FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 29, 1996
Commission File Number: 0-23400
DT INDUSTRIES, INC.
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(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.)
1949 E. Sunshine, Suite 2-300, Springfield, Missouri 65804
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(Address of principal executive offices)
(Zip Code)
(417) 890-0102
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(registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock, $0.01 par value, of the registrant
outstanding as of January 31, 1997 was 11,264,625.
<PAGE>
DT INDUSTRIES, INC.
Index
Page 1
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Page
Number
Part I Financial Information
Item 1. Financial Statements (Unaudited, except as noted)
Consolidated Balance Sheet at December 29, 1996
and June 30, 1996 (Audited) 2
Consolidated Statement of Operations for the
three and six months ended December 29, 1996 and
December 24, 1995 3
Consolidated Statement of Changes in
Stockholders' Equity for the six months
ended December 29, 1996 4
Consolidated Statement of Cash Flows for the
six months ended December 29, 1996 and
December 24, 1995 5-6
Notes to Consolidated Financial Statements 7-13
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 14-23
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 6. Exhibits and Reports on Form 8-K 25
Signature
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Balance Sheet
(Dollars in Thousands Except Per Share Data)
Page 2
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<TABLE>
<CAPTION>
December 29, June 30,
1996 1996
(Unaudited)
------------ -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 359 $ 1,210
Accounts receivable, net 43,000 32,092
Costs and estimated earnings in excess
of amounts billed on uncompleted contracts 68,392 19,130
Inventories, net 42,987 31,403
Prepaid expenses and other 6,405 10,153
------------ -----------
Total current assets 161,143 93,988
Property, plant and equipment, net 48,178 36,713
Goodwill, net 170,656 101,187
Other assets, net 4,042 1,955
------------ -----------
$ 384,019 $ 233,843
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 8,563 $ 8,481
Accounts payable 35,260 19,621
Customer advances 20,128 17,201
Accrued liabilities 25,023 22,524
------------ -----------
Total current liabilities 88,974 67,827
------------ -----------
Long-term debt 114,437 70,846
Deferred income taxes 4,252 4,756
Other long-term liabilities 4,578 2,530
------------ -----------
Total long-term obligations 123,267 78,132
------------ -----------
Commitments and contingencies (See notes 3 and 11)
Stockholders' equity:
Preferred stock, $0.01 par value; 1,500,000 shares
authorized; no shares issued and outstanding
Common stock, $0.01 par value; 100,000,000 shares
authorized; 11,263,875 and 9,001,250 shared
issued and outstanding at December 29, 1996
and June 30, 1996, respectively 113 90
Additional paid-in capital 134,899 61,255
Retained earnings 36,766 26,539
------------ -----------
Total stockholders' equity 171,778 87,884
------------ -----------
$ 384,019 $ 233,843
============ ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Operations
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 3
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<TABLE>
<CAPTION>
Three months ended Six months ended
December 29, December 24, December 29, December 24,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $ 100,693 $ 60,143 $ 183,328 $ 104,931
Cost of sales 73,023 44,986 132,893 78,533
----------- ----------- ----------- -----------
Gross profit 27,670 15,157 50,435 26,398
Selling, general and
administrative expenses 13,762 9,164 25,350 15,789
----------- ----------- ----------- -----------
Operating income 13,908 5,993 25,085 10,609
Interest expense 3,572 698 6,287 1,459
----------- ----------- ----------- -----------
Income before provision for
income taxes and
extraordinary loss 10,336 5,295 18,798 9,150
Provision for income taxes 4,298 2,223 7,887 3,852
----------- ----------- ----------- -----------
Income before extraordinary
loss 6,038 3,072 10,911 5,298
Extraordinary loss on debt
refinancing less applicable
income tax benefits of $216 324
----------- ----------- ----------- -----------
Net income $ 6,038 $ 3,072 $ 10,587 $ 5,298
=========== =========== =========== ===========
Primary earnings per common
share:
Income before
extraordinary loss $ 0.58 $ 0.34 $ 1.09 $ 0.59
Extraordinary loss .03
----------- ----------- ----------- -----------
Net income $ 0.58 $ 0.34 $ 1.06 $ 0.59
=========== =========== =========== ===========
Weighted average common shares 10,478,377 9,000,000 9,996,064 9,000,000
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Changes in Stockholders' Equity
For the Six Months Ended December 29, 1996
(Dollars in Thousands Except Per Share Data)
Page 4
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<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, June 30, 1996 $ 90 $ 61,255 $ 26,539 $ 87,884
Exercise of stock options (unaudited) 170 170
Issuance of common stock (unaudited) 23 73,474 73,497
Net income for the six months ended
December 29, 1996 (unaudited) 10,587 10,587
Cash dividend at $0.02 per common share
(unaudited) (360) (360)
----------- ----------- ----------- -----------
Balance, December 29, 1996 (unaudited) $ 113 $ 134,899 $ 36,766 $ 171,778
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Cash Flows
(Dollars in Thousands)
(Unaudited)
Page 5
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<TABLE>
<CAPTION>
Six months ended Six months ended
December 29, 1996 December 24, 1995
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,587 $ 5,298
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 2,881 1,808
Amortization 2,425 1,176
Deferred income tax provision (582) (268)
Other 411 88
(Increase) decrease in current assets, excluding the
effect of acquisitions:
Accounts receivable (744) 73
Costs and earnings in excess of amounts billed (20,693) (2,717)
Inventories (8,459) 3,737
Prepaid expenses and other 4,557 (1,489)
Increase (decrease) in current liabilities, excluding the
effect of acquisitions:
Accounts payable 755 2,424
Accrued liabilities (5,920) 220
Customer advances (460) (2,014)
Other (19) 652
----------------- -----------------
Net cash provided (used) by operating activities (15,261) 8,988
----------------- -----------------
Cash flows from investing activities:
Capital expenditures (5,742) (4,592)
Acquisition of the stock of Mid-West Automation Enterprises,
Inc. and Hansford Manufacturing Corporation, net of cash
acquired of $21,573 (92,756)
Acquisition of H.G. Kalish Inc. net assets, Arrow Precision
Elements, Inc. net assets and Swiftpack Automation Limited
stock, net of cash acquired of $2,561 (37,810)
----------------- -----------------
Net cash used by investing activities (98,498) (42,402)
----------------- -----------------
</TABLE>
(continued)
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Cash Flows
(Dollars in Thousands)
(Unaudited)
(continued)
Page 6
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<TABLE>
<CAPTION>
Six months ended Six months ended
December 29, 1996 December 24, 1995
----------------- -----------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of debt 96,424 51,713
Repayments of term loans and Loan Notes (88,020) (11,750)
Net borrowings (repayments) on revolving loans 33,725 (2,687)
Repayments of capital leases and other long-term
obligations (76) (100)
Financing costs (2,452) (575)
Issuance of common stock 73,497
Exercise of stock options 170
Payments on stock subscriptions receivable 55
Dividends (360) (360)
----------------- -----------------
Net cash provided by financing activities 112,908 36,296
----------------- -----------------
Net increase (decrease) in cash (851) 2,882
Cash and cash equivalents at beginning of period 1,210 646
----------------- -----------------
Cash and cash equivalents at end of period $ 359 $ 3,528
================= =================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 7
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1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of DT
Industries, Inc. (DTI or the Company) have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. However, in the opinion of
management, such information includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
results of operations for the periods presented. Operating results for
any quarter are not necessarily indicative of the results for any other
quarter or for the full year. These statements should be read in
conjunction with the consolidated financial statements and notes to the
consolidated financial statements thereto included in the Company's Form
10-K Annual Report for the fiscal year ended June 30, 1996.
2. Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
3. Acquisitions
On July 19, 1996, DTI purchased the outstanding stock of Mid-West
Automation Enterprises, Inc. (Mid-West), a designer and manufacturer of
integrated precision assembly systems, in a transaction accounted for
under the purchase method of accounting. The purchase price of
approximately $75,179, net of cash acquired, was financed by borrowings
under the Second Amended and Restated Credit Facilities Agreement. The
purchase price has been preliminarily allocated to the acquired assets
and assumed liabilities based on their estimated fair value at the date
of acquisition. The excess of purchase price over the estimated fair
value of net assets acquired has been recorded as goodwill. The
accompanying consolidated financial statements include the results of
Mid-West from the date of acquisition.
On September 30, 1996, DTI completed the acquisition of Hansford
Manufacturing Corporation (Hansford), a privately held designer and
manufacturer of automated assembly systems, in a transaction accounted
for under the purchase method of accounting. The purchase price of
approximately $17,577 was financed under the Company's credit facility
which was increased concurrent with the acquisition to $210,000 from
$200,000. DTI also agreed to make additional cash payments totaling up to
$20,000, payable over a two-year period beginning in approximately three
years. The amount, if any, will be determined by a formula based on the
earnings of the acquired business. Any additional purchase price paid is
expected to result in additional goodwill. The purchase price has been
preliminarily allocated to the acquired assets and assumed liabilities
based on their estimated fair value at the date of acquisition. The
excess of purchase price over the estimated fair value of net assets
acquired has been recorded as goodwill. The accompanying consolidated
financial statements include the results of Hansford from the date of
acquisition.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 8
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In August 1995 and September 1995, respectively, the Company acquired
certain assets of and assumed certain liabilities of H.G. Kalish Inc.
(Kalish) and Arrow Precision Elements, Inc. (Arrow). The Company also
acquired the stock of Swiftpack Automation Limited (Swiftpack) in
November 1995 and Assembly Machines, Inc. (AMI) in January 1996. See the
consolidated financial statements and notes thereto included in the
Company's Form 10-K Annual Report for the fiscal year ended June 30, 1996
for additional information relating to these acquisitions.
The following table sets forth pro forma information for DTI as if the
acquisitions of Kalish, Arrow, Swiftpack, AMI, Mid-West and Hansford had
taken place on July 1, 1996 and June 26, 1995, respectively. The pro
forma information does not include the pro forma effects of the common
stock issuance on November 25, 1996. This information is unaudited and
does not purport to represent actual net sales, income before
extraordinary loss and earnings per share before extraordinary loss had
the acquisitions actually occurred on July 1, 1996 and June 26, 1995:
PRO FORMA INFORMATION
FOR THE PERIODS
July 1, 1996 June 26, 1995
to to
December 29, 1996 December 24, 1995
----------------- -----------------
Net sales $ 203,426 $ 185,884
Income before extraordinary loss $ 11,633 $ 8,810
Earnings per share
before extraordinary loss $ 1.16 $ 0.98
Weighted average
shares outstanding 9,996,064 9,000,000
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 9
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4. Earnings per share
The computation of primary earnings per share was based on the weighted
average number of outstanding common shares during the period plus, when
the effect was dilutive, common stock equivalents consisting of certain
shares subject to stock options and contingent purchase price payable in
common stock related to an acquired business. The common equivalent
shares arising from the effect of outstanding stock options was computed
using the treasury stock method, if dilutive. The number of contingent
shares used in the primary calculation was based on the average stock
price for the prior fiscal year and the end of the period stock price
assuming maintenance of current earnings. As all potentially dilutive
securities are considered common stock equivalents, there was not a
material difference between primary and fully diluted earnings per share.
5. Supplemental balance sheet information
December 29, 1996 June 30, 1996
(Unaudited)
----------------- -----------------
Inventories, net:
Raw materials $ 16,229 $ 14,814
Work in process 20,849 12,145
Finished goods 5,909 4,444
----------------- -----------------
$ 42,987 31,403
================= =================
Accrued liabilities:
Accrued employee
compensation and benefits $ 9,527 6,030
Taxes payable and
related reserves 1,348 5,120
Product liability 1,727 1,711
Other 12,421 9,663
----------------- -----------------
$ 25,023 $ 22,524
================= =================
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 10
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6. Financing
As of December 29, 1996 and June 30, 1996, long-term debt consisted of
the following:
December 29, 1996 June 30, 1996
(Unaudited)
----------------- -----------------
Term loans to banks $ 71,928 $ 47,917
Loan Notes 13,974
Revolving loans to banks 50,461 16,749
Capital lease obligations and other
long-term debt 611 687
----------------- -----------------
123,000 79,327
Less - current portion of
long-term debt (8,563) (8,481)
----------------- -----------------
$ 114,437 $ 70,846
================= =================
During July 1996, the Company entered into a Second Amended and Restated
Credit Facilities Agreement provided by two institutions. The agreement,
which was subsequently amended in September 1996 and December 1996
provides a total credit line of $210,000, including an $80,000 revolving
credit facility, a $50,500 term loan, a $58,500 acquisition facility and
a $21,000 foreign currency denominated letter of credit and expires on
July 23, 2001. The term loan requires quarterly principal payments
ranging from $1,613 to $2,267 with a final balloon payment at 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. At December 29, 1996,
interest rates on these facilities ranged from 6.8 percent to 8.25
percent. Borrowing availability for the revolver is based on percentages
of the Company's eligible accounts receivable, eligible inventory and
outstanding letters of credit. The Company had excess borrowing
availability of $13,127 relating to the revolving credit facility at
December 29, 1996. The credit facility is secured by substantially all
of the assets of DTI and its subsidiaries and contains certain financial
and other covenants and restrictions. In conjunction with entering
into the new credit facility, the Company recognized an extraordinary
loss in July 1996 of $324 attributable to the write-off of $540
unamortized deferred financing fees, net of related $216 tax benefit.
The acquisition of Hansford in September 1996 was financed under the
Second Amended and Restated Credit Facilities Agreement. Of the $17,577
purchase price, $8,543 was established as an irrevocable letter of credit
payable to the former owner on June 30, 1997. The letter of credit
is included in long term debt on the consolidated balance sheet.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 11
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In connection with the acquisition of Swiftpack on November 23, 1995, DT
Industries (UK) Limited (DTUK), a wholly-owned subsidiary, entered into
the Credit Agreement, Specific Counter-Indemnity and Debenture with a
foreign bank. The foreign credit facility denominated in Pounds Sterling
was used for the cash portion of the purchase price of Swiftpack and the
redemption of five fixed rate guaranteed promissory notes (Loan Notes)
entered into with certain of the prior shareholders. The aggregate
principal amount of the Loan Notes denominated in U.S. dollars was
$13,974. The Loan Notes which bore interest at 5.3%, were redeemed by the
noteholders between November 25, 1996 and December 23, 1996. The
aggregate principal amount of the foreign credit facility is
approximately $21,000. The foreign credit facility bears interest at a
variable rate based upon LIBOR (approximately 7.9% including letter of
credit fees at December 29, 1996). Principal payments thereunder ranging
from $155 to $400 are due quarterly with the remaining principal due
August 16, 2000.
In connection with the issuance of the Loan Notes, the Company entered
into a foreign exchange forward contract to offset exchange gains and
losses related to the Loan Notes recorded by the foreign subsidiary. The
contract matured on November 26, 1996 and provided the purchase of the
equivalent of $13,974 of Pounds Sterling at a rate of $1.5457 per Pound
Sterling. The contract effectively hedged any foreign currency exchange
fluctuation from the date the Loan Notes were issued. No foreign currency
transaction gains or losses were recorded.
The Company has revolving credit facilities through its foreign
subsidiaries of approximately $3,000, of which $2,016 was outstanding at
December 29, 1996.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 12
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7. Issuance of common stock
On November 25, 1996, the Company completed the sale of 2,250,000 shares
of its common stock at $34.50 a share. Net proceeds to the Company were
$73,497 after deducting issuance costs. In connection with the offering
by the Company, certain selling stockholders sold 2,835,000 shares for
which the Company did not receive any proceeds. The proceeds received by
the Company were used to reduce indebtedness.
8. Stock option plans
A summary of stock option transactions pursuant to the 1994 Employee
Stock Option Plan and the 1994 Directors Non-Qualified Stock Option Plan
follows:
AVERAGE SHARES SUBJECT
PRICE TO OPTION
-------------- --------------
Summary of Stock Options
Beginning of period, June 30, 1996 $13.86 662,250
Options granted 21.01 311,950
Options exercised 13.50 (12,625)
Options cancelled 18.25 (1,000)
-------------- --------------
End of period, December 29, 1996 $16.18 960,575
============== ==============
Exercisable at December 29, 1996 83,474
==============
On September 18, 1996, the Board of Directors of the Company adopted the
Long-Term Incentive Plan (the "Plan"). The Plan became effective on
November 11, 1996 upon its approval by the stockholders at the annual
meeting. The Plan provides for the granting of four types of awards on a
stand alone, combination, or a tandem basis, specifically, nonqualified
stock options, incentive stock options, restricted shares and performance
stock awards. The Plan provides for the granting of up to a total of
600,000 shares of common stock, provided that the total number of shares
with respect to which awards are granted in any one year may not exceed
100,000 shares to any individual employee and 200,000 shares in the
aggregate, and the total number of shares with respect to which grants of
restricted stock and performance stock awards are made in any year shall
not exceed 50,000 shares to any individual employee and 100,000 shares in
the aggregate. At December 29, 1996, no option shares or awards had been
granted under the Plan.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 13
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9. Commitments and contingencies
The Company is a party to certain lawsuits involving employee matters,
product liability and other matters. Management and legal counsel do not
expect the outcome of any litigation to have a material adverse effect on
the Company's financial position, results of operations or liquidity.
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). The Company has entered into
an agreement to settle these matters with the IRS. The additional taxes
due under the agreement are not material to the Company's financial
position, results of operations or liquidity. The Company expects the
matter to be settled during the current fiscal year.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 14
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GENERAL OVERVIEW
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of DT Industries,
Inc. (DTI or the Company) for the three and six months ended December 29,
1996 compared to the three and six months ended December 24, 1995,
respectively. This discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements thereto included in the Company's Form 10-K for the fiscal
year ended June 30, 1996.
In fiscal year 1996, the Company acquired the net assets of H. G. Kalish
Inc. (Kalish) and Arrow Precision Elements, Inc. (Arrow). The Company
also acquired the stock of Swiftpack Automation Limited (Swiftpack) and
Assembly Machines, Inc. (AMI). During the six months ended December 29,
1996, the Company acquired the stock of Mid-West Automation Enterprises,
Inc. (Mid-West) and Hansford Manufacturing Corporation (Hansford). The
acquisitions are elements of a business strategy 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 a full range
of integrated automated systems. The Company believes that emphasis on
complementary acquisitions of companies serving target markets allows it
to broaden its product offerings and to provide customers 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.
The Company operates in two business segments, Special Machines and
Components. The Special Machines segment designs and builds integrated
systems, custom equipment, and proprietary machines used by customers in
manufacturing, testing and packaging various products in a wide variety
of industries. The Components segment stamps and fabricates a wide range
of standard and custom metal components. Gross margins of the Special
Machines segment may vary from period to period 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.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 15
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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 for customer
contracts are measured based on the ratio of engineering and
manufacturing labor hours incurred to date compared to total estimated
engineering and manufacturing labor hours or, for certain customer
contracts, the ratio of total costs incurred to date to total estimated
costs. 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.
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 information contained herein, particularly the information
appearing under the headings "Results of Operations", "Liquidity and
Capital Resources" and "Backlog" includes forward-looking statements.
These statements which, at the time made, speak about the future, are
based upon the Company's interpretation of what it believes are
significant factors affecting its businesses and are made pursuant to the
safe harbor provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Actual results could differ materially from those anticipated in
any forward-looking statements as a result of various factors, including
economic downturns in industries served, delays or cancellations of
customer orders, delays in shipping dates of products, significant cost
overruns on certain projects, foreign currency exchange rate fluctuations
and possible future acquisitions that may not be complementary or
additive. Additional information regarding certain important factors that
could cause actual results of operations or outcomes of other events to
differ materially from any such forward-looking statement appears
elsewhere herein, including under the heading "Seasonality and
Fluctuations in Quarterly Results"; and in the Corporation's other
filings with the Securities and Exchange Commission, including its
registration statement on Form S-3 (Registration No. 333-14955) and
prospectuses dated November 25, 1996, including the sections therein
entitled "Risk Factors".
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 16
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RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of consolidated net sales represented by certain items reflected in the
Company's consolidated statement of operations:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 29, December 24, December 29, December 24,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 72.5 74.8 72.5 74.8
------------ ------------ ------------ ------------
Gross profit 27.5 25.2 27.5 25.2
Selling, general and
administrative expenses 13.7 15.2 13.8 15.1
------------ ------------ ------------ ------------
Operating income 13.8 10.0 13.7 10.1
Interest expense 3.5 1.2 3.4 1.4
------------ ------------ ------------ ------------
Income before provision
for income taxes and
extraordinary loss 10.3 8.8 10.3 8.7
Provisions for income taxes 4.3 3.7 4.3 3.7
------------ ------------ ------------ ------------
Income before
extraordinary loss 6.0 5.1 6.0 5.0
Extraordinary loss on
debt refinancing 0.2
------------ ------------ ------------ ------------
Net income 6.0 5.1% 5.8% 5.0%
============ ============ ============ ============
</TABLE>
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 17
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THREE MONTHS ENDED DECEMBER 29, 1996
COMPARED TO THREE MONTHS ENDED DECEMBER 24, 1995
NET SALES
Consolidated net sales increased $40.6 million, or 67.4%, to $100.7
million for the three months ended December 29, 1996 from $60.1 million
for the three months ended December 24, 1995. The increase in sales can
be attributed to the incremental sales of recently acquired businesses,
including Swiftpack in November 1995, AMI in January 1996, Mid-West in
July 1996 and Hansford in September 1996.
Sales by the Special Machines segment increased $40.9 million and sales
by the Components segment decreased $0.3 million. The increase in sales
by the Special Machines segment was due to an increase in sales from
existing businesses of $0.8 million over the second quarter of fiscal
1996 and $40.1 million in incremental sales from recently-acquired
businesses. While total sales for existing businesses of the Special
Machines segment increased only 1.6% for the quarter, the segment had
strong growth in sales of automated assembly systems reflecting
international expansion by certain customers and DTI's increased
penetration into new markets. The growth in sales of automated assembly
systems was offset by a decrease in sales of thermoforming equipment
and a decrease in sales of custom build-to-print machines. The small
decrease in sales by the Components segment of $0.3 million is a result
of the reduction in demand for products from customers in the
transportation industry substantially offset by an increase in sales
to several new customers outside the transportation industry.
GROSS PROFIT
Gross profit increased $12.5 million, or 82.6%, to $27.7 million for the
three months ended December 29, 1996 from $15.2 million for the three
months ended December 24, 1995, as a result of the sales increases
discussed above and gross margin improvements. The gross margin increased
to 27.5% from 25.2%. Gross margin exclusive of acquired operations
increased to 28.4%, reflecting a more favorable product mix and gross
margin improvement across the Special Machines segment, particularly on
custom equipment, thermoformers and tablet packaging equipment. The
gross margin improvements are primarily a result of production
efficiencies and improved project management.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES
SG&A expenses increased $4.6 million, or 50.2%, to $13.8 million for the
three months ended December 29, 1996 from $9.2 million for the three
months ended December 24, 1995. Approximately $3.6 million of the
increase was due to recently acquired businesses, with the remaining
increase the result of personnel additions, higher compensation expense
for current personnel, increased travel costs, increased investment in
marketing activities, and increased professional fees, most of which
related to the overall growth of the Company. As a percentage of
consolidated net sales, SG&A expenses decreased to 13.7% from 15.2%. The
percentage decrease resulted primarily from lower SG&A expenses
associated with acquired businesses.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 18
- --------------------------------------------------------------------------------
OPERATING INCOME
Operating income increased $7.9 million, or 132.1%, to $13.9 million for
the three months ended December 29, 1996 from $6.0 million for the three
months ended December 24, 1995, as a result of the factors noted above.
The operating margin increased to 13.8% from 10.0% in the prior year.
Excluding acquisitions, operating income increased $1.1 million, or
18.0%, and operating margin increased to 11.7%.
INTEREST EXPENSE
Interest expense increased to $3.6 million for the three months ended
December 29, 1996 from $0.7 million for the three months ended December
24, 1995. The increase in interest expense resulted primarily from the
increase in the debt level of the Company to finance recent acquisitions
and meet working capital requirements.
INCOME TAXES
Provision for income taxes increased to $4.3 million for the three months
ended December 29, 1996 from $2.2 million for the three months ended
December 24, 1995, reflecting an effective tax rate of approximately
41.6% and 42.0% for each period, respectively. This rate differs from
statutory rates due to permanent differences primarily related to
non-deductible goodwill amortization on certain acquisitions.
NET INCOME
Net income increased to $6.0 million for the three months ended December
29, 1996 from $3.1 million for the three months ended December 24, 1995
as a result of the factors noted above. Primary earnings per share were
$0.58 for the three months ended December 29, 1996 versus $0.34 for the
three months ended December 24, 1995. The weighted average common shares
outstanding for the three months ended December 29, 1996 were 10,478,377
versus 9,000,000 for the three months ended December 24, 1995. The
increase is a result of the issuance of common stock and the dilutive
effect of certain common stock equivalents, including stock options and
the estimated contingent shares which may be issuable in conjunction with
the Kalish acquisition.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 19
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SIX MONTHS ENDED DECEMBER 29, 1996
COMPARED TO SIX MONTHS ENDED DECEMBER 24, 1995
NET SALES
Consolidated net sales increased $78.4 million, or 74.7%, to $183.3
million for the six months ended December 29, 1996 from $104.9 million
for the six months ended December 24, 1995. Of the $78.4 million increase
in sales, $71.9 million was due to the incremental sales of recently
acquired businesses, with the remaining $6.5 million relating to
increased sales from existing businesses. Recently acquired businesses
include Kalish in August 1995, Arrow in September 1995, Swiftpack in
November 1995, AMI in January 1996, Mid-West in July 1996 and Hansford in
September 1996.
Sales by the Special Machines segment increased $77.6 million and sales
by the Components segment increased $0.8 million. The increase in sales
by the Special Machines segment was due to an increase in sales from
existing businesses of $6.9 million, or 8.2%, over the six months of
fiscal 1996 and $70.7 million in incremental sales from recently acquired
businesses. Sales from existing businesses were up due to the strong
growth occurring in assembly systems, welding systems and foam extrusion
equipment. The increase in sales of assembly and welding systems reflects
international expansion by certain customers and DTI's increased
penetration into new markets. Foam extrusion equipment sales have grown
significantly led by a strong international market and DTI's business
alliance with a proven worldwide marketer of extruders. The growth of
the assembly, welding and foam extrusion systems was partially offset by
a decrease in sales of custom build-to-print machines. The increase
in sales by the Components segment was acquisition related as existing
components businesses were down slightly due to the reduction in demand
for products from customers in the transportation industry. The
reduced sales to customers in the transportation industry were
substantially offset by the increase in sales to several new customers
outside the transportation industry.
GROSS PROFIT
Gross profit increased $24.0 million, or 91.1%, to $50.4 million for the
six months ended December 29, 1996 from $26.4 million for the six months
ended December 24, 1995, as a result of the sales increases discussed
above and gross margin improvements. The gross margin increased to 27.5%
from 25.2%. Gross margin exclusive of acquired operations increased to
27.2%, reflecting a more favorable product mix and gross margin
improvement across the Special Machines segment, particularly on custom
equipment, thermoformers and tablet packaging equipment. The gross margin
improvements are primarily a result of production efficiencies and
improved project management.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES
SG&A expenses increased $9.6 million, or 60.6%, to $25.4 million for the
six months ended December 29, 1996 from $15.8 million for the six months
ended December 24, 1995. Approximately $7.5 million of the increase was
due to recently acquired businesses, with the remaining increase the
result of personnel additions, higher compensation expense for current
personnel, increased travel costs, increased investment in marketing
activities and increased professional fees, most of which related to the
overall growth of the Company. As a percentage of consolidated net sales,
SG&A expenses decreased to 13.8% from 15.1%. The percentage decrease
resulted primarily from lower SG&A expenses associated with acquired
businesses.
OPERATING INCOME
Operating income increased $14.5 million, or 136.5%, to $25.1 million for
the six months ended December 29, 1996 from $10.6 million for the six
months ended December 24, 1995, as a result of the factors noted above.
The operating margin increased to 13.7% from 10.1% in the prior year.
Excluding acquisitions, operating income increased $1.9 million, or
17.6%, and operating margin increased to 11.2%.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 20
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INTEREST EXPENSE
Interest expense increased to $6.3 million for the six months ended
December 29, 1996 from $1.5 million for the six months ended December 24,
1995. The increase in interest expense resulted primarily from the
increase in the debt level of the Company to finance recent acquisitions
and meet working capital requirements.
INCOME TAXES
Provision for income taxes increased to $7.9 million for the six months
ended December 29, 1996 from $3.9 million for the six months ended
December 24, 1995, reflecting an effective tax rate of approximately
42.0% and 42.1% for each period, respectively. This rate differs from
statutory rates due to permanent differences primarily related to
non-deductible goodwill amortization on certain acquisitions.
NET INCOME
Income before extraordinary loss increased to $10.9 million for the six
months ended December 29, 1996 from $5.3 million for the six months ended
December 24, 1995 as a result of the factors noted above. The Company
recognized an extraordinary loss in July 1996 of $0.3 million, or $0.03
per share, attributable to the write-off of $0.5 million unamortized
deferred financing fees, net of related $0.2 million tax benefit. As a
result, net income was $10.6 million, or $1.06 per share. Primary
earnings per share before the extraordinary loss were $1.09 for the six
months ended December 29, 1996 versus $0.59 for the six months ended
December 24, 1995. The weighted average common shares outstanding for the
six months ended December 29, 1996 were 9,996,064 versus 9,000,000 for
the six months ended December 24, 1995. The increase is a result of the
issuance of common stock and the dilutive effect of certain common stock
equivalents, including stock options and the estimated contingent shares
which may be issuable in conjunction with the Kalish acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Net income plus non-cash operating charges provided $15.7 million of
operating cash flow for the six months ended December 29, 1996. Net
increases in working capital balances used operating cash of $31.0
million, resulting in net cash used by operating activities of $15.3
million for the six months ended December 29, 1996. The net increase in
working capital reflected the increased level of manufacturing activity
occurring at the Company, particularly in the Special Machines segment.
The Company has also experienced a trend towards larger dollar value and
longer lead-time projects. In addition, the Special Machines segment has
been working on several such contracts which do not provide for advance
or progress payments. These factors resulted in a $20.7 million increase
in costs and earnings in excess of amounts billed and a $8.5 million
increase in inventory.
During the six months ended December 24, 1995, net cash provided by
operating activities was $9.0 million. Net income plus non-cash operating
charges provided $8.1 million of operating cash flow. A favorable change
in working capital balances resulted in net cash provided of $0.9
million.
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.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 21
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During the six months ended December 29, 1996, net cash of $112.9 million
was provided by financing activities primarily to fund the acquisitions
of Mid-West and Hansford for $92.8 million, net of cash acquired. The net
cash provided by financing activities was also used to finance capital
expenditures of $5.7 million, pay dividends of $0.4 million and fund
working capital requirements. Financing activities consisted of the
renegotiation of the Company's credit facility and the issuance of common
stock. The Company incurred $2.5 million of financing costs in
conjunction with the renegotiating of the credit facility.
During the six months ended December 24, 1995, cash provided by operating
activities was used to finance capital expenditures of approximately $4.6
million, pay dividends of $0.4 million and provide funding toward three
acquisitions. Net borrowings of the Company increased by approximately
$37.2 million in the six months ended December 24, 1995, primarily due to
the acquisition of Kalish for $16.4 million, Arrow for $3.0 million and
Swiftpack for $18.4, net of cash acquired.
On November 25, 1996, the Company completed the sale of 2,250,000 shares
of its common stock at a price to the public of $34.50 a share. Net
proceeds to the Company were $73.5 million after deducting issuance
costs. In connection with the offering by the Company, certain selling
stockholders sold 2,835,000 shares for which the Company did not receive
any proceeds. The proceeds received by the Company were used to reduce
indebtedness. Under terms of the credit facility, the prepayment of
indebtedness has resulted in a reduction in interest rates of 0.75% per
annum on borrowings outstanding under the credit facility. In addition,
the prepayment of indebtedness established a loan commitment which is
available for use by the Company to finance future acquisitions for up to
two years.
During the six months ended December 29, 1996, the Company completed the
acquisitions of Mid-West and Hansford for $75.2 million and $17.6
million, respectively, net of cash acquired. These acquisitions were
financed under the Second Amended and Restated Credit Facilities
Agreement, which replaced the Company's previous credit agreement. The
credit agreement, which was subsequently amended in September and
December 1996, provides a total credit line of $210 million, including an
$80 million revolving credit facility, a $50.5 million term loan, a $58.5
million acquisition facility and a $21 million foreign currency
denominated letter of credit. The term loan requires quarterly principal
payments ranging from $1.6 million to $2.3 million with a final balloon
payment at 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.
At December 29, 1996, interest rates on these facilities ranged from
6.8% to 8.25%. Borrowing availability for the revolver is based on
percentages of the Company's eligible accounts receivable, eligible
inventory and outstanding letters of credit. The Company had excess
borrowing availability of $13.1 million relating to the revolving credit
facility at December 29, 1996. The credit facility is secured by
substantially all of the assets of DTI and its subsidiaries and contains
certain financial and other covenants and restrictions. In conjunction
with entering into this credit facility, the Company recognized an
extraordinary loss in July 1996 of $0.3 million attributable to the
write-off of $0.5 million unamortized deferred financing fees, net
of related $0.2 million tax benefit.
In connection with the acquisition of Swiftpack on November 23, 1995, DT
Industries (UK) Limited (DTUK), a wholly-owned subsidiary, entered into
the Credit Agreement, Specific Counter-Indemnity and Debenture with a
foreign bank. The foreign credit facility denominated in Pounds Sterling
was used for the cash portion of the purchase price of Swiftpack and the
redemption of five fixed rate guaranteed promissory notes (Loan Notes)
entered into with certain of the prior shareholders. The Loan Notes which
bore interest at 5.3% were redeemed by the noteholders on November 25,
1996. The aggregate principal amount of the foreign credit facility is
approximately $21.0 million. The facility bears interest at a variable
rate based upon LIBOR (approximately 7.9% including letter of credit fees
at December 29, 1996). Principal payments are due quarterly with the
remaining principal balance due on August 16, 2000. Principal payments
range from approximately $0.2 million to $0.4 million. The foreign credit
facility is secured by the letter of credit facility provided through the
Second Amended and Restated Credit Facilities Agreement.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 22
- --------------------------------------------------------------------------------
The Company also maintains revolving credit facilities of approximately
$3.0 million through its foreign subsidiaries. At December 29, 1996,
total outstanding indebtedness under such facilities was approximately
$2.0 million.
To manage its exposure to fluctuations in interest rates, the Company
entered into an interest rate swap agreement in June 1995 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
requires the Company to pay a fixed rate of 6.06% in exchange for a
floating rate payment equal to the three month LIBOR determined on a
quarterly basis with settlement occurring on specific dates.
Management anticipates that capital expenditures in the current fiscal
year and 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 believes that its principal
owned manufacturing facilities have sufficient capacity to accommodate
future internal growth without major additional capital improvements.
The Company does expect to enter into new operating leases to accommodate
growth occurring at two of the Special Machines facilities.
The Company paid quarterly cash dividends of $0.02 per share on September
13, 1996 and December 13, 1996 to stockholders of record on August 30,
1996 and November 22, 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). The Company has entered into an
agreement to settle these matters 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 in the
current fiscal year.
BACKLOG
The Company's backlog is based upon customer purchase orders that the
Company believes are firm. As of December 29, 1996, the Company had
$173.5 million of orders in backlog, which compares to a backlog of
approximately $107.4 million as of December 24, 1995. The acquisitions of
Hansford, Mid-West and AMI increased the backlog $73.2 million at
December 29, 1996 in comparison to December 24, 1995. Excluding the
effect of these acquisitions, backlog would have been $100.3 million at
December 29, 1996, a decrease of $7.1 million, or 6.6%, from a year ago.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 23
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The decline is a result of a decrease in the backlog of the Special
Machines segment of $11.6 million, excluding the effect of acquisitions.
The decrease can be attributed to the timing of receipt of purchase
orders for certain custom equipment and an unusually large backlog of
thermoforming machines at December 24, 1995. The custom equipment
business was exceptionally strong in fiscal 1996 substantially due to a
customer in the tire industry. Backlog for the Components segment
increased $4.5 million, up 79.5%, from the $5.9 million backlog a year
ago.
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 the current
fiscal year.
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 be several million dollars, a relatively limited
number of orders can constitute a meaningful percentage of the Company's
revenue in any one quarterly period. As a result, 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. Certain of the
Company's revenues are derived from fixed price contracts. To the extent
that original cost estimates prove to be inaccurate, profitability from a
particular contract may be adversely affected. 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.
<PAGE>
DT INDUSTRIES, INC.
PART II. Other Information
Page 24
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ITEM 4. Submission of Matters to a Vote of Security Holders
On November 11, 1996, the Annual Meeting of the Stockholders of DTI was
held, at which the following matters were voted upon:
1. Approval of the amendment to the Company's Restated Certificate of
Incorporation which would classify the Board of Directors into
three classes of directors with staggered three-year terms. The
vote to approve the amendment was 5,340,282 for and 1,462,558
against.
2. Election of Directors. Each of the following nominees received the
number of affirmative votes set forth opposite his name:
Class I James J. Kerley 7,082,559
(term expires 1997) Charles F. Pollnow 7,163,594
Samuel A. Hamacher 7,146,894
Class II Stephen J. Gore 7,146,994
(terms expires 1998) Lee M. Liberman 7,163,559
Gregory A. Fox 7,147,994
Class III William H. T. Bush 7,163,494
(term expires 1999) James C. Janning 7,147,994
Donald E. Nickelson 7,146,994
3. Adoption of the Company's Long-Term Incentive Plan. The vote to
approve the Company's Long-Term Incentive Plan was 6,009,379 for
and 786,081 against.
4. Ratification of Appointment of Accountants for the fiscal year
ending June 29, 1997. The vote to ratify the appointment of Price
Waterhouse LLP as independent accountants for the fiscal year
ending June 29, 1997 was 7,184,159 for and 600 against.
<PAGE>
DT INDUSTRIES, INC.
PART II. Other Information
Page 25
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 - Underwriting Agreement, dated November 25, 1996,
by and between CS First Boston Corporation, Morgan Stanley & Co.
Incorporated and Schroder Wertheim & Co. Incorporated, as
Representatives of the Several Underwriters named therein, and DT
Industries, Inc.
Exhibit 10.2 - Subscription Agreement, dated November 25, 1996,
by and between CS First Boston Limited, Morgan Stanley & Co.
International and J. Henry Schroder & Co. Limited and the other
Managers named therein and DT Industries, Inc.
Exhibit 10.3 - Amended and Restated Corporate Development
Consulting and Advisory Services Agreement, dated November 6,
1996, by and between DT Industries, Inc. and Harbour Group
Industries, Inc.
Exhibit 10.4 - Amended and Restated Operations Consulting and
Advisory Services Agreement, dated November 6, 1996, by and
between DT Industries, Inc. and Harbour Group Ltd.
Exhibit 10.5 - Indemnification Agreement, dated November 25,
1996, by and among DT Industries, Inc. and Peer Investors L.P.,
Peer Investors II L.P., Harbour Group Investments II, L.P.,
Harbour Group II Management Co. and Fox Family Foundation.
Exhibit 11 - Statement Regarding Computation of Earnings Per
Share
Exhibit 27 - Financial Detail Schedule (EDGAR version only)
(b) Reports on Form 8-K:
On November 21, 1996, a Current Report on Form 8-K was filed to
record the amendment to the Restated Certificate of Incorporation
of the Company which classified the Board of Directors of the
Company into three classes of directors with staggered three-year
terms.
<PAGE>
DT INDUSTRIES, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DT INDUSTRIES, INC.
Date: February 12, 1997 /s/ Bruce P. Erdel
----------------------------------------
(Signature)
Bruce P. Erdel
Vice President - Finance and Secretary
(Principal Financing and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
Page No. in Sequential
Exhibit No. Description Numbering System
- ----------- ----------- ----------------------
10.1 Underwriting Agreement, dated November 25,
1996, by and between CS First Boston
Corporation, Morgan Stanley & Co.
Incorporated and Schroder Wertheim &
Co. Incorporated, as Representatives of
the Several Underwriters named therein,
and DT Industries, Inc.
10.2 Subscription Agreement, dated November 25,
1996, by and between CS First Boston
Limited, Morgan Stanley & Co. International
and J. Henry Schroder & Co. Limited and the
other Managers named therein and DT Industries,
Inc.
10.3 Amended and Restated Corporate Development
Consulting and Advisory Services Agreement,
dated November 6, 1996, by and between
DT Industries, Inc. and Harbour Group
Industries, Inc.
10.4 Amended and Restated Operations Consulting
and Advisory Services Agreement, dated
November 6, 1996, by and between DT Industries,
Inc. and Harbour Group Ltd.
10.5 Indemnification Agreement, dated November 25,
1996, by and among DT Industries, Inc. and
Peer Investors L.P., Peer Investors II L.P.,
Harbour Group Investments II, L.P., Harbour
Group II Management Co. and Fox Family
Foundation.
11 Statement Regarding Computation of Earnings
Per Share
27 Financial Detail Schedule (EDGAR version only)
5,085,000 Shares
DT INDUSTRIES, INC.
Common Stock, $.01 par value
UNDERWRITING AGREEMENT
November 25, 1996
CS FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
SCHRODER WERTHEIM & CO. INCORPORATED
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation
Eleven Madison Avenue,
New York, N.Y. 10010
Dear Sirs:
1. Introductory. DT Industries, Inc., a Delaware corporation ("Company"),
proposes to issue and sell 1,800,000 shares, and the stockholders listed in
Schedule A attached hereto ("Selling Stockholders") propose severally to sell an
aggregate of 2,268,000 outstanding shares, of the Company's Common Stock, $.01
par value (the "Securities") (such 4,068,000 shares of Securities being
hereinafter referred to as the "U.S. Firm Securities"), to the several
Underwriters named in Schedule B hereto ("Underwriters"). Such offering and sale
by the Company and the Selling Stockholders are hereinafter referred to as the
"U.S. Offering."
It is understood that the Company and the Selling Stockholders are
concurrently entering into a Subscription Agreement, dated the date hereof
("Subscription Agreement"), with CS First Boston Limited ("CSFBL"), Morgan
Stanley & Co. International Limited and J. Henry Schroder & Co. Limited, and the
other managers named therein (the "Managers") relating to the concurrent
offering and sale of 1,017,000 shares of Securities ("International Firm
Securities") outside the United States and Canada ("International Offering"), of
which 450,000 Shares will be offered by the Company and 567,000 Shares will be
offered by the Selling Stockholders.
In addition, as set forth below (i) the Company proposes to issue and sell
to the Underwriters, at the option of CS First Boston Corporation ("CSFBC"), an
aggregate of not more than 250,000 additional shares of Securities
and the Selling Stockholders also propose to sell to the Underwriters, at
the option of CSFBC, an aggregate of not more than 360,200 additional
outstanding shares of Securities (such 610,200 additional shares of
<PAGE>
Securities being hereinafter referred to as the "U.S. Optional Securities") and
(ii) the Company proposes to issue and sell to the Managers, at the option of
CSFBL, an aggregate of not more than 62,500 additional shares of Securities and
the Selling Stockholders also propose to sell to the Managers, at the option of
CSFBL, an aggregate of not more than 90,050 additional outstanding shares of
Securities (such 152,550 additional shares of Securities being hereinafter
referred to as the "International Optional Securities"). The U.S. Firm
Securities and the U.S. Optional Securities are hereinafter called the "U.S.
Securities"; the International Firm Securities and the International Optional
Securities are hereinafter called the "International Securities"; the U.S. Firm
Securities and the International Firm Securities are hereinafter called the
"Firm Securities"; the U.S. Optional Securities and the International Optional
Securities are hereinafter called the "Optional Securities." The U.S. Securities
and the International Securities are collectively referred to as the "Offered
Securities." To provide for the coordination of their activities, the
Underwriters and the Managers have entered into an Agreement Between
U.S. Underwriters and Managers which permits them, among other things, to sell
the Offered Securities to each other for purposes of resale.
The Company and the Selling Stockholders hereby agree with the several
Underwriters as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-14955) relating to the
Offered Securities, including a form of prospectus relating to the U.S.
Securities and a form of prospectus relating to the International
Securities being offered in the International Offering, has been filed with
the Securities and Exchange Commission ("Commission") and either (A) has
been declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such
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registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment (if
any) to each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c)
("Rule 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement or, if
filed prior to the execution and delivery of this Agreement, the additional
registration statement means (A) if the Company has advised the
Representatives that it does not propose to amend such registration
statement, the date and time as of which such registration statement, or
the most recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c), or
(B) if the Company has advised the Representatives that it proposes to file
an amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended by
such amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement has
not been filed prior to the execution and delivery of this Agreement but
the Company has advised the Representatives that it proposes to file one,
"Effective Time" with respect to such additional registration statement
means the date and time as of which such registration statement is filed
and becomes effective pursuant to Rule 462(b). "Effective Date" with
respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective
Time, including all material incorporated by reference therein, including
all information contained in the additional registration statement (if any)
and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration are hereinafter referred to collectively as
the "Registration Statements" and individually as a "Registration
Statement". The form of prospectus relating to the U.S. Securities and the
form of prospectus relating to the International Securities, each as first
filed with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Act or (if no such filing is required) as
included in a Registration Statement, including all material incorporated
by reference in each such prospectus, are hereinafter referred to as the
"U.S. Prospectus" and the "International Prospectus," respectively, and
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<PAGE>
collectively as the "Prospectuses." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all material respects to the requirements of
the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of each of the
Prospectuses pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectuses are included, each Registration Statement and each of the
Prospectuses will conform, in all material respects to the requirements of
the Act and the Rules and Regulations, and none of such documents includes,
or will include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and each of the Prospectuses
will conform in all material respects to the requirements of the Act and
the Rules and Regulations, none of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and no Additional Registration Statement has been or will
be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or either of the Prospectuses based
upon (i) written information furnished to the Company by any Selling
Stockholder specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(b)
hereof, and (ii) written information furnished to the Company by any
Underwriter through the Representatives or by any Manager through CSFBL
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own
its properties and conduct its business as described in
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the Prospectuses; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing, as the case may be, will not, individually or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(iv) Each subsidiary of the Company that is a "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X of the Commission)
or that is listed on Exhibit I hereto (each of the foregoing being referred
to as a "Significant Subsidiary") has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectuses;
and each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except with respect to such subsidiaries and
jurisdictions where the failure to be so qualified or in good standing, as
the case may be, will not, individually or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued and is fully paid
and nonassessable; and the capital stock of each Significant Subsidiary
owned by the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects, except insofar as such stock has been
pledged, pursuant to credit agreements filed with the Commission, to secure
obligations of the Company and its subsidiaries to their respective senior
lenders, as set forth on Exhibit II hereto.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement and the Subscription Agreement on each Closing Date (as defined
below), such Offered Securities will have been validly issued, fully paid
and nonassessable and will conform to the description thereof contained in
the Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Securities.
(vi) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any
Underwriter or Manager for a brokerage commission, finder's fee or other
like payment as a result of any of the transactions contemplated by this
Agreement.
(vii) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person granting
such
5
<PAGE>
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to a
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
(viii) The Securities are listed on The Nasdaq Stock Market's National
Market.
(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the
Subscription Agreement in connection with the issuance and sale of the
Offered Securities by the Company, except such as have been obtained and
made, or are required to be made, under the Act and such as may be required
under state or foreign securities laws.
(x) The execution, delivery and performance of this Agreement and
the Subscription Agreement, and the issuance and sale of the Offered
Securities by the Company will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the charter
or by-laws of the Company or any such subsidiary, except with respect to
such breaches, violations and defaults which, individually or in the
aggregate with other breaches, violations and defaults, will not affect the
transactions contemplated hereby and will not have a material adverse
effect on or the Company and its subsidiaries, taken as a whole; and the
Company has full power and authority to authorize, issue and sell the
Offered Securities as contemplated by this Agreement and the Subscription
Agreement, respectively.
(xi) This Agreement and the Subscription Agreement have been duly
authorized, executed and delivered by the Company.
(xii) Except as disclosed in the Prospectuses and except
for statutory liens for sums not yet due or which are being
contested in good faith in appropriate proceedings, the Company
and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in
each case free from liens, encumbrances and defects that would,
individually or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole; and except as disclosed in
the Prospectuses or as will not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, the Company and its
subsidiaries hold any leased real or personal property under valid
6
<PAGE>
and enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(xiii) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them, except where
the failure to possess such certificates or permits will not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the Company and its subsidiaries taken as
a whole.
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that may
be reasonably expected to have a material adverse effect on the Company and
its subsidiaries taken as a whole.
(xv) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, the loss of which may reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
Company and its subsidiaries, taken as a whole; and have not received any
notice of infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined adversely
to the Company or any of its subsidiaries, would, individually or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(xvi) Except as disclosed in the Prospectuses, neither the Company
nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim may
reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the Company and its subsidiaries taken as a
whole; and the Company is not aware of any pending investigation which
might lead to such a claim.
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<PAGE>
(xvii) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, may reasonably be
expected, individually or in the aggregate, to have a material adverse
effect on the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole,
or may reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations under this Agreement or
the Subscription Agreement, or which are otherwise material in the context
of the sale of the Offered Securities; and, to the Company's knowledge, no
such actions, suits or proceedings are threatened or contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectuses present fairly, in all material respects,
the financial position of the Company and its consolidated subsidiaries as
of the dates shown and their results of operations and cash flows for the
periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis; the schedules included in each
Registration Statement present fairly, in all material respects, the
information required to be stated therein; and the assumptions used in
preparing the pro forma financial statements included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(xix) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(xxi) Neither the Company nor any of its subsidiaries does business
with the government of Cuba or with any person located in Cuba within the
meaning of Section 517.075, Florida Statutes, and the Company agrees to
comply with such
8
<PAGE>
Section if prior to the completion of the distribution of the Offered
Securities it commences doing such business.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date
and full right, power and authority to enter into this Agreement and the
Subscription Agreement and to sell, assign, transfer and deliver the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date hereunder; and, upon the delivery of and payment for the
Offered Securities on each Closing Date hereunder, such Selling Stockholder
will convey to the several Underwriters and Managers valid and unencumbered
title to the Offered Securities to be delivered by such Selling Stockholder
on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement did not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, (B) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement did not include, or will
not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and (C) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement
is prior to the execution and delivery of this Agreement, the Additional
Registration Statement each does not include, and at the time of
filing of each of the Prospectuses pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectuses are included, each Registration
Statement and each of the Prospectuses will not include, any untrue
statement of a material fact or omits, or will omit, to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement: on
the Effective Date of the Initial Registration Statement, the Initial
Registration Statement and each of the Prospectuses will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading. The two preceding sentences apply only to the extent that
any statements in or omissions from a Registration Statement or Prospectus
are based on written information furnished to the Company by such Selling
9
<PAGE>
Stockholder specifically for use therein, it being understood and agreed
that the only such information is that described in Section 7(b) hereof.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of U.S. $32.95 per share, that
number of U.S. Firm Securities (rounded up or down, as determined by CSFBC in
its discretion, in order to avoid fractions) obtained by multiplying 1,800,000
U.S. Firm Securities in the case of the Company and the number of U.S. Firm
Securities set forth opposite the name of such Selling Stockholder in Schedule A
hereto, in the case of a Selling Stockholder, in each case by a fraction the
numerator of which is the number of U.S. Firm Securities set forth opposite the
name of such Underwriter in Schedule B hereto and the denominator of which is
the total number of U.S. Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders have been placed in custody, for delivery under this
Agreement and the Subscription Agreement, under Custody Agreements made with
Boatmen's Trust Company, as custodian ("Custodian"). Each Selling Stockholder
agrees that the shares represented by the certificates held in custody for the
Selling Stockholders under such Custody Agreements are subject to the interests
of the Underwriters hereunder and the Managers under the Subscription Agreement,
that the arrangements made by the Selling Stockholders for such custody are to
that extent irrevocable, and that the obligations of the Selling Stockholders
hereunder and thereunder shall not terminate by operation of law, whether by the
death of any individual Stockholder or the occurrence of any other event, or in
the case of a trust, by the death of any trustee or trustees or the termination
of such trust. If any individual Selling Stockholder or any such trustee or
trustees should die, of if any other such event should occur, or if any of such
trusts should terminate, before the delivery of the Offered Securities under
this Agreement and the Subscription Agreement, certificates for such Offered
Securities shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement and the Subscription Agreement as if such death or
other event or termination had not occurred, regardless of whether or not the
custodian shall have received notice of such death or other event or
termination.
The Company and the Custodian will deliver the U.S. Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price by wire transfer of immediately available funds to the Company at
a bank reasonably acceptable to CSFBC in the case of 1,800,000 Firm Securities
and by wire transfer of immediately available funds to the Custodian at a bank
reasonably acceptable to CSFBC in the case of 2,268,000 Firm Securities, at the
office of Dickstein Shapiro Morin & Oshinsky LLP ("Dickstein Shapiro"), at 10:00
A.M., New York time, on December 2, 1996, or at such other time not later than
seven full business days thereafter as CSFBC and the Company determine,
such time being herein referred to as the "First Closing Date".
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<PAGE>
For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the U.S. Offering and the International
Offering. The certificates for the U.S. Firm Securities so to be delivered will
be in definitive form, in such denominations and registered in such names as
CSFBC requests and will be made available for checking and packaging at the
above office of CSFBC at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to the
date of the Prospectuses, the Underwriters may purchase all or less than all of
the U.S. Optional Securities at the purchase price per Security to be paid for
the U.S. Firm Securities. The Company and the Selling Stockholders agree,
severally and not jointly, to sell the respective number of U.S. Optional
Securities determined as follows: first, the Company shall sell the number of
U.S. Optional Securities specified in such notice, or such lesser number of
Securities as shall bring the total number of Optional Securities sold by the
Company to 312,500 and then, after the Company has sold all of such 312,500
Optional Securities, each Selling Stockholder shall sell the respective number
of U.S. Optional Securities obtained by multiplying (a)(i) the number of
U.S. Optional Securities specified in such notice, less (ii) the number of
U.S. Optional Securities sold by the Company pursuant to such notice by (b) a
fraction the numerator of which is the number of shares set forth opposite the
names of such Selling Stockholder in Schedule A hereto under the caption "Number
of U.S. Optional Securities to be Sold" and the denominator of which is the
total number of U.S. Optional Securities to be sold by the Selling Stockholders
(subject to adjustment by CSFBC to eliminate fractions). Such U.S. Optional
Securities shall be purchased from the Company and each Selling Stockholder for
the account of each Underwriter in the same proportion as the number of
U.S. Firm Securities set forth opposite such Underwriter's name bears to the
total number of U.S. Firm Securities (subject to adjustment by CSFBC to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the
U.S. Firm Securities. No Optional Securities shall be sold or delivered unless
the U.S. Firm Securities and the International Firm Securities previously have
been, or simultaneously are, sold and delivered. The right to purchase the
Optional Securities or any portion thereof may be exercised from time to time
and to the extent not previously exercised may be surrendered and terminated at
any time upon notice by CSFBC, on behalf of the Underwriters and the Managers,
to the Company and the Selling Stockholders. It is understood that CSFBC is
authorized to make payment for and accept delivery of such Optional Securities
on behalf of the Underwriters and Managers pursuant to the terms of CSFBC's
instructions to the Company.
Each time for the delivery of and payment for the U.S. Optional
Securities, being herein referred to as an "Optional Closing Date," which
may be the First Closing Date (the First Closing Date and each Optional Closing
Date, if any, being sometimes referred to as a "Closing Date"), shall be
determined by CSFBC but shall be not later than five full business days after
written notice of election to purchase Optional Securities is given. The
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<PAGE>
Company and the Custodian will deliver the U.S. Optional Securities being
purchased on each Optional Closing Date to the Representatives for the accounts
of the several Underwriters, against payment of the purchase price therefor by
wire transfer of immediately available funds to the Company at a bank reasonably
acceptable to CSFBC in the case of Optional Securities sold by the Company and
by wire transfer of immediately available funds to the Custodian at a bank
reasonably acceptable to CSFBC in the case of Optional Securities sold by the
Selling Stockholders, at the above office of Dickstein Shapiro. The certificates
for the U.S. Optional Securities being purchased on each Optional Closing Date
will be in definitive form, in such denominations and registered in such names
as CSFBC requests upon reasonable notice prior to such Optional Closing Date and
will be made available for checking and packaging at the above office of CSFBC
at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several Under-
writers propose to offer the U.S. Securities for sale to the public as set forth
in the U.S. Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file each of the Prospectuses with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by
CSFBC, which consent will not be unreasonably withheld, subparagraph (4))
of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration
Statement.
(b) The Company will advise CSFBC promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of the
Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance with
Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time either Prospectus is
printed and distributed to any Underwriter or Manager, or will make such
filing at such later date as shall have been consented to by CSFBC.
(c) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration statement
as filed or either of the related prospectuses or the Initial
Registration Statement, the Additional Registration Statement (if any)
or either of the Prospectuses and will not effect such
12
<PAGE>
amendment or supplementation without CSFBC's consent; and the Company will
also advise CSFBC promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of a
Registration Statement or either of the Prospectuses and of the institution
by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(d) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter, Manager or dealer, any event occurs as a result
of which either or both of the Prospectuses as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend either or both of the Prospectuses to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's prior consent
to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(e) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earning statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(f) The Company will furnish to the Representatives copies of
each Registration Statement (four of which will be signed and will
include all exhibits), each related preliminary prospectus relating
to the U.S. Securities, and, so long as a prospectus relating to
the Offered Securities is required to be delivered under the Act
in connection with sales by any Underwriter or dealer, the U.S.
Prospectus and all amendments and supplements to such documents,
in each case in such quantities as CSFBC requests. The U.S. Prospectus
shall be so furnished on or prior to 3:00 P.M., New York time, on the
business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement. All
other such documents shall be so furnished as soon as available.
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The Company and the Selling Stockholders will pay the expenses of printing
and distributing to the Underwriters all such documents.
(g) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the United
States as CSFBC designates and will continue such qualifications in effect
so long as required for the distribution.
(h) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (I) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(i) For a period of 90 days after the date of the initial public
offering of the Offered Securities (the "Lock-Up Period"), the Company will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent of
CSFBC, except grants of restricted stock or stock options to employees
pursuant to the terms of a plan in effect on the date hereof (provided that
any such restricted stock or stock options shall not by their terms vest or
be exercisable or transferable during the Lock-Up Period) or the issuance
of stock pursuant to the exercise of any employee stock options outstanding
on the date hereof.
(j) The Company will pay all expenses incident to the performance of
the obligations of the Company and the Selling Stockholders under this
Agreement and for any filing fees and other expenses (including fees and
disbursements of counsel) incurred in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions in the
United States as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review
by the National Association of Securities Dealers, Inc. of the Offered
Securities, for any travel expenses of the Company's officers and employees
and any other expenses of the Company in connection with attending or
hosting meetings with prospective purchasers of the Offered Securities, for
any transfer taxes on the sale by the Selling Stockholders of the Offered
Securities to the Underwriters and for expenses incurred in distributing
preliminary prospectuses and the Prospectuses (including any amendments and
supplements thereto) to the Underwriters.
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(k) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(l) Each Selling Stockholder, other than the Fox Family Foundation,
agrees, for the Lock-Up Period, not to offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any additional
shares of the Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or disposition,
without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the U.S. Firm Securities on the
First Closing Date and the U.S. Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Price Waterhouse LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
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(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date not
more than five business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectuses; or
(C) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year, in consolidated net sales or net
operating income or in the total or per share amounts of
consolidated income before extraordinary items or net income;
except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter;
(iv) on the basis of a reading of the unaudited pro
forma financial statements included in the Registration Statement,
inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that the
unaudited pro forma financial statements included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations, or that the pro forma adjustments
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have not been properly applied to the historical amounts in the
compilation of those statements; and
(v) they have compared specified dollar amounts (or percent-
ages derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statements is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time, and
(iii) "Prospectuses" shall mean the prospectuses included in the Registration
Statements. All financial statements and schedules included in material
incorporated by reference into the Prospectuses shall be deemed included in the
Registration Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time either
Prospectus is printed and distributed to any Underwriter or Manager, or
shall have occurred at such later date as shall have been consented to by
CSFBC. If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, each of the Prospectuses
shall have been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that
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purpose shall have been instituted or, to the knowledge of any Selling
Stockholder, the Company or the Representatives, shall be contemplated by
the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries taken as a whole which, in the reasonable judgment of a
majority in interest of the Underwriters including the Representatives, is
material and adverse and makes it impractical or inadvisable to proceed
with completion of the public offering or the sale of and payment for the
U.S. Securities; (ii) any downgrading in the rating of any debt securities
of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or, New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the reasonable judgment of a
majority in interest of the Underwriters including the Representatives, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the U.S. Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Dickstein Shapiro, counsel for the Company and the Selling
Stockholders, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectuses; and, to the knowledge
of such counsel, the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except such jurisdictions where
the failure of the Company to be so qualified or in good standing, as
the case may be, will not, individually or in the aggregate, have a
material adverse effect on the Company, and its subsidiaries, taken as
a whole;
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(ii) The Offered Securities delivered on such Closing Date and
all other outstanding shares of the Common Stock of the Company have
been duly authorized and, upon payment therefor by the Underwriters
and Managers as provided herein and in the Subscription Agreement,
will be validly issued, fully paid and nonassessable; the Offered
Securities conform in all material respects to the description thereof
contained in the Prospectuses; and the stockholders of the Company
have no preemptive rights with respect to the Securities created by or
under the Company's Certificate of Incorporation or Bylaws, Delaware
state law or any agreements, instruments or understandings of which
such counsel has knowledge;
(iii) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act;
(iv) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectuses, will not be an
"investment company" as defined in the Investment Company Act of 1940.
(v) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the
Subscription Agreement in connection with the issuance or sale of the
Offered Securities, except such as have been obtained and made under
the Act and such as may be required under state or foreign securities
laws;
(vi) The execution, delivery and performance of this Agreement
and the Subscription Agreement and the issuance and sale of the
Offered Securities by the Company will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order known to
such counsel of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties, or any material agreement or instrument known
to such counsel to which the Company or any such subsidiary
is a party or by which the Company or any such subsidiary is bound or
to which any of the properties of the Company or any such subsidiary
is subject (except, in the case of subsidiaries of the Company,
with respect to such breaches, violations and defaults which,
19
<PAGE>
individually or in the aggregate, will not affect the transactions
contemplated hereby and will not have a material adverse effect on the
Company and its subsidiaries, taken as a whole), or the charter or
by-laws of the Company or any such subsidiary; and the Company has
full power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement and the Subscription
Agreement;
(vii) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, each of the Prospectuses either were filed
with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or were
included in the Initial Registration Statement or the Additional
Registration Statement (as the case may be), and, to the best of the
knowledge of such counsel, no stop order suspending the effectiveness
of a Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and each
of the Prospectuses, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; such counsel have no reason to believe that any part of a
Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; or that either of the Prospectuses or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; the descriptions in the Registration Statements and
Prospectuses of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel do not know of any
legal or governmental proceedings required to be described in a
Registration Statement or the Prospectuses which are not described as
required or of any contracts or documents of a character required to
be described in a Registration Statement or the Prospectuses or to be
filed as exhibits to a Registration Statement which are not described
and filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial
data contained in the Registration Statements or the Prospectuses; and
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<PAGE>
(viii) This Agreement and the Subscription Agreement have been
duly authorized, executed and delivered by the Company.
(ix) Each Selling Stockholder has record ownership and, to such
counsel's knowledge, beneficial ownership of the Offered Securities to
be delivered by such Selling Stockholder on such Closing Date and has
the legal right, power and authority to sell, assign, transfer and
deliver the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date hereunder; and, assuming that the
Underwriters and the managers are "bona fide purchasers" (as such term
is defined under Section 8-302 of the New York Uniform Commercial
Code), upon delivery of the certificates for the Offered Securities to
be sold by each Selling Stockholder against payment therefor, the
several Underwriters and the Managers will have acquired valid title
to the Offered Securities purchased by them from the Selling
Stockholders on such Closing Date under this Agreement and the
Subscription Agreement free and clear of any security interest or
"adverse claims" within the meaning of Section 8-302 of the New York
Uniform Commercial Code;
(x) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Custody
Agreement, this Agreement or the Subscription Agreement in connection
with the sale of the Offered Securities sold by the Selling
Stockholders, except such as have been obtained and made under the Act
and such as may be required under state or foreign securities laws;
(xi) The execution, delivery and performance of this Agreement,
the Subscription Agreement and the Custody Agreement and sale of the
Offered Securities by the Selling Stockholders will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order
known to such counsel of any governmental agency or body or any court
having jurisdiction over any Selling Stockholder or any of their
properties or any agreement or instrument known to such counsel to
which any Selling Stockholder is a party or by which any Selling
Stockholder is bound or to which any of the properties of any
Selling Stockholder is subject, or charter or by-laws of any
Selling Stockholder which is a corporation, partnership agreement
of any Selling Stockholder which is a partnership, operating
agreement of any Selling Stockholder which is a limited liability
company or trust agreement of any Selling Stockholder which is a
trust, except such breaches or violations as will not, individually
or in the aggregate, have a material adverse effect on the
ability of such Selling Stockholder to perform its obligations
hereunder and will not, individually or in the aggregate, have
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a material adverse effect on the Company and its subsidiaries, taken
as a whole;
(xii) The Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder have been duly authorized,
executed and delivered by such Selling Stockholder and constitute
valid and legally binding obligations of each such Selling Stockholder
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(xiii) This Agreement, the Subscription Agreement and the Custody
Agreement have been duly authorized, executed and delivered by each
Selling Stockholder.
(e) The Representatives shall have received from Katten Muchin &
Zavis, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectuses and other related matters as the
Representatives may require, and the Selling Stockholders and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time either
Prospectus was printed and distributed to any Underwriter or Manager; and,
subsequent to the respective date of the most recent financial statements
in the Prospectuses, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectuses or as described in such
certificate.
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(g) The Representatives shall have received a letter, dated such
Closing Date, of Price Waterhouse LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to such Closing Date for the purposes of this subsection.
(h) On such Closing Date, the Managers shall have purchased the
International Firm Securities or the International Optional Securities, as
the case may be, pursuant to the Subscription Agreement.
(i) On the Effective Date, the Representatives shall have received
agreements from each of the Company's directors and executive officers to
the effect that they will not, for the Lock-Up Period, offer, sell contract
to sell, pledge or otherwise dispose of, directly or indirectly, any shares
of the Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or disposition,
without the prior written consent of CSFBC.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, either of the
Prospectuses, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating
or defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any
of such documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the
only such information furnished by any Underwriter consists of the information
described as such in subsection (C) below and provided, further, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, the indemnity agreement contained
in this subsection (a) shall not inure to the benefit of any Underwriter
23
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from whom the person asserting such losses, claims, damages or liabilities
purchased the Offered Securities concerned, to the extent that any such loss,
claim, damage or liability of such Underwriter results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Offered Securities to such person, a copy of the Prospectus, if
required by the Act, if the Company had previously furnished copies thereof to
such Underwriter.
(b) Each Selling Stockholder, severally and not jointly, will indemnify
and hold harmless each Underwriter and the Company against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter or the
Company may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder specifically for use
therein, and will reimburse each Underwriter or the Company for any legal or
other expenses reasonably incurred by such Underwriter or the Company,
respectively, in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred it being
understood and agreed that the only information furnished by any Selling
Stockholder consists of information concerning such Selling Stockholder set
forth under the caption "Principal and Selling Stockholders" and in the first
paragraph under the caption "Risk Factors -- Surrender of Voting Control by
Controlling Stockholders" in the Prospectuses; provided, however, that the
Selling Stockholders will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below and provided, further,
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this subsection (b) shall not inure to the benefit of any
Underwriter from whom the person asserting such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that any
such loss, claim, damage or liability of such Underwriter results from the fact
that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus, if required by the Act, if the Company had previously furnished
copies thereof to such Underwriter.
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(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company and each Selling Stockholder in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the
only such information furnished by any Underwriter consists of the following
information in the U.S. Prospectus furnished on behalf of each Underwriter: the
last paragraph on the bottom of the cover page concerning the terms of the
offering by the Underwriters; the legends concerning over-allotments,
stabilizing and passive market making on the inside front cover page; the
concession and reallowance figures appearing in the fifth paragraph under the
caption "Underwriting"; and the information contained in the sixth, seventh and
eighth paragraphs under the caption "Underwriting."
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation. In no
event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to local counsel) for all indemnified parties
in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same set of
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or could
25
<PAGE>
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the U.S. Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
U.S. Securities (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the U.S. Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders
under this Section shall be in addition to any liability which the
Company and the Selling Stockholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of
26
<PAGE>
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act and to each person, if any,
who controls any Selling Stockholder within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase U.S. Securities hereunder on either the First or
any Optional Closing Date and the aggregate number of shares of U.S. Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of U.S. Securities that the
Underwriters are obligated to purchase on such Closing Date, CSFBC may make
arrangements satisfactory to the Company and the Selling Stockholders for the
purchase of such U.S. Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the U.S. Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
U.S. Securities with respect to which such default or defaults occur exceeds 10%
of the total number of shares of U.S. Securities that the Underwriters are
obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such U.S.
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to
U.S. Securities after the First Closing Date, this Agreement will not terminate
as to the U.S. Firm Securities or any U.S. Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and
payment for the U.S. Securities. If this Agreement is terminated pursuant to
Section 8 or if for any reason the purchase of the U.S. Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company, the Selling Stockholders, and the Underwriters
pursuant to Section 7 shall remain in effect, and if any U.S. Securities
have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
27
<PAGE>
the purchase of the U.S. Securities by the Underwriters is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (ii),
(iii) or (iv) of Section 6(c) or the failure solely of the condition set forth
in Section 6(h) due to the occurrence of any event specified in 6(c)(i) of the
Subscription Agreement, the Company and the Selling Stockholders will, jointly
and severally, reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the U.S. Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o CS First Boston Corporation, Eleven Madison Avenue, New
York, N.Y. 10010-3629, Attention: Investment Banking Department - Transactions
Advisory Group, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Corporate Centre, Suite 2-300, 1949 E.
Sunshine, Springfield, Missouri 65804, Attention: Stephen J. Gore, or, if sent
to the Selling Stockholders or any of them, will be mailed, delivered or
telegraphed and confirmed to Samuel A. Hamacher at 7701 Forsyth Boulevard, St.
Louis, Missouri 63105 and to Matthew G. Maloney at 2101 L Street N.W.,
Washington, DC 20037; provided, however, that any notice to an Underwriter
pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to
such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with this financing, and any action under this
Agreement taken by the Representatives joint or by CSFBC will be binding upon
all the Underwriters. Samuel A. Hamacher and Matthew G. Maloney will act for the
Selling Stockholders in connection with such transactions, and any action under
or in respect of this Agreement taken by Samuel A. Hamacher or Matthew G.
Maloney will be binding upon all the Selling Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or
28
<PAGE>
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
29
<PAGE>
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
DT INDUSTRIES, INC.
By /s/ Bruce P. Erdel
-----------------------------------------
Name Bruce P. Erdel
Title VP-Finance
THE SELLING STOCKHOLDERS NAMED IN SCHEDULE A
ATTACHED HERETO, ACTING SEVERALLY
By /s/ Matthew G. Maloney
-----------------------------------------
Attorney-in-fact
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
CS FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
SCHRODER WERTHEIM & CO. INCORPORATED
Acting on behalf of themselves and
as the Representatives of the several
Underwriters
By CS FIRST BOSTON CORPORATION
By /s/ Leslie K. Coote
---------------------------------
Name Leslie K. Coote
Title Associate
<PAGE>
SCHEDULE A
NUMBER OF U.S. FIRM NUMBER OF U.S. OPTIONAL
SELLING STOCKHOLDER SECURITIES TO BE SOLD SECURITIES TO BE SOLD
- ------------------- --------------------- -----------------------
Peer Investors L.P. 1,552,490 253,091
Peer Investors II L.P. 270,992 44,178
Fox Family Foundation 268,000 40,200
Harbour Group II Management
Co. 139,438 22,731
Harbour Group Investments II,
L.P. 37,080 0
--------- -------
2,268,000 360,200
========= =======
A-1
<PAGE>
SCHEDULE B
NUMBER OF
U.S. FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
----------- --------------------
CS First Boston Corporation ............................ 876,000
Morgan Stanley & Co. Incorporated ...................... 876,000
Schroder Wertheim & Co. Incorporated ................... 876,000
Adams, Harkness & Hill, Inc. ........................... 60,000
Arnhold and S. Bleichroeder, Inc. ...................... 60,000
Robert W. Baird & Co. Incorporated ..................... 60,000
George K. Baum & Company ............................... 60,000
Alex. Brown & Sons Incorporated ........................ 120,000
Dresdner Kleinwort Benson North America LLC ............ 120,000
A.G. Edwards & Sons, Inc. .............................. 120,000
EVEREN Securities, Inc. ................................ 120,000
Hambrecht & Quist LLC .................................. 120,000
Huntleigh Securities Corporation ....................... 60,000
Invemed Associates, Inc. ............................... 120,000
Edward D. Jones & Co., L.P. ............................ 60,000
Oppenheimer & Co., Inc. ................................ 120,000
The Robinson-Humphrey Company, Inc. .................... 60,000
Stephens Inc. .......................................... 120,000
Stifel, Nicolaus & Company, Incorporated ............... 60,000
----------
Total 4,068,000
=========
A-2
<PAGE>
The following page contains a list of Exhibits which have been
intentionally omitted by the Registrant pursuant to Item 601(b)(2) of Regulation
S-K.
A copy of any omitted Exhibit will be provided to the Securities and
Exchange Commission upon request.
<PAGE>
Exhibit I - Significant Subsidiaries
Exhibit II - Pledges of Stock of Significant Subsidiaries
5,085,000 Shares
DT INDUSTRIES, INC.
Common Stock, $.01 par value
SUBSCRIPTION AGREEMENT
London, England
November 25, 1996
To: CS FIRST BOSTON LIMITED
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
J. HENRY SCHRODER & CO. LIMITED
ABN AMRO ROTHSCHILD
MORGAN GRENFELL AND CO. LIMITED
RABO SECURITIES N.V.
SOCIETE GENERALE
WESTDEUTSCHE LANDESBANK GIROZENTRALE
c/o: CS FIRST BOSTON LIMITED ("CSFBL")
One Cabot Square
London, England E14 4QJ
Dear Sirs:
1. Introductory. DT Industries, Inc., a Delaware corporation ("Company"),
proposes to issue and sell 450,000 shares, and the stockholders listed in
Schedule A attached hereto ("Selling Stockholders") propose severally to sell an
aggregate of 567,000 outstanding shares, of the Company's Common Stock, $.01 par
value ("Securities") (such 1,017,000 shares of Securities being hereinafter
referred to as the "International Firm Securities"), to the several Managers
named in Schedule B hereto ("Managers"). Such offering and sale by the Company
and the Selling Stockholders are hereinafter referred to as the "International
Offering."
It is understood that the Company and the Selling Stockholders are
concurrently entering into an Underwriting Agreement, dated the date hereof
("Underwriting Agreement"), with certain United States underwriters listed in
Schedule B thereto (the "U.S. Underwriters"), for whom CS First Boston
Corporation ("CSFBC"), Morgan Stanley & Co. Incorporated and Schroder Wertheim &
Co. are acting as representatives (the "U.S. Representatives"), relating to the
concurrent offering and sale of 4,068,000 shares of Securities (" U.S. Firm
Securities") in the United States and Canada ("U.S. Offering"), of which
1,800,000 shares will be offered by the Company and 2,268,000 shares will be
offered by the Selling Stockholders.
In addition, as set forth below, (i) the Company proposes to issue
and sell to the U.S. Underwriters, at the option of CSFBC, an
aggregate of not more than 250,000 additional shares
<PAGE>
of Securities, and the Selling Stockholders also propose to sell to the U.S.
Underwriters, at the option of CSFBC, an aggregate of not more than 360,200
additional outstanding shares of Securities (such 610,200 additional shares of
Securities being hereinafter referred to as the "U.S. Optional Securities") and
(ii) the Company proposes to issue and sell to the Managers, at the option of
CSFBL, an aggregate of not more than 62,500 additional shares of Securities, and
the Selling Stockholders also propose to sell to the Managers, at the option of
CSFBL, an aggregate of not more than 90,050 additional outstanding shares of
Securities (such 152,550 additional shares of Securities being hereinafter
referred to as the "International Optional Securities"). The U.S. Firm
Securities and the U.S. Optional Securities are hereinafter called the "U.S.
Securities"; the International Firm Securities and the International Optional
Securities are hereinafter called the "International Securities"; the U.S. Firm
Securities and the International Firm Securities are hereinafter called the
"Firm Securities"; the U.S. Optional Securities and the International Optional
Securities are hereinafter called the "Optional Securities." The U.S. Securities
and the International Securities are collectively referred to as the "Offered
Securities." To provide for the coordination of their activities, the U.S.
Underwriters and the Managers have entered into an Agreement Between U.S.
Underwriters and Managers which permits them, among other things, to sell the
Offered Securities to each other for purposes of resale.
The Company and the Selling Stockholders hereby agree with the several
Managers as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with, the
several Managers that:
(i) A registration statement (No. 333-14955) relating to
the Offered Securities, including a form of prospectus relating to the
U.S. Securities and a form of prospectus relating to the International
Securities being offered in the International Offering, has been filed
with the Securities and Exchange Commission ("Commission") and either
(A) has been declared effective under the Securities Act of 1933
("Act") and is not proposed to be amended or (B) is proposed to be
amended by amendment or post-effective amendment. If such registration
statement (the "initial registration statement") has been declared
effective, either (A) an additional registration statement (the
"additional registration statement") relating to the Offered
Securities may have been filed with the Commission pursuant to Rule
462(b) ("Rule 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (B) such an additional registration statement is proposed
to be filed with the Commission pursuant to Rule 462(b) and
will become effective upon filing pursuant to such Rule and
upon such filing the Offered Securities will all have been
duly registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Company
does not propose to amend the initial registration
2
<PAGE>
statement or, if an additional registration statement has been filed
and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has
been filed with the Commission prior to the execution and delivery of
this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Act or, in the case of the additional registration
statement, Rule 462(b). For purposes of this Agreement, "Effective
Time" with respect to the initial registration statement or, if filed
prior to the execution and delivery of this Agreement, the additional
registration statement means (A) if the Company has advised CSFBL that
it does not propose to amend such registration statement, the date and
time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to Rule
462(c), or (B) if the Company has advised CSFBL that it proposes to
file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement,
as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised CSFBL that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all material
incorporated by reference therein, including all information contained
in the additional registration statement (if any) and deemed to be a
part of the initial registration statement as of the Effective Time of
the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement." The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"Registration Statements" and individually as a "Registration
Statement." The form of prospectus relating to the U.S. Securities
and the form of prospectus relating to the International
Securities, each as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act
or (if no such filing is required) as included in a Registration
Statement, including all material incorporated by reference in
each such prospectus, are hereinafter referred to as the "U.S.
3
<PAGE>
Prospectus" and the "International Prospectus", respectively, and
collectively as the "Prospectuses." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration State-
ment is prior to the execution and delivery of this Agreement: (A) on
the Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of each of the Prospectuses
pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the
Prospectuses are included, each Registration Statement and each of the
Prospectuses will conform, in all material respects to the
requirements of the Act and the Rules and Regulations, and none of
such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and each of the
Prospectuses will conform in all material respects to the requirements
of the Act and the Rules and Regulations, none of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do
not apply to statements in or omissions from a Registration Statement
or either of the Prospectuses based upon (i) written information
furnished to the Company by any Selling Stockholder specifically for
use therein, it being understood and agreed that the only such
information is that described as such in Section 7(b) hereof, and (ii)
written information furnished to the Company by any Manager through
CSFBL or by any U.S. Underwriter through the U.S. Representatives
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(c)
hereof.
4
<PAGE>
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectuses; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, as the case may be, will not, individually or in aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(iv) Each subsidiary of the Company that is a "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X of the
Commission) or that is listed on Exhibit I hereto (each of the
foregoing being referred to as a "Significant Subsidiary") has been
duly incorporated and is an existing corporation in good standing
under the laws of the jurisdiction of its incorporation, with power
and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectuses; and each subsidiary of
the Company is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except with respect to such subsidiaries and
jurisdictions where the failure to be so qualified or in good
standing, as the case may be, will not, individually or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued and outstanding
capital stock of each Significant Subsidiary has been duly authorized
and validly issued and is fully paid and nonassessable; and the
capital stock of each Significant Subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects, except insofar as such stock has been
pledged, pursuant to credit agreements filed with the Commission, to
secure obligations of the Company and its subsidiaries to their
respective senior lenders, as set forth in Exhibit II hereto.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with
this Agreement and the Underwriting Agreement on each Closing Date (as
defined below), such Offered Securities will have been validly issued,
fully paid and nonassessable and will conform to the description
thereof contained in the Prospectuses; and the stockholders of the
Company have no preemptive rights with respect to the Securities.
(vi) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Manager or U.S. Underwriter for a brokerage commission, finder's
fee or other like payment as a result of any of the transactions
contemplated by this Agreement.
5
<PAGE>
(vii) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(viii) The Securities are listed on The Nasdaq Stock Market's
National Market.
(ix) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this
Agreement or the Underwriting Agreement in connection with the
issuance and sale of the Offered Securities by the Company, except
such as have been obtained and made, or required to be made, under the
Act and such as may be required under state or foreign securities
laws.
(x) The execution, delivery and performance of this Agreement
and the Underwriting Agreement, and the issuance and sale of the
Offered Securities by the Company will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties, or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or by-laws
of the Company or any such subsidiary, except with respect to such
breaches, violations and defaults which, individually or in the
aggregate with other breaches, violations and defaults, will not
affect the transactions contemplated hereby and will not have a
material adverse effect on or the Company and its subsidiaries, taken
as a whole; and the Company has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by this
Agreement and the Underwriting Agreement, respectively.
(xi) This Agreement and the Underwriting Agreement have been
duly authorized, executed and delivered by the Company.
(xii) Except as disclosed in the Prospectuses and except
for statutory liens for sums not yet due or which are being
contested in good faith in appropriate proceedings, the Company
and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects
that would individually or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole; and
except as disclosed in the Prospectuses or as will not have
6
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a material adverse effect on the Company and its subsidiaries, taken
as a whole, the Company and its subsidiaries hold any leased real or
personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be
made thereof by them.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them, except where the failure to possess such
certificates or permits will not, individually or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent
that may be reasonably expected to have a material adverse effect on
the Company and its subsidiaries taken as a whole.
(xv) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them, the
loss of which may reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and have not received any notice of
infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would,
individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries taken as a whole.
(xvi) Except as disclosed in the Prospectuses, neither the
Company nor any of its subsidiaries is in violation of any
statute, any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to
the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property contaminated
with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant
to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability
or claim may reasonably be expected, individually or in the aggregate,
to have a material adverse effect on the Company
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and its subsidiaries taken as a whole; and the Company is not aware of
any pending investigation which might lead to such a claim.
(xvii) Except as disclosed in the Prospectuses, there are no
pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective properties
that, if determined adversely to the Company or any of its
subsidiaries, may reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, or may reasonably
be expected to materially and adversely affect the ability of the
Company to perform its obligations under this Agreement or the
Underwriting Agreement, or which are otherwise material in the context
of the sale of the Offered Securities; and, to the Company's
knowledge, no such actions, suits or proceedings are threatened or
contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectuses present fairly, in all material
respects, the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and
cash flows for the periods shown, and such financial statements have
been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis; the
schedules included in each Registration Statement present fairly, in
all material respects, the information required to be stated therein;
and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein,
the related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts.
(xix) Except as disclosed in the Prospectuses, since the date of
the latest audited financial statements included in the Prospectuses
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectuses, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectuses, will not be an
"investment company" as defined in the Investment Company Act of 1940.
8
<PAGE>
(xxi) Neither the Company nor any of its subsidiaries does
business with the government of Cuba or with any person located in
Cuba within the meaning of Section 517.075, Florida Statutes and the
Company agrees to comply with such Section if prior to the completion
of the distribution of the Offered Securities it commences doing such
business.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Managers that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date and full right, power and authority to enter into this
Agreement and the Underwriting Agreement and to sell, assign, transfer
and deliver the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date hereunder; and upon the delivery of
and payment for the Offered Securities on each Closing Date hereunder,
such Selling Stockholder will convey to the several U.S. Underwriters
and Managers valid and unencumbered title to the Offered Securities to
be delivered by such Selling Stockholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(A) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement did not include any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, (B) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement did not include, or
will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each does not
include, and at the time of filing of each of the Prospectuses
pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the
Prospectuses are included, each Registration Statement and each of the
Prospectuses will not include, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and each of the
Prospectuses will not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
The two preceding sentences apply only to the extent that any
statements in or omissions from a Registration Statement or
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<PAGE>
Prospectus are based on written information furnished to the Company
by such Selling Stockholder specifically for use therein, it being
understood and agreed that the only such information is that described
in Section 7(b) hereof.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to the Managers, and the Managers
agree, severally and not jointly, to purchase from the Company and each Selling
Stockholder, at a purchase price of U.S. $33.57 per share, that number of
International Firm Securities (rounded up or down, as determined by CSFBL in its
discretion, in order to avoid fractions) obtained by multiplying 450,000
International Firm Securities in the case of the Company and the number of
International Firm Securities set forth opposite the name of such Selling
Stockholder in Schedule A hereto, in the case of a Selling Stockholder, in each
case by a fraction the numerator of which is the number of International Firm
Securities set forth opposite the name of such Manager in Schedule B hereto and
the denominator of which is the total number of International Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders have been placed in custody, for delivery under this
Agreement and the Underwriting Agreement, under Custody Agreements made with
Boatmen's Trust Company, as custodian ("Custodian"). Each Selling Stockholder
agrees that the shares represented by the certificates held in custody for the
Selling Stockholders under such Custody Agreements are subject to the interests
of the Managers hereunder and the U.S. Underwriters under the Underwriting
Agreement, that the arrangements made by the Selling Stockholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholders hereunder and thereunder shall not terminate by operation of law,
whether by the death of any individual Stockholder or the occurrence of any
other event, or in the case of a trust, by the death of any trustee or trustees
or the termination of such trust. If any individual Selling Stockholder or any
such trustee or trustees should die, of if any other such event should occur, or
if any of such trusts should terminate, before the delivery of the Offered
Securities under this Agreement and the Underwriting Agreement, certificates for
such Offered Securities shall be delivered by the Custodian in accordance with
the terms and conditions of this Agreement and the Underwriting Agreement as if
such death or other event or termination had not occurred, regardless of whether
or not the custodian shall have received notice of such death or other event or
termination.
The Company and the Custodian will deliver the International
Firm Securities to CSFBL for the accounts of the Managers against
payment of the purchase price by wire transfer of immediately available
funds to the Company at a bank reasonably acceptable to CSFBL in the
case of 450,000 Firm Shares and by wire transfer of immediately
available funds to the Custodian at a bank reasonably acceptable to
CSFBL in the case of 567,000 Firm Shares, at the office of Dickstein
Shapiro Morin & Oshinsky LLP ("Dickstein Shapiro"), at 10:00 A.M., New
York time, on December 2, 1996, or at such other time not later than
seven full business days thereafter as CSFBL and the Company determine,
such time being herein referred to as the "First Closing Date." For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934,
the First Closing Date (if later than the otherwise applicable
settlement date) shall be the settlement date for payment
10
<PAGE>
of funds and delivery of securities for all the Offered Securities sold pursuant
to the U.S. Offering and the International Offering. The certificates for the
International Firm Securities so to be delivered will be in definitive form, in
such denominations and registered in such names as CSFBL requests and will be
made available for checking and packaging at the above office of CSFBL, at least
24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to the
date of the Prospectuses, the Managers may purchase all or less than all of the
International Optional Securities at the purchase price per Security to be paid
for the International Firm Securities. The Company and the Selling Stockholders
agree, severally and not jointly, to sell the respective number of International
Optional Securities determined as follows: first, the Company shall sell the
number of International Optional Securities specified in such notice, or such
lesser number of Securities as shall bring the total number of Optional
Securities sold by the Company to 312,500 and then, after the Company has sold
all of such 312,500 Optional Securities, each Selling Stockholder shall sell the
respective number of International Optional Securities obtained by multiplying
(a)(i) the number of International Optional Securities specified in such notice,
less (ii) the number of International Optional Securities sold by the Company
pursuant to such notice by (b) a fraction the numerator of which is the number
of shares set forth opposite the names of such Selling Stockholder in Schedule A
hereto under the caption "Number of International Optional Securities to be
Sold" and the denominator of which is the total number of International Optional
Securities to be sold by the Selling Stockholders (subject to adjustment by
CSFBC to eliminate fractions). Such International Optional Securities shall be
purchased from the Company and each Selling Stockholder for the account of each
Manager in the same proportion as the number of International Firm Securities
set forth opposite such Manager's name bears to the total number of
International Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Managers only for the purpose of covering
over-allotments made in connection with the sale of the International Firm
Securities. No Optional Securities shall be sold or delivered unless the
International Firm Securities and the U.S. Firm Securities previously have been,
or simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC, on behalf of the Managers and the U.S. Underwriters, to
the Company and the Selling Stockholders. It is understood that CSFBC is
authorized to make payment for and accept delivery of such Optional Securities
on behalf of the U.S. Underwriters and Managers pursuant to the terms of CSFBC's
instructions to the Company.
Each time for the delivery of and payment for the International Optional
Securities, being herein referred to as an "Optional Closing Date", which may be
the First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "Closing Date"), shall be determined by
CSFBC but shall be not later than five full business days after written notice
of election to purchase Optional Securities is given. The Company and the
Custodian will deliver the International Optional Securities being purchased on
each Optional Closing Date to CSFBL for the accounts of the several Managers,
against payment of the purchase price therefor by wire transfer of immediately
available funds to the Company at a bank reasonably acceptable to CSFBL in the
case of Optional Securities sold by the Company and by wire transfer
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<PAGE>
of immediately available funds to the Custodian at a bank reasonably acceptable
to CSFBL in the case of Optional Securities sold by the Selling Stockholders, at
the above office of Dickstein Shapiro. The certificates for the International
Optional Securities being purchased on each Optional Closing Date will be in
definitive form, in such denominations and registered in such names as CSFBL
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the above office of CSFBL, at a
reasonable time in advance of such Optional Closing Date.
The Company will pay to the Managers as aggregate compensation for their
commitments hereunder and for their services in connection with the purchase of
the International Securities and the management of the offering thereof, if the
sale and delivery of the International Securities to the Managers provided
herein is consummated, an amount equal to U.S. $0.62 per International Security
purchased, which may be divided among the Managers in such proportions as they
may determine. Such payment will be made on the First Closing Date in the case
of the International Firm Securities and on each Optional Closing Date in the
case of the International Optional Securities sold to the Manager on such
Closing Date, in each case by way of deduction by the Managers of said amount
from the purchase price for the International Securities referred to above.
4. Offering by Managers. It is understood that the several Managers
propose to offer the International Securities for sale to the public as set
forth in the International Prospectus.
In connection with the distribution of the International Securities, the
Managers, through a stabilizing manager, may over-allot or effect transactions
on any exchange, in any over-the-counter market or otherwise which stabilize or
maintain the market prices of the International Securities at levels other than
those which might otherwise prevail, but in such event and in relation thereto,
the Managers will act for themselves and not as agents of the Company, and any
loss resulting from over-allotment and stabilization will be borne, and any
profit arising therefrom will be beneficially retained, by the Managers. Such
stabilizing, if commenced, may be discontinued at any time.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Managers and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file each of the Prospectuses with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by
CSFBL, which consent will not be unreasonably withheld, subparagraph (4))
of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration
Statement.
(b) The Company will advise CSFBL promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of
this Agreement and an additional registration statement is
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<PAGE>
necessary to register a portion of the Offered Securities under the Act but
the Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement or,
if filed, will file a post-effective amendment thereto with the Commission
pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M.,
New York time, on the date of this Agreement or, if earlier, on or prior to
the time either Prospectus is printed and distributed to any Manager or
U.S. Underwriter, or will make such filing at such later date as shall have
been consented to by CSFBL.
(c) The Company will advise CSFBL promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or either of the related prospectuses or the Initial Registration
Statement, the Additional Registration Statement (if any) or either of the
Prospectuses and will not effect such amendment or supplementation without
CSFBL's prior consent; and the Company will also advise CSFBL promptly of
the effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of a Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(d) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any U.S. Underwriter, Manager or dealer, any event occurs as a
result of which either or both of the Prospectuses as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend either or both of the Prospectuses
to comply with the Act, the Company will promptly notify CSFBL of such
event and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither CSFBL's
consent to, nor the Managers' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(e) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earning statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(f) The Company will furnish to the Managers copies of
each Registration Statement (four of which will be signed
and will include all exhibits), each related
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<PAGE>
preliminary prospectus relating to the International Securities, and, until
completion of the distribution of the International Securities as
determined by CSFBL, the International Prospectus and all amendments and
supplements to such documents, in each case in such quantities as CSFBL
requests. The International Prospectus shall be so furnished on or prior to
3:00 P.M., New York time, on the business day following the later of the
execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other such documents shall be so
furnished as soon as available. The Company and the Selling Stockholders
will pay the expenses of printing and distributing to the Managers all such
documents.
(g) No action has been or, prior to the completion of the
distribution of the Offered Securities, will be taken by the Company in any
jurisdiction outside the United States and Canada that would permit a
public offering of the Offered Securities.
(h) During the period of five years hereafter, the Company will
furnish to CSFBL and, upon request, to each of the other Managers, as soon
as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to CSFBL
(i) as soon as available, a copy of each report and any definitive proxy
statement of the Company filed with the Commission under the Securities
Exchange Act of 1934 or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CSFBL may reasonably
request.
(i) For a period of 90 days after the date of the initial public
offering of the Offered Securities (the "Lock-Up Period"), the Company will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent of
CSFBC, except grants of restricted stock or stock options to employees
pursuant to the terms of a plan in effect on the date hereof (provided that
any such restricted stock or stock options shall not by their terms vest or
be exercisable or transferable during the Lock-Up Period) or the issuance
of stock pursuant to the exercise of any employee stock options outstanding
on the date hereof.
(j) The Company will pay all expenses incident to the performance of
the obligations of the Company and the Selling Stockholders under this
Agreement and for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the U.S. Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. of the
Offered Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities and for expenses incurred in distributing preliminary
prospectuses and the Prospectuses (including any amendments and supplements
thereto) to the Managers.
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(k) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(l) Each Selling Stockholder, other than the Fox Family Foundation,
agrees, for the Lock-Up Period, not to offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any additional
shares of the Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or disposal,
without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Managers. The obligations of the
several Managers to purchase and pay for the International Firm Securities on
the First Closing Date and the International Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders of their obligations hereunder and to the following
additional conditions precedent:
(a) The Managers shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Price Waterhouse LLP in the
agreed form.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBL. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time either
Prospectus is printed and distributed to any Manager or U.S. Underwriter,
or shall have occurred at such later date as shall have been consented to
by CSFBL. If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, each of the
Prospectuses shall have been filed with the Commission in accordance with
the Rules and Regulations and Section 5(a) of this Agreement. Prior to such
Closing Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of any Selling Stockholder, the
Company or the Managers, shall be contemplated by the Commission.
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<PAGE>
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) a change in U.S. or international financial,
political or economic conditions or currency exchange rates or exchange
controls as would, in the reasonable judgment of CSFBL, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the International Securities, whether in the primary market
or in respect of dealings in the secondary market, or (ii)(A) any change,
or any development or event involving a prospective change, in the
condition (financial or other), business, properties or results of
operations of the Company or its subsidiaries taken as a whole which, in
the reasonable judgment of CSFBL, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the International Securities; (B)
any downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading and no implication of a possible
downgrading, of such rating); (C) any suspension or limitation of trading
in securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market; (D) any banking moratorium declared by U.S. Federal or, New York
authorities; or (E) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by the United
States Congress or any other substantial national or international calamity
or emergency if, in the reasonable judgment of CSFBL, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the International Securities.
(d) The Managers shall have received an opinion, dated such Closing
Date, of Dickstein Shapiro, counsel for the Company and the Selling
Stockholders, in the agreed form.
(e) The Managers shall have received from Katten Muchin & Zavis,
counsel for the Managers, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectuses and other related matters as the Managers may
require, and the Selling Stockholders and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(f) The Managers shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers,
to the best of their knowledge after reasonable investigation,
shall state that: the representations and warranties of the
Company in this Agreement are true and correct; the Company has
complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such
16
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Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b),
including payment of the applicable filing fee in accordance with Rule
111(a) or (b) under the Act, prior to the time either Prospectus was
printed and distributed to any Manager or U.S. Underwriter; and, subsequent
to the respective date of the most recent financial statements in the
Prospectuses, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectuses or as described in such
certificate.
(g) The Managers shall have received a letter, dated such Closing
Date, of Price Waterhouse LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three business days prior to such
Closing Date for the purposes of this subsection.
(h) On such Closing Date, the U.S. Underwriters shall have purchased
the U.S. Firm Securities or the U.S. Optional Securities, as the case may
be, pursuant to the Underwriting Agreement.
(i) On the Effective Date, the Managers shall have received
agreements from each of the Company's directors and executive officers to
the effect that they will not, for the Lock-Up Period, offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
any shares of the Securities of the Company or securities convertible into
or exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or disposition,
without the prior written consent of CSFBC.
Documents described as being "in the agreed form" are documents which are in the
forms which have been initialed for the purpose of identification by Katten
Muchin & Zavis, copies of which are held by the Company and CSFBL with such
changes as CSFBL may approve. The Company and the Selling Stockholders will
furnish the Managers with such conformed copies of such opinions, certificates,
letters and documents as the Managers reasonably request. CSFBL may in its sole
discretion waive on behalf of the Managers compliance with any conditions to the
obligations of the Managers hereunder, whether in respect of an Optional Closing
Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Manager against
any losses, claims, damages or liabilities, joint or several, to
which such Manager may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
17
<PAGE>
alleged untrue statement of any material fact contained in any Registration
Statement, either of the Prospectuses, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Manager for any legal or
other expenses reasonably incurred by such Manager in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Manager through CSFBL
specifically for use therein, it being understood and agreed that the only
information furnished by any Manager consists of the information described
as such in subsection (c) below and provided, further, that with respect to
any untrue statement or omission or alleged untrue statement or omission
made in any preliminary prospectus, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Manager from whom
the person asserting such losses, claims, damages or liabilities purchased
the Offered Securities concerned, to the extent that any such loss, claim,
damage or liability of such Manager results from the fact that there was
not sent or given to such person, at or prior to the written confirmation
of the sale of such Offered Securities to such person, a copy of the
Prospectus, if required by the Act, if the Company had previously furnished
copies thereof to such Manager.
(b) Each Selling Stockholder, severally and not jointly, will
indemnify and hold harmless each Manager and the Company against any
losses, claims, damages or liabilities, joint or several, to which such
Manager or the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, either of the Prospectuses, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by
such Selling Stockholder specifically for use therein, and will
reimburse each Manager or the Company for any legal or other
expenses reasonably incurred by such Manager or the Company,
respectively, in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; it being
understood and agreed that the only information furnished by any Selling
Stockholder consists of information concerning such Selling Stockholder set
forth under the caption "Principal and Selling Stockholders" and
in the first paragraph under the caption "Risk Factors -- Surrender of
Voting Control by Controlling Shareholders" in the Prospectuses; provided,
however, that the Selling Stockholders will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
18
<PAGE>
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by a Manager specifically for use therein, it being understood and
agreed that the only such information furnished by any Manager consists of
the information described as such in subsection (c) below and provided,
further, that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this subsection (b) shall not inure to the
benefit of any Manager from whom the person asserting such losses, claims,
damages or liabilities purchased the Offered Securities concerned, to the
extent that any such loss, claim, damage or liability of such Manager
results from the fact that there was not sent or given to such person, at
or prior to the written confirmation of the sale of such Offered Securities
to such person, a copy of the Prospectus, if required by the Act, if the
Company had previously furnished copies thereof to such Manager.
(c) Each Manager will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses,
claims, damages or liabilities to which the Company or such Selling
Stockholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement,
either of the Prospectuses, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by such Manager through CSFBL
specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company and each Selling Stockholder in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Manager consists of
the following information in the International Prospectus furnished on
behalf of each Manager: the last paragraph on the bottom of the cover page
concerning the terms of the offering by the Managers; the legends
concerning over-allotments, stabilizing and passive market making on the
inside front cover page; the concession and reallowance figures appearing
in the fifth paragraph under the caption "Subscription and Sale"; and the
information contained in the sixth, seventh, eighth and ninth paragraphs
under the caption "Subscription and Sale."
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under subsection (a), (b) or (c) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a),
(b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the
19
<PAGE>
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to local counsel)
for all indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the
same set of allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(e) If the indemnification provided for in this Section is unavail-
able or insufficient to hold harmless an indemnified party under subsection
(a), (b) or (c) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a), (b) or (c)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one
hand and the Managers on the other from the offering of the International
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (I) above but
also the relative fault of the Company and the Selling Stockholders on the
one hand and the Managers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on
the one hand and the Managers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the
International Securities (before deducting expenses) received by the
Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Managers. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Managers and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim
which is the subject of this subsection (e). Notwithstanding the provisions
of this subsection (e), no Manager shall be required to
20
<PAGE>
contribute any amount in excess of the amount by which the total price at
which the International Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
which such Manager has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Managers'
obligations in this subsection (e) to contribute are several in proportion
to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section shall be in addition to any liability which the Company and
the Selling Stockholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Manager
within the meaning of the Act; and the obligations of the Managers under
this Section shall be in addition to any liability which the respective
Managers may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act and to each person, if
any, who controls any Selling Stockholder within the meaning of the Act.
8. Default of Managers. If any Manager or Managers default in their
obligations to purchase International Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of International
Securities that such defaulting Manager or Managers agreed but failed to
purchase does not exceed 10% of the total number of shares of International
Securities that the Managers are obligated to purchase on such Closing Date,
CSFBL may make arrangements satisfactory to the Company and the Selling
Stockholders for the purchase of such International Securities by other persons,
including any of the Managers, but if no such arrangements are made by such
Closing Date, the non-defaulting Managers shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the
International Securities that such defaulting Managers agreed but failed to
purchase on such Closing Date. If any Manager or Managers so default and the
aggregate number of shares of International Securities with respect to which
such default or defaults occur exceeds 10% of the total number of shares of
International Securities that the Managers are obligated to purchase on such
Closing Date and arrangements satisfactory to CSFBL and the Company and the
Selling Stockholders for the purchase of such International Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Manager or the
Company or the Selling Stockholders, except as provided in Section 9 (provided
that if such default occurs with respect to International Optional Securities
after the First Closing Date, this Agreement will not terminate as to the
International Firm Securities or any International Optional Securities purchased
prior to such termination). As used in this Agreement, the term "Manager"
includes any person substituted for a Manager under this Section. Nothing herein
will relieve a defaulting Manager from liability for its default.
21
<PAGE>
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several Managers
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Manager, any Selling Stockholder, the Company or any
of their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the International
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the International Securities by the Managers is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company, the Selling Stockholders and the Managers pursuant to Section 7 shall
remain in effect, and if any International Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the
International Securities by the Managers is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in Section 6(c)(i) or clause (C), (D)
or (E) of Section 6(c)(ii), the Company and the Selling Stockholders will,
jointly and severally, reimburse the Managers for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the International Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Managers, will be mailed, delivered or telexed and confirmed to CS First
Boston Limited at One Cabot Square, London E14 4QJ England, Attention: Company
Secretary, or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at Corporate Centre, Suite 2-300, 1949 E. Sunshine,
Springfield, Missouri 65804, Attention: Stephen J. Gore, or, if sent to the
Selling Stockholders or any of them, will be mailed, delivered or telegraphed
and confirmed to Samuel A. Hamacher at 7701 Forsyth Boulevard, St. Louis,
Missouri 63105 and to Matthew G. Maloney at 2101 L Street N.W., Washington, DC
20037; provided, however, that any notice to a Manager pursuant to Section 7
will be mailed, delivered or telexed and confirmed to such Manager.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. Representation of Managers. CSFBL will act for the several Managers in
connection with this financing, and any action under this Agreement taken by
CSFBL will be binding upon all the Managers. Samuel A. Hamacher and Matthew G.
Maloney will act for the Selling Stockholders in connection with such
transactions, and any action under or in respect of this Agreement taken by
Samuel A. Hamacher or Matthew G. Maloney will be binding upon all the Selling
Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
22
<PAGE>
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
23
<PAGE>
If the foregoing is in accordance with the Managers' understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Selling Stockholders, the
Company and the several Managers in accordance with its terms.
Very truly yours,
DT INDUSTRIES, INC.
By /s/ Bruce P. Erdel
-----------------------------------------
Name Bruce P. Erdel
Title VP-Finance
THE SELLING STOCKHOLDERS NAMED IN SCHEDULE A
ATTACHED HERETO, ACTING SEVERALLY
By /s/ Matthew G. Maloney
-----------------------------------------
Attorney-in-fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
CS FIRST BOSTON LIMITED
By its duly authorized attorney-in-fact:
By /s/ Leslie K. Coote
--------------------------------------
Name Leslie K. Coote
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
J. HENRY SCHRODER & CO. LIMITED
ABN AMRO ROTHSCHILD
MORGAN GRENFELL AND CO. LIMITED
RABO SECURITIES N.V.
SOCIETE GENERALE
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Each by its duly authorized attorney-in-fact:
By /s/ Leslie K. Coote
--------------------------------------
Name Leslie K. Coote
-23-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF INTERNATIONAL INTERNATIONAL OPTIONAL
SELLING STOCKHOLDER FIRM SECURITIES TO BE SOLD SECURITIES TO BE SOLD
- ------------------- -------------------------- ----------------------
<S> <C> <C>
Peer Investors, L.P. 388,122 63,273
Peer Investors II, L.P. 67,748 11,044
Fox Family Foundation 67,000 10,050
Harbour Group II Management Co. 34,860 5,683
Harbour Group Investments II, L.P. 9,270 0
------- ------
Total 567,000 90,050
======= ======
</TABLE>
A-1
<PAGE>
SCHEDULE B
NUMBER OF
INTERNATIONAL
FIRM SECURITIES
MANAGER TO BE PURCHASED
- ----------------------------------------------------- ---------------
CS First Boston Limited ........................... 254,250
Morgan Stanley & Co. International ................ 254,250
J. Henry Schroder & Co. Limited ................... 254,250
ABN AMRO Rothschild ............................... 50,850
Morgan Grenfell and Co. Limited ................... 50,850
Rabo Securities N.V. .............................. 50,850
Societe Generale .................................. 50,850
Westdeutsche Landesbank Girozentrale .............. 50,850
-----------
Total 1,017,000
===========
A-2
<PAGE>
The following page contains a list of Exhibits which have been
intentionally omitted by the Registrant pursuant to Item 601(b)(2) of Regulation
S-K.
A copy of any omitted Exhibit will be provided to the Securities and
Exchange Commission upon request.
<PAGE>
Exhibit I - Significant Subsidiaries
Exhibit II - Pledges of Stock of Significant Subsidiaries
Harbour Group Industries, Inc.
7701 Forsyth Boulevard
Suite 600
Clayton, Missouri 63105
November 6, 1996
Attention: President
DT Industries, Inc.
Corporate Centre
1949 E. Sunshine, Suite 2-300
Springfield, MO 65804
Attention: Stephen J. Gore
President and Chief Executive Officer
Re: Corporate Development Consulting and Advisory Services
Gentlemen:
This letter sets forth the agreement among DT Industries, Inc., a
Delaware corporation (the "Company") and Harbour Group Industries, Inc., a
Missouri corporation ("HGI"), with respect to certain consulting and advisory
services to be provided by HGI to the Company from time to time, and by the
Company to HGI, for corporate development services.
HGI hereby agrees to provide to the Company from time to time
throughout the term of this agreement, corporate development services, including
the identification, evaluation and negotiation of acquisitions, strategic
planning, negotiation of dispositions of components of the Company and such
other similar services as the Company may require from time to time.
The fee for services rendered by HGI (the "Hourly Fee") will be based
on the hours actually worked for the Company and upon HGI's hourly rates for the
staff performing such work as set forth on Schedule 1 attached hereto and made a
part hereof. Such rates may be adjusted annually by written notice by HGI to the
Company, which adjustments shall take effect thirty (30) days after receipt of
such notice.
In addition to the Hourly Fee, HGI is to be reimbursed
by the Company for out-of-pocket expenses ("Expenses") incurred for
such matters as travel, printing and reproduction, outside computer
time charges, postage, secretarial overtime, delivery
<PAGE>
DT Industries, Inc.
November 6, 1996
Page 2
services, facsimiles, outside expert and consultant fees, long-distance
telephone charges, local transportation and the like. Outstanding disbursements
will be identified and billed separately or upon billing for consulting and
advisory services. HGI in its discretion may require the advance payment of
Expenses.
HGI shall be entitled to a transaction fee (the "Transaction Fee") for
each completed acquisition or disposition by the Company for which HGI performs
services hereunder during the term of this agreement, based on the total amount
paid by the acquiring party (the "Purchase Price"), including payments for
covenants not to compete and debt assumed in connection therewith, and in the
case of stock transfers, debt of the acquired company. The Transaction Fee for
each transaction completed shall be equal to the greater of (A) one hundred
twenty-five thousand dollars ($125,000) or (B) the sum of (i) two and one-half
percent (2.5%) of the first one million dollars ($1,000,000) of the Purchase
Price, (ii) two percent (2%) of the portion of the Purchase Price in excess of
one million dollars ($1,000,000) up to and including two million dollars
($2,000,000) of the Purchase Price, (iii) one and one half percent (1.5%) of the
portion of the Purchase Price in excess of two million dollars ($2,000,000) up
to and including three million dollars ($3,000,000) of the Purchase Price, (iv)
one percent (1%) of the portion of the Purchase Price in excess of three million
dollars ($3,000,000) up to and including four million dollars ($4,000,000) of
the Purchase Price, and (v) one half of one percent (0.5%) of the portion of the
Purchase Price in excess of four million dollars ($4,000,000). Each Transaction
Fee shall be payable upon the closing of the transaction to which it relates.
The sum of the Hourly Fee and Transaction Fees within any year is herein
referred to as "Fees."
In the event that the Company performs corporate development services
for HGI, the Company shall be entitled to a transaction fee (the "DTII
Transaction Fee"), for each completed acquisition or disposition by HGI or any
of its affiliates for which the Company performs such corporate development
services during the term of this agreement, based on the Purchase Price,
including payments for covenants not to compete and interest bearing debt
assumed in connection therewith, and in the case of stock transfers, debt of the
acquired company. The DTII Transaction Fee for each transaction completed shall
be equal to the greater of (A) one hundred twenty-five thousand dollars
($125,000) or (B) the sum of (i) two and one-half percent (2.5%) of
the first one million dollars ($1,000,000) of the Purchase Price, (ii)
two percent (2%) of the portion of the Purchase Price in excess of
one million dollars ($1,000,000) up to and including two million dollars
($2,000,000) of the Purchase Price, (iii) one and one-half percent
(1.5%) of the portion of the Purchase Price in excess of two million dollars
($2,000,000) up to and including one percent (1%) of the portion of the Purchase
Price in excess of three million dollars ($3,000,000) up to and
<PAGE>
DT Industries, Inc.
November 6, 1996
Page 3
including four million dollars ($4,000,000) of the Purchase Price, and (v)
one-half of one percent (0.5%) of the portion of the Purchase Price in excess of
four million dollars ($4,000,000). Each DTII Transaction Fee shall be payable
upon the closing of the transaction to which it relates.
In order to be entitled to receive a Transaction Fee or a DTII
Transaction Fee, the services performed by HGI or the Company, as appropriate,
shall consist of (at a minimum) an initial written submission, which shall
contain the name of the target (if an acquisition, or the purchaser, if a
disposition), the owner of the target, any broker arrangements, any intermediary
to be paid a fee by the target and a brief description of the target. HGI or the
Company, as appropriate, shall submit a written analysis of the acquisition,
including (A) preliminary calculations of any synergies, (B) financial
forecasts, (C) calculation of EPS effect (D) recommended valuation, and (E)
major risks of the acquisition. HGI or the Company, as appropriate, will attend
negotiating sessions and provide advice on strategy and tactics through the
signing of a letter of intent and as requested following the execution of such
letter of intent. In addition, HGI or the Company, as appropriate, shall visit
the seller (or prospective purchaser) with the buyer and provide financial
statements, product literature and/or a memorandum or other detailed description
of the business, containing such background and financial information with
respect to the target as the Company or HGI, as appropriate, shall deem
reasonably necessary or desirable to facilitate its investigation.
Prior to the completion of any transaction, the Transaction Fees or the
DTII Transaction Fees, payable by either party, may be modified by written
agreement of the parties. Unless otherwise specified therein, such modification
shall affect only the fees payable for that particular transaction and shall
have no effect on Transaction Fees or DTII Transaction Fees payable by either
party for subsequently completed transactions.
HGI and the Company each reserve the right to charge interest at the
rate of one and one-half percent (1.5%) per month from the invoice date if any
invoice is not paid within thirty (30) days.
The term of this agreement shall be one (1) year commencing on the date
hereof and shall continue thereafter from year to year until terminated by
either party upon the giving of thirty (30) days' written notice thereof to the
other.
This agreement is intended to amend and restate in its entirety that
certain letter agreement dated February 7, 1994, by and between HGI and the
Company.
<PAGE>
DT Industries, Inc.
November 6, 1996
Page 4
This agreement shall be governed by and construed in accordance with
the laws of the State of Missouri, without giving effect to its conflicts orf
laws principles.
No provision of this agreement may be modified, amended or waived
except by a writing signed by each party hereto.
IN WITNESS WHEREOF, the undersigned has caused this letter to be duly
executed and delivered by its duly authorized officer, intending to be bound by
the terms and conditions hereof.
Harbour Group Industries, Inc.
By: /s/ Francis M. Loveland
------------------------------------
Name: Francis M. Loveland
Title: Vice President and
Chief Financial Officer
Accepted and agreed to this
11 day of November, 1996:
DT Industries, Inc.
By: /s/ Stephen J. Gore
------------------------------------
Name: Stephen J. Gore
Title: President and
Chief Executive Officer
<PAGE>
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>
Schedule 1 - Hourly Rates
Harbour Group Industries, Inc.
7701 Forsyth Boulevard
Suite 600
Clayton, Missouri 63105
November 6, 1996
Attention: President
DT Industries, Inc.
Corporate Centre
1949 E. Sunshine, Suite 2-300
Springfield, MO 65804
Attention: Stephen J. Gore
President and Chief Executive Officer
Re: Operations Consulting and Advisory Services
Gentlemen:
This letter sets forth the agreement between DT Industries, Inc., a
Delaware corporation (the "Company") and Harbour Group Ltd., a Delaware
corporation ("HGL"), with respect to certain consulting and advisory services to
be provided by HGL to the Company from time to time.
HGL hereby agrees to provide the Company from time to time throughout
the term of this agreement, corporate strategy, operations consulting, review
and analysis, asset management, financial analysis, risk management, management
information services and such other similar services as the Company may require
from time to time.
The fee for services rendered by HGL (the "Fee") will be based on the
hours actually worked for the Company and upon HGL's hourly rates for the staff
performing such work as set forth on Schedule 1 attached hereto and made a part
hereof. Such rates may be adjusted annually by written notice by HGL to the
Company, which adjustments shall take effect thirty (30) days after receipt of
such notice.
In addition to the Fee, HGL is to be reimbursed by the
Company for out-of-pocket expenses ("Expenses") incurred for such matters
as travel, printing and reproduction, outside computer time charges,
postage, secretarial overtime, delivery services, facsimiles,
<PAGE>
DT Industries, Inc.
November 6, 1996
Page 2
outside expert and consultant fees, long-distance telephone charges, local
transportation and the like. Outstanding disbursements will be identified and
billed separately or upon billing for consulting and advisory services. HGL in
its discretion may require the advance payment of Expenses.
HGL reserves the right to charge interest at the rate of one and
one-half percent (1.5%) per month from the invoice date if any invoice is not
paid within thirty (30) days.
The term of this agreement shall be one (1) year commencing on the date
hereof and continue thereafter from year to year until terminated by either
party upon the giving of thirty (30) days' written notice thereof to the other.
This agreement is intended to amend and restate in its entirety that
certain letter agreement dated February 1994, by and between HGL and the
Company.
This agreement shall be governed by and construed in accordance with
the laws of the State of Missouri, without giving effect to its conflicts of
laws principles.
No provision of this agreement may be modified, amended or waived
except by a writing signed by each party hereto.
<PAGE>
DT Industries, Inc.
November 6, 1996
Page 3
IN WITNESS WHEREOF, the undersigned has caused this letter to be duly
executed and delivered by its duly authorized officer, intending to be bound by
the terms and conditions hereof.
Harbour Group Ltd.
By: /s/ Francis M. Loveland
------------------------------------
Name: Francis M. Loveland
Title: Vice President Finance
Accepted and agreed to this
11 day of November, 1996:
DT Industries, Inc.
By: /s/ Stephen J. Gore
------------------------------------
Name: Stephen J. Gore
Title: President and
Chief Executive Officer
<PAGE>
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>
Schedule 1 - Fees
DT INDUSTRIES, INC.
Common Stock
($0.01 Par Value Per Share)
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT made as of the 25th day of November, 1996, by
and among DT Industries, Inc., a Delaware corporation (the "Company"), and the
undersigned, Peer Investors L.P., a Delaware limited partnership, Peer Investors
II L.P., a Delaware limited partnership, Harbour Group II Management Co., a
Missouri corporation, Harbour Group Investments II, L.P., a Delaware limited
partnership, and the Fox Family Foundation, a Missouri trust (collectively, the
"Selling Stockholders").
WHEREAS, the Company has filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as amended
(the "Act"), a Registration Statement (as finally declared effective, the
"Registration Statement") on Form S-3 (File No. 333-14955) pursuant to which the
Company and the Selling Stockholders propose to sell to the public an aggregate
of 5,085,000 shares of the Company's Common Stock through several underwriters
led by CS First Boston Corporation, Morgan Stanley & Co. Incorporated and
Schroder Wertheim & Co. Incorporated and certain of their respective affiliates
(collectively the "Underwriters"), in connection with an offering pursuant to an
underwriting agreement (the "Underwriting Agreement") and a subscription
agreement (the "Subscription Agreement") to be entered into by the Company, the
Selling Stockholders and the Underwriters. In addition, the Company proposes to
grant the Underwriters an option to purchase up to an additional 312,500 shares
of the Company's Common Stock solely to cover over-allotments; and the Selling
Stockholders propose to grant the Underwriters an option to purchase up to an
additional 450,250 shares of the Company's Common Stock solely to cover
over-allotments.
WHEREAS, the Underwriting Agreement and the Subscription Agreement,
respectively, contain certain provisions with respect to the obligations and
liabilities between the Company and the Selling Stockholders on the one hand and
the Underwriters on the other.
WHEREAS, the Underwriters require the Selling Stockholders to agree to
indemnify the Company and the Underwriters for certain liabilities.
WHEREAS, that certain Letter Agreement dated as of March 18, 1994 (the
"Registration Rights Agreement") between the Company and certain of the Selling
Stockholders requires the Company and the Selling Stockholders to indemnify each
other for certain liabilities.
WHEREAS, the Company and the Selling Stockholders desire to set forth
the obligations and liabilities between and among each other arising out of
their respective obligations and liabilities under the Underwriting Agreement,
the Subscription Agreement and the Registration Rights Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Company agrees to indemnify and hold harmless each of the
Selling Stockholders and each person, if any, who controls each Selling
Stockholder within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several, to which any such person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the forms of prospectus first filed with the
Commission pursuant to and in accordance with Rule 424(b) under the Act or (if
no such filing is required) as contained in the Registration Statement,
including all material incorporated by reference in each such prospectus (each,
a "Prospectus" and, collectively, "Prospectuses"), or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; and the Company will reimburse each Selling Stockholder and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Selling Stockholder or any controlling person thereof
specifically for use therein it being understood and agreed that the only such
information is that described as such in Section 2 hereof; and provided further
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this Section 1 shall not inure to the benefit of any
entity or firm or any controlling person thereof from whom the person asserting
such losses, claims, damages or liabilities purchased the shares of Common Stock
concerned, to the extent that any such loss, claim, damage or liability of such
entity, firm or controlling person results from the fact that there was not sent
or given to such person, at or prior to the written confirmation of the sale of
such shares of Common Stock to such person, a copy of the Prospectus, if
required by the Act.
2. Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Act against any losses, claims,
damages or liabilities, joint or several, to which any such person may become
subject, under the Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by the Selling Stockholder specifically for use therein it being
2
<PAGE>
understood and agreed that the only information furnished by any Selling
Stockholder consists of information concerning such Selling Stockholder set
forth under the caption "Principal and Selling Stockholders" and in the first
paragraph under the caption "Risk Factors -- Surrender of Voting Control by
Controlling Stockholders" in the Prospectuses; and the Selling Stockholder will
reimburse any legal and other expenses reasonably incurred by the Company, any
such director, officer or controlling person thereof in connection with
investigating or defending any such loss, claim, damage or liability or action
as such expenses are incurred; provided, however, that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this Section 2
shall not inure to the benefit of any entity, firm or control persons thereof
from whom the person asserting such losses, claims, damages or liabilities
purchased the shares of Common Stock concerned, to the extent that any such
loss, claim, damage or liability of such entity, firm or control persons results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such shares of Common Stock to such
person, a copy of the Prospectus, if required by the Act.
3. Promptly after receipt by an indemnified party under this
Agreement of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Agreement, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
liability which it may have to any indemnified party pursuant to Sections 1 or 2
of this Agreement, except to the extent that it was unaware of such action and
has been materially prejudiced by such failure, or from any liability which it
may have to any indemnified party otherwise than pursuant to Sections 1 and 2 of
this Agreement. In case any such action is brought against any indemnified party
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to the extent
the indemnifying party desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. In no event shall the
indemnifying party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) for all such indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same set of allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnify could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
4. If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under Sections
1 or 2 above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in Section 1 or 2 above (i) in such proportion as is
3
<PAGE>
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other from the offering of the
Common Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the indemnifying party and the indemnified party. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by any
party as a result of the losses, claims, damages, or liabilities referred to in
the first sentence of this Section shall be deemed to include any legal or other
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim which is the subject of this Section. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
5. The obligations of the Company and the Selling Stockholders
under this Agreement shall be in addition to any liability which the Company and
the Selling Stockholders may otherwise have.
6. In the event the Company and the Selling Stockholders shall be
liable to reimburse the Underwriters for out-of-pocket expenses incurred by the
Underwriters as a consequence of the refusal, failure or inability by the
Company or any Selling Stockholder to perform any undertaking or obligation
required to be performed by the Underwriting Agreement or the Subscription
Agreement, the Company and each of the Selling Stockholder agree that the person
who fails to perform its respective obligations shall be liable to the parties
who have not defaulted in their obligations under the Underwriting Agreement or
the Subscription Agreement for all amounts required to be paid by the Company
and the Selling Stockholders pursuant to the Underwriting Agreement or the
Subscription Agreement.
7. Any notice, claim or demand hereunder shall be made in writing
and shall be sufficient if given as provided in the Underwriting Agreement.
8. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
9. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to such jurisdiction's
conflicts of laws principles.
4
<PAGE>
10. Samuel A. Hamacher and Matthew G. Maloney shall act for the
Selling Stockholders in connection with this Agreement and the transactions
contemplated hereby and by the Underwriting Agreement and the Subscription
Agreement, and any action taken by either of them under or in respect of this
Agreement will be binding upon all of the Selling Stockholders.
11. This Agreement may be executed by one or more parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all of which shall be deemed to be one and the same instrument.
12. Except as otherwise specifically defined herein, all capitalized
terms used in this Agreement shall have the meanings assigned such terms in the
Underwriting Agreement.
IN WITNESS WHEREOF, the parties below have caused the foregoing to be
executed on their behalf this 25th day of November, 1996.
DT INDUSTRIES, INC.
By: /s/ Bruce P. Erdel
-----------------------------------------
Name: Bruce P. Erdel
Title: VP-Finance
THE SELLING STOCKHOLDERS NAMED IN
THE FIRST PARAGRAPH HEREOF, ACTING
SEVERALLY
By: /s/ Matthew G. Maloney
-----------------------------------------
Attorney-in-fact
5
DT INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 29, December 24, December 29, December 24,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income before extraordinary loss $ 6,038 $ 3,072 $ 10,911 $ 5,298
Extraordinary loss 324
------------ ------------ ------------ ------------
Net income $ 6,038 3,072 10,587 5,298
============ ============ ============ ============
Primary:
Weighted average number of
shares outstanding 9,829 9,000 9,417 9,000
Add dilutive effect of stock
options based on treasury
stock method using average
market price 537 8 467 6
Add shares contingently issuable
to the former owner of Kalish
assuming maintenance of
current earnings 112 112
------------ ------------ ------------ ------------
Primary weighted average
shares outstanding 10,478 9,008 9,996 9,006
============ ============ ============ ============
Primary earnings per share
before extraordinary loss $ 0.58 $ 0.34a $ 1.09 $ 0.59a
Extraordinary loss 0.03
------------ ------------ ------------ ------------
Primary net income per share $ 0.58 0.34a 1.06 0.59a
============ ============ ============ ============
Fully Diluted:
Weighted average number of
shares outstanding 9,829 9,000 9,417 9,000
Add dilutive effect of stock
options based on treasury
stock method using average
market price or end of
period, whichever is greater 537 8 516 8
Add shares contingently issuable
to the former owner of Kalish
assuming maximum future
earnings 116 222 116 222
------------ ------------ ------------ ------------
10,482 9,230 10,049 9,230
============ ============ ============ ============
Fully diluted earnings per share
before extraordinary loss $ 0.58a $ 0.33a $ 1.08a $ 0.57a
Extraordinary loss 0.03a
------------ ------------ ------------ ------------
Fully diluted net income per
share $ 0.58a $ 0.33a $ 1.05a $ 0.57a
============ ============ ============ ============
a The effect of common stock equivalents and/or other dilutive securities was
not material in this period; therefore, presentation on the income statement
was not considered necessary.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information (in thousands except per
share data) extracted from the Consolidated Balance Sheet as of December 29,
1996 and the Consolidated Statement of Operations for the Six Months Ended
December 29, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-29-1997
<PERIOD-END> DEC-29-1996
<EXCHANGE-RATE> 1
<CASH> 359
<SECURITIES> 0
<RECEIVABLES> 44,399
<ALLOWANCES> 1,399
<INVENTORY> 42,987
<CURRENT-ASSETS> 161,143
<PP&E> 60,664
<DEPRECIATION> 12,486
<TOTAL-ASSETS> 384,019
<CURRENT-LIABILITIES> 88,974
<BONDS> 114,437
0
0
<COMMON> 113
<OTHER-SE> 171,665
<TOTAL-LIABILITY-AND-EQUITY> 171,778
<SALES> 183,328
<TOTAL-REVENUES> 183,328
<CGS> 132,893
<TOTAL-COSTS> 132,893
<OTHER-EXPENSES> 25,283
<LOSS-PROVISION> 67
<INTEREST-EXPENSE> 6,287
<INCOME-PRETAX> 18,798
<INCOME-TAX> 7,887
<INCOME-CONTINUING> 10,911
<DISCONTINUED> 0
<EXTRAORDINARY> 324
<CHANGES> 0
<NET-INCOME> 10,587
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
