisitions.
Excluding the effect of acquisitions, gross profit increased $9.5 million or
25.2%. The gross profit margin increased to 26.9% from 25.6%. The improvement in
gross margin was due to the higher margins obtained by the acquired businesses.
Gross margin exclusive of acquired operations decreased to 25.2% due primarily
to gross profit margin declines in the Components segment. Gross profit margins
exclusive of acquired operations for the Components segment were down from prior
year as a result of start-up costs on new parts business, although such gross
profit margins have improved during fiscal 1996 as production efficiencies were
realized.
SG&A EXPENSES
SG&A expenses increased $14.0 million, or 65.4%, to $35.4 million for the
year ended June 30, 1996, from $21.4 million for the year ended June 25, 1995.
Approximately $10.9 million of the increase is due to the acquisitions discussed
above. The remaining increase of $3.1 million is the result of personnel
additions and related recruiting and relocation fees, increased costs associated
with compensation and incentive programs, increased investment in marketing
activities and increased professional and banking fees.
OPERATING INCOME
Operating income increased $11.6 million, or 71.8%, to $27.9 million for
the year ended June 30, 1996, from $16.3 million for the year ended June 25,
1995, as a result of the factors noted above. As a percentage of consolidated
net sales, operating income increased to 11.8% from 11.0%.
INTEREST EXPENSE
Interest expense increased to $4.8 million for the year ended June 30, 1996
from $1.8 million for the year ended June 25, 1995. The increase in interest
expense resulted primarily from the increase in the debt level of the Company to
finance the recently acquired businesses.
INCOME TAXES
Provision for income taxes increased to $9.6 million for the year ended
June 30, 1996 from $6.0 million for the year ended June 25, 1995, reflecting
effective tax rates of 41.7% and 41.4%, respectively. These rates differ from
statutory rates due to permanent differences primarily related to non-deductible
goodwill amortization arising from certain acquisitions.
20
<PAGE>
NET INCOME
Net income increased to $13.5 million for the year ended June 30, 1996, an
increase of $5.0 million, or 59.7%, over the prior year as a result of the
factors noted above. Earnings per share increased to $1.50 from $0.94 in the
prior year.
FISCAL 1995 COMPARED TO FISCAL 1994
NET SALES
Consolidated net sales increased $39.9 million, or 37.1%, to $147.4
million for the year ended June 25, 1995, from $107.5 million for the year
ended June 26, 1994. The increase in consolidated net sales was a result of a
$35.4 million, or 46.1%, increase in sales by the Special Machines segment and
a $4.5 million, or 14.6%, increase in sales by the Components segment.
The increase in sales by the Special Machines segment resulted from the
incremental effect of the acquisitions of Sencorp in August 1993, Stokes-Merrill
in December 1993, AAA in August 1994, and Lakso and Armac in February 1995,
totaling $33.9 million plus a $1.5 million, or 2.0%, increase in other special
machines sales. Excluding the effect of acquisitions, sales of proprietary
products increased significantly during the year. Sales related to RIGO systems
and strong demand for the Company's line of proprietary equipment resulted in
the increase. These increases were offset by a decrease in the sale of custom
machinery, as sales to a significant custom equipment customer decreased $16.2
million in fiscal 1995. The customer placed significant orders for equipment
which were included in the backlog at June 25, 1995.
The increase in sales by the Components segment resulted from the addition
of new parts supplied to existing customers, continued strength in the markets
served by those customers and the broadening of the customer base through the
addition of new customers. Increased capacity and new capabilities resulted from
capital investments made during the latter part of fiscal 1994. Additional
capital expenditures have been made during the latter part of fiscal 1995 to
further increase capacity.
GROSS PROFIT
Gross profit increased $9.8 million, or 34.9%, to $37.7 million for the
year ended June 25, 1995 from $27.9 million for the prior year. Gross profit
increased $11.4 million as a result of the acquisitions discussed above.
Excluding the effect of acquisitions, gross profit decreased $1.6 million.
The gross profit margin decreased to 25.6% from 26.0%. Gross profit margin
exclusive of acquired operations decreased to 23.1%, reflecting lower custom
equipment margins, product development costs on the RIGO systems and cost
overruns on welding equipment contracts.
SG&A EXPENSES
SG&A expenses increased $7.5 million, or 54.4%, to $21.4 million for fiscal
1995 from $13.9 million for fiscal 1994. Approximately $6.0 million of the
increase is due to the acquisitions discussed above. The remaining increase of
$1.5 million is primarily the result of the incremental costs of being a public
company and increased investment in sales and marketing activities including the
addition of sales people. As a percentage of consolidated net sales, SG&A
increased to 14.6% from 12.9%, reflecting a higher level of SG&A expenses to net
sales associated with recently acquired operations and the increased SG&A
expenses discussed above.
21
<PAGE>
OPERATING INCOME
Operating income increased $2.2 million, or 15.6%, to $16.3 million for
fiscal 1995 from $14.1 million for fiscal 1994 as a result of the factors noted
above. As a percentage of consolidated net sales, operating income decreased to
11.0% from 13.1%.
INTEREST EXPENSE
Interest expense decreased to $1.8 million for fiscal 1995 from $3.5
million for fiscal 1994. The decrease is a result of the Company's initial
public offering in April 1994, the proceeds of which were used to repay
substantially all outstanding indebtedness. This decrease was partially offset
by interest expense resulting from additional borrowings to finance acquisitions
and capital expenditures.
INCOME TAXES
Provision for income taxes increased to $6.0 million for fiscal 1995 from
$4.6 million for fiscal 1994, reflecting effective tax rates of 41.4% and 43.3%,
respectively. These rates differ from statutory rates primarily due to permanent
differences related to non-deductible goodwill amortization arising from certain
acquisitions.
NET INCOME
Net income increased to $8.5 million for fiscal 1995 from $5.8 million for
fiscal 1994 as a result of the factors noted above and a $0.2 million decrease
in extraordinary losses. In fiscal 1994, net income was affected by
extraordinary losses incurred resulting from the extinguishment of long-term
debt. The loss represented the write-off of deferred financing costs net of
related tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1996, 1995 and 1994, net cash provided by operating
activities was approximately $15.1 million, $1.6 million and $3.7 million,
respectively. Net income plus non-cash operating charges provided $20.7 million,
$17.0 million and $10.3 million of operating cash flow in fiscal 1996, 1995 and
1994, respectively. In fiscal 1996, working capital balances increased $5.6
million primarily due to the increased investment in current assets as a result
of the increased sales and backlog, a decrease in customer advances due to
unusually large advances at June 25, 1995 and large deposits to certain
suppliers at June 30, 1996.
In fiscal 1995, cash provided by operating activities was affected by a
$15.4 million increase in net working capital. Strong year-end sales, orders
and backlog resulted in a significant increase in accounts receivable and
inventories at June 25, 1995. An increase in customer advances and accounts
payable partially offset the increases in working capital assets. Accrued
liabilities decreased during the year reflecting reductions in the income tax
payable balance and accrued acquisition costs.
In fiscal 1994, cash provided by operating activities was affected by a
$6.6 million increase in working capital largely resulting from high sales
activity at the end of the year thereby resulting in an increased accounts
receivable balance.
Working capital balances can fluctuate significantly between periods as a
result of the significant costs incurred on individual contracts and the
relatively large amount invoiced and collected by the Company for a number of
large contracts.
22
<PAGE>
During the fiscal year ended June 30, 1996, cash provided by operating
activities was used to finance capital expenditures of approximately $10.2
million, pay dividends of $0.7 million and provide funding towards four
acquisitions. Net borrowings of the Company increased by approximately $42.0
million during fiscal 1996, primarily due to the acquisitions of Kalish for
$16.4 million, Arrow for $3.0 million, Swiftpack for $18.4 million and AMI for
$6.7 million.
During August 1995, the Company entered into an Amended and Restated
Credit Facilities Agreement (Amended Credit Agreement) with six institutions to
provide funding for working capital and acquisitions. In connection with the
acquisition of Swiftpack in November 1995, the Company amended the facility to
provide a total borrowing availability of $90 million. The Amended Credit
Agreement provided for a $25 million revolving credit facility, a $43.5 million
term loan and a $21.5 million letter of credit facility denominated in a foreign
currency to secure loans to finance the Swiftpack acquisition. As of June 30,
1996, the balances outstanding under the revolving credit facility and term loan
were $15.0 million and $41.6 million, respectively. The facilities generally
bear interest at floating rates based upon LIBOR or the bank's base rate plus a
specified percentage which is determined by the Company's ratio of funded debt
to operating cash flow. At June 30, 1996, interest rates on these facilities
ranged from 6.9% to 8.25%.
On November 23, 1995, the Company, through its wholly-owned subsidiary, DT
Industries (UK) Limited (DTUK), acquired ninety-five percent (95%) of the issued
and outstanding stock of Swiftpack and an option (the Option) to acquire the
remaining five percent (5%) of Swiftpack stock. The acquisition was financed by
entering into a Credit Agreement, Specific Counter-Indemnity and Debenture
(collectively, the Foreign Credit Agreements) with a foreign bank which provided
approximately $5.3 million in cash and will provide funding of the principal
amount of $14.0 million in notes (Loan Notes) upon their maturity. The Loan
Notes issued by DTUK directly to certain of the prior shareholders bear interest
at 5.3% and mature the earlier of November 25, 1996, at the holder's option, or
December 23, 1996. The Foreign Credit Agreements provided funding of
approximately $0.9 million upon the exercise of the Option in July 1996. The
Foreign Credit Agreements are denominated in a foreign currency and bear
interest at a variable rate based upon LIBOR (approximately 8.0% including
letter of credit fees at June 30, 1996). Principal payments are due quarterly
with the remaining principal balance due on August 16, 2000. Principal payments
range from approximately $155,000 to $400,000. The Foreign Credit Agreements are
secured by the letter of credit facility provided through the Amended Credit
Agreement.
To manage its exposure to fluctuations in interest rates, on June 28,
1995, the Company entered into an interest rate swap agreement for a notional
principal amount of $30 million, maturing June 29, 1998. Swap agreements involve
the exchange of interest obligations on fixed and floating interest-rate debt
without the exchange of the underlying principal amount. The differential paid
or received on the swap agreement is recognized as an adjustment to interest
expense. The swap agreement provides a fixed rate of 6.06% with a floating rate
payment equal to the three month LIBOR determined on a quarterly basis with
settlement occurring on specific dates.
On July 19, 1996, the Company acquired the issued and outstanding stock of
Mid-West in a transaction accounted for under the purchase method of accounting.
The purchase price paid by the Company of approximately $77 million, net of cash
acquired, was obtained by the Company pursuant to the Company's Second Amended
and Restated Credit Facilities Agreement which replaced the Amended Credit
Agreement. The new facility of $200 million provided by two institutions
includes a $55 million revolving credit facility, a $104 million term loan, a
$20 million acquisition facility and a $21 million foreign currency denominated
letter of credit. The term loan requires quarterly principal payments ranging
from $4.8 million to $5.5 million commencing in January 1997 with final
maturity on July 23, 2001. Borrowings under the agreement bear interest at
prime or LIBOR (at the option of DTI) plus a specified percentage based on the
ratio of funded debt to operating cash flow.
23
<PAGE>
The Company made capital expenditures of $10.2 million in fiscal 1996. Such
capital expenditures in fiscal 1996 included a total of approximately $3.8
million related to the completion of building expansions for the Company's
manufacturing facilities in Lebanon, MO, Benton Harbor, MI and the expansion in
progress at the facility in Erie, PA. The building expansions reflect the growth
occurring at these locations. Additionally, due to significant internal growth
being experienced by AAA, the Company is currently expanding its leased facility
in Dayton, OH. The addition is not expected to result in significant capital
expenditures by the Company, but will result in an increase in annual lease
costs. Subsequent to the completion of the current building expansion programs,
the Company believes that its principal manufacturing facilities will have
sufficient capacity to accommodate future internal growth without major
additional capital improvements.
Management anticipates that capital expenditures in future years will
include recurring replacement or refurbishment of machinery and equipment,
which will approximate depreciation expense, and purchases to improve production
methods or processes or to expand manufacturing capabilities.
The Company paid quarterly cash dividends of $0.02 per share on
September 15, 1995, December 15, 1995, March 15, 1996 and June 15, 1996 to
shareholders of record on August 31, 1995, November 30, 1995, February 29, 1996
and May 31, 1996, respectively.
Based on its ability to generate funds from operations and the
availability of funds under its current credit facilities, the Company believes
that it will have sufficient funds available to meet its currently anticipated
operating and capital expenditure requirements.
TAX MATTERS
The Company files a consolidated federal income tax return. The fiscal
1990, 1991, 1992 and 1993 federal income tax returns for DTI and its predecessor
company, Detroit Tool Group, Inc., have been audited by the Internal Revenue
Service (the IRS). During the fourth quarter of fiscal 1996, the Company reached
an agreement in principle to settle with the IRS. The additional taxes due under
the agreement are not material to the Company's financial position, results of
operations or liquidity and are expected to be paid prior to December 31, 1996.
There are no other material audits underway or notification of audits for DTI
or any of its subsidiaries.
BACKLOG
The Company's backlog is based upon customer purchase orders that the
Company believes are firm. As of June 30, 1996, the Company had $112.2 million
of orders in backlog, which compares to a backlog of approximately $83.6 million
as of June 25, 1995. The $28.6 million increase is due to the acquisitions of
AMI, Swiftpack, Arrow and Kalish. Excluding the effects of acquisitions, backlog
was comparable to the prior year. The backlog for the Special Machines segment
at June 30, 1996 was $106.0 million, which increased $27.4 million from a year
ago. Backlog for the Components segment increased $1.2 million to $6.2 million
from $5.0 million. The level of backlog at any particular time is not
necessarily indicative of the future operating performance of the Company.
Additionally, certain purchase orders are subject to cancellation by the
customer upon notification.
Certain orders are also subject to delays in completion and shipment at the
request of the customer. The Company believes most of the orders in the backlog
will be recognized as sales during fiscal 1997.
24
<PAGE>
SEASONALITY AND FLUCTUATIONS IN QUARTERLY RESULTS
In general, the Company's business is not subject to seasonal variations in
demand for its products. However, because orders for certain of the Company's
products can exceed a few million dollars, a relatively limited number of orders
can constitute a meaningful percentage of the Company's revenue in any one
period. A relatively small reduction or delay in the number of orders can have a
material impact on the timing of recognition of the Company's revenues. Gross
margins in the Special Machines segment may vary between comparable periods as a
result of the variations in profitability of contracts for large orders of
special machines as well as product mix between the various types of custom and
proprietary equipment manufactured by the Company. Accordingly, results of
operations of the Company for any particular quarter are not necessarily
indicative of results that may be expected for any subsequent quarter or related
fiscal year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this item
are presented under Item 14 and incorporated herein by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
25
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A definitive proxy statement is being filed with the Securities and
Exchange Commission on or about October 1, 1996. The information required by
this item is set forth under the caption "Election of Directors" on pages 3
through 6, under the caption "Executive Officers" on page 8 and under the
caption "Compliance with Section 16(a) of the Exchange Act" on page 13 of the
definitive proxy statement, which information is incorporated herein by
reference thereto.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth under the caption
"Executive Compensation" on pages 8 through 12 of the definitive proxy
statement, which information is incorporated herein by reference thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" on pages 6
through 8 of the definitive proxy statement, which information is incorporated
herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth under the caption
"Certain Transactions" on pages 13 through 15 of the definitive proxy statement,
which information is incorporated herein by reference thereto.
26
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and
its subsidiaries, included on pages 25 to 43 in the Annual Report and
the report of independent accountants on page 24 of the Annual Report
are incorporated herein by reference thereto:
Consolidated Balance Sheets as of June 30, 1996 and June 25, 1995
Consolidated Statements of Operations for the Fiscal Years Ended
June 30, 1996, June 25, 1995 and June 26, 1994
Consolidated Statements of Changes in Stockholders' Equity for the
Fiscal Years Ended June 30, 1996, June 25, 1995 and June 26,
1994
Consolidated Statements of Cash Flows for the Fiscal Years Ended
June 30, 1996, June 25, 1995 and June 26, 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. FINANCIAL STATEMENT SCHEDULE
Report of Independent Accounts on Financial
Statement Schedule S-1
Schedule VIII Valuation and Qualifying Accounts and
Reserves for the Fiscal Years Ended
June 30, 1996, June 25, 1995 and
June 26, 1994 S-2
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.
3. EXHIBITS
The exhibits listed on the accompanying Index to Exhibits are filed as
part of this Report.
4. REPORTS ON FORM 8-K
None
27
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Certificate of Incorporation of the Registrant (filed
with the Commission as Exhibit 3.1 to the Company's Registration
Statement on Form S-1 Registration No. 33-75174, filed with the
Commission on February 11, 1994, as amended on March 22, 1994
(the "Registration Statement") and incorporated herein by
reference thereto)
3.2 Amended By-Laws of the Registrant (filed as Exhibit 3.2 to
the Registration Statement and incorporated herein by reference
thereto)
10.1* Purchase and Stockholder Agreement, dated September 30, 1993, by
and between Detroit Tool and Engineering Company and Stephen J.
Gore (filed as Exhibit 10.1 to the Registration Statement and
incorporated herein by reference thereto)
10.2* Stock Pledge Agreement, dated September 30, 1993, by and between
Stephen J. Gore and Detroit Tool and Engineering Company (filed
as Exhibit 10.2 to the Registration Statement and incorporated
herein by reference thereto)
10.3* $84,600 Promissory Note, dated September 30, 1993, by Stephen J.
Gore to Detroit Tool and Engineering Company (filed as Exhibit
10.3 to the Registration Statement and incorporated herein by
reference thereto)
10.4* Letter Agreement, dated September 30, 1993, by Stephen J. Gore
to Detroit Tool and Engineering Company (filed as Exhibit 10.4
to the Registration Statement and incorporated herein by
reference thereto)
10.5* Employment Agreement, dated September 19, 1990, by and between
Detroit Tool Group, Inc. and Stephen J. Gore (filed as Exhibit
10.5 to the Registration Statement and incorporated herein by
reference thereto)
10.6* Amendment to Promissory Note and Stock Pledge Agreement, dated
March 16, 1994, by and among DT Industries, Inc., Peer
Investors, L.P. and Stephen J. Gore (filed as Exhibit 10.6 to
the Registration Statement and incorporated herein by reference
thereto)
10.7* Purchase and Stockholder Agreement, dated September 30, 1993, by
and between Detroit Tool and Engineering Company and James C.
Janning (filed as Exhibit 10.7 to the Registration Statement and
incorporated herein by reference thereto)
10.8* Stock Pledge Agreement, dated September 30, 1993, by and between
James C. Janning and Detroit Tool and Engineering Company (filed
as Exhibit 10.8 to the Registration Statement and incorporated
herein by reference thereto)
10.9* $112,800 Promissory Note, dated September 30, 1993, by James C.
Janning to Detroit Tool and Engineering Company (filed as
Exhibit 10.9 to the Registration Statement and incorporated
herein by reference thereto)
10.10* Letter Agreement, dated September 30, 1993, by and between James
C. Janning and Detroit Tool and Engineering Company (filed as
Exhibit 10.10 to the Registration Statement and incorporated
herein by reference thereto)
10.11* Amendment to Promissory Note and Stock Pledge Agreement, dated
March 16, 1994, by and among DT Industries, Inc., Peer
Investors, L.P. and James C. Janning (filed as Exhibit 10.11 to
the Registration Statement and incorporated herein by reference
thereto)
* Management contract or compensatory plan or arrangement.
<PAGE>
10.12* Purchase and Stockholder Agreement, dated November 30, 1993, by
and between Detroit Tool and Engineering Company and Gregory Fox
(filed as Exhibit 10.12 to the Registration Statement and
incorporated herein by reference thereto)
10.13* Stock Pledge Agreement, dated November 30, 1993, by and between
Gregory Fox and Detroit Tool and Engineering Company (filed as
Exhibit 10.13 to the Registration Statement and incorporated
herein by reference thereto)
10.14* $66,600 Promissory Note, dated November 30, 1993, by Gregory Fox
to Detroit Tool and Engineering Company (filed as Exhibit 10.14
to the Registration Statement and incorporated herein by
reference thereto)
10.15* Letter Agreement, dated November 30, 1993, by and between
Gregory Fox to Detroit Tool and Engineering Company (filed as
Exhibit 10.15 to the Registration Statement and incorporated
herein by reference thereto)
10.16* Amendment to Promissory Note and Stock Pledge Agreement, dated
March 16, 1994, by and among DT Industries, Inc., Peer
Investors, L.P. and Gregory Fox (filed as Exhibit 10.16 to the
Registration Statement and incorporated herein by reference
thereto)
10.17* DT Industries, Inc. Employee Stock Option Plan (filed as Exhibit
10.21 to the Registration Statement and incorporated herein by
reference thereto)
10.18* DT Industries, Inc. 1994 Directors Non-Qualified Stock Option
Plan (filed as Exhibit 10.22 to the Registration Statement and
incorporated herein by reference thereto)
10.19 Purchase Agreement dated as of October 21, 1994 by and among
Stokes-Merrill Corporation, Package Machinery Company and DT
Industries, Inc., as guarantor (filed as Exhibit 2.1 to the
Company's Report on Form 8-K dated February 10, 1995 filed with
the Commission on February 27, 1995 and incorporated herein by
reference thereto)
10.20 First Amendment to Purchase Agreement dated December 29, 1994 by
and among Stokes-Merrill Corporation, Package Machinery Company
and DT Industries, Inc. (filed as Exhibit 2.2 to the Company's
Report on Form 8-K dated February 10, 1995 filed with the
Commission on February 27, 1995 and incorporated herein by
reference thereto)
10.21 Second Amendment to Purchase Agreement dated January 30, 1995 by
and among Stokes-Merrill Corporation, Package Machinery Company
and DT Industries, Inc. (filed as Exhibit 2.3 to the Company's
Report on Form 8-K dated February 10, 1995 filed with the
Commission on February 27, 1995 and incorporated herein by
reference thereto)
10.22 Asset Purchase Agreement, dated as of August 28, 1995, by and
among H.G. Kalish Inc., Kalish Machinery Ltd., Graham Lewis and
Kalish Canada Inc. (filed as Exhibit 2.1 to the Company's Report
on Form 8-K dated August 28, 1995 filed with the Commission on
September 11, 1995 and incorporated
herein by reference thereto)
10.23 ISDA Master Agreement, dated as of June 28, 1995, between The
Boatmen's National Bank of St. Louis and DT Industries, Inc.
(filed as Exhibit No. 10.29 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 25, 1995 filed with the
Commission on September 22, 1995 (the "1995 10-K") and
incorporated herein by reference thereto)
10.24 Letter agreement, dated June 27, 1995, between DT Industries,
Inc. and The Boatmen's National Bank of St. Louis confirming an
interest rate swap transaction (filed as Exhibit No. 10.30 to
the 1995 10-K and incorporated herein by reference thereto)
10.25 Insurance Agreement, dated July 28, 1993, by and between Harbour
Group Ltd. and Detroit Tool and Engineering Company (filed as
Exhibit No. 10.31 to the Registration Statement and incorporated
herein by reference thereto)
* Management contract or compensatory plan or arrangement.
<PAGE>
10.26 Corporate Development Consulting and Advisory Services Letter
Agreement, dated February 9, 1994, by and between DT Industries,
Inc. and Harbour Group Industries, Inc. (filed as Exhibit No.
10.32 to the Registration Statement and incorporated herein by
reference thereto)
10.27 Operations Consulting and Advisory Services Letter Agreement,
dated February 10, 1994, by and between DT Industries, Inc. and
Harbour Group Ltd. (filed as Exhibit No. 10.33 to the
Registration Statement and incorporated herein by reference
thereto)
10.28 Registration Rights Agreement, dated March 18, 1994, by and
among DT Industries, Inc., Peer Investors, L.P., Harbour Group
Investments II, L.P. and Harbour Group II Management Co. (filed
as Exhibit No. 10.34 to the Registration Statement and
incorporated herein by reference thereto)
10.29 Letter Agreement, dated November 7, 1995, between Harbour Group
Ltd, and DT Industries, Inc. amending the Operations Consulting
and Advisory Services Letter Agreement between the parties
dated February 10, 1994 (filed as Exhibit No. 10.37 to the 1995
10-K and incorporated herein by reference thereto)
10.30 Underwriting Agreement, dated April 15, 1994, by and between, CS
First Boston Corporation, Morgan Stanley & Co. Incorporated and
Wertheim Schroder & Co. Incorporated, as representatives of the
Several Underwriters, and DT Industries, Inc. and Harbour Group
Investments II, L.P. (filed as Exhibit No. 10.38 to the 1995
10-K and incorporated herein by reference thereto)
10.31 Agreement of Lease, dated June 12, 1992, between Sydrolar
Holdings Inc. and H.G. Kalish Inc. (filed as Exhibit No. 10.39
to the 1995 10-K and incorporated herein by reference thereto)
10.32 Letter agreement, dated October 30, 1992, between Sydrolar
Holdings Inc. and H.G. Kalish Inc. amending the Agreement of
Lease, dated June 12, 1992, between the parties (filed as
Exhibit No. 10.40 to the 1995 10-K and incorporated herein by
reference thereto)
10.33 Addendum to Agreement, dated October 6, 1993, between Sydrolar
Holdings Inc. and H.G. Kalish Inc. amending the Agreement of
Lease, dated June 12, 1992, between the parties (filed as
Exhibit No. 10.41 to the 1995 10-K and incorporated herein by
reference thereto)
10.34 License Agreement, dated February 7, 1994, by and among RIGO
Group, S.r.l., COMI S.r.l., PMM S.r.l., Sencorp Systems, Inc.
and Detroit Tool and Engineering Company (filed as Exhibit 10.45
to the Registration Statement and incorporated herein by
reference thereto)
10.35 Lease Agreement, Dated February 7, 1995, between Lanard &
Axibund, Inc., as agent, I-95 Business Center at Keystone
Park-1, as lessor, and Stokes-Merrill Corporation, as lessee
(filed as Exhibit No. 10.46 to the 1995 10-K and incorporated
herein by reference thereto)
10.36 Lease, dated as of February 14, 1995, between 925 Airport Road
Realty Trust and Armac Industries, Co. (filed as Exhibit No.
10.47 to the 1995 10-K and incorporated herein by reference
thereto)
10.37 Agreement of Lease, dated August 28, 1995, between Harry G.
Kalish and Kalish Canada Inc. (filed as Exhibit No. 10.48 to the
1995 10-K and incorporated herein by reference thereto)
10.38 Lease, dated December 8, 1989, by and among Parklands Properties
Trust and PI Acquisition, Inc. (filed as Exhibit 10.49 to the
Registration Statement and incorporated herein by reference
thereto)
10.39 Amendment to Lease, dated April 20, 1992, by and between
Parklands Properties Trust and Sencorp Systems, Inc. (filed as
Exhibit 10.50 to the Registration Statement and incorporated
herein by reference thereto)
* Management contract or compensatory plan or arrangement.
<PAGE>
10.40 Commercial Lease, dated October 9, 1991, by and among Capplanco
Four, Inc., Sonya Marie Wotka HelmKampf and Joseph Armin Wotka,
individually, and Stephanie McDonald and Thomas L. McDonald,
Trustees of the Stephanie W. McDonald Revocable Trust,
collectively d/b/a/ C.W. Properties Chicago and Stokes-Merrill,
Inc. (filed as Exhibit 10.51 to the Registration Statement and
incorporated herein by reference thereto)
10.41 Lease, dated December 3, 1992, by and between KLM Realty Company
and Detroit Tool Metal Products Co. (filed as Exhibit 10.53 to
the Registration Statement and incorporated herein by reference
thereto)
10.42 Indemnification Agreement, dated March 18, 1994, between DT
Industries, Inc. and Harbour Group Investments II, L.P. (filed
as Exhibit 10.54 to the Registration Statement and incorporated
herein by reference thereto)
10.43* Purchase and Stockholder Agreement, dated November 30, 1993, by
and between Detroit Tool and Engineering Company and Bruce P.
Erdel (filed as Exhibit 10.55 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 26, 1994 filed with
the Commission on September 23, 1994 (the "1994 10-K") and
incorporated herein by reference thereto)
10.44* Stock Pledge Agreement, dated November 30, 1993, by and between
Bruce P. Erdel and Detroit Tool and Engineering Company (filed
as Exhibit 10.56 to the 1994 10-K and incorporated herein by
reference thereto)
10.45* $33,300 Promissory Note, dated November 30, 1993, by Bruce
P. Erdel to Detroit Tool and Engineering Company (filed as
Exhibit 10.57 to the 1994 10-K and incorporated herein by
reference thereto)
10.46* Letter Agreement, dated November 30, 1993, by and between Bruce
P. Erdel and Detroit Tool and Engineering Company (filed as
Exhibit 10.58 to the 1994 10-K and incorporated herein by
reference thereto)
10.47* Amendment to Promissory Note and Stock Pledge Agreement, dated
March 16, 1994, by and among DT Industries, Inc., Peer
Investors, L.P. and Bruce P. Erdel (filed as Exhibit 10.59 to
the 1994 10-K and incorporated herein by reference thereto)
10.48 Stock Purchase Agreement, dated August 31, 1994, by and among
DT Industries, Inc., Advanced Assembly Automation, Inc. and the
stockholders of Advanced Assembly Automation, Inc. named
therein, (filed as Exhibit No. 2 to the Company's Report on Form
8-K dated August 31, 1994 filed with the Commission on September
15, 1994 and incorporated herein by reference thereto)
10.49 Agreement relating to the sale and purchase of 76,000 Ordinary
Shares of (pound)1 each in the capital of Swiftpack, dated as of
November 23, 1995 by and among Peter Harris and Others and DTUK
and the Company (filed as Exhibit No. 2.1 to the Company's
Report on Form 8-K dated November 23, 1995 filed with the
Commission on December 7, 1995 and incorporated herein by
reference thereto)
10.50 Put and Call Option Agreement dated as of November 23, 1995 by
and among the Company, DTUK and Martin Gully (filed as Exhibit
No. 2.2 to the Company's Report on Form 8-K dated November 23,
1995 filed with the Commission on December 7, 1995 and
incorporated herein by reference thereto)
10.51 Credit Agreement dated as of November 23, 1995 between DTUK and
Dresdner Bank (filed as Exhibit No. 2.3 to the Company's Report
on Form 8-K dated November 23, 1995 filed with the Commission on
December 7, 1995 and incorporated herein by reference thereto)
10.52 Specific Counter-Indemnity dated as of November 23, 1995 between
DTUK and Dresdner Bank (filed as Exhibit No. 2.4 to the
Company's Report on Form 8-K dated November 23, 1995 filed with
the Commission on December 7, 1995 and incorporated herein by
reference thereto)
* Management contract or compensatory plan or arrangement.
<PAGE>
10.53 Debenture dated as of November 23, 1995 between DTUK and
Dresdner Bank (filed as Exhibit No. 2.5 to the Company's Report
on Form 8-K dated November 23, 1995 filed with the Commission on
December 7, 1995 and incorporated herein by reference thereto)
10.54 Agreement and Plan of Merger, dated July 19, 1996, by and among
Automation Acquisition Corporation, DT Industries, Inc.,
Mid-West Automation Enterprises, Inc. and the Stockholders
listed therein (filed as Exhibit 2.1 to the Company's Report on
Form 8-K dated July 19, 1996 filed with the Commission on August
5, 1996 and incorporated herein by reference thereto)
10.55 Indemnification and Escrow Agreement, dated as of July 19, 1996,
by and among Mid-West Automation Enterprises, Inc., the
stockholders listed therein, and LaSalle National Trust, N.A.,
as Escrow Agent (filed as Exhibit 2.2 to the Company's Report on
Form 8-K dated July 19, 1996 filed with the Commission on August
5, 1996 and incorporated herein by reference thereto)
10.56 Second Amended and Restated Credit Facilities Agreement, dated
July 19, 1996, among The Boatmen's National Bank of St. Louis,
Dresdner Bank AG and the other lenders listed on the signature
pages thereof and DT Industries, Inc. and the other borrowers
listed on the signature pages thereof (filed as Exhibit 2.3 to
the Company's Report on Form 8-K dated July 19, 1996 filed with
the Commission on August 5, 1996 and incorporated herein by
reference thereto)
10.57 Lease dated as of February 20, 1996 by and between CityWide
Development Corporation and Advanced Assembly Automation, Inc.
(filed as Exhibit No. 10 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 24, 1996 filed with the
Commission on May 3, 1996 and incorporated herein by reference
thereto).
10.58 Single-Tenant Industrial Building Lease dated July 19, 1996,
between American National Bank and Trust Company of Chicago, as
Trustee under Trust No. 63442, Landlord, and Mid-West Automation
Enterprises, Inc., an Illinois corporation and Mid-West
Automation Systems, Inc., an Illinois corporation, collectively,
Tenant
10.59* DT Industries, Inc. Amendment to 1994 Employee Stock Option Plan,
adopted May 16, 1996
10.60* DT Industries, Inc. Second Amendment to 1994 Employee Stock
Option, adopted September 18, 1996
10.61* DT Industries, Inc. 1996 Long-Term Incentive Plan
13.0 Annual Report to Stockholders
21.0 Subsidiaries of the Registrant
23.0 Consent of Price Waterhouse LLP
24.0 Powers of Attorney
- ---------------------------------
* Management contract or compensatory plan or arrangement.
<PAGE>
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.
DT INDUSTRIES, INC.
By: /s/ Bruce P. Erdel
--------------------------------------
Bruce P. Erdel
Vice President - Finance and Secretary
Dated: September 30, 1996
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 indicated on September 30, 1996.
SIGNATURES TITLE
* Chairman of the Board
- -------------------------------
James C. Janning
* President, Chief Executive Officer and Director
- ------------------------------- (Principal Executive Officer)
Stephen J. Gore
/s/ Bruce P. Erdel Vice President - Finance and Secretary
- ------------------------------- (Principal Financial and Accounting Officer)
Bruce P. Erdel
* Director
- -------------------------------
William H.T. Bush
* Director
- -------------------------------
Gregory A. Fox
* Director
- -------------------------------
Samuel A. Hamacher
* Director
- -------------------------------
Lee M. Liberman
* Director
- -------------------------------
Donald A. Nickelson
* Director
- -------------------------------
Charles Pollnow
*By: /s/ Bruce P. Erdel
--------------------------------------
Bruce P. Erdel
Attorney-In-Fact
- ------------
*Such signature has been affixed pursuant to the following Power of Attorney.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and
Stockholders of DT Industries, Inc.
Our audits of the consolidated financial statements of DT Industries,
Inc. and its subsidiaries, referred to in our report dated August 9, 1996,
appearing on page 24 of the Annual Report to Shareholders of DT Industries, Inc.
(which report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedule of DT Industries, Inc. listed in item 14(2) of this
Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
St. Louis, Missouri
August 9, 1996
S-1
<PAGE>
DT INDUSTRIES, INC.
SCHEDULE VIII
Rule 12-09 Valuation and Qualifying Accounts and Reserves
(In thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G
Balance at Charged to Charged to Purchase Balance at
Valuation and Beginning Costs and Other of End of
Reserve Accounts of Period Expenses Accounts Deductions Net Assets Period
<S> <C> <C> <C> <C> <C> <C>
For the Fiscal Year Ended June 30, 1996
Deferred Tax Assets Valuation
Allowance $1,029 $1,029
Accounts Receivable Reserve $ 751 $143 $0 ($189) $565(1) $1,294
(1) Reflects increase to Accounts Receivable Reserves due to acquisition of
Kalish, Arrow and AMI.
For the Fiscal Year Ended June 25, 1995
Deferred Tax Assets Valuation
Allowance $1,029 $1,029
Accounts Receivable Reserve $ 815 $ 20 $0 ($484) $400(1) $ 751
(1) Reflects increase to Accounts Receivable Reserves due to acquisition of
AAA $375 and Armac $25.
For the Fiscal Year Ended June 26, 1994
Deferred Tax Assets Valuation
Allowance $ 573 $456(1) $1,029
Accounts Receivable Reserve $ 141 $ 76 $0 ($ 83) $681(2) $ 815
(1) Reflects increase in Valuation Allowance due to acquisition of
Stokes-Merrill.
(2) Reflects increase to Accounts Receivable Reserves due to acquisition of
Sencorp $578 and Stokes-Merrill $103
</TABLE>
S-2
SINGLE-TENANT
INDUSTRIAL BUILDING LEASE
Between
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
as Trustee under Trust No. 63442,
Landlord,
and
MID-WEST AUTOMATION ENTERPRISES, INC., an Illinois corporation
AND
MID-WEST AUTOMATION SYSTEMS, INC., an Illinois corporation
collectively, Tenant
Dated: July 19, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
1 GRANT OF LEASE; PREMISES 1
2 TERM; POSSESSION 1
2.1 Term 1
2.2 Lease Year and Rent Commencement Date Defined 1
3 BASE RENT 2
3.1 Base Rent 2
3.2 Manner of Payment 2
4 IMPOSITIONS 3
4.1 Obligation to Pay Impositions 3
4.2 Payment by Tenant 3
4.3 Alternative Taxes 3
4.4 Payment by Landlord 4
4.5 Evidence of Payment 4
4.6 Right to Contest 4
4.7 Representations and Warranties 5
5 USE OF PREMISES 5
6 UTILITIES AND SERVICES 5
6.1 Utilities and Services 5
6.2 Regulations Regarding Utilities and Services 5
7 CONDITION OF PREMISES; COMPLIANCE WITH LEGAL REQUIREMENTS 6
7.1 Possession 6
7.2 Compliance with Legal Requirements 6
8 RETURN OF PREMISES 6
8.1 Surrender of Possession 6
8.2 Installations and Additions 7
8.3 Trade Fixtures and Personal Property 7
8.4 Survival 7
9 HOLDING OVER 8
10 RULES AND REGULATIONS 8
i
<PAGE>
ARTICLE PAGE
11 RIGHTS RESERVED TO LANDLORD 8
11.1 Rights Reserved to Landlord 8
12 MAINTENANCE 10
12.1 Maintenance Obligations 10
12.2 Maintenance Contract 10
12.3 Payment of Certain Maintenance Costs 11
13 ALTERATIONS 12
14 ASSIGNMENT AND SUBLETTING; LEASEHOLD MORTGAGES 13
14.1 Assignment and Subletting 13
14.2 Rentals Based on Net Income 13
14.3 Tenant and Guarantor to Remain Obligated 13
14.4 Tenant's Notice; Landlord's Right to Terminate 14
14.5 Landlord's Consent 14
14.6 Profits 14
14.7 Assignee to Assume Obligations 15
14.8 Change of Control 15
14.9 Assignment or Sublet to Affiliate 15
14.10 No Lien on Landlord's Interest 16
14.11 Provisions Regarding Leasehold Mortgage 16
14.12 Notices of Default 17
14.13 Termination of this Lease 18
14.14 Arbitration 19
15 WAIVER OF CERTAIN CLAIMS; INDEMNITY BY TENANT 19
15.1 Waiver of Certain Claims; Indemnity by Tenant 19
15.2 Damage Caused by Tenant's Neglect 20
15.3 Tenant Responsible for Personal Property 20
15.4 Indemnification 20
15.5 Landlord's Negligence 20
16 DAMAGE OR DESTRUCTION BY CASUALTY 21
16.1 Tenant's Obligation to Rebuild 21
16.2 Preconditions to Rebuilding 21
16.3 Payment for Rebuilding 21
16.4 Excess Receipts by Depositary 22
16.5 Failure to Rebuild 22
17 EMINENT DOMAIN 22
ii
<PAGE>
ARTICLE PAGE
17.1 Taking of Whole 22
17.2 Partial Taking 23
18 DEFAULT 23
18.1 Events of Default 23
18.2 Rights and Remedies of Landlord 25
18.3 Right to Re-Enter 25
18.4 Current Damages 25
18.5 Final Damages 26
18.6 Removal of Personal Property 27
18.7 Attorneys' Fees 27
18.8 Assumption or Rejection in Bankruptcy 27
19 SUBORDINATION 27
19.1 Subordination 27
19.2 Liability of Holder of Mortgage; Attornment 28
19.3 Short Form Lease 28
20 MORTGAGEE PROTECTION 29
21 ESTOPPEL CERTIFICATE 29
22 SUBROGATION AND INSURANCE 30
22.1 Waiver of Subrogation 30
22.2 Tenant's Insurance 30
22.3 Certificates of Insurance 31
22.4 Compliance with Requirements 31
23 NONWAIVER 32
24 TENANT--CORPORATION OR PARTNERSHIP 32
25 REAL ESTATE BROKERS 33
26 NOTICES 33
27 HAZARDOUS MATERIALS PROVISIONS 33
27.1 Defined Terms 33
27.2 Tenant's Obligations with Respect to Environmental Matters 35
27.3 Copies of Notices 35
27.4 Landlord's Right to Inspect 36
iii
<PAGE>
ARTICLE PAGE
27.5 Indoor Sampling and Analysis 36
27.6 Tenant's Obligation to Respond 36
27.7 Landlord's Right to Act 36
27.8 Indemnification 37
27.9 Obligations of Tenant 38
28 EXTENSION OPTION 38
28.1 Extension Option 38
29 TITLE AND COVENANT AGAINST LIENS 39
30 AMERICANS WITH DISABILITIES ACT 40
31 MISCELLANEOUS 41
31.1 Successors and Assigns 41
31.2 Modifications in Writing 41
31.3 No Option; Irrevocable Offer 41
31.4 Definition of Tenant 41
31.5 Definition of Landlord 41
31.6 Headings 42
31.7 Time of Essence 42
31.8 Default Rate of Interest 42
31.9 Severability 42
31.10 Entire Agreement 42
31.11 Force Majeure 42
31.12 Waiver of Trial by Jury 42
31.13 Guaranty of Lease 43
31.14 Tenant 43
32 EXCULPATORY PROVISIONS 43
EXHIBIT A - LEGAL DESCRIPTION OF THE PREMISES
EXHIBIT B - FORM OF GUARANTY OF LEASE
iv
<PAGE>
SINGLE-TENANT
INDUSTRIAL BUILDING LEASE
THIS LEASE is made and entered into as of the 19 day of July, 1996
by and between AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, not
personally but solely as Trustee under Trust Agreement dated March 1, 1985
and known as Trust No. 63442 (hereinafter referred to as "Landlord"), and
MID-WEST AUTOMATION ENTERPRISES, INC. an Illinois corporation
("Enterprises"), and MID-WEST AUTOMATION SYSTEMS, INC., an Illinois
corporation ("Systems"), (hereinafter collectively referred to as "Tenant").
ARTICLE 1
GRANT OF LEASE; PREMISES
Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the real estate consisting of approximately 393,383 square feet of
land legally described on Exhibit A attached hereto and made a part hereof,
together with all improvements now located thereon or to be located thereon
during the Term (as hereinafter defined), together with all appurtenances
belonging to or in any way pertaining to the said premises (such real estate,
improvements and appurtenances hereinafter referred to as the "Premises").
ARTICLE 2
TERM; POSSESSION
2.1 Term. The term of this Lease (hereinafter referred to as the
"Term") shall commence on the date (hereinafter referred to as the
"Commencement Date") of the closing of the acquisition of all the issued and
outstanding capital stock of Enterprises by DT Industries, Inc., a Delaware
corporation and shall end on July 31, 2003 (hereinafter referred to as the
"Expiration Date"), unless sooner terminated as provided herein. DT
Industries, Inc. shall guaranty the performance of Tenant's obligations under
this Lease, as provided in Section 31.13 below, and is hereinafter referred
to as "Guarantor."
2.2 Lease Year and Rent Commencement Date Defined. As used in this
Lease, the term "Lease Year" shall mean (i) f the Commencement Date is the
first day of a calendar month, the twelve 12) month period commencing on the
Commencement Date or (ii) if the Commencement Date is not the first day of a
calendar month, the period commencing on the Commencement Date and ending on
the last day of the twelfth (12th) full calendar month of the Term, and, in
either case, each succeeding twelve (12) month period thereafter which falls in
<PAGE>
whole or in part during the Term. As used in this Lease, the term "Rent
Commencement Date" shall mean the Commencement Date if the Commencement Date
is the first day of a calendar month or if the Commencement Date is not the
first day of a calendar month, the first day of the calendar month
immediately following the Commencement Date; and is based upon the assumption
that if the Commencement Date is not the first day of the month, Systems, as
tenant under a prior lease of the Premises dated May 1, 1985, as amended by
Amendment dated November 8, 1995 (collectively, the "Prior Lease"), has paid
in full the Monthly Base Rent (or equivalent thereof) for the entire calendar
month in which the Commencement Date occurs, and has not received a proration
credit for prepaid or unearned rent under the Prior Lease, and, therefore,
Tenant hereunder shall not be obligated to pay Monthly Base Rent for the
month in which the Commencement Date occurs.
ARTICLE 3
BASE RENT
3.1 Base Rent. Commencing on the Rent Commencement Date, Tenant
shall pay an annual base rent (hereinafter referred to as "Base Rent") to
Landlord for the Premises of the amounts set forth below, payable in equal
monthly installments (hereinafter referred to as "Monthly Base Rent") of the
amounts set forth below, in advance on the Rent Commencement Date and on the
first day of each calendar month thereafter of the Term, and at the same rate
for fractions of a month if the Term shall end on any day except the last day
of a calendar month:
<TABLE>
<CAPTION>
PERIOD ANNUAL MONTHLY
BASE RENT BASE RENT
<C> <C> <C>
Rent Commencement Date - $1,358,400.00 $113,200.00
11/30/98
12/1/98 - 11/30/99 $1,382,568.00 $115,214.00
12/1/99 - 11/30/00 $1,413,279.30 $117,773.27
12/1/00 - 11/30/01 $1,441,544.48 $120,128.70
12/1/00 - 11/30/02 $1,470,375.60 $122,531.30
12/1/02 - 07/31/03 $1,449,783.10 $124,981.92
</TABLE>
3.2 Manner of Payment. Base Rent and Impositions (as hereinafter
defined) and all other amounts becoming due from Tenant to Landlord hereunder
(hereinafter collectively referred to as "Rent") shall be paid in lawful
money of the United States to Landlord or Landlord's agent at the office of
Landlord's agent, or as otherwise designated from time to time
2
<PAGE>
by written notice from Landlord or Landlord's agent to Tenant. The payment of
Rent hereunder is independent of each and every other covenant and agreement
contained in this Lease, and Rent shall be paid without any setoff,
abatement, counterclaim or deduction whatsoever except as may be expressly
provided herein. Concurrently with the execution hereof, Tenant shall pay
Landlord Monthly Base Rent for the first full calendar month of the Term.
ARTICLE 4
IMPOSITIONS
4.1 Obligation to Pay Impositions. In addition to paying the Base
Rent specified in Article 3 hereof, Tenant shall also pay as additional rent
the amounts determined in accordance with this Article 4 (hereinafter
referred to as "Impositions").
4.2 Payment by Tenant. Tenant shall pay as additional rent for the
Premises, all taxes and assessments, general and special, water rates and all
other impositions, ordinary and extraordinary, foreseen or unforeseen, of
every kind and nature whatsoever, which may be levied, assessed, charged or
imposed during the Term of the Lease upon the Premises, or any part thereof,
or upon any improvements at any time situated thereon, including, without
limitation, any assessment by any association of owners of property in the
complex of which the Premises are a part (hereinafter referred to as
"Impositions"). Landlord shall, at Landlord's option, either arrange for the
bills for such Impositions to be issued directly to Tenant or shall forward
such bills to Tenant as soon as reasonably practical after Landlord's receipt
thereof and in either case, Tenant shall pay the amounts shown as due from
Landlord on such bills directly to the taxing authority issuing same at or
prior to the due date (or the date a penalty or charge is imposed for late
payment, if earlier). Impositions levied against the Premises shall not be
prorated between Landlord and Tenant as of the Commencement Date for the
first year of the Term but shall be prorated as of the expiration date of the
Term for the last year of the Term (on the basis of Landlord's reasonable
estimate thereof). Upon Landlord's receipt of the actual bills for
Impositions levied against the Premises for the last year of the Term,
Landlord and Tenant shall reprorate such Impositions based on such actual
bills. Impositions shall also include fees and costs incurred by Landlord
during the Lease Term for the purpose of appealing, contesting or protesting
tax assessments or rates, but only to the extent such fees and costs do not
exceed the actual savings realized during the Term of the Lease and any
extension thereof. Tenant may take the benefit of the provisions of any
statute or ordinance permitting any assessment to be paid over a period of
years, and Tenant shall be obligated to pay only those installments falling
due during the Term of this Lease.
4.3 Alternative Taxes. If at any time during the Term the method of
taxation prevailing at the commencement of the Term hereof shall be altered
so that any new tax, assessment, levy, imposition or charge, or any part
thereof, shall be measured by or be based
3
<PAGE>
in whole or in part upon the Lease or the Premises or the Rent or additional
rent or other income therefrom, and shall be imposed upon the Landlord, then
all such taxes, assessments, levies, impositions or charges, or the part
thereof, to the extent that they are so measured or based, shall be deemed to
be included within the definition of Impositions for the purposes hereof to the
extent that such Impositions would be payable if the Premises were the only
property of Landlord subject to such Impositions, and Tenant shall pay and
discharge the same as herein provided in respect of the payment of Impositions.
There shall be excluded from Impositions all federal income taxes, state and
local net income tax, federal excess profit taxes, franchise, capital stock
and federal or state estate or inheritance taxes of Landlord.
4.4 Payment by Landlord. In the event Tenant fails to timely pay any
Impositions as required by this Article 4, Landlord may pay same, together
with any interest or penalties imposed thereon by reason of Tenant's failure
to so pay, and such amounts paid by Landlord shall be due and payable by
Tenant to Landlord upon demand as additional rent hereunder.
4.5 Evidence of Payment. Tenant shall deliver to Landlord duplicate
receipts (or photostatic copies thereof) showing the payments of all
Impositions within thirty (30) days after the respective payments evidenced
thereby.
4.6 Right to Contest. Tenant shall not be required to pay any
Imposition or charge upon or against the Premises, or any part thereof, or
the improvements at any time situated thereon, in the event that and for so
long as Landlord shall (on its own determination, or after being requested to
do so by Tenant) contest, appeal or protest the same or the validity or
amount thereof by appropriate legal proceeding which shall have the effect of
preventing the collection of the Imposition or charge so contested. If
Tenant has requested that Landlord contest any Imposition, Landlord agrees to
initiate and reasonably diligently pursue such contest, appeal or protest,
provided that, in such event, Tenant shall reimburse Landlord from time to
time upon demand therefor, as additional rent hereunder, any and all costs
and expenses (including reasonable attorneys fees) incurred by Landlord in
initiating and pursuing any such contest, appeal or protest, and pending any
such legal proceedings, Tenant shall give Landlord such security as may be
deemed reasonably satisfactory to Landlord to insure payment of the amount of
the Imposition or charge and all interest and penalties thereon. Tenant
agrees to cooperate with Landlord in any such contest, appeal or protest.
If, at any time during the continuance of such contest, appeal or protest,
the Premises or any part thereof is, in the reasonable judgment of Landlord,
in imminent danger of being forfeited or lost, Landlord may use such security
for the payment of such Imposition. If Landlord has initiated said contest,
appeal or protest on its own, the foregoing provisions shall apply; however,
Landlord shall be responsible for the payment of all costs and expenses;
however, to the extent that Tenant derives a monetary benefit from said
contest, appeal or protest in the form of a reduced Imposition, Landlord
shall be entitled to be reimbursed for its costs and expenses but only to the
extent of such monetary benefit derived by Tenant.
4
<PAGE>
4.7 Representations and Warranties. Tenant agrees and acknowledges
that Landlord has made no representation, warranty or guaranty relating to
the amount of the Impositions. Tenant has had an opportunity to consult with
Landlord with respect to the Impositions projected for the operation of the
Premises but has not relied upon any statements or representations of
Landlord or any agent of Landlord in regard thereto in executing this Lease
and agreeing to perform the terms and covenants hereof and shall make no
claims against Landlord based thereon.
ARTICLE 5
USE OF PREMISES
Tenant shall use and occupy the Premises for manufacturing of automated
machinery and related office space and incidental uses thereto and for no
other use or purpose. Tenant covenants and agrees to use and occupy the
Premises in conformity with all "Legal Requirements" (as such term is defined
in Section 7.2 hereof).
ARTICLE 6
UTILITIES AND SERVICES
6.1 Utilities and Services. Tenant shall purchase all utility
services, including, but not limited to, fuel, water, sewerage and
electricity, from the utility or municipality providing such service, and
shall pay for such services when such payments are due.
6.2 Regulations Regarding Utilities and Services. Tenant agrees to
cooperate fully, at all times, with Landlord in abiding by all reasonable
regulations and requirements which Landlord may prescribe for the proper
functioning and protection of all utilities and services reasonably necessary
for the operation of the Premises. Throughout the Term of this Lease,
Landlord and its contractors shall have free access, upon reasonable advance
notice to Tenant (except in emergencies), to any and all mechanical
installations, and Tenant agrees that there shall be no construction of
partitions or other obstructions which might interfere with access to or the
moving of servicing equipment to or from the enclosures containing said
installations.
5
<PAGE>
ARTICLE 7
CONDITION OF PREMISES;
COMPLIANCE WITH LEGAL REQUIREMENTS
7.1 Possession. Except as otherwise provided in this Section 7.1,
Tenant agrees to accept the Premises in an "as is" condition without
representation or warranty as to the condition thereof, and Tenant's taking
possession of the Premises shall be conclusive evidence against Tenant that
the Premises are in good order and satisfactory condition. No promises of
Landlord to alter, remodel, improve, repair, decorate or clean the Premises
or any part thereof have been made, and no representation respecting the
condition of the Premises has been made to Tenant by or on behalf of Landlord
except that Landlord represents and warrants to Tenant that to the best of
Landlord's knowledge, on the Commencement Date, the foundation, structural
elements and roof of the Premises and the HVAC, electrical, mechanical,
plumbing and other operating systems of the Premises are in good working
order and condition, excluding normal wear and tear, and in the event any of
the foregoing are not in such condition on the Commencement Date and Tenant
so notifies Landlord within ninety (90) days after the Commencement Date,
Landlord shall perform such repairs as may be necessary to place same in such
condition at Landlord's sole cost and expense.
7.2 Compliance with Legal Requirements. From and after the date
hereof, Tenant shall at its sole cost and expense comply with the following
(collectively, "Legal Requirements"): (i) all federal, state, county,
municipal and other governmental and quasi-governmental statutes, laws,
rules, orders, regulations and ordinances affecting the Premises or any part
thereof, or the use thereof, including those which require the making of any
structural, unforeseen or extraordinary changes, whether or not any such
statutes, laws, rules, orders, regulations or ordinances which may be
hereafter enacted involve a change of policy on the part of the governmental
body enacting the same, and (ii) all rules, orders and regulations of the
National Board of Fire Underwriters or other bodies exercising similar
functions in connection with the prevention of fire or the correction of
hazardous conditions, which apply to the Premises. Tenant shall comply with
the requirement of all policies of public liability, fire and other insurance
which at any time may be in force with respect to the Premises.
ARTICLE 8
RETURN OF PREMISES
8.1 Surrender of Possession. At the termination of this Lease by lapse of
time or otherwise or upon termination of Tenant's right of possession without
termination of this Lease, Tenant shall surrender possession of the Premises
to Landlord and deliver all keys to the Premises to Landlord and make known to
Landlord the combination of all locks of vaults then
6
<PAGE>
remaining in the Premises, and shall, subject to the following paragraph,
return the Premises and all equipment and fixtures of Landlord therein to
Landlord in as good condition as when Tenant originally took possession,
ordinary wear, loss or damage by fire or other insured casualty, condemnation
and damage resulting from the act of Landlord or its employees and agents
excepted, failing which Landlord may restore the Premises and such equipment
and fixtures to such condition and Tenant shall pay the cost thereof to
Landlord on demand.
8.2 Installations and Additions. All installations, additions,
partitions, hardware, light fixtures, nontrade fixtures and improvements,
temporary or permanent and whether realty, personalty or mixed (except
movable furniture, trade fixtures, equipment and other personal property
belonging to Tenant which may be removed without causing damage to the
Premises which shall remain Tenant's property), in or upon the Premises,
whether placed there or paid for by Tenant or Landlord, shall be Landlord's
property and shall remain upon the Premises, all without compensation,
allowance or credit to Tenant; provided, however, that if at least thirty
(30) days prior to such termination of this Lease by lapse of time or within
ten (10) days after any other termination of this Lease or Tenant's right of
possession without termination of this Lease, Landlord so directs by notice,
Tenant, at Tenant's sole cost and expense, shall promptly remove such of the
installations, additions, partitions, hardware, light fixtures, nontrade
fixtures and improvements placed in the Premises by Tenant as are designated
in such notice and repair any damage to the Premises caused by such removal,
failing which Landlord may remove the same and repair the Premises, and
Tenant shall pay the cost thereof to Landlord on demand. At the sole option
of Landlord, Tenant shall leave in place any floor covering without
compensation to Tenant, or Tenant shall remove any floor covering and shall
remove all fastenings, paper, glue, bases or other vestiges and restore the
floor surface to its previous condition or shall pay to Landlord upon demand
the cost of restoring the floor surface to such condition.
8.3 Trade Fixtures and Personal Property. Tenant shall also remove
Tenant's furniture, machinery, safes, trade fixtures and other items of
movable personal property of every kind and description from the Premises and
restore any damage to the Premises caused thereby, such removal and
restoration to be performed prior to the end of the Term or ten (10) days
following termination of this Lease or Tenant's right of possession,
whichever might be earlier. If Tenant fails to remove such items, Landlord
may do so and thereupon the provisions of Section 18.6 shall apply, and
Tenant shall pay to Landlord upon demand the cost of removal and of restoring
the Premises.
8.4 Survival. All obligations of Tenant under this Article 8 shall
survive the expiration of the Term or sooner termination of this Lease.
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ARTICLE 9
HOLDING OVER
Tenant shall pay Landlord for each day Tenant retains possession of the
Premises or any part thereof after termination of this Lease, by lapse of
time or otherwise, or of Tenant's right to possession of the Premises, an
amount which is one and one-half times the amount of Base Rent for a day
based on the annual rate of Base Rent set forth in Section 3.1 for the period
in which such possession occurs, calculated as though such period were within
the Term, and Tenant shall also pay all damages, consequential as well as
direct, sustained by Landlord by reason of such retention. Acceptance by
Landlord of Rent after such termination shall not of itself constitute a
renewal. Nothing contained in this Section shall be construed or operate as
a waiver of Landlord's right of reentry or any other right or remedy of
Landlord.
ARTICLE 10
RULES AND REGULATIONS
Tenant agrees, for itself, its employees, agents, contractors, invitees
and licensees, to observe and not to interfere with the rights reserved to
Landlord contained in Article 11 hereof.
ARTICLE 11
RIGHTS RESERVED TO LANDLORD
11.1 Rights Reserved to Landlord. Landlord reserves the following
rights, exercisable without notice and without liability to Tenant for damage
or injury to property, person or business and without effecting an eviction
or disturbance of Tenant's use or possession or giving rise to any claim for
setoff or abatement of Rent or affecting any of Tenant's obligations under
this Lease:
(a) during the last year of the Term to install and maintain
"for sale" or "for rent" signs on the exterior of the Premises;
(b) to retain at all times, and to use in appropriate
instances, pass keys to the Premises;
(c) to exhibit the Premises at reasonable hours upon reasonable
prior verbal or written notice (which in the case of verbal notice
shall be given to Tenant's president or such other individuals as
Tenant may designate from time to time in writing to
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Landlord), and to decorate, remodel, repair, alter or otherwise prepare the
Premises for reoccupancy at any time after Tenant vacates or abandons the
Premises;
(d) to enter the Premises at reasonable hours upon reasonable
advance notice (except in emergencies) for reasonable purposes,
including inspection;
(e) In case of fire, invasion, insurrection, mob, riot, civil
disorder, public excitement or other commotion, or threat thereof,
Landlord reserves the right to limit or prevent access to the Premises
during the continuance of the same, or otherwise take such action or
preventive measures deemed necessary by Landlord for the safety or
security of the occupants of the Premises or the protection of the
Premises. Tenant agrees to cooperate with any reasonable safety or
security measures established by Landlord;
(f) to regulate access to telephone, electrical and other
utility closets in the Premises and to require use of designated
contractors for any work involving access to the same; and
(g) provided that reasonable access to the Premises shall be
maintained and the business of Tenant shall not be interfered with
unreasonably, to decorate and to make, at its own expense, repairs,
alterations, additions and improvements, structural or otherwise, in or
to the Premises, or any part thereof, and any adjacent building, land,
street or alley, including for the purpose of connection with or
entrance into or use of the Premises in conjunction with any adjoining
or adjacent building or buildings, now existing or hereafter
constructed, and may for such purposes erect scaffolding and other
structures reasonably required by the character of the work to be
performed, and during such operations may enter upon the Premises and
take into and upon or through any part of the Premises, all materials
that may be required to make such repairs, alterations, improvements or
additions, and in connection therewith Landlord may temporarily close
public entryways, other public spaces, stairways or corridors and
interrupt or temporarily suspend any services or facilities agreed to
be furnished by Landlord, all without the same constituting an eviction
of Tenant in whole or in part, without abatement of Rent by reason of
loss or interruption of the business of Tenant or otherwise, and
without in any manner rendering Landlord liable for damages or
relieving Tenant from performance of Tenant's obligation under this
Lease. Landlord may at its option make any repairs, alterations,
improvements and additions in and about the Premises during ordinary
business hours, and if Tenant desires to have such work done during
other than business hours, Tenant shall pay all overtime and additional
expenses resulting therefrom.
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ARTICLE 12
MAINTENANCE
12.1 Maintenance Obligations. The obligations of Tenant under this
Section 12.1 shall be subject to the provisions of Sections 7.1 and 12.3
hereof. Tenant shall keep, repair and maintain the entire exterior and
interior of the Premises, specifically including, without limitation, the
heating, ventilating and air conditioning equipment, the parking area and the
roof, in good condition and repair. As used herein, each and every
obligation of Tenant to keep, maintain and repair shall include, without
limitation, all ordinary and extraordinary structural and nonstructural
repairs and replacements. As to any repairs costing in excess of $50,000,
and as to any replacements whatsoever, Tenant shall, in connection therewith,
comply with the requirements of Section 16.2 hereof. Tenant shall, to the
extent possible, keep the Premises from falling temporarily out of repair or
deteriorating. Tenant shall further keep, repair and maintain the
improvements at any time situated upon the Premises, the parking area and all
sidewalks and areas adjacent thereto, and all landscaped areas adjacent
thereto, safe secure, clean and sanitary (including, without limitation, snow
and ice clearance, planting and replacing flowers and landscaping, and
necessary interior painting and carpet cleaning at least once each year), and
in compliance in all material respects with all Legal Requirements. In the
event the Premises are served or traversed by railroad switch or spur track,
then Tenant, notwithstanding the provision of any rail track agreements to
the contrary, shall repair and maintain and remove snow from, or reimburse
the railroad carrier for repairing, maintaining and/or snow removal from, as
the case may be, the portion of the track and related facilities on or
serving the Premises. Landlord may, but shall have no obligation to, elect
to make any or all repairs on Tenant's behalf at Tenant's sole cost if Tenant
fails to do so as required herein or, upon Tenant's request, perform any such
repairs at Tenant's sole cost. In either case, Tenant shall pay the cost
thereof, and, in addition, if Tenant had requested Landlord to make such
repairs, Tenant shall pay to Landlord an amount equal to ten percent (10%) of
such cost as an overhead and supervision fee. If Tenant does not make repairs
promptly and adequately when required to do so (Landlord having not
previously elected to do so), Landlord may, but need not, make such repairs
and replacements, and Tenant shall pay Landlord, on written demand, the cost
thereof and an amount equal to ten percent (10%) of such cost as an overhead
and supervision fee. Landlord shall make available to Tenant, the benefit of
any and all warranties from third parties covering repairs and replacements
to the Premises which Tenant is obligated to make hereunder and Landlord
shall cooperate with Tenant to the extent reasonably necessary in asserting
any such warranty claims on Tenant's behalf.
12.2 Maintenance Contract. Without limiting Tenant's obligations
under Section 12.1 hereof, Tenant shall, at all times during the term of this
Lease, have, keep in force and furnish to Landlord a copy of a maintenance
contract, in form and with a contractor satisfactory to Landlord, providing
for inspection at least once each calendar quarter of the heating,
ventilating and air conditioning equipment, and providing for necessary
maintenance thereof and repairs
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thereto. Said contract shall provide that it will not be cancelable by either
party thereto except upon thirty (30) days' prior written notice to Landlord.
12.3 Payment of Certain Maintenance Costs. For purposes of this
Section 12.3, there shall be deemed to be three separate portions of the
Premises to which the repair and maintenance obligations of this section
shall apply: namely, (a) the foundation; (b) the structural elements of the
Building; and (c) the roof. In the event Tenant determines that it is
necessary to make any repair to or replacement of any of said portions of the
Premises, treating each said portion as an individual category, which repair
or replacement was not caused by the negligence or willful misconduct of
Tenant, its agents, employees, contractors or invitees or by Tenant's default
in the performance of its obligations under Section 12.1 above, Tenant shall
notify Landlord of the necessity and cost of such proposed repair and
replacement. Landlord or Landlord's agent shall notify Tenant within thirty
(30) days after the receipt of said notice of Landlord's approval of such
repair or replacement (in the event Landlord or Landlord's agent fails to
notify Tenant of such approval or disapproval within said thirty (30) day
period, Landlord shall be deemed to have approved such repair or
replacement). If the Landlord approves or is deemed to have approved such
repair or replacement, Tenant may proceed with same in compliance with the
provisions of the Lease (including, without limitation, the provisions of
this Article 12 and Section 16.2) and shall present to Landlord and
Landlord's agent satisfactory evidence of completion in compliance with this
Lease together with contractors' affidavits and full and final waivers of
lien and receipted bills covering all labor and materials expended and used
for such repair or replacement, in form and substance reasonably satisfactory
to Landlord or Landlord's agent. Further, for purposes hereof, the repair or
replacement shall be deemed to have occurred on the date Tenant notifies
Landlord of the necessity and proposed cost of same. Based upon the
foregoing, Landlord shall reimburse Tenant for one-half (1/2) of the amount
by which the costs of the repairs or replacements within any of the three
categories above (each category considered separately) incurred during any
Lease Year during the Term of the Lease, or Extension Period, if applicable,
exceeds $50,000. In the event Landlord or Landlord's agent notifies Tenant
within said thirty (30) day period that Landlord disapproves the necessity of
such repair or replacement, then the parties shall select a mutually
acceptable, independent and qualified third party consultant or contractor
who shall determine the necessity of such repair or replacement. The
determination of such consultant or contractor shall be binding upon Landlord
and Tenant and the fee of such consultant or contractor shall be paid equally
by Landlord and Tenant. If such consultant or contractor determines that
such repair or replacement is necessary, Tenant shall proceed in accordance
with this Section 12.3 as if Landlord had approved same. Landlord shall pay
to Tenant any reimbursement required to be paid by Landlord pursuant to this
Section 12.3 within thirty (30) days after Landlord's receipt of Tenant's
certification that the repair or replacement giving rise to such
reimbursement has been fully completed together with contractors affidavits
and full and final waivers of lien and receipted bills covering all labor and
materials expended and used to complete same. In the event that said
consultant or contractor determines that such repair or replacement is not
necessary, Tenant may proceed with same at Tenant's sole cost and expense,
subject to compliance with this Article 12. In no event shall Tenant be
entitled to reimbursement
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for any repair or replacement except in strict compliance with this Section
12.3. The foregoing notwithstanding, Tenant shall not be required to obtain
Landlord's prior written consent to any such repair or replacement in case
such repair or replacement is required on an emergency basis where obtaining
such prior consent is not reasonably feasible, provided that Landlord's
obligation to reimburse Tenant for any portion of the cost thereof shall be
subject to Landlord's subsequent approval (or deemed approval) as to the
necessity thereof in the same manner as provided for herein where such repair
or replacement would have required Landlord's prior written approval (or
deemed approval).
ARTICLE 13
ALTERATIONS
Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, make any alterations, additions
or improvements to the Premises. Landlord's consent may be conditioned upon
the agreement by Tenant to remove said alterations at the expiration of the
Term and to restore the Premises to their original condition. If Landlord
consents to such alterations, additions or improvements, before commencement
of the work or delivery of any materials onto the Premises, Tenant shall
furnish to Landlord for approval plans and specifications, names and
addresses of contractors, copies of contracts, necessary permits and
licenses, and instruments of indemnification against any and all claims,
costs, expenses, damages and liabilities which may arise in connection with
such work, all in such form, substance and amount as may be reasonably
satisfactory to Landlord. All alterations, additions and improvements shall
be installed in a good, workmanlike manner, and only new, high-grade
materials shall be used. All such work shall be done only by contractors or
mechanics approved by Landlord. Tenant further agrees to hold Landlord
harmless from any and all liabilities of every kind and description which may
arise out of or be connected in any way with said alterations, additions or
improvements. Before commencing any work in connection with such
alterations, additions or improvements, Tenant shall furnish Landlord with
certificates of insurance from all contractors performing labor or furnishing
materials insuring Landlord against any and all liabilities which may arise
out of or be connected in any way with said alterations, additions or
improvements. Tenant shall permit Landlord to supervise construction
operations in connection with the foregoing work if Landlord requests to do
so. Tenant shall pay the cost of all such alterations, additions and
improvements and also the cost of decorating the Premises occasioned by such
alterations, additions and improvements, including the cost of labor and
materials, and contractors' profit, overhead and general conditions. Upon
completing any alterations, additions or improvements, Tenant shall furnish
Landlord with contractors' affidavits, in form required by law, and full and
final waivers of lien and receipted bills covering all labor and materials
expended and used. All alterations, additions and improvements shall comply
with all insurance requirements and with all city and county ordinances and
regulations and with the requirements of all Legal Requirements.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING; LEASEHOLD MORTGAGES
14.1 Assignment and Subletting. Except as otherwise provided in this
Article 14, Tenant shall not, without the prior written consent of Landlord
in each instance, which consent shall not be unreasonably withheld,
(a) assign, transfer, mortgage, pledge, hypothecate or encumber, or subject
to or permit to exist upon or be subjected to any lien or charge, this Lease
or any interest under it; (b) allow to exist or occur any transfer of or lien
upon this Lease or Tenant's interest herein by operation of law; (c) sublet
the Premises or any part thereof (provided, however, Landlord may, in its
absolute discretion, withhold its consent to any such sublease if at said
time, there already exists a sublease of the Premises or any part thereof);
(d) permit the use or occupancy of the Premises or any part thereof for any
purpose not provided for under Article 5 of this Lease or by anyone other
than Tenant and Tenant's employees; or (e) cause, suffer or permit to occur
any "Change of Control" (as such term is defined in Section 14.8 hereof) (any
of the foregoing are sometimes hereinafter referred to as an "Assignment").
In no event shall this Lease be assigned or assignable by voluntary or
involuntary bankruptcy proceedings or otherwise, and in no event shall this
Lease or any rights or privileges hereunder be an asset of Tenant under any
bankruptcy, insolvency or reorganization proceedings.
14.2 Rentals Based on Net Income. Without thereby limiting the
generality of the foregoing provisions of this Article 14, Tenant expressly
covenants and agrees not to enter into any lease, sublease or license,
concession or other agreement for use, occupancy or utilization of the
Premises which provides for rental or other payment for such use, occupancy
or utilization based in whole or in part on the net income or profits derived
by any person from the property leased, used, occupied or utilized (other
than an amount based on a fixed percentage or percentages of receipts or
sales), and that any such purported lease, sublease or license, concession or
other agreement shall be absolutely void and ineffective as a conveyance of
any right to or interest in the possession, use, occupancy or utilization of
any part of the Premises.
14.3 Tenant and Guarantor to Remain Obligated. Consent by Landlord to
any assignment, subletting, use, occupancy or transfer, except to the extent,
if any, expressly provided for in such consent, shall not operate to relieve
Tenant from any covenant or obligation hereunder or be deemed to be a consent
to or relieve Tenant from obtaining Landlord's consent to any subsequent
assignment, transfer, lien, charge, subletting, use or occupancy, or to
relieve Guarantor from its obligations under the Guaranty of Lease referred
to below. Tenant shall pay all of Landlord's reasonable costs, charges and
expenses, including attorneys' fees, incurred in connection with any
assignment, transfer, lien, charge, subletting, use or occupancy made or
requested by Tenant.
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14.4 Tenant's Notice; Landlord's Right to Terminate. Tenant shall, by
notice in writing, advise Landlord of its intention from, on and after a
stated date (which shall not be less than sixty (60) days after the date of
Tenant's notice) to assign this Lease or sublet any part or all of the
Premises for the balance of the Term (including the Extension Period, if
applicable), and, in such event, Landlord shall have the right, to be
exercised by giving written notice to Tenant within thirty (30) days after
receipt of Tenant's notice, to recapture the space described in Tenant's
notice, and such recapture notice shall, if given, terminate this Lease with
respect to the space therein described as of the date stated in Tenant's
notice. Tenant's said notice shall state the name and address of the
proposed subtenant or assignee, and a true and complete copy of the proposed
sublease or assignment and sufficient information to permit Landlord to
determine the financial responsibility and character of the proposed
subtenant or assignee shall be delivered to Landlord with said notice. If
Tenant's notice shall cover all of the space hereby demised, and if Landlord
shall give the aforesaid recapture notice with respect thereto, the Term of
this Lease shall expire on the date stated in Tenant's notice as fully and
completely as if that date had been herein definitely fixed for the
expiration of the Term. If, however, this Lease shall be terminated pursuant
to the foregoing with respect to less than the entire Premises, the Base Rent
and Tenant's Proportionate Share (as defined herein) shall be adjusted on the
basis of the number of rentable square feet retained by Tenant, and this
Lease, as so amended, shall continue thereafter in full force and effect;
provided that Tenant shall pay all costs in connection with the physical
subdivision of any portion of the Premises.
14.5 Landlord's Consent. If Landlord, upon receiving Tenant's said
notice with respect to any such space, shall not exercise its right to
terminate as aforesaid, Landlord will not unreasonably withhold its consent
to Tenant's assignment of this Lease or subletting the space covered by its
notice. Landlord shall not be deemed to have unreasonably withheld its
consent to a sublease of all or part of the Premises or an assignment of this
Lease if its consent is withheld because: (a) Tenant is then in default
hereunder; (b) any notice of termination of this Lease or termination of
Tenant's possession shall have been given under Article 18 hereof; (c) the
portion of the Premises which Tenant proposes to sublease, including the
means of ingress to and egress from and the proposed use thereof, and the
remaining portion of the Premises will violate any Legal Requirements;
(d) the proposed use of the Premises by the subtenant or assignee does not
conform with the use permitted by Article 5 hereof; or (e) in the reasonable
judgment of Landlord, the proposed subtenant or assignee is of a character or
is engaged in a business which would be deleterious to the reputation of the
Premises, or the subtenant or assignee is not sufficiently financially
responsible to perform its obligations under the proposed sublease or
assignment; provided, however, that the foregoing are merely examples of
reasons for which Landlord may withhold its consent and shall not be deemed
exclusive of any permitted reasons for reasonably withholding consent,
whether similar to or dissimilar from the foregoing examples.
14.6 Profits. If Tenant, having first obtained Landlord's consent to
any sublease or assignment, or if Tenant or a trustee in bankruptcy for
Tenant pursuant to the Bankruptcy Code,
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shall assign this Lease or sublet more than fifty percent (50%) of the Premises
at a rental or for other consideration in excess of the Rent or pro rata
portion thereof due and payable by Tenant under this Lease, then Tenant shall
pay to Landlord as additional rent (a) in the case of an assignment, one-half
of any such excess rent or other monetary consideration immediately upon
receipt thereof, or (b) in the case of a sublease, (i) on the first day of
each month during the term of any sublease, one-half of the excess of all rent
and other consideration due from the subtenant for such month over the Rent
then payable to Landlord pursuant to the provisions of this Lease for said
month (or if only a portion of the Premises is being sublet, the excess of all
rent and other consideration due from the subtenant for such month over the
portion of the Rent then payable to Landlord pursuant to the provisions of
this Lease for said month which is allocable on a square footage basis to the
space sublet), and (ii) immediately upon receipt thereof, one-half of any
other consideration realized by Tenant from such subletting; it being agreed,
however, that Landlord shall not be responsible for any deficiency if Tenant
shall assign this Lease or sublet the Premises or any part thereof at a
rental less than that provided for herein. If Tenant has entered into a
permitted sublease of less than fifty percent (50%) of the Premises, Landlord
shall have no right to share in any excess rent paid by said subtenant.
14.7 Assignee to Assume Obligations. If Tenant shall assign this
Lease as permitted herein, the assignee shall expressly assume all of the
obligations of Tenant hereunder in a written instrument satisfactory to
Landlord and furnished to Landlord not later than fifteen (15) days prior to
the effective date of the assignment. If Tenant shall sublease the Premises
as permitted herein, Tenant shall obtain and furnish to Landlord, not later
than fifteen (15) days prior to the effective date of such sublease and in
form satisfactory to Landlord, the written agreement of such subtenant
stating that the subtenant will attorn to Landlord, at Landlord's option and
written request, in the event this Lease terminates before the expiration of
the sublease.
14.8 Change of Control. Notwithstanding anything to the contrary in
this Article 14, if Tenant is a corporation (other than a corporation the
stock of which is publicly traded) the term "Change of Control" shall mean
any change in the ownership of the shares of stock which constitute control
of Tenant other than by reason of gift or death. The term "control" as used
herein means the power to directly or indirectly direct or cause the
direction of the management or policies of Tenant. If Tenant, from time to
time, is a partnership (general or limited) or limited liability company or
limited liability partnership, the term "Change of Control" shall mean any
change in the ownership of the partnership or member interests which
constitute control of Tenant, other than by reason of gift or death.
14.9 Assignment or Sublet to Affiliate. Notwithstanding the
provisions of Article 14 to the contrary, Tenant shall have the right to
assign this Lease or sublet all or any portion of the Premises to a
corporation which controls, is controlled by or is under common control with
Tenant ("Affiliate") provided that the provisions of Sections 14.3 and 14.7
shall apply to such assignment or sublet and further provided that Guarantor
shall in writing consent to same and
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reaffirm that its guaranty of the Lease shall remain in full force and effect
and Tenant shall furnish a copy of such consent and reaffirmation to Landlord.
14.10 No Lien on Landlord's Interest. No mortgage of this Lease or
Tenant's interest therein or any other transfer, hypothecation, lien or
encumbrance thereof which is the functional equivalent of a mortgage thereof
(collectively, "Leasehold Mortgage") or any extension, modification or
amendment thereof made by Tenant shall be a lien or encumbrance upon the
estate or interest of Landlord in and to the Premises or any part thereof.
14.11 Provisions Regarding Leasehold Mortgage. No Leasehold Mortgage
shall be valid or of any force or effect unless and until (a) a true copy of
the original of each instrument creating and effecting such Leasehold
Mortgage, certified by the holder or beneficiary thereof ("Leasehold
Mortgagee") to be a true copy of such instrument, and written notice
containing the name and post office address of the Leasehold Mortgagee shall
have been delivered to Landlord, and (b) the Leasehold Mortgage shall contain
in substance (or adopt by reference) the following provisions:
(a) This mortgage is executed upon the condition that no
purchaser at any foreclosure sale (or purchaser by deed-in-lieu of
foreclosure) shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the purchaser, or the person, firm or
corporation to whom or to which such purchaser's right has been
assigned, in the instrument transferring to such purchaser or to such
assignee the interest of tenant under the lease hereby mortgaged, shall
assume and agree to perform (subject to the provisions hereof) all of
the terms, covenants and conditions of that lease thereafter to be
observed or performed on the part of such tenant, that no further or
additional mortgage or assignment of the lease hereby mortgaged shall
be made except in accordance with the provisions contained in
Article 14 of that lease, and that a duplicate original of said
instrument containing such assumption agreement, duly executed and
acknowledged by such purchaser or such assignee and in recordable form,
is delivered to landlord under the hereby mortgaged lease immediately
after the consummation of such sale, or, in any event, prior to taking
possession of the premises demised thereby.
(b) The mortgagee waives all right and option to retain and
apply the proceeds of any insurance or the proceeds of any condemnation
award toward payment of the sum secured by this mortgage to the extent
such proceeds are required for and applied to the demolition, repair or
restoration of the mortgaged premises in accordance with the provisions
of the lease hereby mortgaged.
(c) In the event of foreclosure, the mortgagee shall not name,
in such foreclosure action or otherwise, and in any event shall not
disturb the possession or right to possession (except for default) of,
any Subtenant of the tenant under the lease hereby mortgaged who are
bona fide Subtenants under Article 14 of such lease and are not
Affiliates of Tenant.
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(d) This mortgage and all rights of the mortgagee hereunder
are, without the necessity for the execution of any further documents,
subject and subordinate to the rights of the landlord under the lease
hereby mortgaged, as said lease may have been previously modified,
amended or renewed with the consent of the mortgagor or its
predecessors in interest, or may hereafter be modified, amended or
renewed with the consent of the mortgagee. Nevertheless, the holder of
this mortgage agrees from time to time upon request and without charge
to execute, acknowledge and deliver any instruments reasonably
requested by the landlord under the lease to evidence the foregoing
subordination.
14.12 Notices of Default.
(a) If Tenant shall mortgage this Lease in compliance with the
provisions of Section 14.11, Landlord shall give to each Leasehold
Mortgagee, at the address of such Leasehold Mortgagee set forth in the
notice mentioned in Section 14.11 hereof, and otherwise in the manner
provided by Article 26 hereof, a copy of each notice of Default by
Tenant at the same time as and whenever any such notice of Default
shall thereafter be given by Landlord to Tenant, and no such notice of
Default by Landlord shall be deemed to have been duly given to Tenant
unless and until a copy thereof shall have been so given to each
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have
a period of ten (10) days more in the case of a Default in the payment
of Base Rent or other Rent and twenty (20) days more in the case of any
other Default, after such notice is given to Leasehold Mortgagee, for
remedying the Default or causing the same to be remedied than is given
Tenant after such notice is given to it; and (ii) shall, within such
period and otherwise as herein provided, have the right to remedy such
Default, cause the same to be remedied. Landlord shall accept
performance by a Leasehold Mortgagee of any covenant, condition or
agreement on Tenant's part to be performed hereunder with the same
force and effect as though performed by Tenant, so long as such
performance is made in accordance with the terms and provisions of this
Lease.
(b) Notwithstanding the provisions of Section 18.1 hereof, no
Default by Tenant shall be deemed to exist as long as a Leasehold
Mortgagee, if possession of the Premises or any part thereof is
required in order to cure the Default, shall have notified Landlord of
its intention to institute foreclosure proceedings to obtain possession
directly or through a receiver, and thereafter within fourteen
(14) days after the giving of such notice commences such foreclosure
proceedings, prosecutes such proceedings with reasonable diligence and
continuity and, upon obtaining such possession, commences promptly to
cure the Default in accordance with Section 14.12(a) hereof; provided
that the Leasehold Mortgagee shall have delivered to Landlord, in
writing, its agreement to take the action described in this Section
14.12(b) and shall have assumed the obligation to cure the Default and
that during the period in which any foreclosure proceedings are
pending, all of the other obligations of Tenant under this Lease are
being duly performed (including, without limitation, payment of all
Rent due hereunder) within any applicable
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grace periods. Notwithstanding anything herein to the contrary, a Leasehold
Mortgagee shall have no obligation to cure any Default of Tenant's under
Section 18.1 of this Lease. However, at any time after the delivery of the
aforementioned agreement, the Leasehold Mortgagee may notify Landlord,
in writing, that it has relinquished possession of the Premises or that
it will not institute foreclosure proceedings or, if such proceedings
have been commenced, that it has discontinued them, and, in such event,
the Leasehold Mortgagee shall have no further liability under such
agreement from and after the date it delivers such notice to Landlord
(except for any obligations assumed by the Leasehold Mortgagee and
accruing prior to the date it delivers such notice), and, thereupon,
Landlord shall have the unrestricted right to terminate this Lease and
to take any other action it deems appropriate by reason of any Default
by Tenant, and upon any such termination the provisions of Article 18
shall apply. Anything contained in this Section to the contrary
notwithstanding, the provisions of this Section shall not apply in the
case of a Leasehold Mortgagee which is not an institutional lender
unless such Leasehold Mortgagee shall provide Landlord with security
for the performance of the assumed obligation in amount and form
satisfactory to Landlord during the period that such Leasehold
Mortgagee is taking the required action to cure the Default.
(c) From and after the date upon which Landlord receives the
notice mentioned in Section 14.11 it shall not modify or amend this
Lease in any material respect or cancel or terminate this Lease other
than as provided herein without the prior written consent of the
Leasehold Mortgagee which gave such notice.
(d) Except as provided in this Section, no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until
such time as it becomes the owner of the leasehold estate created
hereby.
14.13 Termination of this Lease.
(a) In case of termination of this Lease by reason of any
Default or for any other reason, Landlord, subject to the provisions
hereof, shall give prompt notice thereof to each Leasehold Mortgagee
under a Leasehold Mortgage made in compliance with the provisions
hereof, which notice shall be given at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 14.11 hereof.
Landlord, on written request of such Leasehold Mortgagee made any time
within thirty (30) days after the giving of such notice by Landlord,
shall execute and deliver a new lease of the Premises to the Leasehold
Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein
contained; provided that the Leasehold Mortgagee shall pay to Landlord,
simultaneously with the delivery of such new lease, all unpaid Rent due
under this Lease up to and including the date of the commencement of
the term of such new lease and all expenses, including, without
limitation, attorneys' fees and disbursements and court costs, incurred
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by Landlord in connection with the Default by Tenant, the termination
of this Lease and the preparation of the new lease.
(b) Any such new lease and the leasehold estate thereby
created, subject to the same conditions contained in this Lease, shall
continue to maintain the same priority as this Lease with regard to any
Leasehold Mortgage or Fee Mortgage or any other lien, charge or
encumbrance whether or not the same shall then be in existence.
(c) Upon the execution and delivery of a new lease under this
Section, all Subleases which theretofore may have been assigned to
Landlord thereupon shall be assigned and transferred, without recourse,
by Landlord to the tenant named in such new lease. Between the date of
termination of this Lease and the date of execution and delivery of the
new lease, if a Leasehold Mortgagee shall have requested such new lease
as provided in paragraph (a) of this Section, Landlord shall not enter
into any new Subleases, cancel or modify any then-existing Subleases or
accept any cancellation, termination or surrender thereof (unless such
termination shall be effected as a matter of law on the termination of
this Lease) without the written consent of the Leasehold Mortgagee,
except as permitted in the Subleases.
(d) If there is more than one Leasehold Mortgage, Landlord
shall recognize only the Leasehold Mortgagee whose Leasehold Mortgage
is senior in lien as the Leasehold Mortgagee entitled to the rights
afforded by Sections 14.11 through 14.14.
14.14 Arbitration. In any circumstances where arbitration is provided
for under this Lease, Landlord shall give any Leasehold Mortgagee who shall
have given Landlord a notice as provided in Section 14.11 notice of any
demand by Landlord for any arbitration, and Landlord shall recognize the
Leasehold Mortgagee entitled to the rights afforded hereunder in accordance
with this Section as the only proper party to participate in the arbitration
if Tenant fails to do so.
ARTICLE 15
WAIVER OF CERTAIN CLAIMS; INDEMNITY BY TENANT
15.1 Waiver of Certain Claims; Indemnity by Tenant. To the extent not
expressly prohibited by law or otherwise expressly provided in this Lease,
Tenant releases Landlord and its beneficiaries, if any, and their agents,
servants and employees, from and waives all claims for damages to person or
property sustained by Tenant, or by any other person, resulting directly or
indirectly from fire or other casualty, cause or any existing or future
condition, defect, matter or thing in or about the Premises, or from any
equipment or appurtenance therein, or from any accident in or about the
Premises, or from any act or neglect of any other person, including
Landlord's agents and servants. This Section 15.1 shall apply especially,
but not exclusively,
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to damage caused by water, snow, frost, steam, excessive heat or cold,
sewerage, gas, odors or noise, or the bursting or leaking of pipes or plumbing
fixtures, broken glass, sprinkling or air conditioning devices or equipment,
or flooding of basements, and shall apply without distinction as to the person
whose act or neglect was responsible for the damage and whether the damage was
due to any of the acts specifically enumerated above or from any other thing
or circumstance, whether of a like nature or of a wholly different nature.
15.2 Damage Caused by Tenant's Neglect. If any damage to the
Premises, or any equipment or appurtenance thereon, results from any act or
neglect of Tenant, its employees, agents, contractors, licensees or invitees,
Tenant shall be liable therefor, and Landlord may at its option (upon notice
to Tenant except in case of emergency) repair such damage, and Tenant shall
upon demand by Landlord reimburse Landlord for all costs of repairing such
damage in excess of amounts, if any, paid to Landlord under insurance
covering such damage.
15.3 Tenant Responsible for Personal Property. All personal property
belonging to Tenant shall be there at the risk of Tenant, and Landlord shall
not be liable for damage thereto or theft or misappropriation thereof.
15.4 Indemnification. To the extent not expressly prohibited by law,
Tenant agrees to hold Landlord and its beneficiaries, if any, and their
agents, servants and employees, harmless and to indemnify each of them
against claims and liabilities, including reasonable attorneys' fees, for
injuries to all persons and damage to or theft or misappropriation or loss of
property occurring in or about the Premises arising from Tenant's occupancy
of the Premises or the conduct of its business or from any activity, work or
thing done, permitted or suffered by Tenant in or about the Premises or from
any breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of Tenant to be performed pursuant to the
terms of this Lease, or due to any other act or omission of Tenant, its
agents, contractors, invitees, licensees or employees, but only to the extent
of Landlord's liability, if any, in excess of amounts, if any, paid to
Landlord under insurance covering such claims or liabilities. Tenant's
obligation to indemnify Landlord hereunder shall include the duty to defend
against any claims asserted by reason of any such claims or liabilities and
to pay any judgments, settlements, costs, fees and expenses, including
attorneys' fees, incurred in connection therewith.
15.5 Landlord's Negligence. Notwithstanding the provisions of Section
15.1 and to the extent permitted by law, no agreement of Tenant in this Lease
shall be deemed to exempt Landlord from liability or damages for injury to
persons or damage to property caused by or resulting from the negligence of
Landlord, its agents, servants or employees, in the operation or maintenance
of the Premises or Building, or compliance with Landlord's obligations
hereunder.
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ARTICLE 16
DAMAGE OR DESTRUCTION BY CASUALTY
16.1 Tenant's Obligation to Rebuild. In the event of damage to, or
destruction of, any portion of the Premises or of the fixtures and equipment
therein, by fire or other casualty, Tenant shall promptly, at its expense,
repair, restore or rebuild the same to the condition existing prior to the
happening of such fire or other casualty. Rent shall not be reduced or
abated during the period of such repair, restoration or rebuilding even if
the improvements are not tenantable.
16.2 Preconditions to Rebuilding. Before Tenant commences such
repairing, restoration or rebuilding involving an estimated cost of more than
Fifty Thousand Dollars ($50,000), plans and specifications therefor, prepared
by a licensed architect reasonably satisfactory to Landlord shall be
submitted to Landlord for approval and Tenant shall furnish to Landlord
(a) an estimate of the cost of the proposed work, certified to by said
architect; (b) satisfactory evidence of sufficient contractor's comprehensive
general liability insurance covering Landlord, builder's risk insurance, and
workers' compensation insurance; (c) a performance and payment bond issued by
an institution reasonably satisfactory to Landlord; and (d) such other
security as Landlord may reasonably require to insure payment for the
completion of all work free and clear of liens.
16.3 Payment for Rebuilding. Except as otherwise provided in this
Section 16.3, all sums arising by reason of loss under the insurance referred
to in Section 22.2 herein shall be deposited with the Depositary (as
hereinafter defined) to be available to Tenant for the work. Tenant shall
deposit with the Depositary any excess cost of the work over the amount held
by the Depositary as proceeds of the insurance within thirty (30) days from
the date of the determination of the cost of the work by the architect in
accordance with clause (a) of Section 16.2. If Tenant is then in Default
hereunder and such Default can be cured solely by the payment of money,
Landlord may deduct from the insurance proceeds payable to the Depositary the
amounts necessary to cure such Default, provided that if such Default cannot
be cured solely by the payment of money, deposit of proceeds of insurance
with the Depository as provided herein shall not be deemed to waive any such
Default and Landlord shall retain all of its rights and remedies under this
Lease or otherwise with respect to such Default. Tenant shall diligently
pursue the repair or rebuilding of the improvements in a good and workmanlike
manner using only new materials comparable to those existing in the damaged
portion of the Premises at the time of the casualty. The Depositary shall
pay out construction funds from time to time on the written direction of the
architect provided that the Depositary and Landlord shall first be furnished
with waivers of lien, contractors and subcontractors sworn statements and
other evidence of cost and payments so that the Depositary can verify that
the amounts disbursed from time to time are represented by completed and
in-place work, and that said work is free and clear of possible mechanics
liens. No payment made prior to the final completion of the work
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(or portions thereof) shall exceed ninety percent (90%) of the value of the
work completed (or portions thereof) and in place from time to time. At all
times, the undisbursed balance remaining in the hands of Depositary shall be
at least sufficient to pay for the cost of completion of the work free and
clear of liens; any deficiency shall be paid into the Depositary by Tenant.
Depositary, as used herein, shall be a title insurer selected and directed by
Landlord.
16.4 Excess Receipts by Depositary. Any excess of money received from
insurance remaining with the Depositary after the repair or rebuilding of
improvements, if there be no default by Tenant in the performance of the
Tenant's covenants and agreements hereunder, shall be paid to Tenant.
16.5 Failure to Rebuild. If Tenant shall not enter upon the repair or
rebuilding of the Premises within a period of sixty (60) days after damage or
destruction by fire or otherwise, and prosecute the same thereafter with such
dispatch as may be necessary to complete the same within a reasonable period
after said damage or destruction occurs, but in any event prior to the
expiration of the Term, including the Extension Period, if applicable, then,
in addition to whatever other remedies Landlord may have either under this
Lease, at law or in equity, the money received by and then remaining in the
hands of the Depositary shall be paid to and retained by Landlord as security
for the continued performance and observance by Tenant of Tenant's covenants
and agreements hereunder, or Landlord may terminate this Lease and then be
paid and retain the amount so held as liquidated damages resulting from the
failure on the part of Tenant to comply with the provisions of this
Article 16. Notwithstanding anything herein to the contrary, if the fire or
other casualty causes damage of or destruction to more than fifty percent
(50%) of the Premises on a replacement cost basis, and if such damage or
destruction occurs within the last twelve (12) months of the Term, or the
Extension Period, if applicable, either Landlord or Tenant may terminate this
Lease upon thirty (30) days' prior written notice to the other party, given
within thirty (30) days from the date of such casualty, in which event all
insurance proceeds necessary to repair, rebuild or restore the Premises shall
be paid directly to and retained by Landlord.
ARTICLE 17
EMINENT DOMAIN
17.1 Taking of Whole. If the whole of the Premises shall be taken or
condemned for a public or quasi-public use or purpose by a competent
authority, or if such a portion of the Premises shall be so taken that, as a
result thereof, the balance cannot be used for the same purpose and with
substantially the same utility to Tenant as immediately prior to such taking,
or if the taking is material and substantial and Landlord elects (subject to
the consent of any first mortgagee whose consent thereto is required) to
terminate this Lease, which election shall be made by giving written notice
thereof to Tenant within thirty (30) days after delivery of
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possession to the condemning authority, then in any of such events, the Term
shall terminate upon delivery of possession to the condemning authority, and
any award, compensation or damages (hereinafter sometimes called the "Award")
shall be paid to and be the sole property of Landlord, whether the Award shall
be made as compensation for diminution of the value of the leasehold estate or
the fee of the Premises or otherwise and Tenant hereby assigns to Landlord all
of Tenant's right, title and interest in and to any and all of the Award.
Notwithstanding the foregoing, Tenant shall be entitled to receive and retain
amounts which may be specifically awarded to Tenant in any such condemnation
proceedings due to the taking of its trade fixtures, leasehold improvements,
moving expenses and such business loss as Tenant shall separately and
specifically establish. Tenant shall continue to pay rent and other charges
hereunder until the Lease is terminated and any impositions and insurance
premiums prepaid by Tenant or any unpaid impositions or other changes which
accrue prior to the termination, shall be adjusted between the parties.
17.2 Partial Taking. If only a part of the Premises shall be so taken
or condemned, but this Lease is not terminated pursuant to Section 17.1
hereof, Tenant, at its sole cost and expense, shall repair and restore the
Premises and all improvements thereon. There shall be no abatement or
reduction in any Rent because of such taking or condemnation. Tenant shall
promptly and diligently proceed to make a complete architectural unit of the
remainder of the improvements, complying with the procedure set forth in
Section 16.2. For such purpose, the amount of the Award relating to the
Premises shall be deposited with the Depositary (as defined in Section 16.3
hereof), which shall disburse the Award to apply on the cost of said
repairing or restoration in accordance with the procedure set forth in
Section 16.3, provided that in the event Tenant is then in Default hereunder,
the Award shall be retained or disbursed by Landlord in the same manner as
insurance proceeds are retained and disbursed under Section 16.3 when Tenant
is in Default. If Tenant does not make a complete architectural unit of the
remainder of the Premises within a reasonable period after such taking or
condemnation, but in any event prior to the expiration of the Term, or the
Extension Period, if applicable, then, in addition to whatever other remedies
Landlord may have either under this Lease, at law or in equity, the money
received by and then remaining in the custody of the Depositary shall, at
Landlord's election, be paid to and retained by Landlord. Any portion of the
Award as may not have to be expended for such repairing or restoration shall
be paid to Landlord.
ARTICLE 18
DEFAULT
18.1 Events of Default. The occurrence of any one or more of the
following matters constitutes a default ("Default") by Tenant under this
Lease:
(a) failure by Tenant to pay any Rent within five (5) days
after notice of failure to pay the same on the due date from Landlord
to Tenant, provided that no such
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notice shall be required for the third or any subsequent failure to pay any
Rent when due within any twelve-month period and in such event, a Default
shall be deemed to occur upon such failure to pay any such Rent within five (5)
days after the date when due;
(b) failure by Tenant to pay, within five (5) days after notice
of failure to pay on the due date from Landlord to Tenant, any other
moneys required to be paid by Tenant under this Lease;
(c) an Assignment by Tenant without Landlord's prior written
consent as required by Section 14.1 or the failure by Tenant to
substantially observe or perform any of the covenants in respect of an
Assignment as set forth in Article 14;
(d) failure by Tenant to comply in all material respects with
Tenant's warranties, representations and covenants set forth in
Article 27;
(e) failure by Tenant to cure promptly in accordance with
applicable law immediately after receipt of notice from Landlord, any
hazardous condition which Tenant has created in violation of law or of
this Lease;
(f) failure by Tenant to observe or perform any covenant,
agreement, condition or provision of this Lease (provided that if the
provisions of any of Sections 18.1(a), 18.1(b), 18.1(c), 18.1(d) or
18.1(e) above is specifically applicable to such failure, the
provisions of such applicable Section shall apply), if such failure
shall continue for thirty (30) days after notice thereof from Landlord
to Tenant, provided that if such failure cannot reasonably be cured
within said thirty (30) days, the period for cure shall be extended for
such period reasonably required for such cure provided Tenant commences
such cure within said thirty (30) days and diligently pursues same to
completion;
(g) the levy upon under writ of execution or the attachment by
legal process of the leasehold interest of Tenant, or the filing or
creation of a lien in respect of such leasehold interest, except as
permitted under Article 14, which lien shall not be released or
discharged within ninety (90) days from the date of such filing;
(h) Tenant becomes insolvent or bankrupt, or admits in writing
its inability to generally pay its debts as they mature, or makes a
general assignment for the benefit of creditors, or applies for or
consents to the appointment of a trustee or receiver for Tenant or for
the major part of its property;
(i) a trustee or receiver is appointed for Tenant or for the
major part of its property and is not discharged within ninety (90)
days after such appointment; or
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(j) bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings for relief under any
bankruptcy law or similar law for the relief of debtors, are instituted
(i) by Tenant or (ii) against Tenant and are allowed against it or are
consented to by it or are not dismissed within ninety (90) days after
such institution.
18.2 Rights and Remedies of Landlord. If a Default occurs, Landlord
shall have the rights and remedies hereinafter set forth, which shall be
distinct, separate and cumulative and shall not operate to exclude or deprive
Landlord of any other right or remedy allowed it by law:
(a) Landlord may terminate this Lease by giving to Tenant
notice of Landlord's election to do so, in which event the Term of this
Lease shall end, and all right, title and interest of Tenant hereunder
shall expire on the date stated in such notice;
(b) Landlord may terminate the right of Tenant to possession of
the Premises without terminating this Lease by giving notice to Tenant
that Tenant's right of possession shall end on the date stated in such
notice, whereupon the right of Tenant to possession of the Premises or
any part thereof shall cease on the date stated in such notice; and
(c) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits
in equity or at law for the specific performance of any covenant or
agreement contained herein, or for the enforcement of any other
appropriate legal or equitable remedy, including recovery of all moneys
due or to become due from Tenant under any of the provisions of this
Lease.
18.3 Right to Re-Enter. If Landlord exercises either of the remedies
provided for in subparagraphs (a) and (b) of the foregoing Section 18.2,
Tenant shall surrender possession and vacate the Premises and immediately
deliver possession thereof to Landlord, and Landlord may re-enter and take
complete and peaceful possession of the Premises, with or without process of
law, full and complete license so to do being hereby granted to Landlord, and
Landlord may remove all occupants and property therefrom, using such force as
may be necessary, without being deemed in any manner guilty of trespass,
eviction or forcible entry and detainer and without relinquishing Landlord's
right to Rent or any other right given to Landlord hereunder or by operation
of law.
18.4 Current Damages. If Landlord terminates the right of Tenant to
possession of the Premises without terminating this Lease, Landlord shall
have the right to immediate recovery of all amounts then due hereunder. Such
termination of possession shall not release Tenant, in whole or in part, from
Tenant's obligation to pay the Rent hereunder for the full Term, and Landlord
shall have the right, from time to time, to recover from Tenant, and Tenant
shall remain liable for, all Base Rent, Rent Adjustments and any other sums
accruing as they become
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due under this Lease during the period from the date of such notice of
termination of possession to the stated end of the Term. In any such case
Landlord may relet the Premises or any part thereof for the account of Tenant
for such rent, for such time (which may be for a term extending beyond the
Term of this Lease) and upon such terms as Landlord shall determine and collect
the rents from such reletting. Landlord shall not be required to accept any
tenant offered by Tenant or to observe any instructions given by Tenant
relative to such reletting. Also, in any such case, Landlord may make repairs,
alterations and additions in or to the Premises and redecorate the same to the
extent reasonably deemed by Landlord necessary or desirable and, in connection
therewith, change the locks to the Premises, and Tenant shall upon demand pay
the reasonable cost of all the foregoing together with Landlord's reasonable
expenses of reletting. The rents from any such reletting shall be applied
first to the payment of the expenses of reentry, redecoration, repair and
alterations and the expenses of reletting (including brokers' commissions and
attorneys' fees), and second to the payment of Rent herein provided to be paid
by Tenant. Any excess or residue shall operate only as an offsetting credit
against the amount of Rent due and owing as the same thereafter becomes due
and payable hereunder, and the use of such offsetting credit to reduce the
amount of Rent due Landlord, if any, shall not be deemed to give Tenant any
right, title or interest in or to such excess or residue, and any such excess
or residue shall belong to Landlord solely, and in no event shall Tenant be
entitled to a credit on its indebtedness to Landlord in excess of the aggregate
sum (including Base Rent and Rent Adjustments) which would have been paid by
Tenant for the period for which the credit to Tenant is being determined, had
no Default occurred. No such reentry or repossession, repairs, alterations and
additions, or reletting shall be construed as an eviction or ouster of Tenant
or as an election on Landlord's part to terminate this Lease, unless a written
notice of such intention shall be given to Tenant, or shall operate to release
Tenant in whole or in part from any of Tenant's obligations hereunder, and
Landlord may, at any time and from time to time, sue and recover judgment for
any deficiencies from time to time remaining after the application from time
to time of the proceeds of any such reletting.
18.5 Final Damages. If this Lease is terminated by Landlord as
provided for by subparagraph (a) of Section 18.2, Landlord shall be entitled
to recover from Tenant all Rent accrued and unpaid for the period up to and
including such termination date, as well as all other additional sums payable
by Tenant or for which Tenant is liable or in respect of which Tenant has
agreed to indemnify Landlord under any of the provisions of this Lease, which
may be then owing and unpaid, and all costs and expenses, including court
costs and attorneys' fees, incurred by Landlord in the enforcement of its
rights and remedies hereunder, and, in addition, Landlord shall be entitled
to recover as damages for loss of the bargain and not as a penalty: (a) the
unamortized portion of Landlord's contribution to the cost of tenant
improvements and alterations, if any, installed by either Landlord or Tenant
pursuant to this Lease or any Workletter; (b) the aggregate sum which at the
time of such termination represents the excess, if any, of the present value
of the aggregate rents which would have been payable after the termination
date had this Lease not been terminated, including, without limitation, Base
Rent at the annual rate or respective annual rates for the remainder of the
Term provided for in Article 3 of this Lease or elsewhere herein and the
amount projected by Landlord to represent CPI
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Adjustments for the remainder of the Term pursuant to Article 3 of this Lease,
over the then-present value of the then-aggregate fair rental value of the
Premises for the balance of the Term, such present worth to be computed in
each case on the basis of a discount rate equal to one percent (1%) over the
then-applicable Federal rate, as specified in the Internal Revenue Code, from
the respective dates upon which such rentals would have been payable hereunder
had this Lease not been terminated; and (c) any damages in addition thereto,
including reasonable attorneys' fees and court costs, which Landlord shall have
sustained by reason of the breach of any of the covenants of this Lease other
than for the payment of Rent.
18.6 Removal of Personal Property. All property of Tenant removed
from the Premises by Landlord pursuant to any provisions of this Lease or of
law may be handled, removed or stored by Landlord at the cost and expense of
Tenant, and subject to Section 15.5 above, Landlord shall in no event be
responsible for the value, preservation or safekeeping thereof. Tenant shall
pay Landlord for all expenses incurred by Landlord in such removal and
storage charges against such property so long as the same shall be in
Landlord's possession or under Landlord's control. All such property not
removed from the Premises or retaken from storage by Tenant on or before
thirty (30) days after the first to occur of the end of the Term, however
terminated, or the termination of Tenant's right of possession of the
Premises, shall, at Landlord's option, be conclusively deemed to have been
conveyed by Tenant to Landlord as by bill of sale without further payment or
credit by Landlord to Tenant.
18.7 Attorneys' Fees. Tenant shall pay all of Landlord's costs,
charges and expenses, including court costs and reasonable attorneys' fees,
incurred in enforcing Tenant's obligations under this Lease, incurred by
Landlord in any action brought by Tenant in which Landlord is the prevailing
party, or incurred by Landlord in any litigation, negotiation or transaction
in which Tenant causes Landlord, without Landlord's fault, to become involved
or concerned.
18.8 Assumption or Rejection in Bankruptcy. If Tenant shall be
adjudged bankrupt or if a trustee-in-bankruptcy shall be appointed for
Tenant, Landlord and Tenant agree, to the extent permitted by law, to request
that the trustee in bankruptcy shall determine within sixty (60) days
thereafter whether to assume or reject this Lease.
ARTICLE 19
SUBORDINATION
19.1 Subordination. Landlord has heretofore and may hereafter from time
to time execute and deliver a mortgage or first trust deed in the nature of a
mortgage (both being hereinafter referred to as a "Mortgage") against the
Premises or any interest therein. Landlord may designate on behalf of any such
mortgagee or trustee under any Mortgage, that Tenant's interest in this Lease
is either (a) subordinate to said Mortgage, and to any and all advances
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made thereunder and to the interest thereon, and to all renewals, replacements,
supplements, amendments, modifications and extensions thereof, or (b) as to
certain of Tenant's rights and interest in this Lease superior thereto; and
upon said designation, Tenant's interest under this Lease shall automatically
and without further action of Tenant be subordinate or superior to the
Mortgage, as applicable. With respect to the foregoing, Tenant agrees promptly
to execute and deliver such agreement or agreements as may be reasonably
required by such mortgagee or trustee under any Mortgage; however, Tenant's
execution of said agreement shall not be required in order to effectuate the
subordination or creation of superior interests as aforesaid. Landlord shall
use reasonable commercial efforts to obtain for Tenant the mortgagee's
agreement to recognize Tenant's rights and obligations under this Lease upon
an attornment to such mortgagee by Tenant as provided in such mortgagee's
then-current form of non-disturbance agreement. Notwithstanding anything in
the foregoing to the contrary, it is understood and agreed that Tenant's
covenant to subordinate this Lease to any future Mortgage shall be conditioned
upon Tenant's receipt of a non-disturbance agreement from the Mortgagee, which
shall provide, in addition to such other terms and provisions customarily
included in such agreements by said Mortgagee, that so long as Tenant is not
in Default under this Lease, its rights hereunder shall not be disturbed by
said Mortgagee.
19.2 Liability of Holder of Mortgage; Attornment. It is further
agreed that (a) if any Mortgage shall be foreclosed, (i) the holder of the
Mortgage, ground lessor (or their respective grantees) or purchaser at any
foreclosure sale (or grantee in a deed in lieu of foreclosure), as the case
may be, shall not be (x) liable for any act or omission of any prior landlord
(including Landlord), (y) subject to any offsets or counterclaims which
Tenant may have against a prior landlord (including Landlord), or (z) bound
by any prepayment of Base Rent or Rent Adjustments which Tenant may have made
in excess of the amounts then due for the next succeeding month; (ii) the
liability of the mortgagee or trustee hereunder or the purchaser at such
foreclosure sale or the liability of a ground lessor or a subsequent owner
designated as Landlord under this Lease shall exist only so long as such
trustee, mortgagee, purchaser or owner is the owner of the Premises, and such
liability shall not continue or survive after further transfer of ownership;
(iii) upon request of the mortgagee or trustee, if the Mortgage shall be
foreclosed, Tenant will attorn, as Tenant under this Lease, to the purchaser
at any foreclosure sale under any Mortgage, and Tenant will execute such
instruments as may be necessary or appropriate to evidence such attornment;
and (b) this Lease may not be modified or amended so as to reduce the Rent or
shorten the Term provided hereunder or so as to adversely affect in any other
respect to any material extent the rights of Landlord, nor shall this Lease
be cancelled or surrendered, without the prior written consent, in each
instance, of the ground lessor and the mortgagee or trustee under any
Mortgage.
19.3 Short Form Lease. The parties agree to execute a short form of
lease containing the names of the parties, description of the Premises and
the Term of this Lease, which shall be recorded with the Recorder of Deeds of
Lake County, Illinois.
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ARTICLE 20
MORTGAGEE PROTECTION
Tenant agrees to give any holder of any Mortgage (as defined in
Section 19.1 hereof) against the Premises, or any interest therein, by
registered or certified mail, a copy of any notice or claim of Default served
upon Landlord by Tenant, provided that prior to such notice Tenant has been
notified in writing (by way of service on Tenant of a copy of an assignment
of Landlord's interests in leases, or otherwise) of the address of such
Mortgage holder. Tenant further agrees that if Landlord shall have failed to
cure such Default within twenty (20) days after such notice to Landlord (or
if such Default cannot be cured or corrected within that time, then such
additional time as may be necessary if Landlord has commenced within such
twenty (20) days and is diligently pursuing the remedies or steps necessary
to cure or correct such Default), then the holder of the Mortgage shall have
an additional thirty (30) days within which to cure or correct such Default
(or if such Default cannot be cured or corrected within that time, then such
additional time as may be necessary if such holder of the Mortgage has
commenced within such thirty (30) days and is diligently pursuing the
remedies or steps necessary to cure or correct such Default, including the
time necessary to obtain possession if possession is necessary to cure or
correct such Default).
ARTICLE 21
ESTOPPEL CERTIFICATE
Tenant agrees that, from time to time upon not less than ten (10) days'
prior request by Landlord or the holder of any Mortgage or any ground lessor,
Tenant (or any permitted assignee, subtenant, licensee, concessionaire or
other occupant of the Premises claiming by, through or under Tenant) will
deliver to Landlord, or to the holder of any Mortgage or any ground lessor, a
statement in writing signed by Tenant certifying (a) that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that this Lease as modified is in full force and effect and identifying the
modifications); (b) the date upon which Tenant began paying Rent and the
dates to which the Rent and other charges have been paid; (c) that to the
best of Tenant's knowledge, Landlord is not in Default under any provision of
this Lease, or, if in Default, the nature thereof in detail; (d) that the
Premises have been completed in accordance with the terms hereof and Tenant
is in occupancy and paying Rent on a current basis with no rental offsets or
claims; (e) that there has been no prepayment of Rent other than that
provided for in this Lease; (f) that there are no actions, whether voluntary
or otherwise, pending against Tenant under the bankruptcy laws of the United
States or any state thereof; and (g) such other matters as may be reasonably
required by Landlord, the holder of the Mortgage or any ground lessor.
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ARTICLE 22
SUBROGATION AND INSURANCE
22.1 Waiver of Subrogation. Landlord and Tenant agree to have all
fire and extended coverage and other property damage insurance which may be
carried by either of them endorsed with a clause providing that any release
from liability of, or waiver of claim for, recovery from the other party
entered into in writing by the insured thereunder prior to any loss or damage
shall not affect the validity of said policy or the right of the insured to
recover thereunder and providing further that the insurer waives all rights
of subrogation which such insurer might have against the other party.
Without limiting any release or waiver of liability or recovery set forth
elsewhere in this Lease, and notwithstanding anything in this Lease which may
appear to be to the contrary, each of the parties hereto waives all claims
for recovery from the other party for any loss or damage to any of its
property insured under valid and collectible insurance policies to the extent
of any recovery collectible under such insurance policies. Notwithstanding
the foregoing or anything contained in this Lease to the contrary, any
release or any waiver of claims shall not be operative, nor shall the
foregoing endorsements be required, in any case where the effect of such
release or waiver is to invalidate insurance coverage or invalidate the right
of the insured to recover thereunder or to increase the cost thereof
(provided that in the case of increased cost the other party shall have the
right, within ten (10) days following written notice, to pay such increased
cost keeping such release or waiver in full force and effect).
22.2 Tenant's Insurance. Tenant shall procure and maintain policies
of insurance, at its sole cost and expense, during the entire Term hereof
with terms and coverages and companies satisfactory to Landlord and with such
increases in limits as Landlord may from time to time request, but initially
Tenant shall maintain the following coverages insuring:
(a) all improvements at any time situated upon the Premises against
loss or damage by fire, lightning, wind storm, hail storm, aircraft, vehicles,
smoke, explosion, riot or civil commotion as provided by the standard fire and
extended coverage policy and all other risks of direct physical loss as
insured against under a special extended coverage endorsement. The insurance
coverage shall be for not less than one hundred percent (100%) of the full
replacement cost of such improvements with agreed amount endorsement, subject
to the condition that in the event repair or restoration of any damage or
destruction to the improvements situated on the Premises covered by such
insurance is never commenced or completed, such coverage may be limited to the
greater of the actual cash value of such damaged or destroyed improvements or
the replacement cost of such portions of such damaged or destroyed improve-
ments which are actually repaired or restored. Landlord shall be named as the
insured and all proceeds of insurance shall be payable to Landlord. The full
replacement cost of improvements shall be designated annually by Landlord in
the good faith exercise of Landlord's judgment. In the event that Tenant does
not agree with Landlord's designation, Tenant shall have
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the right to submit the matter to an insurance appraiser reasonably selected
by Landlord and paid for by Tenant. The insurance appraiser shall submit a
written report of his appraisal, and if said report discloses that the
improvements are not insured as therein required, Tenant shall promptly
obtain the insurance required.
(b) Tenant and Landlord from all claims, demands or actions
made by, or on behalf of, any person or persons, firm or corporation
and arising from, related to or connected with the Premises, for injury
to or death of any person in an amount of not less than Five Million
and No/100 Dollars ($5,000,000.00), for injury to or death of more than
one person in any one occurrence in an amount of not less than Ten
Million and No/100 Dollars ($10,000,000.00), and for damage to property
in an amount of not less than Three Million and No/100 Dollars
($3,000,000.00).
(c) Commencing within thirty (30) days after the Commencement
Date, insurance against loss or damage from external explosion or breakdown of
boilers, air conditioning equipment and miscellaneous electrical apparatus, if
any, in the Premises, in an amount not less than Three Million and No/100
Dollars ($5,000,000.00), with loss or damage payable to Landlord and Tenant
as their interests may appear.
(d) Insurance against all worker's compensation claims.
(e) All contents, and Tenant's trade fixtures, machinery,
equipment, furniture and furnishings, in the Premises to the extent of
at least ninety percent (90%) of their replacement cost under standard
fire and extended coverage insurance, including, without limitation,
vandalism and malicious mischief and sprinkler leakage endorsements.
22.3 Certificates of Insurance. Within thirty (30) days after
the commencement of the Term, Tenant shall furnish to Landlord policies
or certificates evidencing such coverage, which policies or
certificates shall state that such insurance coverage may not be
reduced, cancelled or not renewed without at least thirty (30) days'
prior written notice to Landlord and Tenant (unless such cancellation
is due to nonpayment of premium, and, in that case, only ten (10) days'
prior written notice shall be sufficient). If Landlord is an Illinois
land trust, the insurance referred to in Section 22.2 hereof shall also
insure the beneficiary or beneficiaries thereof.
22.4 Compliance with Requirements. Tenant shall comply with all
applicable laws and ordinances, all orders and decrees of court and all
requirements of other governmental authority, and shall not, directly or
indirectly, make any use of the Premises which may thereby be prohibited or
be dangerous to person or property or which may jeopardize any insurance
coverage, increase the cost of such insurance or require additional insurance
coverage.
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ARTICLE 23
NONWAIVER
No waiver of any condition expressed in this Lease shall be implied by
any neglect of Landlord to enforce any remedy on account of the violation of
such condition whether or not such violation be continued or repeated
subsequently, and no express waiver shall affect any condition other than the
one specified in such waiver and that one only for the time and in the manner
specifically stated. Without limiting Landlord's rights under Article 9, it
is agreed that no receipt of moneys by Landlord from Tenant after the
termination in any way of the Term or of Tenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or
extend the Term or affect any notice given to Tenant prior to the receipt of
such moneys. It is also agreed that after the service of notice or the
commencement of a suit or after final judgment for possession of the
Premises, Landlord may receive and collect any moneys due, and the payment of
said moneys shall not waive or affect said notice, suit or judgment.
ARTICLE 24
TENANT -- CORPORATION OR PARTNERSHIP
Tenant (a) represents and warrants that this Lease has been duly
authorized, executed and delivered by and on behalf of Tenant and constitutes
the valid and binding agreement of Tenant in accordance with the terms
hereof, and (b) shall deliver to Landlord, concurrently with the delivery of
this Lease executed by Tenant, certified resolutions of the board of
directors of Tenant authorizing Tenant's execution and delivery of this Lease
and the performance of Tenant's obligations hereunder, together with
certified resolutions of the board of directors (or the executive committee
thereof) of the Guarantor authorizing Guarantor's execution and delivery of
the Guaranty. In case Tenant is a partnership, Tenant represents and
warrants that all of the persons who are general or managing partners in said
partnership have executed this Lease on behalf of Tenant, or that this Lease
has been executed and delivered pursuant to and in conformity with a valid
and effective authorization therefor by all of the general or managing
partners of such partnership and is and constitutes the valid and binding
agreement of the partnership and each and every partner therein in accordance
with its terms. Also, it is agreed that each and every present and future
partner in Tenant shall be and remain at all times jointly and severally
liable hereunder and that the death, resignation or withdrawal of any partner
shall not release the liability of such partner under the terms of this Lease
unless and until Landlord shall have consented to such release in writing.
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ARTICLE 25
REAL ESTATE BROKERS
Tenant represents that Tenant has not dealt with any broker in
connection with this Lease, and Tenant agrees to indemnify and hold Landlord
harmless from all damages, liability and expense (including reasonable
attorneys' fees) arising from any claims or demands of any broker or brokers
or finders for any commission alleged to be due such broker or brokers or
finders in connection with its having introduced Tenant to the Premises or
participating in the negotiation with Tenant of this Lease.
ARTICLE 26
NOTICES
All notices and demands required or desired to be given by either party
to the other with respect to this Lease or the Premises shall be in writing
and shall be delivered personally, sent by overnight courier service,
prepaid, or sent by United States registered or certified mail, return
receipt requested, postage prepaid, and addressed as herein provided.
Notices to or demands upon Tenant shall be addressed to Tenant at the
Premises with a copy to Guarantor at 1944 East Sunshine, Springfield,
Missouri 65804. Notices to or demands upon Landlord shall be addressed to
Landlord at 33 North LaSalle Street, Chicago, Illinois 60602 with a copy to
Landlord's agent, Robert Eitzinger, at 3675 Cuba Road, Long Grove, Illinois
60047. Notices and demands shall be deemed given and served (a) upon receipt
or refusal, if delivered personally, (b) one (1) business day after deposit
with an overnight courier service, or (c) three (3) business days after
deposit in the United States mails, if mailed. Either party may change its
address for receipt of notices by giving notice of such change to the other
party in accordance herewith. Notices and demands from Landlord to Tenant
may be signed by Landlord, its beneficiary, the managing agent for the
Premises or the agent of any of them.
ARTICLE 27
HAZARDOUS MATERIALS PROVISIONS
27.1 Defined Terms.
(a) "Claim" shall mean and include any demand, cause of action,
proceeding, or suit for any one or more of the following: (i) actual or
punitive damages, losses, injuries to person or property, damages to natural
resources, fines, penalties, interest, contribution or settlement, (ii) the
costs and expenses of site investigations, feasibility studies, information
requests, health or risk assessments, or Response (as hereinafter
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defined) actions, and (iii) the costs and expenses of enforcing insurance,
contribution or indemnification agreements.
(b) "Environmental Laws" shall mean and include all applicable
federal, state and local statutes, ordinances, regulations and rules in
effect and as amended from time to time relating to environmental
quality, health, safety, contamination and cleanup, including, without
limitation, the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Clean Water Act, 33 U.S.C. Section 1251 et seq., and the Water Quality
Act of 1987; the Federal Insecticide, Fungicide, and Rodenticide Act
("FIFRA"), 7 U.S.C. Section 136 et seq.; the Marine Protection,
Research, and Sanctuaries Act, 33 U.S.C. Section 1401 et seq.; the
National Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; the
Noise Control Act, 42 U.S.C. Section 4901 et seq.; the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq.,
as amended by the Hazardous and Solid Waste Amendments of 1984; the
Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act, the Emergency Planning and
Community Right-to-Know Act, and the Radon Gas and Indoor Air Quality
Research Act; the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et
seq., and the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section 10101
et seq.; and the Environmental Protection Act of Illinois ("IEPA"),
Ill. Rev. Stat. ch. 111 1/2, para. 1001 et seq., and state and local
superlien and environmental statutes and ordinances, with implementing
regulations, rules and guidelines, as any of the foregoing may be
amended from time to time. Environmental Laws shall also include all
state, regional, county, municipal, and other local laws, regulations,
and ordinances insofar as they are equivalent or similar to the federal
laws recited above or purport to regulate Hazardous Materials (as
hereinafter defined).
(c) "Hazardous Materials" shall mean and include the following,
including mixtures thereof: any hazardous substance, pollutant, contaminant,
waste, by-product or constituent regulated under CERCLA; oil and petroleum
products and natural gas, natural gas liquids, liquefied natural gas and
synthetic gas usable for fuel; pesticides regulated under the FIFRA; asbestos
and asbestos-containing materials, PCBs, and other substances regulated under
TSCA; source material, special nuclear material, by-product material and any
other radioactive materials or radioactive wastes, however produced, regulated
under the Atomic Energy Act or the Nuclear Waste Policy Act; chemicals subject
to the OSHA Hazard Communication Standard, 29 C.F.R. Section 1910.1200 et seq.;
and industrial process and pollution control wastes whether or not hazardous
within the meaning of RCRA, and any other hazardous substance, pollutant or
contaminant regulated under any other Environmental Law.
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(d) "Manage" or "Management" means to generate, manufacture,
process, treat, store, use, re-use, refine, recycle, reclaim, blend or
burn for energy recovery, incinerate, accumulate speculatively,
transport, transfer, dispose of or abandon Hazardous Materials.
(e) "Release" or "Released" shall mean any actual or threatened
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of Hazardous
Materials into the environment, as "environment" is defined in CERCLA.
(f) "Response" or "Respond" shall mean action taken to correct,
remove, remediate, clean up, prevent, mitigate, monitor, evaluate,
investigate, assess or abate the Release of a Hazardous Material.
27.2 Tenant's Obligations with Respect to Environmental Matters.
During the Term of this Lease: (i) Tenant shall comply at its sole cost and
expense with all Environmental Laws applicable to the operation of Tenant's
business at the Premises; (ii) Tenant shall Manage, or authorize the
Management of, any Hazardous Materials on the Premises, in accordance with
all Environmental Laws; (iii) Tenant shall not take any action that would
subject the Premises to the permit requirements under RCRA for storage,
treatment or disposal of Hazardous Materials; (iv) Tenant shall not dispose
of Hazardous Materials in dumpsters provided by Landlord for tenant use,
except in compliance with Environmental Laws; (v) Tenant shall not discharge
Hazardous Materials into drains or sewers serving the Premises except in
compliance with Environmental Laws; (vi) Tenant shall not cause or allow,
except in compliance with Environmental Laws, the Release of any Hazardous
Materials on, to or from the Premises or surrounding land; (vii) Tenant shall
arrange at its sole cost and expense for the lawful disposal of all Hazardous
Materials that it generates; and (viii) Tenant shall not install any
underground storage tanks without the prior written approval of Landlord,
which approval shall not be unreasonably withheld.
27.3 Copies of Notices. During the term of this Lease, Tenant shall
provide Landlord promptly with copies of all summons, citations, directives,
information inquiries or requests, notices of potential responsibility,
notices of violation or deficiency, orders or decrees, Claims, complaints,
investigations, judgments, letters, notices of environmental liens or
Response actions in progress, and other communications, written or oral,
actual or threatened, from the United States Environmental Protection Agency,
Occupational Safety and Health Administration, Illinois Environmental
Protection Agency, or other federal, state, or local agency or authority, or
any other entity or individual, concerning (i) any actual or alleged Release
of a Hazardous Material on, to or from the Premises; (ii) the imposition of
any lien on the Premises; (iii) any actual or alleged violation of, or
responsibility under, any Environmental Laws; or (iv) any actual or alleged
liability under any theory of common law tort or toxic tort, including
without limitation, negligence, trespass, nuisance, strict liability, or
ultrahazardous activity, in each case, which
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could reasonably be expected to result in substantial damage to the Premises,
a direct claim against the Premises or Landlord or a material adverse effect
on Tenant's business.
27.4 Landlord's Right to Inspect. In the event Landlord has reasonable
cause to believe that Tenant is not substantially in compliance with the
requirements of this Article 27, Landlord shall have the right to request in
writing that Tenant provide specific information with respect to such
suspected non-compliance. Within fifteen (15) days of Tenant's receipt of
Landlord's request for information, Tenant shall respond to Landlord's
request in writing. Thereafter, if Landlord is not reasonably satisfied with
Tenant's response, Landlord and Landlord's employees shall have the right,
after a good faith attempt to give reasonable notice to Tenant, to enter the
Premises and conduct appropriate inspections or tests for the purpose of
determining Tenant's compliance with this Article 27, provided, however, that
this section shall not require Tenant to disclose to Landlord or Landlord's
employees any trade secret or other confidential information of Tenant.
Tenant agrees to cooperate with such investigations by providing any relevant
information requested by Landlord, including, but not limited to, information
Landlord requests to comply with Landlord's obligations under Environmental
Laws.
27.5 Indoor Sampling and Analysis. Tenant shall not perform any
sampling, testing, or drilling to locate Hazardous Materials on the Premises
without the Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Tenant
shall have the right to perform any sampling, testing, drilling, and
abatement required under Environmental Laws or necessary, in the reasonable
judgement of Tenant, to detect, prevent, or mitigate any substantial risk to
Tenant's workers, the public, or the environment, including, without
limitation, with respect to asbestos-containing materials. Tenant shall
first provide Landlord, for its review and comments, timely written notice of
the scope of its proposed activities and shall thereafter promptly provide
Landlord with written documentation concerning all such investigative and
abatement activities, except that, if Tenant, in its reasonable judgment, is
responding to an emergency, it shall use its best efforts to consult with
Landlord prior to taking action hereunder.
27.6 Tenant's Obligation to Respond. If Tenant's Management of
Hazardous Materials at the Premises (i) gives rise to liability or to a Claim
under any Environmental Law, or any common law theory of tort or otherwise;
(ii) causes a threat to, or endangers, the public health; or (iii) creates a
nuisance or trespass, Tenant shall, at its sole cost and expense, promptly
defend against any such liability or Claim and otherwise take all appropriate
action to comply with all applicable Environmental Laws.
27.7 Landlord's Right to Act. In the event that Tenant shall fail to
comply in all material respects with any of its obligations under this
Article 27 as and when required hereunder, Landlord shall have the right to
demand in writing that Tenant take appropriate action with respect to such
failure to comply. Within five (5) business days of Tenant's receipt of
Landlord's request for information, Tenant shall respond to Landlord's
request in writing
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describing in detail the actions Tenant is proposing or has performed to
address its failure to comply with its obligations pursuant to this Article 27.
Thereafter, if Landlord is not reasonably satisfied with Tenant's response,
Landlord shall have the right (but not the obligation) to take such action to
prevent and correct substantial damage to the Premises as is required to be
taken by Tenant hereunder and in such event, Tenant shall be liable and
responsible to Landlord for all reasonable costs, expenses, liabilities,
claims and other obligations paid, suffered, or incurred by Landlord in
connection with such matters. Tenant shall reimburse Landlord promptly upon
demand (accompanied by reasonable documentation of costs) for all such amounts
for which Tenant is liable.
27.8 Indemnification. Notwithstanding anything contained in this
Lease to the contrary, Tenant shall reimburse, defend, indemnify and hold
Landlord, and its beneficiaries, officers, directors, shareholders,
employees, and agents, free and harmless from and against any and all
Response costs, losses, liabilities, damages, costs, and expenses, including,
without limitation, loss of rental income, loss due to business interruption,
and reasonable attorneys' fees and costs (the "Indemnified Costs") and
Claims, arising from and after the Commencement Date out of or in connection
with any or all of the following:
(i) any Hazardous Materials which, at any time during the Term,
are or were actually or allegedly Managed, generated, stored, treated,
released, disposed of or otherwise located on or at the Premises due to
the operations of Tenant's business at the Premises or permitted to be
on the Premises by Tenant (regardless of the location at which such
Hazardous Materials are now or may in the future be located or disposed
of), including but not limited to, any and all (1) liabilities under
any common law theory of tort, nuisance, strict liability,
ultrahazardous activity, negligence or other legal theory, resulting
from or in connection with any Hazardous Materials; (2) obligations
under Environmental Laws to take Response, cleanup or corrective action
pursuant to any investigation or remediation in connection with the
decontamination, removal, transportation, incineration, or disposal of
any of the foregoing; and
(ii) any actual or alleged illness, disability, injury, or death
of any person arising out of or allegedly arising out of exposure to
Hazardous Materials Managed by Tenant on the Premises, or conditions
present at the Premises due to the operation of Tenant's business at
the Premises, regardless of when any such illness, disability, injury,
or death shall have occurred or been incurred or manifested itself; and
(iii) any actual or alleged failure of Tenant or the Premises at
any time and from time to time after the Effective Date of this Lease
to comply with all Environmental Laws applicable to the operation of
Tenant's business at the Premises; and
(iv) any failure by Tenant to comply with its obligations under
this Article 27;
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provided, however, that Landlord shall use its best efforts to control or
mitigate such Indemnified Costs.
In the event any Claims or other assertion of liability shall be made
against Landlord for which Landlord is entitled to indemnity hereunder,
promptly upon learning of the facts underlying such Claim or assertion
Landlord shall provide written notice to Tenant in reasonable detail of such
facts and of Tenant's obligations under this Article 27. Thereupon Tenant
shall, at its sole cost and expense, assume the defense of such Claim or
assertion of liability with counsel reasonably satisfactory to Landlord, and
continue such defense at all times thereafter until completion. Landlord
shall provide all reasonably requested assistance. Tenant agrees to keep
Landlord informed of the progress of such defense, and to allow Landlord the
right to review and comment on any proposed offer of settlement concerning
any Claim or assertion of liability.Notwithstanding the foregoing, Landlord
shall have the right, at its own expense, to consult with Tenant with respect
to any Claim or remedial activity which may be required hereunder at the
Premises, and Tenant and Landlord shall otherwise cooperate with each other
in implementing such remedial activities or obligations as may be required at
the Premises pursuant to Environmental Laws or pursuant to this Lease.
Landlord shall have the right to defend and take Response action with respect
to any Claim or other assertion, or part thereof, for which Tenant denies
responsibility, without prejudice to any other right of Landlord under this
Lease or law.
27.9 Obligations of Tenant. The obligations of Tenant under this
Article 27 shall survive any termination or expiration of this Lease.
ARTICLE 28
EXTENSION OPTION
28.1 Extension Option. Subject to the provisions hereinafter set
forth, Landlord hereby grants to Tenant an option to extend the Term of this
Lease (for purposes of this Article, referred to as the "Initial Term") on
the same terms, conditions and provisions as contained in this Lease, except
as otherwise provided herein, for one period of five (5) years (the
"Extension Period") after the expiration of the Initial Term, which Extension
Period shall commence on the day after the stated Expiration Date of the
Initial Term (the "Extension Period Commencement Date") and end on the day
before the fifth (5th) anniversary of the Extension Period Commencement Date.
(a) Said option shall be exercisable by written notice from Tenant to
Landlord of Tenant's election to exercise said option given not later than
the date which is nine (9) months prior to the Extension Period Commencement
Date, time being of the essence. If Tenant's option is not so exercised,
said option shall thereupon expire.
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(b) Tenant may only exercise said option, and an exercise thereof
shall only be effective, if at the time of Tenant's exercise of said option
this Lease is in full force and effect and Tenant is not in Default under
this Lease.
(c) Base Rent for the Premises payable during the Extension Period
shall be equal to the product of (i) the Base Rent payable under this Lease
during the period commencing on the Commencement Date and continuing to and
including November 30, 1998 times (ii) a fraction whose numerator is the
Consumer Price Index (as hereinafter defined) for the month in which the
Extension Period Commencement Date occurs and whose denominator is the
Consumer Price Index for the month of November, 1998. All such Base Rent
shall be paid as provided in Article 3 of this Lease and Tenant shall
continue to pay all other Rent as provided in the Lease during the Extension
Period. Notwithstanding the foregoing, in no event shall the rate of Base
Rent payable during the Extension Period be less than the rate of Base Rent
in effect on the day preceding the Extension Period Commencement Date. As
used herein, "Consumer Price Index" shall mean the Revised Consumer Price
Index for Urban Wage Earners and Clerical Workers, All Items (base index year
1982-84=100), for Chicago, Gary, Lake County, IL-IN-WI, as published by the
United States Department of Labor, Bureau of Labor Statistics. If the manner
in which the Consumer Price Index is determined by the Bureau of Labor
Statistics shall be substantially revised, including, without limitation, a
change in the base index year, an adjustment shall be made by mutual
agreement of Tenant and Landlord in such revised index which would produce
results equivalent, as nearly as possible, to those which would have been
obtained if such Consumer Price Index had not been so revised. If the
Consumer Price Index shall become unavailable to the public because
publication is discontinued, or otherwise, or if equivalent data is not
readily available to enable Landlord to make the adjustment referred to in
the preceding sentence, then Landlord will substitute therefor a comparable
index based upon changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental agency or, if no such
index shall be available, then a comparable index published by a major bank
or other financial institution or by a university or a recognized financial
publication, which comparable index, in either case, shall be reasonably
acceptable to Tenant.
(d) If Tenant has validly exercised said option, then within thirty
(30) days after request by either party hereto, Landlord and Tenant shall
enter into a written amendment to this Lease confirming the terms, conditions
and provisions applicable to the Extension Period as determined in accordance
herewith, with such revisions to the rental provisions of this Lease as may
be necessary to conform such provisions to the new rental rate.
ARTICLE 29
TITLE AND COVENANT AGAINST LIENS
Landlord's title is and always shall be paramount to the title of
Tenant, and nothing in this Lease contained shall empower Tenant to do any
act which can, shall or may encumber the
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title of Landlord. Tenant covenants and agrees not to suffer or permit any
lien of mechanics or materialmen to be placed upon or against the Premises
or against Tenant's leasehold interest in the Premises and, in case of any
such lien attaching, to immediately pay and remove same. Tenant has no
authority or power to cause or permit any lien or encumbrance of any kind
whatsoever, whether created by act of Tenant, operation of law or otherwise,
to attach to or be placed upon the Premises and any and all liens and
encumbrances created by Tenant shall attach only to Tenant's interest in
the Premises. If any such liens so attach and Tenant fails to pay and remove
same (or bond against same in a manner satisfactory to Landlord) within ten
(10) days, Landlord, at its election, may pay and satisfy the same, and in
such event the sums so paid by Landlord shall accrue with interest from the
date of payment at the rate set forth in Section 30.8 hereof for amounts owed
Landlord by Tenant. Such sums shall be deemed to be additional rent due and
payable by Tenant at once without notice or demand.
ARTICLE 30
AMERICANS WITH DISABILITIES ACT
30.1 The parties acknowledge that the Americans With Disabilities Act
of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented
from time to time (collectively referred to herein as the "ADA") establish
requirements under Title III of the ADA ("Title III") pertaining to business
operations, accessibility and barrier removal, and that such requirements may
be unclear and may or may not apply to the Premises depending on, among other
things: (1) whether Tenant's business operations are deemed a "place of public
accommodation" or a "commercial facility," (2) whether compliance with such
requirements is "readily achievable" or "technically infeasible," and
(3) whether a given alteration affects a "primary function area" or triggers
so-called "path of travel" requirements. Tenant acknowledges and agrees that
except as may otherwise be specifically provided herein, Tenant accepts the
Premises in "as-is" condition and agrees that Landlord makes no
representation or warranty as to whether the Premises conforms to the
requirements of the ADA Accessibility Guidelines ("ADAAG") or any other
requirements under the ADA pertaining to the accessibility of the Premises.
Landlord represents that it has received no notice alleging a violation of
ADAAG. Notwithstanding anything to the contrary in this Lease, the parties
hereby agree to allocate responsibility for Title III compliance as follows:
(a) Tenant shall be responsible for all Title III compliance and costs in
connection with the Premises, including structural work, if any, and
including any leasehold improvements or other work to be performed in the
Premises under or in connection with this Lease, and (b) Landlord shall
perform, and Tenant shall be responsible for the cost of, any so-called
Title III "path of travel" requirements triggered by any construction
activities or alterations in the Premises. Except as set forth above with
respect to Landlord's Title III obligations, Tenant shall be solely
responsible for all other requirements under the ADA relating to the Tenant
or any affiliates or persons or entities related to the Tenant (Collectively,
"Affiliates"), operations
40
<PAGE>
of the Tenant or Affiliates, or the Premises, including, without limitation,
requirements under Title I of the ADA pertaining to Tenant's employees.
ARTICLE 31
MISCELLANEOUS
31.1 Successors and Assigns. Each provision of this Lease shall
extend to and shall bind and inure to the benefit not only of Landlord and
Tenant, but also their respective heirs, legal representatives, successors
and assigns, but this provision shall not operate to permit any transfer,
assignment, mortgage, encumbrance, lien, charge or subletting contrary to the
provisions of this Lease.
31.2 Modifications in Writing. No modification, waiver or amendment
of this Lease or of any of its conditions or provisions shall be binding upon
Landlord unless in writing signed by Landlord.
31.3 No Option; Irrevocable Offer. Submission of this instrument for
examination shall not constitute a reservation of or option for the Premises
or in any manner bind Landlord, and no lease or obligation of Landlord shall
arise until this instrument is signed and delivered by Landlord and Tenant;
provided, however, the execution and delivery by Tenant of this Lease to
Landlord or the agent of Landlord's beneficiary, if any, shall constitute an
irrevocable offer by Tenant to lease the Premises on the terms and conditions
herein contained, which offer may not be revoked for thirty (30) days after
such delivery.
31.4 Definition of Tenant. The word "Tenant" whenever used herein
shall be construed to mean Tenants or any one or more of them in all cases
where there is more than one Tenant; and the necessary grammatical changes
required to make the provisions hereof apply either to corporations or other
organizations, partnerships or other entities, or individuals, shall in all
cases be assumed as though in each case fully expressed herein. In all cases
where there is more than one Tenant, the liability of each shall be joint and
several.
31.5 Definition of Landlord. The term "Landlord" as used in this
Lease means only the owner or owners at the time being of the Premises so
that in the event of any assignment, conveyance or sale, once or
successively, of said Premises, or any assignment of this Lease by Landlord,
said Landlord making such sale, conveyance or assignment shall be and hereby
is entirely freed and relieved of all covenants and obligations of Landlord
hereunder accruing after such sale, conveyance or assignment, and Tenant
agrees to look solely to such purchaser, grantee or assignee with respect
thereto. This Lease shall not be affected by any such assignment, conveyance
or sale, and Tenant agrees to attorn to the purchaser, grantee or assignee.
41
<PAGE>
31.6 Headings. The headings of Articles and Sections are for
convenience only and do not limit, expand or construe the contents of the
Sections.
31.7 Time of Essence. Time is of the essence of this Lease and of all
provisions hereof.
31.8 Default Rate of Interest. All amounts (including, without
limitation, Base Rent and Rent Adjustments) owed by Tenant to Landlord
pursuant to any provision of this Lease shall bear interest from the date due
until paid at the annual rate of three percent (3%) in excess of the rate of
interest announced from time to time by First Chicago/NBD Bank at Chicago,
Illinois (or its successor) as its prime, reference or corporate base rate,
changing as and when said prime rate changes, unless a lesser rate shall then
be the maximum rate permissible by law with respect thereto, in which event
said lesser rate shall be charged.
31.9 Severability. The invalidity of any provision of this Lease
shall not impair or affect in any manner the validity, enforceability or
effect of the rest of this Lease.
31.10 Entire Agreement. All understandings and agreements, oral or
written, heretofore made between the parties hereto are merged in this Lease,
which alone fully and completely expresses the agreement between Landlord
(and its beneficiary, if any, and their agents) and Tenant.
31.11 Force Majeure. If Landlord fails to timely perform any of the
terms, covenants and conditions of this Lease on Landlord's part to be
performed and such failure is due in whole or in part to any strike, lockout,
labor trouble, civil disorder, inability to procure materials, failure of
power, restrictive governmental laws and regulations, riots, insurrections,
war, fuel shortages, accidents, casualties, acts of God, acts caused directly
or indirectly by Tenant (or Tenant's agents, employees, contractors,
licensees or invitees) or any other cause beyond the reasonable control of
Landlord, then Landlord shall not be deemed in default under this Lease as a
result of such failure and any time for performance by Landlord provided for
herein shall be extended by the period of delay resulting from such cause.
31.12 Waiver of Trial by Jury. It is mutually agreed by and between
Landlord and Tenant that the respective parties hereto shall, and they hereby
do, waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use of or occupancy of the Premises or any
claim of injury or damage and any emergency statutory or any other statutory
remedy. If Landlord commences any summary proceeding for nonpayment of Rent,
Tenant will not interpose any counterclaim of whatever nature or description
in any such proceeding.
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<PAGE>
31.13 Guaranty of Lease. The effectiveness of this Lease is contingent
upon the execution of a guaranty thereof by Guarantor in the form attached
hereto as Exhibit B and made a part hereof.
31.14 Tenant. The word "Tenant" whenever used herein shall be
construed to mean Tenants or any one or more of them in all cases where there
is more than one Tenant and the necessary grammatical changes required to
make the provisions hereof apply either to corporations or other
organizations, partnerships or other entities, or individuals, shall in all
cases be assumed as though in each case fully expressed. In all cases where
there is more than one Tenant, the liability of each shall be joint and
several.
ARTICLE 32
EXCULPATORY PROVISIONS
It is expressly understood and agreed by and between the parties
hereto, anything herein to the contrary notwithstanding, that each and all
of the representations, warranties, covenants, undertakings and agreements
herein made on the part of Landlord while in form purporting to be the
representations, warranties, covenants, undertakings and agreements of
Landlord are nevertheless each and every one of them made and intended, not
as personal representations, warranties, covenants, undertakings and
agreements by Landlord or for the purpose or with the intention of binding
Landlord personally, but are made and intended for the purpose only of
subjecting Landlord's interest in the Premises to the terms of this Lease and
for no other purpose whatsoever, and in case of default hereunder by Landlord
(or default through, under or by any of its beneficiaries, or agents or
representatives of said beneficiaries), Tenant shall look solely to the
interests of Landlord in the Premises; that this Lease is executed and
delivered by Landlord not in its own right, but solely in the exercise of the
powers conferred upon it as Trustee; that neither Landlord nor any of
Landlord's beneficiaries shall have any personal liability beyond their
respective interests in the Premises to pay any indebtedness accruing
hereunder or to perform any covenant, either express or implied, herein
contained, and no liability or duty shall rest upon Landlord to sequester the
trust estate or the rents, issues and profits arising therefrom or the
proceeds arising from any sale or other disposition thereof; and that no
personal liability beyond its interest in the Premises or personal
responsibility of any sort beyond its interest in the Premises is assumed by,
nor shall at any time be asserted or enforceable against, said Landlord,
individually or personally, but only as Trustee under the provisions of the
Trust Agreement establishing the Trust, or against any of the beneficiaries
under the Trust Agreement establishing the Trust on account of this Lease
beyond its interest in the Premises or on account of any representation,
warranty, covenant, undertaking or agreement of Landlord in this Lease
contained, either express or implied, all such personal liability beyond
their respective interests in the Premises, if any, being expressly waived
and released by Tenant and by all persons claiming by, through or under
Tenant.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the date first written above.
This instrument is executed by the LANDLORD:
undersigned Land Trustee, not
personally but solely as Trustee AMERICAN NATIONAL BANK
in the exercise of the power and AND TRUST COMPANY OF CHICAGO,
authority conferred upon and vested not personally but solely
in it as such Trustee. It is as Trustee as aforesaid
expressly understood and agreed that
all of the warranties, indemnities,
representations, covenants, under- By: /s/ David Rosenfeld
takings and agreements herein made ------------------------------
on the part of the Trustee are under-
taken by it solely in its capacity
as Trustee and not pesonally. No
personal liability or personal
responsibility is assumed by or shall
at any time be asserted or enforceable
against the Trustee on account of any
warranty, indemnity, representation,
covenant, undertaking or agreement of
the Trustee in this instrument.
TENANT:
MID-WEST AUTOMATION ENTERPRISES, INC.,
and Illinois corporation
By: /s/ Stephen J. Gore
------------------------------
Its: Chief Executive Officer
-------------------------
MID-WEST AUTOMATION SYSTEMS, INC.,
an Illinois corporation
By: /s/ Stephen J. Gore
------------------------------
Its: Chief Executive Officer
-------------------------
44
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The following page contains a list of Exhibits and Schedules which
have been intentionally omitted by the Registrant pursuant to Item 601(b)(2)
of Regulation S-K.
A copy of any omitted Exhibit or Schedule will be provided to the
Securities and Exchange Commission upon request.
<PAGE>
Exhibit A - Legal Description of the Premises
Exhibit B - Form of Guaranty of Lease
DT INDUSTRIES, INC.
AMENDMENT TO 1994 EMPLOYEE STOCK OPTION PLAN
WHEREAS, DT Industries, Inc., a Delaware corporation (the "Company"),
adopted the DT Industries, Inc. 1994 Employee Stock Option Plan (the "Plan"),
dated March 15, 1994. Capitalized terms used herein and not otherwise defined
have the meanings given such terms in the Plan; and
WHEREAS, Article IV of the Plan provides that the Board may at any time
amend or revise the terms of the Plan, subject to certain limitations described
therein;
WHEREAS, the Board has resolved to make certain amendments and revisions
to the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 6(c) of Article II thereof is hereby revised to read as
follows:
c. An Option may be exercised only by a written notice
of intent to exercise such Option with respect to a specified number
of shares of the Common Stock and payment to the Company of the amount
of the Option price for the number of shares of the Common Stock so
specified: provided, however, that, if the Committee shall in its
sole discretion so determine at the time of the grant or exercise of
any Option, (1) a notice of intent to exercise an Option may be given
by telephonic or electronic means, and (2) all or any portion of such
payment may be made in kind by the delivery of shares of the Common
Stock having a fair market value, on the date of delivery (as
determined in the manner set forth in Section 2(c) of this Article),
equal to the portion of the Option price so paid. Options granted
pursuant to the Plan shall be exercised by the Optionee as to all or
part of the shares covered thereby by (A) giving notice of the
exercise thereof, specifying the number of shares to be purchased:
(i) in writing to the corporate secretary of the Company at the
principal business office of the Company, (ii) if the Committee in
its sole discretion determines under this Section 6(c) of Article II
of the
<PAGE>
Plan, by telephonic or electronic means approved by the Committee,
or (iii) if the Committee in its sole discretion determines, in a
combination of the methods described in (A)(i) and (ii) above; and
(B) accompanied by payment of the full purchase price therefor:
(i) in cash or by certified or official bank check, (ii) if the
Committee in its sole discretion determines under this Section 6(c)
of Article II of the Plan, in shares of Common Stock, valued as of
the date of exercise, of the same class as those to be granted by
the exercise of the Option, or (iii) if the Committee in its sole
discretion determines, in a combination of the methods described
in (B)(i) and (ii) above. The Company will deliver the shares
being purchased within five business days of receipt of notice,
payment and any other items required under this Plan or the
applicable Non-Qualified Stock Option Agreement or Incentive
Stock Option Agreement to exercise Options by an Optionee.
2. No other provision of the Plan shall be altered, amended, revised or
otherwise modified hereby.
IN WITNESS WHEREOF, this Amendment has been duly executed by order of the
Board as of the sixteenth day of May, 1996.
DT INDUSTRIES, INC.
By: /s/ Bruce P. Erdel
--------------------------------
Bruce P. Erdel
Vice President--Finance and Secretary
2
DT INDUSTRIES, INC.
SECOND AMENDMENT TO 1994 EMPLOYEE STOCK OPTION PLAN
WHEREAS, DT Industries, Inc., a Delaware corporation (the "Company"),
adopted the DT Industries, Inc. 1994 Employee Stock Option Plan (the "Plan"),
dated March 15, 1994. Capitalized terms used herein and not otherwise defined
have the meanings given such terms in the Plan; and
WHEREAS, Article IV of the Plan provides that the Board may at any time
amend or revise the terms of the Plan, subject to certain limitations described
therein;
WHEREAS, the Board has resolved to make certain amendments and revisions
to the Plan.
NOW, THEREFORE, the Plan is hereby amended, effective as of the earlier
of November 1, 1996 or the date on which the Company's 1996 Long-Term Incentive
Term Plan is adopted by the Company's stockholders, as follows:
1. Section 2(a) of Article I thereof is hereby revised to read as
follows:
a. The Plan shall be administered by a committee (the
"Committee") as appointed from time to time by the Board of
Directors (the "Board") of the Company (or any successor
committee appointed by the Board). The Committee shall
consist of two or more individuals who shall be members of
the Board and each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Members of the Committee shall not be
eligible to receive Options under the Plan while a member.
Any member of the Committee may, however, exercise Options
previously granted. A majority of the members of the
Committee shall constitute a quorum. Any action of the
Committee with respect to the administration of the Plan
shall be taken by majority vote or written consent of a
majority of its members. The Board of Directors, acting by
resolution approved at a duly convened meeting of the full
Board of Directors at which a quorum was present or by
written consent of all of the members of the Board of
Directors, may exercise any of the powers granted to the
Committee under the Plan.
2. No other provision of the Plan shall be altered, amended, revised or
otherwise modified hereby.
3. This Second Amendment to 1994 Employee Stock Option Plan shall
become effective on the earlier of November 1, 1996 or the date on which the
Company's 1996 Long-Term Incentive Plan is adopted by the Company's
stockholders.
IN WITNESS WHEREOF, this Second Amendment has been duly executed by
order of the Board as of the 18th day of September, 1996.
DT INDUSTRIES, INC.
By: /s/ Bruce P. Erdel
-------------------------------------
Bruce P. Erdel
Vice President--Finance and Secretary
DT INDUSTRIES, INC.
1996 LONG-TERM INCENTIVE PLAN
1. ADOPTION AND PURPOSE
DT Industries, Inc. (the "Company") hereby adopts this 1996 Long-Term Incentive
Plan dated September 18, 1996 (the "Plan"). The purposes of the Plan are to
promote the interests of the Company and its stockholders by (a) attracting and
retaining exceptional executive personnel and other key employees of the Company
and its Subsidiaries (as defined below); (b) motivating such employees by means
of performance-related incentives to achieve long-range performance goals; and
(c) enabling such employees to participate in the long-term growth and financial
success of the Company.
2. DEFINITIONS
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
"Award" means, individually or collectively, a grant under this Plan of Options
or Restricted Shares or a Performance Stock Award. The issuance of Restricted
Shares pursuant to a Performance Stock Award shall not be a new Award under this
Plan.
"Award Agreement" means a written agreement entered into between the Company and
a Participant setting forth the terms and conditions of an Award made to such
Participant under this Plan, in the form prescribed by the Committee.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning specified in Section 12(b).
"Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Committee" means a committee appointed by the Board, each member of which shall
be a "Non-Employee Director" within the meaning of
<PAGE>
Rule 16b-3 under the Exchange Act and shall be an "outside director" within the
meaning of Section 162(m) of the Code. The Committee shall be composed of at
least two (2) such directors.
"Common Stock" means the common stock of the Company.
"Company" means DT INDUSTRIES, INC., a Delaware corporation headquartered in
Springfield, Missouri.
"Effective Date" means the effective date of this Plan as defined in Section 17.
"Employee" means a key employee of the Company or a Subsidiary.
"Employee Award" means an Award to an Employee under this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the Exchange Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Fair Market Value" means the closing price of the Common Stock as reported on
the Nasdaq "National Market" on the relevant valuation date or, if there were no
Common Stock transactions on the valuation date, on the next preceding date on
which there were Common Stock transactions.
"Incentive Stock Option" has the meaning specified in Section 6(b).
"Negative Discretion" means other factors to be applied by the Committee in
reducing the number of Restricted Shares to be issued pursuant to a Performance
Stock Award if the Performance Goals have been met or exceeded if, in the
Committee's sole judgment, such application is appropriate in order to act in
the best interest of the Company and its shareholders.
"Participant" means an Employee who has been granted an Award under this Plan.
"Performance Goals" means, with respect to any Performance Period, performance
goals based on any of the following criteria
2
<PAGE>
and established by the Committee prior to the beginning of such Performance
Period or performance goals based on any of the following criteria and
established by the Committee after the beginning of such Performance Period
that meet the requirements to be considered pre-established performance goals
under Section 162(m) of the Code: earnings or earnings growth; earnings per
share; return on equity, assets, capital employed or investment; revenues or
revenue growth; gross profit; gross margin; operating profit; operating margin;
operating cash flow; stock price appreciation and total shareholder return.
Such Performance Goals may be particular to an Employee or the division,
department, branch, line of business, Subsidiary or other unit in which the
Employee works, or may be based on the performance of the Company generally.
"Performance Period" means the period of time designated by the Committee
applicable to a Performance Stock Award during which the Performance Goals shall
be measured.
"Performance Stock Award" shall have the meaning specified in Section 6(d).
"Plan" means this DT INDUSTRIES, INC. 1996 Long-Term Incentive Plan.
"Plan Year" means an annual period coinciding with the Company's fiscal year.
"Reporting Person" means an officer or director of the Company subject to the
reporting requirements of Section 16 of the Exchange Act.
"Restricted Shares" shall have the meaning specified in Section 6(c).
"Securities Act" means the Securities Act of 1933, as amended. Reference to a
specific section of the Securities Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Stock Option" has the meaning specified in Section 6(a).
3
<PAGE>
"Subsidiary" means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a proprietary
interest of more than 50% by reason of stock ownership or otherwise.
3. ELIGIBILITY
Any Employee selected by the Committee is eligible to receive an Employee Award.
4. PLAN ADMINISTRATION
(a) This Plan shall be administered by the Committee. The Committee shall
periodically make determinations with respect to the participation of Employees
in this Plan and, except as otherwise required by law or this Plan, the grant
terms of Awards including vesting schedules, price, performance standards
(including Performance Goals), length of relevant performance, restriction or
option period, dividend rights, post-retirement and termination rights, payment
alternatives such as cash, stock, contingent awards or other means of payment
consistent with the purposes of this Plan, and such other terms and conditions
as the Committee deems appropriate. Except as otherwise required by this Plan,
the Committee shall have authority to interpret and construe the provisions of
this Plan and the Award Agreements and make determinations pursuant to any Plan
provision or Award Agreement which shall be final and binding on all persons.
(b) The Committee, in its sole discretion and on such terms and conditions as it
may provide, may delegate all or any part of its authority and powers under this
Plan to one or more directors or officers of the Company; provided, however,
that the Committee may not delegate its authority and powers (i) with respect to
Reporting Persons, or (ii) in any way which would jeopardize this Plan's
qualification under Section 162(m) of the Code or Rule 16b-3 of the Exchange
Act.
(c) All determinations and decisions made by the Committee, the Board and any
delegate of the Committee pursuant to Section 4(b) shall be final, conclusive,
and binding on all persons, and shall be given the maximum deference permitted
by law.
4
<PAGE>
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall either be shares of
authorized but unissued Common Stock, shares of Common Stock held as treasury
stock or previously issued shares of Common Stock reacquired by the Company,
including shares purchased on the open market. Subject to adjustment in
accordance with the provisions of Section 10, (i) the total number of shares of
Common Stock with respect to which Awards may be granted under this Plan may not
exceed 600,000 shares, (ii) the total number of shares of Common Stock with
respect to which Awards may be granted in any Plan Year may not exceed 200,000
shares and (iii) the total number of Restricted Shares with respect to which
Awards may be granted in any Plan Year shall not exceed 100,000 shares.
(b) Subject to adjustment in accordance with Section 10, and subject to Section
5(a), (i) the total number of shares of Common Stock with respect to which
Awards may be granted in any Plan Year to any Employee shall not exceed 100,000
shares and (ii) the total number of Restricted Shares with respect to which
Awards may be granted in any Plan Year to any Employee shall not exceed 50,000
shares.
(c) For purposes of calculating the total number of shares of Common Stock
available for grants of Awards, the grant of an Award of Restricted Shares or a
Performance Stock Award shall be deemed to be equal to the maximum number of
shares of Common Stock which may be issued under the Award.
(d) Subject to clauses (ii) and (iii) of Section 5(a) and subject to Section
5(b), there shall again be available for Awards under this Plan, all of the
following: (i) shares of Common Stock represented by Awards which have been
canceled, forfeited, surrendered, terminated or expire unexercised during
preceding Plan Years; and (ii) the excess amount of variable Awards which become
fixed at less than their maximum limitations.
6. EMPLOYEE AWARDS UNDER THIS PLAN
Subject to the provisions of this Plan, the Committee shall have the sole and
complete authority to determine the Employees to whom Awards shall be granted
and the type, terms and conditions of such Awards. As the Committee may
determine, the following
5
<PAGE>
types of Awards may be granted under this Plan to Employees on a stand alone,
combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common Stock at
a fixed exercise price during a specified time, and subject to such other terms
and conditions, all as the Committee may determine; provided that the exercise
price of any Stock Option shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of grant of the Award.
(b) Incentive Stock Option. An award in the form of a Stock Option which shall
comply with the requirements of Section 422 of the Code or any successor Section
as it may be amended from time to time.
(c) Restricted Shares. A transfer of shares of Common Stock to a Participant,
subject to such restrictions, if any, on transfer or other incidents of
ownership, for such periods of time (with respect to each Award, a "Restriction
Period") as the Committee may determine. The stock certificate or certificates
representing Restricted Shares shall be registered in the name of the
Participant to whom such Restricted Shares shall have been awarded. During the
Restriction Period, certificates representing the Restricted Shares shall bear a
restrictive legend to the effect that ownership of the Restricted Shares, and
the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the applicable Award
Agreement. Such certificates shall remain in the custody of the Company and the
Participant shall deposit with the Company stock powers or other instruments of
assignment, each endorsed in blank, so as to permit retransfer to the Company of
all or any portion of the Restricted Shares that shall be forfeited or otherwise
not become vested in accordance with the Plan and the applicable Award
Agreement.
Restricted Shares shall constitute issued and outstanding shares of Common Stock
for all corporate purposes. The Participant will have the right to vote such
Restricted Shares, to receive and retain all dividends and distributions paid or
distributed on such Restricted Shares, and to exercise all other rights, powers
and privileges of a holder of Common Stock with respect to such Restricted
Shares; except that (i) the Participant will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Shares until the
Restriction Period shall have expired and unless all other vesting requirements
with
6
<PAGE>
respect thereto shall have been fulfilled or waived; (ii) the Company will
retain custody of the stock certificate or certificates representing the
Restricted Shares during the Restriction Period; (iii) any such dividends and
distributions paid in shares of Common Stock shall constitute Restricted Shares
and be subject to all of the same restrictions during the Restriction Period as
the Restricted Shares with respect to which they were paid; (iv) the Participant
may not sell, assign, transfer, pledge, exchange, encumber or dispose of the
Restricted Shares or his or her interest in any of them during the Restriction
Period; and (v) a breach of any restrictions, terms or conditions provided in
the Plan or established by the Committee with respect to any Restricted Shares
will cause a forfeiture of such Restricted Shares.
(d) Performance Stock Awards. A right, granted to an Employee, to receive
Restricted Shares (as defined in Section 6(c) hereof) that are not to be issued
to the Employee until after the satisfaction of the Performance Goals during a
Performance Period.
7. PERFORMANCE STOCK AWARDS
(a) Administration. Performance Stock Awards may be granted to Employees either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the Employees to whom Performance Stock Awards shall be awarded
for any Performance Period, the duration of the applicable Performance Period,
the number of Restricted Shares to be awarded at the end of a Performance Period
to Employees if the Performance Goals are met or exceeded and the terms and
conditions of the Performance Stock Award in addition to those contained in this
Section 7.
(b) Payment of Award. During or after the end of a Performance Period, the
financial performance of the Company during such Performance Period shall be
measured against the Performance Goals. If the Performance Goals are not met, no
Restricted Shares shall be issued pursuant to the Performance Stock Award. If
the Performance Goals are met or exceeded, the Committee shall certify that fact
in writing in the Committee minutes or elsewhere and certify the number of
Restricted Shares to be issued under each Performance Stock Award in accordance
with the related Award Agreement. The Committee may, in its sole discretion,
apply Negative Discretion to reduce the number of Restricted Shares to be issued
under a Performance Stock Award.
7
<PAGE>
(c) Requirement of Employment. To be entitled to receive a Performance Stock
Award, an Employee must remain in the employment of the Company or its
Subsidiaries through the end of the Performance Period, except that the
Committee may provide for partial or complete exceptions to this requirement as
it deems equitable in its sole discretion.
8. OTHER TERMS AND CONDITIONS
(a) Assignability. No Stock Option or Performance Stock Award shall be
assignable or transferable except by will or by the laws of descent and
distribution and during the lifetime of a Participant, Stock Options shall be
exercisable only by such Participant.
(b) Award Agreement. Each Award under this Plan shall be evidenced by an Award
Agreement.
(c) Rights as a Shareholder. Except as otherwise provided in this Plan or in any
Award Agreement, a Participant shall have no rights as a shareholder with
respect to shares of Common Stock covered by an Award until the date the
Participant is the holder of record of such shares.
(d) No Obligation to Exercise. The grant of an Award shall impose no obligation
upon the Participant to exercise the Award.
(e) Payments by Participants. The Committee may determine that Awards for which
a payment is due from a Participant may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the Company,
by money transfers or direct account debits; (ii) through the delivery or deemed
delivery based on attestation to the ownership of shares of Common Stock with a
Fair Market Value equal to the total payment due from the Participant; (iii) by
a combination of the methods described in (i) and (ii) above; or (iv) by such
other methods as the Committee may deem appropriate.
(f) Tax Withholding. The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state and local taxes (including the Participant's FICA
obligation) required to be withheld with respect to an Award or any dividends or
other distributions payable with respect thereto. Subject to
8
<PAGE>
the requirements of Rule 16b-3 of the Exchange Act, the Committee, in its sole
discretion and pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding obligation, in whole
or in part, by (i) electing to have the Company withhold otherwise deliverable
shares of Common Stock having a Fair Market Value not exceeding the minimum
amount required to be withheld, or (ii) delivering to the Company shares of
Common Stock then owned by the Participant. The amount of the withholding
obligation satisfied by shares of Common Stock withheld or delivered shall be
the Fair Market Value of such shares determined as of the date that the taxes
are required to be withheld.
(g) Restrictions on Sale and Exercise. If and to the extent required to comply
with rules promulgated under Section 16 of the Exchange Act, (i) no Award
providing for exercise, a vesting period, a Restriction Period or the attainment
of performance standards shall permit unrestricted ownership of shares of Common
Stock by the Participant for at least six months from the date of grant, and
(ii) shares of Common Stock acquired pursuant to an Award granted under this
Plan may not be sold or otherwise disposed of for at least six months after the
date of the grant of the Award.
(h) Requirements of Law. The granting of Awards and the issuance of shares of
Common Stock upon the exercise of Awards shall be subject to all applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges (including the Nasdaq Stock Market) upon which the Common Stock may be
listed. As a condition precedent to the issuance of shares of Common Stock
pursuant to the grant or exercise of an Award, the Company may require the
Participant to take any reasonable action to meet such requirements.
(i) Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options and the awarding of stock and
cash otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
9
<PAGE>
(j) Unfunded Plan. Neither the Company nor any Subsidiary shall be required to
segregate any cash or any shares of Common Stock which may at any time be
represented by Awards and the Plan shall constitute an "unfunded" plan of the
Company. Neither the Company nor any Subsidiary shall, by any provisions of the
Plan, be deemed to be a trustee of any Common Stock or any other property, and
the liabilities of the Company and any Subsidiary to any Employee pursuant to
the Plan shall be those of a debtor pursuant to such contract obligations as are
created by or pursuant to the Plan, and the rights of any Employee, former
employee or beneficiary under the Plan shall be limited to those of a general
creditor of the Company or the applicable Subsidiary, as the case may be. In its
sole discretion, the Board may authorize the creation of trusts or other
arrangements to meet the obligations of the Company under the Plan, provided,
however, that the existence of such trusts or other arrangements is consistent
with the unfunded status of the Plan.
(k) Legends. In addition to any legend contemplated by Section 6(c), each
certificate evidencing Common Stock subject to an Award shall bear such legends
as the Committee deems necessary or appropriate to reflect or refer to any
terms, conditions or restrictions of the Award applicable to such shares,
including, without limitation, any to the effect that the shares represented
thereby may not be disposed of unless the Company has received an opinion of
counsel, acceptable to the Company, that such disposition will not violate any
federal or state securities laws.
(l) Company's Rights. The grant of Awards pursuant to the Plan shall not affect
in any way the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business structure or
to merge, consolidate, liquidate, sell or otherwise dispose of all or any part
of its business or assets.
(m) Designation of Beneficiaries. If permitted by the Committee, a Participant
may designate a beneficiary or beneficiaries in the event of the death of the
Participant and may change such designation from time to time by filing a
written designation of beneficiary or beneficiaries with the Committee on a form
to be prescribed by it, provided that no such designation shall be effective
unless so filed prior to the death of such Participant.
10
<PAGE>
9. AMENDMENTS
(a) Except as otherwise provided in this Plan, the Board may at any time
terminate and, from time to time, may amend or modify this Plan. Any such action
of the Board may be taken without the approval of the Company's shareholders,
but only to the extent that such shareholder approval is not required by
applicable law or regulation, including specifically Rule 16b-3 under the
Exchange Act and Section 162(m) of the Code.
(b) No amendment, modification or termination of this Plan shall in any manner
adversely affect any Awards theretofore granted to a Participant under this Plan
without the consent of such Participant. No amendment or modification of this
Plan may change any Performance Goal, or increase the benefits payable for
achievement of a Performance Goal, once established for a Performance Stock
Award.
10. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be granted
to Participants, the number of shares thereof covered by each outstanding Award,
and the price per share thereof in each such Award, shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or other such change.
Any such adjustment may provide for the elimination of fractional shares.
11. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the grant of
an Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company or a Subsidiary. Nothing in this Plan shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any
Subsidiary.
11
<PAGE>
12. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Agreement to
the contrary, in the event of a Change of Control, as defined below, the
following may, in the sole discretion of the Committee (as constituted prior to
the occurrence of the Change of Control), occur with respect to any and all
Employee Awards outstanding as of such Change of Control:
(i) automatic lapse of all restrictions and acceleration of any time periods
relating to the exercise or vesting of Stock Options and Restricted Shares so
that such Awards may be immediately exercised or vested in full on or before the
relevant date fixed in the Award Agreement; and automatic satisfaction of
Performance Goals on a pro rata basis with respect to the maximum number of
Restricted Shares issuable pursuant to a Performance Stock Award, or on such
other basis as set forth in the Award Agreement, so that such pro rata or other
portion of such Restricted Shares may be immediately vested;
(ii) upon exercise of a Stock Option (including an Incentive Stock Option)
during the 60-day period from and after the date of a Change of Control, the
Participant exercising the Stock Option may in lieu of the receipt of Common
Stock upon the exercise of the Stock Option, elect by written notice to the
Company to receive an amount in cash equal to the excess of the aggregate Value
(as defined below) of the shares of Common Stock covered by the Stock Option or
portion thereof surrendered determined on the date the Stock Option is
exercised, over the aggregate exercise price of the Stock Option. As used in
this Section 12(a)(iii) the term "Value" means the higher of (i) the highest
Fair Market Value during the 60-day period from and after the date of a Change
of Control and (ii) if the Change of Control is the result of a transaction or
series of transactions described in paragraphs (i) or (iii) of the definition of
Change of Control, the highest price per share of the Common Stock paid in such
transaction or series of transactions (which in the case of paragraph (i) shall
be the highest price per share of the Common Stock as reflected in a Schedule
13D filed by the person having made the acquisition);
(iii) following a Change of Control, if a Participant's employment terminates
for any reason other than retirement or death, any Stock Options held by such
Participant may be exercised by such Participant until the earlier of three
months
12
<PAGE>
after the termination of employment or the expiration date of such Stock
Options; and
(iv) all Awards become non-cancellable.
(b) A "Change of Control" of the Company shall be deemed to have occurred upon
the happening of any of the following events:
(i) the acquisition, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
of beneficial ownership of 25 or more of either the then outstanding shares of
Common Stock of the Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors; provided, however, that any acquisition by the Company or any of its
Subsidiaries, or any employee benefit plan (or related trust) of the Company or
its Subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Common Stock and voting securities of the Company
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the then outstanding
shares of Common Stock of the Company or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors, as the case may be, shall not constitute a Change of
Control;
(ii) individuals who constitute the Board as of the Effective Date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to such date
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company (as
such terms are used
13
<PAGE>
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a reorganization, merger or
consolidation of the Company, in each case, with respect to which the
individuals and entities who were the respective beneficial owners of the Common
Stock and voting securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the sale or other disposition of
all or substantially all of the assets of the Company.
13. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall be
construed in accordance with and governed by the law of the State of Delaware.
14. CAPTIONS
Captions are provided herein for convenience of reference only, and shall not
serve as a basis for interpretation or construction of this Plan.
15. RESERVATION OF SHARES
The Company, during the term of the Plan, will at all times reserve and keep
available the number of shares of Common Stock as shall be sufficient to satisfy
the requirements of the Plan. The inability of the Company to obtain the
necessary approvals from any regulatory body having jurisdiction or approval
deemed necessary by the Company's counsel to the lawful issuance and sale of any
shares of Common Stock under the Plan shall relieve the Company of any liability
in respect of the nonissuance or sale of such shares of Common Stock as to which
such requisite authority shall not have been obtained.
14
<PAGE>
16. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Employees who are Reporting
Persons, Rule 16b-3 under the Exchange Act. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in any
respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by law, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan. Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to Participants who are Reporting Persons without so restricting, limiting or
conditioning this Plan with respect to other Participants. All Awards of Stock
Options and Performance Stock Awards are intended to comply with Section 162(m)
of the Code.
17. EFFECTIVE DATE AND TERM
The effective date (the "Effective Date") of this Plan shall be the date of its
approval by the Company's shareholders. If such approval is not obtained on or
before June 29, 1997, this Plan shall terminate on such date. No new Awards
shall be granted under this Plan after the tenth anniversary of the Effective
Date. Unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted hereunder may, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
continue after the authority for grant of new Awards hereunder has been
exhausted.
15
<TABLE>
<CAPTION>
JURISDICTION OF NAMES UNDER WHICH
SUBSIDIARY INCORPORATION SUBSIDIARIES DO BUSINESS
<S> <C> <C>
Detroit Tool Metal Missouri F.J. Potter Company
Products Co. Fred J. Potter Company
Detroit Tool Metal Products Co.
Arrow Precision Elements, Inc.
Detroit Tool and Delaware Detroit Tool and Engineering
Engineering Company Company
Peer
Sencorp Systems, Inc. Delaware Sencorp Systems, Inc.
Sencorp FSC, Inc. United States Sencorp FSC, Inc.
Virgin Islands
Pharma Group, Inc. Delaware Stokes-Merrill Corporation
Stokes
Merrill-Lakso
Kalish
Advanced Assembly Ohio Advanced Assembly Automation, Inc.
Automation, Inc.
Armac Industries, Co. Delaware Armac Industries, Co.
DT Canada Inc. New Brunswick, DT Canada Inc.
Canada
Kalish Canada Inc. New Brunswick, Kalish Canada Inc.
Canada
DT Industries (UK) England and DT Industries (UK) Limited
Limited Wales
Swiftpack Automation England and Swiftpack Automation Limited
Limited Wales
Assembly Machines, Inc. Pennsylvania Assembly Machines, Inc.
Mid-West Automation Illinois Mid-West Automation Enterprises, Inc.
Enterprises, Inc.
Mid-West Automation Illinois Mid-West Automation Systems, Inc.
Systems, Inc.
Hansford Manufacturing New York Hansford Manufacturing Corporation
Corporation
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-77882, No. 33-77884 and No. 33-77888) of DT
Industries, Inc. of our report dated August 9, 1996, appearing on page 24 of the
fiscal 1996 Annual Report to Shareholders of DT Industries, Inc. (which report
and consolidated financial statements are incorporated by reference in this
Annual Report on Form 10-K). We also consent to the incorporation by reference
of our report on the Financial Statement Schedule, which appears on page S-1 of
this Form 10-K.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
St. Louis, Missouri
September 27, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ James C. Janning
-------------------------------------
James C. Janning
Date: August 19, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Stephen J. Gore
-------------------------------------
Stephen J. Gore
Date: August 19, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Bruce P. Erdel
-------------------------------------
Bruce P. Erdel
Date: Sept 3, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ William H.T. Bush
-------------------------------------
William H.T. Bush
Date: August 21, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Gregory A. Fox
-------------------------------------
Gregory A. Fox
Date: 9-3-96, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Samuel A. Hamacher
-------------------------------------
Samuel A. Hamacher
Date: August 22, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Lee M. Liberman
-------------------------------------
Lee M. Liberman
Date: August 20, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Donald E. Nickelson
-------------------------------------
Donald E. Nickelson
Date: August 22, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen J. Gore and Bruce P.
Erdel as his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1996 Annual Report on Form 10-K of DT Industries, Inc.,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
each said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
/s/ Charles F. Pollnow
-------------------------------------
Charles F. Pollnow
Date: August 19, 1996
