As filed with the Securities and Exchange Commission on October 14, 1998
Registration No. 333-46027
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
C2, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1915787
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
700 North Water Street, Suite 1200
Milwaukee, Wisconsin
(414) 291-9000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------------
William T. Donovan
Chairman
C2, Inc.
700 North Water Street, Suite 1200
Milwaukee, Wisconsin 53202
(414) 291-9000
Facsimile (414) 291-9061
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies to:
Marc J. Marotta, Esq.
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 297-5658
Facsimile: (414) 297-4998
----------------------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
----------------------------
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |_|
----------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Amount of
Title of Each Class of Securities Amount To Be Proposed Maximum Offering Proposed Maximum Registration
To Be Registered Registered Price Per Unit Aggregate Offering Price(1) Fee(1)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value............ 5,202,664 $4.00 $20,810,656 $6,139.14
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Rights to Purchase Common Stock -- -- -- --
====================================================================================================================================
(1) Estimated in accordance with Rule 457(o) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee pursuant to Section 6(b)
thereunder.
</TABLE>
----------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion
November __, 1998
5,202,664 SHARES OF COMMON STOCK
$4.00 PER SHARE
Prior to the Offering, a wholly-owned subsidiary of Weatherford
International, Inc. will merge with and into Christiana Companies, Inc. and we
will purchase two-thirds of the issued and outstanding ownership interests of
Total Logistic Control, LLC, a wholly-owned subsidiary of Christiana. Christiana
Shareholders will have a Right to subscribe for their pro rata share of Common
Stock offered by this Prospectus. Each Right entitles each Christiana
Shareholder to purchase one share of Common Stock for each share of Christiana
Common Stock held immediately prior to the effective time of the Merger. In
addition, Total Logistic Control management, Christiana Shareholders and the
general public, in that order of allocation preference, may purchase any shares
of Common Stock remaining after Christiana Shareholders decide whether or not to
exercise their Rights.
On August 17, 1998, the Merger was approved by the shareholders of both
Christiana and Weatherford. The Merger was not completed because the Merger did
not qualify as a "tax-free" reorganization under the Internal Revenue Code of
1986. On October 14, 1998, the parties to the Merger revised the terms of the
Merger and will submit a revised Joint Proxy Statement/Prospectus of Christiana
and Weatherford to the shareholders of Christiana and Weatherford for their
approval at separate special meetings on ____________, 1998. If you subscribed
for Common Stock pursuant to the C2 Prospectus, dated July 13, 1998, you may
reconfirm or cancel your prior subscription and/or subscribe again for Common
Stock in the manner described herein and via a Letter of Transmittal provided
with the Joint Proxy Statement/Prospectus. This Prospectus supersedes the prior
C2 Prospectus in all respects and potential investors should rely strictly on
this Prospectus in making a determination of whether or not to purchase Common
Stock.
--------------
Consider carefully the risk factors beginning on page 12 in this Prospectus.
--------------
The Offering Per Share Total
Public Price $ 4.00 $20,810,656
Estimated Expenses $ 0.05 275,000
Proceeds to C2, Inc. $ 3.95 $20,535,656
Proposed Trading Symbol: Nasdaq SmallCap Market - CTOO.
Prior to the Offering, there has not been a public market for the
Common Stock.
The Offering is contingent upon the closing of the Merger. In the event
the closing of the Merger does not occur, or the Merger Agreement is terminated,
this Offering will immediately cease and any payment for shares of Common Stock
hereunder will promptly be refunded, without interest.
Sheldon B. Lubar, David J. Lubar and certain members of the Lubar
family have committed to purchase a minimum of 2,734,250 shares of Common Stock
to ensure that the net proceeds of the Offering to the Company will be at least
$10,666,667. This will allow the Company to have sufficient funds to acquire
two-thirds of the ownership interest of Total Logistic Control. Members of the
Lubar Family may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder. If these members of the Lubar Family are deemed to be underwriters,
they will not be able to resell their shares of Common Stock, except pursuant to
a registration statement declared effective under the Securities Act or under an
applicable exemption from registration under the Securities Act.
Neither the Securities and Exchange Commission nor any state securities
commission approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is November __, 1998.
<PAGE>
The Total Logistic Control Network
[MAP WITH DISTRIBUTION CENTERS IDENTIFIED]
o Refrigerated Distribution Center
- Dry Distribution Center
Total Logistic Control operates through an extensive
network of refrigerated distribution centers and dry
(non-refrigerated) distribution centers. Total Logistic
Control uses this network to provide its warehousing and
logistic services to its customers.
-------------------------
We intend to furnish our shareholders with annual reports
containing consolidated financial statements audited by its independent auditors
and with quarterly reports containing unaudited interim consolidated financial
information for each of the first three quarters of each year.
-2-
<PAGE>
CERTAIN DEFINED TERMS USED IN THIS PROSPECTUS
In this Prospectus:
o We refer to C2, Inc., a Wisconsin corporation, as "C2" or the Company.
o We refer to Christiana Companies, Inc., a Wisconsin corporation, as
"Christiana".
o We refer to Total Logistic Control, LLC, a Delaware limited liability
company, as "TLC".
o We refer to Weatherford International, Inc., a Delaware corporation,
as "Weatherford". Weatherford was previously known as EVI Weatherford,
Inc.
o We refer to Christiana Acquisition Co., a Wisconsin corporation and
wholly owned subsidiary of Weatherford, as "Sub".
o We refer to the merger of Sub into Christiana as the "Merger".
o We refer to the time that the Articles of Merger are filed with the
Department of Financial Institutions of the State of Wisconsin (or a
later time specified therein) as the "Effective Time".
o We refer to the sale by Christiana to C2 of a two-thirds interest in
TLC as the "Acquisition".
o We refer to Sheldon Lubar, Chairman of the Board of Directors of
Christiana, and the members of his immediate family as the "Lubar
Family".
o We refer to the agreement between Weatherford, Christiana, C2 and Sub
concerning the Merger as the "Merger Agreement".
o We refer to the Amendment to the Merger Agreement dated October 14,
1998 as "Amendment No. 2".
o We refer to the agreement governing the future operations of TLC as
the "Operating Agreement".
o We refer to the agreement under which C2 will acquire its interest in
Logistic as the "Purchase Agreement".
o We refer to the special meeting of Christiana shareholders scheduled
for ____________, 1998 as the "Christiana Special Meeting".
o We refer to the Christiana Special Meeting of August 17, 1998 as the
"Prior Special Meeting".
-3-
<PAGE>
o We refer to common stock, par value $0.01 per share, of C2 as "Common
Stock".
o We refer to common stock, par value $1.00 per share, of Christiana as
"Christiana Common Stock".
o We refer to common stock, par value $1.00 per share, of Weatherford as
"Weatherford Common Stock".
o We refer to that fraction of a share of Weatherford Common Stock to be
issued in exchange for each share of Christiana Common Stock in the
Merger as the "Weatherford Share Consideration."
o We refer to the amount of cash to be paid in respect of each share of
Christiana Common Stock as the "Cash Consideration".
o We refer to the obligations and liabilities to be assumed by C2 and
Logistic pursuant to the Purchase Agreement as the "Assumed
Liabilities".
o We refer to the purchases of Weatherford Common Stock required to be
made by Christiana following the Christiana Special Meeting, if
necessary to qualify the Merger as a tax free reorganization, as the
"Additional Open Market Purchases".
o We refer to the Merger and related transactions as the "Transaction".
o We refer to the agreement whereby the Lubar Family agreed to purchase
enough shares of common stock of C2 as are necessary to raise the
$10.67 million needed to effect C2's purchase of a two-thirds interest
in Logistic as the "Lubar Commitment".
-4-
<PAGE>
PROSPECTUS SUMMARY
Simultaneous with the closing of the Offering, we will consummate the
acquisition of two-thirds of the issued and outstanding ownership interests in
Total Logistic Control. The following summary is qualified in its entirety by
the more detailed information, and the consolidated financial statements of C2
and Total Logistic Control and notes thereto, appearing elsewhere in this
Prospectus.
The Company
C2 was formed on December 11, 1997. We operate through Total Logistic
Control, our only non-cash asset. Total Logistic Control provides refrigerated
and dry (non-refrigerated) third-party logistic services including warehousing,
transportation, distribution and international freight forwarding. The
third-party logistics industry is comprised generally of asset-based entities
that provide services through their warehousing and fleet operations and
non-asset based entities that provide strategic solutions to, and arrange for,
the distribution and warehousing needs of their customers. We believe that Total
Logistic Control's ability to offer customers "one-stop shopping" through its
complement of services, which include both asset and non-asset based solutions,
provides it with a competitive advantage. Total Logistic Control's integrated
logistic services generally combine transportation, warehousing and information
services to manage the distribution channel for a customer's products from the
point of manufacturing to the point of consumption. This combination allows us
to capitalize on the growing trend of corporations toward reducing costs by
outsourcing large components of their logistics function.
Total Logistic Control's operations are conducted through a network of
12 distribution warehouses, comprised of an aggregate of 34 million cubic feet
of refrigerated and frozen storage capacity in seven locations and five dry
distribution centers, primarily in the upper Midwest. Total Logistic Control
provides transportation and logistic services utilizing owned equipment as well
as through carrier management services utilizing third party common and contract
carriers.
Total Logistic Control's refrigerated warehousing operations include:
temperature sensitive storage services, freezing services, vegetable processing
and packaging services. Its transportation and distribution services include:
full service truckload, less-than-truckload and pooled consolidation in both
temperature controlled and dry (non-temperature controlled) freight equipment,
dedicated fleet services and other specialized services. Total Logistic Control
also provides: a full range of international freight management services, fully
computerized inventory management, assembly, repackaging and just-in-time
production supply services.
We believe Total Logistic Control is the nation's seventh largest
provider of public refrigerated warehouse space. Two of its refrigerated
distribution centers are located in Rochelle, Illinois; and two are located in
Kalamazoo, Michigan. Total Logistic Control's other refrigerated distribution
centers are located in Milwaukee, Wisconsin; Beaver Dam, Wisconsin (located
approximately 60 miles northwest of Milwaukee); Wauwatosa, Wisconsin (a suburb
of Milwaukee); and Holland, Michigan (located approximately 20 miles southwest
of Grand Rapids). Two of Total Logistic Control's dry distribution centers are
located in Zeeland, Michigan and the others are located in Kalamazoo, Michigan;
Munster, Indiana; and South Brunswick, New Jersey. Total Logistic Control's
customers consist primarily of national, regional and local firms engaged in
food processing, consumer product manufacturing, wholesale distribution and
retailing.
-5-
<PAGE>
The following summarizes certain financial data regarding Total
Logistic Control (amounts in thousands):
Year Ended June 30,
1998 1997 1996
-------- -------- --------
Revenues $ 90,179 $ 84,208 $ 76,976
Income from operations 6,974 6,311 5,689
Net income 3,741 12,181(3) 1,536(2)
EBITDA(1) 13,571 13,143 12,552
Cash flows from operating
activities 12,305 9,294 11,043
Cash flows from investing
activities (1,653) (1,822) (16,262)
Cash flows from financing
activities (10,335) (7,277) 4,883
- ---------------
(1) EBITDA is defined as income (loss) before taxes plus fixed charges.
Fixed charges consist of interest expense, depreciation and
amortization, and gains or losses on the disposal of assets. EBITDA is
not a measure of financial performance under generally accepted
accounting principles and should not be considered as an alternative to
net income as a measure of performance nor as an alternative to cash
flow as a measure of liquidity. Since all companies do not calculate
EBITDA uniformly, it may not be an accurate measure of comparison.
(2) Net income for the year ended June 30, 1996 reflects the impact of an
income tax provision as Total Logistic Control was a C-Corporation
during this period. For comparative purposes, net income for the year
ended June 30, 1996 would have been $2,611 absent a provision for
income taxes of $1,075.
(3) Includes $11,171 of income related to an adjustment of deferred income
taxes resulting from a change in Total Logistic Control's tax status
from a C-Corporation to a limited liability company.
Total Logistic Control was formed on June 30, 1997 as a result of the
combination of Wiscold, Inc. ("Wiscold") and Total Logistic Control, Inc.
("Total Logistic Inc.") (two former wholly-owned subsidiaries of Christiana)
into Total Logistic Control. Christiana acquired Wiscold in September of 1992
and Total Logistic Inc. in January of 1994.
C2 is a Wisconsin corporation with its executive offices located at 700
North Water Street, Suite 1200, Milwaukee, Wisconsin 53202, and its telephone
number is (414) 291-9000. Total Logistic Control is a Delaware limited liability
company with is principal executive offices located at 8300 Logistic Drive,
Zeeland, Michigan 49464, and its telephone number is (616) 748-0701.
-6-
<PAGE>
The Merger and the Acquisition
The Merger will result in Christiana becoming a wholly-owned subsidiary
of Weatherford. The terms and conditions of the Merger are set forth in an
Agreement and Plan of Merger, dated December 12, 1997, as amended, by and among
Christiana, Weatherford, a wholly-owned subsidiary of Weatherford and C2. On
August 17, 1998, at a special meeting of Christiana Shareholders, 89% of all
Christiana Shareholders, and 98% of Christiana Shareholders voting in person or
by proxy, approved the Merger. The Merger was not completed because a decrease
in the price of Weatherford Common Stock from $46 3/8 on December 12, 1997 (the
last trading date prior to a public announcement of the Merger) to below $30
prevented the Merger from being treated as a "tax-free" reorganization under the
Internal Revenue Code of 1986, as amended (the "Code"). For the Merger to
qualify as a "tax-free" reorganization under the Code, at least 80% of the total
consideration received by Christiana Shareholders must be in the form of
Weatherford Common Stock. Pursuant to the Merger Agreement, prior to amendment,
each outstanding share of Christiana Common Stock was to be converted into a
right to receive:
o The number of shares of Weatherford Common Stock held by
Christiana immediately prior to the Merger divided by the number of
shares of Christiana Common Stock issued and outstanding immediately
prior to the Merger. At the time of the First Special Meeting, this
resulted in total Weatherford Share Consideration of 3,897,462 shares
of Weatherford Common Stock (approximately 0.74913 shares of
Weatherford Common Stock for each share of Christiana Common Stock);
o Cash in an amount equal to the cash of Christiana as of the
effective time of the Merger less the sum of (i) Christiana's accrued
taxes (without giving effect to the value of certain tax deductions to
be retained by Christiana) and other liabilities as of such time that
are not assumed by C2 and (ii) $10.0 million (approximately $4.00 for
each share of Christiana Common Stock) (the "Cash Consideration"); and
o A contingent cash payment of up to $10.0 million payable
five years after the effective date of the Merger (approximately $1.92
for each share of Christiana Common Stock) (the "Contingent Cash
Consideration"). This $10.0 million is the amount of Christiana cash
excluded from the calculation of Cash Consideration above and, under
the Merger Agreement, was required to be maintained to satisfy claims
against Christiana and various indemnity obligations.
Based on the above, the Weatherford Common Stock had to be trading at
or above $30 per share on the last trading date prior to the closing of the
Merger to constitute at least 80% of the total consideration received in the
Merger. The Merger Agreement was amended and restated on October 14, 1998
("Amendment No. 2") to:
o Eliminate the requirement that Christiana hold $10.0 million
of cash for five years to satisfy certain contingent liabilities and
indemnification obligations, which eliminates the Contingent Cash
Consideration;
o Require Christiana to use the $10.0 million to purchase
Weatherford Common Stock in the open market prior to the Special
Meetings;
o Require Christiana to purchase up to an additional $5.0
million of Weatherford Common Stock in the open market if necessary to
qualify the Merger as a "tax-free" reorganization under the Code; and
o Extend the date on which either party may terminate the
Merger Agreement (if the Merger is not then consummated) to January 31,
1999.
Christiana purchased __________ shares of Weatherford Common Stock for a total
price of $10.0 million. These purchases increase the amount of Weatherford
Common Stock owned by Christiana to __________. It also increases the amount of
Weatherford Common Stock to be received by Christiana Shareholders in the
Merger.
Before the Effective Time, Christiana will sell two-thirds of its
interest in C2
-7-
<PAGE>
for approximately $10.7 million. The purchase price of $10.7 million must be
paid no later than thirty (30) days after the Effective Time (the "Payment
Date"). The Acquisition will be effected pursuant to the terms of an Agreement,
dated December 12, 1997, by and among C2, TLC, Christiana and Weatherford which
is attached as Annex A.
The Merger Agreement requires TLC to pay Christiana (i) a distribution
in the amount of $20 million (the "TLC Dividend") and (ii) the entire principal
amount of $3,000,000 advanced to Wiscold pursuant to a note dated September 1,
1992 (the "Wiscold Note"), together with all accrued interest thereon. TLC will
use its revolving credit facility, which has a maximum limit of up to
$65,000,000, to pay the TLC Dividend, to repay the Wiscold Note and to refinance
existing bank debt of approximately $30,000,000. Under the Purchase Agreement,
the Company must assume, pay and discharge when due all liabilities known or
unknown, fixed or contingent (including all expenses related to the Merger) to
which Weatherford, Christiana or Christiana Affiliates may become liable in any
way as a result of the business, operations or assets of Christiana or any
Christiana Affiliate (including TLC) on or prior to the Effective Time.
The Assumed Liabilities include Liabilities resulting from, arising out of
or relating to:
o any Christiana Affiliate,
o the business, operations or assets of Christiana or
Christiana Affiliate on or prior to the Effective Time,
o any taxes to which Christiana or any Christiana Affiliate
may be obligated for periods ending on or before the Effective Time
(except for Christiana taxes expressly retained by Christiana pursuant
to the Merger Agreement),
o any obligation, matter, fact, circumstance or action or
omission by any person relating to or arising from the business,
operations or assets of Christiana or a Christiana Affiliate existing
on or prior to the Effective Time,
o any product or service provided by Christiana or any
Christiana Affiliate prior to the Effective Time,
o the Merger, the Acquisition or any transaction contemplated
thereby,
o previously conducted operations of Christiana or any
Christiana Affiliate and
o C2's ownership interest in TLC.
In addition, TLC agreed to assume, pay and discharge when due the Assumed
Liabilities relating to any historical business operations or assets of TLC.
The Purchase Agreement provides that C2 and TLC, jointly and severally,
will indemnify Christiana and any Christiana Affiliates from and against any and
all the Liabilities that are based upon, arise out of, or relate to:
o any breach of the Purchase Agreement by the Company or TLC;
o any acts or omissions of Christiana and any Christiana
Affiliates on or before the Effective Time;
o the Assumed Liabilities;
o any taxes resulting from the transactions contemplated by
the Purchase Agreement other than any tax Liability for income of
Weatherford attributable to Christiana under the equity method of
accounting either before or after the Effective Time;
-8-
<PAGE>
o any taxes that result from the Merger subsequently being
determined to be taxable;
o any environmental Liabilities arising out of conditions
existing on, at or underlying any properties currently or previously
owned or operated by Christiana or any Christiana Affiliates; and
o certain other Liabilities.
As soon as possible after the Effective Time, but no later than the Payment
Date, the parties to the Merger Agreement will determine the Cash Consideration.
On the Payment Date, Weatherford will pay the Cash Consideration due ech
Christiana Shareholder to Firstar Trust Company (the "Subscription Agent")
(which will also act as escrow agent in the Merger), and the Subscription Agent
will promptly distribute such cash according to the election made by the
Christiana Shareholder pursuant to the Letter of Transmittal, provided as part
of the Joint Proxy Statement (the "Letter of Transmittal").
Set forth below is a timeline of key events relating to the Offering, the
Merger and the Acquisition.
Timeline of Key Events
Key Event Proposed Date
o First Special Meeting of Shareholders of Weatherford and
Christiana Amendment No. 2 to the Merger Agreement. August 17, 1998
o Amendment No. 2 to Merger Agreement October 14, 1998
o Special Meeting of Shareholders of Weatherford and
Christiana to Vote on Merger. December __, 1998
o Christiana to make Additional Open Market Purchases,
if necessary _________, 1998
(following Special
Meetings)
o Expiration Date for submission of Letter of Transmittal
and/or Subscription Agreement (for non-Christiana
Shareholders) to purchase Company Common Stock. _________, 1998
o Complete Acquisition with obligation to pay purchase
price no later than thirty(30) days thereafter. _________, 1998
o Complete Merger with distribution of Cash Consideration
to be made no later than thirty (30) days thereafter,
except to the extent applied to purchase Company Common
Stock pursuant to Letter of Transmittal. _________, 1998
o Distribution of Cash Consideration and/or application of
Cash Consideration to purchase Company Common Stock, based
on election made in Letter of Transmittal. _________, 1998
o Purchase of at least 2,734,250 shares of Company Common
Stock by Lubar Family. _________, 1998
o Payment of Purchase Price for Acquisition. _________, 1998
o Issuance of Company Common Stock to Subscribers. _________, 1998
-9-
<PAGE>
The following diagram sets forth the organizational structure
and stock ownership of the Company, TLC, Christiana and Weatherford following
the Merger and the Acquisition.
[BEFORE AND AFTER DIAGRAM]
-10-
<PAGE>
The Offering
Common Stock offered hereby.................5,202,664 shares
Minimum Number of Shares of Common Stock
to be Outstanding after the Offering......2,734,250 shares (1)
Maximum Number of Shares of Common Stock
to be Outstanding after the Offering......5,202,689 shares
Subscription Price..........................$4.00 per share of Common Stock.
The Subscription Price was
determined by the Company's Board of
Directors which considered the
following (1) the desire to have a
subscription price close to the Cash
Consideration per share to be
received in the Merger; (2) meeting
the minimum initial bid price of
$4.00 per share for the Common Stock
to qualify for listing on the Nasdaq
SmallCap Market; (3) the fairness of
the price to be paid by the Company
for its two-thirds interest in TLC;
and (4) the potential usefulness of
the excess funds to be generated
from the Offering. No independent
valuation of the Company was done.
Subscription Agent..........................Firstar Trust Company, Milwaukee,
Wisconsin.
Rights......................................Each Right consists of the Basic
Subscription Privilege and the
Additional Subscription Privilege.
Basic Subscription Privilege................The Basic Subscription Privilege
grants each Christiana Shareholder a
nontransferable right to purchase
one share of Common Stock for every
one share of Christiana Common Stock
held immediately prior to the
Effective Time.
Additional Subscription Privilege...........If the entire Basic Subscription
Privilege is not exercised in full,
TLC management, Christiana
Shareholders who exercise their
Basic Subscription Privilege in full
and the general public, in that
order of allocation preference, will
have an Additional Subscription
Privilege to purchase any remaining
shares of Common Stock (subject to
proration as described below).
- ------------------------
(1) Represents the Lubar Commitment. The minimum percentage of ownership of
outstanding Common Stock following the Offering by the Lubar Family will be
53% and the maximum percentage of ownership by the Lubar Family following
the Offering (assuming no other Christiana Shareholders exercise their
Basic Subscription Privilege and that TLC management and the general public
do not purchase shares of Common Stock in the Offering) is 100%
-11-
<PAGE>
Subscription Procedure for
Christiana Shareholders............ The Basic Subscription Privilege may be
exercised by delivery of a properly
completed Letter of Transmittal, even if it
was completed and delivered in connection
with the First Special Meeting. Christiana
Shareholders wishing to exercise their Basic
Subscription Privilege will automatically,
upon completion and delivery of the Letter
of Transmittal, have the exercise price paid
directly by the Subscription Agent. If the
Cash Consideration per share is less than
$4.00 per share, the exercise of the Basic
Subscription Privilege in full may require
an additional cash payment. Christiana
Shareholders wishing to exercise their
Additional Subscription Privilege may do so
pursuant to the Letter of Transmittal.
Payment for shares purchased pursuant to the
Additional Subscription Privilege must be
made in the form of an additional cash
payment by the subscriber. The Letter of
Transmittal must be delivered to the
Subscription Agent on or before the
Expiration Date.
Subscription Procedure for Others...Non-Christiana Shareholders may exercise
their Additional Subscription Privilege by
executing the Subscription Agreement
provided herewith, providing full payment
for all shares of Common Stock subscribed
for pursuant to the Additional Subscription
Privilege and delivering the Subscription
Agreement to the Subscription Agent on or
before the Expiration Date.
Proration...........................If a proration of shares of Common Stock to
persons exercising the Additional
Subscription Privilege occurs, the
Subscription Agent will promptly refund,
without interest, the amount of any
overpayment.
Expiration Date.....................____________, 1998 at 5:00 p.m., Central
Standard Time.
Proceeds of the Offering............If fully subscribed, the Offering will
result in proceeds to the Company, net of
estimated Offering expenses, of $20,535,656.
Further Information.................Any questions or requests for assistance
concerning the method of subscribing for
Common Stock or requests for additional
copies of this Prospectus can be directed to
William T. Donovan (414) 291-9000..
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<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the following factors,
together with other information in this Prospectus, in evaluating an investment
in the shares of Common Stock. This Prospectus contains certain forward-looking
statements,including statements containing the words "believes," "anticipates,"
"expects" and words of similar import. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: adverse changes in national or local economic
conditions; increased competition in the transportation, warehousing and
logistics business; ability of the Company to service its debt; changes in
availability, cost and terms of financing; oversupply of warehousing space;
changes in operating expenses; indemnification obligations under the Merger
Agreement and the Purchase Agreement; and other factors referenced in this
Prospectus. Given these uncertainties, prospective investors are cautioned not
to place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce the
results of any revision to any of the forward-looking statements contained in
this Prospectus to reflect future events or developments.
Dependence on Single Line of Business and Significant Customers
The Company intends to acquire other companies that may be within TLC's
general industry. Currently, the Company's ownership interest in TLC represents
its only non-cash asset.
TLC's business could be adversely affected if warehousing and logistic
services cease to be a preferred method of outsourcing or if new technological
methods of food preservation become available and widely utilized. A number of
TLC's facilities depend on a small number of customers or commodities. During
fiscal 1998, 10 of TLC's customers accounted for 43% of TLC's total revenues. A
reduction in the business received by such customers will result in a decrease
in the sales at such facilities and, possibly, in the overall net sales of TLC.
Moreover, increasing consolidation among TLC's customers and the resulting
ability of such customers to utilize their size to negotiate lower outsourcing
costs has and may continue in the future, to have a depressing effect on the
pricing of third-party logistic services. See "Business-General; Services, Sales
and Customers."
Competition
Local, regional and national companies provide significant competition
to TLC in each of its business segments. These companies may seek to expand
their presence into local markets in which TLC competes. Some of these companies
have substantially greater financial and other resources than TLC. Competition
varies by local market and there are low barriers to entry. If there is excess
warehousing capacity in the market, it may have a depressing effect on the
pricing of warehousing services which, in fiscal 1998, accounted for
approximately 58% of our business.
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<PAGE>
Substantial Leverage; Ratio of Earnings to Fixed Charges
The Merger Agreement requires TLC to pay the TLC Dividend and the
Wiscold Note, together with all accrued interest thereon, prior to the Effective
Time. TLC will borrow $23 million under its revolving credit facility to finance
these obligations. Following this, TLC will have approximately $12 million of
available borrowing capacity under its revolving credit facility. TLC and C2, on
a pro forma basis, will be highly leveraged. Assuming a fully subscribed
Offering, C2's pro forma total funded debt to total capitalization including
minority interest at June 30, 1998 was 63%. See "Capitalization" and "Pro Forma
Summary Combined Balance Sheet." In addition, TLC may, subject to certain
restrictions in its debt agreements, incur further indebtedness from time to
time to finance expansion.
Due to TLC's substantial indebtedness, a significant portion of its
cash flow from operations will be required for debt service. On a pro forma
basis, for the fiscal year ended June 30, 1998, this results in the Company's
ratio of earnings to fixed charges being approximately 1.13 to 1.0, principally
as a result of significant interest charges on the debt to be incurred in
connection with the financing of the TLC Dividend.
The extent to which TLC is leveraged could have consequences to the
holders of Common Stock, including:
o impairment of TLC's ability to obtain additional financing
in the future for working capital, capital expenditures, acquisitions
or other purposes;
o dedication of a substantial portion of TLC's cash flow from
operations to the payment of debt service requirements (principal and
interest) on its indebtedness;
o vulnerability of TLC to changes in general economic
conditions; and
o limitations on TLC's ability to capitalize on significant
business opportunities and to respond to competition.
Assumed Liabilities and Indemnification Obligations of C2 and TLC
Under the Purchase Agreement, C2 will assume, pay and discharge when
due the Assumed Liabilities. In addition, TLC has agreed to assume, pay and
discharge when due the Assumed Liabilities to the extent such Assumed
Liabilities relate to any of the TLC Historic Business.
The Purchase Agreement also provides that C2 and TLC, jointly and
severally, will indemnify Weatherford, Christiana and their affiliates (the
"Weatherford Indemnified Parties") from and against any and all Liabilities to
which any Weatherford Indemnified
-15-
<PAGE>
Party becomes subject that are based upon, arise out of, or relate to certain
activities. See "The Purchase Agreement - Indemnification Obligations."
Prior to Amendment No. 2, Christiana was to hold $10.0 million
following the Merger to pay for any such Liability or claim (the "Holdback
Amount"). With the elimination of the Holdback Amount, C2 will not have the
protection of this Holdback Amount and will be primarily responsible to
indemnify Weatherford for Liabilities or claims relating to a matter other than
the TLC Historic Business.
If TLC is obligated to pay any amounts relating to an Assumed Liability
or an indemnification claim, Christiana will be entitled to receive a cash
payment from C2 equal to one-third of any such amount paid when and if (i) TLC
or all or substantially all of its assets are sold; (ii) C2 sells its Membership
Units in TLC; (iii) or if there is a direct or indirect transfer or sale of
Membership Units of TLC held by C2 or of all of the Common Stock.
The obligations of C2 under the Purchase Agreement are secured by all
of C2's ownership interest in TLC. Any substantial claims made by Weatherford,
Christiana or any of their affiliates in connection with the Assumed Liabilities
or the indemnification obligations contained in the Purchase Agreement which are
not covered by the insurance of the Weatherford Indemnified Parties may have a
material adverse effect on C2's financial condition and results of operations.
Any failure by C2 to satisfy its obligations under such indemnification
provisions could result in the loss of C2's ownership interest in TLC.
Restrictions on Actions of TLC Under Operating Agreement
The Operating Agreement, which is attached as Annex B will be entered
into as of the Effective Time between C2 and Christiana (the "Operating
Agreement") restricts C2's control of TLC. The Operating Agreement vests the
management of TLC in a Board of Managers consisting of six members. Each Manager
is elected by the vote or written consent of the members (currently C2 and
Christiana) (the "Members"). However, Christiana and C2 will each be entitled to
elect, without the consent of any other member, a number of Managers that is
proportionate to the number of Membership Units held by Christiana and C2,
respectively. Christiana (which will be controlled by Weatherford post- Merger)
will have the power to appoint two members of the Board of Managers.
Consequently, C2 will not have the means to assure unanimous consent.
The Board of Managers may not cause TLC to take certain specified
actions without the prior approval of the Members. As a result, the Company may
not take certain actions relating to TLC without the consent of Christiana. See
"The Operating Agreement."
Transfer Restrictions
A Member may not voluntarily sell, give, assign, bequeath or pledge
(each a "Transfer") any Membership Unit without the consent of the Board of
Managers:
o C2 may pledge and assign its Membership Units to Christiana.
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<PAGE>
o Christiana may Transfer these Units if C2 defaults on its
obligations to Christiana.
o Christiana may Transfer its Membership Units if the transferee
is an affiliate of Christiana or C2 and the transferee agrees
to be bound by the provisions of the Operating Agreement.
o After the fifth anniversary of the date of the Operating
Agreement, Christiana may Transfer any or all of its
Membership Units to any person; provided, that C2 has the
right of first refusal to purchase such Membership Units for
the same price and at the same terms as such Membership Units
were offered to the transferee. See "The Operating Agreement."
The Purchase Agreement provides that neither C2 nor TLC may transfer a
majority of C2's or TLC's assets to any person or entity unless the acquiring
person or entity meets certain net worth requirements and assumes the
obligations of C2 or TLC, as the case may be, under the Purchase Agreement (See
"- Assumed Liabilities and Indemnification Obligations of C2 and TLC" above).
See "The Purchase Agreement."
Christiana's Put and Participation Rights
The Purchase Agreement provides that during the one year period
following the fifth anniversary of the Merger, Christiana will have the option
(but not the obligation) to sell to C2 or TLC, and C2 or TLC as applicable, will
be required to purchase, all (but not less than all) of Christiana's 333.333
Membership Units in TLC for a price equal to $7 million.
In the event of a change of control of C2, Christiana will have the
right to sell its interest in TLC to C2. If C2 proposes to transfer its interest
in TLC to an unrelated third party, Christiana will have the right to
participate in such sale for the same consideration per Membership Unit as C2
transfers its Membership Units in TLC.
Availability and Integration of Potential Future Acquisitions
A substantial part of C2's future growth will come from acquiring
either directly or through TLC other businesses which may or may not be related
to TLC's current business. C2 or TLC may not be able to identify or negotiate
suitable acquisitions. There can be no assurance that any debt or equity
financing necessary to complete acquisitions can be arranged on satisfactory
terms or that such financing will not increase the Company's leverage or result
in additional dilution to Company shareholders. Moreover, there can be no
assurance that any acquired warehousing or logistics business can be integrated
successfully into TLC or that TLC or the Company, as the case may be, will
manage or improve the operating or administrative efficiencies of any acquired
business. Failure of the Company or TLC to implement successfully their
acquisition strategies will limit the Company's growth potential.
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<PAGE>
TLC's Fleet; Relationship with Truckload Contract Carriers
TLC utilizes both its own fleet of trucks and truckload contract
carriers ("Contract Carriers") to conduct its operations. As TLC expands, it
will likely require the services of additional Contract Carriers. At some TLC
locations, only a few Contract Carriers meet TLC's quality standards. In
addition, the trucking industry has experienced severe shortages of available
drivers in recent years. This may curtail the ability of TLC and Contract
Carriers to expand and may require TLC and Contract Carriers to increase
drivers' compensation, thereby increasing transportation costs to TLC.
Possible Effect of Economic Developments; Geographic Concentration
TLC's results of operations are affected by general economic conditions
in the United States, the Midwest region and by other factors that may be beyond
its control. These factors include interest rate fluctuations, economic
recession, customers' business cycles, changes in fuel prices and supply,
increases in fuel or energy taxes and the transportation costs of TLC's internal
fleet of trucks and Contract Carriers. Increases in operating expenses will
result in higher transportation operating costs for TLC. TLC's operating margins
would be adversely affected if it were unable to pass these increases through to
its customers.
Dependence on Management
We believe that our ability to successfully implement our business
strategy and to operate profitably depends on the continued employment of our
senior management teams including, in the case of the Company, William T.
Donovan and David J. Lubar and in the case of TLC, Brian L. Brink, John R.
Patterson, Gary R. Sarner and other members of TLC's senior management group.
Neither the Company nor TLC has written employment agreements with any of its
executive officers and no insurance is maintained on the life of these
individuals. See "Management."
Conflicts of Interest
Sheldon B. Lubar, a director of the Company, David J. Lubar, President
and a director of the Company and William T. Donovan, Chairman and a director of
the Company, have participated individually, and as a group, in investments in
other business entities independent from Christiana. We have adopted guidelines
which generally require that before independently pursuing an acquisition
opportunity, the opportunity will be presented to the Board of Directors. A
majority of the members of the Board who are not otherwise interested in the
opportunity will decide whether the Company should pursue the opportunity.
Concentration of Ownership of Common Stock
Following the Offering, the Lubar Family and the other officers and
directors of the Company will own at least 66% of the outstanding shares of
Common Stock. Accordingly, the Lubar Family and the other directors and officers
of the Company will have the ability to
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<PAGE>
influence significantly the election of directors and most corporate actions.
See "Principal Shareholders."
No Prior Public Market; Possible Stock Price Volatility
There has not been a public market for the Common Stock. C2 will list
the Common Stock for trading on the Nasdaq Small Cap Market. C2 does not know
the extent to which investor interest in the Company will lead to the
development of a trading market or how liquid the market might be. The initial
public offering price for the Common Stock was determined at the discretion of
C2's Board of Directors and bears no relationship to the price at which the
Common Stock will trade after this Offering.
Dilution
Investors will experience substantial dilution as a result of the
Acquisition to the extent of intangible assets purchased in the Acquisition,
which, at June 30, 1998, was $5,435,000, or $1.04 per share assuming the
Offering is fully subscribed.
Dividends from TLC
The Operating Agreement to be entered into at the Closing between
Christiana and C2 will govern the relationship between Christiana and C2 as the
two Members of TLC. The Operating Agreement provides that other than quarterly
distributions to cover the estimated income tax payments on items of income,
gain, loss or deduction allocated to the Members with respect to TLC's taxable
income, no distributions from TLC will be made to the Members without the
consent of both Christiana and C2. C2 and Christiana do not currently intend to
cause TLC to pay any cash dividends except for tax related distributions. TLC
will pay to C2 an annual management fee of $250,000. In addition, the new credit
agreement to be entered into by TLC as of the Merger prohibits TLC from
declaring or paying dividends, subject to limited exceptions. See "Dividend
Policy" below.
Restrictive Covenants in the TLC Credit Agreement
The Credit Agreement contains customary affirmative and negative
covenants including the following financial covenants:
o minimum consolidated tangible net worth;
o maximum consolidated funded debt ratio;
o minimum cash flow coverage ratio; and
o positive annual earnings.
Failure of TLC to meet any of its covenants may have a material adverse affect
on the Company or TLC's future operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Description of
Credit Agreement."
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<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of 5,202,664 shares of
Common Stock offered hereby, after deducting offering expenses payable by the
Company of $275,000 will be approximately $20,535,000. The Lubar Family has
committed to exercise their Basic Subscription Privilege in full to ensure that
the net proceeds of the Offering to the Company will be at least $10,666,667.
The first $10,666,667 of the net proceeds will be used no later than 30 days
following the Effective Time to consummate the Acquisition. The remainder of the
net proceeds will be used for offering expenses and general corporate purposes,
including future acquisitions. Proceeds not immediately required for the
purposes described above will be invested principally in United States
government securities or other high-grade, short-term, interest-bearing
investments.
DIVIDEND POLICY
The Company was formed on December 11, 1997 and has never paid any cash
dividends on its capital stock. The Company's ability to generate cash for the
payment of dividends is restricted by the terms of the Operating Agreement. See
"Risk Factors -- Dividends" and "The Operating Agreement." Moreover, the Company
and its Board of Directors currently intend to retain any earnings for use in
the expansion of the Company's business and do not anticipate paying any cash
dividends on the Common Stock in the foreseeable future.
Upon the Effective Time, TLC will replace its existing revolving credit
facility with a new revolving credit facility. Pursuant to this revolving credit
facility, TLC is prohibited from declaring or paying dividends (other than a
dividend or distribution payable solely in stock or an equity interest);
provided, that TLC may declare and pay distributions to its Members from time to
time in amounts up to the Members' respective federal, state and local income
tax liabilities resulting from such Members' ownership of limited liability
company interests in TLC subject to the limitation that no such distribution
shall be made if there shall exist any default or event of default or if the
making of any such payment would cause a default or event of default to occur
under this revolving credit facility. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Description of Credit
Agreement."
SUMMARY OF CERTAIN TERMS OF THE MERGER
General
At the Effective Time, Weatherford will acquire Christiana through the
Merger of Sub with and into Christiana.
Each outstanding share of Christiana Common Stock will be converted in
the Merger into a right to receive (i) the Weatherford Share Consideration and
(ii) the Cash Consideration.
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<PAGE>
Cash Consideration to be Received in the Merger
The exact calculation of Cash Consideration will equal the quotient of
the Christiana Net Cash (as defined below) divided by 5,202,664, the amount of
shares of Christiana Common Stock to be outstanding as of the Effective Time.
Cash Consideration will be equal to the cash of Christiana as of the effective
time of the Merger less the sum of Christiana's accrued taxes (without giving
effect to the value of certain tax deductions to be retained by Christiana) and
other liabilities as of such time that are not assumed by the Company. The
definitive calculation of Cash Consideration will be made by the parties to the
Merger Agreement no later than thirty (30) days following the Effective Time.
The "Christiana Net Cash" will be equal to (i) the sum of
o all of the cash on hand of Christiana as of the Effective
time,
minus (ii) the sum of
o an amount of cash necessary to pay the Assumed Liabilities
(which include, without limitation, all expenses relating to
the Merger) in full without giving effect to the use or
application of any tax deductions relating to the exercise of
options or any tax benefits that may be realized as a result
of amended tax returns of Christiana (such Assumed Liabilities
are described more fully herein under "Risk Factors-Assumed
Liabilities and Indemnification Obligations of C2 and TLC" and
"Pro Forma Combined Financial Data").
Based on the current capitalization of Christiana and the assets and
liabilities of Christiana as of June 30, 1998, and after giving effect to the
estimated expenses of the Merger payable by Christiana, the Cash Consideration
per share is anticipated to be approximately $4.00 for each share of Christiana
Common Stock. In the event Additional Open Market Purchases are made, it is
likely that Cash Consideration will be less than $4.00 per share.
Christiana Shareholders purchasing shares of Common Stock pursuant to
the Basic Subscription Privilege, must complete and deliver the Letter of
Transmittal, even if previously submitted in connection with the First Special
Meeting, to the Subscription Agent (which will also act as exchange agent in the
Merger). See "The Offering - How to Exercise Basic Subscription Privilege and
Additional Subscription Privilege." However, because the Cash Consideration per
share of Christiana Common Stock may be less than the Subscription Price per
share of Common Stock offered hereby (particularly if Additional Open Market
Purchases are made), any exercise of the Basic Subscription Privilege in full
may require an additional cash payment.
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<PAGE>
CAPITALIZATION
The following table sets forth the combined capitalization of the
Company as of June 30, 1998 (i) on a pro forma combined basis to give effect to
the Acquisition, the TLC Dividend and repayment of the Wiscold Note; and (ii) as
further adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom, assuming the sale of a minimum 2,734,250
shares of Common Stock pursuant to the Lubar Commitment. This table should be
read in conjunction with the unaudited Pro Forma Combined Financial Data of the
Company and the notes thereto included elsewhere in this Prospectus. See "Pro
Forma Summary Combined Financial Data."
June 30, 1998
-------------------------
Pro Forma As Adjusted(4)
(Amounts in thousands,
except per share data)
Short-term debt:
Short-term obligations(1) $ 239,000 $ 239,000
Current maturities of long-term
debt(1) 3,003,000 3,003,000
Liability for purchase of 666.667
Membership Units of Total Logistic
Control, LLC 10,667,000 --
Long-term debt, net of current
maturities(1) 50,122,000 50,122,000
Minority interest(2) 7,705,000 7,705,000
Shareholders' equity:
Preferred Stock, par value $0.01
per share, 10,000,000 shares
authorized; none issued or outstanding -- --
Common Stock, par value $0.01 per share,
50,000,000 shares authorized, none
issued and outstanding; pro forma
2,734,250 shares issued and
outstanding, as adjusted(3) -- 27,000
Additional paid-in capital -- 10,635,000
Retained earnings(2) 2,847,000 2,847,000
----------- -----------
Total shareholders' equity 2,847,000 13,509,000
----------- -----------
Total capitalization including
minority interest $74,583,000 $75,578,000
=========== ===========
(1) For a description of TLC's debt, see "Notes to the Financial Statements
of TLC" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Description of Credit Agreement."
(2) The retained earnings amount as included in the capitalization table
represents the difference between the purchase price of 667 membership
units of TLC ($10,667,000) and the carry over basis of TLC equity as
adjusted for (i) the TLC Dividend; (ii) the drop down of certain
Christiana assets and liabilities; (iii) minority interest: and (iv)
deferred income taxes of the Registrant related to the difference
between purchase price and carry over basis. A calculation of the
retained earnings adjustment is as follows:
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Purchase price of two-third TLC $10,667,000
Net book value of TLC at
June 30, 1998 43,897,000
Less: Drop down assets/liabilities (780,000)
Less: Dividend to Christiana (20,000,000)
Less: Minority interest 7,705,000
Less: Deferred income taxes (1,898,000)
---------
Retained earnings adjustment $2,847,000
----------
(3) Does not include up to 520,000 additional shares reserved for issuance
pursuant to the 1998 Equity Incentive Plan (the "1998 Plan"), of which
options to purchase 12,000 shares of Common Stock will be granted to
independent directors of the Company concurrently with the Offering at
an exercise price of $4.00 per share. See "Management -- 1998 Equity
Incentive Plan."
(4) The minimum number of shares of Common Stock which will be issued in
the Offering is 2,734,250 pursuant to the Lubar Commitment. The maximum
number of shares to be issued in the Offering is 5,202,664. If the
maximum amount of shares are issued in the Offering, total shareholders
equity on a pro forma basis, as of June 30, 1998, would be $23,383,000.
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COMPANY FINANCIAL DATA
Set forth below is the audited balance sheet of the Company as of
December 31, 1997 which is derived from and qualified by reference to, and
should be read in conjunction with the balance sheet of the Company and notes
thereto which have been audited by Arthur Andersen LLP and which appear
elsewhere in this Prospectus. The balance sheet of the Company as of December
31, 1997 set forth below reflects only the initial capitalization of the Company
pursuant to a $100 investment by Sheldon B. Lubar. Also set forth below is the
unaudited balance sheet of the Company as of June 30, 1998 which reflects the
initial capitalization of the Company in addition to costs deferred in
connection with the public offering and acquisition of a two-thirds interest in
TLC. In the opinion of the Company, the unaudited balance sheet as of June 30,
1998 includes all adjusting entries necessary to present fairly the information
set forth therein. This financial information should be read in conjunction with
the Company's balance sheet as of June 30, 1998 and related notes thereto which
appear elsewhere in this Prospectus.
C2, Inc.
(A Newly-Formed Holding Company)
BALANCE SHEET
As of June 30, 1998 and December 31, 1997
June 30, 1998 December 31,
(Unaudited) 1997
--------------- ----------------
ASSETS:
Cash $ 100 $ --
Due from shareholder for Common Stock
Subscribed -- 100
Deferred offering and acquisition costs 240,000 --
-------- --------
Total Assets $240,100 $ 100
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY:
Accrued expenses $240,000 $ --
-------- --------
Total Liabilities $240,000 --
======== ========
SHAREHOLDER'S EQUITY:
Preferred Stock, $.01 par value, 10,000,000
shares authorized, none issued or
outstanding -- --
Common Stock, $.01 par value, 50,000,000
shares authorized, 25 shares issued and
outstanding -- --
Additional paid-in capital 100 100
-------- --------
Total Shareholder's Equity 100 100
-------- --------
Total Liabilities and Shareholder's Equity $240,100 $ 100
======== ========
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PRO FORMA SUMMARY COMBINED FINANCIAL DATA
Set forth below is unaudited pro forma summary combined financial
statements for the year ended June 30, 1998 and as of June 30, 1998.
These pro forma summary combined financial statements should be read in
conjunction with other information contained elsewhere in this Prospectus,
including "Selected Historical TLC Financial Data," and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," the historical
financial statements of TLC, and the historical balance sheet of the Company.
See "Index to Financial Statements."
The pro forma summary combined statements of income for the year ended
June 30, 1998 reflect the effects on the historical results of operations of the
Company of the following transactions as if these transactions had occurred on
July 1, 1997: (i) the sale of 5,202,664 shares of Common Stock; (ii) the
application of the proceeds for the purchase of 666.667 Membership Units of TLC
from Christiana for approximately $10.7 million; (iii) the additional operating
expenses associated with corporate charges including officers salaries,
professional, legal, occupancy, public company and other corporate related
expenses; and (iv) the establishment of deferred income taxes for TLC. In
addition, the pro forma financial data reflects the following pre-Acquisition
adjustments: (i) the refinancing of the Wiscold Note; (ii) $20 million of
borrowings by TLC and subsequent payment of the TLC Dividend; and (iii) the
additional interest expense associated with these aforementioned increases in
outstanding debt and the adjustment to interest expense to reflect the costs of
borrowing under TLC's new credit facility to be entered into as of the Effective
Time.
The pro forma financial data does not purport to represent what the
Company's financial position or results of operations would actually have been
if such a transaction in fact had occurred on those dates or to project the
Company's financial position or results of operations for any future period.
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<TABLE>
PRO FORMA SUMMARY COMBINED BALANCE SHEET
<CAPTION>
As of June 30, 1998
---------------------------------------------------------------------------------------------------
Historical Pro Forma Pro Forma Offering As
TLC Adjustments(1) C2, Inc. Adjustments Adjusted
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 541,000 $ - $541,000 $20,536,000 (8) $10,410,000
(10,667,000)(9)
Other current assets 8,283,000 8,283,000 8,283,000
Total long-term assets 76,787,000 1,431,000 (4) 78,218,000 78,218,000
---------------------------------------------------------------------------------------------------
Total assets $85,611,000 $1,431,000 $87,042,000 $9,869,000 $96,911,000
===================================================================================================
Total current liabilities $11,252,000 $1,177,000 (4) $12,429,000 $12,429,000
Due to Parent company 3,000,000 (3,000,000)(2) - -
Liability for purchase
of 666.667
Membership Units of TLC - 10,667,000 (7) 10,667,000 (10,667,000)(9) -
Deferred income taxes - 1,898,000 (6) 1,898,000 1,898,000
Long-term debt 27,122,000 20,000,000 (3) 50,122,000 50,122,000
3,000,000 (2)
Other liabilities 340,000 1,034,000 (4) 1,374,000 1,374,000
---------------------------------------------------------------------------------------------------
Total liabilities 41,714,000 34,776,000 76,490,000 (10,667,000) 65,823,000
Minority interest - 7,705,000 (5) 7,705,000 7,705,000
Preferred stock -
Common Stock - 52,000 (8) 52,000
Additional paid-in capital - 20,484,000 (8) 20,484,000
Retained earnings
Members' equity 43,897,000 (20,000,000)(3) 2,847,000 2,847,000
(7,705,000)(5)
(1,898,000)(6)
(780,000)(4)
(10,667,000)(7)
---------------------------------------------------------------------------------------------------
Total shareholders' equity 43,897,000 (41,050,000) 2,847,000 20,536,000 23,383,000
---------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $85,611,000 $1,431,000 $87,042,000 $9,869,000 $96,911,000
===================================================================================================
</TABLE>
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<PAGE>
NOTES TO PRO FORMA SUMMARY COMBINED BALANCE SHEET
(1) The acquisition of 666.667 Membership Units of TLC by the Company
represents a combination of entities under common control because a
single group of shareholders controlled TLC and will control the
Company. Accordingly, no purchase accounting adjustments have been
recorded and the difference between the acquisition price and the
historical cost basis of TLC has been reflected as an equity
adjustment.
(2) Represents a $3 million draw on TLC's revolving credit facility and
subsequent payment of the Wiscold Note prior to the Acquisition.
(3) Represents a $20 million draw on TLC's revolving credit facility
(interest at LIBOR plus 225 basis points) and the subsequent payment of
the TLC Dividend prior to the Acquisition.
(4) Represents the book value of certain assets and liabilities of
Christiana which were contributed to TLC prior to the Acquisition as
follows:
ASSETS:
Long-term assets $1,431,000
LIABILITIES:
Accrued liabilities $(1,177,000)
Other long-term liabilities (1,034,000)
-------------
Reduction to equity related to
asset/liability transfer $ (780,000)
=============
(5) Represents the establishment of Minority Interest for the one-third
interest in TLC not owned by the Company. Minority Interest represents
one-third of TLC's Members equity subsequent to the adjustment for the
TLC Dividend and contribution of certain Christiana assets and
liabilities.
(6) Represents the establishment of a deferred income tax liability
attributed to temporary differences between the purchase price and
carryover basis of TLC assets and liabilities.
(7) Represents the liability for cash consideration to be paid to
Christiana related to the purchase of 666.667 Membership Units of TLC.
(8) Represents the amount of net proceeds associated with the sale of
5,202,664 shares of Common Stock offered by the Company at $4.00 per
share, net of expenses of $275,000.
(9) Represents the payment of the purchase price due to Christiana in
connection with the Acquisition.
-26-
<PAGE>
<TABLE>
PRO FORMA SUMMARY COMBINED STATEMENTS OF INCOME
<CAPTION>
For the Year Ended June 30, 1998
Pro Forma
Historical TLC Pro Forma Adjustments C2, Inc.
<S> <C> <C> <C>
Revenues $90,179,000 $ -- $90,179,000
Operating expenses 83,205,000 1,000,000 84,205,000
Interest expense 2,854,000 1,880,000 4,734,000
Other (income) expense, net 379,000 -- 379,000
Income (loss) before minority
interest and income taxes 3,741,000 (2,880,000) 861,000
Provision for income taxes -- 130,000 130,000
Minority interest expense -- 537,000 537,000
Net income (loss) 3,741,000 (3,547,000) 194,000
Basic and diluted net income per
share of common stock $ 0.04
</TABLE>
-27-
<PAGE>
NOTES TO PRO FORMA SUMMARY
COMBINED STATEMENTS OF INCOME
(1) Represents additional operating expenses resulting from corporate
expenses, including officers' salaries, occupancy expenses,
professional, legal, public company and other corporate related
expenses.
For the Year
Ended June
30, 1998
-------------------------
Officers salaries $390,000
Occupancy expenses 150,000
Other corporate expenses 460,000
-------------------------
$1,000,000
(2) Represents (i) the additional interest expense on the $20 million of
additional debt incurred immediately prior to the Acquisition and (ii)
the increase in interest expense related to higher borrowing rates on
the new revolving credit facility as follows:
For the Year
Ended
June 30, 1998
------------------------------
$20 million draw on TLC's
revolving credit facility, interest at
an average rate of LIBOR + 225
basis points $1,550,000
Additional interest expense on
historical outstanding debt bearing
interest at a rate of LIBOR + 225
basis points (revolving credit facility
rate) versus a historical rate of
LIBOR + 125 basis points 330,000
------------------------------
$1,880,000
(3) Represents the incremental provision for Federal and state income taxes
required on the earnings of TLC, in addition to the required adjustment
for the tax impact of the pro forma adjustments.
(4) Represents 33.3% of net income allocable to TLC's minority interest
owner.
-28-
<PAGE>
SELECTED HISTORICAL TLC FINANCIAL DATA
The following table sets forth certain selected historical financial
data for TLC as of and for each of the five years ended June 30, 1998 and as of
June 30, 1998. The historical financial data as of and for each of the four
years ended June 30, 1998 was derived from the Financial Statements of TLC,
which were audited by Arthur Andersen LLP, independent public accountants. The
historical financial data as of and for the year ended June 30, 1994 has not
been audited. In the opinion of TLC, the historical financial data as of and for
the year ended June 30, 1994 includes all adjusting entries necessary to present
fairly the information set forth therein. The following selected historical
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and TLC's Financial
Statements and related notes thereto appearing elsewhere in this Prospectus.
<TABLE>
Selected Historical TLC Financial Data
(Amounts in thousands, except per membership unit data)
<CAPTION>
For the Year Ended June 30
--------------------------------------------------------------------
1998 1997 1996 1995 1994(1)
--------------------------------------------------------------------
Statement of Income Data:
<S> <C> <C> <C> <C> <C>
Revenues $ 90,179 $ 84,208 $ 76,976 $ 71,029 $ 42,355
Income from operations 6,974 6,311 5,689 7,555 4,611
Interest expense 2,854 3,216 3,176 3,378 3,003
Net income 3,741 12,181(4) 1,536 2,562 995
Basic and diluted income
per membership unit(2) 3,741 12,181 1,536 2,562 995
Other Data:
Capital Expenditures 2,283 3,294 17,646 7,552 3,146
Depreciation and
amortization 6,651 7,186 6,971 6,684 4,671
EBITDA(3) 13,571 13,143 12,552 14,218 9,303
Cash flows from operating
activities 12,305 9,294 11,043 10,180 7,121
Cash flows from investing
activities (1,653) (1,822) (16,262) (7,116) (2,858)
Cash flows from financing
activities (10,335) (7,277) 4,883 (3,247) (3,934)
<CAPTION>
As of June 30
--------------------------------------------------------------------
1998 1997 1996 1995 1994(1)
--------------------------------------------------------------------
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
Total Assets $85,611 $90,140 $97,923 $88,731 $87,079
Total Debt 33,364 40,394 47,671 42,788 46,035
Total Member's Equity 43,897 43,461 31,280 29,744 27,182
- ---------------
(1) Effective January 4, 1994, Christiana consummated the acquisition of
Total Logistic Inc. The statement of income data and cash flow
information for fiscal 1994 reflects the combined operating results of
Wiscold and Total Logistic Inc. subsequent to its date of acquisition.
The balance sheet data reflects the combined results of these
aforementioned entities as of June 30, 1994.
(2) Effective June 30, 1997, Wiscold and Total Logistic Inc. were merged to
form TLC. Basic and diluted income per membership unit for periods
presented prior to 1997 are shown as if the units had been outstanding
for all periods presented.
(3) EBITDA is defined as income (loss) before taxes plus fixed charges.
Fixed charges consist of interest expense, depreciation and
amortization and gains or losses on disposal of assets. EBITDA is not a
measure of financial performance under generally accepted accounting
principles and should not be considered as an alternative to net income
as a measure of performance nor as an alternative to cash flow as a
measure of liquidity. Since all companies do not calculate EBITDA
uniformly, it may not be an accurate measure of comparison.
(4) Includes $11,171 of income related to an adjustment of deferred income
taxes resulting from a change in TLC's tax status from a C-Corporation
to a limited liability company.
</TABLE>
-29-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
TLC provides full service public and contract warehousing and logistic
services in all ranges of frozen, refrigerated and ambient temperatures. TLC's
transportation and distribution services include full service truckload,
less-than-truckload and pooled consolidation in both temperature controlled and
dry freight equipment, dedicated fleet services and specialized store-door
delivery formats. Transportation and logistic services are provided utilizing
company-owned equipment, as well as through carrier management services
utilizing third party common and contract carriers. Integrated logistic services
generally combine transportation, warehousing and information services to manage
the distribution channel for a customer's products from the point of
manufacturer to the point of consumption. TLC also provides a full range of
international freight management services, fully computerized inventory
management, kitting, repackaging and just-in-time production supply services.
TLC Historical Income Statement Information
The following table sets forth, for the fiscal years ended June 30,
1998, 1997 and 1996 respectively, certain consolidated financial data for TLC,
expressed as a percentage of net sales, and the percentage changes in the dollar
amounts as compared to the prior period:
<TABLE>
<CAPTION>
Percentage of
Revenues
June 30, Percentage Change
1997 1996
1998 1997 1996 to 1998 to 1997
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 7.1% 9.4%
Warehouse and Logistic
Expenses 84.3% 84.3% 84.4% 7.7% 9.3%
Selling and Administration 8.0% 8.2% 8.2% (2.4)% 9.4%
Income from operations 7.7% 7.5% 7.4% 10.5% 10.9%
</TABLE>
Comparison of Year Ended June 30, 1998 to the Year Ended June 30, 1997 for TLC
The Company's consolidated revenues for fiscal 1998 were $90,179,000
compared to $84,208,000 reported for fiscal 1997, an increase of $5,971,000 or
7.1%. Revenue growth at TLC was primarily attributable to volume increases in
logistic services which includes carrier management services, transportation
management services and transportation operations. During fiscal 1998, revenues
attributable to Logistic services increased $6,049,000 or 18.1% over the prior
year due to operation of an expanded fleet and strong demand for transportation
services. Revenue growth in Refrigerated Warehousing services was $1,686,000 or
5.1% in fiscal 1998 due primarily to increased utilization of existing
facilities from both new and existing customer relationships. Revenues from Dry
Warehousing operations in fiscal 1998 declined $3,599,000 or 29.9%, due to the
closure of two facilities at the end of fiscal 1997 consistent with the
Company's strategy to de-emphasize public dry warehousing activities. The
balance of the
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<PAGE>
revenue increase in fiscal 1998 of $1,835,000, is primarily attributable to
expanded volume in distribution services of food products to the State of
Michigan Department of Education under a new 5 year contract.
Gross profit for the year increased $887,000 or 6.7% to $14,122,000
from $13,235,000 in 1997. Each of TLC's service lines with the exception of Dry
Warehousing had increased gross profit due primarily to better utilization of
the Company's assets, improved productivity and strong cost controls. Logistic
services increased gross profit by $1,009,000 or 38.5%, due to volume growth,
higher utilization of revenue producing assets and an expanded fleet compared to
fiscal 1997. Refrigerated Warehousing operations increased gross profit by
$465,000 or 6.0%, through increased capacity utilization of facilities and
strong cost control. Dry Warehousing had a decline in gross profit of $494,000
or 26% primarily due to reduced revenues in this area. Distribution services
gross profit increased $240,000 or 49%, due to higher volume attributable to a
new 5-year contract with Michigan Department of Education covering an expanded
region of service.
Selling, general and administrative expenses, which include marketing
and advertising expenses, increased $224,000 or 3.2% for the fiscal year
compared to fiscal year 1997. The increase in these expenses is due primarily to
increases associated with inflation.
Income from operations for the fiscal year ended June 30, 1998
increased $663,000 or 10.5% from $6,311,000 in 1997 to $6,974,000 in 1998.
Revenue growth, especially in Transportation services, was the primary reason
for increased operating income and higher operating margin.
Interest expense for the fiscal year was $2,854,000, a reduction of
$362,000 from the prior year of $3,216,000. Interest expense in fiscal 1998 was
lower due to strong cash flow which enabled over $9,000,000 of debt reduction
during the year.
Pretax income for the fiscal year was $3,741,000, an increase of
$2,036,000 or 119.4% over fiscal year 1997. Strong growth and margins in
Transportation and the improved capacity utilization in Refrigerated Warehousing
were the main operational contributors to these results. The 1998 pretax results
include one-time non-operating expenses totaling $325,000. This amount is made
up of $200,000 associated with the closure and sale of Wisconsin Logistic
Center. The remaining $125,000 in costs were expenses attributable to financing
requirements related to the merger between Christiana and Weatherford. Pretax
results for fiscal 1997 included a loss of $1,086,000 for the disposal of
special freezing equipment in connection with securing a long-term contract for
vegetable processing, IQF freezing and warehousing with a major customer at the
Beaver Dam facility.
No provision for income taxes was recorded for the fiscal year because
TLC was a limited liability company for this period. For the fiscal year 1997,
TLC recorded an income tax provision of $695,000.
Comparison of Year Ended June 30, 1997 to the Year Ended June 30, 1996 for TLC
Total revenue for fiscal 1997 increased $7,232,000 or 9.4% to
$84,208,000 compared to fiscal 1996 due primarily to increased volume in
Transportation and Refrigerated Warehousing
-31-
<PAGE>
services. The most significant improvement was in revenue from Transportation
operations which increased 20.6% over the previous year, from $27,677,000 in
fiscal 1996 to $33,392,000 in fiscal 1997. During fiscal 1997, TLC secured a
large multi-year contract to provide logistic services to a major frozen food
producer. This contract, and certain management changes, enabled TLC to improve
significantly the operating performance in transportation-related logistic
services during fiscal 1997. Refrigerated Warehousing service revenue increased
5.7% from $35,428,000 to $37,450,000 due primarily to increased utilization of
expanded capacity at the Rochelle Logistic Center and higher utilization at all
the Michigan based refrigerated facilities during fiscal 1997. In late fiscal
1997, TLC closed two dry public warehouses which were leased facilities in
Atlanta, Georgia and Sparks, Nevada. The closure of these facilities resulted
from TLC's strategic focus to provide value-added logistic services on a
contractual and longer term basis in Dry Warehousing operations. As a result of
these strategic changes, revenue for Dry Warehousing operations was down for
fiscal year 1997 by $1,600,000 or 11.9%.
Gross profit increased in fiscal 1997 by $1,215,000 or 10.1% compared
to fiscal 1996, primarily as a result of revenue growth combined with aggressive
cost management. An expanded transportation fleet and better utilization of
transportation equipment contributed to an increase of $1,200,000 in gross
profit for the year, compared to 1996. Refrigerated Warehousing increased gross
profit by $110,000 for the year, compared to fiscal 1996, mainly through higher
occupancy levels in TLC's Michigan facilities and increased utilization of the
new Rochelle Logistic Center. Dry Warehousing and added logistic expenses had a
negative impact on gross profits by $358,000 due to changes related to warehouse
closures and corporate restructuring.
Selling, general and administrative expenses increased $593,000 or 9.4%
in fiscal 1997, due in large part to increased activities in marketing and
sales.
Income from operations increased by $622,000 or 10.9% over fiscal 1996.
Operating income in 1997 was $6,311,000 compared to $5,689,000 in 1996. This
increase was due primarily to volume and productivity gains in Transportation
operations.
Interest expense for the year was $3,216,000 compared to $3,176,000 in
fiscal 1996.
Pre-tax income was $1,705,000, a decrease of $906,000 compared to
fiscal 1996, due primarily to a loss of $1,036,000 related to the disposal of
special freezing equipment in connection with securing a longer term contract
for vegetable processing, IQF freezing and warehouse services with a major
customer of the Beaver Dam Logistic Center.
The provision for taxes for fiscal year 1997 was $695,000 compared to
$1,075,000 for 1996. The effective tax rates for the two years were the same. In
1997, an adjustment of $11,171,000 was made to add to income the deferred income
taxes that resulted from a change in TLC's tax status from a C-corporation to a
limited liability company.
Net income for 1997 was $12,181,000, up from $1,536,000 in 1996 based
on the results of operations and the change in the tax status that eliminated
the deferred taxes as of 1997.
-32-
<PAGE>
Financial Liquidity and Capital Resources for the Company and TLC
The Company's current sources of capital to fund corporate expenses are
management fees of $250,000 payable by TLC, short-term investments which are
expected to be $10,410,000, assuming the Offering is fully subscribed, and the
income on such investments.
The Company will continue to evaluate new acquisitions in areas
strategic to existing operations as well as new lines of business. Future
acquisitions may be funded through the proceeds of this Offering, cash from
operations, borrowings under the existing line of credit or other credit
facilities, along with potential future equity issuances.
-33-
<PAGE>
TLC has historically funded its operations and capital expenditures
with cash flow from operations supplemented by its revolving credit facility.
Net cash provided from operations was $12,305,000 in fiscal 1998 compared to
$9,294,000 in fiscal 1997, primarily as a result of an increase in earnings
after considering the elimination of $11,171,000 of income related to an
adjustment of deferred income taxes resulting from a change in TLC's tax status
from a C-Corporation to a limited liability company during fiscal 1997.
Net cash used in investing activities for TLC for the fiscal year ended
June 30, 1998 decreased to $1,653,000 from $1,822,000 in fiscal 1997. The
decrease between years is predominantly the result of a decrease in capital
expenditures.
Net cash used in financing activities for the fiscal year ended June
30, 1998 was $10,335,000 from $7,277,000 during the fiscal year ended June 30,
1997. The increase in cash used in financing activities is primarily due to the
retirement of a promissory note and payment of income taxes in the amount of
$2,326,000 and $979,000, respectively.
In January 1997, TLC increased its transportation fleet by assuming the
leases for 60 additional tractors and 75 additional trailers from one of its
customers. The addition of these tractors and trailers represented approximately
a 50% increase in TLC's transportation fleet.
During fiscal 1998, TLC completed a comprehensive assessment of Year
2000 issues for both its financial information systems and other non-financial
systems. Year 2000 issues, as they relate to financial information systems, are
being corrected through hardware and software upgrades. Non-financial systems,
primarily telephone and security, will be repaired or replaced in order to
achieve Year 2000 compliance.
Based upon TLC's current projections, all Year 2000 compliant systems,
both financial and non-financial, will be implemented no later than January 1,
1999. As of June 30, 1998, TLC was approximately 60% complete with the
installation of its Year 2000 upgrades. By the time these upgrades are
completed, the Company estimates that it will have expended approximately
$800,000 to resolve its Year 2000 problems and improve its systems in this
regard.
TLC will have available to it a revolving credit facility of
$65,000,000 at a floating rate of LIBOR plus 225 basis points to finance its
capital needs, the TLC Dividend, the refinancing of the Wiscold Note. After
consummation of the Offering, TLC will have approximately $12 million of
additional available borrowings under its credit facility.
As of June 30, 1998, TLC had no significant capital commitments.
TLC believes the future cash generated from operations will be more
than adequate to service its debt requirements and future capital expenditures
for the foreseeable future.
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<PAGE>
Description of Credit Agreement
TLC intends to enter into a credit agreement (the "Credit Agreement")
with Firstar Bank Milwaukee, N.A., as agent, and certain other banks which will
be parties thereto (together, the "Banks") on or before the Effective Time of
the Merger. Pursuant to the Credit Agreement, TLC will, subject to the
achievement of certain financial ratios and compliance with certain conditions,
have the right to obtain revolving loans in the following outstanding principal
amounts:
Maximum Amount of
Time Period Revolving Loans Outstanding
Closing date through April 15, 1999 $65 million
April 16, 1999 through April 15, 2000 $61 million
April 16, 2000 through April 15, 2001 $56 million
April 16, 2001 through April 15, 2002 $50.5 million
April 16, 2002 through April 15, 2003 $43 million
The entire unpaid principal balance of loans made under the Credit Agreement
will be due and payable on April 15, 2003.
The proceeds of the initial loans under the Credit Agreement will be
used to refinance existing indebtedness of TLC to the Banks in the amount of
approximately $30,000,000; finance the payment of the TLC Dividend; finance the
repayment of the Wiscold Note; and pay related fees and expenses. The available
balance of the facility, estimated to be $12 million after completion of this
Offering will be available for working capital and general corporate purposes,
including the issuance of letters of credit of up to $3.5 million outstanding at
any one time.
The Credit Agreement will be secured by liens or security interests on
all or substantially all of the assets of TLC, other than certain transportation
equipment, and mortgages on its real estate.
The initial interest rate on borrowings under the Credit Agreement is
expected to be, at the option of TLC, LIBOR plus 225 basis points or the prime
rate. These rates will vary over the term of the Credit Agreement pursuant to a
pricing grid based on the ratio of Consolidated Funded Debt to Consolidated
EBITDA (the "Consolidated Funded Debt Ratio"), all as defined in the Credit
Agreement, in accordance with the following table:
-35-
<PAGE>
APPLICABLE PERCENTAGES
Applicable
Percentage Applicable Applicable
for Percentage Percentage
Consolidated Eurodollar for for
Pricing Funded Debt Revolving Prime Rate Letter of
Level Ratio Loans Loans Credit Fee
- --------------------------------------------------------------------------------
7 >4.5:1.0 2.25 0.00 1.25
6 <4.5:1.0 but >4.0:1.0 2.00 (0.25) 1.25
5 <4.0:1.0 but >3.5:1.0 1.75 (0.25) 1.25
4 <3.5:1.0 but >3.0:1.0 1.50 (0.50) 1.25
3 <3.0:1.0 but >2.5:1.0 1.25 (0.50) 1.25
2 <2.5:1.0 but >2.0:1.0 1.00 (0.50) 1.25
1 <2.0:1.0 0.75 (1.00) 1.25
The Credit Agreement also contains provisions requiring TLC to reimburse the
Banks for increases in certain taxes, revenue requirements and other costs
incurred by the Banks.
Loans made under the Credit Agreement may be prepaid in whole or in
part without premium or penalty, except for reimbursement of the Banks for any
losses the Banks suffer as a result of repayment of LIBOR-based loan prices to
the last day of that applicable interest period.
The Credit Agreement contains representations and warranties, including
without limitation those relating to financial statements, ownership of
properties, liens and encumbrances, corporate existence, compliance with law,
legal authorization and enforceability, absence of default, litigation, ERISA,
environmental and tax matters, use of proceeds, solvency, accuracy of
information and the matters set forth in the merger and divestiture documents.
The Credit Agreement also contains conditions precedent (or in certain
instances concurrent) to the initial funding at the Closing, which will include,
without limitation, those relating to the following: (i) satisfactory financing
documentation; (ii) the obtaining of certain approvals and agreements; (iii)
consummation of the Merger; (iv) satisfactory proforma and other financial
statements; (v) environmental reports; (vi) certain appraisals and business
valuations; (vii) the absence of a material adverse change; and (viii) the
delivery of customary closing documents. The conditions to all borrowings
include requirements relating to prior notice of borrowing, the accuracy of
representations and warranties, the absence of any default or potential event of
default and the absence of a material adverse change in TLC's business.
The Credit Agreement also contains affirmative and negative covenants
(including, where appropriate, certain exceptions and baskets mutually agreed
upon), including but not limited to furnishing financial and other information
payment of obligations, conduct of business, maintenance of existence,
maintenance of property, insurance, inspection of property, books and records,
notices, environmental laws, additional subsidiary guarantors, bank accounts,
indebtedness, liens, nature of business, consolidation, merger, sale or purchase
of assets, advances, investments and loans guarantee obligations, transactions
with affiliates, ownership of subsidiaries, fiscal year, prepayment of
indebtedness and dividends. The Credit Agreement also
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<PAGE>
contains the following financial covenants: minimum consolidated tangible net
worth; maximum consolidated funded debt ratio; minimum cash flow coverage ratio;
and positive annual earnings.
Events of default under the Credit Agreement, include without
limitation, those relating to: (i) non-payment of interest, principal or fees
payable under the Credit Agreement; (ii) inaccuracy of representations or
warranties in the loan documents; (iii) non-performance of covenants; (iv)
cross-default to other material debt of the Company and its subsidiaries; (v)
bankruptcy or insolvency; (vi) judgments in excess of specified amounts; (vii)
certain ERISA events; (viii) impairment of security interests in collateral;
(ix) invalidity of guarantees; (x) materially inaccurate or false
representations or warranties; and (xi) a change in control.
-37-
<PAGE>
BUSINESS
General
The Company was formed on December 11, 1997 and has conducted no
operations to date other than in connection with the Acquisition. Following this
Offering and the Acquisition, the Company's only non-cash asset will be its
ownership interest in TLC. The Company intends to pursue acquisitions of
businesses which may or may not relate to the third-party logistics business of
TLC. As of the date hereof, the Company has not identified any acquisition
candidates.
Immediately prior to the Merger, the Company will acquire 666.667
Membership Units of TLC (representing two-thirds of the outstanding ownership
interests of TLC) from Christiana pursuant to the Purchase Agreement. For
additional information concerning the Merger and the Acquisition, see "Summary
of Certain Terms of the Merger" and "The Purchase Agreement."
TLC was formed on June 30, 1997 through a combination of the operations
of two wholly-owned subsidiaries of Christiana, Wiscold and Total Logistic Inc.
On September 1, 1992, Christiana acquired the assets of Wiscold, a company
formed in 1915, which engaged in providing public refrigerated warehousing
services, vegetable processing and individual quick freeze (IQF) services,
automated vegetable poly bag and bulk packaging services, and transportation
services into and out of its facilities. On January 4, 1994, Christiana acquired
Total Logistic Inc. (formerly known as The TLC Group, Inc.), a Zeeland,
Michigan-based firm engaged in providing fully integrated third-party logistic
services, which includes warehouse, distribution and transportation services in
both refrigerated and non-refrigerated facilities.
TLC provides third-party logistic services as well as full service
public and contract warehousing in all ranges of frozen refrigerated and ambient
temperatures. Integrated logistic services generally combine transportation,
warehousing and information services to manage the distribution channel for a
customer's products from the point of manufacturer to the point of consumption.
TLC's transportation and distribution services include full service truckload,
less-than-truckload and pooled consolidation in both temperature controlled and
dry freight equipment, dedicated fleet services and specialized store-door
delivery formats. Transportation and logistic services are provided utilizing
company-owned equipment as well as through carrier management services utilizing
third party common and contract carriers. TLC also provides a full range of
international freight management services, fully computerized inventory
management, kitting, repackaging and just-in-time production supply services.
TLC's transportation fleet is comprised of 175 tractors, 97 of which
are 0-3 years old; 78 of which are 4-6 years old; and none of which are older
than 6 years.
TLC's customers consist primarily of national, regional and local firms
engaged in food processing, consumer product manufacturing, wholesale
distribution and retailing. During fiscal 1998, TLC's top 10 customers accounted
for approximately 43% of total revenues. TLC serves approximately 1,450
customers.
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<PAGE>
TLC believes it is the nation's seventh largest provider of public
refrigerated warehouse space. All of TLC's refrigerated facilities are modern
and efficient single story buildings at dock height elevation and fully
insulated.
Prior to the Merger, Christiana will contribute certain assets and
liabilities to TLC for no consideration. See "Pro Forma Combined Financial
Data." On the asset side, these items consist primarily of mortgage notes
receivable derived from certain condominium sales by Christiana which, as of
June 30, 1998, had an aggregate principal amount outstanding of $532,000
(accruing interest at rates ranging from 7.25% to 8.5%) and approximately
$899,000 of cash surrender value of life insurance. In addition, Christiana has
already contributed to TLC approximately 1.9 acres of undeveloped, partially
submerged land in Huntington Beach, California with a current book value of $0.
This property is currently subject to an easement granted in favor of the City
of Huntington Beach. Christiana is currently pursuing a change in zoning
applicable to the property in order to conduct residential development on the
property. The outcome of these efforts, and the value of the property if such
efforts are successful, are unable to be predicted at this time. On the
liability side, the items contributed by Christiana consist of accounts payable
and accrued liabilities including compensation, vacation, insurance benefits and
taxes in the aggregate amount of $2,211,000.
Strategy
The Company's strategy is to identify and pursue suitable acquisition
candidates in businesses related and unrelated to the third-party logistic
services business of TLC.
TLC's strategy is to grow its business by emphasizing and enhancing its
ability to offer "one-stop shopping" to its customers through its wide variety
of asset and non-asset based services. Asset-based services are generally
considered to include warehousing and transportation related activities provided
through TLC's owned or leased assets. Non-asset based services utilize
warehouses and transportation equipment owned by others for which TLC contracts
on a one-time or short-term basis. TLC believes that its asset base of
refrigerated and dry warehouses and fleet operations, together with its
expertise in logistics strategy and solutions, provides it with an advantage
over its competitors which generally offer only asset or non-asset based
services. TLC's competitors provide individual services such as warehousing,
transportation and freight forwarding in substantially the same manner as TLC.
Some TLC competitors provide only transportation services and/or warehousing
services. Others provide only logistics management services. TLC, however,
provides all of these services in an integrated fashion, providing more
efficient distribution programs and reduced inventory for its customers. It is
the goal of TLC to continue to enhance the services that it provides to its
customers by continuing to develop solutions involving multiple services
throughout the entire supply chain from the manufacturer to end consumer.
TLC's focus on its third-party logistic services is based on its belief
that competitive market forces are dictating that corporations focus on core
competencies leading more and more corporations to outsource logistic services
and distribution functions. In addition, TLC believes that corporations are
recognizing, on an increasing basis, that properly provided logistic services
will provide enhanced inventory management, more responsive information systems
and more efficient use of fleet capacity.
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<PAGE>
Management believes that if TLC continues to market and enhance its
integrated logistics, transportation and warehousing business, it will be able
to capitalize on the trends of its customers toward the use of multi-service
providers and the outsourcing of distribution and warehousing functions and
thereby maximize the utilization and income potential of its assets.
TLC provides both asset-based and non-asset based solutions to its
customers because it believes that long-term success in integrated logistic
services will be dependent on offering a wide array of solutions which entail
both TLC-owned assets and the assets of TLC's established subcontractors. By
offering a complement of both asset and non-asset based solutions, TLC believes
growth will be less capital intensive than a company which offers only
asset-based services, and more intensive in the areas of management, services
and systems.
Services, Sales and Customers
TLC assists companies in managing the logistics of the physical
movement of product and materials. TLC offers refrigerated and frozen
warehousing, dry warehousing, transportation, information systems, and
international freight forwarding services. These services can be applied to
customers' needs individually, as a single service or in combination as a
unified set of services.
TLC provides various solutions that address a wide range of customer
needs. A few examples of the types of services TLC provides to its customers
follow:
TLC provides an international food manufacturer a combination of
transportation solutions, which includes the use of TLC's transportation fleet
and carrier-managed equipment and refrigerated storage. TLC provides a national
food manufacturer with a consolidation and distribution center and with outbound
transportation. TLC provides a national food distributor with refrigerated
warehousing, including high volume order selection and shipping to facilitate
rapid inventory turnover. TLC serves as the distributor for the Michigan
Department of Education school lunch program, which involves a combination of
warehousing, order selection, store door delivery and related customer billings.
TLC has a strategic alliance with a furniture manufacturer to provide
warehousing services for the consolidation of products and order selection for
international shipments on a global basis.
TLC's revenue for each of the basic service lines are detailed below
for fiscal years ended June 30, 1998, 1997, and 1996.
Revenues
(Dollars in Millions)
1998 1997 1996
------ ------ -----
Amount % Amount % Amount %
Refrigerated $44 49% $38 45% $35 45%
Dry Warehousing 8 9% 12 14% 14 18%
Transportation 39 43% 33 39% 28 36%
International 2 2% 3 4% 3 4%
Eliminations (3) (3%) (2) (2%) (3) (3%)
--- ---- ---- ---- ---- ----
Total Revenues $90 100% $ 84 100% $ 77 100%
=== ==== ==== ==== ==== ====
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TLC's services target the consumer goods industries; industries in
which logistics performance is important to success. Nearly 75% of TLC's
revenues come from food manufacturers, food wholesalers and food retailers.
Because of its unique storage and distribution needs, the food industry has
launched broad industry-wide initiatives, such as Efficient Consumer Response
(ECR) and Efficient Foodservice Response (EFR), that are formulated on high
quality logistic services. The basis of ECR is to reduce the cost of delivering
products from the place of manufacture to the point of sale. TLC believes that
its one of only a few companies which have the capabilities and range of service
offerings to sufficiently address these initiatives.
While TLC's top 15 customers, all of which participate in the food
industry, account for 60% of revenues, no one customer represents more than 10%
of TLC's business. Beyond the food industry, the balance of TLC's customer base
is spread across a broad base of industries including pharmaceuticals,
automotive suppliers, building supplies and office furniture.
Competition
Competition in the logistic services industry is very fragmented.
Leonard's Guide, a leading industry publication, lists more than 1500 companies
competing in the United States marketplace. TLC believes that competitors can be
characterized as either asset or non-asset based providers and single or
integrated service providers. Asset-based companies, such as Exel, AmeriCold
Logistics, Prologis, Inc., GATX Logistics, Inc., or Ryder Integrated Logistics,
Inc. own and operate warehouses and/or transportation equipment. These companies
utilize their asset- base and the expertise with which to operate them to
provide services. Non-asset based competitors, such as Hub Group Logistics
Services, Menlo Logistics, and C.H. Robinson Logistics offer logistics
management expertise and information systems and sub-contract warehousing and
transportation services to asset-based providers.
TLC experiences competition for logistic services on a national basis
and in its warehousing and transportation business TLC competes generally on a
regional and local basis. Other than the high capital requirements of building a
refrigerated warehouse facility, there are no significant barriers to entry into
the transportation, warehousing and non-asset based logistic service markets in
which TLC operates, permitting a relatively large number of smaller competitors
to enter the various markets.
In addition, TLC's customers, many of which have substantially greater
resources than TLC, may divert business from TLC's warehousing and
transportation operations by building their own warehouse facilities and/or
operating their own transportation fleet.
Organization
TLC's operations are headquartered in Zeeland, Michigan, and TLC also
maintains an office in Milwaukee, Wisconsin. TLC is organized into three main
operating units: refrigerated warehousing, dry warehousing and transportation.
Each operating unit is headed up by a group vice president/general manager.
Sales and marketing for TLC are principally performed at the corporate level,
with support from the group vice presidents as well as local warehouse facility
managers. TLC also maintains a business development group which is responsible
for pricing,
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logistics engineering, and transporting large logistic accounts over from sales
to operations during start up.
Sales and Marketing
Sales and marketing are principally performed at the corporate level,
with support from the group vice presidents and facility managers. The sales
organization is comprised of seven individuals and is divided into the following
teams: refrigerated warehousing team; dry warehousing team; transportation team;
and logistics sales team. Each of these teams has primary responsibility for
selling their specific services. The goal is to develop the sales team to
effectively present the fullest extent of TLC's services suited for each
customer.
Marketing and advertising is done centrally for the entire company and
uses a combination of media advertising and direct mail. The marketing
organization also has responsibility for maintaining and gathering information
on market intelligence related to competition, customers and the logistic
industry in general.
Business development supports both sales and operations by providing
logistics engineering capabilities, pricing and costing services, and assists in
the startup of complex logistic projects.
Employees
The only employees of the Company are the executive officers described
under "Management-Executive Officers and Directors of the Company." TLC had
approximately 718 employees as of June 30, 1998. A breakdown of the employees by
functional area is set forth below:
Function Number of Employees Percentage of Total
-------- ------------------- -------------------
Operations 448 64.4%
Transportation 208 29.0%
Administration 51 7.1%
Sales and Marketing 11 1.5%
--- -----
Total 718 100%
No TLC employees are covered by union contracts.
Patents, Licenses and Trademarks
TLC's operations are not dependent on any particular patent, license,
franchises, or trademarks. TLC has registered a trademark and the name "Total
Logistic Control" with the United States Patent and Trademark office.
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<PAGE>
Research and Product Development
TLC does not operate in an environment which has a strong need or
reliance on research and development. TLC has not made material expenditures
with regard to research or development in the past and does not see it as a
material issue in the future.
Government Regulations
TLC's transportation operations in interstate commerce are regulated by
the Interstate Commerce Commission ("ICC") and the operations of TLC in
intrastate commerce are regulated by various state agencies. These regulatory
authorities have broad authority, including the power to authorize motor carrier
operations, approve rates, charges and accounting systems, require periodic
financial reporting, and approve certain merger, consolidations and
acquisitions. TLC is also subject to safety requirements prescribed by the
United States Department of Transportation ("DOT"). Such matters as weight and
dimension of equipment and load are also subject to federal and state
regulations.
TLC's operations related to refrigerated food storage are subject to
regulations promulgated by the United States Department of Agriculture ("USDA").
TLC believes it is in compliance in all material respects with
applicable regulatory requirements relating to its operations. The failure of
TLC to comply with the regulations of the ICC, DOT, USDA or state agencies could
result in substantial fines or revocation of TLC's operating authority.
Properties
As of June 30, 1998, TLC owned or leased twelve facilities in five
states. Of this total, seven are refrigerated/frozen with the balance being dry
facilities. The refrigerated facilities are operated through seven public
refrigerated warehouses located in Wisconsin (2), Michigan (3), and Illinois
(2). TLC's refrigerated facilities are large single-story buildings constructed
at dock height with full insulation and vapor barrier protection. The
refrigeration is provided by screw-type compressors in ammonia-based cooling
systems. These facilities are strategically located and well served by rail and
truck.
In addition to the refrigerated facilities discussed above, there are
five public non-refrigerated (or dry) warehouse distribution facilities, three
of which are located in Michigan and one in each of Indiana and New Jersey.
Zeeland Distribution Center II, located in Zeeland, Michigan is a company owned
facility. All other dry facilities are held under lease. Lease terms generally
match the underlying contracts with major customers served at each facility.
These facilities are single-story block or metal construction buildings. All dry
facilities are approved as food grade storage facilities.
The following tables list the thirteen facilities by location, size,
type, and if owned or leased. Other than as indicated, all facilities are owned.
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<PAGE>
<TABLE>
REFRIGERATED WAREHOUSE FACILITIES
<CAPTION>
Total Storage Space Type of
Facility Location (cubic feet in millions) Facility
<S> <C> <C> <C>
Rochelle Logistic Center I Rochelle, Illinois #1 10.6 Distribution
Rochelle Logistic Center II Rochelle, Illinois #2 3.5 Distribution
Beaver Dam Logistic Center Beaver Dam, Wisconsin 7.2 Distribution/
Production
Milwaukee Logistic Center Wauwatosa, Wisconsin 4.3 Distribution
Holland Logistic Center(1) Holland, Michigan 2.1 Distribution/
Production
Kalamazoo Logistic
Center I(2) Kalamazoo, Michigan 3.3 Distribution
Kalamazoo Logistic Center II Kalamazoo, Michigan 2.8 Distribution
===
TOTAL 33.8
<CAPTION>
DRY WAREHOUSE FACILITIES
Total Storage
Space Type of
Facility Location (sq. ft. in thousands Facility
<S> <C> <C> <C>
Zeeland Logistic Center I(1) Zeeland, MI 202 Public
Zeeland Logistic Center II Zeeland, MI 220 Public
Michigan Distr. Center I(1) Kalamazoo, MI 88 Public
Munster Logistic Center(1) Munster, IN 125 Public
South Brunswick Logistic
Center(1) South Brunswick, NJ 100 Public
TOTAL 735
===
(1) Leased facility
(2) Includes 1.8 million cubic feet of dry storage capacity.
</TABLE>
Description of Properties
A brief description of each of the Properties follows, listed alphabetically by
state and city.
Illinois Properties
Rochelle Logistic Center I Rochelle Logistic Center II
975 South Caron Road 600 Wiscold Drive
Rochelle, IL 61068 Rochelle, IL 61068
Rochelle Cold Storage campus is TLC's newest and largest refrigerated facility,
initially constructed in 1986. TLC believes that Rochelle Cold Storage is one of
the largest and most modern cold storage warehouse facilities in the United
States. Currently this facility is comprised of 14,100,000 cubic feet of
capacity after undergoing four capacity expansions in 1988, 1990, 1993, and
1996. All space is capable of temperatures of -20(0)F to ambient. Rochelle Cold
Storage is strategically located at the intersection of two main line East-West
railroads, the
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Burlington Northern and the Chicago Northwestern, and the cross roads of
interstate highways I 39 and I 88. Rochelle Cold Storage serves primarily
distribution customers in the Midwest.
Indiana Properties
Munster Logistic Center
9200 Calumet Avenue
Munster, IN 46321
Munster Logistic Center is located just south of the Chicago market with access
to major north-south and east-west highways. The facility has access to rail
through Conrail and is a food grade warehouse. The total facility has available
125,000 square feet of dry storage. The warehouse operates as a public warehouse
with most of the customer base on short term contracts.
Michigan Properties
Holland Logistic Center
449 Howard Avenue
Holland, MI 49424
Holland Logistic Center has undergone a number of expansions over the years,
with a major reconstruction in 1983 after a fire destroyed approximately 50% of
the facility. This refrigerated facility comprises 2,100,000 cubic feet of
storage capacity of which 1,300,000 cubic feet is freezer capacity, 400,000
cubic feet is cooler capacity and 400,000 cubic feet is convertible capacity
between freezer and cooler. Holland services both distribution customers as well
as blueberry growers in the West Michigan area. This location is situated on a
CSX rail spur with two refrigerated rail docks. This facility is held under a
lease which expires December 31, 2000.
Kalamazoo Logistic Center I Kalamazoo Logistic Center II
6677 Beatrice Drive 6805 Beatrice Drive
Kalamazoo, MI 49009 Kalamazoo, MI 49009
Kalamazoo Logistic Center campus has two distribution centers at this location.
Facility #1 is a 3,300,000 cubic foot facility with 1,100,000 cubic feet of
freezer capacity, 400,000 cubic feet of cooler capacity and 1,800,000 cubic feet
of dry storage capacity. This location services a number of distribution
customers in the Midwest and is strategically located at the I 94 and U.S. 31
crossroads in Michigan, equal distance between Chicago and Detroit.
Facility #2 is located adjacent to Facility #1 and is comprised of 2,800,000
cubic feet of capacity. This facility contains 1,500,000 cubic feet of cooler
capacity and 1,300,000 cubic feet of freezer capacity. Two large distribution
customers utilize 75% of this space. These facilities are held under long term
leases.
Also located at the Kalamazoo Logistic Center is a company owned 10,000 square
foot transportation equipment maintenance center. Approximately 50% of TLC's
fleet of over-the-road transportation units is domiciled in Kalamazoo, Michigan.
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Zeeland Logistic Center I Zeeland Logistic Center II
8250 Logistic Drive 8363 Logistic Drive
Zeeland, MI 49464 Zeeland, MI 49464
Zeeland Logistic Center campus has two facilities each of which provide dry
warehousing storage as public warehouses. Each of these facilities are Foreign
Trade Zones and food grade warehouses, that provide both racked and bulk
storage. Capacity is utilized by both long term contractual customers and as
short term public warehouses. Zeeland Logistic Center I has 201,600 square feet
of storage and Zeeland Logistic Center II has 220,000 square feet.
New Jersey Properties
South Brunswick Logistic Center
308 Herrod Blvd.
South Brunswick, NJ 08852
South Brunswick Logistic Center provides warehousing and distribution services
for customers to the Northeast region of the country. The facility has both
contractual and short term customers and operates as a public warehouse. In
total, the facility has 100,000 square feet of dry storage capacity.
Wisconsin Properties
Beaver Dam Logistic Center
1201 Green Valley Road
Beaver Dam, WI 53916
Beaver Dam Logistic Center was originally constructed in 1975. Since 1975, this
facility has undergone three freezer additions, the most recent in 1991, and is
comprised of 7,200,000 cubic feet of freezer storage space. Beaver Dam Logistic
Center serves distribution related customers as well as vegetable and cranberry
processors. This facility's unique capabilities involve value added services for
vegetable processors including IQF, blanching, slicing, dicing and food service
and retail poly bag packaging operations. Badger's IQF tunnels have the capacity
to freeze 30,000 pounds of product per hour.
Milwaukee Logistic Center
11400 West Burleigh Street
Milwaukee, WI 53222
Milwaukee Logistic Center was originally constructed in 1954. There have been
six expansions of this facility. The Milwaukee Logistic Center facility
comprises 4,300,000 cubic feet of which 3,754,000 cubic feet is freezer capacity
and 546,000 cubic feet is cooler space. This facility has multi-temperature
refrigerated storage ranging from -20(0)F to +40(0)F and daily blast freezing
capacity of 750,000 pounds. This location has a 7-car private rail siding. An
additional 3,000,000 cubic feet of company owned refrigerated and processing
space adjacent to the Milwaukee Logistic Center facility is leased on a long
term basis to a third party retail grocery company.
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<PAGE>
Legal Proceedings
As of the date of this Prospectus, the Company has never been a party
to any legal proceeding. From time to time, TLC is named as a defendant in
actions arising out of the normal course of its business. As of the date of this
Prospectus, TLC is not a party to any pending legal proceeding that it believes
to be material.
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<PAGE>
THE PURCHASE AGREEMENT
The following is a brief summary of certain provisions of the Purchase
Agreement which is attached as Annex A and incorporated herein by reference.
Such summary is qualified in its entirety by reference to the Purchase Agreement
and Amendment No. 1 which is attached as Annex C.
Purchase Price and Assumption of Liabilities
The Purchase Agreement provides that, prior to the Effective Time of
the Merger, the Company will complete the Acquisition by purchasing 666.667
Membership Units of TLC for an aggregate purchase price of $10,666,667. The
Purchase Agreement provides that the purchase price is payable no later than
thirty (30) days following the Effective Time of the Merger and the completion
of the Acquisition. Accordingly, the Acquisition will be completed with the
obligation of the Company to pay the purchase price no later than thirty (30)
days thereafter. Prior to the Expiration Date, the Christiana Shareholders will
mail to the Subscription Agent (which will also act as exchange agent for the
Merger) Letters of Transmittal electing one of the following:
o To reconfirm their prior election pursuant to the Letter of
Transmittal provided on July 13, 1998
o To purchase no shares of Common Stock
o To purchase as many shares of Common Stock as possible using
the Cash Consideration to be received in the Merger
o To purchase a stated number of shares of Common Stock using a
portion of the Cash Consideration
o To purchase all shares of Common Stock to which such
Christiana Shareholder is entitled using the Cash
Consideration, together with an additional payment
o To purchase all shares of Common Stock to which such
Christiana Shareholder is entitled, plus a stated number of
additional shares (subject to availability) using the Cash
Consideration and an additional payment.
All Letters of Transmittal must be received by the Subscription Agent
on or prior to the Expiration Date (expected to be ___________, 1998). Once
received, Weatherford will pay to the Subscription Agent the Cash Consideration
due to such Christiana Shareholder and the Subscription Agent will apply such
Cash Consideration in the manner directed by the Letter of Transmittal submitted
by such Christiana Shareholder.
In connection with the Merger, the Company and TLC have agreed to
assume the Assumed Liabilities. The term Assumed Liabilities shall include,
without limitation, Liabilities resulting from, arising out of or relating to
(i) any Christiana Affiliate, (ii) the business, operations or assets of
Christiana or Christiana Affiliate on or prior to the Effective Time, (iii)
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any taxes to which Christiana or any Christiana Affiliate may be obligated for
periods ending on or before the Effective Time (except for Christiana taxes
expressly retained by Christiana pursuant to the Merger Agreement), (iv) any
obligation, matter, fact, circumstance or action or omission by any person in
any way relating to or arising from the business, operations or assets of
Christiana or a Christiana Affiliate that existed on or prior to the Effective
Time, (v) any product or service provided by Christiana or any Christiana
Affiliate prior to the Effective Time, (vi) the Merger, the Acquisition or any
of the other transactions contemplated thereby, (vii) previously conducted
operations of Christiana or any Christiana Affiliate and (viii) the Company's
ownership interest in TLC.
Christiana "Put" and Participation Rights
The Purchase Agreement also provides that at any time after the fifth
anniversary of the Effective Time of the Merger, Christiana has the option to
sell to the Company or TLC, and the Company or TLC will be obligated to
purchase, Christiana's 333.333 Membership Unit for $7 million. In addition, if
there shall be proposed a change of control of the Company or the Company
proposes to sell its interest in TLC to an unrelated third party, Christiana has
the right, but not the obligation, to participate in such transaction with
respect to its 333.333 Membership Units by selling its interest in TLC to the
Company in the case of a change of control or to an unrelated third party for
the same equivalent consideration per equivalent unit in TLC in the case of a
sale to a third party.
Indemnification Obligations
TLC and the Company have agreed under the Purchase Agreement, to
indemnify, defend and hold Christiana, Weatherford and the Weatherford
Indemnified Parties harmless from and against any and all Liabilities
(including, without limitation, reasonable fees and expenses of attorneys,
accountants, consultants and experts) that such parties incur, are subject to a
claim for, or are subject to, that are based upon, arising out of, relating to
or otherwise in respect of:
o any breach of any covenant or agreement of TLC or the
Company contained in the Purchase Agreement or any other agreement
contemplated thereby;
o the acts or omissions of Christiana or any Christiana
Affiliate on or before the Effective Time;
o the acts or omissions of any Christiana Affiliate, TLC, the
Company or TLC's or the Company's affiliates or the conduct of any
business by them on or after the Effective Time;
o the Assumed Liabilities;
o any taxes as a result of the Merger subsequently being
determined to be a taxable transaction for foreign, Federal, state or
local law purposes regardless of the theory or reason for the
transactions being subject to tax;
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<PAGE>
o any and all amounts for which Christiana or Weatherford may
be liable on account of any claims, administrative charges,
self-insured retentions, deductibles, retrospective premiums or
fronting provisions in insurance policies, including as the result of
any uninsured period, insolvent insurance carriers or exhausted
policies, arising from claims by Christiana's or any Christiana
Affiliate, or the employees of any of the foregoing, or claims by
insurance carriers of Christiana or any Christiana Affiliate for
indemnity arising from or out of claims by or against Christiana or any
Christiana Affiliate for acts or omissions of Christiana or any
Christiana Affiliate, or related to any current or past business of
Christiana or any Christiana Affiliate or any product or service
provided by Christiana or any Christiana Affiliate in whole or in part
prior to the Effective Time;
o any liability under the Consolidated Omnibus Budget
Reconciliation Act of 1986 with respect to any employees of Christiana
or any Christiana Affiliate who become employees of TLC or the Company
after the Acquisition;
o any settlements or judgements in any litigation commenced by
one or more insurance carriers against Christiana or Weatherford on
account of claims by TLC or the Company or any Christiana Affiliate or
employees of TLC or the Company or any Christiana Affiliate;
o any and all liabilities incurred by Christiana or
Weatherford pursuant to its obligations hereunder in seeking to obtain
or obtaining any consent or approval to assign, transfer or lease any
interest in any asset or instrument, contract, lease, permit or benefit
arising thereunder or resulting therefrom;
o the on-site or off-site handling, storage, treatment or
disposal of any Waste Materials (as hereinafter defined) generated by
Christiana or any Christiana Affiliate on or prior to the Effective
Time or any Christiana Affiliate at any time;
o any and all Environmental Conditions (as hereinafter
defined) on or prior to the Effective Time, known or unknown, existing
on, at or underlying any of the properties owned, leased or operated by
Christiana on or after the Effective Time;
o any acts or omissions on or prior to the Effective Time of
Christiana or any Christiana Affiliate relating to the ownership or
operation of the business of Christiana or any Christiana Affiliate or
the properties currently or previously owned or operated by Christiana
or any Christiana Affiliate;
o any liability relating to any claim or demand by any
stockholder of Christiana or Weatherford with respect to the Merger,
this Acquisition or the transactions relating thereto; and
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<PAGE>
o any liability relating to Christiana's 401(k) Plan and the
other employee benefit or welfare plans of Christiana or any Christiana
Affiliate arising out of circumstances occurring on or prior to the
Effective Time.
Certain Definitions
For purposes of the Purchase Agreement, the following terms have the
following meanings:
"Environmental Conditions" means any pollution, contamination,
degradation, damage or injury caused by, related to, arising from or in
connection with the generation, handling, use, treatment, storage,
transportation, disposal, discharge, release or emission of any Waste Materials
(as hereinafter defined).
"Environmental Laws" means all laws, rules, regulations, statutes,
ordinances, decrees or orders of any governmental entity now or at any time in
the future in effect relating to (i) the control of any potential pollutant or
protection of the air, water or land, (ii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation and (iii)
exposure to hazardous, toxic or other substances alleged to be harmful. The term
"Environmental Laws" includes, without limitation, (1) the terms and conditions
of any license, permit, approval or other authorization by any governmental
entity and (2) judicial, administrative or other regulatory decrees, judgments
and orders of any governmental entity. The term "Environmental Laws" includes,
but is not limited to the following statutes and the regulations promulgated
thereunder: the Clean Air Act, 42 U.S.C. sec. 7401 et seq., The Clean Water Act,
33 U.S.C. sec. 1251 et seq., the Resource Conservation Recovery Act, 42 U.S.C.
sec. 6901 et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C.
sec. 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq., the Water Pollution Control Act, 33 U.S.C. sec. 1251, et. seq., the Safe
Drinking Water Act, 42 U.S.C. sec. 300f et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601, et. seq., and
any state, county or local regulations similar thereto.
"Waste Materials" means any (i) toxic or hazardous materials or
substances, (ii) solid wastes, including asbestos, polychlorinated biphenyls,
mercury, buried contaminants, chemicals, flammable or explosive materials, (iii)
radioactive materials, (iv) petroleum wastes and spills or releases of petroleum
products and (v) any other chemical, pollutant, contaminant, substance or waste
that is regulated by any governmental entity under any Environmental Law.
Dispute Resolution
Any disputes, claims or counterclaims connected with or arising out of,
or related to, this Agreement are to be settled by Arbitration to be conducted
in accordance with the Commercial Rules of Arbitration of the American
Arbitration Association, except as otherwise provided in the Purchase Agreement.
The dispute, claim or controversy will be decided by three independent
arbitrators, one to be appointed by TLC and the Company, one to be appointed by
Weatherford and the third to be appointed by the two so appointed. The place of
any such arbitration will be in Houston, Texas.
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THE OPERATING AGREEMENT
The following is a brief summary of certain provisions of the Operating
Agreement between the Company and Christiana as the two members of TLC. The
Operating Agreement is attached as Annex B and is incorporated herein by
reference. The summary below is qualified in its entirety by reference to the
Operating Agreement and Amendment No. 1 which is attached as Annex C.
General
The Operating Agreement sets forth the terms and conditions of the
Company's and Christiana's interests in TLC. The Operating Agreement provides
that TLC is a Delaware limited liability company.
Members
The initial Members of TLC are the Company and Christiana. Additional
members may be admitted to TLC only with the unanimous vote or written consent
of the existing Members.
Capital Contributions
Christiana made an initial capital contribution to TLC in exchange for
1,000 Membership Units representing 100 percent of the ownership interests in
TLC. Pursuant to the terms of the Purchase Agreement, the Company acquired
666.667 Membership Units in TLC representing a two-thirds interest in TLC from
Christiana. The Membership Units have identical preferences, limitations and
other relative rights. No additional capital contributions are required and no
additional Membership Units may be issued without the vote or consent of the
both the Company and Christiana. No Member may make a loan to TLC without
approval by the Board of Managers. Capital contributions made by the Members
will not earn interest. A separate capital account will be maintained for each
Member on the books and records of TLC in accordance with the requirements of
Section 704(b) of the Code, and the Treasury Regulations promulgated thereunder.
Allocations
All items of income, gain, loss or deduction of TLC determined in
accordance with the Code will be allocated among the Members in proportion to
the number of Membership Units held by each Member. The allocation of items of
income, gain, loss or deduction will be interpreted so as to comply with the
Treasury Regulations promulgated under the Code.
Distributions
In order to permit the Members to make their required estimated income
tax payments on items of income, gain, loss or deduction allocated to the
Members, TLC will make mandatory distributions to the Members in an amount equal
to TLC's estimated federal taxable income for each calendar quarter, multiplied
by the sum of (i) the highest corporate federal and Wisconsin income tax rates
minus (ii) the product of both tax rates. The mandatory distributions will be
made to the Members in proportion to the number of Membership Units held by each
Member.
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TLC may make additional distributions to the Members in proportion to the number
of Membership Units held by each Member at such times as the Company and
Christiana determine by vote or written consent. See "Risk Factors -- Dividends
from TLC" for additional information regarding distributions from TLC.
Management
The Management of TLC is vested in a Board of Managers. The initial
Board of Managers will consist of six Managers, including William T. Donovan,
Bernard J. Duroc- Danner, Curtis W. Huff, Sheldon B. Lubar, John R. Patterson
and Gary R. Sarner. See "Management-Executive Officers and Prospective Managers
of TLC". Each Manager is elected by the vote or written consent of the Members
holding at least a majority of the Membership Units in TLC; provided, however,
that Christiana and the Company will at all times each be entitled to elect,
without the consent of any other Member, a number of Managers that is
proportionate to the number of Membership Units held by Christiana and the
Company, respectively. The Operating Agreement provides that the Board of
Managers may not cause TLC to take certain specified actions without the prior
approval of the Members by unanimous vote or written consent. Such matters
include (i) the authorization or issuance of additional Membership Units, (ii)
the authorization or payment of any distribution with respect to Membership
Units, except for the payment of any distribution that is necessary for the
Company to fulfill its purchase obligation with respect to Christiana's interest
in TLC, (iii) any direct or indirect purchase or acquisition by TLC or any
subsidiary of TLC of Membership Units, (iv) approval of any merger,
consolidation or similar transaction or sale of all or substantially all of the
operating assets of TLC in one or more transactions, (v) the creation of any new
direct or indirect subsidiary of TLC, (vi) the making of any tax election, (vii)
the liquidation or dissolution of TLC or any subsidiary of TLC, (vii) any
transaction between TLC or subsidiary of TLC and any affiliate of a Member
(other than a transaction between TLC and a subsidiary of TLC), (viii) the
payment of any compensation to any Member or any affiliate of a Member or
entering into any employee benefit plan or compensatory arrangement with or for
the benefit of any Member or affiliate of any Member, (ix) any amendment to the
Operating Agreement or the Certificate of Organization and (x) any other matter
for which approval of Members is required under the Delaware Limited Liability
Company Act.
TLC will generally indemnify the Managers to the fullest extent
permitted under the Delaware Limited Liability Company Act against any losses
incurred by reason of any act or omission in connection with the business of
TLC. The Board of Managers may appoint officers of TLC to perform such duties as
are set forth in the Operating Agreement or as specified by the Board of
Managers. The Board of Managers may authorize TLC to pay the officers any
reasonable fees for their services. Neither the Members nor the Managers are
required to devote their full time and efforts to the Company. TLC will pay the
Company an annual management fee of $250,000.
Assignment, Transfer and Repurchase of a Member's Units
Except as specifically set forth in the Operating Agreement, a Member
may not voluntarily sell, give, assign, bequeath or pledge (each a "Transfer")
any Membership Unit without the prior written consent of the Board of Managers;
provided, however that the Company may pledge and assign its Membership Units to
Christiana. Christiana may effect a Transfer of
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the Company's Membership Units pursuant to any action taken with respect to any
security interest granted to Christiana by the Company. Christiana may also
Transfer its Membership Units if the transferee is an affiliate of Christiana or
the Company and the transferee agrees to be bound by the provisions of the
Operating Agreement. At any time after the fifth anniversary of the date of the
Operating Agreement, Christiana may Transfer any or all of its Membership Units
to any person provided, however, that the Company shall have a right of first
refusal to purchase such Membership Units for the same price and at the same
terms as such Membership Units were offered to the transferee. In the event of
any attempted involuntary Transfer of a Unit, TLC shall have the option to
purchase the Membership Units subject to the involuntary Transfer at an amount
equal to the book value of such Membership Units. An involuntary transferee
receiving Membership Units will not be considered a member of TLC unless all of
the Members consent in writing to treat the involuntary transferee as a member.
Dissolution and Winding Up
TLC will be dissolved upon (i) the unanimous vote or written consent of
the Members to dissolve TLC; (ii) TLC being adjudicated insolvent or bankrupt;
or (iii) an entry of a decree of judicial dissolution relating to TLC. Upon a
dissolution of TLC, the Members will select a liquidator to liquidate TLC, pay
and discharge all of TLC's debts and liabilities, and distribute all remaining
assets of TLC to the Members in accordance with their respective capital
accounts.
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THE OFFERING
Rights
Each Christiana Shareholder has a Right to subscribe for their pro rata
share of Common Stock in the Offering. This Right consists of the Basic
Subscription Privilege and the Additional Subscription Privilege.
Basic Subscription Privilege
The Basic Subscription Privilege entitles each Christiana Shareholder
to purchase one share of Common Stock for $4.00 per share for each share of
Christiana Common Stock held immediately prior to the Effective Time. Christiana
Shareholders are entitled to subscribe for all, or any whole number of, the
shares of Common Stock underlying their Basic Subscription Privilege. Because
the Cash Consideration per share of Christiana Common Stock to be received in
the Merger may be less than the Subscription Price per share of Common Stock
(particularly if Additional Open Market Purchases are made), Christiana
shareholders wishing to exercise their Basic Subscription Privileges in full may
be required to make an additional cash payment, as described below under "- How
to Exercise Basic Subscription Privilege and Additional Subscription Privilege."
The Lubar Commitment ensures that the net proceeds of the Offering to the
Company (after deducting expenses estimated to be $275,000) will be at least
$10,666,667.
Additional Subscription Privilege
Each Christiana Shareholder who subscribes in full for all shares of
Common Stock that the holder is entitled to purchase pursuant to the Basic
Subscription Privilege, as well as the Management of TLC and the general public,
will be entitled to purchase additional shares of Common Stock (the "Remaining
Shares") at the Subscription Price from any unsubscribed shares remaining, if
any, after the exercise or expiration of the Basic Subscription Privilege, (such
entitlement heretofore and hereinafter referred to as the "Additional
Subscription Privilege"); provided that, (i) members of senior management of TLC
shall have the ability to subscribe for up to 100,000 of the Remaining Shares
(the "Management Allocation"); (ii) each Christiana Shareholder shall have a
right to subscribe for the Remaining Shares on a pro rata basis if any shares
are remaining after the Management Allocation (the "Shareholder Allocation");
and (iii) the general public shall have a right to subscribe to the Remaining
Shares on a pro rata basis if any shares are remaining after the Management
Allocation and the Shareholder Allocations.
Subscription Price
The Subscription Price was determined by the Company's Board of
Directors and is not based on an independent valuation of the Company. The
purchase price was determined based on a number of factors including the desire
to simplify the process of Christiana Shareholders purchasing Common Stock by
setting a price which would be proximate to the Cash Consideration per share to
be received in the Merger, while at the same time, meeting the minimum initial
bid price of $4.00 per share for the Common Stock to qualify for listing on the
Nasdaq SmallCap Market. In setting the price, the Company also considered the
fairness of the price to be paid for its two-thirds interest in TLC and the
potential usefulness of the excess funds
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to be generated from the Offering. These factors, taken together, formed the
basis of the $4.00 per share price for the Common Stock.
Subscription Expiration Date
The ability to subscribe for Common Stock will expire at 5:00 p.m.,
Central Standard Time, on the Expiration Date. The Company is not obligated to
honor any subscriptions received by the Subscription Agent after the Expiration
Date, regardless of when such subscriptions were sent.
How To Exercise Basic Subscription Privilege and Additional Subscription
Privilege
Christiana Shareholders. Christiana Shareholders may exercise the Basic
Subscription Privilege by delivering to the Subscription Agent at its offices
listed under "Subscription Agent" below, prior to 5:00 p.m., Central Standard
Time, on the Expiration Date, a properly completed and executed Letter of
Transmittal (even if it was completed in connection with the First Special
Meeting) provided pursuant to the Merger Proxy Statement delivered
simultaneously herewith to Christiana Shareholders. Christiana Shareholders
wishing to exercise their Basic Subscription Privilege will automatically upon
completion and delivery of the Letter of Transmittal, have the Subscription
Price paid on the Effective Time by the Subscription Agent from the Cash
Consideration received from Weatherford. For a description of the Cash
Consideration, see "Summary of Certain Terms of the Merger - Cash Consideration
to be Received in the Merger." Because the Cash Consideration per share may be
less than the Subscription Price (particularly if Additional Open Market
Purchases are made), any exercise of the Basic Subscription Privilege in full
may require an additional cash payment for the difference. The amount of the
additional cash payment will be set forth in an invoice sent by the Company to
the subscriber setting forth the amount of such difference, which invoice must
be paid, in the form of a check made payable to "Firstar Trust Company" within
___ days of receipt. If such invoice is not paid on a timely basis, the Company
will automatically reduce the amount of shares of Common Stock purchased by the
subscriber by an amount equal to the amount of the invoice divided by four (4).
For example, if a Christiana Shareholder holds 1,000 shares of Christiana Common
Stock immediately prior to the Effective Time and wishes to purchase 1,000
shares of Common Stock in this Offering, $3,600 (assuming the Cash Consideration
equals per share, $3.60 multiplied by 1,000) will be applied automatically by
the Subscription Agent from the anticipated Cash Consideration to be received in
the Merger, and the Christiana Shareholder will be invoiced for the $400
difference ($4,000 total Subscription Price less the $3,600 paid automatically
by the Subscription Agent). The Christiana Shareholder will then satisfy such
invoice in the form of a check made payable to "Firstar Trust Company." In the
event the invoice is not satisfied on a timely basis, the subscription will be
automatically reduced by 100 shares of Common Stock ($400 divided by four (4)).
Christiana Shareholders who exercise their Basic Subscription Privilege in full,
may exercise, pursuant to the Letter of Transmittal, the Additional Subscription
Privilege, together with full payment of the aggregate Subscription Price, to be
paid in the form of check made payable to "Firstar Trust Company." To the extent
the Cash Consideration at the Determination Date is greater than $4.00, any
excess amount paid by a Christiana Shareholder will be refunded promptly
following the Determination Date, without interest.
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Others. Others, such as TLC management and the general public wishing
to exercise the Additional Subscription Privilege shall do so by delivery of a
properly completed and executed Subscription Agreement (provided with this
Prospectus) to the Subscription Agent, together with payment in full in the form
of a check made payable to "Firstar Trust Company" as Subscription Agent.
Manner of Purchase. Any cash payment shall be made with the delivery of
the Letter of Transmittal and/or the Subscription Agreement, as the case may be,
by check payable to "Firstar Trust Company", as Subscription Agent at or prior
to 5:00 p.m., Central Standard Time, on the Expiration Date.
COMPLETED LETTERS OF TRANSMITTAL, SUBSCRIPTION AGREEMENTS AND THE
RELATED PAYMENT SENT TO THE OFFICE OF THE SUBSCRIPTION AGENT MUST BE RECEIVED
BEFORE 5:00 P.M. CENTRAL STANDARD TIME, ON THE EXPIRATION DATE. DO NOT SEND
ELECTION FORMS, SUBSCRIPTION AGREEMENTS OR PAYMENTS TO THE COMPANY, CHRISTIANA,
TLC, SUB OR WEATHERFORD. SUBSCRIBERS WILL NOT HAVE ANY ALLOCATION PREFERENCE TO
REVOKE THE EXERCISE OF THEIR ALLOCATION PREFERENCES OR THEIR ADDITIONAL
SUBSCRIPTION PRIVILEGE AFTER DELIVERY OF THEIR LETTER OF TRANSMITTAL AND/OR
SUBSCRIPTION AGREEMENTS TO THE SUBSCRIPTION AGENT.
THE METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL, SUBSCRIPTION
AGREEMENTS AND PAYMENT OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL
BE AT THE ELECTION AND RISK OF THE SUBSCRIBER, NOT THE COMPANY, CHRISTIANA, TLC,
SUB, WEATHERFORD, THE SUBSCRIPTION AGENT, OR ANY AFFILIATES THEREOF. IF SENT BY
MAIL, IT IS RECOMMENDED THAT THE LETTER OF TRANSMITTAL AND/OR SUBSCRIPTION
AGREEMENT BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE RECEIPT BY
THE SUBSCRIPTION AGENT PRIOR TO 5:00 P.M., CENTRAL STANDARD TIME, ON THE
EXPIRATION DATE.
Proration. In the event of a proration of shares of Common Stock to
persons exercising the Additional Subscription Privilege as described above
under "- Additional Subscription Privilege," the Subscription Agent will
promptly refund, without interest, the amount of any overpayment as described
above under "- Additional Subscription Privilege." The instructions that
accompany the Letter of Transmittal and Subscription Agreement should be read
carefully and followed in detail.
Brokers, Trusts and Depositaries. Record holders of shares of
Christiana Common Stock, such as brokers, trusts or depositaries for securities,
who hold the shares for the account of others, should notify the respective
beneficial owners of the shares as soon as possible to ascertain the beneficial
owners' intentions and instructions with respect to the related Basic
Subscription Privilege and Additional Subscription Privilege. Based upon the
instructions received from the beneficial holders, the record holders should
complete the Letter of Transmittal and/or Subscription Agreements and submit
them with the applicable payment.
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Company Discretion with Respect to Offering. All questions regarding
the timeliness, validity, form and eligibility of any exercise of the Basic
Subscription Privilege will be determined by the Company, in its sole
discretion, whose determination will be final and binding. The Company reserves
the absolute right to reject any subscription if such subscription is not in
proper form or if the acceptance thereof or the issuance of shares of Common
Stock pursuant thereto could be deemed unlawful. The Company, in its sole
discretion may waive any defect or irregularity, permit a defect or irregularity
to be corrected within such time as it may determine or reject the purported
exercise of any allocation preferences or the exercise of any Additional
Subscription Privilege. Subscriptions will not be deemed to have been received
or accepted until all irregularities have been waived or cured within such time
as the Company determines in its sole discretion. The Company and the
Subscription Agent will not be under any duty to give notification of any defect
or irregularity in connection with the submission of Letters of Transmittal, or
Subscription Agreements nor will any of them incur any liability for failure to
give such notification.
Delivery of Certificates
Certificates for shares of Common Stock issuable on exercise of the
Basic Subscription Privilege and/or the Additional Subscription Privilege will
be mailed as soon as practicable after the subscriptions have been accepted by
the Subscription Agent, but not prior to the Expiration Date. Certificates for
shares of Common Stock issued pursuant to the exercise of the Basic Subscription
Privilege and the Additional Subscription Privilege will be registered in the
name of the person exercising such privilege.
Subscription Agent
The Subscription Agent is Firstar Trust Company. The address to which
Letters of Transmittal and Subscription Agreements should be delivered, whether
by hand, by mail or by overnight courier, is:
Firstar Trust Company
1555 North River Center Drive
Suite 301
Milwaukee, Wisconsin 53212
Any questions or requests for assistance concerning the method of
subscribing for shares of Common Stock should be directed to the Subscription
Agent at (414) 905-5000.
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MANAGEMENT
Executive Officers and Directors of the Company
The following table contains the name, age and position with the
Company of each executive officer and director as of June 30, 1998. All
executive officers are full-time employees of the Company. Each person's
respective background is described following the table.
NAME AGE POSITION
---- --- --------
William T. Donovan 46 Chairman and Director
David J. Lubar 43 President and Director
Oyvind Solvang 39 Vice President
David E. Beckwith 70 Secretary
Nicholas F. Brady 68 Director
Sheldon B. Lubar 69 Director
Albert O. Nicholas 67 Director
William T. Donovan was named Chairman of the Company in December 1997.
Mr. Donovan is also the President, Chief Financial Officer and a director of
Christiana, positions he will vacate on the Effective Time. Mr. Donovan has held
various executive positions with Christiana since June 1988. Mr. Donovan has
also been a principal of Lubar & Co., a venture capital and investments firm
located in Milwaukee, Wisconsin since January 1980. Mr. Donovan is also a
Director of Grey Wolf, Inc.
David J. Lubar has been President of the Company since December 1997.
Mr. Lubar also serves as President of Lubar & Co., a position he has held since
January 1991. Mr. Lubar is a Director of Christiana, a position he will vacate
as of the Effective Time. Mr. Lubar is the son of Sheldon B. Lubar.
Oyvind Solvang has been Vice President of the Company since December
1997. Mr. Solvang is also the Vice President of Christiana, a position he will
vacate on the Effective Time. Mr. Solvang has served as President of Cleary Gull
Reiland & McDevitt, Inc., an investment banking firm located in Milwaukee,
Wisconsin from January 1996 to October 1996 and Chief Operating Officer of
Cleary Gull Reiland & McDevitt, Inc., from October 1995 to January 1996. Prior
thereto, from May 1994 to September 1995, Mr. Solvang served as President of
Scinticor, Incorporated, a manufacturer of cardiac imaging devices, located in
Milwaukee, Wisconsin, and from August 1990 to April 1994 as Vice President and
General Manager of Applied Power, Inc., a supplier of hydraulic systems, located
in Butler, Wisconsin.
David E. Beckwith has been Secretary of the Company since December
1997. Since May 1995, he served as Secretary of Christiana, a position he will
vacate as of the Effective Time. Mr. Beckwith has been associated with the law
firm of Foley & Lardner since 1952 and has been a Partner at Foley & Lardner
since 1960.
Nicholas F. Brady has been a Director of the Company since December
1997. Since February 1993, Mr. Brady has been Chairman and President of Darby
Advisors, Inc., a private investment company located in Easton, Maryland. Prior
thereto, Mr. Brady served as Secretary
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of the United States Department of the Treasury for over four years, and before
that, Chairman of Dillon, Reed & Co., Inc. Mr. Brady is a Director of Amerada
Hess Corporation and H.J. Heinz Company, as well as a Director (or trustee) of
27 Templeton funds, which are registered investment companies. Mr. Brady is also
a Director of Christiana, a position he will vacate as of the Effective Time.
Sheldon B. Lubar has been a Director of the Company since December
1997. Mr. Lubar has also been a principal of Lubar & Co. since its inception in
1977. Mr. Lubar is a Director of Ameritech Corporation, Weatherford, Firstar
Corporation, Massachusetts Mutual Life Insurance Co. and MGIC Investment
Corporation. Mr. Lubar currently serves as Chairman, Chief Executive Officer and
a Director of Christiana, all of which positions he will vacate as of the
Effective Time. Mr. Lubar is the father David J. Lubar.
Albert O. Nicholas has been a Director of the Company since December
1997. Mr. Nicholas has been owner and President of Nicholas Company, Inc., a
registered investment advisor located in Milwaukee, Wisconsin since December,
1967. Nicholas Company, Inc. is the advisor to six registered investment
companies: Nicholas Fund, Inc., Nicholas Two, Inc., Nicholas Income Fund, Inc.,
Nicholas Limited Addition, Inc., Nicholas Money Market Fund, Inc. and Nicholas
Equity Income Fund. Mr. Nicholas is the President and a Director of each of
these investment companies. Mr. Nicholas is also a Director of Bando McGlocklin
Capital Corporation. In addition, Mr. Nicholas serves as a Director of
Christiana, a position he will vacate as of the Effective Time.
Executive Officers and Prospective Managers of TLC
The following table contains the name, age and position with TLC of
each executive officer as of June 30, 1998 and the persons who will serve on the
Board of Managers upon completion of the Offering. Each person's respective
background is described following the table.
NAME AGE POSITION
Gary R. Sarner 52 Chairman and Manager
John R. Patterson 51 President, Chief Executive Officer
and Manager
Brian L. Brink 37 Vice President and Chief Financial
Officer
Sheldon B. Lubar 69 Manager
William T. Donovan 46 Manager
Bernard J. Duroc-Danner 44 Manager
Curtis W. Huff 40 Manager
Gary R. Sarner was named Chairman of TLC in January 1994. Prior
thereto, Mr. Sarner was the President of Wiscold, Inc., the business of which
was acquired by Christiana in September 1992. Mr. Sarner is a Director of
Christiana, a position he will vacate as of the Effective Time.
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John R. Patterson has served as President and Chief Executive Officer
of TLC since February 1996. Prior thereto, from June 1993 to February 1996, Mr.
Patterson served as Vice President-Operations for Schneider Logistics, Inc., a
provider of transportation and logistics services located in Green Bay,
Wisconsin. For the six prior years, Mr. Patterson was the President and
principal owner of Pro Drive, Inc., a truck driver recruiting and training firm
in Green Bay, Wisconsin. Mr. Patterson is a director of Christiana, a position
he will vacate as of the Effective Time.
Brian L. Brink has been Vice President and Chief Financial Officer of
TLC since May 1997. Prior thereto from December 1993 to May 1997, Mr. Brink
served as Chief Financial Officer for the Van Eerden Company, a national
refrigerated transportation and wholesale food distribution company. From May
1988 to December 1993, Mr. Brink served as Controller of Bil Mar Foods, a
division of Sara Lee Company, an international food processor.
Bernard J. Duroc-Danner joined Weatherford in May 1987 to initiate the
start-up of Weatherford's oilfield service and equipment business. He was
elected President of Weatherford in January 1990 and Chief Executive Officer in
May 1990. In connection with the Weatherford Merger, Mr. Duroc-Danner was
elected to the additional position of Chairman of the Board. Mr. Duroc-Danner
holds a Ph.D. in economics from Wharton (University of Philadelphia). Mr.
Duroc-Danner is a director of Parker Drilling Company.
Curtis W. Huff became Senior Vice President, General Counsel and
Secretary of Weatherford in June 1998. Prior thereto, Mr. Huff served as a
Partner of the law firm of Fullbright & Jaworski L.L.P. for seven years. Mr.
Huff is a director of UTI Energy Corporation.
Board Committees of the Company
The Board of Directors has established an Audit Committee, a
Compensation and Nominating Committee and a Finance Committee, each consisting
of three or more directors. The Company will maintain at least two Independent
Directors on its Board of Directors.
The duties of the Audit Committee will be to select and engage
independent public accountants to audit the books and records of the Company
annually, to review the activities and the reports of the independent public
accountants and authorize appropriate action. The Audit Committee will also
approve any other services to be performed by and approve the audit fee and
other fees payable to the independent public accountants and monitor the
internal accounting controls of the Company. A majority of the members of the
Audit Committee will consist of Independent Directors.
The duties of the Compensation and Nominating Committee will be to (i)
provide a general review of the Company's compensation and benefit plans to
ensure that they meet the Company's objectives; (ii) to administer the 1998 Plan
described below and to grant awards thereunder; (iii) to consider and establish
the compensation of all officers of the Company and adopt major Company
compensation policies and practices; (iv) to consider and make recommendations
to the Board of Directors regarding the selection and retention of all elected
officers of the Company and its subsidiaries; and (v) such other duties assigned
by the Board of
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Directors or the Bylaws of the Company. A majority of the members of the
Compensation and Nominating Committee will consist of Independent Directors.
The duties of the Finance Committee will be to assist the Board of
Directors in making financial decisions, which shall include (i) reviewing and
approving all investments and capital commitments of the Company not delegated
to management pursuant to resolutions adopted by the majority of the entire
Board of Directors; (ii) development of financial plans and strategies of the
Company; and (iii) such other duties delegated to the Finance Committee by the
Board of Directors.
Executive Compensation
The Company was incorporated on December 11, 1997. Since its
incorporation, the Company has conducted no operations (other than in connection
with the Merger and the Acquisition), and has generated no revenue. The Company
has never paid any of its executive officers compensation. The Company
anticipates that during fiscal 1999 its most highly compensated officers will be
William T. Donovan, David J. Lubar and Oyvind Solvang, who will be paid
$175,000, $120,000 and $120,000, respectively.
1998 Equity Incentive Plan
The 1998 Plan authorizes the granting of: (i) stock options, which may
be either incentive stock options meeting the requirements of Section 422 of the
Code or nonqualified stock options; (ii) stock appreciation rights ("SARs");
(iii) restricted stock; (iv) performance shares; and (v) stock option grants to
directors who are not employees of the Company ("Independent Directors"). The
1998 Plan is designed to provide the Compensation and Nominating Committee with
broad flexibility and discretion to deal with the ever changing executive
compensation environment. In general, the terms and conditions of key employee
awards under the 1998 Plan will be left to the discretion of the Compensation
and Nominating Committee. This will allow the Compensation and Nominating
Committee to structure varying incentive compensation awards from time to time
in order to best achieve the purposes of the 1998 Plan. The 1998 Plan provides
that up to a total of 520,000 shares of Common Stock will be available for
issuance pursuant to the granting of awards thereunder, with no more than 50,000
shares issuable as restricted stock.
As of the date of the Prospectus, no awards have been granted under the
1998 Plan, except automatic grants to Independent Directors on the effective
date of this Offering, as described under "Director Compensation" below.
Director Compensation
The directors of the Company will receive no compensation for service
as members of either the Board of Directors or committees thereof other than
option grants pursuant to 1998 Plan. Effective after this Offering, Independent
Directors will be entitled to reimbursement of out-of-pocket expenses.
In addition, under the 1998 Plan, on the effective date of this
Offering, each then serving Independent Director will be granted non-qualified
stock options under the 1998 Plan to purchase
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12,000 shares of Common Stock at a per share exercise price equal to the $4.00
per share. Each Independent Director's initial option grant will vest ratably
over an approximate five-year period, provided that the Independent Director
continues to serve as a member of the Board of Directors at the end of each
vesting period with respect to the increment then vesting. Notwithstanding the
aforementioned vesting provisions, all outstanding options granted to
Independent Directors under the 1998 Plan will vest immediately upon a "change
in control," or the director's death or disability. All options granted to
Independent Directors under the 1998 Plan will expire upon the earlier to occur
of five years from the grant date or one year from the Independent Director
ceasing to hold such position.
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CERTAIN TRANSACTIONS
Pursuant to the Merger, each share of Christiana Common Stock as of the
Effective Time will be converted into the right to receive (i) the Weatherford
Share Consideration; and (ii) the Cash Consideration. For more information
concerning the terms and conditions of the Merger, potential investors are urged
to read carefully the Merger Proxy Statement.
All future material affiliated transactions and loans will be made and
entered into on terms that are no less favorable to the Company than those that
can be obtained from unaffiliated third parties and shall be approved by a
majority of the Independent Directors who do not have an interest in the
transaction and who have access, at the Company's expense, to Company's counsel
or independent legal counsel.
The directors and officers of the Company beneficially own shares of
Christiana Common Stock (including shares of Common Stock subject to options) in
the following amounts:
SHARES OF CHRISTIANA COMMON
NAME STOCK BENEFICIALLY OWNED
Sheldon B. Lubar 968,615(1)
Albert O. Nicholas 310,700
David J. Lubar 427,403
Nicholas F. Brady 200,000
William T. Donovan 178,532
- --------------------
(1) Includes 433,705 shares owned by Mr. Lubar's wife and 91,205 shares held in
trusts for the benefit of Mr. Lubar's grandchildren for which Mr. Lubar serves
as trustee.
Sheldon B. Lubar's three daughters, Joan P. Lubar, Kristine L. Thomson
and Susan L. Solvang (the wife of Oyvind Solvang, a Vice President of the
Company), own 448,551, 430,478 and 442,953 shares of Christiana Common Stock,
respectively.
In connection with the Merger and the Acquisition, Sheldon B. Lubar
entered into a letter agreement with the Company in which the Company and Mr.
Lubar agreed (i) that all Christiana Shareholders would have the right to
purchase at least the same percentage ownership in the Company as such
Christiana Shareholder has in Christiana immediately prior to the Effective Time
and at the same price per share as each of the Lubar Family and (ii) that Mr.
Lubar and the remainder of the Lubar Family would exercise their Basic
Subscription Privilege in full to ensure that the met proceeds of the Offering
to the Company will be at least $10,666,667.
The Lubar Family, Lubar & Co. and Venture Capital Fund, L.P., a fund
managed by Lubar & Co., and William T. Donovan own 5.3%, 0.8%, 6.0% and 0.7%,
respectively, of Emmpak Foods, Inc., a customer of TLC. During fiscal 1998,
Emmpak Foods, Inc. accounted for approximately $2.2 million in gross revenue for
TLC. David J. Lubar serves on the board of directors of Emmpak Foods, Inc.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company, after giving effect to the
Merger and this Offering, by (i) each of the Company's directors; (ii) each of
the Company's executive officers; (iii) each person who is known by the Company
to own beneficially more than 5% of the Common Stock; and (iv) all Company's
executive officers and directors as a group.
<TABLE>
<CAPTION>
Number of Shares Beneficially Shares Beneficially Owned
Owned Prior to Offering After Offering
Name Number Percent Number Percent
<S> <C> <C> <C> <C>
William T. Donovan -- -- (1) (1)
David J. Lubar(2) -- -- (1) (1)
Oyvind Solvang -- -- (1) (1)
David E. Beckwith -- -- (1) (1)
Nicholas F. Brady -- -- (1) (1)
Sheldon B. Lubar 25 100% (1) (1)
Albert O. Nicholas -- -- (1) (1)
Joan P. Lubar(2) -- -- (1) (1)
Kristine L. Thomson(2) -- -- (1) (1)
Susan L. Solvang(2) -- -- (1) (1)
All directors and executive
officers as a group
(seven persons): 25 100% (1) (1)
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* Less than one percent.
(1) To be determined following the amount of shares purchased by Christiana
Shareholders and the above named individuals pursuant to the Basic
Subscription Privilege and the Additional Subscription Privilege. The
Lubar Family (which includes Sheldon B. Lubar, David J. Lubar, Joan P.
Lubar, Kristine L. Thomson and Susan L. Solvang) has committed pursuant
to an agreement between the Company and Sheldon B. Lubar, dated
December 24, 1997, and certain related agreements, to exercise their
Basic Subscription Privileges in full to generate proceeds from the
Offering of at least $10,666,667, after expenses estimated to be
$275,000.
(2) David J. Lubar is the son of Sheldon B. Lubar and Joan P. Lubar,
Kristine L. Thomson and Susan L. Solvang are daughters of Sheldon B.
Lubar.
</TABLE>
-65-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon consummation of the Offering, the authorized capital stock of the
Company will consist of 50,000,000 shares of Common Stock, $.01 par value, and
10,000,000 shares of undesignated preferred stock, $.01 par value. Upon
consummation of the Offering, 5,202,689 shares of Common Stock and no shares of
preferred stock will be issued and outstanding, assuming the maximum number of
shares of Common Stock offered hereby are sold.
The following summary description of the Common Stock and preferred
stock is subject to, and qualified in its entirety by, the provisions of the
Amended and Restated Articles of Incorporation and Amended and Restated By-laws
which are included as exhibits to the Registration Statement of which this
Prospectus is a part and by the provisions of applicable law.
Common Stock
After all cumulative dividends have been paid or declared and set apart
for payment on any shares of preferred stock that are outstanding, the Common
Stock is entitled to such dividends as may be declared from time to time by the
Board of Directors in accordance with applicable law. For certain restrictions
on the ability of the Company to declare dividends, see "Dividend Policy."
Except as may be determined by the Board of Directors of the Company
with respect to any series of preferred stock, only the holders of Common Stock
shall be entitled to vote for the election of directors of the Company and on
all other matters. Upon any such vote the holders of Common Stock will be
entitled to one vote for each share of Common Stock held by them subject to any
applicable law. Cumulative voting is not permitted.
All shares of Common Stock are entitled to participate equally in
distributions in liquidation, subject to the prior rights of any preferred stock
that may be outstanding. Except as the Board of Directors may in its discretion
otherwise determine, holders of Common Stock have no preemptive rights to
subscribe for or purchase shares of the Company. There are no conversion rights
or sinking fund or redemption provisions applicable to the Common Stock. The
Common Stock to be outstanding upon completion of the Offering will be fully
paid and nonassessable (subject to Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law ("WBCL")).
The transfer agent for the Common Stock is Firstar Trust Company.
Preferred Stock
The Company's Amended and Restated Articles of Incorporation will
provide that the Board of Directors has the authority, without further action by
the shareholders, to issue up to 10,000,000 shares of preferred stock in one or
more series and to fix the designations, powers, preferences, privileges, and
relative participating, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of the Common Stock; provided that
the Company will not offer preferred stock to any officer, director, 5%
shareholder or other affiliate except on the same terms as it is offered to all
-66-
<PAGE>
other existing shareholders or new shareholders. The Board of Directors, without
shareholder approval, can issue preferred stock with voting, conversion or other
rights that could adversely affect the voting power and other rights of the
holders of Common Stock. Preferred stock could thus be issued quickly with terms
calculated to delay or prevent a change in control of the Company or make
removal of management more difficult. Additionally, the issuance of preferred
stock may have the effect of decreasing the market price of the Common Stock,
and may adversely affect the voting and other rights of the holders of Common
Stock. The Company has no present plans to issue any shares of preferred stock.
Certain Anti-Takeover and Indemnification Provisions
By-law Provisions
The Company's Amended and Restated By-laws provide that a Special
Meeting may be called only by (i) the Chairman of the Board, (ii) the President,
or (iii) the Board of Directors and shall be called by the Chairman of the Board
or the President upon the demand of the holders of record of shares representing
at least 10% of all the votes entitled to be cast on any issue proposed to be
considered at the Special Meeting.
The Amended and Restated By-laws provide that the directors and
executive officers of the Company shall be indemnified to the fullest extent
permitted by the WBCL against expenses (including attorneys' fees), judgments,
fines, settlements and other amounts actually and reasonably incurred by them in
connection with any proceeding arising out of their status as directors and
executive officers.
The foregoing provisions and the prohibitions set forth in the WBCL
could have the effect of delaying, deferring or preventing a change in control
or the removal of existing management of the Company.
Statutory Provisions
Section 180.1150 of the WBCL provides that the voting power of shares
of public Wisconsin corporations, such as the Company, held by any person or
persons acting as a group that hold in excess of 20% of the voting power for the
election of directors is limited to 10% of the full voting power of those
shares. This restriction does not apply to shares acquired directly from the
Company or in certain specified transactions or shares for which full voting
power has been restored pursuant to a vote of shareholders.
Sections 180.1140 to 180.1144 (the "Wisconsin Business Combination
Statute") of the WBCL contain certain limitations and special voting provisions
applicable to "business combinations" between a Wisconsin corporation and an
"interested shareholder." The term "business combination" is defined for
purposes of the Wisconsin Business Combination Statute to include a merger or
share exchange, sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets equal to at least 5% of the market value of the stock or
assets of a corporation or 10% of its earning power, issuance of stock or rights
to purchase stock with a market value equal to at least 5% of the outstanding
stock, adoption of a plan of liquidation and certain other transactions
involving an "interested shareholder." An "interested shareholder" is defined as
a person who beneficially owns, directly or indirectly, 10% of the voting power
of the
-67-
<PAGE>
outstanding voting stock of a corporation or who is an affiliate or associate of
the corporation and beneficially owned 10% of the voting power of the then
outstanding voting stock within the last three years. The Wisconsin Business
Combination Statute prohibits a corporation from engaging in a business
combination (other than a business combination of a type specifically excluded
from the coverage of the statute) with an interested shareholder for a period of
three years following the date such person becomes an interested shareholder,
unless the Board of Directors approved the business combination or the
acquisition of the stock that resulted in a person becoming an interested
shareholder before such acquisition. Business combinations after the three-year
period following the stock acquisition date are permitted only if (i) the Board
of Directors approved the acquisition of the stock prior to the acquisition
date; (ii) the business combination is approved by a majority of the outstanding
voting stock not beneficially owned by the interested shareholder; or (iii) the
consideration to be received by shareholders meets certain requirements of the
Wisconsin Business Combination Statute with respect to form and amount.
Sections 180.1130 to 180.1133 of the WBCL provide that certain
"business combinations" not meeting certain fair price standards must be
approved by a vote of at least 80% of the votes entitled to be cast by all
shareholders and by two-thirds of the votes entitled to be cast by shareholders
other than a "significant shareholder" who is a party to the transaction. The
term "business combination" is defined, for purposes of Sections 180.1130 to
180.1133 of the WBCL, to include, subject to certain exceptions, a merger or
consolidation of the corporation (or any subsidiary thereof) with, or the sale
or other disposition of substantially all of the assets of the corporation to,
any significant shareholder or affiliate thereof. "Significant shareholder" is
defined generally to include a person that is the beneficial owner of 10% or
more of the voting power of the corporation.
Section 180.1134 of the WBCL (the "Wisconsin Defensive Action
Restrictions") provides that, in addition to the vote otherwise required by law
or the articles of incorporation of an issuing public corporation, the approval
of the holders of a majority of the shares entitled to vote is required before
such corporation can take certain action while a takeover offer is being made or
after a takeover offer has been publicly announced and before it is concluded.
Under the Wisconsin Defensive Action Restrictions, shareholder approval is
required for the corporation to (i) acquire more than 5% of its outstanding
voting shares at a price above the market price from any individual or
organization that owns more than 3% of the outstanding voting shares and has
held such shares for less than two years, unless a similar offer is made to
acquire all voting shares; or (ii) sell or option assets of the corporation that
amount to at least 10% of the market value of the corporation, unless the
corporation has at least three independent directors or a majority of the
independent directors vote not to have the provision apply to the corporation.
The restrictions described in clause (i) above may have the effect of deterring
a shareholder from acquiring shares of the Company with the goal of seeking to
have the Company repurchase such shares at a premium over the market price.
SHARES ELIGIBLE FOR FUTURE SALE
After the Offering, assuming the issuance of 5,202,664 shares of Common
Stock, the Company will have outstanding 5,202,689 shares of Common Stock. The
5,202,664 shares of Common Stock to be sold in this Offering will be freely
tradeable without restriction unless acquired by affiliates of the Company. All
but the 25 shares of Common Stock issued to Sheldon
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<PAGE>
B. Lubar in connection with the Company's initial capitalization were registered
in the Offering. The registered shares held by affiliates are hereinafter
referred to as "Control Shares" and the 25 unregistered shares held by Sheldon
B. Lubar are hereinafter referred to as "Restricted Shares." The Restricted
Shares may be resold only upon registration under the Securities Act or in
compliance with an exemption from the registration requirements of the
Securities Act.
With respect to Restricted Shares, under Rule 144 as currently in
effect, if one year has elapsed (the "Waiting Period") since the later of the
date of the acquisition of Restricted Shares from either the Company or any
affiliate of the Company, the acquiror or subsequent holder thereof may sell,
within any three-month period commencing 90 days after consummation of the
Offering, a number of shares that does not exceed the greater of one percent of
the then outstanding shares of the Common Stock, or the average weekly trading
volume of the Common Stock on the Nasdaq SmallCap Market during the four
calendar weeks preceding the date on which notice of the proposed sale is sent
to the Commission. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about the Company. If two years have elapsed since the later of the
date of the acquisition of Restricted Shares of Common Stock from the Company or
any affiliate of the Company, a person who is not deemed to have been an
affiliate of the Company at any time for 90 days preceding a sale would be
entitled to sell such shares under Rule 144 without regard to the volume
limitations, manner of sale provisions or notice requirements. Affiliates, will
also be able to sell their Control Shares pursuant to the Rule 144 exemption,
except that the Waiting Period will not apply.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Foley & Lardner, Milwaukee, Wisconsin.
EXPERTS
The audited financial statements of the Company and TLC appearing in
this Prospectus and elsewhere in this registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-1 under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto, to which reference is hereby made.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete; with respect to each such
contract, agreement or other document are not necessarily complete; with respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved.
-69-
<PAGE>
After the consummation of the Offering, the Company will be subject to
the informational requirements of the Securities and Exchange Act of 1934, as
amended, and, in accordance therewith, will file reports, proxy and information
statements and other information with the Commission. The Registration
Statement, as well as any such reports, proxy and information statements and
other information filed by the Company with the Commission, may be inspected and
copies at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York, 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements certified by its independent auditors.
Christiana and Weatherford have filed the Merger Proxy Statement under
Section 14(a) of the Exchange Act, with respect to the Merger and certain other
matters. Christiana and Weatherford are subject to the information requirements
of the Exchange Act and in accordance therewith, have filed reports and
information with the Commission in accordance with the Commission's rules, which
reports and information may be obtained as described above.
The Commission maintains an Internet web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
web site is http://www.sec.gov.
-70-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
C2, INC. FINANCIAL STATEMENTS:
Report of Independent Public Accountants.............. F-2
Balance Sheet as of December 31, 1997................. F-3
Notes to Balance Sheet................................ F-4
Balance Sheets as of June 30, 1998
and December 31, 1997 (unaudited)..................... F-6
Notes to Balance Sheets (unaudited).................. F-7
TLC FINANCIAL STATEMENTS
Report of Independent Public Accountants.............. F-8
Balance Sheets as of June 30, 1998 and 1997 .......... F-9
Statements of Income for the years
ended June 30, 1998, 1997 and 1996................... F-10
Statements of Equity for the years
ended June 30, 1998, 1997 and 1996................... F-11
Statements of Cash Flows for the years
ended June 30, 1998, 1997 and 1996................... F-12
Notes to Financial Statements......................... F-13
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholder of C2, Inc.
We have audited the accompanying balance sheet of C2, Inc. (a Wisconsin
corporation), as of December 31, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of C2, Inc. as of December 31, 1997,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 6, 1998
F-2
<PAGE>
C2, Inc.
Balance Sheet
As of December 31, 1997
ASSETS:
Due from Shareholder for common stock
subscribed $ 100
------
Total assets $ 100
======
LIABILITIES AND
SHAREHOLDER'S EQUITY:
Total liabilities $ -
SHAREHOLDER'S
EQUITY:
Preferred stock, $.01 par, 10,000,000 shares
authorized, none issued or outstanding -
Common stock, $.01
par, 50,000,000 shares
authorized, 25 shares issued and outstanding -
Additional
paid-in capital 100
------
Total shareholder's equity 100
======
Total liabilities and shareholder's equity $ 100
======
The accompanying notes are an integral part of this balance sheet.
F-3
<PAGE>
C2, Inc.
Notes to Balance Sheet
A. Business and Organization:
C2, Inc. (the "Company") was organized in December 1997, for the purposes of
acquiring a two-thirds interest in Total Logistic Control, LLC ("TLC"), a
transportation, warehousing and logistics company (the "Acquisition"). The
Company intends to complete an initial public offering of up to 5,202,664 shares
of its common stock (the "Offering") and utilize the proceeds to fund the
Acquisition and for future operations. There is no assurance the Acquisition
will be completed and that the Company will be able to generate future operating
revenues.
The Company's assets as of December 31, 1997 consist exclusively of an amount
due from the sole shareholder pertaining to the initial capitalization of the
Company. The Company has not conducted any operations and all activities to date
have related to the Acquisition and the Offering. Accordingly, statements of
operations, changes in shareholder's equity and cash flows would not provide
meaningful information and have been omitted.
B. Shareholder's Equity:
In connection with its organization and initial capitalization, the Company
issued 25 shares of common stock for $100.
C. Commitments and Contingencies:
On December 12, 1997, the Company entered into a Purchase Agreement (the
"Agreement") to acquire from Christiana Companies, Inc. ("Christiana") 666.667
Membership Units (two-thirds) of TLC for cash consideration of $10,667,000. The
Acquisition is contingent upon the consummation of the merger between Christiana
and Weatherford discussed elsewhere in this Prospectus.
Under the Agreement, the company agreed to indemnify Christiana for certain
liabilities of Christiana. Christiana further has the right to require the
Company to purchase all of Christiana's 333.333 Membership Units in TLC for a
price equal to $7 million. See "The Purchase Agreement" included elsewhere in
the Prospectus.
D. Stock Options
The Company's shareholder has approved the 1998 Equity Incentive Plan (the "1998
Plan") under which a total of 520,000 shares of Common Stock are reserved for
awards to officers, directors and key employees as stock options, stock
appreciation rights, restricted stock and performance shares. As of December 31,
1997, no awards have been granted under the 1998 Plan.
E. Events Subsequent to Date of Report of Independent Public
Accountants (Unaudited):
F-4
<PAGE>
(1) Subsequent to December 31, 1997, the Company has incurred
various legal and professional fees associated with the
Acquisition and the Offering. On February 10, 1998, the
Company filed a Registration Statement on Form S-1 for the
sale of its common stock. See "Risk Factors" included
elsewhere in this Prospectus.
(2) Subsequent to December 31, 1997, the Company amended its
Articles of Incorporation to change the par value of its
Common Stock from $1.00 to $.01, increase the number of
common shares authorized from 9,000 to 50,000,000 and
authorize 10,000,000 shares of $.01 par value preferred
stock. The impact of this amendment resulted only in a
reclassification of amounts within the Company's shareholder
equity accounts. The balance sheet as of December 31, 1997
has been restated to reflect the impact of this amendment.
F-5
<PAGE>
C2
Balance Sheets (Unaudited)
As of June 30, 1998 and December 31, 1997
June 30, December 31,
1998 1997
ASSETS:
Cash $ 100 $ --
Due from shareholder for common
stock subscribed -- 100
Deferred offering and acquisition costs 240,000 --
-------- --------
Total assets $240,100 $ 100
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY:
Accrued expenses $240,000 $ --
-------- --------
Total liabilities 240,000 --
SHAREHOLDERS EQUITY:
Preferred stock, $.01 par, 10,000,000 shares
authorized, none issues or outstanding -- --
Common stock, $.01 par, 50,000,000 shares
authorized, 25 shares issued and outstanding -- --
Additional paid-in capital 100 100
-------- --------
Total shareholder's
equity 100 100
-------- --------
Total liabilities and shareholder's equity $240,100 $ 100
======== ========
The accompanying notes are an integral part of this balance sheet.
F-6
<PAGE>
C2, Inc.
Notes to Balance Sheets (Unaudited)
June 30, 1998
A. Business and Organization:
C2, Inc. (the "Company") was organized in December 1997, for the purposes of
acquiring a two-thirds interest in Total Logistic Control, LLC ("TLC"), a
transportation, warehousing and logistics company (the "Acquisition"). The
Company intends to complete an initial public offering of up to 5,202,664 shares
of its common stock (the "Offering") and utilize the proceeds to fund the
Acquisition and for future operations. There is no assurance the Acquisition
will be completed and that the Company will be able to generate future operating
revenues.
The Company's assets as of June 30, 1998, consist of cash and costs incurred in
connection with the Offering and Acquisition which have been deferred in the
accompanying balance sheet. These offering and acquisition costs have been
deferred as they will be included either as a reduction to the amount raised in
the Offering or as an expense of the Acquisition. As of December 31, 1997, the
Company's assets consisted exclusively of an amount due from the sole
shareholder pertaining to the initial capitalization of the Company. Other than
activities related to the Offering and Acquisition, the Company has not
conducted any operations. Accordingly, statements of operation, changes in
shareholder's equity and cash flows would not provide meaningful information and
have been omitted for all periods presented.
B. Shareholder's Equity:
In connection with its organization and initial capitalization, the Company
issued 25 shares of common stock for $100.
C. Commitments and Contingencies:
On December 12, 1997, the Company entered into a Purchase Agreement (the
"Agreement") to acquire from Christiana Companies, Inc. ("Christiana") 666.667
Membership Units (two-thirds) of TLC for cash consideration of $10,667,000. The
Acquisition is contingent upon the consummation of the merger between Christiana
and Weatherford discussed elsewhere in this Prospectus.
Under the Agreement, the Company agreed to indemnify Christiana for certain
liabilities of Christiana. Christiana further has the right to require the
Company to purchase all of Christiana's 333.333 Membership Units in TLC for a
price equal to $7 million. See "The Purchase Agreement" included elsewhere in
the Prospectus.
D. Stock Options:
The Company's shareholder has approved the 1998 Equity Inventive Plan (the "1998
Plan") under which a total of 520,000 shares of common stock are reserved for
awards to officers, directors and key employees as stock options, stock
appreciation rights, restricted stock and performance shares. As of March 31,
1998, no awards have been granted under the 1998 Plan.
F-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Members of Total Logistic Control, LLC:
We have audited the accompanying balance sheets of Total Logistic Control, LLC
(a Delaware limited liability company and wholly owned subsidiary of Christiana
Companies, Inc.) as of June 30, 1998 and 1997 , and the related statements of
income, equity and cash flows for each of the three years in the period ended
June 30, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidencing
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Total Logistic Control, LLC as
of June 30, 1998 and 1997 , and the results of its operations and its cash flows
for each of the years in the three year period ended June 30, 1998, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 12, 1998
F-8
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
BALANCE SHEETS
AS OF JUNE 30
ASSETS 1998 1997
CURRENT ASSETS:
Cash and cash equivalents $ 541,000 $ 224,000
Accounts receivable, less allowance
for uncollectable accounts 7,739,000 7,552,000
Inventories 233,000 273,000
Prepaids and other assets 311,000 259,000
----------- -----------
Total current assets 8,824,000 8,308,000
LONG-TERM ASSETS:
Fixed assets, net 70,601,000 75,501,000
Goodwill 5,435,000 5,592,000
Other assets 751,000 739,000
----------- -----------
Total long-term assets 76,787,000 81,832,000
----------- -----------
Total assets $85,611,000 $90,140,000
=========== ===========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Short-term debt $ 239,000 --
Current maturities of long-term debt 3,003,000 1,245,000
Accounts payable 3,774,000 2,868,000
Accrued liabilities 4,236,000 3,056,000
----------- -----------
Total current liabilities 11,252,000 7,169,000
DUE TO PARENT COMPANY 3,000,000 3,000,000
LONG-TERM LIABILITIES:
Long-term debt 27,122,000 36,149,000
Other liabilities 340,000 361,000
----------- -----------
Total long-term liabilities 27,462,000 36,510,000
----------- -----------
Total liabilities 41,714,000 46,679,000
----------- -----------
TOTAL MEMBER'S EQUITY 43,897,000 43,461,000
----------- -----------
Total liabilities and member's equity $85,611,000 $90,140,000
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-9
<PAGE>
<TABLE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30
<CAPTION>
1998 1997 1996
REVENUES:
<S> <C> <C> <C>
Warehousing and logistic services $ 90,179,000 $ 84,208,000 $ 76,976,000
OPERATING EXPENSES:
Warehousing and logistic expenses 76,057,000 70,973,000 64,956,000
Selling, general and
administrative expenses 7,148,000 6,924,000 6,331,000
------------ ------------ ------------
83,205,000 77,897,000 71,287,000
------------ ------------ ------------
Income from operations 6,974,000 6,311,000 5,689,000
OTHER INCOME (EXPENSES):
Interest expense (2,854,000) (3,216,000) (3,176,000)
Gain (Loss) on disposal of assets (159,000) (1,036,000) 206,000
Other expense, net (220,000) (354,000) (108,000)
------------ ------------ ------------
(3,233,000) (4,606,000) (3,078,000)
------------ ------------ ------------
NET INCOME BEFORE INCOME TAXES 3,741,000 1,705,000 2,611,000
PROVISION FOR INCOME TAXES -- 695,000 1,075,000
ADJUSTMENT OF DEFERRED INCOME
TAXES RESULTING FROM A CHANGE IN
TAX STATUS -- 11,171,000 --
------------ ------------ ------------
NET INCOME $ 3,741,000 $ 12,181,000 $ 1,536,000
============ ============ ============
BASIC AND DILUTED INCOME PER
MEMBERSHIP UNIT $ 3,741 $ 12,181 $ 1,536
============ ============ ============
BASIC AND DILUTED WEIGHTED AVERAGE
MEMBERSHIP UNITS OUTSTANDING 1,000 1,000 1,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF EQUITY
FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996
Member's
Membership Units Equity
--------------------- -----------------
Balance, June 30, 1995 1,000 $ 29,744,000
Net income -- 1,536,000
------------ ------------
Balance, June 30, 1996 1,000 31,280,000
Net income -- 12,181,000
------------ ------------
Balance, June 30, 1997
1,000 $ 43,461,000
Net income -- 3,741,000
Distribution to Christiana for
promissory note retirement -- (2,326,000)
Distribution to Christiana
for income taxes -- (979,000)
------------ ------------
Balance, June 30, 1998 1,000 $ 43,897,000
============ ============
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
<TABLE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
<CAPTION>
1998 1997 1996
---------------- ------------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 3,741,000 $ 12,181,000 $ 1,536,000
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation and amortization 6,651,000 7,186,000 6,971,000
(Gain) loss on disposal of assets 159,000 1,036,000 (206,000)
Deferred income tax provision -- 1,023,000 746,000
Adjustment of deferred income taxes
resulting from a change in tax status -- (11,171,000) --
Changes in Assets and Liabilities:
(Increase) decrease in accounts
receivable (187,000) 465,000 (404,000)
(Increase) decrease in inventories 40,000 166,000 (191,000)
(Increase) decrease of prepaids and
other assets (164,000) 668,000 564,000
Increase (decrease) in accounts
payable and accrued liabilities 2,065,000 (2,260,000) 2,027,000
------------ ------------ ------------
Net cash provided by operating
activities 12,305,000 9,294,000 11,043,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (2,283,000) (3,294,000) (17,646,000)
Proceeds from sale of fixed assets 630,000 1,472,000 1,384,000
------------ ------------ ------------
Net cash used in investing activities (1,653,000) (1,822,000) (16,262,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) on line of
credit, net 239,000 (1,354,000) (490,000)
Proceeds from issuance of
long-term debt -- -- 9,011,000
Payment of amounts due to Christiana -- (295,000) --
Payment of long-term debt (7,269,000) (5,628,000) (3,638,000)
Distribution to Christiana for
promissory note retirement (2,326,000) -- --
Distribution to Christiana for
income taxes (979,000) -- --
------------ ------------ ------------
Net cash provided by (used
in) financing activities (10,335,000) (7,277,000) 4,883,000
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 317,000 195,000 (336,000)
BEGINNING CASH AND CASH EQUIVALENTS,
JULY 1 224,000 29,000 365,000
------------ ------------ ------------
ENDING CASH AND CASH EQUIVALENTS,
JUNE 30 $ 541,000 $ 224,000 $ 29,000
============ ============ ============
Supplemental Disclosures of Cash
Flow Information
Interest paid $ 2,683,000 $ 3,000,000 $ 3,046,000
Amounts paid to Parent for
income taxes -- 300,000 279,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business: Total Logistic Control, LLC ("TLC") is a
wholly owned subsidiary of Christiana Companies, Inc. ("Christiana").
TLC was formed on June 30, 1997 as a result of the combination of
Wiscold, Inc. ("Wiscold") and Total Logistic Control, Inc. ("Total
Logistic"), both former wholly owned subsidiaries of Christiana. The
accompanying financial statements have been restated to reflect this
combination for all periods presented. The June 30, 1998 and 1997
balance sheets reflect the consolidated results of TLC . The fiscal
1998 statements of earnings, equity and cash flows reflect the
consolidated results of TLC. The fiscal 1997 and 1996 statements of
earnings, equity and cash flows reflect the combined operations of
Wiscold and Total Logistic. All material intercompany transactions have
been eliminated. TLC operates in one industry segment providing fully
integrated third-party logistic services, including warehousing,
distribution and transportation services in both refrigerated and
non-refrigerated facilities predominantly in the Midwest United States.
Revenue Recognition: Transportation revenue is recognized when the
goods are delivered to the customer. Warehousing revenue is recognized
as services are provided. Costs and related expenses are recorded as
incurred.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Accounts Receivable: Accounts receivable are presented net of an
allowance for uncollectable accounts of $222,000 and $223,000 at June
30, 1998 and 1997 , respectively. The provision for bad debts was
$119,000, $123,000 and $227,000 for the years ended June 30, 1998, 1997
and 1996, respectively.
Inventories: Inventories consist predominately of transportation
equipment repair parts. These items are carried at their lower of FIFO
(first-in, first-out) cost or market value.
Fixed Assets: Fixed assets are carried at cost less accumulated
depreciation, which is computed using both straight-line and
accelerated methods for financial reporting purposes. The cost of major
renewals and improvements are capitalized; repair and maintenance costs
are expensed as incurred. Tires related to new equipment are included
in the capitalized equipment cost and depreciated using the same
methods as equipment. Replacement tires are expensed when placed in
service. A summary of the cost of fixed assets, accumulated
depreciation and the estimated useful lives for financial reporting
purposes is as follows:
Estimated
1998 1997 Useful Lives
------------- ------------- ---------------
Land $ 3,331,000 $ 3,380,000 -
Machinery and equipment 52,859,000 52,816,000 5-7 years
Buildings
and improvements 41,488,000 41,534,000 30-32 years
Construction in
progress 616,000 451,000 -
Less: Accumulated
depreciation (27,693,000) (22,680,000)
----------- -----------
$ 70,601,000 $75,501,000
============ ===========
Goodwill: Goodwill is amortized on a straight-line basis over 40 years
($157,000 in 1998, 1997 and 1996). The accumulated amortization at June
30, 1998 and 1997 was $723,000 and $566,000 , respectively. TLC
continually evaluates whether events and circumstances have occurred
that indicate the remaining estimated useful life may warrant revision
or that the remaining balance of goodwill may not be recoverable. When
factors indicate that goodwill should be evaluated for possible
impairment, TLC uses an estimate of the undiscounted cash flows over
the remaining life
F-13
<PAGE>
of the goodwill measuring whether the goodwill is impaired. If
impaired, a loss is recognized for the amount the carrying value
exceeds the fair value.
Cash and Cash Equivalents: TLC considers all highly liquid investments
with original maturities of less than ninety days to be cash
equivalents.
Income Per Membership Unit: Basic and Diluted Income per Membership
Unit have been restated in accordance with SFAS 128, "Earnings per
Share" and have been computed based on the weighted number of units as
if the units had been outstanding for all periods presented. As TLC
does not have dilutive financial instruments, basic and diluted income
per membership unit are the same for all periods presented.
Long-lived assets: During fiscal 1997, TLC adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed of." Adoption
of this standard did not have a material impact on TLC's financial
position or results of operations. TLC continually evaluates whether
events and circumstances have occurred that may indicate the remaining
estimated useful life may warrant revision or that the remaining
balance of long-lived assets may not be recoverable. When factors
indicate that long-lived assets should be evaluated for possible
impairment, TLC uses an estimate of the undiscounted cash flows over
the remaining life of the long-lived assets measuring whether the
long-lived assets are impaired. If impaired, a loss is recognized for
the amount the carrying value exceeds the fair value.
B. RELATED PARTY TRANSACTIONS:
As of June 30, 1998 and 1997 , TLC had amounts due to Christiana of
$3,000,000 which represented a note payable to Christiana that bears
interest at a rate of 8.0% per annum. Related party interest expense
was $240,000 for fiscal 1998, 1997 and 1996. Prior to the combination
of Wiscold and Total Logistic, Total Logistic charged Christiana a
management fee related to certain administrative services rendered by
TLC on behalf of Christiana. The amount of this management fee was
$240,000 for fiscal 1997 and 1996 and is reflected as a reduction to
selling, general and administrative expenses in the statement of
earnings. The amount of services rendered by Christiana on behalf of
TLC for fiscal 1998, 1997 and 1996 is not material.
During fiscal 1998, TLC made a payment on behalf of Christiana to
retire a promissory note and accrued interest thereon in the amount of
$2,326,000. TLC will make distributions for current taxes payable
attributable to TLC's income. During fiscal 1998, TLC recorded
distributions to Christiana of $979,000. These distributions to
Christiana are reflected as a reduction to Member's Equity in the
period then ended.
C. INDEBTEDNESS:
The following is a summary of indebtedness as of June 30, 1997 and
1996:
1998 1997
------------ ------------
Revolving credit agreement $ 27,273,000 $ 31,248,000
Line of credit 239,000 --
Notes payable 1,088,000 4,382,000
Subordinated Note 1,764,000 1,764,000
------------ ------------
30,364,000 37,394,000
------------ ------------
Less: Current portion
of long-term
debt (3,003,000) (1,245,000)
Line of credit (239,000) --
------------ ------------
Long-term debt $ 27,122,000 $ 36,149,000
============ ============
TLC has a revolving credit agreement that provides for borrowings at
June 30, 1998 of up to $35,000,000. Borrowings under this agreement
mature on March 31, 2001 and bear interest, payable monthly at either
LIBOR plus 125 basis points, or a floating rate at the bank's prime
rate (6.9% at June 30, 1998) and are unsecured. The revolving credit
agreement requires, among other things, that defined levels of net
worth and debt service coverage be maintained
F-14
<PAGE>
and restricts certain activities including limitation on new
indebtedness and the disposition of assets. As of June 30, 1998, TLC
was in compliance with all covenants. No compensating balances are
required under the terms of this credit facility.
TLC has a bank line of credit which permits borrowings up to
$5,000,000. As of June 30, 1998 and 1997, borrowings outstanding under
this line of credit were $239,000 and $-0-, respectively. Borrowings
bear interest at either LIBOR plus 200 basis points, or the bank's
prime rate, at TLC's option (7.65% and 7.69% at June 30, 1998 and 1997
, respectively), and are secured by certain accounts receivable. This
line of credit was terminated on August 5, 1998. Notes payable relate
to specific equipment purchases, primarily transportation and material
handling equipment and a new distribution facility, and are secured by
certain assets of TLC. These notes bear interest on both fixed and
floating terms ranging from 6.375% to 9.37%. No compensating balances
are required under the terms of these credit arrangements. TLC's
subordinated note bears interest at 8% and is guaranteed by Christiana.
Future maturities of consolidated indebtedness are as follows:
Year Ended
June 30 Total
------------------------- ------------------------------
1999 $ 3,003,000
2000 5,008,000
2001 22,114,000
The weighted average interest rate paid on short-term borrowings was
7.73% and 7.46% for fiscal 1998 and 1997 , respectively. The carrying
value of TLC's debt approximates fair value. The carrying amount of
TLC's floating rate debt was assumed to approximate its fair value. The
fair value of TLC's fixed-rate, long-term notes payable was based on
the market value of debt with similar maturities and interest rates.
The fixed-rate subordinated note that was given to a former owner of
TLC was negotiated in the overall context of the acquisition. TLC
believes it is impracticable to obtain the current fair value of this
note because of the excessive costs that would have to be incurred to
obtain this information.
D. INCOME TAXES:
Prior to July 1, 1997, TLC was included in the consolidated income tax
return of Christiana. The amounts reflected in the financial statements
are as if TLC was filing on a stand-alone basis. Income taxes paid as
shown in the statement of cash flows represents combined cash payments
made to Christiana by TLC.
Effective June 30, 1997, TLC converted from a C-Corporation to a
Limited Liability Company. For purposes of taxation, all earnings of
TLC are "passed through" to its members and taxed at the member level.
As TLC is no longer a taxable entity at June 30, 1997, all deferred
taxes of TLC have been removed from the balance sheet. The removal of
these deferred taxes due to TLC's change in tax status resulted in an
increase to earnings of $11,171,000 during fiscal 1997. The $695,000
provision for income taxes for fiscal 1997 represents the combined
Federal and state income tax provision for the period during the fiscal
year that TLC was a C-Corporation.
Year Ended June 30
1997 1996
---- ----
Current:
Federal $(279,000) $280,000
State (49,000) 49,000
Deferred 1,023,000 746,000
--------- ---------
$ 695,000 $1,075,000
========= =========
F-15
<PAGE>
In the event that TLC was a taxable entity, a net deferred tax liability of
$11,227,000 and $11,171,000 as of June 30, 1998 and 1997 would have been
recorded on the balance sheet. The components are as follows:
1997 1998
----------- -----------
Deferred Tax assets:
Accrued expenses $ 978,000 $ 596,000
Book over tax amortization 424,000 584,000
Deferred revenue
----------- -----------
Total deferred tax
asset $ 1,402,000 $ 1,180,000
=========== ===========
Deferred tax liabilities:
Tax over book depreciation $12,629,000 $12,351,000
----------- -----------
Total deferred tax
liability $12,629,000 $12,351,000
=========== ===========
A reconciliation of the statutory Federal income tax rate to TLC's
effective tax rate is as follows:
Year ended June 30
1997 1996
------------------- ----------------
Statutory Federal income tax rate 34% 34%
Increase in taxes resulting from
State income tax, net 5 5
Other, net 2 2
-------- --------
41% 41%
======== ========
E. EMPLOYEE BENEFIT PLANS:
TLC has two 401(k) plans covering substantially all employees. The
expense incurred by TLC related to these plans is not material. TLC
does not provide post employment medical or insurance benefits.
F. COMMITMENTS:
TLC has operating leases for warehousing and office facilities along
with certain transportation equipment. Rental expense under these
leases was $6,812,000, $7,213,000 and $5,479,000 in fiscal 1998, 1997
and 1996 , respectively. At June 30, 1998, future minimum lease
payments under these operating leases are as follows:
Year Ended
June 30 Amount
------- ------
1999 $4,226,000
2000 3,765,000
2001 3,304,000
2002 2,630,000
2003 1,825,000
Thereafter 8,456,000
G. Accounting Pronouncements:
Effective July 1, 1998, TLC adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This statement
establishes standards for reporting and display of comprehensive income and its
components. Components of comprehensive income are net income and all other
non-shareholder changes in equity. For the quarter ended September 30, 1998, TLC
will be required to show components of comprehensive income in a separate
financial statement, if any other comprehensive income exists.
F-16
<PAGE>
Effective July 1, 1998, TLC adopted SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information." This statement establishes
standards for the way a public company reports information about operating
segments in its annual financial statements. It also requires TLC to report
selected information about operating segments in its interim financial reports.
This statement requires that a public company report financial and descriptive
information about its operating segments based on the way that the chief
operating decision maker organizes segments within TLC for making operating
decisions and assessing performance. TLC believes that it operates in a single
segment as of June 30, 1998.
H. Weatherford International, Inc. Merger Agreement:
On December 12, 1997, Christiana entered in an agreement with
Weatherford International, Inc. ("Weatherford") whereby Weatherford will
purchase all of the outstanding shares of Christiana. The terms of the merger
provide that each Christiana common share will be converted into (i) .7453
shares of Weatherford International, Inc. common stock, (ii) cash in the
approximate amount of $4.00, depending upon the balance of certain assets and
liabilities at the time of closing and (iii) a contingent cash payment of
approximately $1.92 after 5 years, subject to the incurrence of any indemnity
claims by Weatherford during this period.
On August 17, 1998, the shareholders of both Weatherford and Christiana
overwhelmingly approved the Merger agreement and sale of TLC to C2, Inc.
However, due to the recent decline in the value of Weatherford's common stock
price, the merger transaction was postponed until the conditions are met for
Christiana's shareholders to not recognize any taxable gain or loss on their
exchange of Christiana shares for Weatherford common stock in the merger. To
meet this requirement, Weatherford's stock price must be approximately $30.00
per share.
On October 14, 1998, Weatherford and Christiana amended the merger
agreement in order to complete the merger on a partially tax-free basis. The
revised merger agreement eliminates the requirement for a contingent cash
payment after five years. This cash payment will be used by Christiana to
purchase additional Weatherford common stock in the open market. Additionally,
Christiana agreed to spend up to $5 million of available cash to buy Weatherford
stock, if necessary. The share price of Weatherford stock needed to consummate
the merger was reduced from $30 to approximately $16 per share.
By its terms, the Merger Agreement may be terminated by either party
after January 31, 1999. At or prior to the completion of the merger:
(1) TLC will declare and pay a $20,000,000 dividend to Christiana
which will be financed by a new $65,000,000 revolving credit
facility which will bear interest at a floating rate of LIBOR
plus 225 basis points, mature on April 15, 2003, and be
secured by substantially all of the assets of TLC.
(2) Christiana will sell 666.667 Membership Units (two-thirds) of
TLC to C2, Inc. (a newly formed corporation) for $10,667,000.
(3) TLC will agree to indemnify Christiana for certain liabilities
of Christiana. See "The Purchase Agreement" included elsewhere
in this prospectus.
F-17
<PAGE>
ANNEX A
AGREEMENT*
By and Among
WEATHERFORD INTERNATIONAL, INC.,
TOTAL LOGISTIC CONTROL, LLC,
CHRISTIANA COMPANIES, INC.
AND
C2, INC.
December 12, 1997
*As amended by Amendment No. 1 to Agreement and Plan of Merger and Logistic
Purchase Agreement dated May 26, 1998 and Amendment No. 2 to Logistic Purchase
Agreement dated October 14, 1998.
<PAGE>
AGREEMENT
THIS AGREEMENT ("Agreement") made as of this 12th day of December,
1997, as amended by Amendment No. 1 dated May 26, 1998 and Amendment No. 2 dated
October 14, 1998, by and among Weatherford International, Inc., a Delaware
corporation ("Weatherford"), Total Logistic Control, LLC, a Delaware limited
liability company ("TLC"), Christiana Companies, Inc., a Wisconsin corporation
("Christiana") and C2, Inc., a Wisconsin corporation ("C2").
W I T N E S S E T H :
WHEREAS, Weatherford, Christiana Acquisition, Inc., a
Wisconsin corporation ("Sub"), Christiana and C2 have entered into an Amended
and Restated Agreement and Plan of Merger dated December 12, 1997 (the "Merger
Agreement") pursuant to which Sub, a wholly owned subsidiary of Weatherford,
will merge with and into Christiana and thereby Christiana will become a wholly
owned subsidiary of Weatherford (the "Merger")
WHEREAS, as a condition to the Merger, Christiana will sell
666.667 Membership Units (as defined in Section 1.16 hereof) of TLC to C2
pursuant to the terms and conditions hereinafter set forth (the "Logistic
Sale").
NOW, THEREFORE, in consideration of the mutual covenants of
the parties herein and the mutual benefits derived from this Agreement
("Agreement"), the parties, intending to be legally bound, hereby agree as
follows:
1. Definitions.
1.1 Affiliate. Affiliate means, as to the person specified,
any person controlling, controlled by or under common control with such person,
with the concept of control in such context meaning the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of another, whether through the ownership of voting securities, by
contract or otherwise.
1.2 Assumed Liabilities. Assumed Liabilities means any and all
Liabilities and Environmental Liabilities (except for the Retained Liabilities)
to which Christiana, Weatherford or a Christiana Company may now or at any time
in the future become subject (whether directly or indirectly, including by
reason of Christiana or a Christiana Company owning, controlling or operating
any business or assets of any Person (including any current or past Affiliate)),
resulting from, arising out of or relating to (i) any Christiana Company (other
than TLC), (ii) the business, operations or assets of Christiana or any
Christiana Company on or prior to the Effective Date, (iii) any Christiana Taxes
for periods ending on or before the Effective Date (except Christiana Taxes to
be expressly retained by Christiana pursuant to the Merger
-2-
<PAGE>
Agreement), (iv) any obligation, matter, fact, circumstance or action or
omission by any Person in any way relating to or arising from the business,
operations or assets of Christiana or a Christiana Company that existed on or
prior to the Effective Date; (v) any product or service provided by Christiana
or any Christiana Company prior to the Effective Date, (vi) the Merger, the
Logistic Sale or any of the other transactions contemplated hereby, (vii)
previously conducted operations of Christiana or any Christiana Company and
(viii) C2's interest in TLC. The term "Assumed Liabilities" shall include,
without limitation, the following Liabilities (other than Retained Liabilities):
(a) Any and all Liabilities and Environmental Liabilities
resulting from, arising out of or relating to (i) the assets,
activities, operations, current or former facilities, actions or
omissions of Christiana or any of its officers, directors, employees,
independent contractors or agents occurring on or before the Effective
Date, (ii) the assets, activities, operations, current or former
facilities, actions or omissions of any Christiana Company or any of
its officers, directors, employees, independent contractors or agents,
(iii) any product liability claim, recall, replacement, returns or
customer allowances of or relating to Christiana or any Christiana
Company, or (iv) any contract or permit of Christiana or any Christiana
Company;
(b) Any and all accounts and notes payable of Christiana or
any Christiana Company, excluding accounts payable which have been
accounted for in the calculation of Christiana Net Cash set forth in
the Merger Agreement;
(c) Any and all Liabilities relating to Christiana or any
Christiana Company employee benefit plans;
(d) Any and all Liabilities and Environmental Liabilities on
behalf of or which arise from or relate to active employees, or retired
and inactive employees, of Christiana or any Christiana Company,
including, without limitation, (i) liability for any salaries, wages,
tax equalization payments, vacation pay, sick leave, personal leave,
severance pay, wrongful dismissal or discrimination claims; (ii)
liability for or under any employee benefit plan, policy or
arrangement, including, without limitation, retirement, pension,
medical, dental, profit sharing, unemployment, supplemental
unemployment or disability plan policy or arrangement; (iii) liability
for any payroll taxes, social security or similar taxes or withholding;
(iv) liability arising from claims or litigation; and (v) liability
arising from any injury, death, loss, disability, occupational disease
or claims under any worker's compensation laws;
(e) Any and all Liabilities and Environmental Liabilities
resulting from, arising out, relating to or occurring on the
Properties, including those properties listed on Schedule 1.2 hereof,
the operations on any of the foregoing, and any off-site Environmental
Liabilities related to any of the foregoing, including without
limitation, those under any indemnification agreement or obligation of
Christiana or any Christiana Company and any documents relating
thereto;
-3-
<PAGE>
(f) Any and all Liabilities of TLC or any of its subsidiaries
with respect to transactions or events occurring or existing on or
prior to the Effective Date;
(g) Any and all litigation and claims for Liabilities of
Christiana or any Christiana Company existing as of the Effective Date;
(h )Any and all Liabilities for Christiana Taxes, arising out
of, or related to, Christiana for taxable periods on or before the
Effective Date (except such Christiana Taxes expressly retained by
Christiana pursuant to the Merger Agreement);
(i) Any misrepresentation or incorrect representation or
warranty of Christiana under the Merger Agreement without regard to any
materiality or knowledge qualification; and
(j) Any and all legal, accounting, consulting and expert fees
and expenses incurred after the date hereof in investigating,
preparing, defending, settling or discharging any claim or action
arising under, out of or in connection with any of the Assumed
Liabilities other than those associated with Weatherford's counsel's
evaluation of the Merger and the Logistic sale.
1.3 Business Day. Business Day means a day on which national
banks are generally open for the transaction of business in Houston, Texas.
1.4 CERCLA. CERCLA means the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601, et seq.
1.5 Christiana. Christiana, for purposes of the assumption
indemnification provisions of this Agreement includes Christiana Companies, Inc.
and any and all predecessors thereto, whether by merger, purchase or acquisition
of assets or otherwise, and any and all predecessors to any such entities.
1.6 Circumstance. Circumstance has the meaning specified in
Section 6.2 hereof.
1.7 Effective Date. Effective Date means the time and date the
Merger is made effective.
1.8 Environmental Conditions. Environmental Conditions means
any pollution, contamination, degradation, damage or injury caused by, related
to, arising form or in connection with the generation, handling, use, treatment,
storage, transportation, disposal, discharge, release or emission of any Waste
Materials.
-4-
<PAGE>
1.9 Environmental Law or Environmental Laws. Environmental Law
or Environmental Laws means all laws, rules, regulations, statutes, ordinances,
decrees or orders of any governmental entity now or at any time in the future in
effect relating to (i) the control of any potential pollutant or protection of
the air, water or land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii) exposure to
hazardous, toxic or other substances alleged to be harmful. The term
"Environmental Law" or "Environmental Laws" includes, without limitation, (1)
the terms and conditions of any license, permit, approval or other authorization
by any governmental entity and (2) judicial, administrative or other regulatory
decrees, judgments and orders of any governmental entity. The term
"Environmental Law" or "Environmental Laws" includes, but is not limited to the
following statutes and the regulations promulgated thereunder: the Clean Air
Act, 42 U.S.C. ss. 7401 et seq., The Clean Water Act, 33 U.S.C. ss. 1251 et
seq., the Resource Conservation Recovery Act, 42 U.S.C. ss. 6901 et seq., the
Superfund Amendments and Reauthorization Act, 42 U.S.C. ss. 11011 et seq., the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Water Pollution
Control Act, 33 U.S.C. ss. 1251, et seq., the Safe Drinking Water Act, 42 U.S.C.
ss. 300f et seq., CERCLA and any state, county or local regulations similar
thereto.
1.10 Environmental Liabilities. Environmental Liabilities
means any and all liabilities, responsibilities, claims, suits, losses, costs
(including remediation, removal, response, abatement, clean-up, investigative or
monitoring costs and any other related costs and expenses), other causes of
action recognized now or at any later time, damages, settlements, expenses,
charges, assessments, liens, penalties, fines, pre-judgment and post-judgment
interest, attorney fees and other legal fees (i) pursuant to any agreement,
order, notice, requirement, responsibility or directive (including directives
embodied in Environmental Laws), injunction, judgment or similar documents
(including settlements) arising out of or in connection with any Environmental
Laws, or (ii) pursuant to any claim by a governmental entity or other person or
entity for personal injury, property damage, damage to natural resources,
remediation or similar costs or expenses incurred or asserted by such entity or
person pursuant to common law or statute.
1.11 Weatherford Indemnified Parties. Weatherford Indemnified
Parties shall have the meaning set forth in Section 6.1(a) hereof.
1.12 Christiana Company. Christiana Company means any
corporation, partnership, limited liability company, association or other
entity, of which Christiana or any Christiana Company now or at any time in the
past owned, directly or indirectly, an ownership interest in (whether or not
such ownership interest constituted control of the entity and whether or not
such interest represented a passive or active investment), including those
companies named on Schedule 1.12 hereto.
1.13 Christiana Taxes. Christiana Taxes means any and all
taxes (other than Weatherford Related Taxes as defined in the Merger Agreement)
to which Christiana or any Christiana Company may be obligated relating to or
arising from (i) the current or past operations or assets of Christiana or any
Christiana Company through the Effective Date, (ii) the Logistic Sale, (iii) the
Merger, (iv) any tax return filed by any current or past member of
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<PAGE>
Christiana's consolidated group, (v) any Tax to which Christiana may be alleged
to be liable by reason of being affiliated with any other Person for all periods
prior to the Effective Date, (vi) property taxes with respect to the assets of
Christiana or any Christiana Company for all periods prior to the Effective Date
and (vii) any transfer taxes or value added taxes in connection with the
transactions contemplated by the Logistic Sale and the Merger.
1.14 Liability. Liability means any and all claims, demands,
liabilities, responsibilities, disputes, causes of action and obligations of
every nature whatsoever, liquidated or unliquidated, known or unknown, matured
or unmatured, or fixed or contingent.
1.15 Member. Member means each person who has been admitted to
TLC as a member as provided in the Delaware Limited Liability Company Act (the
"DLLCA") and the Operating Agreement.
1.16 Membership Units. Membership Units means the basis by
which a Member's ownership interest in TLC issued pursuant to the Operating
Agreement is measured.
1.17 Merger. Merger means the merger of Christiana
Acquisition, Inc. with and into Christiana Companies, Inc. as contemplated by
the Merger Agreement.
1.18 Merger Agreement. Merger Agreement means the Amended and
Restated Agreement and Plan of Merger dated December 12, 1997, by and among
Weatherford, Christiana Acquisition, Inc., Christiana Companies, Inc. and C2,
Inc.
1.19 Operating Agreement. Operating Agreement shall mean the
form of Operating Agreement attached hereto as Exhibit A.
1.20 Person. Person means an individual, corporation, limited
liability company, partnership, governmental authority or any other entity.
1.21 Properties. Properties means the properties currently or
previously owned or operated by Christiana or any Christiana Company.
1.22 Retained Liabilities. Retained Liabilities shall mean and
be limited solely to (i) those accounts payable relating to Christiana that are
reflected on the Effective Date balance sheet of Christiana, (ii) those accounts
payable reflected on the Effective Date balance sheet of Christiana and agreed
to by Weatherford prior to the Effective Date, (iii) the obligations of
Christiana that arise after the Effective Date (other than obligations relating
to matters existing or occurring on or prior to the Effective Date and
indemnification, warranty and product liability, wrongful death or property
claims associated with actions or omissions prior to the Effective Date or any
business conducted prior to the Effective Date) and (iv) Weatherford Related
Taxes (as defined in the Merger Agreement).
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1.23 Taxes. Taxes means all federal, state, local, foreign and
other taxes, charges, fees, duties, levies, imposts, customs or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, profit share,
license, lease, service, service use, value added, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, premium, property,
windfall profits or other taxes, fees, assessments, customs, duties, levies,
imposts, or charges of any kind whatsoever with any interest, penalties,
additions to tax, fines or other additional amounts imposed thereon or related
thereto, and the term Tax means any one of the foregoing Taxes.
1.24 Waste Materials. Waste Material means any (i) toxic or
hazardous materials or substances; (ii) solid wastes, including asbestos,
polychlorinated biphenyls, mercury, buried contaminants, chemicals, flammable or
explosive materials; (iii) radioactive materials; (iv) petroleum wastes and
spills or releases of petroleum products; and (v) any other chemical, pollutant,
contaminant, substance or waste that is regulated by any governmental entity
under any Environmental Law.
2. Purchase and Sale of Membership Units; Purchase Price.
2.1. Purchase and Sale of Membership Units.
(a) Effective as of the closing, Christiana shall sell,
transfer, assign, convey and deliver, and C2 shall purchase and accept,
666.667 Membership Units.
(b) CHRISTIANA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE MEMBERSHIP UNITS OR THE ASSETS (CURRENT,
FIXED, PERSONAL, REAL, TANGIBLE OR INTANGIBLE) OF TLC AND ITS
SUBSIDIARIES, INCLUDING, BUT NOT LIMITED TO, CONDITION OR WORKMANSHIP
THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, CAPACITY, SUITABILITY, UTILITY, SALABILITY, AVAILABILITY,
COLLECTIBILITY, OPERATIONS, CONDITIONS, MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, IT BEING THE EXPRESS AGREEMENT OF C2, TLC AND
CHRISTIANA THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, C2
WILL ACQUIRE THE MEMBERSHIP UNITS AND INTEREST IN THE ASSETS OF TLC
THROUGH SUCH OWNERSHIP INTEREST IN THEIR PRESENT CONDITION AND STATE OF
REPAIR, ON AN "AS IS AND WHERE IS, WITH ALL FAULTS" BASIS.
2.2 Assumption. Effective as of the closing, as an inducement
to Sub to merge with Christiana, C2 hereby unconditionally assumes and
undertakes to pay, satisfy and discharge when due the Assumed Liabilities.
Notwithstanding the foregoing, Christiana hereby retains and C2 will have no
liability with respect to the Retained Liabilities. In addition, effective as of
the Closing, as a further inducement to Sub to merge with Christiana, TLC hereby
unconditionally
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assumes and undertakes to pay, satisfy and discharge when due the Assumed
Liabilities to the extent such Assumed Liabilities relate to any of the
historical businesses, operations or assets of TLC and its subsidiaries. The
closing shall occur on or prior to the closing of the Merger.
2.3. Purchase Price. The aggregate purchase price ("Purchase
Price") for the 666.667 Membership Units shall be (i) $10,666,667, payable on
the same date that funds are paid by Weatherford to the Exchange Agent (as
defined in the Merger Agreement) pursuant to Section 1.8(c) of the Merger
Agreement by C2 to Christiana in the form of a certified or cashier's check, or,
at the option of Christiana, by wire transfer of immediately available funds to
an account designated by Christiana and (ii) the assumption by C2 at the closing
of the Assumed Liabilities.
2.4 Absolute Assumption. It is the intent of the parties that
the Liabilities and Environmental Liabilities assumed by C2 and TLC under this
Agreement shall be without regard to the cause thereof or the negligence of any
Person, whether such negligence be sole, joint or concurrent, active or passive,
and whether such Liability or Environmental Liability is based on strict
liability, absolute liability or arising as an obligation of contribution. C2
and TLC each hereby waives and releases for itself and on behalf of Affiliates
(other than Christiana, Weatherford and their respective Affiliates) any claims,
defenses or claims for contribution that it has or may have against Christiana,
Weatherford or any of their respective Affiliates with respect to the Assumed
Liabilities.
3. Representations of Christiana.
3.1. Organization. Christiana is a corporation duly organized
and validly existing under the laws of the state of Wisconsin. TLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of Delaware.
3.2. Title. The 666.667 Membership Units being transferred
pursuant to this Agreement without any representation or warranty of any kind,
including any implied representations of the title.
4. Representations of C2 and TLC.
4.1. Organization. TLC is a limited liability company duly
organized and validly existing under the laws of the state of Delaware. C2 is a
corporation duly organized and validly existing under the laws of the state of
Wisconsin.
4.2. Corporate Power. Each of C2 and TLC has full power, legal
right and authority to enter into this Agreement, and to carry out the
transactions contemplated hereby. The execution of this Agreement, and full
performance hereunder, has been duly authorized by C2's Board of Directors and
TLC's Members.
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4.3. Validity. This Agreement has been duly and validly
executed and delivered by C2 and TLC and is the legal, valid and binding
obligation of each of C2 and TLC, enforceable in accordance with its terms.
5. Operating Agreement; Put and Participation Rights.
5.1 Operating Agreement. At the Closing, C2 and Christiana
shall enter into the Operating Agreement.
5.2 Put.At any time after the fifth anniversary date of the
Effective Date, Christiana shall have the option (but shall not be required) to
sell to C2 or TLC, at Christiana's option, and C2 and TLC, as applicable, shall
be required to purchase, all (but not less than all) of Christiana's Membership
Units for a price equal to $7 million. To exercise this option, Christiana shall
provide notice in writing to C2 or TLC, as applicable, of such election. The
closing of any purchase pursuant to this Section 5.2 shall occur within 60 days
of notice to C2 or TLC, as applicable. The price required to be paid by C2 or
TLC, as applicable pursuant to this Section 5.2 shall be paid in cash. The
rights contained in this Section 5.2 shall expire on the date one year after the
fifth anniversary of the Effective Date.
5.3 Participation Rights.If there is a proposed merger,
consolidation or share exchange involving C2 or TLC or if C2 shall propose to
transfer or sell all its interest in TLC to an unrelated third party (a "Third
Party") in one or more transactions, Christiana shall have the right to
participate (a "Tag Along Right") in such sale with respect to the Membership
Units held by it for the same equivalent consideration per equivalent unit in
TLC and otherwise on the same terms as such member sells or transfers their
interests in C2. If circumstances occur which give rise to the Tag Along Right,
then C2 shall give written notice ("Tag Along Notice") to Christiana providing a
summary of the terms of the proposed sale to the Third Party and advising
Christiana of its Tag Along Right. Christiana may exercise its Tag Along Right
by delivery of written notice to C2 within fifteen (15) days of its receipt of
the Tag Along Right. If Christiana gives written notice indicating that it
wishes to sell, it shall be obligated to sell its Membership Units upon the
substantially same terms and conditions as the members of C2 are selling to the
Third Party conditioned upon and contemporaneous with completion of the
transaction of purchase and sale with the Third Party.
6. Indemnification.
6.1 Indemnification Matters.
(a) Indemnification. Each of C2 and TLC, jointly and
severally, hereby agree to indemnify, defend and hold Christiana,
Weatherford and their respective officers, directors, employees, agents
and assigns (collectively, the "Weatherford Indemnified Parties")
harmless from and against any and all Liabilities or Environmental
Liabilities (including, without limitation, reasonable fees and
expenses of attorneys, accountants, consultants and experts) that the
Weatherford Indemnified Parties incur, are subject to a claim for, or
are subject to, that are based upon, arising out of, relating to or
otherwise in respect of:
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(i) Any breach of any covenant or agreement of C2 or
TLC contained in this Agreement or in any other agreement
contemplated hereby;
(ii) The acts or omissions of Christiana or any
Christiana Company on or before the Effective Date;
(iii) The acts or omissions of TLC, any Christiana
Company or any of its Affiliates (other than Christiana or
Weatherford) or the conduct of any business by them on or
after the Effective Date (it being understood that this
indemnification shall not apply to acts or omissions by
Christiana or Weatherford after the Effective Date);
(iv) The Assumed Liabilities;
(v) Any and all amounts for which Christiana or
Weatherford may be liable on account of any claims,
administrative charges, self-insured retentions, deductibles,
retrospective premiums or fronting provisions in insurance
policies, including as the result of any uninsured period,
insolvent insurance carriers or exhausted policies, arising
from claims by Christiana or any Christiana Company, or the
employees of any of the foregoing, or claims by insurance
carriers of Christiana or any Christiana Company for indemnity
arising from or out of claims by or against Christiana or any
Christiana Company for acts or omissions of Christiana or any
Christiana Company, or related to any current or past business
of Christiana or any Christiana Company or any product or
service provided by Christiana or any Christiana Company in
whole or part prior to the Effective Date;
(vi) Any settlements or judgments in any litigation
commenced by one or more insurance carriers against Christiana
or Weatherford on account of claims by any Christiana Company
or employees of any Christiana Company and, if filed prior to
the Effective Date, by Christiana or any employee of
Christiana;
(vii) Any Taxes (other than Weatherford Related
Taxes) as a result of the Logistic Sale and any Taxes as a
result of the Merger subsequently being determined to be a
taxable transaction for foreign, federal, state or local law
purposes regardless of the theory or reason for the
transactions being subject to Tax;
(viii) The on-site or off-site handling, storage,
treatment or disposal of any Waste Materials generated by
Christiana or any Christiana Company on or prior to the
Effective Date or any Christiana Company at any time;
(ix) Any COBRA Liability with respect to any
employees of Christiana or any Christiana Company prior to the
Closing;
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(x) Any and all Environmental Conditions, known or
unknown, existing on, at or underlying any of the Properties
on or prior to the Effective Date;
(xi) Any and all Liabilities incurred by Christiana
or Weatherford pursuant to its obligations hereunder in
seeking to obtain or obtaining any consent or approval to
assign and transfer any interest in TLC;
(xii) Any acts or omissions of Christiana or any
Christiana Company relating to the ownership or operation of
the business of Christiana or any Christiana Company or the
Properties on or prior to the Effective Date;
(xiii) Any Liability relating to any claim or demand
by any stockholder of Christiana or Weatherford with respect
to the Merger, the Logistic Sale or the transactions relating
thereto; and
(xiv) Any Liability relating to any Christiana or any
Christiana Company employee benefit or welfare plans arising
out of circumstances occurring on or prior to the Effective
Date.
(b) Allocation of Liability Payment Obligations. To the extent
a Liability exists or a claim for indemnification is made by an
Weatherford Indemnified Party hereunder, such Liability shall be paid
and such claim shall be defended and paid as follows:
(i) If the Liability or claim relates primarily to
the historic assets, liability operations of business TLC
(excluding [describe non TLC historic subs] (the "TLC Historic
Business"), TLC shall, as between C2 and TLC, be primarily
responsible for the payment of such Liability and the defense
and payment of such claim. If TLC does not defend or pay such
claim, C2 shall be responsible for the defense and payment of
such claim.
(ii) If the Liability or claim relates primarily to a
matter other than the TLC Historic Business, C2 shall, as
between C2 and TLC and subject to the provisions of clause
(iii) below, be primarily responsible for the payment of such
Liability and the defense and payment of such claim. If C2
does not defend or pay such claim, TLC shall be responsible
for the defense and payment of such claim.
(iii) If the Liability or claim relates primarily to
a matter other than the TLC Historic Business, the costs of
defense and payment of the Liability shall be paid by
Weatherford to the extent and only to the extent of the
Christiana Retained Cash (as defined in the Merger Agreement);
provided that once such Christiana Retained Cash is paid
pursuant to the Merger Agreement, Weatherford shall have no
obligation to pay such amounts. Any such payments shall be
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subject to Weatherford being provided with reasonable
documentation regarding the payment obligations.
(iv) If TLC pays any amounts relating to an Assumed
Liability or an indemnification claim hereunder, Christiana
shall be entitled to receive a cash payment equal to one-third
of any such amount paid when and if (i) TLC or all or
substantially all of its assets are sold, (ii) there is a sale
of Membership Units by C2 or (iii) there is a direct or
indirect transfer or sale of the membership units of TLC held
by C2 or of the membership units of C2. The obligation to pay
such amounts shall be payable by C2.
(v) To secure the obligations of C2 hereunder, C2
shall pledge to Christiana all of C2's interest in TLC,
including all rights to distributions in respect thereof,
pursuant to a pledge agreement in such form and having such
terms as Christiana may reasonably request.
(vi) Notwithstanding the foregoing, nothing contained
in this Agreement shall be construed to be an assumption of
any obligation or responsibility by Weatherford of any Assumed
Liabilities and its obligations hereunder shall be personal to
TLC and C2 to the extent and only to the extent Weatherford
has agreed to fund the payment of indemnity claims by it with
the Christiana Retained Cash as expressly provided herein. No
third party shall be deemed to have any rights against
Weatherford as result of this Agreement.
(c) Absolute Indemnity. NONE OF THE WEATHERFORD INDEMNIFIED
PARTIES WILL BE OBLIGATED TO INSTITUTE ANY LEGAL PROCEEDINGS IN
CONNECTION WITH THE COLLECTION OR PURSUIT OF ANY INSURANCE IN ORDER TO
EXERCISE AN INDEMNIFICATION REMEDY UNDER THIS SECTION VI. UNLESS
OTHERWISE SPECIFICALLY EXPRESSED, THIS INDEMNITY OBLIGATION SHALL APPLY
WITHOUT REGARD TO WHETHER THE LIABILITY OR ENVIRONMENTAL LIABILITY WAS
CAUSED BY THE ORDINARY OR GROSS NEGLIGENCE OF ANY OF THE WEATHERFORD
INDEMNIFIED PARTIES (WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT OR ACTIVE OR PASSIVE), OR WHETHER THE LIABILITY OR
ENVIRONMENTAL LIABILITY IS BASED ON STRICT LIABILITY, ABSOLUTE
LIABILITY OR ARISES AS AN OBLIGATION OF CONTRIBUTION OR INDEMNITY. EACH
OF C2 AND TLC ACKNOWLEDGES THAT IT IS AWARE OF VARIOUS THEORIES KNOWN
AS THE "EXPRESS NEGLIGENCE" DOCTRINE AND OTHER SIMILAR DOCTRINES AND
THEORIES THAT MAY LIMIT INDEMNIFICATION AND AGREES AND STIPULATES THAT
THE PROVISIONS OF THIS AGREEMENT REFLECT THE EXPRESS INTENT OF THE
PARTIES THAT THE INDEMNIFICATION TO BE PROVIDED BY TLC AND C2 APPLY
NOTWITHSTANDING THE FACT THAT THE LIABILITY OR ENVIRONMENTAL LIABILITY
(I) MAY NOT CURRENTLY BE KNOWN BY IT OR MANIFEST ITSELF IN ANY REGARD,
(II) MAY ARISE UNDER A STATUTE OR THEORY THAT MAY NOT CURRENTLY EXIST
OR BE KNOWN
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TO TLC, (III) MAY ARISE AS A RESULT OF A NEGLIGENT ACT OR OMISSION BY
ANY OF THE WEATHERFORD INDEMNIFIED PARTIES (WHETHER SUCH CONDUCT BE
SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR (IV) MAY CONSTITUTE
A VIOLATION OF ANY APPLICABLE CIVIL OR CRIMINAL LAW OR REGULATION.
6.2 Notice of Circumstance. After receipt by an Weatherford
Indemnified Party of notice, or an Weatherford Indemnified Party's actual
discovery, of any action, proceeding, claim, demand or potential claim which
could give rise to a right to indemnification pursuant to any provision of this
Agreement (any of which is individually referred to a as a "Circumstance"), the
Weatherford Indemnified Party shall give TLC and C2 (collectively the "TLC
Parties") written notice describing the Circumstances in reasonable detail;
provided, however, that no delay by an Weatherford Indemnified Party in
notifying the TLC Parties shall relieve the TLC Parties from any Liability or
Environmental Liability hereunder unless (and then solely to the extent) the TLC
Parties' position is actually adversely prejudiced. In the event the TLC Parties
notifies the Weatherford Indemnified Party within 15 days after such notice that
the TLC Parties is assuming the defense thereof, (i) the TLC Parties will defend
the Weatherford Indemnified Parties against the Circumstances with counsel of
its choice, provided such counsel is reasonably satisfactory to Weatherford,
(ii) the Weatherford Indemnified Parties may retain separate co-counsel at its
or their sole cost or expense (except that the TLC Parties will be responsible
for the fees and expenses for the separate co-counsel to the extent Weatherford
concludes reasonably that the counsel the TLC Parties has selected has a
conflict of interest), (iii) the Weatherford Indemnified Parties will not
consent to the entry of any judgment or enter into any settlement with respect
to the Circumstances without the written consent of the TLC Parties, and (iv)
the TLC Parties will not consent to the entry of any judgment with respect to
the Circumstances, or enter into any settlement which (x) requires any payments
by or continuing obligations of an Weatherford Indemnified Party, (y) requires
an Weatherford Indemnified Party to admit any facts or liability that could
reasonably be expected to adversely affect an Weatherford Indemnified Party in
any other matter or (z) does not include a provision whereby the plaintiff or
claimant in the matter released the Weatherford Indemnified Parties from all
Liability with respect thereto, without the written consent of Weatherford. In
the event the TLC Parties does not notify Weatherford within 15 days after
Weatherford has given notice of the Circumstance that the TLC Parties is
assuming the defense thereof, the Weatherford Indemnified Parties may defend
against, or enter into any settlement with respect to, the Circumstance in any
manner the Weatherford Indemnified Parties reasonably may deem appropriate, at
the TLC Parties' sole cost. The foregoing provisions shall be subject to the
provisions of Section 6.1(b).
6.3 Insurance. the TLC Parties shall not be obligated to
indemnify the Weatherford Indemnified Parties for amounts which shall have been
covered and paid by insurance of the Weatherford Indemnified Parties, provided,
however, insurance shall not include deductibles or self-insured retentions.
6.4 Scope of Indemnification. INDEMNIFICATION UNDER THIS
SECTION VI SHALL BE IN ADDITION TO ANY REMEDIES CHRISTIANA,
WEATHERFORD OR ANY WEATHERFORD INDEMNIFIED PARTY MAY HAVE AT
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LAW OR EQUITY. THERE SHALL BE NO TIME LIMIT AS TO C2'S OF TLC'S
INDEMNIFICATION OBLIGATIONS HEREUNDER.
6.5 Indemnity for Certain Environmental Liabilities. It is the
intention of the parties that the indemnity provided herein with respect to
Environmental Liabilities under CERCLA and corresponding provisions of state law
is an agreement expressly not barred by 42 U.S.C. ss. 9607(e)(i) and
corresponding provisions of state law.
6.6 C2 and TLC Covenants. To assure the performance of the
obligations of C2 and TLC under this Agreement, C2 and TLC each hereby covenants
and agrees that it will not, and will cause its subsidiaries to not, merge,
convert into another entity, engage in a share or interest exchange for a
majority of its units or shares, liquidate or transfer, assign or otherwise
convey or allocate, directly or indirectly, in one or more transactions, whether
or not related, a majority of C2's or TLC's assets (determined in good faith by
a board or similar managing body's resolution prior to the transaction on a fair
value and consolidated basis) to any Person unless the acquiring Person
expressly assumes the obligations of C2 or TLC, as the case may be, hereunder,
(ii) executes and delivers to Christiana and Weatherford an agreement agreeing
to be bound by each and every provision of this Agreement as if it were C2 or
TLC, as the case may be,and (iii) has a net worth on a pro forma basis after
giving effect to the acquisition or business combination equal to or greater
than that of C2 or TLC, as the case may be, on a consolidated basis.
7. Miscellaneous.
7.1. Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits thereof.
This Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto, provided that this
Agreement may be amended only as may be permitted by the laws that govern
Weatherford, TLC, Christiana and C2. The waiver by any party hereto of any
condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement other than with respect to the condition so waived.
7.2 Arbitration. Any disputes, claims or controversies
connected with, arising out of, or related to, this Agreement and the rights and
obligations created herein, or the breach, validity, existence or termination
hereof, shall be settled by Arbitration to be conducted in accordance with the
Commercial Rules of Arbitration of the American Arbitration Association, except
as such Commercial Rules may be changed by this Section 7.2. The disputes,
claims or controversies shall be decided by three independent arbitrators (that
is, arbitrators having no substantial economic or other material relationship
with the parties), one to be appointed by TLC and C2 and one to be appointed by
Weatherford within fourteen days following the submission of the claim to the
parties hereto and the third to be appointed by the two so appointed within five
days. Should either party refuse or neglect to join in the timely appointment of
the arbitrators, the other party shall be entitled to select both arbitrators.
Should the two arbitrators
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fail timely to appoint a third arbitrator, either party may apply to the Chief
Judge of the United States District Court for the Southern District of Texas to
make such appointment. The arbitrators shall have ninety days after the
selection of the third arbitrator within which to allow discovery, hear evidence
and issue their decision or award and shall in good faith attempt to comply with
such time limits; provided, however, if two of the three arbitrators believe
additional time is necessary to reach a decision, they may notify the parties
and extend the time to reach a decision in thirty day increments, but in no
event to exceed an additional ninety days. Discovery of evidence shall be
conducted expeditiously by the Parties, bearing in mind the parties desire to
limit discovery and to expedite the decision or award of the arbitrators at the
most reasonable cost and expense of the parties. Judgment upon an award rendered
pursuant to such Arbitration may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award,
and an order of enforcement, as the case may be. The place of Arbitration shall
be Houston, Texas. The decision of the arbitrators, or a majority thereof, made
in writing, shall be final and binding upon the parties hereto as to the
questions submitted, and each party shall abide by such decision.
Notwithstanding the provisions of this Section 7.2, neither party shall be
prohibited from seeking injunctive relief pending the completion of any
arbitration. The costs and expenses of the arbitration proceeding, including the
fees of the arbitrators and all costs and expenses, including legal fees and
witness fees, incurred by the prevailing party, shall be borne by the losing
party.
Solely for purposes of injunctive relief, orders in aid of
arbitration and entry of the arbitrator's award:
(a) each of the parties hereto irrevocably consents to the
non-exclusive jurisdiction of, and venue in, any state court located in
Harris County, Texas or any federal court sitting in the Southern
District of Texas in any suit, action or proceeding seeking injunctive
relief, arising out of or relating to this Agreement or any of the
other agreements contemplated hereby and any other court in which a
matter that may result in a claim for indemnification hereunder by an
Weatherford Indemnified Party may be brought with respect to any claim
for indemnification by an Weatherford Indemnified Party;
(b) each of the parties hereto waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to
the laying of venue of any suit, action or proceeding seeking
injunctive relief, orders in aid of arbitration or entry of an
arbitration arising out of or relating to this Agreement or any of the
other agreements contemplated hereby brought in any state court located
in Harris County, Texas or any federal court sitting in the Southern
District of Texas or any other court in which a matter that may result
in a claim for indemnification hereunder by an Weatherford Indemnified
Party may be brought with respect to any claim for indemnification by
an Weatherford Indemnified Party, and further irrevocably waive any
claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum; and
(c) each of the parties hereto irrevocably designates,
appoints and empowers CT Corporation System, Inc. and any successor
thereto as its designee, appointee and
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agent to receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any suit, action or
proceeding arising out of or relating to this Agreement or any of the
other agreements contemplated hereby.
7.3. Assignment. This Agreement shall inure to the benefit of
and will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
TLC, C2, Christiana, Weatherford, and the Weatherford Indemnified Parties any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
7.4. Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Weatherford:
Weatherford, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Stauss
Facsimile: (713) 651-5246
if to TLC:
Total Logistic Control, LLC
Suite 1200
700 N. Water Street
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
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if to Christiana:
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
if to C2:
Suite 1200
700 N. Water Street
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.4. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
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7.5. Governing Law. All questions arising out of this
Agreement and the rights and obligations created herein, or its validity,
existence, interpretation, performance or breach shall by governed by the laws
of the State of Texas without regard to conflict of laws principles.
7.6. Severability. If any provision of this Agreement is held
to be unenforceable, this Agreement shall be considered divisible and such
provision shall be deemed inoperative to the extent it is deemed unenforceable,
and in all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by applicable law.
7.7. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.8. Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7.9. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
oral and written, among the parties or any of them, with respect to the subject
matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
WEATHERFORD INTERNATIONAL, INC.
("Weatherford")
By /s/BERNARD J. DUROC-DANNER
Name: Bernard J. Duroc-Danner
Title: President
TOTAL LOGISTIC CONTROL, LLC
("TLC")
By /s/ WILLIAM T. DONOVAN
Name: William T. Donovan
Title: Vice President
CHRISTIANA COMPANIES, INC.
("Christiana")
By /s/ WILLIAM T. DONOVAN
Name: William T. Donovan
Title: President
C2, INC.
("C2")
By /s/ WILLIAM T. DONOVAN
Name: William T. Donovan
Title: President
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<PAGE>
ANNEX B
TOTAL LOGISTIC CONTROL, LLC
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
____________, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. FORMATION
1.1 Definitions..................................................1
1.2 Formation; Name..............................................1
1.3 Purposes.....................................................1
1.4 Registered and Principal Offices.............................2
1.5 Term.........................................................2
1.6 Foreign Qualification........................................2
1.7 No State Law Partnership.....................................2
1.8 Partnership Classification...................................2
2. MEMBERS
2.1 Members......................................................2
2.2 Admission of Additional Members..............................2
3. CAPITAL CONTRIBUTIONS
3.1 Capital Contributions by Members.............................3
3.2 Purchase of Units by C2, Inc.................................3
3.3 Loans to the Company.........................................3
3.4 Withdrawal and Return of Contributions.......................3
3.5 Interest on Contributions....................................3
3.6 Limitation on Member's Deficit Make-up.......................3
3.7 Capital Accounts.............................................3
3.8 Units........................................................4
4. ALLOCATIONS
4.1 Profits and Losses...........................................4
4.2 Tax Allocations..............................................4
4.3 Construction.................................................5
5. DISTRIBUTIONS
5.1 Current Tax Distributions....................................5
5.2 Other Distributions..........................................5
5.3 Amounts Withheld.............................................5
5.4 Distribution Restrictions....................................6
(i)
<PAGE>
6. MANAGEMENT
6.1 Voting and Decisions........................................ 6
6.2 Restriction on Transactions................................. 6
6.3 Regular Meetings............................................ 7
6.4 Special Meetings............................................ 7
6.5 Quorum...................................................... 7
6.6 Notice...................................................... 7
6.7 Manner of Acting............................................ 8
6.8 Vacancies................................................... 8
6.9 Presumption of Assent....................................... 8
6.10 Resignation of Manager...................................... 8
6.11 Action Without Meeting...................................... 8
6.12 Telephonic Meetings......................................... 8
6.13 Reliance by Third Parties................................... 9
6.14 Filing of Documents......................................... 9
6.15 Limitation on Liability; Indemnification.................... 9
6.16 Delegation to Members or Representatives of Members......... 9
6.17 Time Devoted to Business....................................11
6.18 Compensation of Members and Officers........................11
7. ASSIGNMENT, TRANSFER AND REPURCHASE OF MEMBER'S UNITS
AND DISASSOCIATION
7.1 Assignment and Transfer.....................................11
7.2 Disassociation..............................................13
7.3 Restraining Order...........................................13
8. DISSOLUTION AND WINDING UP
8.1 Dissolution.................................................13
8.2 Winding Up and Liquidation..................................14
8.3 Compliance With Timing Requirements of Regulations..........14
9. BOOKS, REPORTS, ACCOUNTING, AND TAX ELECTIONS
9.1 Books and Records...........................................14
9.2 Fiscal Year and Method of Accounting........................15
9.3 Reports and Statements......................................15
9.4 Tax Elections...............................................15
9.5 Tax Matters Partner.........................................15
(ii)
<PAGE>
10. MISCELLANEOUS
10.1 Amendments..................................................16
10.2 Bank Accounts...............................................16
10.3 Binding Effect..............................................16
10.4 Rules of Construction.......................................16
10.5 Choice of Law and Severability..............................16
10.6 Counterparts................................................16
10.7 Entire Agreement............................................16
10.8 Last Day for Performance Other Than a Business Day..........16
10.9 Notices.....................................................17
10.10 Title to Property; No Partition.............................17
11. GLOSSARY.............................................................17
(iii)
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
THIS FIRST AMENDED AND RESTATED OPERATING AGREEMENT (this "Operating
Agreement") is effective as of the [____] day of _________, 1997, between
CHRISTIANA COMPANIES, INC., a Wisconsin corporation, and C2, INC., a Wisconsin
corporation (individually, "Member", and collectively, the "Members").
W I T N E S S E T H :
WHEREAS, Christiana Companies, Inc. has formed a limited liability
company known as Total Logistic Control, LLC (the "Company"), by causing the
filing of a Certificate of Organization (the "Certificate") pursuant to the Act;
WHEREAS, C2, Inc. desires to acquire an interest in the Company and
Christiana Companies, Inc. desires to sell a portion of its interest to C2, Inc.
pursuant to the terms and conditions of that certain Purchase Agreement by and
among Weatherford International, Inc., a Delaware corporation, Christiana
Acquisition Co., a Wisconsin corporation, Christiana Companies, Inc., a
Wisconsin corporation, and C2, Inc., a Wisconsin corporation, dated December 12,
1997 as amended by Amendment No. 1 dated May 26, 1998 and Amendment No. 2 dated
October __, 1998 (the "Purchase Agreement").
WHEREAS, the parties hereto desire to set forth in full all of the
terms and conditions of their agreements and understandings in this Operating
Agreement;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
1. FORMATION
1.1 Definitions. Capitalized terms used in this Operating Agreement
shall have the meanings set forth in the text of this Operating Agreement in the
Glossary contained in Article XI.
1.2 Formation; Name. Christiana Companies, Inc. formed the Company as
a limited liability company pursuant to the Act by causing, on June 13, 1997,
the Certificate to be filed with the Delaware Secretary of State, which shall
constitute notice that the Company is a limited liability company. The Company's
name shall be Total Logistic Control, LLC.
1.3 Purposes. The purposes of the Company shall be to engage in any
and all general business activities permissible under the Act.
<PAGE>
1.4 Registered and Principal Offices. The registered office of the
Company shall initially be located at 1209 Orange Street, Wilmington (County of
New Castle), Delaware, 19801. The registered agent of the Company shall be the
Corporation Trust Company, whose address is the same as that of the registered
office. The principal office of the Company shall be located at 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202. The Board of Managers may
establish additional offices or may relocate the principal or registered
offices.
1.5 Term. The Company's term officially began on June 13, 1997, and
shall continue until terminated by operation of law or by some provision of this
Operating Agreement.
1.6 Foreign Qualification. Prior to the Company's conducting business
in any jurisdiction other than Delaware, the Board of Managers shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Board of Managers, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. Each Member shall execute, acknowledge, swear to, and deliver all
certificates and other instruments conforming with this Operating Agreement that
are necessary or appropriate to qualify, continue, and terminate the Company as
a foreign limited liability company in all such jurisdictions in which the
Company may conduct business.
1.7 No State Law Partnership. The Members intend that the Company be
operated in a manner consistent with its treatment as a partnership for federal
and state income tax purposes and not be operated or treated as a "partnership"
(including, without limitation, a limited partnership or joint venture) for any
other purpose, including, but not limited to, Section 303 of the Federal
Bankruptcy Code, and this Operating Agreement shall not be construed to suggest
otherwise. No Member shall take any action inconsistent with the express intent
of the parties hereto as set forth herein.
1.8 Partnership Classification. The Members hereby agree that the
Company shall not be operated or treated as an "association" taxed as a
corporation under the Code and that no election shall be made under the Treasury
Regulations by the Members, the Members or any officer to treat the Company as
an "association" taxable as a corporation without the prior unanimous written
consent of the Members.
2. MEMBERS
2.1 Members. The names and business addresses of the Members of the
Company are set forth on Exhibit A hereto.
2.2 Admission of Additional Members. Additional members may be
admitted to the Company only with Member Approval.
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<PAGE>
3. CAPITAL CONTRIBUTIONS
3.1 Capital Contributions by Members.
(i) Initial Capital Contributions. The initial capital
contribution made by Christiana Companies, Inc. to the Company in exchange for
its 100% percentage interest in the Company is set forth on Exhibit C to this
Operating Agreement of Total Logistic Control, LLC dated June 13, 1997.
Christiana Companies, Inc.'s 100% percentage interest is hereby restated as
1,000 Units in the Company.
(ii) Additional Capital Contributions. No additional capital
contributions to the Company shall be required. Additional capital contributions
to the Company may be made with Manager Approval. No additional Units in the
Company may be issued without prior Member Approval.
3.2 Purchase of Units by C2, Inc. Pursuant to the terms and conditions
of the Purchase Agreement, C2, Inc. purchased 666.667 of the Units in the
Company held by Christiana Companies, Inc. Immediately following such purchase,
each Member holds the number of Units in the Company set forth on Exhibit A
hereto.
3.3 Loans to the Company. Except as set forth in this Operating
Agreement, no Member shall make a loan to the Company without Manager Approval.
3.4 Withdrawal and Return of Contributions. No Member shall be entitled
to withdraw or to the return of its capital contributions. No Member shall have
the right to demand and receive property other than cash in return for its
contributions, except that upon dissolution, the Members shall be entitled to
share in the distribution of the remaining assets of the Company in accordance
with Article VIII of this Operating Agreement.
3.5 Interest on Contributions. Capital contributions to the Company
shall not earn interest.
3.6 Limitation on Member's Deficit Make-up. The Members shall have no
obligation to restore any deficit in their Capital Accounts.
3.7 Capital Accounts.
(i) Maintenance of Capital Accounts. A separate Capital Account
shall be maintained and adjusted for each Member on the books and records of the
Company in accordance with the Code and the Treasury Regulations. The initial
balance of each Member's Capital Account shall be the amount of its initial
contribution to the Company.
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<PAGE>
(a) Transfers. In the event any interest in the Company is
transferred in accordance with the terms of this Operating Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest.
(b) Revaluation. In the event the Values of Company assets
are adjusted pursuant to the definition of the term "Value" in Article XI
hereof, the Capital Accounts of all Members shall be adjusted simultaneously to
reflect the aggregate net adjustment as if the Company recognized gain or loss
equal to the amount of such aggregate net adjustment, and such adjustment shall
be allocated to the Members in accordance with Article IV hereof.
(c) Interpretation. The manner in which Capital Accounts are
to be maintained pursuant to this Section 3.07 is intended to and shall be
construed so as to comply with the requirements of Section 704(b) of the Code
and the Treasury Regulations promulgated thereunder.
3.8 Units. The membership interests in the Company shall be divided
into Units. Except as set forth herein, each Unit shall have identical
preferences, limitations, and other relative rights.
4. ALLOCATIONS
4.1 Profits and Losses. Except as otherwise provided in Section 4.02
hereof, Profits and Losses shall be allocated among the Members in proportion to
the number of Units held by such Members.
4.2 Tax Allocations.
(i) Capital Contributions. In accordance with section 704(c) of
the Code and the Treasury Regulations under that section, income, gain, loss,
and deduction with respect to any capital contribution shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of the capital contribution for federal income tax
purposes and its initial Value.
(ii) Adjustment of Value. If the Value of any Company asset is
adjusted, subsequent allocations of income, gain, loss, and deduction with
respect to the asset shall take account of any variation between the asset's
adjusted basis for federal income tax purposes and its Value as so adjusted in
the same manner as under section 704(c) of the Code and the Treasury Regulations
under that section.
(iii) Elections. Any elections or other decisions relating to the
allocations shall be made by the Board of Managers in any manner that reasonably
reflects the purpose and intent of this Operating Agreement. Allocations
pursuant to this Section 4.02 are solely for purposes of national, state and
local taxes and shall not affect, or in any way be taken into account in
-4-
<PAGE>
computing, any Capital Account or share of Profits and Losses, other items, or
Distributions pursuant to any provision of this Operating Agreement.
(iv) Determination of Allocable Amounts. For purposes of
determining the Profits and Losses, or any other items of income, gain, loss, or
deduction allocable to any fiscal period, Profits and Losses, and any other such
items shall be determined on a daily, monthly, or other basis, as determined by
the Board of Managers using any permissible method under section 706 of the Code
and the Treasury Regulations under that section.
(v) Income Tax Consequences. The Members are aware of the income
tax consequences of the allocations made by this Article IV and agree to be
bound by the provisions of this Article IV in reporting their shares of income,
gain, loss, and deductions for income tax purposes.
4.3 Construction. The provisions of this Article IV (and other related
provisions in this Operating Agreement) pertaining to the allocation of items of
Company income, gain, loss, deductions, and credits shall be interpreted
consistently with the Treasury Regulations, and to the extent unintentionally
inconsistent with such Treasury Regulations, shall be deemed to be modified to
the extent necessary to make such provisions consistent with the Treasury
Regulations.
5. DISTRIBUTIONS
5.1 Current Tax Distributions. To the extent permitted by law and
consistent with the Company's obligations to its creditors, the Company shall
make distributions ("Tax Distributions") in accordance with this Section 5.01 on
or before April 15, June 15, September 15 and December 15 of each year. The
aggregate amount of the Tax Distribution made with respect to a given date shall
be the product of (1) the Company's estimated federal taxable income (computed
without taking into account any asset change in value due to the Purchase
Agreement for the calendar quarter that includes such date, multiplied by (2)
the sum of (i) the highest corporate federal income tax rate as stated in the
Internal Revenue Code, plus (ii) the highest corporate Wisconsin income tax rate
as stated in Wisconsin law, minus (iii) the product of (i) and (ii). The
aggregate amount of each Tax Distribution shall be distributed to the Members in
proportion to the number of Units held by such Members.
5.2 Other Distributions. At such times and in such form as may be
determined by Member Approval, distributions (in addition to the distributions
described in Sections 5.01 and 5.03) shall be made to the Members in proportion
to the number of Units held by each such Member.
5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to the Members shall be treated as amounts distributed to the
Members pursuant to this Article V for all purposes under this Operating
Agreement.
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<PAGE>
5.4 Distribution Restrictions. The Company shall make no distribution
if, and to the extent, that after such distribution, the Company would not be
able to pay its debts as they become due in the usual course of business, or the
fair value of the Company's total assets would be less than the sum of its total
liabilities.
6. MANAGEMENT
6.1 Voting and Decisions. Subject to the provisions of Section 6.02,
the management of the Company shall be vested in a Board of Managers. The
initial Board of Managers shall consist of six Managers. Each Manager shall be
elected by the vote or written consent of the Members owning at least a majority
of the Units in the Company provided, however, that Christiana Companies, Inc.
and C2, Inc. shall at all times each be entitled to elect, without the consent
of any other Member, a number of Managers that is proportionate to the number of
Units in the Company held by Christiana Companies, Inc. and C2, Inc.,
respectively.
6.2 Restriction on Transactions. The following actions shall require
Member Approval:
(i) The authorization or issuance of additional Units except for
the issuance of up to 101 Units to Company management for management incentive
options with five year cliff vesting;
(ii) The authorization or payment of any distribution with
respect to Units, except for payment of any distribution that is necessary for
C2, Inc. to fulfill its obligation with respect to Section 5.2 of the Purchase
Agreement;
(iii) The direct or indirect purchase or acquisition by the
Company or any Subsidiary of the Company of Units;
(iv) The approval of any merger, consolidation or other similar
transaction involving the Company or any subsidiary of the Company or sale of
all or substantially all of the operating assets of the Company or any
subsidiary of the Company in one or more transactions;
(v) The creation of any new direct or indirect Subsidiary of the
Company;
(vi) The making of any tax election;
(vii) The liquidation or dissolution of the Company or any
Subsidiary of the Company;
(viii) Any transaction between the Company or any Subsidiary of
the Company and any affiliate of a Member (other than a transaction between the
Company and a Subsidiary of the Company);
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<PAGE>
(ix) The payment of any compensation to any Member or any
affiliate of a Member or the entering into any employee benefit plan or
compensatory arrangement with or for the benefit of any Member or affiliate of
any Member except as permitted under Section 6.18;
(x) Any amendment to this Operating Agreement or the Certificate;
and
(xi) Any other matter for which Member Approval is required under
the Act.
6.3 Regular Meetings. A regular meeting of the Managers shall be held
without other notice other than this Operating Agreement at such time and place
as the Board of Managers shall determine. The Board of Managers may provide, by
resolution, the time and place, either within or without the State of Delaware,
for the holding of additional regular meetings without other notice than such
resolution. An annual meeting of Members shall be held without notice other than
this Operating Agreement immediately following the annual meetings of Managers.
6.4 Special Meetings. Special meetings of the Board of Managers or
Members may be called at the request of any two Managers or any Member. The
person or persons authorized to call special meetings of the Board of Managers
may fix any place, either within our without the State of Delaware, as the place
for holding any special meeting of the Board of Managers called by them.
6.5 Quorum.
(i) Managers. A majority of the number of Managers shall
constitute a quorum for the transaction of business at any meeting of the Board
of Managers, but if less than such majority is present at a meeting, a majority
of the Board of Managers or Members present may adjourn the meeting from time to
time without further notice.
(ii) Members. All Members shall be required to be present to
constitute a quorum for the transaction of business of a meeting of the Members.
A Member may not unreasonably fail to attend a meeting of Members where such
failure would cause irreparable damage to the Company, its business or its
assets.
6.6 Notice. Notice of any special meeting shall be given at least five
business days prior thereto by written notice delivered personally or mailed to
each Manager at his business address, or by telegram; provided, however,
telephonic meetings may be called on only two business days' notice. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any Manager or Member may waive notice of
any meeting. The attendance of a Manager or Member at a meeting shall constitute
a waiver of notice of such meeting, except where a Manager or Member attends a
meeting for the express purpose of
-7-
<PAGE>
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Managers need be specified in the
notice or waiver of notice of such meeting.
6.7 Manner of Acting. The act of the majority of the Managers present
at a meeting at which a quorum is present shall be the act of the Board of
Managers ("Manager Approval").
6.8 Vacancies. Subject to the provisions of Section 6.01 hereof, any
vacancy occurring in the Board of Managers shall be filled by the affirmative
vote of a majority of the remaining Managers through less than a quorum of the
Board of Managers. A Manager elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office.
6.9 Presumption of Assent. A Manager of the Company who is present at a
meeting of the Board of Managers at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless such
Manager's dissent shall be entered into the minutes of the meeting or unless
such Manager shall file his or her written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a Manager who voted in favor of such action.
6.10 Resignation of Manager. A Manager may resign from his or her
position as a Manager at any time by notice to the Board of Managers. Such
resignation shall become effective as set forth in such notice.
6.11 Action Without Meeting. Any action required or permitted by this
Operating Agreement or by law to be taken at a meeting of the Board of Managers
or by the Members may be taken without a meeting if a written consent or
consents, describing the action so taken, is signed by all of the Managers or
Members, respectively, entitled to vote with respect to the subject matter
thereof and delivered to the Company for inclusion in the Company's records.
6.12 Telephonic Meetings. Except as herein provided and notwithstanding
any place set forth in the notice of the meeting or this Operating Agreement,
Members, Board of Managers and any committees thereof may participate in regular
or special meetings by, or through the use of, any means of communication by
which (a) all participants may simultaneously hear each other, such as by
conference telephone, or (b) all communication is immediately transmitted to
each participant, and each participant can immediately send messages to all
other participants. If a meeting is conducted by such means, then at the
commencement of such meeting, the presiding person shall inform the
participating Managers and Members that a meeting is taking place at which
official business may be transacted. Any participants in a meeting by such means
shall be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means on any
particular matter, which the presiding person determines, in his or her sole
discretion, to be inappropriate under the circumstances for
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<PAGE>
action at a meeting held by such means. Such determination shall be made and
announced in advance of such meeting.
6.13 Reliance by Third Parties. Any person dealing with the Company,
other than a Member, may rely on the authority of the Board of Managers and any
officer of the Company in taking any action that is in the name of the Company
without inquiry into the provisions of this Operating Agreement or compliance
therewith. Every instrument purporting to be the action of the Company and
executed by the Board of Managers or any officer of the Company shall be
conclusive evidence in favor of any person relying thereon or claiming
thereunder that, at the time of delivery thereof, this Operating Agreement was
in full force and effect and that the execution and delivery of that instrument
is duly authorized by the Company.
6.14 Filing of Documents. The Board of Managers shall file or cause to
be filed all certificates or documents as may be determined by the Board of
Managers to be necessary or appropriate for the formation, continuation,
qualification, and operation of a limited liability company in the State of
Delaware and any other state in which the Company may elect to do business. To
the extent that the Board of Managers determines the action to be necessary or
appropriate, the Board of Managers shall do all things to maintain the Company
as a limited liability company under the laws of the State of Delaware and any
other state in which the Company may elect to do business.
6.15 Limitation on Liability; Indemnification. No Manager, Member or
officer of the Company shall be liable, responsible, or accountable in damages
or otherwise to the Members or the Company for any act or omission in connection
with the business of the Company if the officer acted (i) in good faith and in a
manner he or she reasonably believed to be within the scope of the authority
granted to him or her by this Operating Agreement and (ii) in the best
interests, or not opposed to the best interests, of the Company; provided that
the Manager or officer shall not be relieved from liability for any claim, issue
or matter as to which the officer shall have been finally adjudicated to have
committed fraud or willful misconduct. Subject to this limitation in the case of
such adjudication of liability, the Company shall indemnify the Managers, to the
fullest extent permitted under the Act, against any losses, judgements,
liabilities, and expenses (including, without limitation, reasonable attorney's
fees) incurred by reason of any act or omission in connection with the business
of the Company.
6.16 Delegation to Members or Representatives of Members. The Board of
Managers may, from time to time, fill the offices of president, vice president,
secretary and treasurer. The Board of Managers may appoint such other officers
and assistant officers as they deem necessary. Unless the Board of Managers
decide otherwise, if the title is one commonly used for officers of a business
corporation, the assignment of such title shall constitute the delegation of the
authority and duties that are normally associated with that office, as set forth
below, subject to any specific delegation of authority and duties made pursuant
to the first sentence of this Section 6.16. Any number of titles may be held by
the same person. Any delegation pursuant to this Section 6.16 may be revoked at
any time by the Board of Managers.
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<PAGE>
Any person so delegated under this Section 6.16 shall not be considered a
"manager" as defined in Section 18.101(10) of the Act.
(i) President. The President shall be the principal executive
officer of the Company and, subject to the direction of the Board of Managers,
shall in general supervise and control the day-to-day operations of the Company.
The President shall preside at all meetings of the Board of Managers. He or she
shall have authority, subject to the terms of this Operating Agreement and such
rules as may be prescribed by the Board of Managers, to appoint such agents and
employees of the Company as he or she shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the President. He or she
shall have authority to sign, execute, and acknowledge, on behalf of the
Company, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports, and all other documents or instruments necessary or proper to be
executed in the course of the Company's regular business, or which shall be
authorized by resolution of the Board of Managers or Members; and except as
otherwise provided by the Board of Managers, he or she may authorize any Vice
President or other officer or agent of the Corporation to sign, execute, and
acknowledge such documents or instruments in his or her place and stead. In
general, he or she shall perform all duties incident to the office of the
President and such other duties as may be prescribed by the Board of Managers
from time to time.
(ii) The Vice President. In the absence of the President or in
the event of the President's death, inability or refusal to act, or in the event
for any reason it shall be impracticable for the President to act personally,
the Vice President (or in the event there be more than one vice President, the
Vice Presidents in the order designated by the Board of Managers, or in the
absence of any designation, then in the order of their election or appointment)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Any
Vice President shall perform such other duties and have such authority as from
time to time may be delegated or assigned to him or her by the President or by
the Board of Managers. The execution of any instrument of the Company by any
Vice President shall be conclusive evidence, as to third parties, of his or her
authority to act in the stead of the President.
(iii) The Secretary. The Secretary shall (i) keep minutes of the
meetings of the Members and the Board of Managers (and of committees thereof) in
one or more books provided for that purpose (including records of actions taken
by the Members and the Board of Managers); (ii) see that all notices are duly
given in accordance with the provisions of this Operating Agreement or as
required by the Act; (iii) be custodian of the corporate records; (iv) maintain
a record of the Members of the Company, in a form that conforms to the
requirements of the Act; and (v) in general perform all duties incidental to the
office of Secretary and have such other duties and exercise such other authority
as from time to time may be delegated or assigned by the President.
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(iv) The Treasurer. The Treasurer shall (i) have charge and
custody of and be responsible for all funds and securities of the Company; (ii)
maintain appropriate accounting records; (iii) receive and give receipt for
monies due and payable to the Company from any source whatsoever, and deposit
all such monies in the name of the Company in such banks, trust companies, or
other depositories as shall be selected in accordance with the provisions of
this Operating Agreement; and (iv) in general perform all of the duties incident
to the office of Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned by the President.
6.17 Time Devoted to Business. The Members and the Managers shall not
be required to devote their full time and efforts to the Company, but only so
much of their time and efforts as is reasonably necessary to perform their
duties and responsibilities to the Company.
6.18 Compensation of Members and Officers. The Board of Managers may
authorize the Company to pay the officers (other than those affiliated with
Lubar & Co., Incorporated) any reasonable fees or other compensation for their
services. C2 shall be paid an annual management fee of $250,000.
7. ASSIGNMENT, TRANSFER AND REPURCHASE OF MEMBER'S UNITS AND
DISASSOCIATION
7.1 Assignment and Transfer.
(i) General Restrictions on Transfers. Except as otherwise
provided herein, a Member may not Transfer any Unit without the prior written
consent of the Board of Managers. Any Transfer, attempted Transfer, or purported
Transfer in violation of this Operating Agreement's terms and conditions shall
be null and void. Notwithstanding the foregoing, C2, Inc. may pledge and assign
its interest to Christiana and Christiana may effect a Transfer of C2, Inc.'s
Units pursuant to any action taken with respect to any security interest granted
to it by C2, Inc. Christiana may also transfer its Units without consent of the
Board of Managers if the transferee is an affiliate of Christiana or C2, Inc.
and such party agrees in writing to be bound by the provisions of this Operating
Agreement. At any time after the fifth anniversary of the date of this Operating
Agreement, Christiana may transfer any or all of its Units in the Company to any
person without the prior consent of the Board of Managers, provided, however,
that in order to effect any such Transfer, Christiana must provide C2, Inc. with
a copy of the terms of the proposed transfer (the "Transfer Notice"). C2, Inc.
shall have a right of first refusal to purchase such Units for the same price
and on the same terms set forth in the Transfer Notice. Such right shall be
exercised by C2, Inc. sending an appropriate notice to Christiana within 60 days
after receipt of the Transfer Notice. The closing shall then be held 30 days
after C2, Inc. sends its notice to Christiana.
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(ii) Involuntary Transfer.
(a) Notice of Involuntary Transfer. In the event of an
Involuntary Transfer of a Unit, the Transferor or the Involuntary Transferee
shall immediately deliver a Notice of Involuntary Transfer to the Company.
During the 90-day period beginning on the earlier of (i) the date of receipt by
the Company of the Notice of Involuntary Transfer or (ii) the date that the
Company provides a notice to the Involuntary Transferee and the Members that the
Company is aware of the Involuntary Transfer, the Company shall have the option
to purchase the Units that are subject to the Involuntary Transfer. The purchase
price shall be an amount equal to the book value attributable to those Units, as
determined by the Company's accountants, calculated as of the last day of the
calendar quarter immediately preceding the date of the Involuntary Transfer. The
purchase price shall be payable pursuant to the terms of payment set forth in
the applicable provisions of Section 7.01(e) below. Notwithstanding the
foregoing, in the case of a Member that is an entity, the option described above
in this Section 7.01(b) shall not apply with respect to an Involuntary Transfer
of Units resulting from a merger of such Member into another entity if the
proportionate interest owned by each person who owns, directly or indirectly, an
ownership interest in such other entity immediately after the merger is
substantially the same as the proportionate interest owned, directly or
indirectly, by such person in the Member immediately before the merger.
(b) Acceptance of Offer. The Company shall exercise any such
option by delivering a written notice to the Transferor (if the Transferor is
still in existence) and the Involuntary Transferee within such 90-day period,
which notice shall specify a closing date, occurring within 30 days after the
end of such 90-day period, for the purchase by the Company.
(c) Status of Involuntary Transferee. Regardless of whether
the Company exercises such option or closes such purchase, the Involuntary
Transferee shall not be considered to be a Member, for any period of time, as a
result of the Involuntary Transfer (and the rights of the Involuntary Transferee
shall be as described in Section 7.01(c)), unless all the Nontransferring
Members have delivered (within such 90-day period) their written consent, which
consent may be withheld in the sole and absolute discretion of the
Nontransferring Members, to treating the Involuntary Transferee as a Member.
(iii) Effect of Transfers. Until an Involuntary Transferee is
considered a Member, if ever, pursuant to the applicable provisions of this
Article VII, the Units transferred to an Involuntary Transferee shall be
considered in all respects as Units held by the Transferor for purposes of this
Operating Agreement except for those provisions relating to the economic rights
associated with such Units, the nonmanagement provisions of which will apply to
the Involuntary Transferee as though the Involuntary Transferee held the Units.
Except as otherwise provided in this Operating Agreement, any actions that a
Member takes or would be entitled to take with respect to Units, including,
without limitation, votes, consents, offers, sales, purchases, options, or other
deeds taken pursuant to this Operating Agreement, shall be taken by the Member
for its Involuntary Transferees with respect to the Units held by those
Involuntary Transferees. This Section 7.01(c) shall constitute an irrevocable
and absolute proxy
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and power of attorney granted by each Involuntary Transferee to its Transferor
to (1) take such actions on behalf of the Involuntary Transferee without any
further deed than the taking of the action by the Member, and (2) sign any
document or instrument evidencing such action for or on behalf of the
Involuntary Transferee relating to the Units held by the Involuntary Transferee.
(iv) Time and Place of Closing. Except as otherwise agreed by the
Company, the closing of any Involuntary Transfer (or purchase by the Company)
pursuant to this Article VII shall occur at the Company's principal office on
such day as the Company shall select pursuant to the provisions of this Article
VII. The Company shall notify the Transferor and the Involuntary Transferee in
writing of the exact date and time of closing at least 10 days before the
closing date.
(v) Transfer and Payment of Purchase Price. At the closing, the
Transferor shall deliver the Units that are subject to the Involuntary Transfer
(or purchase or redemption by the Company) free and clear of any liens, security
interests, encumbrances, charges, or other restrictions (other than those
created pursuant to this Operating Agreement), together with all such
instruments or documents of conveyance as shall be reasonably required. If not
otherwise provided pursuant to this Section 7.01 and the Notice of Involuntary
Transfer, or otherwise agreed, the price for any Units to be purchased or
redeemed by the Company shall be paid by certified or bank cashier's check.
7.2 Disassociation. A person ceases to be a Member of the Company upon
the occurrence of, and at the time of, any event of disassociation defined under
the Act.
7.3 Restraining Order. In the event that any Member shall at any time
Transfer or attempt to Transfer its Units in violation of the provisions of this
Operating Agreement and any rights hereby granted, then the other Members and
the Company shall, in addition to all rights and remedies at law and in equity,
be entitled to a decree or order restraining and enjoining such Transfer, and
the offending Member shall not plead in defense thereto that there would be an
adequate remedy at law; it being hereby expressly acknowledged and agreed that
damages at law will be an inadequate remedy for a breach or threatened breach of
the violation of the provisions concerning transfer set forth in this Operating
Agreement.
8. DISSOLUTION AND WINDING UP
8.1 Dissolution. The Company shall be dissolved upon the happening of
any of the following:
(i) By Member Approval to dissolve the Company;
(ii) The Company being adjudicated insolvent or bankrupt; or
(iii) Entry of a decree of judicial dissolution.
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8.2 Winding Up and Liquidation. Upon a dissolution of the Company, the
Members shall by Member Approval select a liquidator (the "Liquidator"). The
Liquidator shall liquidate as much of the Company's assets in its discretion,
and shall do so as promptly as is consistent with obtaining fair value for them,
and shall apply and distribute the assets of the Company in accordance with the
following:
(i) First, to the payment and discharge of all of the Company's
debts and liabilities to creditors of the Company regardless of whether they are
Members, including, without limitation, the unpaid principal balance (and any
interest thereon) of any loan made by a Member; and
(ii) Second, to the Members in accordance with their Capital
Accounts, after giving effect to all contributions, distributions and
allocations for all periods.
8.3 Compliance With Timing Requirements of Regulations. In the event
the Company is "liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Treasury Regulations, distributions shall be made pursuant to this
Article IX by the end of the fiscal year in which such liquidation occurs, or if
later, within ninety (90) days of such liquidation. Distributions pursuant to
the preceding sentence may be distributed to a trust established for the benefit
of the Members for the purposes of liquidating Company assets, collecting
amounts owed to the Company, and paying any contingent or unforeseen liabilities
or obligations of the Company or of the Members arising out of or in connection
with the Company. The assets of any such trust shall be distributed to the
Members from time to time, in the reasonable discretion of the Members in the
same proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Members pursuant to this Operating
Agreement; provided, however, such trust may only be created if the Company has
received an opinion from counsel, which is generally recognized as being capable
and qualified in the area of federal income taxation, that such trust will not
be classified as an association which would be taxed as a corporation for
federal income tax purposes.
9. BOOKS, REPORTS, ACCOUNTING, AND TAX ELECTIONS
9.1 Books and Records. The Company shall maintain or cause to be
maintained at the Company's principal place of business, complete and accurate
books and records with respect to all Company business and transactions. Such
books and records shall be at all times during normal business hours open to
inspection by any Member. At a minimum, the Company shall keep the following
books and records at the principal place of business of the Company: (a) a list
of the full name(s) and last known business address(es) of each current and
former Member in alphabetical order, setting forth the date on which such person
became a Member and the date, if applicable, on which the person ceased to be a
Member; (b) a copy of the Articles of Organization and all certificates of
amendment, together with executed copies of any powers of attorney pursuant to
which any certificate has been executed; (c) a copy of this Operating Agreement
and all amendments thereto, including any prior Operating Agreements no longer
in effect; (d) copies of the Company's federal, state, and local income tax
returns and reports for
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the seven (7) most recent years; (e) copies of any effective written Company
agreements and of any financial statements of the Company for the seven (7) most
recent years; (f) all such other records as may be required by law; and (g) full
and true books of account.
9.2 Fiscal Year and Method of Accounting. The Company's fiscal year for
both tax and financial reporting purposes shall be the calendar year. The method
of accounting for both tax and financial reporting purposes shall be the cash
method, unless otherwise required for tax purposes or if the Board of Managers
determine that there would be a significant advantage to the Company if
different methods were followed.
9.3 Reports and Statements.
(i) Annual Tax Reports. Within ninety (90) days of the end of
each fiscal year of the Company, the Company shall deliver to the Members such
information as shall be necessary for the preparation by the Members of their
federal, state, and local income and other tax returns.
(ii) Annual Financial Reports. Within ninety (90) days after the
end of each fiscal year of the Company, the Company shall deliver to the Members
unaudited financial statements of the Company for the just completed fiscal
year, prepared at the expense of the Company, which financial statements shall
set forth, as of the end of and for the preceding fiscal year, the following:
(a) A profit and loss statement and a balance sheet of the
Company;
(b) Members' equity and changes in financial position; and
(c) The balances in the Capital Accounts of each Member.
9.4 Tax Elections.
(i) General. The Members shall have the sole authority through
Member Approval to make or revoke any elections on behalf of the Company for tax
purposes.
(ii) Section 754 Election. In the event of a transfer of all or
part of the interest of a Member in the Company, at the request of the
transferee, the Board of Managers may, in its sole discretion, cause the Company
to elect, pursuant to Code Section 754, or the corresponding provision of
subsequent law, to adjust the basis of the Company property as provided by Code
Sections 734 and 743 provided, however, such election shall be made effective as
of the Closing of the transactions contemplated by the Purchase Agreement.
9.5 Tax Matters Partner. ___________________ is designated as the "tax
matters partner" of the Company, as provided in regulations pursuant to Code
Section 6231 and to perform such duties as are required or appropriate
thereunder.
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10. MISCELLANEOUS
10.1 Amendments. Except as provided in Section 10.05 hereof, amendments
to this Operating Agreement shall be undertaken and effective only with Member
Approval.
10.2 Bank Accounts. Company funds shall be deposited in the name of the
Company in accounts designated by the Board of Managers and withdrawals shall be
made only by persons duly authorized by the Board of Managers.
10.3 Binding Effect. Except as provided to the contrary, the terms and
provisions of this Operating Agreement shall be binding upon and shall inure to
the benefit of all the Members, their personal representatives, heirs,
successors, and assigns.
10.4 Rules of Construction. The captions in this Operating Agreement
are inserted only as a matter of convenience and in no way affect the terms or
intent of any provision of this Operating Agreement. All defined phrases,
pronouns, and other variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural, as the actual identity of the
organization, person, or persons may require. No provision of this Operating
Agreement shall be construed against any party hereto by reason of the extent to
which such party or its counsel participated in the drafting hereof.
10.5 Choice of Law and Severability. This Operating Agreement shall be
construed in accordance with the internal laws of Delaware. If any provision of
this Operating Agreement shall be contrary to the internal laws of Delaware or
any other applicable law, at the present time or in the future, such provision
shall be deemed null and void, but shall not affect the legality of the
remaining provisions of this Operating Agreement. This Operating Agreement shall
be deemed to be modified and amended so as to be in compliance with applicable
law and this Operating Agreement shall then be construed in such a way as will
best serve the intention of the parties at the time of the execution of this
Operating Agreement.
10.6 Counterparts. This Operating Agreement may be executed in one or
more counterparts. Each such counterpart shall be considered an original and all
of such counterparts shall constitute a single agreement binding all the parties
as if all had signed a single document.
10.7 Entire Agreement. This Operating Agreement constitutes the entire
agreement among the Members regarding the terms and operations of the Company,
except for any amendments to this Operating Agreement adopted in accordance with
Section 10.01 hereof. This Operating Agreement and the other agreements referred
to in the preceding sentence supersede all prior and contemporaneous agreements,
statements, understandings, and representations of the parties regarding the
terms and operations of the Company, except as provided in the preceding
sentence.
10.8 Last Day for Performance Other Than a Business Day. In the event
that the last day for performance of an act or the exercise of a right hereunder
falls on a day other than
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a Business Day, then the last day for such performance or exercise shall be the
first Business Day immediately following the otherwise last day for such
performance or such exercise.
10.9 Notices. All notices, requests, consents, or other communications
provided for in or to be given under this Operating Agreement shall be in
writing, may be delivered in person, by facsimile transmission (fax), by
overnight air courier or by mail, and shall be deemed to have been duly given
and to have become effective (i) upon receipt if delivered in person or by fax,
(ii) one day after having been delivered to an overnight air courier, or (iii)
three days after having been deposited in the mails as certified or registered
matter, all fees prepaid, directed to the parties or their assignees at the
following addresses (or at such other address as shall be given in writing by a
party hereto):
If to the Company, to the Board of Managers at:
Total Logistic Control, LLC
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Attention: William T. Donovan
(414) 291-9000
If to a Member, to the intended recipient at the Member's most
recent address as reflected in the Company's records.
10.10 Title to Property; No Partition. All real and personal property
owned by the Company shall be owned by it as an entity and no Member shall have
any ownership interest in such property in its individual right or name, and
each Member's Units represented thereby shall be personal property.
11. GLOSSARY
In this Operating Agreement, the following terms shall have the
meanings indicated below, and any derivations of these terms shall have
correlative meanings:
"Act" means the Delaware Limited Liability Company Act in its form as
of the date of this Operating Agreement.
"Affiliate" means any of the following persons or entities: (i) any
person directly or indirectly controlling, controlled by, or under common
control with the person in question; (ii) any person owning any interest in the
person in question; (iii) any officer, director, employee, or partner of the
person in question; and (iv) if the person in question or any partner of the
person in question is an officer, director, or partner, any company for which
such person in question or any partner of the person in question acts in any
such capacity.
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"Board of Managers" means the management body of the Company acting on
behalf of the Members pursuant to Section 6.01.
"Business Day" means a day other than a Saturday, Sunday, or a legal
holiday on which federally chartered banks in the United States of America are
generally closed for business.
"Capital Account" means the separate account maintained for each Member
pursuant to Section 3.06 hereof.
"Christiana" means Christiana Companies, Inc. and its permitted
successors and assigns.
"Code" means the Internal Revenue Code of 1986, and any successor
provisions or codes thereto.
"Company" means Total Logistic Control, LLC.
"Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis.
"Involuntary Transfer" means a Transfer of a Unit due to the bankruptcy
of a Member under applicable federal law.
"Involuntary Transferee" means any person receiving an interest in
Units due to the bankruptcy of a Member under applicable federal law pursuant to
Section 7.01(b).
"Liquidator" means the person selected as such by the Member pursuant
to Section 8.02
hereof.
"Manager" means an individual serving on the Board of Managers.
"Manager Approval" means an act of a majority of the Board of Managers
pursuant to
Section 6.07.
"Member" means the parties executing this Operating Agreement or any
Member admitted pursuant to Section 2.02 or any Transferee permitted to become a
Member pursuant to Section 7.01.
"Member Approval" means the unanimous vote or written consent of the
Members.
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"Nontransferring Members" means, with respect to a Transfer of Units,
all persons (other than the Transferor) who are Members immediately prior to
such Transfer.
"Notice of Involuntary Transfer" means the written notice to be sent by
a Transferor or an Involuntary Transferee to the Company pursuant to Article VII
describing the event giving rise to the Involuntary Transfer; the date upon
which the Transfer occurred; the reason or reasons for the Transfer; the name,
address and capacity of the Involuntary Transferee; and the number of Units
involved.
"Profits and Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses pursuant
to this definition shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise
taken into account in computing Profits or Losses pursuant to this definition,
shall be subtracted from such taxable income or loss;
(iii) Gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Value;
(iv) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or other
period hereof; and
(v) Notwithstanding any other provision of this definition, any
items, which are specially allocated pursuant to Section 4.02 hereof shall not
be taken into account in computing Profits or Losses.
"Sale" (or "Sell") means a sale, transfer, financing, refinancing,
condemnation, or other disposition by the Company of all or any portion of its
assets.
"Subsidiary" means any corporation, partnership, limited partnership,
association, limited liability company or other business entity.
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"Tax Matters Partner" means the person designated in Section 9.05 as
provided in regulations pursuant to Code Section 6231.
"Transfer" means, with respect to a Unit, to voluntarily sell, give,
assign, bequeath, pledge or otherwise encumber, divest, dispose of, or transfer
direct ownership of all, any part of, or any interest in the Unit, but does not
include a change in control of any Member or any affiliate thereof.
"Transferor" means a Member who Transfers, or proposes to Transfer, any
of its Units pursuant to the terms of Article VII.
"Treasury Regulations" means the Federal Income Tax Regulations
promulgated under the Code, as such Regulations may be amended from time to
time. All references herein to specific sections of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations, and any References to Temporary Regulations shall be
deemed also to refer to any corresponding provisions of final Treasury
Regulations.
"Unit" or "Units" means the basis by which a Member's ownership
interest in the Company issued pursuant to Section 3.01(a) or (b) is measured.
"Value" means, with respect to any asset, the assets adjusted basis for
federal income tax purposes, except as follows:
(a) The initial Value of any asset
contributed by a Member to the Company shall be the gross
fair market value of such asset, as determined by the
Members;
(b) The Values of all Company assets shall
be adjusted to equal their respective gross fair market
values, as determined by the Members as of the following
times: (A) the acquisition of any additional interest in the
Company by any new or existing Member in exchange for more
than a de minimis capital contribution; (B) the distribution
by the Company to a Member of more than a de minimis amount
of Company property, unless all Members receive simultaneous
distributions of undivided interests in the distributed
property in proportion to their interests in the Company; and
(C) the termination of the Company for federal income tax
purposes pursuant to Code Section 708(b)(1)(B); and
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(c) If the Value of an asset has been
determined or adjusted pursuant to (i) or (ii) above, such
Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of
computing Profits and Losses.
IN WITNESS WHEREOF, the undersigned have caused this Operating
Agreement to be executed as of the day and year first above written.
CHRISTIANA COMPANIES, INC.
By: _________________________________
William T. Donovan, President
C2, INC.
By: _________________________________
Name: _____________________
Title: ___________________________
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EXHIBIT A
Member Units
C2, Inc.
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202 666.667
Christiana Companies, Inc.
5 Post Oak Park
Suite 1760
Houston, TX 77027 333.333
<PAGE>
- --------------------------------------- ---------------------------------------
- --------------------------------------- ---------------------------------------
No person is authorized in connection
with any offering made hereby to give
any information or to make any 5,202,664 Shares
representation other than as contained
in this Prospectus, and, if given or
made, such information or representation C2, INC.
must not be relied upon as having been
authorized by the Company. This Common Stock
Prospectus does not constitute an offer
to sell or a solicitation of an offer to
buy any security other than shares of
Common Stock offered hereby, nor does it
constitute an offer to sell or a
solicitation of an offer to buy any of
the securities offered hereby to any
persons in any jurisdiction in which it
is unlawful to make such an offer or
solicitation to such person. Neither the
delivery of this Prospectus nor any sale
made hereunder shall under any
circumstance create any implication that
the information herein is correct as of
any date subsequent to the date hereof.
----------------------------
TABLE OF CONTENTS
Page
Prospectus Summary .............
Risk Factors.................... _________________________
Use of Proceeds ................
Dividend Policy ............... PROSPECTUS
Summary of Certain Terms
of the Merger.................. , 1998
Capitalization.................. _________________________
Company Financial Data..........
Pro Forma Summary Combined
Financial Data...............
Selected Historical TLC
Financial Data.................
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations ..................
Business........................
The Purchase Agreement..........
The Operating Agreement.........
The Offering ...................
Management......................
Certain Transactions ...........
Principal Shareholders .........
Description of Capital
Stock..........................
Shares Eligible for Future
Sale.........................
Legal Matters...................
Experts.........................
Available Information...........
Index to Financial
Statements.................... . F-1
Purchase Agreement..............Annex A
Operating Agreement.............Annex B
------------------------------
Until , 1998 (25 days after the date of
this Prospectus), all dealers effecting
transactions in the Common Stock,
whether or not participating in this
distribution, may be required to deliver
a Prospectus.
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- --------------------------------------- ---------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission filing fee..................... $ 6,140
Nasdaq listing fee................................................ $ 10,000
Blue sky fees and expenses........................................ $ 2,000
Transfer agent expenses and fees.................................. $ 3,000
Printing and engraving............................................ $ 30,000
Accountants' fees and expenses.................................... $ 75,000
Legal fees and expenses........................................... $140,000
Miscellaneous..................................................... $ 8,860
--------
Total.................................. $275,000
========
- --------------------------
All of the above fees, costs and expenses above will be paid by the
Company. Other than the SEC filing fee, all fees and expenses are estimated.
Item 14. Indemnification of Directors and Officers.
Pursuant to the WBCL and the Company's By-Laws, directors and officers
of the Company are entitled to mandatory indemnification from the Company
against certain liabilities and expenses (i) to the extent such officers or
directors are successful in the defense of a proceeding and (ii) in proceedings
in which the director or officer is not successful in defense thereof, unless
(in the latter case only) it is determined that the director or officer breached
or failed to perform his duties to the Company and such breach or failure
constituted: (a) a willful failure to deal fairly with the Company or its
Shareholders in connection with a matter in which the director or officer had a
material conflict of interest; (b) a violation of criminal law unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(c) a transaction from which the director or officer derived an improper
personal profit; or (d) willful misconduct. The WBCL specifically states that it
is public policy of Wisconsin to require or permit indemnification, allowance of
expenses and insurance in connection with a proceeding involving securities
regulation, as described therein, to the extent required or permitted as
described above. Additionally, under the WBCL, directors of the Company are not
subject to personal liability to the Company, its Shareholders or any person
asserting rights on behalf thereof for certain breaches or failures to perform
any duty resulting solely from their status as directors, except in
circumstances paralleling those in subparagraphs (a) through (d) outlined above.
The indemnification provided by the WBCL and the Company's By-Laws is
not exclusive of any other rights to which a director or officer may be
entitled. The general effect of the foregoing provisions may be to reduce the
circumstances under which an officer or director may be required to beach the
economic burden of the foregoing liabilities and expense.
Item 15. Recent Sales of Unregistered Securities.
On December 11, 1997, as part of its initial capitalization, the
Company issued 25 shares of Common Stock to Sheldon B. Lubar in exchange for
total cash consideration of $100.
Other than as set forth in the preceding paragraphs, the Company has
not sold any securities within the past three years.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits. The exhibits filed herewith are as specified on the
Exhibit Index included herein.
(b) Financial Statement Schedules. All schedules are omitted because
the required information is not present or is not present in
amounts sufficient to require submission of a schedule or because
the information required is included in the consolidated
financial statements of the Registrant or notes thereto or the
schedule is not required or inapplicable under the related
instructions.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Milwaukee, and State of Wisconsin, on this 14th day of October, 1998.
C2, INC.
By: /s/ William T. Donovan
William T. Donovan, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on October 14, 1998.
Signature Title Date
/s/ William T. Donovan Chairman (Principal Executive October 14, 1998
- ----------------------- Officer and Principal
William T. Donovan Financial and Accounting
Officer)
/s/ David J. Lubar* President and Director October 14, 1998
- -----------------------
David J. Lubar
/s/ Nicholas F. Brady* Director October 14, 1998
- -----------------------
Nicholas F. Brady
/s/ Albert O. Nicholas* Director October 14, 1998
- -----------------------
Albert O. Nicholas
/s/ Sheldon B. Lubar* Director October 14, 1998
- -----------------------
Sheldon B. Lubar
By: /s/ William T. Donovan
*Attorney-in-Fact
II-3
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Exhibit Description Number
2.1 Amended and Restated Agreement and Plan of Merger, dated
as of December 12, 1997, by and among Weatherford, Sub,
Christiana and the Company.
2.2 Purchase Agreement, dated as of December 12, 1997,
as amended by Amendment No. 1 dated May 26, 1998 and
Amendment No. 2 dated October 13, 1998, by and among
EVI, TLC, Christiana and the Company, Incorporated by
reference to Annex A of this Registration Statement.*
3.1 Amended and Restated Articles of Incorporation of the Company.*
3.2 Amended and Restated Bylaws of the Company.*
4.1 Specimen Common Stock Certificate.*
4.2 See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Articles of Incorporation and Bylaws of the Company
defining the rights of the holders of Common Stock.*
4.3 Form of Subscription Agreement.*
4.4 Form of Letter of Transmittal.
5.1 Opinion of Foley & Lardner regarding the legality of securities
being offered.*
10.1 Form of Credit Agreement, by and among the TLC, Firstar Bank
Milwaukee, N.A., individually and as agent, and the lenders that
are a party thereto. This agreement will be executed and become
effective on the Effective Date.*
10.2 Form of First Amended and Restated Operating Agreement, by and
among the Company and Christiana, Incorporated by reference to
Annex B of this Registration Statement. This agreement will be
executed and become effective on the Effective Date.
10.3 C2, Inc. 1998 Equity Incentive Plan.*
21.1 List of Subsidiaries of the Company.*
23.1 Consent of Arthur Andersen LLP, independent public accountants.
23.2 Consent of Foley & Lardner (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page to the
Registration Statement).*
27.1 Financial Data Schedule.
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*Previously filed.
II-5
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Among
WEATHERFORD INTERNATIONAL, INC.,
CHRISTIANA ACQUISITION, INC.,
CHRISTIANA COMPANIES, INC.
and
C2, INC.
dated as of
October 14, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER................................................ 1
1.1 The Merger................................................ 1
1.2 Closing Date.............................................. 2
1.3 Consummation of the Merger................................ 2
1.4 Effects of the Merger..................................... 2
1.5 Articles of Incorporation; Bylaws......................... 2
1.6 Directors and Officers.................................... 2
1.7 Conversion of Securities.................................. 2
1.8 Exchange of Certificates.................................. 4
(a) Exchange Agent................................... 4
(b) Payment of Merger Consideration.................. 4
(c) Retention of Cash Pending Post Closing Audit..... 4
(d) Payment of Contingent Cash Consideration......... 4
(e) Exchange Procedure............................... 5
(f) Distributions with Respect to Unexchanged
Christiana Shares............................. 6
(g) No Further Ownership Rights in Christiana
Shares........................................... 6
(h) Escheat.......................................... 6
1.9 Taking of Necessary Action; Further Action................ 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES............................ 7
2.1 Representations and Warranties of Weatherford and Sub..... 7
(a) Organization and Compliance with Law............. 7
(b) Capitalization................................... 7
(c) Authorization and Validity of Agreement. ....... 8
(d) No Approvals or Notices Required; No Conflict ... 8
(e) Commission Filings; Financial Statements......... 8
(f) Absence of Certain Charges and Events............ 9
(g) Tax Matters...................................... 9
(h) Voting Requirements.............................. 9
(i) Brokers.......................................... 9
(j) Information Supplied.............................. 10
2.2 Representations and Warranties of Christiana and C2........ 10
(a) Organization...................................... 10
(b) Capitalization.................................... 10
(c) Authorization and Validity of Agreement........... 11
(d) No Approvals or Notices Required; No Conflict with
Instruments to which Christiana is a Party........ 12
(e) Commission Filings; Financial Statements.......... 13
(f) Conduct of Business in the Ordinary Course; Absence
of Certain Changes and Events..................... 13
(g) Litigation........................................ 14
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<PAGE>
(h) Employee Benefit Plans............................ 14
(i) Taxes............................................. 16
(j) Environmental Matters............................. 17
(k) Investment Company................................ 18
(l) Severance Payments................................ 18
(m) Voting Requirements............................... 19
(n) Brokers........................................... 19
(o) Assets and Liabilities at Closing................. 19
(p) Compliance with Laws.............................. 19
(q) Contracts......................................... 20
(r) Title to Property................................. 21
(s) Insurance Policies................................ 21
(t) Loans............................................. 21
(u) No Fraudulent Transfer............................ 21
(v) Information Supplied.............................. 22
ARTICLE III
COVENANTS OF CHRISTIANA.................................... 22
3.1 Conduct of Business by Christiana Pending the Merger....... 22
3.2 Cash Requirements.......................................... 25
3.3 Affiliates' Agreements..................................... 25
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME....... 26
4.1 Reservation of Weatherford Stock........................... 26
4.2 Conduct of Weatherford Pending the Merger.................. 26
4.3 Stock Exchange Listing..................................... 26
ARTICLE V
ADDITIONAL AGREEMENTS...................................... 26
5.1 Joint Proxy Statement/Prospectus; Registration Statement... 26
5.2 Accountants Letter......................................... 26
5.3 Meetings of Stockholders................................... 27
5.4 Filings; Consents; Reasonable Efforts...................... 27
5.5 Notification of Certain Matters............................ 27
5.6 Expenses................................................... 28
5.7 Christiana's Employee Benefits............................. 28
5.8 Liquidation or Merger of Christiana........................ 28
ARTICLE VI
CONDITIONS................................................. 29
6.1 Conditions to Obligation of Each Party to Effect the
Merger..................................................... 29
6.2 Additional Conditions to Obligations of Weatherford........ 29
6.3 Additional Conditions to Obligations of Christiana......... 31
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<PAGE>
ARTICLE VII
MISCELLANEOUS.............................................. 32
7.1 Termination................................................ 32
7.2 Effect of Termination...................................... 33
7.3 Waiver and Amendment....................................... 33
7.4 Nonsurvival of Representations and Warranties.............. 33
7.5 Public Statements.......................................... 33
7.6 Assignment................................................. 33
7.7 Notices.................................................... 34
7.8 Governing Law.............................................. 35
7.9 Arbitration................................................ 35
7.10 Severability............................................... 36
7.11 Counterparts............................................... 36
7.12 Headings................................................... 36
7.13 Confidentiality Agreement.................................. 36
7.14 Entire Agreement: Third Party Beneficiaries................ 36
7.15 Disclosure Letters......................................... 36
List of Exhibits
Exhibit A - Logistic Purchase Agreement
Exhibit B - Amended and Restated Certificate of Incorporation of Christiana
-iii-
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as October 14,
1998 (this "Agreement"), is made and entered into by and among Weatherford
International, Inc. (formerly known as EVI, Inc.), a Delaware corporation
("Weatherford"), Christiana Acquisition, Inc., a Wisconsin corporation and
wholly owned subsidiary of Weatherford ("Sub"), Christiana Companies, Inc., a
Wisconsin corporation ("Christiana"), and C2, Inc., a Wisconsin corporation
("C2").
WHEREAS, Weatherford, Sub, Christiana and C2 entered into an Agreement and
Plan of Merger, dated as of December 12, 1997, and an Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement dated May 26, 1998;
WHEREAS, Weatherford, Sub, Christiana and C2 desire to amend and restate
the Agreement and Plan of Merger to provide for additional amendments set forth
herein;
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Weatherford, Sub and
Christiana, and Weatherford as sole stockholder of Sub, have approved the merger
of Sub with and into Christiana (the "Merger"), whereby each issued and
outstanding share of common stock, $1.00 par value, of Christiana ("Christiana
Common Stock") not owned directly or indirectly by Christiana will be converted
into the right to receive (i) common stock, $1.00 par value, of Weatherford
("Weatherford Common Stock") plus (ii) the Cash Consideration Per Share (as
defined in Section 1.7(e));
WHEREAS, as a condition to the Merger, Christiana will sell to C2
two-thirds of the interest (the "Logistic Interest") in Total Logistic Control,
LLC, a Delaware limited liability company and wholly owned subsidiary of
Christiana ("Logistic"), in consideration for $10,666,667 in cash (the "Logistic
Sale") pursuant to a Purchase Agreement, as amended by Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement dated May 26, 1998
and Amendment No. 2 to Logistic Purchase Agreement dated October 14, 1998,
between Christiana, C2, EVI, Inc. (now known as Weatherford International, Inc.)
and Sub in substantially the form attached hereto as Exhibit A (the "Logistic
Purchase Agreement");
WHEREAS, immediately after the Effective Time, Christiana will only hold
the Christiana Assets, as such terms are hereinafter defined in Sections 1.3 and
2.2(o);
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) by
reason of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
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<PAGE>
ARTICLE I
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with the Wisconsin Business Corporation Law
("WBCL"), at the Effective Time (as defined in Section 1.3), Sub shall be merged
with and into Christiana. As a result of the Merger, the separate corporate
existence of Sub shall cease and Christiana shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation"), and
all the properties, rights, privileges, powers and franchises of Sub and
Christiana shall vest in the Surviving Corporation, without any transfer or
assignment having occurred, and certain liabilities, debts and duties of Sub and
Christiana shall attach to the Surviving Corporation, all in accordance with the
WBCL and subject to the provisions of the Logistic Purchase Agreement.
1.2 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P, Houston, Texas, as soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VI hereof or at such other time
and place and on such other date as Weatherford and Christiana shall agree;
provided that the closing conditions set forth in Article VI hereof shall have
been satisfied or waived at or prior to such time. The date on which the Closing
occurs is herein referred to as the "Closing Date".
1.3 Consummation of the Merger. As soon as practicable on the Closing Date,
the parties hereto will cause the Merger to be consummated by filing with the
Department of Financial Instutitions of the State of Wisconsin the Articles of
Merger in such form as required by, and executed in accordance with, the
relevant provisions of the WBCL. The "Effective Time" of the Merger, as that
term is used in this Agreement, shall mean such time as the Articles of Merger
are duly filed with the Department of Financial Institutions of the State of
Wisconsin or at such later time (not to exceed seven days from the date the
Articles of Merger are filed) as is specified in the Articles of Merger pursuant
to the mutual agreement of Weatherford and Christiana.
1.4 Effects of the Merger. The Merger shall have the effects set forth in
the applicable provisions of the WBCL. If at any time after the Effective Time
of the Merger, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or otherwise are necessary or desirable
to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, all rights, title and interests in all real estate and other
property and all privileges, powers and franchises of Christiana and Sub, the
Surviving Corporation and its proper officers and directors, in the name and on
behalf of Christiana and Sub, shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of Christiana or otherwise to take any and all such action.
1.5 Articles of Incorporation; Bylaws. The Articles of Incorporation of
Christiana, as amended and restated by the amendment set forth in Exhibit B
attached hereto, shall be the Articles of Incorporation of the Surviving
Corporation and thereafter shall continue to be its Articles of Incorporation
until amended as provided therein or under the WBCL. The bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation and thereafter shall continue to be its bylaws until
amended as provided therein or under the WBCL.
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<PAGE>
1.6 Directors and Officers. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation at and after
the Effective Time, each to hold office in accordance with the Articles of
Incorporation and bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation at and after the Effective Time, in each case until the earlier of
their resignation or removal or their respective successors are duly elected or
appointed and qualified.
1.7 Conversion of Securities. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
further action on the part of Weatherford, Christiana, Sub or their
stockholders:
(a) Subject to adjustments pursuant to Sections 1.7(d) and
1.7(e) hereof, each share of Christiana Common Stock issued and
outstanding immediately prior to the Effective Time (the "Christiana
Shares") shall be converted into the right to receive (i) a fraction of
a share of Weatherford Common Stock equal to the number of shares of
Weatherford Common Stock held by Christiana at the Effective Time
divided by the number of shares of Christiana Common Stock outstanding
immediately prior to the Effective Time (the "Stock Exchange Ratio")
plus (ii) the Cash Consideration Per Share as defined in Section
1.7(e); provided, however, that no fractional shares of Weatherford
Common Stock shall be issued and, in lieu thereof, all fractional
shares of Weatherford Common Stock that would otherwise be issuable in
the Merger shall be rounded to the nearest whole share of Weatherford
Common Stock. Except as set forth in the preceding sentence with
respect to the Cash Consideration Per Share, no other consideration
will be paid to the Christiana stockholders.
(b) Each Christiana Share owned directly or indirectly by
Christiana as treasury stock and each Christiana Share owned by Sub,
Weatherford or any direct or indirect wholly-owned subsidiary of
Weatherford or of Christiana immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof and
no payment or other consideration shall be made or paid with respect
thereto.
(c) Each share of common stock, $1.00 par value, of Sub issued
and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock,
$1.00 par value, of the Surviving Corporation.
(d) [Intentionally Omitted]
(e) The "Cash Consideration Per Share", shall equal the
quotient of the Christiana Net Cash divided by 5,149,330. The
"Christiana Net Cash" shall mean and be equal to (i) all cash on hand
of Christiana at the Closing minus (ii) an amount of cash necessary to
pay the Christiana Liabilities in full without giving effect to the use
or application of any tax deductions relating to the exercise of
options or any tax benefits that may be realized as a result of amended
Tax Returns. The Stock Exchange Ratio and the "Cash Consideration Per
Share" is based on 5,149,330 shares of Christiana Common Stock being
issued and outstanding
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<PAGE>
immediately prior to the Effective Time. In the event the number of
shares of Christiana Common Stock outstanding immediately prior to the
Effective Time is greater or less than 5,149,330, the Stock Exchange
Ratio and the Cash Consideration Per Share shall be adjusted to equal
the quotient of the Christiana Net Cash divided by the number of
shares of Christiana Common Stock issued and outstanding immediately
prior to the Effective Time. The terms "TLC Dividend," "Wiscold Note"
and "Christiana Liabilities" shall have the meanings set forth in
Sections 3.1(s), 3.1(t) and 2.2(o), respectively.
1.8 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time of the Merger,
Weatherford shall select a bank or trust company to act as exchange
agent (the "Exchange Agent") for the issue of shares of Weatherford
Common Stock upon surrender of certificates representing Christiana
Shares.
(b) Payment of Merger Consideration. Weatherford shall take
all steps necessary to enable and cause there to be provided to the
Exchange Agent on a timely basis, as and when needed after the
Effective Time of the Merger, certificates for the shares of
Weatherford Common Stock to be issued upon the conversion of the
Christiana Shares pursuant to Section 1.7 and the cash necessary to be
issued for the Cash Consideration Per Share.
(c) Retention of Cash Pending Post Closing Audit. Within 30
days following the Effective Date, Weatherford shall (i) complete a
post closing audit by Weatherford of the Christiana Net Cash and (ii)
pay to the Exchange Agent on behalf of the holders of the Christiana
Shares the Cash Consideration Per Share in respect of such Christiana
Shares subject to the prior presentation of the certificates that
immediately prior to the Effective Time represented the outstanding
Christiana Shares (the "Certificates").
(d) [Intentionally Omitted]
(e) Exchange Procedure. As soon as reasonably practical after
the Effective Time of the Merger, the Exchange Agent shall mail to each
holder of record of a Certificate or Certificates, other than
Weatherford, Sub and Christiana and any directly or indirectly wholly
owned subsidiary of Weatherford, Sub or Christiana, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in a
form and have such other provisions as Weatherford and Sub may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the certificates
representing the shares of Weatherford Common Stock and the Cash
Consideration Per Share. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as
may be appointed by the Surviving Corporation, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of
Weatherford Common Stock into which the Christiana Shares theretofore
represented by such Certificate shall have been converted pursuant to
Section 1.7 and the Cash Consideration Per Share as provided in Section
1.8(c) and the Certificate so surrendered shall forthwith be canceled.
If the shares of Weatherford Common Stock are to be issued to an
individual, corporation, limited liability company, partnership,
governmental authority or any other entity (a
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<PAGE>
"Person"), other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of exchange that
such Certificate shall be properly endorsed or otherwise in proper form
for transfer and that the Person requesting such exchange shall pay any
transfer or other taxes required by reason of the exchange to a Person
other than the registered holder of such Certificate or establish to
the satisfaction of the Surviving Corporation that such tax has been
paid or is not applicable. Until surrendered as contemplated by this
Section 1.8, each Certificate shall be deemed at any time after the
Effective Time of the Merger to represent only the right to receive
upon such surrender the number of shares of Weatherford Common Stock,
and the Cash Consideration Per Share payable in respect of the
Christiana Shares pursuant to Section 1.7. The Exchange Agent shall not
be entitled to vote or exercise any rights of ownership with respect to
the shares of Weatherford Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect thereto for the account
of Persons entitled thereto. Any unexchanged shares of Weatherford
Common Stock issuable pursuant to the Merger in respect of the
Christiana Shares shall be issued in the name of the Exchange Agent
pending the receipt by the Exchange Agent of Certificates.
(f) Distributions with Respect to Unexchanged Christiana
Shares. No dividends or other distributions declared or made after the
Effective Time of the Merger with respect to the shares of Weatherford
Common Stock with a record date after the Effective Time of the Merger
shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Weatherford Common Stock represented thereby
and the Cash Consideration Per Share shall not be paid until the holder
of record of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the
Certificates representing the shares of Weatherford Common Stock issued
in exchange therefor, without interest, (i) the amount of dividends or
other distributions with a record date after the Effective Time of the
Merger theretofore paid with respect to such whole shares of
Weatherford Common Stock, as the case may be, (ii) at the appropriate
payment date, the amount of dividends or other distributions with a
record date after the Effective Time of the Merger but prior to
surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Weatherford Common Stock and (iii) the
Cash Consideration Per Share at the appropriate payment date as
provided in this Section 1.8.
(g) No Further Ownership Rights in Christiana Shares. All
shares of Weatherford Common Stock issued upon the surrender of
Certificates in accordance with the terms of this Article I, together
with any dividends payable thereon to the extent contemplated by this
Section 1.8 and the rights to receive the Cash Consideration Per Share
as provided herein, shall be deemed to have been exchanged and paid in
full satisfaction of all rights pertaining to the Christiana Shares
theretofore represented by such Certificates and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the Christiana Shares that were outstanding
immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.
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<PAGE>
(h) Escheat. None of Weatherford, Sub, Christiana, the
Surviving Corporation or their transfer agents shall be liable to a
holder of the Christiana Shares for any amount properly paid to a
public official pursuant to applicable property, escheat or similar
laws.
1.9 Taking of Necessary Action; Further Action. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger and the Logistic Sale as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement or the Logistic Sale,
and to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of Christiana or
Sub as of the Effective Time, such corporations shall direct their respective
officers and directors to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Weatherford and Sub. Weatherford and
Sub hereby jointly and severally represent and warrant to Christiana that:
(a) Organization and Compliance with Law. Weatherford and
Sub are corporations duly incorporated, validly existing and in good
standing under the laws of the states of Delaware and Wisconsin,
respectively. Each of Weatherford and Sub has all requisite corporate
power and corporate authority to own, lease and operate all of its
properties and assets and to carry on its business as now being
conducted, except where the failure to be so organized, existing or in
good standing would not have a material adverse effect on the
financial condition of Weatherford and its subsidiaries (the
"Weatherford Subsidiaries"), taken as a whole (a "Weatherford MAE").
Each of Weatherford and Sub is duly qualified to do business, and is
in good standing, in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such jurisdictions where
the failure to be duly qualified would not have a Weatherford MAE.
Each of Weatherford and Sub is in compliance with all applicable laws,
judgments, orders, rules and regulations, except where such failure
would not have a Weatherford MAE. Weatherford has heretofore delivered
to Christiana true and complete copies of Weatherford's Amended and
Restated Certificate of Incorporation, as amended (the "Weatherford
Certificate"), and Sub's Articles of Incorporation and their
respective bylaws as in existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Weatherford
consists of 250,000,000 shares of Weatherford Common Stock,
$1.00 par value, and 3,000,000 shares of preferred stock,
$1.00 par value ("Weatherford Preferred Stock"). As of July
10, 1998, there were 97,511,967 shares of Weatherford Common
Stock issued and outstanding. As of July 10, 1998, (i)
5,031,250 shares of Weatherford Common Stock were reserved for
issuance pursuant to the conversion provisions of
Weatherford's 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027, (ii) 3,900,000 shares of Weatherford
Common Stock were
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<PAGE>
reserved for issuance pursuant to pending or proposed
acquisitions, (iii) 1,577,410 shares of Weatherford Common
Stock were remaining to be exchanged for shares of stock in
connection with various completed acquisitions, and (iv)
3,269,376 shares of Weatherford Common Stock were reserved for
issuance pursuant to Weatherford's employee and director
benefit plans and arrangements, of which 1,897,704 shares of
Weatherford Common Stock were reserved for issuance upon
exercise of outstanding options. At July 10, 1998, there were
no shares of Weatherford Preferred Stock issued or
outstanding. No holder of Weatherford Common Stock is entitled
to preemptive rights under Delaware law or Weatherford's
Certificate of Incorporation.
(ii) As of the date hereof, the authorized capital
stock of Sub consists of 1,000 shares of common stock, $1.00
par value, all of which are validly issued, fully paid and
nonassessable and are owned by Weatherford.
(iii) Each share of Weatherford Common Stock to be
issued hereunder as a result of the Merger will be fully paid
and non-assessable upon issuance.
(c) Authorization and Validity of Agreement. The execution and
delivery by Weatherford and Sub of this Agreement and the consummation
by each of them of the transactions contemplated hereby have been duly
authorized by all necessary corporate action (subject only, with
respect to the Merger, to approval of this Agreement by each of their
stockholders as provided for in Section 5.3). On or prior to the date
hereof, the Board of Directors of Weatherford or duly authorized
committee thereof has determined to recommend approval of the Merger to
the stockholders of Weatherford, and such determination is in effect on
the date hereof. This Agreement has been duly executed and delivered by
Weatherford and Sub and is the valid and binding obligation of
Weatherford and Sub, enforceable against Weatherford and Sub in
accordance with its terms.
(d) No Approvals or Notices Required; No Conflict . Neither
the execution and delivery of this Agreement nor the performance by
Weatherford or Sub of its obligations hereunder, nor the consummation
of the transactions contemplated hereby by Weatherford and Sub, will
(i) conflict with the Weatherford Certificate or the bylaws of
Weatherford or Sub; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Weatherford or any of the Weatherford Subsidiaries; (iii) except for
(A) requirements of Federal or state securities laws, (B) requirements
arising out of the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), (C) requirements of notice filings in such foreign
jurisdictions as may be applicable, and (D) the filing of Articles
Merger by Sub in accordance with the WBCL, require any consent or
approval of, or filing with or notice to, any public body or authority,
domestic or foreign, under any provision of law applicable to
Weatherford or any of the Weatherford Subsidiaries; or (iv) require any
consent, approval or notice under, or violate, breach, be in conflict
with or constitute a default (or an event that, with notice or lapse of
time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or
imposition of any lien, mortgage, pledge, security interest,
restriction on transfer, option, charge, right of any third Person or
any other encumbrance of any nature (a "Lien") upon any properties,
assets or business of Weatherford or any of the Weatherford
Subsidiaries under, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment or any order, judgment or decree to
which Weatherford or any of the Weatherford Subsidiaries is a party or
by which Weatherford or any of the Weatherford Subsidiaries or any of
its or their
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assets or properties is bound or encumbered, except (A) those that have
already been given, obtained or filed and (B) those that, in the
aggregate, would not have a Weatherford MAE.
(e) Commission Filings; Financial Statements. Weatherford has
filed all reports and documents required to filed with the Securities
and Exchange Commission (the "Commission") since December 31, 1995. All
reports, registration statements and other filings (including all
notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by Weatherford with the Commission since
December 31, 1995, through the date of this Agreement, together with
any amendments thereto, are sometimes collectively referred to as the
"Weatherford Commission Filings". Weatherford has heretofore delivered
to, or made accessible to, Christiana copies of the Weatherford
Commission Filings. As of the respective dates of their filing with the
Commission, the Weatherford Commission Filings complied in all material
respects with the applicable requirements of the Securities Act of 1934
(the "Securities Act"), the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(f) Absence of Certain Charges and Events. Since December 31,
1997, except as contemplated by this Agreement or as disclosed in the
Weatherford Commission Filings filed with the Commission prior to the
date hereof, there has been no Weatherford MAE.
(g) Tax Matters.
(i) Except as set forth in Section 2.1(g) of the
disclosure letter delivered by Weatherford to Christiana on
the date hereof (the "Weatherford Disclosure Letter"), all
returns and reports, including, without limitation,
information and withholding returns and reports ("Tax
Returns"), of or relating to any foreign, federal, state or
local tax, assessment or other governmental charge ("Taxes" or
a "Tax") that are required to be filed on or before the
Closing Date by or with respect to Weatherford or any of the
Weatherford Subsidiaries, or any other corporation that is or
was a member of an affiliated group (within the meaning of
Section 1504(a) of the Code) of corporations of which
Weatherford was a member for any period ending on or prior to
the Closing Date, have been or will be duly and timely filed,
and all Taxes, including interest and penalties, due and
payable pursuant to such Tax Returns have been paid or, except
as set forth in Section 2.1(g) of the Weatherford Disclosure
Letter, adequately provided for in reserves established by
Weatherford, except where the failure to file, pay or provide
for would not have a Weatherford MAE.
(ii) Weatherford has no present plan or intention
after the Merger to (A) liquidate the Surviving Corporation,
(B) merge the Surviving Corporation with or into another
corporation, (C) sell or otherwise dispose of the stock of the
Surviving Corporation, (D) cause or permit the Surviving
Corporation to sell or otherwise dispose of any of the assets
of Christiana or the assets of Sub vested in the Surviving
Corporation except for dispositions made in the ordinary
course of business or transfers of assets to a corporation
controlled by the Surviving Corporation within the meaning of
Section 368(a)(2)(C) of the Code, or (E) reacquire any of the
stock issued to the Christiana stockholders pursuant to the
Merger.
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(iii) Weatherford is not an investment company as
defined in ss.368(a)(2)(F)(iii) and (iv) of the Code or as
defined in the Investment Company Act of 1940 and the rules
and regulations promulgated thereunder.
(h) Voting Requirements. The affirmative vote of the holders
of a majority of the shares of Weatherford Common Stock present at the
special stockholders' meeting and entitled to vote is the only vote of
the holders and any class or series of the capital stock of Weatherford
necessary to approve this Agreement and the Merger.
(i) Brokers. Except for fees and expenses payable by
Weatherford to Morgan Stanley & Co. Incorporated, no broker, investment
banker, or other Person acting on behalf of Weatherford is or will be
entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement.
(j) Information Supplied. None of the information supplied or
to be supplied by Weatherford for inclusion or incorporation by
reference in (i) the Registration Statement (as defined in Section 5.1)
will, at the time the Registration Statement is filed with the
Commission, and at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain 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, and (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to Weatherford's stockholders and
at the time of the Weatherford Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations thereunder. For purposes of this Agreement, the
parties agree that the statements made and information in the
Registration Statement and the Proxy Statement relating to the Federal
income tax consequences of the transactions contemplated hereby shall
be deemed to be supplied by Christiana and not by Weatherford or Sub.
2.2 Representations and Warranties of Christiana and C2. Each of Christiana
and C2 hereby, jointly and severally, represents and warrants to Weatherford
that:
(a) Organization. Each of Christiana and C2 is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Wisconsin. Logistic is a limited liability company duly
organized, validly existing and in good standing under the laws of the
state of Delaware. Each of Christiana, C2 and Logistic has all
requisite corporate (or equivalent) power and corporate (or equivalent)
authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such governmental
authority would not (i) have a material adverse effect on the financial
condition of Christiana or Logistic after giving effect to the Logistic
Sale or (ii) prevent or adversely affect the ability of Christiana and
C2 to perform and comply with their respective obligations under this
Agreement, the Logistic Purchase Agreement or any other agreement to be
executed and delivered in connection with the transactions contemplated
hereby or thereby (a "Christiana MAE"). Except as set forth in Section
2.2(a) of the disclosure letter delivered by Christiana to Weatherford
on the date hereof (the "Christiana Disclosure Letter"), each of
Christiana, Logistic and C2 is duly
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qualified as a foreign corporation or limited liability company to do
business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified does not and would
not have a Christiana MAE. Each of Christiana, Logistic and C2 is in
compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not have a Christiana MAE. Christiana has heretofore
delivered to Weatherford true and complete copies of (i) Christiana's
Articles of Incorporation (the "Christiana Articles") and bylaws, (ii)
Logistic's Certificate of Organization and operating agreement and
(iii) C2's Articles of Incorporation and operating agreement, in each
case as in existence on the date hereof.
(b) Capitalization.
(i)The authorized capital stock of Christiana consists
of 12,000,000 shares of Christiana Common Stock, $1.00 par
value, and 1,000,000 shares of preferred stock, $10.00 par
value ("Christiana Preferred Stock"). As of July 10, 1998,
there were 5,149,330 shares of Christiana Common Stock issued
and outstanding and no shares of Christiana Common Stock were
held as treasury shares. There are no outstanding shares of
Christiana Preferred Stock. No shares of Christiana Common
Stock have been reserved for issuance pursuant to the stock
option plan described in Section 2.2(b)(iii). All issued and
outstanding shares of Christiana Common Stock are validly
issued, fully paid and nonassessable (except as set forth in
Wis Stats ss. 180.0622) and no holder thereof is entitled to
preemptive rights. Christiana is not a party to, and is not
aware of, any voting agreement, voting trust or similar
agreement or arrangement relating to any class or series of
its capital stock, or any agreement or arrangement providing
for registration rights with respect to any capital stock or
other securities of Christiana.
(ii) Christiana owns 100% of the membership interests
in Logistic. All issued and outstanding membership interests
of Logistic are validly issued, fully paid and nonassessable
and no holder thereof is entitled to preemptive rights.
Logistic is not a party to, any voting agreement, voting trust
or similar agreement or arrangement relating to its membership
interests, or any agreement or arrangement providing for
registration rights with respect to any membership interests
or other interests of Logistic.
(iii) As of the date hereof, there are outstanding
options (the "Christiana Options") to purchase an aggregate of
267,083 shares of Christiana Common Stock under the 1995 Stock
Option Plan (the "Christiana Option Plan"). All Christiana
Options shall be terminated or exercised prior to the
Effective Time. As of the Effective Time, there will be no
options outstanding under the Christiana Option Plan. There
are not now (other than as set forth in this Section 2.2(b)),
and at the Effective Time there will not be, any (A) shares of
capital stock or other equity securities of Christiana
issuable pursuant to the exercise of Christiana Options or (B)
outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for,
shares of any class of capital stock of Christiana, or
contracts, understandings or arrangements to which Christiana
is a party, or by which it is or
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may be bound, to issue additional shares of its capital stock
or options, warrants, scrip or rights to subscribe for, or
securities or rights convertible into or exchangeable for, any
additional shares of its capital stock.
(iv) Section 2.2(b)(iv) of the Christiana Disclosure
Letter sets forth a list of all corporations, partnerships,
limited liability companies and other entities of which
Christiana owns directly or indirectly, an equity interest
(such entities, excluding Weatherford and its subsidiaries,
referred to herein as the "Christiana Subsidiaries").
(c) Authorization and Validity of Agreement. Each of
Christiana and C2 has all requisite corporate power and authority to
enter into this Agreement, the Logistic Purchase Agreement and the
other agreements and instruments contemplated to be executed and
delivered in connection with the Merger and the Logistic Sale (the
Logistic Purchase Agreement and such other agreements and instruments
contemplated to be executed and delivered in connection with the Merger
and the Logistic Sale being referred to as the "Other Agreements") and
to perform its obligations hereunder and thereunder. The execution and
delivery by Christiana and C2 of this Agreement and the Other
Agreements to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action (subject only, with respect to the
Merger and the Logistic Sale, to approval of this Agreement and the
Logistic Sale by the Christiana stockholders as provided for in Section
5.3). On or prior to the date hereof the Board of Directors of
Christiana has determined to recommend approval of the Merger and the
Logistic Sale to the stockholders of Christiana, and such determination
is in effect as of the date hereof. This Agreement has been duly
executed and delivered by Christiana and C2 and is the valid and
binding obligation of Christiana and C2 enforceable against it in
accordance with its terms. The Other Agreements, when executed and
delivered by Christiana and C2, as applicable, will constitute valid
and binding obligations of Christiana and C2, enforceable against them
in accordance with their respective terms.
(d) No Approvals or Notices Required; No Conflict with
Instruments to which Christiana is a Party. The execution and delivery
of this Agreement and the Other Agreements do not, and the consummation
of the transactions contemplated hereby and thereby and compliance with
the provisions hereof and thereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to
loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Christiana, Logistic, C2 or any
of their subsidiaries under, any provision of (i) the Christiana
Articles or bylaws of Christiana, the Certificate of Organization or
operating agreement of Logistic or the Articles of Incorporation or
bylaws of C2, or any provision of the comparable organizational
documents of its subsidiaries, (ii) except as set forth in Section
2.2(d) of the Christiana Disclosure Letter, any loan or credit
agreement, note, bond, mortgage, indenture, lease, guaranty or other
financial assurance agreement or other agreement, instrument, permit,
concession, franchise or license applicable to Christiana or its
properties or assets, (iii) except as set forth in Section 2.2(d) of
the Christiana Disclosure Letter, any loan or credit agreement, note,
bond, mortgage, indenture, lease, guaranty or other financial assurance
agreement or other agreement, instrument, permit, concession, franchise
or license applicable to Logistic or any other Christiana Subsidiary,
or their respective properties or assets and (iv) subject to
governmental filing and other matters referred to in the following
sentence, any judgment, order, decree,
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statute, law, ordinance, rule or regulation or arbitration award
applicable to Christiana, Logistic or C2 or any of their subsidiaries
or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not have a
Christiana MAE. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or agency,
domestic or foreign, including local authorities (a "Governmental
Entity"), is required by or with respect to Christiana, Logistic or C2
or any of their subsidiaries in connection with the execution and
delivery of this Agreement by Christiana and C2 or the consummation by
Christiana of the transactions contemplated hereby, except for (i) the
filing of a pre-merger notification and report form by Christiana under
the HSR Act, (ii) the filing with the Commission of (A) a proxy or
information statement relating to Stockholder Approval (such proxy or
information statement as amended or supplemented from time to time, the
"Proxy Statement"), and (B) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and
the transactions contemplated hereby, (iii) the filing of the
Certificate of Merger with the Wisconsin Secretary of State with
respect to the Merger as provided in the WBCL and appropriate documents
with the relevant authorities of other states in which Christiana is
qualified to do business and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations, filings and
notices as are set forth in Section 2.2(d) of the Christiana Disclosure
Letter.
(e) Commission Filings; Financial Statements. Christiana has
filed all reports, registration statements and other filings, together
with any amendments required to be made with respect thereto, that it
has been required to file with the Commission. All reports,
registration statements and other filings (including all notes,
exhibits and schedules thereto and documents incorporated by reference
therein) filed by Christiana with the Commission since December 31,
1995, through the date of this Agreement, together with any amendments
thereto, are sometimes collectively referred to as the "Christiana
Commission Filings." Christiana has heretofore delivered to Weatherford
copies of the Christiana Commission Filings. As of the respective dates
of their filing with the Commission, the Christiana Commission Filings
complied in all material respects with the Securities Act, the Exchange
Act and the rules and regulations of the Commission thereunder, and did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. To the best knowledge of Christiana, all
material contracts of Christiana and its subsidiaries have been
included in the Christiana Commission Filings since the initial
registration of its stock under the Exchange Act, except for those
contracts not required to be filed pursuant to the rules and
regulations of the Commission.
Each of the consolidated financial statements (including any
related notes or schedules) included in the Christiana Commission
Filings was prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be noted
therein or in the notes or schedules thereto) and complied with the
rules and regulations of the Commission. Such consolidated financial
statements fairly present the consolidated financial position of
Christiana as of the dates thereof and the results of operations, cash
flows and changes in stockholders' equity for the periods then ended
(subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments on a basis comparable with past
periods). As of the date hereof, Christiana has
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no liabilities, absolute or contingent, that may reasonably be expected
to have a Christiana MAE, that are not reflected in the Christiana
Commission Filings, except (i) those incurred in the ordinary course of
business consistent with past operations and not relating to the
borrowing of money and (ii) those set forth in Section 2.2(e) of the
Christiana Disclosure Letter.
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events. Since December 31, 1995, except as
contemplated by this Agreement, the Logistic Purchase Agreement or as
disclosed in the Christiana Commission Filings or set forth in Section
2.2(f) of the Christiana Disclosure Letter, Christiana and its
subsidiaries have conducted their respective businesses only in the
ordinary and usual course in accordance with past practice, and there
has not been: (i) a Christiana MAE or any other material adverse change
in the financial condition, results of operations, assets or business
of Christiana, taken as a whole; (ii) to the knowledge of Christiana,
any other condition, event or development that reasonably may be
expected to result in any such material adverse change or a Christiana
MAE; (iii) any change by Christiana or Logistic in its accounting
methods, principles or practices; (iv) any revaluation by Christiana or
Logistic of any of its assets, including, without limitation, writing
down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business and consistent with past
practice; (v) any entry by Christiana or Logistic into any commitment
or transaction that would be material to Christiana or Logistic; (vi)
any declaration, setting aside or payment of any dividends or
distributions in respect of the Christiana Common Stock or any
redemption, purchase or other acquisition of any of its securities;
(vii) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of Christiana
or Logistic; (viii) any increase in indebtedness of borrowed money
other than borrowing under existing credit facilities as disclosed in
Section 2.2(f) of the Christiana Disclosure Letter; (ix) any granting
of a security interest or Lien on any property or assets of Christiana
or Logistic, other than (A) Liens for taxes not due and payable and (B)
inchoate mechanics', warehousemen's and other statutory Liens incurred
in the ordinary course of business (collectively, "Permitted Liens");
or (x) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted
stock awards), stock purchase or other employee benefit plan or any
other increase in the compensation payable or to become payable to any
directors, officers or key employees of Christiana or Logistic or which
Christiana or Logistic would be responsible.
(g) Litigation. Except as disclosed in the Christiana
Commission Filings or as set forth in Section 2.2(g) of the Christiana
Disclosure Letter, there are no claims, actions, suits, investigations,
inquiries or proceedings, ("Demands"), pending or, to the knowledge of
Christiana, threatened against or affecting (i) Christiana or Logistic
or any of their respective properties at law or in equity, or any of
their employee benefit plans or fiduciaries of such plans, or (ii) C2
or any Christiana or C2 subsidiaries or any of their respective
properties at law or in equity, or any of their respective employee
benefit plans or fiduciaries of such plans, before or by any federal,
state, municipal or other governmental agency or authority, or before
any arbitration board or panel (each a "Governmental Entity"), wherever
located (i) that exist today or (ii) that would otherwise, if adversely
determined, have a Christiana MAE. None of Christiana, Logistic or C2
is subject to any judicial, governmental or administrative order, writ,
judgment, injunction or decree.
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(h) Employee Benefit Plans.
(i) Section 2.2(h) of the Christiana Disclosure
Letter provides a description of each of the following which
is sponsored, maintained or contributed to by Christiana or
any corporation, trade, business or entity under common
control with Christiana within the meaning of Section
414(b),(c),(m) or (o) of the Code or Section 4001 of ERISA (a
"Christiana ERISA Affiliate") for the benefit of its
employees, or has been so sponsored, maintained or contributed
to within three years prior to the Closing Date.
(A) each "employee benefit plan," as such
term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), ("Plan"); and
(B) each stock option plan, collective
bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive
compensation or supplemental income arrangement,
consulting agreement, employment agreement and each
other employee benefit plan, agreement, arrangement,
program, practice or understanding that is not
described in Section 2.2(h)(i)(A) to which Christiana
or Logistic is a party or has any obligation
("Benefit Program or Agreement").
True and complete copies of each of the Plans, Benefit
Programs or Agreements, related trusts, if applicable, and all
amendments thereto, together with (i) the Forms 5500, 990 and
1041, as applicable, for the three most recent fiscal years,
(ii) all current summary plan descriptions for each such Plan,
(iii) the most recent Internal Revenue Service determination
letters for each such Plan, as applicable, and all
correspondence with the Internal Revenue Service and the
Department of Labor relating to such Plans, Benefit Programs
and Agreements have been furnished to Weatherford.
(ii) Except as otherwise set forth in Section 2.2(h)
of the Christiana Disclosure Letter,
(A) None of Christiana or any Christiana
ERISA Affiliate contributes to or has an obligation
to contribute to, or has at any time contributed to
or had an obligation to contribute to, a plan subject
to Title IV of ERISA, including, without limitation,
a multi employer plan within the meaning of Section
3(37) of ERISA, nor have such companies engaged in
any transaction described in Sections 406 and 407 of
ERISA (unless exempt under Section 408) or Section
4975 of the Code (unless exempt);
(B) Each Plan and each Benefit Program or
Agreement has been administered, maintained and
operated in all material respects in accordance with
the terms thereof and in compliance with its
governing documents and applicable law (including,
where applicable, ERISA and the Code and timely
filing of Form 5500s for each year);
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(C) There is no matter pending with respect
to any of the Plans before any governmental agency,
and there are no actions, suits or claims pending
(other than routine claims for benefits) or, to the
knowledge of Christiana or C2, threatened against, or
with respect to, any of the Plans or Benefit Programs
or Agreements or its assets;
(D) No act, omission or transaction has
occurred which would result in imposition on
Christiana or any Christiana ERISA Affiliate of
breach of fiduciary duty liability damages under
Section 409 of ERISA, a civil penalty assessed
pursuant to subsections (c), (i) or (l) of Section
502 of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code; and
(E) Except as provided in Section 5.7, the
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
will not require Christiana or any Christiana ERISA
Affiliate to make a larger contribution to, or pay
greater benefits under, any Plan, Benefit Program or
Agreement than it otherwise would or create or give
rise to any additional vested rights or service
credits under any Plan or Benefit Program or
Agreement or cause the companies to make accelerated
payments.
(iii) Except as set forth in Section 2.2(h) of the
Christiana Disclosure Letter, termination of employment of any
employee of Christiana immediately after consummation of the
transactions contemplated by this Agreement would not result
in payments under the Plans, Benefit Programs or Agreements
which, in the aggregate, would result in imposition of the
sanctions imposed under Sections 280G and 4999 of the Code.
(iv) Each Plan may be unilaterally amended or
terminated in its entirety without liability except as to
benefits accrued thereunder prior to such amendment or
termination.
(v) Except as set forth in Section 2.2(h) of the
Christiana Disclosure Letter, none of the employees of
Christiana or Logistic are subject to union or collective
bargaining agreements.
(vi) None of Christiana or any of the Christiana
ERISA Affiliates has agreed or is obligated to provide retiree
medical coverage and each of such companies has fully complied
with all obligations under COBRA applicable to it.
(i) Taxes.
(i) Except as set forth in Section 2.2(i) of the
Christiana Disclosure Letter, all Tax Returns of or relating
to any Tax that are required to be filed on or before the
Closing Date by or with respect to Christiana or any
Christiana Subsidiary, or any other corporation that is or was
a member of an affiliated group (within the meaning of Section
1504(a) of the Code) of corporations of which Christiana was a
member for any period ending on or prior to the Closing Date,
have been or will be duly and timely filed, and all Taxes,
including interest and penalties, due and payable pursuant to
such Tax Returns have been or will be duly and timely paid or
adequately
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provided for in reserves established by Christiana or any such
Christiana Subsidiary, except where the failure to file, pay
or provide for would not have a material adverse effect on the
financial condition, results of operations, or business of
Christiana or otherwise result in a Christiana MAE. All income
Tax returns of or with respect to Christiana or any Christiana
Subsidiary have been audited by the applicable Governmental
Authority, or the applicable statute of limitations has
expired, for all periods up to and including the tax year
ended June 30, 1993. There is no material claim against
Christiana or any Christiana Subsidiary with respect to any
Taxes, and no material assessment, deficiency or adjustment
has been asserted or proposed with respect to any Tax Return
of or with respect to Christiana or any Christiana Subsidiary
that has not been adequately provided for in reserves
established by Christiana or such Christiana Subsidiary. The
total amounts set up as liabilities for current and deferred
Taxes in the consolidated financial statements included in the
Christiana Commission Filings have been prepared in accordance
with generally accepted accounting principles and are
sufficient to cover the payment of all material Taxes,
including any penalties or interest thereon and whether or not
assessed or disputed, that are, or are hereafter found to be,
or to have been, due with respect to the operations of
Christiana or any Christiana Subsidiary through the periods
covered thereby. Christiana has (and as of the Closing Date
will have) made estimated tax payments for taxable years for
which the United States consolidated federal income Tax return
is not yet due required with respect to Taxes. Except as set
forth in Section 2.2(i) of the Christiana Disclosure Letter,
no waiver or extension of any statute of limitations as to any
federal, state, local or foreign Tax matter has been given by
or requested from Christiana or any Christiana Subsidiary.
Except for statutory Liens for current Taxes not yet due, no
Liens for Taxes exist upon the assets of Christiana. Except as
set forth in paragraph 2.2(i) of the Christiana Disclosure
Letter, none of Christiana or any Christiana Subsidiary has
filed consolidated income Tax Returns with any corporation,
other than consolidated federal, state or foreign income Tax
returns by Christiana for any taxable period which is not now
closed by the applicable statute of limitations. Except as set
forth in Section 2.2(i) of the Christiana Disclosure Letter,
none of Christiana or any Christiana Subsidiary has any
deferred intercompany gain as defined in Treasury Regulations
Section 1.1502-13.
(ii) As of the Closing Date, to Christiana's
knowledge, there is no plan or intention by the stockholders
of Christiana to sell, exchange or otherwise dispose of a
number of shares of Weatherford received in the Merger that
would reduce the Christiana stockholders' ownership of
Weatherford shares to a number of shares having a value, as of
the date of the Merger, of less than 50% of the value of all
of the formerly outstanding Christiana Shares as of the same
date. The shares of Weatherford Common Stock held by the
Christiana stockholders and otherwise sold, redeemed or
disposed of prior or subsequent to the Merger will be
considered in making this representation.
(iii) Christiana is not under the jurisdiction of a
court in a Title 11 or similar case with the meaning of
ss.368(a)(3)(A) of the Code.
(iv) There is no intercorporate indebtedness existing
between Christiana and Weatherford that was issued, acquired
or will be settled at a discount.
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(v) As of the Closing Date, Christiana shall have
fully accrued for all Taxes that may be required to be paid as
a result of the Logistic Sale and the other transactions
contemplated hereby. The value of the interest in Logistic
Common Stock to be sold pursuant to the Logistic Sale has been
determined pursuant to an outside appraisal and reflects an
amount equal to or greater than the fair value and fair market
value of such shares.
(j) Environmental Matters. Except as set forth in Section
2.2(j) of the Christiana Disclosure Letter, (i) the properties,
operations and activities of Christiana and each of its Subsidiaries
complies in all material respects with all applicable Environmental
Laws; (ii) none of Christiana or any of its Christiana Subsidiaries is
subject to any existing, pending or, to the knowledge of Christiana,
threatened action, suit, investigation, inquiry or proceeding by or
before any governmental authority under any Environmental Law; (iii)
except where the failure would have a Christiana MAE, all notices,
permits, licenses, or similar authorizations, if any, required to be
obtained or filed by Christiana under any Environmental Law in
connection with any aspect of the business of Christiana, Logistic or
any Christiana Subsidiary, including without limitation those relating
to the treatment, storage, disposal or release of a hazardous substance
or solid waste, have been duly obtained or filed and will remain valid
and in effect after the Merger and the Logistic Sale, and each of
Christiana, Logistic and each other Christiana Subsidiary is in
compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations; (iv) Christiana and each of its
Subsidiaries has satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations
and imposed by any governmental authority under any other Environmental
Law, and none of such parties has received any notice of noncompliance
with any such requirements; (v) to Christiana's knowledge, there are no
physical or environmental conditions existing on any property currently
owned or previously owned by Christiana or any entity in which it has
or had ownership interest that could reasonably be expected to give
rise to any on-site or off-site remedial obligations under any
Environmental Laws; and (vi) to Christiana's knowledge, since the
effective date of the relevant requirements of applicable Environmental
Laws, all hazardous substances or solid wastes generated by Christiana
or used in connection with their properties or operations have been
transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at
treatment, storage, and disposal facilities authorized under
environmental laws to treat, store or dispose of such substances and
wastes, and, to the knowledge of Christiana, such carriers and
facilities have been and are operating in compliance with such
authorizations and are not the subject of any existing, pending, or
overtly threatened action, investigation, or inquiry by any
governmental authority in connection with any Environmental Laws.
For purposes of this Agreement, the term "Environmental Laws"
shall mean any and all laws, statutes, ordinances, rules, regulations,
orders or determinations of any Governmental Authority pertaining to
health or the environment currently in effect in any and all
jurisdictions in which the party in question and its subsidiaries own
property or conduct business, including without limitation, the Clean
Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water
Act, as amended, the Toxic Substances Control Act, as amended, the
Hazardous & Solid Waste Amendments Act
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of 1984, as amended, the Superfund Amendments and Reauthorization Act
of 1986, as amended, the Hazardous Materials Transportation Act, as
amended, the Oil Pollution Act of 1990 ("OPA"), any state laws
pertaining to the handling of oil and gas exploration and production
wastes or the use, maintenance, and closure of pits and impoundments,
and all other environmental conservation or protection laws. For
purposes of this Agreement, the terms "hazardous substance" and
"release" have the meanings specified in RCRA; provided, however, that
to the extent the laws of the state in which the property is located
establish a meaning for "hazardous substance," "release," "solid waste"
or "disposal" that is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply. For purposes of this Agreement,
the term "Governmental Authority" includes the United States, any
foreign jurisdiction, the state, county, city, and political
subdivisions in which the party in question owns property or conducts
business, and any agency, department, commission, board, bureau or
instrumentality of any of them.
(k) Investment Company. Christiana is not an investment
company as defined in the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder.
(l) Severance Payments. Except as set forth in Section 2.2(l)
of the Christiana Disclosure Letter, Christiana will not have any
liability or obligation to pay a severance payment or similar
obligation to any of their respective employees, officers, or directors
as a result of the Merger or the transactions contemplated by this
Agreement, nor will any of such Persons be entitled to an increase in
severance payments or other benefits as a result of the Merger, the
Logistic Sale or the transactions contemplated by this Agreement or the
Other Agreements in the event of the subsequent termination of their
employment.
(m) Voting Requirements. Subject to the provisions of Section
5.3(a), the affirmative vote of the holders of a majority of the
outstanding shares of Christiana Common Stock is the only vote of the
holders of any class or series of the capital stock of Christiana
necessary to approve this Agreement, the Merger, the Logistic Sale and
the transactions contemplated hereby and by the Other Agreements in
order to comply with the WBCL, Christiana's Articles of Incorporation
and Bylaws and the rules and regulations of the New York Stock Exchange
(the "NYSE").
(n) Brokers. Except for Prudential Securities Incorporated,
whose fees shall be paid by Christiana, no broker, investment banker,
or other Person acting on behalf of Christiana is or will be entitled
to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement.
(o) Assets and Liabilities at Closing. At the Effective Time:
(i) the assets of Christiana (the "Christiana
Assets") shall consist of (1) at least 3,897,462 shares of
Weatherford Common Stock, which shall be held free and clear
of all Liens, (2) cash of at least $13,000,000, (3) a
one-third interest in Logistic, (4) certain tax benefits, and
(5) all tax, financial, accounting and other general corporate
records, including records relating to all past operations and
subsidiaries (including partnerships and joint ventures);
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(ii) the liabilities of Christiana (the "Christiana
Liabilities") shall consist only of (1) transactional expenses
related to the Merger and the Logistic Sale, (2) all Taxes of
Christiana relating to periods through the Closing Date,
including Taxes (other than the Weatherford Related Taxes)
from the Logistic Sale and deferred intercompany Taxes and (3)
all other outstanding and accrued liabilities to which
Christiana may be subject, other than Assumed Liabilities (as
defined in the Logistic Purchase Agreement) and Weatherford
Related Taxes;
(iii) all obligations and liabilities (fixed or
contingent, known or unknown) of Christiana shall have been
assumed by C2 and Logistic other than liabilities described in
clause (ii); and
(iv) except as set forth in Section 2.2(o) of the
Disclosure Schedule or agreed to in writing by Weatherford
prior to the Closing, Christiana shall have been released from
all continuing obligations (i) relating to Logistic or any
other historical business of Christiana or its subsidiaries
and affiliates and (ii) under any and all agreements relating
to the borrowing of funds, including any and all guarantees or
similar arrangements relating thereto.
(p) Compliance with Laws. Christiana, Logistic, C2 and each of
their respective subsidiaries hold all required, necessary or
applicable permits, licenses, variances, exemptions, orders, franchises
and approvals of all Governmental Entities, except where the failure to
so hold could not reasonably be expected to have a Christiana MAE (the
"Christiana Permits"). All applications with respect to such permits,
licenses, variances, exemptions, orders, franchises and approvals were
complete and correct in all material respects when made and neither
Christiana nor C2 know of any reason why any of such permits, licenses,
variances, exemptions, orders, franchises and approvals would be
subject to cancellation. Christiana, Logistic, C2 and each of their
respective subsidiaries are in compliance with the terms of the
Christiana Permits except where the failure to so comply could not
reasonably be expected to have a Christiana MAE. None of Christiana,
Logistic, C2 or any of their respective subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule,
permit or order of any Federal, state or local government, domestic or
foreign, or any Governmental Entity, any arbitration award or any
judgment, decree or order of any court or other Governmental Entity,
applicable to Christiana, Logistic, C2 or any of their respective
subsidiaries or their respective business, assets or operations, except
for violations and failures to comply that would not have a Christiana
MAE.
(q) Contracts.
(i) Section 2.2(q) to the Christiana Disclosure
Letter contains a complete list of the following contracts,
agreements, arrangements and commitments: (i) all employment
or consulting contracts or agreements to which Christiana or
Logistic is contractually obligated; (ii) current leases,
sales contracts and other agreements with respect to any
property, real or personal, of Christiana or Logistic or to
which Christiana or Logistic is contractually obligated; (iii)
contracts or commitments for capital expenditures or
acquisitions in excess of $30,000 to which Christiana or
Logistic is obligated; (iv) agreements, contracts, indentures
or other instruments relating to the borrowing of money, or
the guarantee of any obligation for the borrowing of money, to
which Christiana or Logistic or any of their subsidiaries is a
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party or any of their respective properties is bound; (v)
contracts or agreements or amendments thereto that would be
required to be filed as an exhibit to an Annual Report on Form
10-K filed by Christiana as of the date hereof that has not
been filed as an exhibit to the Christiana's Annual Report on
Form 10-K for the year ended June 30, 1997, filed by it with
the Commission or any report filed with the Commission under
the Exchange Act since such date; (vi) all corporations,
partnerships, limited liability companies and other entities
which Christiana has owed, directly or indirectly, an equity
interest since 1953, (vii) all material indemnification and
guaranty or other similar obligations to which Christiana or
Logistic is bound and which the officers of Christiana, after
reasonable investigation, are aware, (viii) any outstanding
bonds, letters of credit posted or guaranteed by Christiana or
Logistic with respect to any Person, (ix) any covenants not to
compete or other obligations affecting Christiana or Logistic
that would restrict the Surviving Corporation or Weatherford
and its affiliates from engaging in any business or activity
which the officers of Christiana or Logistic are aware, after
reasonable investigation and (x) contracts, agreements,
arrangements or commitments, other than the foregoing that
could reasonably be considered to be material to Christiana or
Logistic.
(ii) True and correct copies of all the instruments
described in Section 2.2(q) of the Christiana Disclosure
Letter have been furnished or made a available to Weatherford.
Except as noted in the Christiana Disclosure Letter, all such
agreements, arrangements or commitments are valid and
subsisting and each of Christiana, Logistic and their
respective subsidiaries to the extent each is a party, has
duly performed its obligations thereunder in all material
respects to the extent such obligations have accrued, and no
breach or default thereunder by Christiana, Logistic or their
respective subsidiaries or, to the knowledge of Christiana,
any other party thereto has occurred that could impair the
ability of Christiana, Logistic or their respective
subsidiaries to enforce any material rights thereunder. There
are no material liabilities of any of the parties to any of
the contracts between Christiana, Logistic or C2 or any of
their respective subsidiaries and third parties arising from
any breach of or default in any provision thereof or which
would permit the acceleration of any obligation of any party
thereto or the creation of a Lien upon any asset of
Christiana, Logistic or any of their respective subsidiaries.
(r) Title to Property.
(i) At the Effective Time, Christiana will have good
and marketable title to, or valid leasehold interests in, all
its properties and assets. Christiana has good and valid title
to 3,897,462 shares of Weatherford Common Stock, free and
clear of all Liens. Christiana has good and valid title to
1000 units of Logistic, free and clear of all Liens, which
units represents all of the interest in Logistics.
(ii) Except as set forth in Section 2.2(r)(ii) of the
Christiana Disclosure Letter, each of Christiana and Logistic
has complied in all material respects with the terms of all
leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect.
Each of Christiana and Logistic enjoys peaceful and
undisturbed possession under all such leases.
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(s) Insurance Policies. Section 2.2(s) of the Christiana
Disclosure Letter contains a correct and complete description of all
insurance policies of Christiana covering Christiana, Logistic and
their respective subsidiaries, any employees or other agents of
Christiana, Logistic and their respective subsidiaries or any assets of
Christiana and its subsidiaries. Each such policy is in full force and
effect, is with responsible insurance carriers and is substantially
equivalent in coverage and amount to policies covering companies of the
size of Christiana and in the business in which Christiana and its
subsidiaries is engaged, in light of the risk to which such companies
and their employees, businesses, properties and other assets may be
exposed. All retroactive premium adjustments under any worker's
compensation policy of Christiana or any of its Subsidiaries have been
recorded in Christiana's financial statements in accordance with
generally accepted accounting principles and are reflected in the
financial statements contained in the Commission Filings.
(t) Loans. Section 2.2(t) of the Christiana Disclosure Letter
sets forth all existing loans, advances or other extensions of credit
(excluding accounts receivable arising in the ordinary course of
business) by Christiana or its subsidiaries to any party other than
intercompany loans, advances, guaranties or extensions of credit. All
items listed in Section 2.2(t) of the Christiana Disclosure Letter will
be repaid in full or assumed by C2 prior to the Effective Time of the
Merger. All intercompany obligations and loans between Christiana and
its subsidiaries, including C2, will be extinguished prior to the
Logistic Sale without any ongoing liability to Christiana or C2 with
respect thereto, except as set forth herein or in the Logistic Purchase
Agreement.
(u) No Fraudulent Transfer. Christiana has not within the last
twelve months made any transfer or incurred any obligation with actual
intent to hinder, delay or defraud any entity to which it was or may
become indebted and it has not transferred any material property
without receiving reasonably equivalent value for any such transfer
obligation. Both immediately prior to and immediately after the
Logistic Sale and the Merger, (i) the fair value of (x) Christiana's
assets at the time of the Merger and (y) Logistic's and C2's assets
after the Logistic Sale and (z) the assets of CST Financial, Inc.
("CST") Martinique Holdings, Inc. ("MHI") and Christiana Community
Builders, Inc. ("CCB") immediately prior to their liquidation in each
case at a fair valuation exceeds their respective debts and
liabilities, subordinated, contingent or otherwise, (ii) the present
fair saleable value of Christiana's, Logistic's, C2's, CST's, MHI's and
CCB's property is greater than the amount that will be required to pay
its probable liability on their respective debts and other liabilities,
subordinated, contingent or otherwise, as such debts and liabilities
become absolute and mature, (iii) Christiana prior to the Logistic Sale
and Logistic, C2 after the Logistic Sale and CST, MHI and CCB prior to
their liquidation each reasonably expect to be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, and (iv) Christiana before
the Logistic Sale and Logistic and C2 after the Logistic Sale will not
have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed
to be conducted. For all purposes of clauses of (i) through (iv), the
amount of contingent liabilities at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(v) Information Supplied. None of the information supplied or
to be supplied by Christiana or C2 for inclusion or incorporation by
reference in (i) the Registration
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Statement (as defined in Section 5.1) will, at the time the
Registration Statement is filed with the Commission, and at any time it
is amended or supplemented or at the time it becomes effective under
the Securities Act, contain 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, and (ii) the
Proxy Statement will, at the date the Proxy Statement is first mailed
to Christiana's stockholders and at the time of the Christiana
Stockholders Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder. For purposes of this Agreement, the parties agree that the
statements made and information in the Registration Statement and the
Proxy Statement relating to the Federal income tax consequences of the
transactions contemplated hereby shall be deemed to be supplied by
Christiana and C2 and not by Weatherford or Sub.
ARTICLE III
COVENANTS OF CHRISTIANA
3.1 Conduct of Business by Christiana Pending the Merger. Christiana
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Weatherford shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement or the Logistic Purchase Agreement or
set forth in Section 3.1 of the Christiana Disclosure Letter:
(a) the business of Christiana and the Christiana Subsidiaries
shall be conducted only in, and Christiana and the Christiana
Subsidiaries shall not take any action except in, the ordinary course
of business and consistent with past practice, provided that Christiana
may take the actions required by Section 3.4 hereof;
(b) Christiana shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber any capital
stock of Christiana except upon the exercise of Christiana Options;
(ii) split, combine, or reclassify any outstanding capital stock, or
declare, set aside, or pay any dividend payable in cash, stock,
property, or otherwise with respect to its capital stock whether now or
hereafter outstanding; (iii) redeem, purchase or acquire or offer to
acquire any of its capital stock; (iv) acquire, agree to acquire or
make any offer to acquire for cash or other consideration, any equity
interest in or assets of any corporation, partnership, joint venture,
or other entity in an amount greater than $500,000, provided that
Christiana may take the actions required by Section 3.4 hereof; or (v)
enter into any contract, agreement, commitment, or arrangement with
respect to any of the matters set forth in this Section 3.1(b);
(c) Christiana shall not transfer, dispose or otherwise convey
any of the shares of Weatherford Common Stock held by it or grant or
permit there to exist any Lien on such shares;
(d) Christiana shall not enter into any contract regarding its
business having a term greater than 120 days or involving an amount in
excess of $50,000 or commit to do the
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same and except for a cold storage facility in Hudsonville, Michigan,
no Christiana Subsidiary shall enter into any contract outside the
ordinary course of business;
(e) Christiana shall not become bound by any agreement or
obligation in an amount in excess of $500,000 in the aggregate for all
such agreements and obligations;
(f) Christiana shall not pledge or encumber any of the assets
to be held by Christiana following the Logistic Sale;
(g) Neither Christiana nor any of its Subsidiaries shall enter
into any employment or consulting contracts;
(h) Neither Christiana nor any of its Subsidiaries shall enter
into any contract or agreement that if effective on the date hereof
would be required to be identified as a disclosure pursuant to Section
2.2(q) of the Christiana Disclosure Letter;
(i) Neither Christiana nor any of its Subsidiaries shall sell,
lease, mortgage, pledge, grant a Lien on or otherwise encumber or
otherwise dispose of any of Christiana's or its Subsidiaries'
properties or assets, except sales of inventory in the ordinary course
of business consistent with past practice and Christiana may liquidate
(in a manner acceptable to Weatherford) CST Financial, Inc., Martinique
Holdings, Inc. and Christiana Community Builders, Inc. and transfer
their assets to Logistic without consideration;
(j) Neither Christiana nor any of its Subsidiaries shall,
directly or indirectly, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of Christiana or its Subsidiaries, guarantee any debt
securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice which
obligations in respect of Christiana and its Subsidiaries other than
Logistic shall be released in connection with the Logistic Sale, or
make or permit to remain outstanding any loans, advances or capital
contributions to, or investments in, any other Person, other than to
Christiana or any direct or indirect wholly owned subsidiary of
Christiana;
(k) Neither Christiana nor any of its Subsidiaries shall make
any election relating to Taxes except for those elections to be made in
connection with its 1997 Tax Returns that are consistent with the 1996
Tax Returns;
(l) Neither Christiana nor any of its Subsidiaries shall
change any accounting principle used by it;
(m) Christiana shall use its reasonable efforts (i) to
preserve intact the business organization of Christiana and Logistic
except Christiana may liquidate (in a manner acceptable to Weatherford)
CST Financial, Inc., Martinique Holdings, Inc. and Christiana Community
Builders, Inc. and transfer their assets to Logistic without
consideration, (ii) to maintain in effect any material authorizations
or similar rights of Christiana and Logistic, (iii) to preserve the
goodwill of those having material business relationships with it; (iv)
to
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maintain and keep each of Christiana's properties in the same repair
and condition as presently exists, except for deterioration due to
ordinary wear and tear and damage due to casualty; and (v) to maintain
in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained by it;
(n) Christiana shall, and shall cause the Christiana
Subsidiaries to, perform their respective obligations under any
contracts and agreements to which it is a party or to which any of its
assets is subject, except to the extent such failure to perform would
not have a Christiana MAE and except for such obligations as Christiana
in good faith may dispute;
(o) Christiana shall cause there to exist immediately prior to
the Effective Time Christiana Net Cash (including $10,666,677 to be
paid by C2 under the Logistic Purchase Agreement) of not less than $13
million;
(p) Neither Christiana nor any of its Subsidiaries shall
settle or compromise any litigation (whether or not commenced prior to
the date of this Agreement) other than settlements or compromises: (i)
of litigation where the amount paid in settlement or compromise does
not exceed $500,000, or if greater, the amount of the reserve therefor
reflected in the most recent SEC Documents and the terms of the
settlement would not otherwise have a Christiana MAE, or (ii) in
consultation and cooperation with Weatherford, and, with respect to any
such settlement, with the prior written consent of Weatherford;
(q) Christiana shall cause the Logistic Purchase Agreement to
be executed and delivered by Christiana and the Logistic Sale to be
effected prior to the Merger immediately prior to the Effective Time;
(r) Christiana shall not authorize any of, or commit or agree
to take any of, or permit any Christiana Subsidiary to take any of, the
foregoing actions to the extent prohibited by the foregoing and shall
not, and shall not permit any of the Christiana Subsidiaries to, take
any action that would, or that reasonably could be expected to, result
in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set
forth in Article VI not being satisfied. Christiana promptly shall
advise Weatherford orally and in writing of any change or event having,
or which, insofar as reasonably can be foreseen, would have, a material
adverse effect on Christiana and the Christiana Subsidiaries, taken as
a whole, or cause a Christiana MAE.
(s) Christiana shall cause Logistic to pay to Christiana a
distribution in the amount of $20 million cash prior to the Effective
Time (the "TLC Dividend");
(t) Christiana shall cause Logistic to pay in full the entire
principal amount of the Wiscold Note dated September 1, 1992, in the
principal amount of $3,000,000, together with all accrued interest
thereon (the "Wiscold Note"); and
(u) Except as set forth in Section 2.2(o) of the Disclosure
Schedule or agreed to in writing by Weatherford prior to the Closing,
Christiana shall cause all of its obligations (i) relating to Logistics
or any other historical business of Christiana or its Subsidiaries and
(ii) under any and all agreements relating to the borrowing of funds,
including all guarantees and other similar arrangements relating
thereto, to be fully released or otherwise satisfied in a manner
acceptable to Weatherford.
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3.2 Cash Requirements. Christiana covenants that as of the Effective
Time it shall have cash equal to the sum of (i) $13 million (including
$10,666,677 to be received under the Logistic Purchase Agreement) and (ii) all
accrued and unpaid liabilities and obligations of Christiana. For purposes of
this Section 3.2, the unpaid liabilities and obligations of Christiana shall
mean the full undiscounted amount of liabilities for which Christiana shall be
responsible, including any liabilities that will accrue as a result of the
Merger, the Logistic Sale or the transactions contemplated herein, whether or
not such liabilities would be required to be reflected as a liability by
generally accepted accounting principles; provided, however, that such
liabilities shall not include any liabilities for any gain on any Weatherford
Common Stock held by Christiana realized as a result of a sale of such stock by
Christiana or a liquidation or merger of Christiana (other than the Merger)
within two years after the Effective Time, nor any tax liability for income of
Weatherford attributable to Christiana under the equity method of accounting
either before or after the Effective Time (the "Weatherford Related Taxes).
Further, for purposes of calculating such liabilities, any Taxes (other than the
Weatherford Related Taxes) payable in respect of the Logistic Sale or other
transactions contemplated herein or under the Logistic Purchase Agreement shall
be fully accrued as a liability and any Tax credits, deductions, other Tax
benefits of Christiana shall not be considered or used to offset any such
liability. The provisions of this Section 3.2 shall not affect Logistic's and
C2's obligations under the Logistic Purchase Agreement to assume and indemnify
Weatherford as set forth therein.
3.3 Affiliates' Agreements. Prior to the Closing Date, Christiana shall
deliver to Weatherford a letter identifying all Persons that are, at the time
this Agreement is submitted for approval to the stockholders of Christiana,
"affiliates" of Christiana for purposes of Rule 145 under the Securities Act
("Affiliates"). Christiana shall deliver or cause to be delivered to Weatherford
an undertaking by each Affiliate in form satisfactory to Weatherford that no
Weatherford Common Stock received or to be received by such Affiliate pursuant
to the Merger will be sold or disposed of except pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of Rule 144 or paragraph (d) of Rule 145 under the Securities Act or
another exemption from registration under the Securities Act.
3.4 Weatherford Common Stock Purchases. Prior to the date the Proxy
Statement is mailed to the stockholders of Weatherford and Christina, Christiana
shall purchase, in one transaction or a series of transactions, at least $10
million of Weatherford Common Stock (the "$10 Million Purchase"). After the
Christiana Stockholders Meeting, as defined in section 5.3, Christiana shall
purchase, in one transaction or a series of transactions, up to an addtional $5
million of Weatherford Common stock (the "$5 Million Purchase"). Notwithstanding
the foregoing Christiana shall not be required to make any purchase unless such
purcahse, when considering the then current price of Weatherford Common Stock,
prior purchases and amounts, if any, remaining under the $10 million Purchase
and the $5 Million Purchase will allow the merger when completed to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) by reason of Section
368(a)(2)(E) of the Code. Christiana may, but is not required to, waive the
foregoing and puchase any other Weatherford Common Stock. All such purchases
shall be made in accordance with applicable securities laws, including
Regulation M and Rule 10b-8 promulgated under the Exchange Act.
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
4.1 Reservation of Weatherford Stock. Weatherford shall reserve for
issuance, out of its authorized but unissued capital stock, such number of
shares of Weatherford Common Stock as may be issuable upon consummation of the
Merger.
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4.2 Conduct of Weatherford Pending the Merger. Weatherford covenants
and agrees that, from the date of this Agreement until the Effective Time,
unless Christiana shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement, it will not take any action that would, or that
could be expected to, result in any of the representations and warranties set
forth in this Agreement becoming untrue or any of the conditions to the merger
set forth in Article VI not being satisfied.
4.3 Stock Exchange Listing. Weatherford shall use reasonable efforts to
cause the shares of Weatherford Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement. As
promptly as reasonably practicable after the execution of this Agreement,
Weatherford and Christiana shall prepare and file with the Commission
preliminary proxy materials that shall constitute the Proxy Statement of
Weatherford and Christiana and the registration statement with respect to the
Weatherford Common Stock to be issued in connection with the Merger (the
"Registration Statement"). As promptly as reasonably practicable after final
comments are received from and cleared by the Commission on the preliminary
proxy materials, Weatherford and Christiana shall file with the Commission a
combined joint proxy statement and registration statement on Form S-4 (or on
such other form as shall be appropriate) relating to the approval and adoption
of the Merger and this Agreement by the stockholders of Weatherford and the
stockholders of Christiana and the issuance by Weatherford of Weatherford Common
Stock in connection with the Merger and shall use their reasonable efforts to
cause the Registration Statement to become effective as soon as practicable.
Subject to the terms and conditions set forth in Section 6.2 and the fiduciary
obligations of the Board of Directors of Weatherford with respect to such
matters, the Proxy Statement shall contain a statement that the Board of
Directors of Weatherford recommended that the stockholders of Weatherford
approve and adopt the Merger and this Agreement. Subject to the terms and
conditions set forth in Section 6.3 and the fiduciary obligations of the Board
of Directors of Christiana with respect to such matters, the Proxy Statement
shall contain a statement that the Board of Directors of Christiana recommended
that the stockholders of Christiana approve and adopt the Merger and this
Agreement.
5.2 Accountants Letter. Christiana shall use its reasonable efforts to
cause Arthur Andersen LLP to deliver a letter pursuant to SAS 72 dated as of the
date of the Proxy Statement and confirmed and updated at the Closing as of the
Closing Date, and addressed to itself and Weatherford, in the form and substance
reasonably satisfactory to Weatherford and customary in the scope and substance
for agreed upon procedures letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
5.3 Meetings of Stockholders.
(a) Christiana shall promptly take all action reasonably
necessary in accordance with the WBCL and its Articles of Incorporation
and bylaws to convene a meeting of its stockholders to consider and
vote upon the adoption and approval of the Merger and this
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Agreement and the Logistic Sale (the "Christiana Shareholder
Meeting"). Christiana shall provide that, in addition to any vote that
may be required by law, the approval of the Merger and this Agreement
and the Logistic Sale shall require approval of a majority of the
votes cast for or against such matters excluding any shares of
Christiana Common Stock held by Lubar & Co. Incorporated and its
affiliates; provided, however, Christiana may, in lieu of such
requirement, obtain an agreement by Lubar & Co. Incorporated and its
affiliates to vote all of its shares of Christiana Common Stock for,
against or abstain from voting with respect to such matters in the
same proportion as the shares of Christiana Common Stock are voted on
such matters by the other stockholders of Christiana. Subject to the
terms and conditions set forth in Section 6.3 and the fiduciary
obligations of the Board of Directors of Christiana with respect to
such matters, the Board of Directors of Christiana (i) shall recommend
at such meeting that the stockholders of Christiana vote to adopt and
approve the Merger and this Agreement and the Logistic Sale, (ii)
shall use its best efforts to solicit from stockholders of Christiana
proxies in favor of such adoption and approval and (iii) shall take
all other action reasonably necessary to secure a vote of its
stockholders in favor of the adoption and approval of the Merger and
this Agreement.
(b) Weatherford shall promptly take all action reasonably
necessary in accordance with the General Corporation Law of the State
of Delaware (the "DGCL") and its Certificate of Incorporation and
bylaws to convene a meeting of its stockholders to consider and vote
upon the adoption and approval of the Merger and this Agreement.
Subject to the terms and conditions set forth in Section 6.2 and the
fiduciary obligations of the Board of Directors of Weatherford with
respect to such matters, the Board of Directors of Weatherford (i)
shall recommend at such meeting that the stockholders of Weatherford
vote to adopt and approve the Merger and this Agreement, (ii) shall use
its reasonable efforts to solicit from stockholders of Weatherford
proxies in favor of such adoption and approval and (iii) shall take all
other action reasonably necessary to secure a vote of its stockholders
in favor of the adoption and approval of the Merger and this Agreement.
(c) Weatherford and Christiana shall coordinate and cooperate
with respect to the timing of such meetings and shall endeavor to hold
such meetings on the same day and as soon as practicable after the date
hereof.
5.4 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, Christiana and Weatherford shall (i) make all
necessary filings with respect to the Merger and this Agreement under the HSR
Act, the Securities Act, the Exchange Act, and applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto; (ii) use reasonable efforts to
obtain all consents, waivers, approvals, authorizations, and orders required in
connection with the authorization, execution, and delivery of this Agreement and
the consummation of the Merger; and (iii) use reasonable efforts to take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper, or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
5.5 Notification of Certain Matters. Christiana shall give prompt
notice to Weatherford, and Weatherford shall give prompt notice to Christiana,
orally and in writing, of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate at any time from
the date hereof to the Effective Time; and (ii) any material failure of
Christiana or Weatherford, as
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the case may be, or any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be compiled with or
satisfied by it hereunder.
5.6 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
those out-of-pocket expenses (which do not include fees for attorneys,
accountants and financial advisors) incurred in connection with (i) the
registration fees for the Weatherford Common Stock under the Securities Act to
be issued in the Merger, (ii) the registration and qualification of the
Weatherford Common Stock under any state securities and blue sky laws, (iii) the
listing of the Weatherford Common Stock on the NYSE, (iv) the HSR filing fee (v)
the investment banking, appraisal, and related expenses of Christiana, (vi) the
cost of any proxy solicitors and (vii) the printing and mailing of the
Registration Statement and the Proxy Statement shall be paid by Christiana;
provided, however, that if this Agreement shall have been terminated pursuant to
Section 7.1 as a result of the willful breach by a party of any of its
representations, warranties, covenants, or agreements set forth in this
Agreement, such breaching party shall pay the direct out-of-pocket costs and
expenses of the other parties in connection with the transactions contemplated
by this Agreement.
5.7 Christiana's Employee Benefits.
(a) Christiana shall take action prior to the Merger and the
Logistic Sale to (i) either cancel all outstanding Christiana Options
or accelerate such Christiana Options and make such Christiana Options
terminate prior to the Effective Time and (ii) and terminate the
Christiana Option Plan.
(b) Christiana shall pay to each holder of Christiana Options
an amount of cash necessary to obtain cancellation of all Christiana
Options held by such holders.
(c) Christiana shall cause all employee benefit plans to which
it is a sponsor or has obligations to be terminated or assumed by
Logistic or C2 without any continuing obligations on the part of
Christiana.
(d) Christiana shall transfer to Logistic or C2 all employees
of Christiana without any liability to the Surviving Corporation. C2
shall be responsible for all severance and other obligations with
respect to such terminated employees, if any. As of the Effective Time,
Christiana shall have no employees or employee benefit plans or
obligations.
5.8 Liquidation or Merger of Christiana. Weatherford agrees that for a
period of two years following the Effective Time it shall not cause or permit
Christiana to (i) liquidate or dissolve, (ii) sell or transfer any shares of
Weatherford Common Stock held by Christiana or (iii) merge Christiana into any
other entity unless Weatherford receives an opinion of a nationally-recognized
tax counsel or accounting firm that such transaction will not adversely affect
the tax treatment of the Merger; provided, however, this restriction shall not
be deemed to prohibit or restrict (i) a sale or disposition of Christiana's
interest in Logistic to the extent permitted by the Logistic Purchase Agreement
or the operating agreement relating to Logistic, (ii) a change in control of
Weatherford, (iii) a merger, consolidation, share exchange or similar
transaction involving Weatherford or its subsidiaries (other than Christiana) or
(iv) a sale or disposition of any assets of Weatherford or its subsidiaries
(other than Christiana).
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ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger (and the Logistic Sale in
the case of Christiana) shall have been approved and adopted by the
requisite vote of the stockholders of Christiana and Weatherford, as
may be required by law, by the rules of the NYSE, by Section 5.3(a) and
by any applicable provisions of their respective charters or bylaws;
(b) The waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated;
(c) No order shall have been entered and remain in effect in
any action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Logistic Sale and the Merger;
(d) The Registration Statement and a registration statement
under the Securities Act to be filed by C2 in connection with the
Merger shall each be effective on the Closing Date, and all
post-effective amendments thereto filed shall have been declared
effective or shall have been withdrawn; and no stop-order suspending
the effectiveness thereof shall have been issued and no proceedings for
that purpose shall have been initiated or, to the knowledge of the
parties, threatened by the Commission;
(e) There shall have been obtained any and all material
permits, approvals and consents of securities or blue sky commissions
of any jurisdiction, and of any other governmental body or agency, that
reasonably may be deemed necessary so that the consummation of the
Merger and the transactions contemplated thereby will be in compliance
with applicable laws, the failure to comply with which would have a
Christiana MAE or Weatherford MAE;
(f) The shares of Weatherford Common Stock issuable upon
consummation of the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance;
(g) Weatherford, C2 and Christiana shall have received an
opinion, dated as of the Effective Time, from American Appraisal
Associates, Inc. in form and substance satisfactory to them, in respect
of the matters described in Section 2.2(u); and
(h) All approvals and consents of third Persons (i) the
granting of which is necessary for the consummation of the Merger, the
Logistic Sale or the transactions contemplated in connection therewith
and (ii) the non-receipt of which would have a Christiana MAE or an
Weatherford MAE.
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6.2 Additional Conditions to Obligations of Weatherford. The obligation
of Weatherford to effect the Merger is, at the option of Weatherford, also
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The representations and warranties of Christiana contained
in Section 2.2 shall be accurate as of the date of this Agreement and
(except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though
such representations and warranties had been made at and as of that
time; all of the terms, covenants and conditions of this Agreement to
be complied with and performed by Christiana on or before the Closing
Date shall have been duly complied with and performed in all material
respects; and a certificate to the foregoing effect dated the Closing
Date and signed by the chief executive officer and the president of
Christiana shall have been delivered to Weatherford;
(b) There shall not have occurred or exist any fact or
condition that would reasonably result in a Christiana MAE or would
constitute a material fixed or contingent liability to Christiana, and
Weatherford shall have received a certificate signed by the president
of Christiana dated the Closing Date to such effect;
(c) The Board of Directors of Weatherford shall have received
from Morgan Stanley & Co. Incorporated, financial advisor to
Weatherford, a written opinion, satisfactory in form and substance to
the Board of Directors of Weatherford, to the effect that consideration
to be paid by Weatherford in the Merger is fair to Weatherford from a
financial point of view, which opinion shall have been confirmed in
writing to such Board as of a date reasonably proximate to the date the
Proxy Statement is first mailed to the stockholders of Weatherford and
not subsequently withdrawn;
(d) The Christiana Options shall have been cancelled and the
Christiana Plans shall have been terminated or such options shall have
been exercised;
(e) Christiana shall have received, and furnished written
copies of Weatherford of, the Christiana affiliates' agreements
pursuant to Section 3.3;
(f) Weatherford shall have received from Foley & Lardner,
counsel to Christiana, an opinion dated the Closing Date covering
customary matters relating to the Agreement and the Merger, including
an opinion in form and substance satisfactory to Weatherford with
respect to the matters described in Section 2.2(a), (b), (c), (d) and
(k) (provided that the form of such opinion shall be agreed upon prior
to the filing of the Registration Statement with the Commission);
(g) Weatherford shall have received from Arthur Andersen LLP a
written opinion, in form and substance satisfactory to Weatherford,
dated as of the date that the Proxy Statement is first mailed to the
Stockholders of Christiana and Weatherford to the effect that (i) the
Merger will be treated for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code
by reason of Section 368(a)(2)(E) of the Code, (ii) Weatherford, Sub
and Christiana will each be a party to that reorganization within the
meaning of Section 368(b) of the Code and (iii) Weatherford, Sub and
Christiana shall not recognize any gain or loss for U.S. federal income
tax purposes as a result of the Merger
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(although Christiana will recognize gain or loss for U.S. federal
income tax purposes as a result of the Logistic Sale), and such opinion
shall be confirmed at the Closing;
(h) Weatherford shall have received from Arthur Andersen LLP a
letter, in form and substance satisfactory to Weatherford, dated as of
the Closing Date, to the effect that the Merger would not adversely
affect the ability of Weatherford to account for any prior or future
business combination as a pooling of interest;
(i) C2 shall have executed and delivered to Christiana and
Weatherford the Logistic Purchase Agreement and agreement among members
in form and substance, including schedules, acceptable to Weatherford;
(j) The Logistic Sale shall have been consummated;
(k) Christiana shall have delivered to Weatherford a pro forma
balance sheet after giving effect to the Logistic Sale, including a
full accrual for Taxes thereon without regard to any tax credits or tax
deductions that Christiana may have in connection with the exercise of
any stock options, reflecting Christiana Net Cash in an amount not less
than $13 million;
(l) Except as permitted by Section 3.1, all outstanding
Indebtedness (including guarantees thereof) of Christiana and its
Subsidiaries (other than Logistics) shall have been paid in full or
Christiana shall have been fully released therefrom;
(m) The assets of Christiana shall consist only of cash of
at least $13 million, at least 3,897,462 shares of Weatherford Common
Stock, certain tax benefits and 333.333 units of Logistic representing
one-third of the outstanding interests of Logistic; and
(n) There shall not be pending any litigation involving
Christiana or any of its subsidiaries, that Weatherford, in its sole
discretion, considers to be a material liability for which adequate
security has not been provided.
6.3 Additional Conditions to Obligations of Christiana. The obligation
of Christiana to effect the Merger is, at the option of Christiana, also subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Weatherford and Sub
contained in Section 2.1 shall be accurate as of the date of this
Agreement and (except to the extent such representations and warranties
speak specifically as of an earlier date) as of the Closing Date as
though such representations and warranties had been made at and as of
that time; all the terms, covenants and conditions of this Agreement to
be complied with and performed by Weatherford on or before the Closing
Date shall have been duly complied with and performed in all material
respects; and a certificate to the foregoing effect dated the Closing
Date and signed by the chief executive officer of Weatherford shall
have been delivered to Christiana;
(b) The Board of Directors of Christiana and C2 shall have
received from Prudential Securities Corporation, financial advisor to
Christiana and C2, a written opinion, satisfactory in form and
substance to the Board of Directors of Christiana and C2, to the effect
that from a financial point of view to the Christiana Shareholders the
Merger, which includes
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(i) the consideration to be received in the Merger and (ii) the
purchase price for Logistic is fair to the Christiana Shareholders,
which opinion shall have been confirmed in writing to such Board as of
a date reasonably proximate to the date the Proxy Statement is first
mailed to the stockholders of Christiana and Weatherford and not
subsequently withdrawn;
(c) Christiana and C2 shall have received from Fulbright &
Jaworski L.L.P. counsel to Weatherford, an opinion dated the Closing
Date covering customary matters relating to this Agreement and the
Merger, including an opinion in form and substance with respect to the
matters described in Section 2.1(a), (b)(iii), (c) and (d)(i), (ii) and
(iii);
(d) C2 and Christiana shall have received from Arthur Andersen
LLP, a written opinion, in form and substance satisfactory to
Christiana, dated as of the date that the Proxy Statement is first
mailed to stockholders of Christiana and Weatherford to the effect that
(i) the Merger will be treated for U.S. federal income tax purposes as
a reorganization within the meaning of Section 368(a)(1)(A) of the Code
by reason of Section 368(a)(2)(E) of the Code; (ii) Weatherford, Sub
and Christiana will each be a party to that reorganization within the
meaning of Section 368(b) of the Code, and (iii) Weatherford, Sub and
Christiana shall not recognize any gain or loss for U.S. federal income
tax purposes as a result of the Merger (although Christiana will
recognize gain or loss for U.S. federal income tax purposes as a result
of the Logistic Sale), and such opinion shall be confirmed at the
Closing; and
(e) The Logistic Sale under the Logistic Purchase Agreement
shall have occurred.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated and the Merger and
the other transactions contemplated herein may be abandoned at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Christiana:
(a) by mutual written consent of Weatherford and Christiana;
(b) by either Weatherford or Christiana if (i) the Merger has
not been consummated on or before June 30, 1998 (provided that the
right to terminate this Agreement under this clause (i) shall not be
available to any party whose breach of any representation or warranty
or failure to fulfill any covenant or agreement under this Agreement
has been the cause of or resulted in the failure of the Merger to occur
on or before such date); (ii) any court of competent jurisdiction, or
some other governmental body or regulatory authority shall have issued
an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger; (iii) the stockholders
of Christiana shall not approve the Logistic Sale or the Merger at the
Christiana stockholder meeting or at any adjournment thereof; (iv) the
stockholders of Weatherford shall not approve the Merger at the
Weatherford stockholder meeting or any adjournment thereof; or (v) in
the exercise of its good faith judgment as to its fiduciary duties to
its stockholders imposed by law, as advised by outside counsel, the
Board of Directors of Christiana or Weatherford determines that such
termination is appropriate in complying with its fiduciary obligations.
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(c) by Christiana if (i) Weatherford shall have failed to
comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by
Weatherford or Sub at or prior to such date of termination (provided
such breach has not been cured within 30 days following receipt by
Weatherford of written notice from Christiana of such breach and is
existing at the time of termination of this Agreement); (ii) any
representation or warranty of Weatherford contained in this Agreement
shall not be true in all respects when made (provided such breach has
not been cured within 30 days following receipt by Weatherford of
written notice from Christiana of such breach and is existing at the
time of termination of this Agreement) or on and as of the Effective
Time as if made on and as of the Effective Time (except to the extent
it relates to a particular date), except for such failures to be so
true and correct which would not individually or in the aggregate,
reasonably be expected to have an Weatherford MAE, assuming the
effectiveness of the Merger; or (iii) the Board of Directors of
Weatherford withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Christiana or shall have
resolved to do any of the foregoing.
(d) by Weatherford if (i) Christiana shall have failed to
comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by it at
or prior to such date of termination (provided such breach has not been
cured within 30 days following receipt by Christiana of written notice
from Weatherford of such breach and is existing at the time of
termination of this Agreement; (ii) any representation or warranty of
Christiana contained in this Agreement shall not be true in all
respects when made (provided such breach has not been cured within 30
days following receipt by Christiana of written notice from Weatherford
of such breach and is existing at the time of termination of this
Agreement) or on and as of the Effective Time as if made on and as of
the Effective Time (except to the extent it relates to a particular
date), except for such failures to be so true and correct which would
not individually or in the aggregate, reasonably be expected to have a
Christiana MAE assuming the effectiveness of the Merger or (iii) the
Board of Directors of Christiana withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to
Weatherford or shall have resolved to do any of the foregoing.
7.2 Effect of Termination. In the event of termination of this
Agreement by either Weatherford or Christiana as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Weatherford, Sub or Christiana, except (i) with
respect to this Section 7.2, Section 5.6 and Section 7.13, and (ii) such
termination shall not relieve any party hereto for any intentional breach prior
to such termination by a party hereto of any of its representations or
warranties or of any of its covenants or agreements set forth in this Agreement.
7.3 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any time,
except by an instrument in writing signed on behalf of each party hereto,
provided that after this Agreement has been approved and adopted by the
stockholders of Weatherford and Christiana, this Agreement may be amended only
as may be permitted by applicable provisions of the DGCL and the WBCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto
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of any of the conditions precedent to its obligations under this Agreement shall
not preclude it from seeking redress for breach of this Agreement other than
with respect to the condition so waived.
7.4 Nonsurvival of Representations and Warranties. Except for the
representations and warranties of C2 contained herein, which shall survive
without limitation, none of the representations and warranties in this Agreement
shall survive the Effective Time.
7.5 Public Statements. Christiana and Weatherford agree to consult with
each other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby.
7.6 Assignment. This Agreement shall inure to the benefit of and will
be binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns.
7.7 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Christiana:
Christiana Companies, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to C2:
C2, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
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with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to Weatherford or Sub:
Weatherford, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.8 Governing Law. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall be governed by the laws of the State
of Delaware, without regard to conflict of laws principles.
7.9 Arbitration. Any disputes, claims or controversies connected with,
arising out of, or related to, this Agreement and the rights and obligations
created herein, or the breach, validity, existence or termination hereof, shall
be settled by Arbitration to be conducted in accordance with the Commercial
Rules of Arbitration of the American Arbitration Association, except as such
Commercial Rules may be changed by this Section 7.9. The disputes, claims or
controversies shall be decided by three independent arbitrators (that is,
arbitrators having no substantial economic or other material relationship with
the parties), one to be appointed by Christiana, if prior to the Merger, or C2,
if after the Merger, and one to be appointed by Weatherford within fourteen days
following the submission of the claim to the parties hereto and the third to be
appointed by the two so appointed within five days thereafter. Should either
party refuse or neglect to join in the timely appointment of the arbitrators,
the other party shall be entitled to select both arbitrators. Should the two
arbitrators fail timely to appoint a third arbitrator, either party may apply to
the Chief Judge of the United States District Court for the Southern District of
Texas to make such appointment. The arbitrators shall have ninety days after the
selection of the third arbitrator within which to allow discovery, hear evidence
and issue their decision or award and shall in good faith attempt to comply
-35-
<PAGE>
with such time limits; provided, however, if two of the three arbitrators
believe additional time is necessary to reach a decision, they may notify the
parties and extend the time to reach a decision in thirty day increments, but in
no event to exceed an additional ninety days. Discovery of evidence shall be
conducted expeditiously by the parties, bearing in mind the parties desire to
limit discovery and to expedite the decision or award of the arbitrators at the
most reasonable cost and expense of the parties. Judgment upon an award rendered
pursuant to such Arbitration may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award,
and an order of enforcement, as the case may be. The place of Arbitration shall
be Houston, Texas. The decision of the arbitrators, or a majority thereof, made
in writing, shall be final and binding upon the parties hereto as to the
questions submitted, and each party shall abide by such decision.
Notwithstanding the provisions of this Section 7.9, neither party shall be
prohibited from seeking injunctive relief pending the completion of any
arbitration. The costs and expenses of the arbitration proceeding, including the
fees of the arbitrators and all costs and expenses, including legal fees and
witness fees, incurred by the prevailing party, shall be borne by the losing
party.
Solely for purposes of injunctive relief, orders in aid of arbitration
and entry of the arbitrators' award:
(a) each of the parties hereto irrevocably consents to the
non-exclusive jurisdiction of, and venue in, any state court located in
Harris County, Texas or any federal court sitting in the Southern
District of Texas in any suit, action or proceeding seeking injunctive
relief, orders in aid of arbitration, or entry of an arbitral award
arising out of or relating to this Agreement or any of the other
agreements contemplated hereby and any other court in which a matter
that may result in a claim for indemnification hereunder by an
Weatherford Indemnified Party (as defined in the Logistic Purchase
Agreement) may be brought with respect to any claim for indemnification
by an Weatherford Indemnified Party;
(b) each of the parties hereto waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to
the laying of venue of any suit, action or proceeding seeking
injunctive relief, orders in aid of arbitration or entry of an arbitral
award arising out of or relating to this Agreement or any of the other
agreements contemplated hereby brought in any state court located in
Harris County, Texas or any federal court sitting in the Southern
District of Texas or any other court in which a matter that may result
in a claim hereunder or for indemnification under the Logistic Purchase
Agreement by an Weatherford Indemnified Party may be brought with
respect to any claim for indemnification by an Weatherford Indemnified
Party, and further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum;
(c) each of the parties hereto irrevocably designates,
appoints and empowers CT Corporation System, Inc. and any successor
thereto as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and documents
which may be served in any suit, action or proceeding arising out of or
relating to this Agreement or any of the other agreements contemplated
hereby for the purposes of injunctive relief, orders in aid of
arbitration and entry of an arbitral award.
7.10 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms,
-36-
<PAGE>
provision, covenants and restrictions of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired or invalidated.
7.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
7.12 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.13 Confidentiality Agreement. The Confidentiality Agreements entered
into between Weatherford and Christiana on December 10, 1997 (the
"Confidentiality Agreements") are hereby incorporated by reference herein and
made a part hereof.
7.14 Entire Agreement: Third Party Beneficiaries. This Agreement, the
Other Agreements and the Confidentiality Agreements constitute the entire
agreement and supersede all other prior agreements and understandings, both oral
and written, among the parties or any of them, with respect to the subject
matter hereof and neither this nor any document delivered in connection with
this Agreement confers upon any Person not a party hereto any rights or remedies
hereunder.
7.15 Disclosure Letters.
(a) The Christiana Disclosure Letter, executed by Christiana
as of the date hereof, and delivered to Weatherford on the date hereof,
contains all disclosure required to be made by Christiana under the
various terms and provisions of this Agreement. Each item of disclosure
set forth in the Christiana Disclosure Letter specifically refers to
the Article and Section of the Agreement to which such disclosure
responds, and shall not be deemed to be disclosed with respect to any
other Article or Section of the Agreement.
(b) The Weatherford Disclosure Letter, executed by Weatherford
as of the date hereof, and delivered to Christiana on the date hereof,
contains all disclosure required to be made by Weatherford under the
various terms and provisions of this Agreement. Each item of disclosure
set forth in the Weatherford Disclosure Letter specifically refers to
the Article and Section of the Agreement to which such disclosure
responds, and shall not be deemed to be disclosed with respect to any
other Article or Section of the Agreement.
-37-
<PAGE>
IN WITNESS WHEREOF, each of the parties caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
Weatherford, INC.
By: /s/ BERNARD J. DUROC-DANNER
Name: Bernard J. Duroc-Danner
Title: President
CHRISTIANA ACQUISITION, INC.
By: /s/ BERNARD J. DUROC-DANNER
Name: Bernard J. Duroc-Danner
Title: President
CHRISTIANA COMPANIES, INC.
By: /s/ WILLIAM T. DONOVAN
Name: William T. Donovan
Title: President
C2, INC.
By: /s/ WILLIAM T. DONOVAN
Name: William T. Donovan
Title: President
-38-
<PAGE>
WEATHERFORD DISCLOSURE LETTER
Section 2.1(g) - Tax Matters
CHRISTIANA COMPANIES, INC.
LETTER OF TRANSMITTAL
Background. This letter of transmittal serves two purposes. First, it
is to accompany certificates representing the Common Stock, par value $1.00 per
share, of Christiana Companies, Inc. ("Christiana") when submitted in connection
with the merger of Christiana Acquisition, Inc., a wholly-owned subsidiary of
EVI, Inc. ("EVI") with and into Christiana. Second, this letter of transmittal
is the means by which a Christiana shareholder may make an election to purchase
Common Stock in C2, Inc. ("C2") as described in the C2 Prospectus, dated
- ----------.
TO BE EFFECTIVE IN MAKING AN ELECTION WITH RESPECT TO THE PURCHASE OF
COMMON STOCK OF C2, THIS FORM LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND
SIGNED IN ACCORDANCE WITH THE INSTRUCTIONS HEREIN, TOGETHER WITH CERTIFICATES
FOR THE COMMON SHARES OF CHRISTIANA COMPANIES, INC. COVERED HEREBY, MUST BE
DELIVERED TO FIRSTAR TRUST COMPANY NO LATER THAN 5 P.M. CENTRAL TIME, ON
_________________, 1998 AT THE APPROPRIATE ADDRESS SET FORTH BELOW.
The address for Firstar Trust Company is Firstar Trust Company,
Attention: Corporate Trust Department (by mail: P.O. Box 2077, Milwaukee,
Wisconsin 53201-2077) or if by hand 1555 North RiverCenter Drive, Suite 301,
Milwaukee, Wisconsin.
Questions regarding the Election procedure to purchase shares of C2,
Inc. may be directed to William T. Donovan, President of Christiana Companies,
Inc., at telephone number (414) 291-9000.
PLEASE READ CAREFULLY THE INSTRUCTIONS INCLUDED HEREIN
================================================================================
Name and Address of Registered Owner
(Fill in exactly as name appears on Certificate(s);
please print clearly or type)
- --------------------------------------------------------------------------------
================================================================================
TO: FIRSTAR TRUST COMPANY
1. Christiana Stock. In connection with the merger (the "Merger") of
Christiana Acquisition, Inc., a wholly-owned subsidiary of EVI with and into
Christiana, the undersigned hereby submits the certificate(s) listed below
representing Common Stock, par value $1.00 per share, of Christiana ("Christiana
Common Stock"):
================================================================================
CERTIFICATE INFORMATION
(Attach additional sheets if necessary)
- --------------------------------------------------------------------------------
Certificate Number Total Number of Shares
Represented by Certificate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Shares:
================================================================================
<PAGE>
2. C2 Stock. The undersigned hereby makes the following election
regarding the purchase of C2 Stock:
- --------------------------------------------------------------------------------
E ELECTION TO PURCHASE C2, INC. SHARES
L
E I understand (i) that I will receive approximately $3.50 for each share
C of Christiana Common Stock that I own immediately prior to the Merger;
T (ii) that I am entitled to purchase the same number of shares of C2,
I Inc. ("C2") Common Stock at $4.00 per share; and (iii) that I may
O purchase more shares of C2, if they are available.
N
I HEREBY ELECT THE FOLLOWING OPTION (check one):
[ ] I do not want to purchase any shares of C2, so please send me all the
proceeds from the sale of Christiana Common Stock to which I am
entitled pursuant to the Merger Agreement.
[ ] I want to purchase as many shares of C2 as possible using only the cash
(approximately $3.50 per share) to which I am entitled from the sale of
my Christiana Common Stock pursuant to the Merger Agreement.
[ ] I only want to purchase __________ C2 shares using a portion of the
cash (approximately $3.50 per share) to which I am entitled from the
sale of my Christiana Common Stock pursuant to the Merger Agreement.
Please apply the appropriate amount to such purchase and send me the
balance.(A)
[ ] I only want to purchase the number of shares of C2 to which I am
entitled. Accordingly, I am hereby enclosing a check for an additional
$.50 per share payable to Firstar Trust Company in the following
amount. Number of shares I own: _________________ times $.50 per
share.(B)
[ ] I want to purchase the number of shares of C2 to which I am entitled,
plus an additional ____________ shares of C2 (if they are
available).(C) Accordingly, I am enclosing the amount set forth below
payable to Firstar Trust Company:
(1) Number of shares I own _______________
times $.50 per share: $____________________ (1)
(2) Number of additional C2 shares I want to
buy __________ times $4.00 per share: $____________________ (2)
AMOUNT ENCLOSED (1) plus (2): $
====================
(A) This is the exercise of a portion of your Basic Subscription Privilege as
described in the C2 Prospectus under "The Offering."
(B) This is the exercise of your entire Basic Subscription Privilege as more
fully described in the C2 Prospectus under "The Offering."
(C) This is the exercise of your entire Basic Subscription Privilege plus your
Additional Subscription privilege as more fully described in the C2
Prospectus under "The Offering."
- --------------------------------------------------------------------------------
It is understood that such Election is subject to (i) the Instructions included
herein, (ii) the C2 Prospectus, receipt of which is hereby acknowledged, and
(iii) the terms, conditions and limitations of the Agreement and Plan of Merger
among EVI, Subsidiary, Christiana and C2 dated December 12, 1997 (the "Merger
Agreement"), which appears in the Joint Proxy Statement/Prospectus dated
________________, 1998, relating to the Merger (the "Proxy Statement"), receipt
of which is hereby acknowledged.
3. General. The undersigned hereby represents and warrants (and if more
than one, each undersigned represents and warrants jointly and severally) to
Firstar Trust Company that the undersigned has full power and authority to
assign and transfer the shares of Christiana Common Stock made subject to this
Form Letter of Transmittal and to make the Election made herein, and that there
is no lien, restriction, charge or encumbrance against the shares of Christiana
Common Stock made subject hereto.
-2-
<PAGE>
- -------------------------------------- --------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 9)
To be completed ONLY if certificates
To be completed ONLY if certificates and any check issued in the name of
and any check are to be issued in the the undersigned are to be sent to
name of someone other than the someone other than the undersigned or
registered owner(s) of the Christiana to the undersigned at an address other
Common Stock than that shown above.
Name _________________________________ Name _________________________________
(Please Print or Type) (Please Print or Type)
Address ______________________________ Address ______________________________
(Street) (Street)
- -------------------------------------- --------------------------------------
(City) (State) (Zip Code) (City) (State) (Zip Code)
- --------------------------------------
(Social Security Number)
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
PLEASE SIGN HERE SIGNATURE(S) GUARANTEED,
(See Instruction 7) IF REQUIRED
(See Instructions 7 and 9)
- -------------------------------------- Firm _________________________________
(Please Print or Type)
- --------------------------------------
(Signature(s) of Owner(s)) ______________________________________
(Authorized Signature)
Date _________________, 1995 Title ________________________________
(____) _________________________ Address ______________________________
(Area Code and Telephone Number) (Street)
______________________________________ ______________________________________
Tax Identification or (City) (State) (Zip Code)
Social Security Number
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
TO BE EXECUTED ONLY BY NON-UNITED STATES RESIDENTS:
(See Instruction 11)
I hereby certify that the foregoing purchase of C2, Inc.
Common Stock has been effected in accordance with the
applicable laws of the jurisdiction in which I reside.
__________, 1998 ______________________________ ___________________________
Dated Signature Signature for Joint
Subscriber (if any)
- --------------------------------------------------------------------------------
-3-
<PAGE>
See Instruction 13 for instructions concerning
the completion of the Substitute Form W-9 below.
Substitute
Form W-9
Give form to the
(Rev. December Request for Taxpayer requester. Do
1996) Identification Number and Certification NOT
send to the IRS.
Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
Name (If a joint account or you changed your name, see Specific instructions on
page 2.)
- --------------------------------------------------------------------------------
Business name, if different from above. (See Specific Instructions on page 2.)
- --------------------------------------------------------------------------------
Check appropriate box |_| Individual/Sole proprietor |_| Corporation
|_| Partnership |_| Other ________________
- --------------------------------------------------------------------------------
Address (number, street, and Apt. or suite no.) Requester's name and address
(optional)
- -----------------------------------------------
City, state and ZIP code
- -----------------------------------------------
Part I Taxpayer Identification Number (TIN) List account number(s) here
(optional)
- ----------------------------------------------------
----------------------
Enter your TIM in the Social security number
appropriate box. For
individuals, this is your
social security number
(SSN). However, if you
are a resident alien OR
a sole proprietor, see the
instructions on page 2.
---------------------------
For other entities, it is your employer PART II For Payees Exempt
identification number (EIN). If you From Backup
do not have a number, see How To OR Withholding (See
Get a TIN on page 2. the instructions
on page 2.)
---------------------- ---------------------------
NOTE: If the account is in Employer identification
more than one name, see the number
chart on page
2 for guidelines on whose
number to enter. ---------------------- ---------------------------
- --------------------------------------------------------------------------------
Part III Certification
- --------------------------------------------------------------------------------
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
Certification Instructions.- You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest and dividends on your tax return. For
real estate transactions, item 2 does not apply. For mortgage interest paid,
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally,
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (See the instructions on
page 2.)
- --------------------------------------------------------------------------------
Sign
Here Signature Date
- --------------------------------------------------------------------------------
-4-
<PAGE>
INSTRUCTIONS
1. Time in Which to Elect. This form or a facsimile thereof should be
submitted, accompanied by the certificates representing shares of Christiana
Common Stock described on the front hereof, to Firstar Trust Company at the
appropriate address set forth on the front hereof, no later than 5:00 P.M.,
Central Time, on ________________, 1998. Holders of Christiana Common Stock
whose Form Letters of Transmittal and certificates are not so delivered will not
be entitled to make an Election to Purchase C2 Shares, but will be entitled to
receive the consideration provided for Christiana shareholders in the Merger.
2. Change or Revocation Letter of Transmittal. Any record holder of
Christiana Common Stock may change an Election by delivering a written notice
accompanied by a properly completed, revised Form Letter of Transmittal to
Firstar Trust Company prior to 5:00 P.M., Central Standard Time, on
_________________, 1998. Similarly, an Election may be revoked by delivering a
written notice to Firstar Trust Company prior to such time or by withdrawing
prior to such time the certificates previously deposited with Firstar Trust
Company.
3. Nullification of Election. All Form Letters of Transmittal will be
void and deemed to be of no effect if the Merger is not consummated, and
certificates submitted therewith shall be returned to the persons submitting the
same as promptly as practicable. The undersigned directs Firstar Trust Company
to issue in exchange for the Christiana Common Stock subject hereto the
certificates representing the EVI Common Stock and a check for the Cash
Consideration into which such EVI Common Stock will be converted in the Merger
in the name(s) of the registered owner(s) of the shares of Christiana Common
Stock subject hereto, unless otherwise indicated under the "Election to Purchase
C2, Inc. Shares" and/or "Special Issuance Instructions" boxes herein. The
undersigned directs Firstar Trust Company, unless otherwise indicated under the
"Election to Purchase C2, Inc. Shares" and/or "Special Delivery Instructions"
boxes herein, to mail such certificates and check to the undersigned at the
address shown above.
4. Receipt of Checks and EVI Common Stock. As soon as possible after
the date of the Merger, but no later than 30 days thereafter (the "Payment
Date"), the parties to the Merger Agreement shall calculate and agree upon the
Cash Consideration (anticipated to be approximately $3.50 per share of
Christiana Common Stock based upon the terms of the Merger Agreement as
described more fully on the cover page of the Joint Proxy Statement/Prospectus)
and the Contingent Cash Consideration (approximately $1.92 per share of
Christiana Common Stock, based upon the terms of the Merger Agreement as
described more fully on the cover page of the Joint Proxy Statement/Prospectus).
On the Payment Date, EVI will pay the Cash Consideration due each Christiana
Shareholder to Firstar Trust Company who shall promptly distribute such cash to
each Christiana Shareholder; provided, however, that if the Firstar Trust
Company has authorization from the Christiana Shareholders pursuant to this Form
to apply all or a portion of the Cash Consideration to the purchase of C2 stock,
such cash shall be so applied. Firstar Trust Company shall, following
instructions from the Christiana Shareholders, either transmit such funds to C2
to purchase C2 shares or transmit such funds to the Christiana Shareholders. The
Contingent Cash Payment shall be made in about 5 years to the Shareholder at the
address indicated on the first page.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF
THE SHAREHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, PROPERLY INSURED, IS
SUGGESTED.
5. Inadequate Space. If there is insufficient space to list all
certificates being submitted to Firstar Trust Company or to respond to any other
information, please attach a separate sheet hereto.
6. Signatures. The signature (or signatures, in the case of
certificates owned by two or more joint holders) on the Form Letter of
Transmittal should correspond exactly with the name(s) as written on the face of
the certificates unless the shares of Christiana Common Stock described on the
Form Letter of Transmittal have been assigned by the registered holder(s), in
which event the Form Letter of Transmittal should be signed in exactly the same
form as the name of the last transferee endorsed on the certificates or on
accompanying stock powers. In addition, in the event of such assignment, the
certificates must be endorsed or accompanied by appropriate stock powers, signed
exactly as the name(s) of the registered owner(s) appear on the certificate and
such signature(s) must be GUARANTEED as provided in Instruction 9.
-5-
<PAGE>
If the Form Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, officer of a corporation, attorney-in-fact or in any
other representative or fiduciary capacity, the person signing must give such
person's full title in such capacity, and appropriate evidence of authority to
act in such capacity must be forwarded with the Form Letter of Transmittal. For
a corporation, appropriate evidence of authority of an officer would include a
certified board resolution, a form of which is included herewith.
If shares of Christiana Common Stock are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate Form Letters of Transmittal as there are different registrations
of certificates.
7. Checks and New Certificates in Same Name. If checks or certificates
representing EVI Common Stock are to be payable to the order of or registered in
exactly the same name that appears on the certificates representing shares of
Christiana Common Stock being submitted herewith, the shareholder will not be
required to endorse the old certificates or to make payment of transfer taxes.
8. Checks and New Certificates in Different Names. If checks or stock
certificates representing EVI Common Stock are to be payable to the order of or
registered in other than exactly the name that appears on the certificates
submitted herewith, the certificates submitted must be endorsed, or accompanied
by appropriate, signed stock powers, and the SIGNATURE GUARANTEED by a member of
a national securities exchange or of the National Association of Securities
Dealers, Inc. ("NASD") or by a commercial bank or trust company in the United
States. Additionally, in such case all requisite stock transfer tax stamps must
be affixed to the certificates submitted.
9. Lost Certificates. If a holder is not able to locate his
certificates representing shares of Christiana Common Stock, he should contact
Christiana for advice on the procedure to be followed to obtain replacement
certificates. Such holder should note that it may take in excess of two weeks to
obtain such replacement certificates.
10. Non-United States Residents. Non-United States residents purchasing
shares of C2 must verify by proper execution of the statement made in the
signature box entitled "To Be Executed Only By Non-United States Residents".
11. Important Tax Information. Federal income tax law requires that
each holder of Christiana Common Stock certify to the Exchange Agent such
holder's correct Taxpayer Identification Number ("TIN") and to indicate that the
holder is not subject to backup withholding. If such holder is an individual,
the TIN is his or her social security number. Payments that are made to such
holder with respect to such Cash Consideration are subject to backup withholding
if such holder fails to make such certification on the enclosed Substitute Form
W-9.
If backup withholding applies, the Exchange Agent is required to
withhold 31% on payments for Christiana Common Stock made to the holder pursuant
to the Merger. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If backup withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service. Certain holders
(including, among others, all corporations and certain foreign individuals) are
exempt from the backup withholding and reporting requirements. In order for a
holder who is a foreign individual to qualify as an exempt recipient, such
holder must submit a statement on the appropriate form, signed under penalties
of perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Exchange Agent.
If the holder has not been issued a TIN or intends to apply for a TIN
in the near future, the holder should write "Applied For" in the space for the
TIN. If the Exchange Agent is not provided with a TIN before the effective time
of the Merger, the Exchange Agent will withhold 31% on all payments for any
Christiana Common Stock made to the holder pursuant to the Merger.
12. Miscellaneous. A single check or a single stock certificate will be
issued for all shares subject to each Form Letter of Transmittal unless written
instructions to the contrary are attached hereto.
All questions with respect to this Form Letter of Transmittal, these
Instructions and the Election (including, without limitation, questions relating
to the timeliness or effectiveness of revocation of any Election and
computations as to proration) will be determined by Firstar Trust Company in
accordance with the terms of the Merger Agreement and C2 Prospectus.
Additional copies of this Form Letter of Transmittal may be obtained
from Firstar Trust Company.
-6-
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and all references to our Firm) included in or made a part of this
Registration Statement.
/s/ ARTHUR ANDERSEN
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 240,100
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 240,100
<CURRENT-LIABILITIES> 240,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 100
<TOTAL-LIABILITY-AND-EQUITY> 240,100
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
