As filed with the Securities and Exchange Commission on February 10, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
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 (Primary Standard (I.R.S. Employer
incorporation) Industrial Identification No.)
Classification Code
Number)
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. [_]
____________________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class Amount To Offering Aggregate Registra-
of Securities Be Price Per Offering tion
To Be Registered Registered Unit Price(1) Fee(1)
Common Stock, $.01
par value . . . . . 5,202,664 $4.00 $20,810,656 $6,139.14
Allocation
Preferences 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.
______________________
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.
5,202,664 Shares Subject to Completion
February 10, 1998
C2, Inc.
Common Stock
_________________________
C2, Inc. (the "Company or C2") is hereby offering 5,202,664 shares of
common stock, $0.01 par value per share ("Common Stock") of the Company
for $4.00 per share (the "Subscription Price"). The Company intends to
use the proceeds of this offering (1) to finance its acquisition of
666.667 membership units ("Membership Units") of Total Logistic Control,
LLC ("TLC"), a wholly-owned subsidiary of Christiana Companies, Inc.
("Christiana"), representing two-thirds of the issued and outstanding
ownership interests in TLC (the "Acquisition") and (2) to raise additional
proceeds for general corporate purposes, including future acquisitions.
Immediately prior to the offering, a wholly-owned subsidiary of EVI, Inc.
("EVI") will merge with and into Christiana (the "Merger"). Holders
("Christiana Shareholders") of common stock, $1.00 par value per share of
Christiana ("Christiana Common stock") will have an allocation preference
in subscribing for their pro rata share of Common Stock offered hereby.
Each Christiana Shareholder will be entitled to purchase one share of
Common Stock for each share of Christiana Common Stock held immediately
prior to the Effective Time (the "Basic Subscription Privilege"). Each
Christiana Shareholder may use cash received as consideration in the
merger to purchase Common Stock. In the event not all shares of Common
Stock are subscribed for pursuant to the Basic Subscription Privilege, TLC
management, Christiana Shareholders who have exercised their Basic
Subscription Privilege in full and the general public, in that order of
allocation preference, will be entitled to subscribe for the remaining
shares of Common Stock ("Additional Subscription Privilege") in the manner
described under "The Offering-Additional Subscription Privilege." The
offering of Common Stock pursuant to this Prospectus is hereinafter
referred to as the "Offering."
Prior to the Offering, there has not been a public market for the
Common Stock. See "Risk Factors - No Prior Public Market; Possible Stock
Price Volatility" and "The Offering" for factors that were considered in
determining the Subscription Price.
The Basic Subscription Privilege and the Additional Subscription
Privilege will be exercisable only during the period commencing on the
date hereof and ending at 5:00 p.m. Central Standard Time, on
______________, 1998 (the "Expiration Date"). See "The Offering" for the
manner in which the Basic Subscription Privilege and the Additional
Subscription Privilege may be exercised. 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.
The Company has applied to have the Common Stock approved for
quotation on the Nasdaq SmallCap Market under the symbol "CTOO."
--------------
The Common Stock offered hereby involves a high degree of risk.
See "Risk Factors" commencing on page 5 hereof.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proceeds to
Price to Public Company(1)
Per Share . . . . . . . $4.00 $4.00
Total . . . . . . . . . $20,810,656 $20,810,656
(1) Before deducting expenses of the offering, payable by the Company,
estimated at $170,000.
The date of this Prospectus is , 1998.
<PAGE>
The TLC Network
[Map with Distribution Centers Identified]
- Refrigerated Distribution Center
- Dry Distribution Center
TLC operates through an extensive network of refrigerated
distribution centers and dry (non-refrigerated) distribution
centers. TLC uses this network to provide its warehousing and
logistic services to its customers.
_________________________
The Company intends to furnish its 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.
<PAGE>
PROSPECTUS SUMMARY
Simultaneous with the closing of the Offering, the Company will
acquire for approximately $10.7 million in cash 666.667 Membership Units
of TLC, representing two-thirds of the issued and outstanding ownership
interests in TLC (sometimes hereinafter referred to as the "Acquisition").
The following summary is qualified in its entirety by the more detailed
information, and the consolidated financial statements of the Company and
TLC and notes thereto, appearing elsewhere in this Prospectus.
The Company
The Company was formed on December 11, 1997 for the purpose of
consummating the Acquisition. The Company intends to utilize any
additional funds raised in the Offering for general corporate purposes,
including future acquisitions.
TLC 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 entities which provide either asset-based or
non-asset based services. Asset-based entities provide services through
their warehousing and fleet operations, while non-asset based entities
provide strategic solutions to, and arrange for, the distribution and
warehousing needs of their customers. TLC believes that its 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. The Company'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 and allows the Company to
capitalize on the growing trend of corporations toward seeking to reduce
costs by outsourcing large components of their logistics function.
TLC's operations are conducted through a network of 13 distribution
warehouses, comprised of an aggregate of 33 million cubic feet of
refrigerated and frozen storage capacity in eight locations and five dry
distribution centers in key markets, primarily in the upper Midwest.
TLC's refrigerated warehousing operations include temperature sensitive
storage services, blast freezing, individual quick freeze services,
vegetable blanching and processing and automated poly bag and bulk
packaging services. 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, assembly, repackaging and just-in-time production supply
services.
TLC believes it is the nation's seventh largest provider of public
refrigerated warehouse services. Two of TLC's refrigerated distribution
centers are located in Rochelle, Illinois; and two are located in
Kalamazoo, Michigan. Other TLC 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 TLC's dry distribution centers
are located in Zeeland, Michigan and the others are located in Kalamazoo,
Michigan; Munster, Indiana; and South Brunswick, New Jersey. TLC's
customers consist primarily of national, regional and local firms engaged
in food processing, consumer product manufacturing, wholesale distribution
and retailing.
Set forth below is certain summary financial data regarding TLC
(amounts in thousands):
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year Ended June 30,
1997 1996 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Revenues $ 23,047 $ 20,480 $84,208 $76,976 $71,029
Earnings from
operations 1,947 1,763 6,311 5,689 7,555
Net earnings 923(2) 503 12,181(3) 1,536 2,562
EBITDA(1) 3,602 3,543 13,143 12,552 14,218
_______________
(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.
(2) Net earnings for the three months ended September 30, 1997 does not reflect the
impact of an income tax provision as TLC was a limited liability company during
this period. For comparative purposes, net earnings for the three month period
ended September 30, 1996 (during which TLC was a C-Corporation) would have been
$812 absent a provision for income taxes of $309.
(3) 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>
TLC 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
TLC. Christiana acquired Wiscold in September of 1992 and Total Logistic
Inc. in January of 1994.
The Company 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. TLC 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.
The Offering
Common Stock offered hereby . . 5,202,664 shares
Minimum Number of Shares of
Common Stock to be
Outstanding after the
Offering . . . . . . . . . . 2,718,000 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
Basic Subscription Privilege . Each Christiana Shareholder will have
a Basic Subscription Privilege to
purchase one share of Common Stock for
every one share of Christiana Common
Stock held immediately prior to the
Effective Time. The Basic
Subscription Privilege is
nontransferable.
Additional Subscription
Privilege . . . . . . . . . . In the event 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). The
Additional Subscription Privilege is
nontransferable.
Subscription Procedure for
Christiana Shareholders . . . The Basic Subscription Privilege may
be exercised by delivery of a properly
completed Proxy and Election Form
provided as part of the Joint Proxy
Statement/Prospectus of Christiana and
EVI (the "Merger Proxy Statement")
delivered to Christiana Shareholders
in connection with the Merger.
Christiana Shareholders wishing to
exercise their Basic Subscription
Privilege will automatically, upon
completion of the Proxy and Election
Form, have the exercise price paid
directly by Firstar Trust Company, as
subscription agent (the "Subscription
Agent") from the cash consideration to
be paid to such Christiana Shareholder
pursuant to the Merger (the "Cash
Consideration"). See "Summary of
Certain Terms of the Merger" for a
description of the Cash Consideration.
However, because the Cash
Consideration per share is expected to
be less than the Subscription Price,
any exercise of the Basic Subscription
Privilege in full will require an
additional cash payment. Christiana
Shareholders wishing to exercise their
Additional Subscription Privilege
shall also do so pursuant to the Proxy
and Election Form. Payment for shares
purchased pursuant to the Additional
Subscription Privilege shall be made
in the form of an additional cash
payment by the subscriber. The Proxy
and Election Form must be delivered to
the Subscription Agent on or before
the Expiration Date. See "The
Offering."
Subscription Procedure
for Others . . . . . . . . . . Others wishing to exercise the
Additional Subscription Privilege
shall do so pursuant to the
Subscription Agreement provided
herewith, together with full payment
for all shares of Common Stock
subscribed for pursuant to the
Additional Subscription Privilege.
The Subscription Agreement must be
delivered to the Subscription Agent on
or before the Effective Time.
Proration . . . . . . . . . . . In the event of a proration of shares
of Common Stock to persons exercising
the Additional Subscription Privilege,
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 Offering expenses, of approximately
$20,640,656 million. Approximately
$10.7 million of the proceeds will be
used to fund the Acquisition, with the
remainder, if any, being used for
general corporate purposes, including
future acquisitions.
Listing . . . . . . . . . . . . The Company has applied for listing on
the Nasdaq SmallCap Market under the
symbol "CTOO."
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.
________________________
(1) Sheldon B. Lubar, David J. Lubar and members of the Lubar family
(collectively, the "Lubar Family") have 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 Privilege in full to ensure that the net proceeds of
the Offering to the Company (after deducting for expenses estimated
to be $170,000) will be at least $10,666,667 which will allow the
Company to have sufficient funds to complete the Acquisition.
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; ability to service its debt;
changes in availability, cost and terms of financing; oversupply of
warehousing space; changes in operating expenses; indemnification
obligations; 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
While the Company intends to make additional acquisitions of
companies that are within TLC's general industry or unrelated thereto, in
the foreseeable future the Company's only non-cash asset will be its
ownership interest in TLC.
If, for any reason, TLC's business of providing warehousing and
logistic services ceases to be a preferred method of outsourcing these
functions, or if new technological methods of food preservation become
available and widely utilized, TLC's business could be adversely affected.
A number of TLC's facilities depend, to a large extent, upon one or a
small number of customers or commodities. During fiscal 1997, 10 of TLC's
customers accounted for 47% of TLC's total revenues. An interruption or
reduction in the business received by such facilities from such customers
or a decline in the demand for such commodities may result in a decrease
in the sales at such facilities and 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
Each of TLC's individual business segments is highly fragmented and
competitive with significant competition from local and regional companies
and national companies which 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 generally
varies by local market and is characterized by low barriers to entry since
any competitor able to obtain financing may build a warehouse facility.
Companies that compete in the warehousing market include Americold
Corporation, United Refrigerated Services, Inc., Millard Refrigerated
Services, Christian Salvesen, Inc. and KLLM Transfer Services in the
refrigerated warehousing sector and Exel Logistics and many regional
operators and real estate developers in the dry warehousing sector.
Competition in the third-party logistic services sector includes Menlo
Logistics, Schneider Logistics, Inc., Caliber Logistics and Ryder
Dedicated Logistics. In the transportation market, TLC's competitors
include Schneider National, J.B. Hunt, M.S. Carriers, CR England and a
substantial number of local and regional operators. Additionally, TLC's
customers, many of which have substantially greater resources than TLC,
may divert business from TLC by building their own warehouse facilities or
establishing their own fleet operations. To the extent there is a
proliferation of competition which leads to excess warehousing capacity,
it will likely have a depressing effect on the pricing of warehousing, a
function which, in fiscal 1997, accounted for approximately 58% of TLC's
business. See "Business-Competition; Services, Sales and Customers."
Substantial Leverage; Deficit of Earnings to Fixed Charges
Pursuant to the Merger and prior to the Effective Time, TLC is
required to pay to Christiana a distribution in the amount of $20 million
(the "TLC Dividend") and to pay to Christiana in full 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. To finance these obligations TLC will borrow $23 million under
its revolving credit facility. After such borrowing, TLC will have
approximately $6 million of available borrowing capacity under its
revolving credit facility. As a result, TLC, as well as the Company on a
pro forma basis, will be highly leveraged. The Company's pro forma total
funded debt to total capitalization at September 30, 1997 is 67% assuming
the maximum number of shares are sold. 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, either through acquisitions or
capital leases, or for other purposes.
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, 1997, this results in the
Company's earnings being insufficient to cover fixed charges by
approximately $79,000, principally as a result of significant interest
charges on the debt to be incurred in connection with the financing of the
TLC Dividend. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In addition, the Company's Pro
Forma Income Statement reflects a loss of $888,000 for the year ended June
30, 1997 and a loss of $23,000 for the three months ended September 30,
1997. See "Pro Forma Summary Combined Financial Data."
The extent to which TLC is leveraged could have consequences to the
holders of Common Stock, including (a) impairment of TLC's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions or other purposes; (b) 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;
(c) vulnerability of TLC to changes in general economic conditions; and
(d) limitations on TLC's ability to capitalize on significant business
opportunities and to respond to competition. In addition, if TLC
experiences losses, the Company may decide to contribute some or all of
the excess proceeds of this Offering to TLC to fund such operating losses.
To the extent of such a contribution, the proceeds of this Offering in
excess of the amount necessary to finance the Acquisition would be
unavailable for future acquisitions.
TLC will have substantial payment obligations with respect to its
indebtedness. No assurance can be given that TLC will be able to generate
sufficient cash flow from operations to meet its debt service obligations.
TLC anticipates, however, that the level of cash flow from operations will
be sufficient to cover all interest payments, principal payments, working
capital requirements and capital expenditure needs for the foreseeable
future.
If for any reason TLC were unable to meet its debt service
obligations, it would be in default under the terms of its indebtedness.
In the event of such a default, the financial institutions holding such
indebtedness could elect to declare all such indebtedness immediately due
and payable, including accrued and unpaid interest, and to terminate their
commitments (if any) with respect to funding obligations under such
indebtedness. In addition, such holders could proceed against their
collateral (if any). Any such default would have a significant adverse
effect on the market value and marketability of the Common Stock.
Assumed Liabilities and Indemnification Obligations of the Company and TLC
Under the Purchase Agreement pursuant to which the Company has agreed
to purchase 666.667 Membership Units of TLC (the "Purchase Agreement"),
the Company will assume, pay and discharge when due all liabilities, known
or unknown, fixed or contingent (including all environmental liabilities)
("Liabilities") to which EVI, Christiana or any of its current and
historical subsidiaries, predecessors and affiliates (collectively,
"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 (such Liabilities being
hereinafter referred to as 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 historical
businesses, operations or assets of TLC ("TLC Historic Business").
The Purchase Agreement also provides that the Company and TLC,
jointly and severally, will indemnify EVI, Christiana and their affiliates
(the "EVI Indemnified Parties") from and against any and all Liabilities
to which any EVI Indemnified Party becomes subject that are based upon,
arise out of, or relate to, any breach of the Purchase Agreement by the
Company or TLC; any acts or omissions of Christiana or any of its
affiliates on or before the Effective Time; the Assumed Liabilities; any
taxes resulting from the transactions contemplated by the Purchase
Agreement other than any tax Liability for income of EVI attributable to
Christiana under the equity method of accounting either before or after
the Effective Time, and any taxes as a result of the Merger subsequently
being determined to be taxable (the Merger is intended to qualify as a
tax-free reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code") by reason of
Section 368(a)(2)(E) of the Code); 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 Affiliate;
and certain other Liabilities. If the Liability subject to such
indemnification provisions relates to the TLC Historic Business, TLC, as
between the Company and TLC, will be primarily responsible for the payment
of any such Liability and the defense of any indemnification claim. If
TLC does not defend or pay such obligation, the Company will be
responsible for such Liability and the defense of any such claim. If the
Liability or claim relates primarily to a matter other than the TLC
Historic Business, the Company, as between the Company and TLC, will be
primarily responsible, with TLC backing up the Company's indemnity
obligation.
Notwithstanding the foregoing, however, the Purchase Agreement
provides that with respect to a Liability or claim relating to a matter
other than the TLC Historic Business, the costs of defense and payment of
the Liability shall be the obligation of EVI to the extent and only to the
extent of the $10 million of cash (the "Holdback") withheld, pursuant to
the Merger Agreement from payment to Christiana Shareholders for a period
of five (5) years from the Effective Time to pay for any items for which
any EVI Indemnified Party is entitled to indemnification under the
Purchase Agreement. Once the Holdback is exhausted or paid to Christiana
Shareholders pursuant to the terms of the Merger Agreement, EVI shall have
no obligation to pay such amounts and the Company and TLC will continue to
be responsible for the indemnity obligations described herein. In
addition, neither the Company nor TLC will be obligated to indemnify the
EVI Indemnified Parties for amounts which are covered and paid by
insurance of the EVI Indemnified Parties (excluding deductibles or
self-insured retentions).
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 the Company 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) the Company 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 the Company or of all of the Common Stock.
The obligations of the Company under the Purchase Agreement are
secured by all of the Company's ownership interest in TLC. Any
substantial claims made by EVI, 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 EVI Indemnified Parties or which are in excess of the Holdback may
have a material adverse effect on the Company's financial condition and
results of operations and, if the Company were unable to satisfy its
obligations under the Assumed Liabilities and indemnification provisions
of the Purchase Agreement, could result in the loss of the Company's
ownership interest in TLC.
Restrictions on Actions of TLC Under Operating Agreement; Transfer
Restrictions and Christiana Put and Participation Rights
The Operating Agreement to be entered into as of the Effective Time
between the Company and Christiana (the "Operating Agreement") restricts
the Company's control of TLC. The Operating Agreement provides that the
management of TLC shall be vested in a Board of Managers which shall
consists of six initial members. Each Manager is elected by the vote or
written consent of the members (currently the Company and Christiana) (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. Christiana, a wholly-owned
subsidiary of EVI that will be unaffiliated with the Company and beyond
its control (at the Effective Time), shall have the power to appoint two
members of the Board of Managers. Consequently, whenever unanimous action
is required, the Company will not have the means to assure unanimous
consent.
The Operating Agreement also provides that the Board of Managers may
not cause TLC to take certain specified actions without the prior approval
of the Members by unanimous consent. As a result of the foregoing, the
Company may not take certain actions relating to TLC without the prior
written consent of Christiana including (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; (viii) 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); (ix) 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; (x) any
amendment to the Operating Agreement or the Certificate of Organization;
and (xi) any other matter for which approval of Members is required under
the Delaware Limited Liability Company Act. See "The Operating
Agreement."
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 and Christiana may effect a
Transfer of 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. See "The Operating
Agreement." In addition, the Purchase Agreement provides that neither the
Company nor TLC may transfer, directly or indirectly, a majority of the
Company's or TLC's assets to any person or entity unless the acquiring
person or entity expressly assumes the obligations of the Company or TLC,
as the case may be, under the Purchase Agreement (See "- Assumed
Liabilities and Indemnification Obligations of the Company and TLC" above)
and has a net worth, on a pro forma basis after giving effect to the
acquisition equal to or greater than the Company or TLC, as the case may
be, on a consolidated basis. See "The Purchase Agreement."
The Purchase Agreement also provides that at any time during the one
year period following the fifth anniversary of the Effective Time,
Christiana will have the option (but not the obligation) to sell to the
Company or TLC, at Christiana's option, and the Company 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, payable in cash within 60 days of Christiana providing notice of
its intent to exercise this option.
In the event of a proposed merger, consolidation or share exchange
involving TLC or if the Company proposes to transfer or sell all of its
interest in TLC to an unrelated third party ("Third Party") in one or more
transactions, Christiana will have the right ("Tag Along Right") to
participate in such sale with respect to its Membership Units in TLC for
the same equivalent consideration per equivalent Membership Unit and
otherwise on the same terms as the Company transfers its Membership Units
in TLC. The Company is obligated to provide notice to Christiana of any
circumstances which gives rise to the Tag Along Right and if Christiana
exercises its Tag Along Right in the manner set forth in the Purchase
Agreement it will be obligated to sell its Membership Units upon
substantially the same terms and conditions as the Company transfers its
Membership Interests in TLC.
Availability and Integration of Potential Future Acquisitions
The Company's strategy provides that a substantial part of its 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.
There can be no assurance that the Company or TLC will be able to identify
suitable acquisition candidates or, if identified, negotiate successfully
their acquisition. If the Company or TLC is successful in identifying and
negotiating suitable acquisitions, there can be no assurance that any debt
or equity financing necessary to complete such acquisition can be arranged
on terms satisfactory to the Company or TLC, as the case may be, or that
such financing will not increase the Company's leverage or result in
additional dilution to existing 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.
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. Thus, as TLC
expands, it will likely be required to expand its fleet of trucks and
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, which may curtail the ability of TLC
and Contract Carriers to expand the size of their fleets. This shortage
may also require TLC and Contract Carriers to increase drivers'
compensation, thereby increasing transportation costs to TLC. If TLC were
unable to successfully expand its own fleet and secure additional local
Contract Carrier capacity to handle the transportation needs of its
customers or had to increase the amount paid for transportation services,
TLC's results of operations, and accordingly, the Company's results of
operations, could be adversely affected.
Possible Effect of Economic Developments; Geographic Concentration
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 are economic factors over which TLC has little or no
control. Increased operating expenses incurred by Contract Carriers,
together with any internal increases in the cost of TLC's fleet of trucks,
can be expected to result in higher transportation operating costs for
TLC. TLC's operating margins would be adversely affected if it were
unable to pass through to its customers the full amount of increased
operating costs. Economic recession or a downturn in customers' business
cycles also could have an adverse effect on TLC's results of operations
and TLC's growth by reducing demand for TLC's services.
TLC's operations and customers are currently located primarily in
Wisconsin, Illinois and Michigan. Therefore, TLC's results of operations,
and accordingly, the Company's results of operations, are susceptible to
downturns in the general economy in this geographic region.
Dependence on Management
The Company and TLC are, and for the foreseeable future will be,
dependent on the services of their respective 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 does not maintain insurance on the life of any of
its executive officers.
The loss of any of these individuals could adversely affect the
operations of the Company and TLC. 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, from time to time, participated
individually, and as a group, in acquisitions of, and investments in,
other business entities independent from Christiana. The Company's Board
of Directors have adopted guidelines which generally require that before
independently pursuing an acquisition opportunity, the opportunity will be
presented to the Board of Directors. The decision as to whether to pursue
the opportunity will be made by a majority of the members of the Board who
are not otherwise potentially interested in the opportunity.
Concentration of Ownership of Common Stock
Following the Offering, the Lubar Family and the other officers and
directors of the Company will beneficially own approximately 63% of the
outstanding shares of Common Stock assuming such individuals exercise
their Basic Subscription Privilege in full. In the event the entire Basic
Subscription Privilege is not exercised in full by Christiana
Shareholders, it is likely that the Lubar Family and the other directors
and officers of the Company will beneficially own an even higher percentage
of outstanding shares of Common Stock.
Accordingly, the Lubar Family and the other directors and officers of
the Company will have the ability to influence significantly the election
of directors and most corporate actions. See "Principal Shareholders."
No Prior Public Market; Possible Stock Price Volatility
Prior to this Offering, there has been no public market for the
Common Stock, and there can be no assurance that an active trading market
for the Common Stock will develop or be sustained following this Offering.
The initial public offering price for the Common Stock has been determined
at the discretion of the Company's Board of Directors and bears no
relationship to the price at which the Common Stock will trade after this
Offering. There can be no assurance that future market prices of the
Common Stock will not be lower than the initial public offering price.
After this Offering, the market price of the Common Stock may be
subject to significant fluctuations in response to such factors as
variations in the annual or quarterly financial results of the Company or
its competitors, changes by financial research analysts in their estimates
of the earnings of the Company or other companies in, or with ownership
interests in, the warehousing and transportation industries, conditions in
the economy in general or in the Company's or TLC's industry in
particular, unfavorable publicity or changes in applicable laws and
regulations (or judicial or administrative interpretations thereof)
affecting the Company, TLC or the warehousing and transportation industry.
Dilution
Purchasers of shares of Common Stock in this Offering will not incur
dilution in the net tangible book value of their purchased shares of
Common Stock in the Offering. Investors however may experience dilution
as a result of the Acquisition to the extent of intangible assets
purchased in the Acquisition and as a result of shares of Common Stock
being issued in future business acquisitions.
Dividends from TLC
The Operating Agreement to be entered into at the Closing between
Christiana and the Company (the "Operating Agreement") will govern the
relationship between Christiana and the Company 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
(which will be passed through to each Member since TLC, as a limited
liability company, will be taxed as a partnership), no distributions from
TLC will be made to the Members without the consent of both Christiana and
the Company. For the foreseeable future, the Company and Christiana do
not anticipate causing TLC to pay any cash distributions (other than to
cover the tax liabilities of the Members with respect to federal, state
and local income tax liabilities resulting from the Members' ownership
interest in TLC). TLC will pay to the Company an annual management fee of
$250,000. In addition, the new credit agreement to be entered into by TLC
as of the Effective Time will prohibit TLC from declaring or paying
dividends, subject to limited exceptions. See "Dividend Policy" below.
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 $170,000 will be approximately $20,641,000. 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 after expenses. 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 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 recently 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, EVI will acquire Christiana through a merger
of Christiana Acquisition Co., a wholly owned subsidiary of EVI ("Sub"),
with and into Christiana.
Each outstanding share of Christiana Common Stock will be converted
in the Merger into a right to receive a pro rata portion of
(i) approximately .74193 of a share of EVI Common Stock subject to certain
adjustments based on the number of shares of Christiana Common Stock
outstanding at the Effective Time; (ii) cash of approximately $3.50 per
share of Christiana Common Stock subject to adjustment based on the amount
of certain Christiana liabilities existing as of the Effective Time (the
"Cash Consideration"); and (iii) a contingent cash payment of
approximately $1.92 payable to the shareholders of record following the
fifth anniversary of the Effective Time subject to any indemnity claims by
EVI under the Merger Agreement (the "Contingent Cash Consideration").
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. The "Christiana Net Cash" will be equal to (i) the sum of
(A) $20,000,000 obtained in connection with the TLC Dividend, (B)
$10,666,667 to be obtained by Christiana in connection with the
Acquisition, (C) $3,000,000 obtained in connection with payment in full by
TLC of the entire principal amount of the Wiscold Note, (D) the cash
received from the exercise of stock options and (E) all of the cash on
hand of Christiana as of the Effective Time minus (ii) the sum of (A) an
amount of cash necessary to pay the Assumed 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 of Christiana and (B) $10,000,000 (the
initial amount of the Contingent Cash). Total Cash Consideration and Cash
Consideration per share of Christiana Common Stock held prior to the
Effective Time, will be determined definitively within 30 days from the
Effective Time.
Christiana Shareholders purchasing shares of Common Stock pursuant to
the Basic Subscription Privilege, will upon proper completion and delivery
of the Proxy and Election Form to the Subscription Agent (which will also
act as exchange agent in the Merger) authorize the Subscription Agent to
apply the Cash Consideration to be received in the Merger toward payment
for such shares of Common Stock. See "The Offering - How to Exercise
Basic Subscription Privilege and Additional Subscription Privilege."
However, because the Cash Consideration per share of Christiana Common
Stock is expected to be less than the Subscription Price per share of
Common Stock offered hereby, any exercise of the Basic Subscription
Privilege in full will require an additional cash payment.
CAPITALIZATION
The following table sets forth the combined capitalization of the
Company as of September 30, 1997 (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
5,202,664 shares of Common Stock. 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."
September 30, 1997
Pro Forma As Adjusted
(Amounts in thousands, except
per share data)
Short-term debt:
Short-term obligations(1) $ 944,000 $ 944,000
Current maturities of long-term
debt(1) 1,245,000 1,245,000
Liability for purchase of 666.667
Membership Units of Total Logistic
Control, LLC 10,667,000 --
Long-term debt, net of current
maturities(1) 59,415,000 59,415,000
Minotiry interest 7,130,000 7,130,000
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; 5,202,689 shares issued and
outstanding, as adjusted(2) -- 52,000
Additional paid-in capital -- 20,589,000
Retained earnings 2,156,000 2,156,000
---------- ----------
Total shareholders' equity 2,156,000 22,797,000
---------- ----------
Total capitalization including
minority interest $81,557,000 $91,531,000
========== ==========
(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) 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 _____ 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."
COMPANY FINANCIAL DATA
Set forth below is the 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 set
forth below reflects only the initial capitalization of the Company
pursuant to a $100 investment by Sheldon B. Lubar.
C2, Inc.
(A Newly-Formed Holding Company)
BALANCE SHEET
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 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
---
Total Shareholder's Equity 100
---
Total Liabilities and Shareholder's Equity $100
===
PRO FORMA SUMMARY COMBINED FINANCIAL DATA
Set forth below is unaudited pro forma summary combined financial
statements for the year ended June 30, 1997 and for the three months ended
September 30, 1997 and as of September 30, 1997.
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 earnings for the year
ended June 30, 1997 and the three months ended September 30, 1997 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,
1996: (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.
<TABLE>
PRO FORMA SUMMARY COMBINED BALANCE SHEET
<CAPTION>
As of September 30, 1997
Historical Pro Forma Pro Forma Offering As
TLC Adjustments(1) C2, Inc. Adjustments Adjusted
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $578,000 $ - $578,000 $20,641,000 (8) $10,552,000
(10,667,000)(9)
Other current assets 11,984,000 134,000 (4) 12,118,000 12,118,000
Total long-term assets 80,445,000 2,164,000 (4) 82,609,000 82,609,000
---------- --------- ---------- ---------- -----------
Total assets $93,007,000 $2,298,000 $95,305,000 $9,974,000 $105,279,000
========== ========= ========== ========== ===========
Total current liabilities $11,178,000 $2,121,000 (4) $13,299,000 $13,299,000
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 -- 1,437,000 (6) 1,437,000 1,437,000
Long-term debt 36,415,000 20,000,000 (3) 59,415,000 59,415,000
3,000,000 (2)
Other liabilities 356,000 845,000 (4) 1,201,000 1,201,000
---------- ---------- ---------- ---------- ----------
Total liabilities 50,949,000 35,070,000 86,019,000 (10,667,000) 75,352,000
Minority interest -- 7,130,000 (5) 7,130,000 7,130,000
Preferred stock -- -- -- --
Common Stock -- -- -- 52,000 (8) 52,000
Additional paid-in capital -- -- 2,156,000 20,589,000 (8) 20,589,000
Retained earnings
Members' equity 42,058,000 (20,000,000) (3) 2,156,000
(7,130,000) (5)
(668,000) (4)
(1,437,000) (6)
(10,667,000) (7)
---------- ---------- ---------- ---------- -----------
Total shareholders' equity 42,058,000 (39,902,000) 2,156,000 20,641,000 22,797,000
---------- ---------- ---------- ---------- -----------
Total liabilities and
shareholders' equity $93,007,000 $2,298,000 $95,305,000 $9,974,000 $105,279,000
========== ========== ========== ========== ===========
</TABLE>
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:
Prepaids and other assets $ 134,000
Other long-term assets 2,164,000
LIABILITIES:
Accrued liabilities $(2,121,000)
Other long-term liabilities (845,000)
----------
Equity adjustment related to
asset/liability transfer $(668,000)
==========
(5) Represents the establishment of Minority Interest for the one-third
interest in TLC not owned by the Company.
(6) Represents the establishment of a deferred income tax liability
attributed to temporary differences between the financial reporting
basis and tax basis of certain assets and liabilities of TLC.
(7) Represent 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 $170,000.
(9) Represents the payment of the purchase price due to Christiana in
connection with the Acquisition.
<PAGE>
PRO FORMA SUMMARY COMBINED STATEMENTS OF EARNINGS
For the Year Ended June 30, 1997
Historical Pro Forma Pro Forma
TLC Adjustments C2, Inc.
Revenues $84,208,000 - $84,208,000
Operating expenses 77,897,000 1,490,000 (1) 79,387,000
Interest expense 3,216,000 1,934,000 (2) 5,150,000
Other (income) expense,
net 1,390,000 - 1,390,000
Earnings (loss) before
minority interest and
income taxes 1,705,000 (3,424,000) (1,719,000)
Provision for (benefit
from) income taxes 695,000 (1,287,000)(3) (592,000)
Adjustment of deferred
income taxes resulting
from a change in tax
status 11,171,000 (11,171,000)(4) -
Minority interest income - (239,000)(5) (239,000)
Net earnings (loss) 12,181,000 (13,069,000) (888,000)
Primary and fully diluted
net loss per share of
common stock $ (0.17)
For the Three Months Ended September 30, 1997
Historical Pro Forma Pro Forma
TLC Adjustments C2, Inc.
Revenues $23,047,000 - $23,047,000
Operating expenses 21,100,000 373,000 (1) 21,473,000
Interest expense 773,000 484,000 (2) 1,257,000
Other (income) expense,
net 251,000 - 251,000
Earnings before minority
interest and income
taxes 923,000 (857,000) 66,000
Benefit from income taxes - (16,000)(3) (16,000)
Minority interest expense - 105,000 (5) 105,000
Net earnings (loss) 923,000 (946,000) (23,000)
Primary and fully diluted
net earnings per share
of common stock $ -
NOTES TO PRO FORMA SUMMARY
COMBINED STATEMENTS OF EARNINGS
(1) Represents additional operating expenses resulting from corporate
expenses, including officers' salaries, professional, legal,
occupancy, public company and other corporate related expenses.
(2) Represents the additional interest expense on the $20 million of
additional debt incurred immediately prior to the Acquisition coupled
with an increase in interest expense related to higher borrowing
rates on the new revolving credit facility as follows:
For the Three
For the Year Months Ended
Ended September 30,
June 30, 1997 1997
$20 million draw on TLC's
revolving credit facility,
interest at an average rate
of LIBOR + 225 basis points $1,572,000 $ 393,000
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 362,000 91,000
---------- ---------
$1,934,000 $484,000
(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 the elimination of the Adjustment of Deferred Income Taxes
Resulting from a Change in Tax Status. This non-recurring charge to
earnings incurred during the year ended June 30, 1997, pertains to
the elimination of the net deferred income tax liability resulting
from TLC's conversion from a taxable C-Corporation to a limited
liability company.
(5) Represents 33.3% of net earnings allocable to TLC's minority interest
owner.
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, 1997.
The historical financial data as of and for each of the three years ended
June 30, 1997 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 each of the two years ended June
30, 1994 have not been audited. In the opinion of TLC, the historical
financial data as of and for the two years ended June 30, 1994 include 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>
<CAPTION>
Selected Historical TLC Financial Data
(Amounts in thousands, except per membership unit data)
Three months ended
September 30 For the Year Ended June 30
1997 1996 1997 1996 1995 1994(2) 1993(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Earnings Data:
Revenues $23,047 $20,480 $84,208 $76,976 $71,029 $42,355 $15,190
Earnings from operations 1,947 1,763 6,311 5,689 7,555 4,611 3,273
Interest expense 773 884 3,216 3,176 3,378 3,003 2,356
Net earnings 923(6) 503 12,181(5) 1,536 2,562 995 585
Net earnings per membership
unit(3) 923 503 12,181 1,536 2,562 995 585
Other Data:
Capital Expenditures 839 801 3,294 17,646 7,552 3,146 8,017
Depreciation and
amortization 1,706 1,847 7,186 6,971 6,684 4,671 2,795
EBITDA(4) 3,602 3,543 13,143 12,552 14,218 9,303 6,097
<CAPTION>
As of September 30 As of June 30
1997 1996 1997 1996 1995 1994(2) 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets $93,007 $97,686 $90,140 $97,923 $88,731 $87,079 $65,417
Total Debt 41,604 48,179 40,394 47,671 42,788 46,035 42,374
Total Member's Equity 42,058 31,783 43,461 31,280 29,744 27,182 15,207
_______________
(1) Effective September 1, 1992, Christiana consummated the acquisition
of Wiscold. The statement of earnings data for fiscal 1993 reflects
only the results of operations subsequent to the date of acquisition.
(2) Effective January 4, 1994, Christiana consummated the acquisition of
Total Logistic Inc. The statement of earnings data 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.
(3) Effective June 30, 1997, Wiscold and Total Logistic Inc. were merged
to form TLC. Earnings per membership unit for periods presented
prior to 1997 are shown as if the units had been outstanding for all
periods presented.
(4) 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.
(5) 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.
(6) Net earnings for the three months ended September 30, 1997 do not
reflect the impact of an income tax provision as TLC was a limited
liability company during this period. For comparative purposes, net
earnings for the three month period ended September 30, 1996 (during
which TLC was a C-Corporation) would have been $812 absent a
provision for income taxes of $309.
</TABLE>
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,
1997, 1996 and 1995 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:
Percentage of Revenues
June 30, Percentage Change
1996 1995
1997 1996 1995 to 1997 to 1996
Revenues 100.0% 100.0% 100.0% 9.4% 8.4%
Warehouse and Logistic
Expenses 84.3% 84.4% 80.1% 9.3% 14.2%
Selling and
Administration 8.2% 8.2% 9.3% 9.4% (3.9)%
Gross Operating Margin 7.5% 7.4% 10.6% 10.9% (24.7)%
EBITDA(1) 15.6% 16.3% 20.0%
_______________
(1) EBITDA is defined as income (loss) before taxes plus fixed charges.
Fixed charges consist of interest expense, depreciation and
amortization and gain or loss 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. EBITDA is a performance measure in the
Company's primary debt financing instrument.
Comparison of Three Months Ended September 30, 1997 to the Three Months
Ended September 30, 1996 for TLC
Total revenue increased $2,567,000 or 12.5% to $23,047,000 for the
three months ended September 30, 1997 compared to the three months ended
September 30, 1996. The increase in revenue was substantially
attributable to the three functional areas of TLC's business,
Transportation, Refrigerated Warehousing and Dry Warehousing.
Transportation operation revenue was up $2,766,000 for the quarter over
the same period last year due primarily to an expanded fleet and strong
demand for freight. Refrigerated Warehousing operations also had an
improved quarter with growth in revenue of $1,536,000 derived primarily
from improved warehouse occupancy levels from new customers and a strong
vegetable crop. Dry Warehousing operations had a decline in revenue for
the quarter of $1,076,000, primarily as a result of the closure at the end
of fiscal 1997 of two dry warehouses located in Atlanta, Georgia and
Sparks, Nevada, and a substantial reduction in occupancy caused by a
change in distribution patterns of a major customer of TLC's Munster,
Indiana facility.
Gross profit for the quarter increased $667,000 or 21.0% to
$3,846,000. Gross profit attributable to Transportation operations for
the quarter increased $785,000, up 403%, primarily as a result of an
expanded transportation fleet and more efficient utilization thereof.
Gross profit for Refrigerated Warehousing operations for the quarter
increased $279,000, up 12% as a result of an increase in capacity
utilization and higher processing revenue from the Beaver Dam Logistic
Center. Gross profit for Dry Warehousing operations for the quarter
decreased $449,000 to $276,000, down 61.9%, due to the closure of two
facilities and a substantial decline in utilization in the Munster,
Indiana facility.
Selling, general and administrative expenses, which includes
marketing and advertising expenses, increased 34.1% or $483,000 for the
quarter over the same period for the prior year. A substantial portion of
the increased expense relates to sales and marketing expense designed to
develop and grow the logistics business
Earnings from operations for the quarter increased $184,000 or 10.4%
to $1,947,000 compared to $1,763,000 in fiscal 1997. The increased margin
from Transportation operations was the primary reason for this
improvement.
Interest expense was reduced $111,000 for the quarter ended September
30, 1997 compared to the same period in 1996, due to both lower rates and
lower borrowings.
Pre-tax earnings for the quarter increased 13.7% to $923,000 compared
to $812,000 for the three months ended September 30, 1996. Stronger
capacity utilization and efficiencies in Refrigerated warehousing and
Transportation operations contributed primarily to these results. No
provision for income taxes was recorded for the three months ended
September 30, 1997 because TLC was a limited liability company for this
period. For the three months ended September 30, 1996, provision for
income taxes was $309,000.
Net earnings increased 83.5% to $923,000 for the three months ended
September 30, 1997 compared to $503,000 for the three month period ended
September 30, 1996.
Comparison of Fiscal 1997 to Fiscal 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 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.
Earnings from operations increased by $622,000 or 10.9% over fiscal
1996. Operating earnings in 1997 were $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 earnings were $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 $5,981,000 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 earnings for 1997 were $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.
Comparison of Fiscal 1996 to Fiscal 1995 for TLC
Total revenue for fiscal 1996 increased $5,947,000 or 8.4% to
$76,976,000 compared to $71,029,000 for fiscal 1995, primarily as a result
of increased warehouse capacity and growth in logistic services. Logistic
services grew in both Transportation operations by $2,282,000 or 9.0% and
International Freight Forwarding operations by $1,210,000 or 65.2%
compared to fiscal 1995.
Gross profit for fiscal year 1996 decreased $2,120,000 or 15.0% to
$12,020,000 compared to $14,140,000 in fiscal 1995, primarily as a result
of reduced vegetable processing volumes and freezing volumes in
Refrigerated warehousing, and start-up costs for high volume distribution
accounts. The balance of reduced gross profit results from higher
transportation costs than historical levels and less than optimal
utilization of equipment.
Fiscal 1996 selling, general and administrative expenses declined
from those reported for fiscal 1995 by $254,000 due to improved cost
controls. Selling, general and administrative expense for 1996 was
$6,331,000 compared to $6,585,000 in fiscal 1995.
TLC's earnings from operations declined by $1,866,000 or 24.7% from
$7,555,000 in fiscal 1995 to $5,689,000 in fiscal 1996. Reduced volume
and profitability attributable to vegetable processing and freezing
operations, along with higher transportation expenses were the principal
factors in the reduction of earnings from operations.
Interest expense for fiscal 1996 was $3,176,000 which was down from
$3,378,000 in fiscal 1995 due to lower borrowing levels in 1996.
Pre-tax profits declined in fiscal 1996 to $2,611,000 from $4,286,000
or 39%, due primarily to the reduction in gross profit.
TLC's effective tax rate in fiscal 1996 increased to 41% from 40% in
fiscal 1995 due to changes in the relative state components of TLC's
earnings. The provision for taxes for fiscal 1996 was $1,075,000 compared
to $1,724,000 in fiscal 1995.
Net earnings for TLC in 1996 were $1,536,000, down $1,026,000 or
40.1% from $2,562,000 in fiscal 1995, primarily as a result of reduced
gross profits in Refrigerated Warehousing, operational inefficiencies in
Transportation operations and the increased effective income tax rate.
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 $9,900,000, 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.
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 $9,294,000 in fiscal 1997
compared to $11,045,000 in fiscal 1996, primarily as a result of (i) a
decrease in accounts payable from fiscal 1996 when TLC was engaged in a
construction project generating significant accounts payable compared to
fiscal 1997 when no similar construction project was in process and
(ii) lower earnings after 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. Net cash
provided from operating activities was $10,180,000 for fiscal 1995.
Capital expenditures of TLC for fiscal 1997, 1996 and 1995 were
$3,294,000, $17,646,000 and $7,522,000, respectively. During fiscal 1996,
TLC expended $11,422,000 on a major expansion of one of its refrigerated
warehouses. TLC anticipates capital expenditures to be approximately
$4,000,000 per year over the next two fiscal years. During fiscal 1997,
TLC evaluated and developed a plan to address the impact of the Year 2000
on its computer systems. The impact of the plan is not expected to be
significant to TLC's ongoing results of operations. As of June 30, 1997,
TLC had no significant capital commitments.
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 and the refinancing of the Wiscold
Note. As of consummation of the Offering, TLC will have approximately $6
million of additional available borrowings under its credit facility.
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.
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
Revolving Loans
Time Period 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 $36,000,000; finance the payment of the TLC Dividend;
finance the repayment of the Wiscold Note; and pay related fees and
expenses. The balance of the facility 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 financial performance of TLC. The
Credit Agreement also contains customary provisions requiring TLC to
reimburse the Banks for certain fees and increased costs.
Loans made under the Credit Agreement may be prepaid in whole or in
part without premium or penalty, except for customary break-funding
charges.
The Credit Agreement contains customary and appropriate
representations and warranties, including without limitation those
relating to due organization and authorization, no conflicts, financial
condition, no material adverse changes, solvency, title to properties,
litigation, payment of taxes, compliance with laws, environmental
liabilities, full disclosure, and accuracy of representations and
warranties in the Merger Documents.
The Credit Agreement also contains customary and appropriate
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 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, and the absence of any default or
potential event of default, and will otherwise be customary and
appropriate for financings of this type.
The Credit Agreement also contains customary affirmative and negative
covenants (including, where appropriate, certain exceptions and baskets
mutually agreed upon), including but not limited to furnishing
information, compliance with environmental laws, and limitations on other
indebtedness, liens, investments, guarantees, dividends, mergers and
acquisitions, sales of assets, nature of business, and affiliate
transactions. The Credit Agreement also 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 are usual and customary,
including without limitation, those relating to: (i) non-payment of
interest, principal or fees payable under the Credit Agreement;
(ii) non-performance of covenants; (iii) cross-default to other material
debt of the Company and its subsidiaries; (iv) bankruptcy or insolvency;
(v) judgments in excess of specified amounts; (vi) impairment of security
interests in collateral; (vii) invalidity of guarantees; (viii) materially
inaccurate or false representations or warranties; and (ix) a change in
control.
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,
including 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 customers consist primarily of national, regional and local
firms engaged in food processing, consumer product manufacturing,
wholesale distribution and retailing. During fiscal 1997, TLC's top 10
customers accounted for approximately 47% of total revenues. TLC serves
approximately 1,250 customers.
TLC believes it is the nation's seventh largest provider of public
refrigerated warehouse services. 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. On the asset side, these item
consist primarily of mortgage notes receivable derived from certain
condominium sales by Christiana which, as of December 31, 1997, had an
aggregate principal amount outstanding of $1,273,000 (accruing interest at
rates ranging from 6.875% to 9%). 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 $2,966,000.
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. 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. Where others are selling individual services
such as warehousing, transportation, or freight forwarding, TLC is
providing those services in an integrated fashion, providing supply-chain
solutions to 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.
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, 1997, 1996, and 1995.
<TABLE>
<CAPTION>
Revenues
(Dollars in Millions)
1997 1996 1995
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Refrigerated Warehousing $38 45% $35 45% $34 48%
Dry Warehousing 12 14% 14 18% 11 15%
Transportation 33 39% 28 36% 25 35%
International 3 4% 3 4% 2 3%
Eliminations (2) (2%) (3) (3%) (1) (1%)
Total Revenues $ 84 100% $ 77 100% $ 71 100%
==== ==== ==== ==== ==== ====
</TABLE>
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 the 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 Corporation, 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,
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 735 employees as of December 31, 1997. A
breakdown of the employees by functional area is set forth below:
Function Number of Employees Percentage of Total
Operations 472 64.2%
Transportation 207 28.2%
Administration 46 6.2%
Sales and Marketing 10 1.4%
--- ----
Total 735 100%
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.
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.
Properties
As of December 31, 1997, TLC owned or leased thirteen facilities in
five states. Of this total, eight are refrigerated/frozen with the
balance being dry facilities. The refrigerated facilities are operated
through eight public refrigerated warehouses located in Wisconsin (3),
Michigan (3), and Illinois (2). Other than Wisconsin Cold Storage,
located in downtown Milwaukee, 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.
The Wisconsin Cold Storage facility is scheduled to close by the end
of February 1998. The property is currently offered for sale.
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.
REFRIGERATED WAREHOUSE FACILITIES
Total Storage
Space (cubic
feet in Type of
Facility Location millions) Facility
Rochelle Logistic Rochelle, Illinois 10.6 Distribution
Center I #1
Rochelle Logistic Rochelle, Illinois 3.5 Distribution
Center II #2
Beaver Dam Logistic Beaver Dam, 7.2 Distribution/
Center Wisconsin Production
Milwaukee Logistic Wauwatosa, 4.3 Distribution
Center Wisconsin
Holland Logistic Holland, Michigan* 2.1 Distribution/
Center Production
Kalamazoo Logistic Kalamazoo Logistic 3.3 Distribution
Center I #1**
Kalamazoo Logistic Kalamazoo Logistic 2.8 Distribution
Center II #2
Wisconsin Logistic Milwaukee, 1.0 Distribution
Center Wisconsin
----
TOTAL 34.8
====
DRY WAREHOUSE FACILITIES
Total
Storage
Space (sq.
ft. in Type of
Facility Location thousands) Facility
Zeeland Logistic Center I* Zeeland, MI 202 Public
Zeeland Logistic Center II Zeeland, MI 220 Public
Michigan Distr. Center I* Kalamazoo, MI 88 Public
Munster Logistic Center* Munster, IN 125 Public
South Brunswick Logistic South Public
Center* Brunswick, NJ 200
---
TOTAL 835
===
*Leased facility
**Includes 1.8 million cubic feet of dry storage capacity.
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 degrees F to ambient. Rochelle Cold Storage is
strategically located at the intersection of two main line East-West
railroads, the 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.
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 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 200,000 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 degrees F to
+40 degrees 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.
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.
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.
General
The Purchase Agreement provides that, prior to the Effective Time of
the Merger, the Company shall purchase 666.667 Membership Units of TLC for
an aggregate purchase price of $10,666,667. In connection with the
Merger, the Company and TLC agreed to assume the Assumed Liabilities. 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 its 333.333 Membership Unit for $7 million.
In addition, if the Company proposes to sell its interest in TLC to an
unrelated third party, Christiana has the right to participate in such
sale with respect to its 333.333 Membership Units for the same equivalent
consideration per equivalent unit in TLC. It is currently anticipated
that the Acquisition will take place prior to the Effective Time.
Indemnification Obligations
TLC and the Company agreed under the Purchase Agreement, to
indemnify, defend and hold Christiana, EVI and the EVI Indemnified Parties
harmless from and against any and all Liabilities including environmental
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: (i) any breach of
any covenant or agreement of TLC or the Company contained in the Purchase
Agreement or any other agreement contemplated thereby; (ii) the acts or
omissions of Christiana or any Christiana Affiliate on or before the
Effective Time; (iii) 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, (iv) the Assumed
Liabilities; (v) 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; (vi) any and all amounts for which Christiana or EVI
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; (vii) 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; (viii) any settlements or
judgements in any litigation commenced by one or more insurance carriers
against Christiana or EVI on account of claims by TLC or the Company or
any Christiana Affiliate or employees of TLC or the Company or any
Christiana Affiliate; (ix) any and all liabilities incurred by Christiana
or EVI 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; (x) 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;
(xi) 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; (xii) 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; (xiii) any liability relating to
any claim or demand by any stockholder of Christiana or EVI with respect
to the Merger, this Acquisition or the transactions relating thereto; and
(xiv) 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 EVI and the third to be appointed by the two so
appointed. The place of any such arbitration will be in Houston, Texas.
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.
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. 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 consists of six Managers, which includes William T.
Donovan, Bernard J. Duroc-Danner, Ghazi J. Hashem, Sheldon B. Lubar, John
R. Patterson and Gary R. Sarner. See "Management-Executive Officers and
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 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.
THE OFFERING
Basic Subscription Privilege
Christiana Shareholders will have an allocation preference in
subscribing for their pro rata share of Common Stock in the Offering. 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. The
Subscription Price does not reflect an estimate by the Company,
Christiana, Sub or EVI or any of their respective affiliates of the fair
market value of the Company. 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 this
Merger is expected to be less than the Subscription Price per share of
Common Stock, Christiana shareholders wishing to exercise their Basic
Subscription Privileges in full will be required to make an additional
cash payment, as described below under "- How to Exercise Basic
Subscription Privilege and Additional Subscription Privilege." The Lubar
Family 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 Privilege in full to ensure that the
net proceeds of the Offering to the Company (after deducting expenses
estimated to be $170,000) 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 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 Proxy and Election Form 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 Proxy and
Election Form, have the Subscription Price paid on the Effective Time by
the Subscription Agent from the Cash Consideration received from EVI. For
a description of the Cash Consideration, see "Summary of Certain Terms or
the Merger - Cash Consideration to be received in the Merger." Because
the Cash Consideration per share is expected to be less than the
Subscription Price ($3.50 relative to a $4.00 subscription price), any
exercise of the Basic Subscription Privilege in full will require an
additional cash payment for the difference in the form of a check made
payable to "Firstar Trust Company" as Subscription Agent. 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, $3,500 ($3.50 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 required to pay the difference of $500
($4,000 total Subscription Price less the $3,500 paid automatically by the
Subscription Agent) in the form of a check made payable to "Firstar Trust
Company." Christiana Shareholders who exercise their Basic Subscription
Privilege in full, may exercise, pursuant to the Proxy and Election Form,
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 $3.50, any excess amount paid by
Christiana Shareholder will be refunded promptly following the
Determination Date, without interest.
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 Proxy and Election Form 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 PROXY AND ELECTION FORMS, 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 EVI. SUBSCRIBERS WILL NOT HAVE ANY
ALLOCATION PREFERENCE TO REVOKE THE EXERCISE OF THEIR ALLOCATION
PREFERENCES OR THEIR ADDITIONAL SUBSCRIPTION PRIVILEGE AFTER DELIVERY OF
THEIR PROXY AND ELECTION FORMS AND/OR SUBSCRIPTION AGREEMENTS TO THE
SUBSCRIPTION AGENT.
THE METHOD OF DELIVERY OF PROXY AND ELECTION FORMS, 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, EVI, THE SUBSCRIPTION AGENT, OR ANY AFFILIATES
THEREOF. IF SENT BY MAIL, IT IS RECOMMENDED THAT THE ELECTION FORM 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 Proxy and Election Form 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 Proxy and Election Forms
and/or Subscription Agreements and submit them with the applicable
payment.
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 Proxy and
Election Forms, 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 Proxy and Election Forms 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.
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 January 1, 1998.
Each person's respective background is described following the table.
NAME AGE POSITION
William T. Donovan 45 Chairman and Director
David J. Lubar 43 President and Director
Oyvind Solvang 38 Vice President
David E. Beckwith 69 Secretary
Nicholas F. Brady 67 Director
Sheldon B. Lubar 68 Director
Albert O. Nicholas 66 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 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, EVI,
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 Managers of TLC
The following table contains the name, age and position with TLC of
each executive officer as of January 1, 1998. Each person's respective
background is described following the table.
NAME AGE POSITION
Gary R. Sarner 51 Chairman and Director
John R. Patterson 50 President, Chief Executive
Officer and Director
Brian L. Brink 37 Vice President and Chief
Financial Officer
Sheldon B. Lubar 68 Director
William T. Donovan 45 Director
Bernard J. 44 Director
Duroc-Danner
Ghazi J. Hashem 63 Director
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.
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 EVI in May 1987 to initiate the
start-up of EVI's oilfield service and equipment business. He was elected
President of EVI in January 1990 and Chief Executive Officer in May 1990.
In prior years, Mr. Duroc-Danner was with Arthur D. Little Inc., a
management consulting firm in Cambridge, Massachusetts. Mr. Duroc-Danner
is a director of Parker Drilling Company and Dailey Petroleum Services
Corp.
Ghazi J. Hashem was elected Senior Vice President, Technical
Operations of EVI in May 1994 and Vice President, Technical Operations in
November 1992. Mr. Hashem previously served as Chairman of the Board of
Grant Prideco, Inc., a wholly owned subsidiary of EVI, from May 1992 to
November 1992 and as president of Grant Prideco from April 1984 to May
1992.
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 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 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 did not pay any of its executive officers
compensation during 1997. The Company anticipates that during 1998 its
most highly compensated officers will be William T. Donovan, David J.
Lubar and Oyvind Solvang.
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 ______ shares
of Common Stock at a per share exercise price equal to the $4.00 per
share. Each new Independent Director joining the Board of Directors after
the Offering will receive an initial non-qualified stock option to
purchase _______ shares of Common Stock exercisable at the closing sale
price of the Common Stock on the date of grant. 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. The 1998 Plan also
provides that, beginning with the 1998 annual shareholders meeting and for
each annual meeting thereafter, each then serving and continuing
Independent Director will receive an additional non-qualified stock option
to purchase ______ shares of Common Stock at an exercise price equal to
the closing sale price of the Common Stock on the date of grant. These
annual option grants will vest in full within six months from the date of
grant. 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.
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) approximately .74193 of a share of EVI Common Stock subject to certain
adjustments based on the number of shares of Christiana Common Stock
outstanding at the Effective Time; (ii) cash of approximately $3.50 per
share of Christiana Common Stock, subject to adjustment based on the
amount of certain Christiana liabilities existing as of the Effective
Time; and (iii) a contingent cash payment of approximately $1.92 payable
to the shareholders of record following the fifth anniversary of the
Effective Time, subject to any indemnity claims by EVI under the Merger
Agreement. For more information concerning the terms and conditions of
the Merger, potential investors are urged to read carefully the Merger
Proxy Statement.
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 1997, Emmpak Foods, Inc. accounted for approximately $2.1 million
in gross revenue for TLC. David J. Lubar serves on the board of directors
of Emmpak Foods, Inc.
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.
Number of Shares Shares
Beneficially Owned Beneficially Owned
Prior to Offering After Offering
Name Number Percent Number Percent
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)
_______________
* 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 $170,000.
(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.
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. 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 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
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.
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 EVI 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 EVI 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.
INDEX TO FINANCIAL STATEMENTS
Page
C2, INC. FINANCIAL STATEMENTS:
Report of Independent Public Accountants . . . . . . . F-2
Balance Sheet . . . . . . . . . . . . . . . . . . . . F-3
Notes to Balance Sheet . . . . . . . . . . . . . . . . F-4
TLC FINANCIAL STATEMENTS
Report of Independent Public Accountants . . . . . . . F-6
Balance Sheets as of June 30, 1997 and 1996 . . . . . F-7
Statements of Earnings for the years
ended June 30, 1997, 1996 and 1995 . . . . . . . . . F-8
Statements of Equity for the years
ended June 30, 1997, 1996 and 1995 . . . . . . . . . F-9
Statements of Cash Flows for the years
ended June 30, 1997, 1996 and 1995 . . . . . . . . . F-10
Notes to Financial Statements . . . . . . . . . . . . F-11
Condensed Balance Sheets as of September 30,
1997 and June 30, 1997 (unaudited) . . . . . . . . . F-15
Condensed Statements of Earnings for the
three months ended September 30, 1997 and
1996 (unaudited) . . . . . . . . . . . . . . . . . . F-16
Condensed Statements of Cash Flows for the
three months ended September 30, 1997 and
1996 (unaudited) . . . . . . . . . . . . . . . . . . F-17
Notes to Condensed Financial Statements
(unaudited) . . . . . . . . . . . . . . . . . . . . . F-18
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
<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.
<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.
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):
(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.
<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, 1997 and 1996,
and the related statements of earnings, equity and cash flows for each of
the three years in the period ended June 30, 1997. 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three year
period ended June 30, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
August 1, 1997
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
BALANCE SHEETS
AS OF JUNE 30
1997 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 224,000 $ 29,000
Accounts receivable, less
allowance for uncollectable
accounts 7,552,000 8,017,000
Inventories 273,000 439,000
Prepaids and other assets 259,000 1,202,000
---------- ---------
Total current assets 8,308,000 9,687,000
LONG-TERM ASSETS:
Fixed assets, net 75,501,000 81,272,000
Goodwill 5,592,000 5,749,000
Other assets 739,000 1,215,000
---------- ----------
Total long-term assets 81,832,000 88,236,000
---------- ----------
Total assets $ 90,140,000 $ 97,923,000
========== ==========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Short-term debt - $ 1,354,000
Current maturities of long-term
debt $1,245,000 1,595,000
Accounts payable 2,868,000 5,298,000
Accrued liabilities 3,056,000 2,768,000
---------- ----------
Total current liabilities 7,169,000 11,015,000
DUE TO PARENT COMPANY 3,000,000 3,295,000
LONG-TERM LIABILITIES:
Long-term debt 36,149,000 41,427,000
Deferred income taxes - 10,528,000
Other liabilities 361,000 378,000
---------- ----------
Total long-term liabilities 36,510,000 52,333,000
---------- ----------
Total liabilities 46,679,000 66,643,000
---------- ----------
TOTAL MEMBER'S EQUITY 43,461,000 31,280,000
---------- ----------
Total liabilities and member's
equity $90,140,000 $97,923,000
========== ==========
The accompanying notes are an integral part of these balance sheets.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF EARNINGS
FOR THE YEARS ENDED JUNE 30
1997 1996 1995
REVENUES:
Warehousing and logistic
services $84,208,000 $76,976,000 $71,029,000
OPERATING EXPENSES:
Warehousing and logistic
expenses 70,973,000 64,956,000 56,889,000
Selling, general and
administrative expenses 6,924,000 6,331,000 6,585,000
---------- ---------- ----------
77,897,000 71,287,000 63,474,000
---------- ---------- ----------
Earnings from operations 6,311,000 5,689,000 7,555,000
OTHER INCOME (EXPENSES):
Interest expense (3,216,000) (3,176,000) (3,378,000)
Gain (Loss) on disposal of
assets (1,036,000) 206,000 130,000
Other expense, net (354,000) (108,000) (21,000)
---------- ---------- ----------
(4,606,000) (3,078,000) (3,269,000)
---------- ---------- ----------
NET EARNINGS BEFORE INCOME
TAXES 1,705,000 2,611,000 4,286,000
PROVISION FOR INCOME TAXES 695,000 1,075,000 1,724,000
ADJUSTMENT OF DEFERRED INCOME
TAXES RESULTING FROM A
CHANGE IN TAX STATUS 11,171,000 - -
---------- --------- ---------
NET EARNINGS $12,181,000 $ 1,536,000 $ 2,562,000
========== ========= =========
NET EARNINGS PER MEMBERSHIP
UNIT $ 6,991 $ 1,536 $ 2,562
========== ========= =========
WEIGHTED AVERAGE MEMBERSHIP
UNITS OUTSTANDING 1,000 1,000 1,000
====== ====== ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF EQUITY
FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
Membership Member's
Units Equity
Balance, June 30, 1994 1,000 $27,182,000
Net earnings - 2,562,000
-------- ----------
Balance, June 30, 1995 1,000 29,744,000
Net earnings - 1,536,000
-------- ----------
Balance, June 30, 1996 1,000 31,280,000
Net earnings - 12,181,000
-------- ----------
Balance, June 30, 1997 1,000 $43,461,000
======== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1997,1996 AND 1995
1997 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $12,181,000 $1,536,000 $2,562,000
Adjustments to Reconcile
Net Earnings to Net Cash
Provided by Operating
Activities:
Depreciation and
amortization 7,186,000 6,971,000 6,684,000
(Gain) loss on disposal
of assets 1,036,000 (206,000) (130,000)
Deferred income tax
provision 1,023,000 746,000 1,400,000
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 465,000 (404,000) (401,000)
(Increase) decrease in
inventories 166,000 (191,000) 163,000
(Increase) decrease of
prepaids and other
assets 668,000 564,000 (998,000)
Increase (decrease) in
accounts payable and
accrued liabilities (2,260,000) 2,027,000 900,000
--------- ---------- ----------
Net cash provided by
operating activities 9,294,000 11,043,000 10,180,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed
assets (3,294,000) (17,646,000) (7,522,000)
Proceeds from sale of
fixed assets 1,472,000 1,384,000 406,000
--------- ---------- ---------
Net cash used in
investing activities (1,822,000) (16,262,000) (7,116,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings (payments)
on line of credit, net (1,354,000) (490,000) 501,000
Proceeds from issuance
of long-term debt - 9,011,000 4,125,000
Payment of amounts due
to parent (295,000) - -
Payment of long-term
debt (5,628,000) (3,638,000) (7,873,000)
--------- --------- ---------
Net cash provided by
(used in) financing
activities (7,277,000) 4,883,000 (3,247,000)
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 195,000 (336,000) (183,000)
BEGINNING CASH AND CASH
EQUIVALENTS, JULY 1 29,000 365,000 548,000
ENDING CASH AND CASH
EQUIVALENTS, JUNE 30 $ 224,000 $ 29,000 $ 365,000
========== ========= =========
Supplemental Disclosures
of Cash Flow Information
Interest paid $ 3,000,000 $3,046,000 $3,148,000
Amounts paid to Parent
for income taxes 300,000 279,000 201,000
The accompanying notes are an integral part of these financial statements.
<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, 1997 and 1996
balance sheets reflect the consolidated results of TLC and combined
results of Wiscold and Total Logistic, respectively. The fiscal
1997, 1996 and 1995 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 $223,000 and $253,000 at
June 30, 1997 and 1996, respectively. The provision for bad debts
was $123,000 and $227,000 for the years ended June 30, 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. A summary of the cost of
fixed assets, accumulated depreciation and the estimated useful lives
for financial reporting purposes is as follows:
Estimated
1997 1996 Useful Lives
Land $ 3,380,000 $ 3,416,000 -
Machinery and equipment 52,816,000 54,047,000 5-7 years
Buildings and
improvements 41,534,000 41,394,000 30-32 years
Construction in
progress 451,000 12,000 -
Less: Accumulated
depreciation (22,680,000) (17,597,000)
---------- ----------
$75,501,000 $ 81,272,000
========== ==========
Goodwill: Goodwill is amortized on a straight-line basis over
40 years ($157,000 in both 1997 and 1996). The accumulated
amortization at June 30, 1997 and 1996 was $566,000 and $409,000,
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.
Cash and Cash Equivalents: TLC considers all highly liquid
investments with original maturities of less than ninety days to be
cash equivalents.
Earnings Per Membership Unit: Earnings per Membership Unit have been
computed based on the weighted number of units as if the units had
been outstanding for all periods presented.
Derivatives: Derivative financial instruments have been used by TLC
to manage its interest rate exposure on certain debt instruments.
Amounts to be received or paid under interest rate swap agreements
are recognized as interest income or expense in the periods which
they accrue. If interest rate swap agreements are terminated due to
the underlying debt being extinguished, any resulting gain or loss is
recognized as interest income or expense at the time of termination.
B. RELATED PARTY TRANSACTIONS:
As of June 30, 1997 and 1996, TLC had amounts due to Christiana of
$3,000,000 and $3,295,000, respectively. As of June 30, 1997 and
1996, $3,000,000 of the outstanding balance was 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 1997, 1996 and 1995.
TLC charges 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, 1996 and
1995 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 1997,
1996 and 1995 are not material.
C. INDEBTEDNESS:
The following is a summary of indebtedness as of June 30, 1997 and
1996:
1997 1996
Revolving credit agreement $31,248,000 $35,248,000
Line of credit - 1,354,000
Notes payable 4,382,000 6,010,000
Subordinated Note 1,764,000 1,764,000
---------- ----------
37,394,000 44,376,000
---------- ----------
Less: Current portion of (1,245,000) (1,595,000)
long-term debt
Line of credit - (1,354,000)
---------- ----------
Long-term debt $36,149,000 $41,427,000
========== ==========
TLC has a revolving credit agreement that provides for borrowings at
June 30, 1997 up to $40,000,000. 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 (6.7% at June 30, 1997) and are unsecured. At June 30, 1996,
TLC's borrowings under the original revolving credit agreement were
priced at LIBOR plus 175 basis points or prime (7.1% at June 30,
1996) and were secured by TLC's assets. The revolving credit
agreement requires, among other things, that defined levels of net
worth and debt service coverage be maintained and restricts certain
activities including limitation on new indebtedness and the
disposition of assets. No compensating balances are required under
the terms of this credit facility.
On September 15, 1992, TLC entered into an interest rate swap
agreement with three commercial banks which expires on December 15,
1997. As of June 30, 1997, $12,650,000 of outstanding debt was
subject to the swap agreement. The agreement effectively fixes the
interest rate payable by TLC on this portion of the debt at 5.3% plus
an interest rate spread determined by TLC's leverage ratio. As of
June 30, 1997, the effective rate of this outstanding debt was 6.55%.
Under the swap agreement, TLC is exposed to credit risk only in the
event of non-performance by the commercial banks, which is not
anticipated.
TLC has a bank line of credit which permits borrowings up to
$5,000,000. Borrowings bear interest at either LIBOR plus 200 basis
points, or the bank's prime rate, at TLC's option (7.69% and 7.48% at
June 30, 1997 and 1996, respectively), and are secured by certain
accounts receivable. 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 the Parent.
Future maturities of consolidated indebtedness are as follows:
Year Ended
June 30 Total
1998 $ 1,245,000
1996 4,078,000
2000 5,193,000
2001 25,150,000
2002 1,728,000
Thereafter -
The weighted average interest rate paid on short-term borrowings was
7.46% and 8.21% for fiscal 1997 and 1996, respectively. The carrying
value of TLC's debt approximates fair value.
D. INCOME TAXES:
TLC is 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 $5,981,000 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 1995
Current:
Federal $(279,000) $280,000 $275,000
State (49,000) 49,000 49,000
Deferred 1,023,000 746,000 1,400,000
--------- --------- ---------
$ 695,000 $1,075,000 $1,724,000
========= ========= =========
In the event that TLC was a taxable entity, a net deferred tax liability
of $11,171,000 as of June 30, 1997 would have been recorded on the balance
sheet. The components are as follows:
1997 1996
Deferred tax assets:
Alternative minimum tax - $1,255,000
Accrued expenses $ 399,000 358,000
Book over tax
amortization 584,000 480,000
Deferred revenue 197,000 201,000
--------- ---------
Total deferred tax
asset $1,180,000 $2,294,000
========= =========
Deferred tax liabilities:
Tax over book
depreciation $7,838,000 $7,183,000
Condemnation proceeds 4,513,000 5,259,000
---------- ----------
Total deferred tax
liability $12,351,000 $12,442,000
========== ==========
A reconciliation of the statutory Federal income tax rate to TLC's
effective tax rate is as follows:
Year ended June 30
1997 1996 1995
Statutory Federal income tax rate 34% 34% 34%
Increase in taxes resulting from
State income tax, net 5 5 6
Other, net 2 2 --
---- ---- ----
41% 41% 40%
==== ==== ====
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 $7,213,000, $5,479,000 and $5,100,000 in fiscal 1997, 1996
and 1995, respectively. At June 30, 1997, future minimum lease
payments under these operating leases are as follows:
Year Ended
June 30 Amount
1998 $5,800,000
1999 4,513,000
2000 3,982,000
2001 2,993,000
2002 2,274,000
Thereafter 11,976,000
G. Events Subsequent to Date of Report of Independent Public Accountants
(Unaudited):
On December 12, 1997, Christiana, the parent of TLC, entered into an
agreement and plan of merger with EVI, Inc. 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 _______, 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.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
CONDENSED BALANCE SHEETS (UNAUDITED)
AS OF SEPTEMBER 30, 1997 AND JUNE 30, 1997
September 30,
1997 June 30, 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 578,000 $224,000
Accounts receivable, net 10,754,000 7,552,000
Inventories, prepaids and other
assets 1,230,000 532,000
---------- ----------
Total current assets 12,562,000 8,308,000
LONG-TERM ASSETS:
Fixed assets, net 74,746,000 75,501,000
Goodwill 5,549,000 5,592,000
Other assets 150,000 739,000
---------- ----------
Total long-term assets 80,445,000 81,832,000
---------- ----------
Total assets $93,007,000 $ 90,140,000
========== ==========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Short-term debt $ 944,000 -
Current maturities of long-term
debt 1,245,000 $1,245,000
Accounts payable 5,515,000 2,868,000
Accrued liabilities 3,474,000 3,056,000
---------- ----------
Total current liabilities 11,178,000 7,169,000
DUE TO PARENT COMPANY 3,000,000 3,000,000
LONG-TERM LIABILITIES:
Long-term debt 36,415,000 36,149,000
Other liabilities 356,000 361,000
---------- ----------
Total long-term liabilities 36,771,000 36,510,000
---------- ----------
Total liabilities 50,949,000 46,679,000
---------- ----------
MEMBER'S EQUITY 42,058,000 43,461,000
---------- ----------
Total liabilities and member's
equity $ 93,007,000 $ 90,140,000
========== ==========
The accompanying notes are an integral part of these condensed balance
sheets.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
REVENUES:
Warehousing and logistic services $23,047,000 $ 20,480,000
OPERATING EXPENSES:
Warehousing and logistic expenses 19,201,000 17,301,000
Selling, general and administrative
expenses 1,899,000 1,416,000
---------- ----------
21,100,000 18,717,000
---------- ----------
Earnings from operations 1,947,000 1,763,000
OTHER INCOME (EXPENSES):
Interest expense (773,000) (884,000)
Other expense, net (251,000) (67,000)
(1,024,000) (951,000)
---------- -----------
NET EARNINGS BEFORE INCOME TAXES 923,000 812,000
PROVISION FOR INCOME TAXES -- 309,000
--------- ---------
NET EARNINGS $ 923,000 $ 503,000
========= =========
NET EARNINGS PER MEMBERSHIP UNIT $ 923 $ 503
========= =========
WEIGHTED AVERAGE MEMBERSHIP UNITS
OUTSTANDING 1,000 1,000
====== ======
The accompanying notes are an integral part of these condensed statements.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 923,000 $ 503,000
Adjustments to Reconcile Net Earnings to Net
Cash Provided by Operating Activities:
Depreciation and amortization 1,706,000 1,847,000
Changes in Assets and Liabilities:
Increase in accounts receivable (3,202,000) (1,235,000)
Decrease in inventories, prepaids and
other assets 349,000 46,000
Increase (decrease) in accounts payable
and accrued liabilities 3,065,000 (704,000)
--------- ---------
Net cash provided by operating
activities 2,841,000 457,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (839,000) (801,000)
--------- ----------
Net cash used in investing activities (839,000) (801,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit, net 944,000 1,176,000
Payment of long-term debt (266,000) (736,000)
Dividend distribution to Parent Company (2,326,000) -
--------- ----------
Net cash provided by financing activities (1,648,000) 440,000
--------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 354,000 96,000
BEGINNING CASH AND CASH EQUIVALENTS 224,000 29,000
--------- ----------
ENDING CASH AND CASH EQUIVALENTS $ 578,000 $ 125,000
========= ==========
Supplemental Disclosures of Cash Flow
Information:
Interest paid $ 765,000 $ 867,000
Amounts paid to Parent for income taxes - -
The accompanying notes are an integral part of these condensed statements.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
1. Basis of Presentation:
The condensed financial statements reflect all adjustments which are,
in the opinion of management, necessary for a fair presentation of
the results for the interim periods presented. These financial
statements should be read in conjunction with the TLC's audited
financial statements for the year ended June 30, 1997 found elsewhere
in this Prospectus.
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. ("TLC"), both former wholly owned subsidiaries of Christiana.
The accompanying financial statements have been restated to reflect
this combination for all periods presented.
2. Earnings per Membership Unit:
Earnings per Membership Unit have been computed based on the weighted
number of units outstanding as if outstanding for all periods
presented.
3. Income Taxes:
TLC is 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 represent cash payments made to the Parent.
Effective June 30, 1997, TLC converted from a C-Corporation to a
Limited Liability Company ("LLC"). For purposes of taxation, all
earnings of the LLC are "passed through" to its members and taxed at
the member level. As the LLC is no longer a taxable entity, deferred
income taxes are not reflected on the balance sheets. Additionally,
a provision for income taxes for the three months ended September 30,
1997 is not required. The $309,000 provision for income taxes for
the period ended September 30, 1996 represents the combined Federal
and state income tax provision for the period during the fiscal year
that TLC was a C-Corporation.
4. Distribution to Parent Company:
During the three month period ended September 30, 1997, TLC made a
payment on behalf of Christiana to pay down a promissory note payable
and accrued interest thereon in the amount of $2,326,000. This
payment has been deemed a dividend distribution to Christiana and is
reflected as a reduction to member's equity in the period then ended.
<PAGE>
ANNEX A
AGREEMENT
By and Among
EVI, INC.,
TOTAL LOGISTIC CONTROL, LLC,
CHRISTIANA COMPANIES, INC.
and
C2, INC.
December 12, 1997
<PAGE>
AGREEMENT
THIS AGREEMENT ("Agreement") made as of this 12th day of
December, 1997 by and among EVI, Inc., a Delaware corporation ("EVI"),
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, EVI, Christiana Acquisition, Inc., a Wisconsin
corporation ("Sub"), Christiana and C2 have entered into an Agreement and
Plan of Merger dated December 12, 1997 (the "Merger Agreement") pursuant
to which Sub, a wholly owned subsidiary of EVI, will merge with and into
Christiana and thereby Christiana will become a wholly owned subsidiary of
EVI (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, EVI 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 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;
(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 EVI'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. Section 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.
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. Section 7401 et seq., The Clean Water Act, 33 U.S.C. Section 1251
et seq., the Resource Conservation Recovery Act, 42 U.S.C. Section 6901
et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C.
Section 11011 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Water Pollution Control Act, 33 U.S.C. Section
1251, et seq., the Safe Drinking Water Act, 42 U.S.C. Section 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 EVI Indemnified Parties. EVI 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 EVI 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 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 Agreement and
Plan of Merger dated December 12, 1997, by and among EVI, 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 EVI 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) EVI Related Taxes (as defined in the Merger
Agreement).
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 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 EVI 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, EVI and
their respective Affiliates) any claims, defenses or claims for
contribution that it has or may have against Christiana, EVI 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.
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, EVI
and their respective officers, directors, employees, agents and
assigns (collectively, the "EVI 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 EVI
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:
(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 EVI)
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 EVI after the
Effective Date);
(iv) The Assumed Liabilities;
(v) Any and all amounts for which Christiana or EVI 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 EVI 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 EVI 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;
(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 EVI
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 EVI 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 EVI
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 EVI 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, EVI shall have no obligation to pay such amounts.
Any such payments shall be subject to EVI 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 EVI of any Assumed Liabilities
and its obligations hereunder shall be personal to TLC and C2 to
the extent and only to the extent EVI 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 EVI as result of this
Agreement.
(c) Absolute Indemnity. NONE OF THE EVI 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 EVI 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 TO TLC, (III) MAY ARISE AS A RESULT OF A
NEGLIGENT ACT OR OMISSION BY ANY OF THE EVI 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 EVI
Indemnified Party of notice, or an EVI 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 EVI 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
EVI 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 EVI
Indemnified Party within 15 days after such notice that the TLC Parties is
assuming the defense thereof, (i) the TLC Parties will defend the EVI
Indemnified Parties against the Circumstances with counsel of its choice,
provided such counsel is reasonably satisfactory to EVI, (ii) the EVI
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 EVI concludes
reasonably that the counsel the TLC Parties has selected has a conflict of
interest), (iii) the EVI 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 EVI Indemnified Party, (y)
requires an EVI Indemnified Party to admit any facts or liability that
could reasonably be expected to adversely affect an EVI Indemnified Party
in any other matter or (z) does not include a provision whereby the
plaintiff or claimant in the matter released the EVI Indemnified Parties
from all Liability with respect thereto, without the written consent of
EVI. In the event the TLC Parties does not notify EVI within 15 days
after EVI has given notice of the Circumstance that the TLC Parties is
assuming the defense thereof, the EVI Indemnified Parties may defend
against, or enter into any settlement with respect to, the Circumstance in
any manner the EVI 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 EVI Indemnified Parties for amounts which shall have been
covered and paid by insurance of the EVI 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, EVI OR ANY EVI
INDEMNIFIED PARTY MAY HAVE AT 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. Section
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 EVI 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 EVI, 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 EVI 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 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 EVI Indemnified Party may be brought with respect to
any claim for indemnification by an EVI 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 EVI
Indemnified Party may be brought with respect to any claim for
indemnification by an EVI 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 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, EVI, and the EVI 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 EVI:
EVI, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Bernard J. Duroc-Danner
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Curtis W. Huff
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
if to Christiana:
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: James G. Kiley
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Curtis W. Huff
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.
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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
EVI, INC.
("EVI")
By:
Title:
TOTAL LOGISTIC CONTROL, LLC
("TLC")
By:
Title:
CHRISTIANA COMPANIES, INC.
("Christiana")
By:
Title:
C2, INC.
("C2")
By:
Title:
<PAGE>
ANNEX B
TOTAL LOGISTIC CONTROL, LLC
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
____________, 1997
<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
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
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
<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 EVI, Inc., a Delaware corporation, Christiana
Acquisition Co., a Wisconsin corporation, Christiana Companies, Inc., a
Wisconsin corporation, and C2, Inc., a Wisconsin corporation, dated
_______________, 1997 (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.
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.
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.
(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 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 Agreement among EVI, Inc., Total Logistic
Control, LLC, Christiana and C2, Inc. dated _____, 1997) 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.
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 ____ (__)
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
agreement among EVI, Inc., Total Logistic Control, LLC, Christiana and C2,
Inc. dated ______, 1997;
(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);
(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 [insert time
and place]. 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 [insert time and place].
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 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 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. 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.
(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. Lubar & Co., Incorporated 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.
(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 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.
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 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.
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 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.
"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.
"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.
"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
(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: ________________________
<PAGE>
EXHIBIT A
Member Units
C2, Inc.
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202 666.667
Christiana Companies, Inc.
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202 333.333
<PAGE>
No person is authorized in connection with any offering made
hereby to give any information or to make any representation other
than as contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having
been authorized by the Company. This 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 . . . . . . . . . . . . . . . . . . . . . . .
Summary of Certain Terms of the Merger . . . . . . . . . . . .
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.
5,202,664 Shares
C2, INC.
Common Stock
_________________________
PROSPECTUS
, 1998
_________________________
<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 . . . . . . . . . $ 45,000
Legal fees and expenses . . . . . . . . . . . . . $ 70,000
Miscellaneous . . . . . . . . . . . . . . . . . . $ 3,860
-------
Total . . . . . . . . . . . . . . $170,000
=======
__________________________
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.
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this 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 10th day of February, 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 and on the dates indicated. Each person whose signature
appears below constitutes and appoints William T. Donovan and David J.
Lubar and each of them individually, his or her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Signature Title Date
Chairman (Principal
/s/ William T. Donovan Executive Officer and February 10, 1998
William T. Donovan Principal Financial and
Accounting Officer)
/s/ David J. Lubar President and Director February 10, 1998
David J. Lubar
/s/ Nicholas F. Brady Director February 10, 1998
Nicholas F. Brady
/s/ Albert O. Nicholas Director February 10, 1998
Albert O. Nicholas
/s/ Sheldon B. Lubar Director February 10, 1998
Sheldon B. Lubar
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Exhibit Description Number
2.1 Agreement and Plan of Merger, dated as of
December 12, 1997, by and among EVI, Sub,
Christiana and the Company.
2.2 Form of Purchase Agreement, dated as of December
12, 1997, 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 Proxy and Election Form.
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.
_________________________
*To be filed by Amendment.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Among
EVI, INC.,
CHRISTIANA ACQUISITION, INC.,
CHRISTIANA COMPANIES, INC.
and
C2, INC.
December 12, 1997
<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 Certificate 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 EVI 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
(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 EVI PRIOR TO THE EFFECTIVE TIME . . . . . 26
4.1 Reservation of EVI Stock . . . . . . . . . . . . . . . 26
4.2 Conduct of EVI 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 EVI. . . . . . 29
6.3 Additional Conditions to Obligations of Christiana. . 31
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
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of December 12, 1997 (this
"Agreement"), is made and entered into by and among EVI, Inc., a Delaware
corporation ("EVI"), Christiana Acquisition, Inc., a Wisconsin corporation
and wholly owned subsidiary of EVI ("Sub"), Christiana Companies, Inc., a
Wisconsin corporation ("Christiana"), and C2, Inc., a Wisconsin
corporation ("C2").
WHEREAS, subject to and in accordance with the terms and conditions
of this Agreement, the respective Boards of Directors of EVI, Sub and
Christiana, and EVI 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 EVI ("EVI Common Stock") plus (ii) the Cash Consideration Per
Share (as defined in Section 1.7(e)) and (iii) the Contingent Cash
Consideration Per Share (as defined in Section 1.7(f));
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 between
Christiana, C2, EVI 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:
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 General
Corporation Law of the State of Wisconsin ("WGCL"), 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 WGCL 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 EVI 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 Secretary of State of Wisconsin a certificate of merger
in such form as required by, and executed in accordance with, the relevant
provisions of the WGCL. The "Effective Time" of the Merger, as that term
is used in this Agreement, shall mean such time as a certificate of merger
is duly filed with the Wisconsin Secretary of State or at such later time
(not to exceed seven days from the date the certificate of merger is
filed) as is specified in the certificates of merger pursuant to the
mutual agreement of EVI and Christiana.
1.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the WGCL. 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 Certificate of Incorporation; Bylaws. The Certificate of
Incorporation of Christiana, as amended and restated by the amendment set
forth in Exhibit B attached hereto, shall be the Certificate of
Incorporation of the Surviving Corporation and thereafter shall continue
to be its Certificate of Incorporation until amended as provided therein
or under the WGCL. 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 WGCL.
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 Certificate 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 EVI, 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) .75876 of
one share of EVI Common Stock (the "Stock Exchange Ratio") plus
(ii) the Cash Consideration Per Share as defined in Section 1.7(e)
and (iii) the Contingent Cash Consideration Per Share (as defined in
Section 1.7(f)); provided, however, that no fractional shares of EVI
Common Stock shall be issued and, in lieu thereof, all fractional
shares of EVI Common Stock that would otherwise be issuable in the
Merger shall be rounded to the nearest whole share of EVI 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,
EVI or any direct or indirect wholly-owned subsidiary of EVI 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) The Stock Exchange Ratio is based on (i) 5,136,630 shares
of Christiana Common Stock being issued and outstanding immediately
prior to the Effective Time and (ii) 3,897,462 shares of EVI Common
Stock being held by Christiana 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 5,136,630 or the number of shares of EVI Common Stock held
by Christiana immediately prior to the Effective Time is greater or
less than 3,897,462, the Stock Exchange Ratio shall be adjusted to
equal the number of shares of EVI Common Stock held by Christiana
immediately prior to the Effective Time divided by the number of
shares of Christiana Common Stock issued and outstanding immediately
prior to the Effective Time.
(e) The "Cash Consideration Per Share", shall equal the
quotient of the Christiana Net Cash divided by 5,136,630. The
"Christiana Net Cash" shall mean and be equal to (i) the sum of
(A) $20,000,000 obtained in connection with the TLC Dividend, (B)
$10,666,667 to be obtained in connection with the Logistic Sale
(provided, however, that if such funds are not received by Christiana
when and as required under the Logistic Purchase Agreement, such
funds will not be considered as part of Christiana Net Cash),
(C) $3,000,000 obtained in connection with the Wiscold Note, (D) the
cash received from the exercise of stock options and (E) all other
cash on hand of Christiana at the Closing minus (ii) the sum of (A)
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 and (B) $10,000,000. The
"Cash Consideration Per Share" is based on 5,136,630 shares of
Christiana Common Stock being issued and outstanding 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 5,136,630, 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.
(f) The "Contingent Cash Consideration Per Share" shall mean
the Remaining Contingent Cash divided by 5,136,630. The "Remaining
Contingent Cash" shall mean $10,000,000 less the sum of (i) all
Assumed Liabilities (as defined in the C2 Purchase Agreement) paid by
Christiana, EVI or their respective successors and assigns during the
Contingent Liability Period and (ii) all other Liabilities (as
defined in the Logistic Purchase Agreement) incurred by or on behalf
of them during the Contingent Liability Period; provided, however,
that no subtraction shall be made in either (i) or (ii) for
liabilities previously subtracted for Christiana Liabilities in
Section 1.7(e). The Contingent Liability Period shall mean the
period from the Effective Date through the fifth anniversary of
Effective Date; provided, however, that if on the fifth anniversary
of the Effective Date there is any pending or threatened claim,
demand or suit or existing matter for which EVI has reasonably
determined that an EVI Indemnified Party (as defined in the Logistic
Purchase Agreement) will be entitled to indemnification under
Section 6.1(a) of the Logistic Purchase Agreement, the Contingent
Liability Period shall be extended until such time that such claim,
demand, suit or matter is wholly resolved, paid and not subject to
appeal or further claims. The "Contingent Cash Consideration Per
Share" is based on 5,136,630 shares of Christiana Common Stock being
issued and outstanding 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
5,136,630, the Contingent Cash Consideration Per Share shall be
adjusted to equal the quotient of the Remaining Contingent Cash
divided by the number of shares of Christiana Common Stock issued and
outstanding immediately prior to the Effective Time.
1.8 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time of the Merger,
EVI shall select a bank or trust company to act as exchange agent
(the "Exchange Agent") for the issue of shares of EVI Common Stock
upon surrender of certificates representing Christiana Shares.
(b) Payment of Merger Consideration. EVI 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 EVI 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. The Contingent Cash Consideration Per Share
shall be paid as provided in Section 1.8(d).
(c) Retention of Cash Pending Post Closing Audit. Within 30
days following the Effective Date, EVI shall (i) complete a post
closing audit by EVI 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) Payment of Contingent Cash Consideration. Within 60 days
following the expiration of the Contingent Liability Period, EVI
shall send a notice to the prior holders of the Christiana Shares as
of the Effective Time of the Merger at their last known address
advising them as to the amount of the Contingent Cash Consideration
Per Share as determined in the reasonable good faith by EVI;
provided, however, that if on the fifth anniversary of the Effective
Date there is any pending or threatened claim, demand or suit or
existing matter for which EVI has reasonably determined an EVI
Indemnified Party will be entitled to indemnification under
Section 6.1(a) of the Logistic Agreement (an "Extension Event"), EVI
shall within 60 days thereafter determine the amount, if any, of the
Contingent Cash Consideration that is in excess of the sum of (i) the
amount necessary to pay the full amount of all such pending or
threatened claims, demands, suits or matters based on the amount
claimed, demanded or sought and (ii) the estimated costs of
investigation and defense of such matters (the "Excess Cash") and
send a notice to the prior holders of the Christiana Shares as of the
Effective Time of the Merger at their last known address advising
them of the amount of the Excess Cash Per Share (as defined below).
The Excess Cash Per Share shall mean the Excess Cash divided by the
number of shares of Christiana Common Stock issued and outstanding
immediately prior to the Effective Time. The Excess Cash Per Share
shall be part of the Contingent Cash Per Share and not a separate
right to payment. Such determinations shall be conclusive and
binding on the prior holders of the Christiana Shares. Subject to
any limitations existing under law, along with the aforementioned
notice, EVI shall send to each holder of record of a Certificate that
was tendered for exchange pursuant to Section 1.8(e) a check in an
amount equal to (i) if an Extension Event exists on the fifth
anniversary of the Effective Date, the Excess Cash Per Share with the
first notice and the Contingent Cash Consideration Per Share, if any,
less the Excess Cash Per Share at the time of the second notice and
(ii) if an Extension Event does not exist on the fifth anniversary of
the Effective Time of the Merger, the Contingent Cash Consideration
Per Share, in each case, payable in respect of the Christiana Shares
represented by such Certificate. Such payments shall be made without
interest and be subject to any applicable withholding for taxes
thereon. The Contingent Cash Consideration Per Share shall represent
an inchoate right to receive cash in the future under certain limited
circumstances provided herein and shall not represent any right to or
in any of the assets of EVI or Christiana. The right to receive the
Contingent Cash Consideration Per Share shall not be transferrable
except for transfers by operation of law or by will or intestate
succession. EVI may, but shall not be required to, establish a trust
or escrow fund with respect to the Contingent Cash Consideration Per
Share that may be payable hereunder.
(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
EVI, Sub and Christiana and any directly or indirectly wholly owned
subsidiary of EVI, 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 EVI 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 EVI Common Stock, the Cash Consideration Per Share and Contingent
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 EVI 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 and Contingent Cash
Consideration Per Share as provided in Section 1.8(c) and (d), and
the Certificate so surrendered shall forthwith be canceled. If the
shares of EVI Common Stock are to be issued to an individual,
corporation, limited liability company, partnership, governmental
authority or any other entity (a "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 EVI Common Stock, the
Cash Consideration Per Share and Contingent 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 EVI
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 EVI 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 EVI
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 EVI 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 EVI 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 EVI 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 EVI Common
Stock and (iii) the Cash Consideration Per Share and Contingent 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 EVI 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 and the Contingent 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.
(h) Escheat. None of EVI, 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 EVI and Sub. EVI and Sub
hereby jointly and severally represent and warrant to Christiana that:
(a) Organization and Compliance with Law. EVI 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 EVI 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 EVI and
its subsidiaries (the "EVI Subsidiaries"), taken as a whole (an "EVI
MAE"). Each of EVI 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 an EVI MAE.
Each of EVI and Sub is in compliance with all applicable laws,
judgments, orders, rules and regulations, except where such failure
would not have an EVI MAE. EVI has heretofore delivered to
Christiana true and complete copies of EVI's Restated Certificate of
Incorporation, as amended (the "EVI Certificate"), and Sub's
Certificate of Incorporation and their respective bylaws as in
existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of EVI consists of
80,000,000 shares of EVI Common Stock, $1.00 par value, and
3,000,000 shares of preferred stock, $1.00 par value ("EVI
Preferred Stock"). As of December 10, 1997, there were
47,103,494 shares of EVI Common Stock issued and outstanding.
As of December 10, 1997, (i) 5,031,250 shares of EVI Common
Stock were reserved for issuance pursuant to the conversion
provisions of EVI's 5% Convertible Subordinated Preferred
Equivalent Debentures due 2027, (ii) 800,000 shares of EVI
Common Stock were reserved for issuance pursuant to pending or
proposed acquisitions and (iii) 2,506,400 shares of EVI Common
Stock were reserved for issuance pursuant to EVI's employee and
director benefit plans and arrangements, of which 1,376,400
shares of EVI Common Stock were reserved for issuance upon
exercise of outstanding options. At December 10, 1997, there
were no shares of EVI Preferred Stock issued or outstanding. No
holder of EVI Common Stock is entitled to preemptive rights
under Delaware law or EVI'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 EVI.
(iii) Each share of EVI 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 EVI 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 EVI or duly authorized
committee thereof has determined to recommend approval of the Merger
to the stockholders of EVI, and such determination is in effect on
the date hereof. This Agreement has been duly executed and delivered
by EVI and Sub and is the valid and binding obligation of EVI and
Sub, enforceable against EVI 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
EVI or Sub of its obligations hereunder, nor the consummation of the
transactions contemplated hereby by EVI and Sub, will (i) conflict
with the EVI Certificate or the bylaws of EVI or Sub; (ii) assuming
satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to EVI or any of the EVI
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 a Certificate of Merger by Sub
in accordance with the WGCL, 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 EVI or any of the
EVI 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 EVI or
any of the EVI 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 EVI or any of the EVI Subsidiaries
is a party or by which EVI or any of the EVI Subsidiaries or any of
its or their 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 an EVI MAE.
(e) Commission Filings; Financial Statements. EVI has filed
all reports and documents required to filed with the Securities and
Exchange Commission (the "Commission") since December 31, 1994. All
reports, registration statements and other filings (including all
notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by EVI with the Commission since
December 31, 1994, through the date of this Agreement, together with
any amendments thereto, are sometimes collectively referred to as the
"EVI Commission Filings". EVI has heretofore delivered to, or made
accessible to, Christiana copies of the EVI Commission Filings. As
of the respective dates of their filing with the Commission, the EVI
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,
1996, except as contemplated by this Agreement or as disclosed in the
EVI Commission Filings filed with the Commission prior to the date
hereof, there has been no EVI MAE.
(g) Tax Matters.
(i) Except as set forth in Section 2.1(g) of the
disclosure letter delivered by EVI to Christiana on the date
hereof (the "EVI 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 EVI or
any of the EVI 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 EVI 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 EVI Disclosure Letter, adequately provided
for in reserves established by EVI, except where the failure to
file, pay or provide for would not have a EVI MAE.
(ii) EVI 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.
(iii) EVI is not an investment company as defined in
Section 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 EVI 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 EVI
necessary to approve this Agreement and the Merger.
(i) Brokers. Except for fees and expenses payable by EVI to
Morgan Stanley & Co. Incorporated, no broker, investment banker, or
other Person acting on behalf of EVI 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 EVI 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 EVI's stockholders and at the time of
the EVI 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 EVI or
Sub.
2.2 Representations and Warranties of Christiana and C2. Each of
Christiana and C2 hereby, jointly and severally, represents and warrants
to EVI 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 EVI on the date
hereof (the "Christiana Disclosure Letter"), each of Christiana,
Logistic and C2 is duly 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 EVI true and
complete copies of (i) Christiana's Certificate of Incorporation (the
"Christiana Certificate") 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 December 12, 1997, there
were 5,136,630 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. A total of 500,000 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 Section 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 outstanding other
than Christiana Common Stock issued 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 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 EVI 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 Certificate 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, 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 WGCL 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, 1994, 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 EVI 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's filings
with the Commission 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
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.
(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 EVI.
(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 5500's for each year);
(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 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
EVI received in the Merger that would reduce the Christiana
stockholders' ownership of EVI 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 EVI 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 Section
368(a)(3)(A) of the Code.
(iv) There is no intercorporate indebtedness existing
between Christiana and EVI that was issued, acquired or will be
settled at a discount.
(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 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 WGCL, Christiana's Certificate 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) 3,897,462 shares of EVI Common Stock, which
shall be held free and clear of all Liens, (2) cash in the
amount of $20,000,000 received in connection with the TLC
Dividend as defined in Section 3.1(s), (3) the right to receive
$10,666,667 in connection with the Logistic Sale (4) $3,000,000
to be received in connection with the Wiscold Note, (5) the cash
received from the exercise of stock options, (6) all other cash
on hand, (7) a one-third interest in Logistic, and (8) all tax,
financial, accounting and other general corporate records,
including records relating to all past operations and
subsidiaries (including partnerships and joint ventures);
(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 EVI 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 EVI 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 EVI 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 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 EVI 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 EVI. 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 EVI 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.
(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 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 EVI 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 EVI 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;
(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; 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 EVI 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 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 EVI) 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 EVI) 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 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
$20 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 EVI, and, with respect to any such
settlement, with the prior written consent of EVI;
(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 EVI 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 EVI 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 EVI.
3.2 Cash Requirements. Christiana covenants that as of the
Effective Time it shall have cash equal to the sum of (i) $30 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 EVI 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 EVI
attributable to Christiana under the equity method of accounting either
before or after the Effective Time (the "EVI Related Taxes). Further, for
purposes of calculating such liabilities, any Taxes (other than the EVI
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 EVI as set forth therein.
3.3 Affiliates' Agreements. Prior to the Closing Date, Christiana
shall deliver to EVI 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 EVI an undertaking by each Affiliate in form satisfactory to
EVI that no EVI 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.
ARTICLE IV
COVENANTS OF EVI PRIOR TO THE EFFECTIVE TIME
4.1 Reservation of EVI Stock. EVI shall reserve for issuance, out
of its authorized but unissued capital stock, such number of shares of EVI
Common Stock as may be issuable upon consummation of the Merger.
4.2 Conduct of EVI Pending the Merger. EVI 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. EVI shall use reasonable efforts to
cause the shares of EVI 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,
EVI and Christiana shall prepare and file with the Commission preliminary
proxy materials that shall constitute the Proxy Statement of EVI and
Christiana and the registration statement with respect to the EVI 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, EVI 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 EVI and the
stockholders of Christiana and the issuance by EVI of EVI 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 EVI with respect to
such matters, the Proxy Statement shall contain a statement that the Board
of Directors of EVI recommended that the stockholders of EVI 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 EVI, in the
form and substance reasonably satisfactory to EVI 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 WGCL 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 and the Logistic Sale. 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) EVI 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 EVI with respect to such
matters, the Board of Directors of EVI (i) shall recommend at such
meeting that the stockholders of EVI vote to adopt and approve the
Merger and this Agreement, (ii) shall use its reasonable efforts to
solicit from stockholders of EVI 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) EVI 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 EVI 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 EVI, and EVI 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 EVI, as 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 EVI Common Stock under the
Securities Act to be issued in the Merger, (ii) the registration and
qualification of the EVI Common Stock under any state securities and blue
sky laws, (iii) the listing of the EVI 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. EVI agrees that for a
period of two years following the Effective Date it shall not cause or
permit Christiana to (i) liquidate or dissolve, (ii) sell or transfer any
shares of EVI Common Stock held by Christiana or (iii) merge Christiana
into any other entity unless EVI 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 EVI, (iii) a merger, consolidation,
share exchange or similar transaction involving EVI or its subsidiaries
(other than Christiana) or (iv) a sale or disposition of any assets of EVI
or its subsidiaries (other than Christiana).
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 EVI, 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 EVI MAE;
(f) The shares of EVI Common Stock issuable upon consummation
of the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance;
(g) EVI, C2 and Christiana shall have received an opinion,
dated as of the Effective Date, 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 EVI MAE.
6.2 Additional Conditions to Obligations of EVI. The obligation of
EVI to effect the Merger is, at the option of EVI, 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 EVI;
(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 EVI shall have received a certificate signed by the president of
Christiana dated the Closing Date to such effect;
(c) The Board of Directors of EVI shall have received from
Morgan Stanley & Co. Incorporated, financial advisor to EVI, a
written opinion, satisfactory in form and substance to the Board of
Directors of EVI, to the effect that consideration to be paid by EVI
in the Merger is fair to EVI 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 EVI 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 EVI of, the Christiana affiliates' agreements pursuant to
Section 3.3;
(f) EVI 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 EVI 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) EVI shall have received from Arthur Andersen LLP a written
opinion, in form and substance satisfactory to EVI, dated as of the
date that the Proxy Statement is first mailed to the Stockholders of
Christiana and EVI 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) EVI, Sub and Christiana will
each be a party to that reorganization within the meaning of
Section 368(b) of the Code and (iii) EVI, 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;
(h) EVI shall have received from Arthur Andersen LLP a letter,
in form and substance satisfactory to EVI, dated as of the Closing
Date, to the effect that the Merger would not adversely affect the
ability of EVI to account for any prior or future business
combination as a pooling of interest;
(i) C2 shall have executed and delivered to Christiana and EVI
the Logistic Purchase Agreement and agreement among members in form
and substance, including schedules, acceptable to EVI;
(j) The Logistic Sale shall have been consummated;
(k) Christiana shall have delivered to EVI 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 $20 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 $30 million, 3,897,462 shares of EVI Common Stock 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 EVI, 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 EVI 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 EVI 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 EVI 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 (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 EVI and not subsequently withdrawn;
(c) Christiana and C2 shall have received from Fulbright &
Jaworski L.L.P. counsel to EVI, 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 EVI 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) EVI, Sub and
Christiana will each be a party to that reorganization within the
meaning of Section 368(b) of the Code, and (iii) EVI, 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 EVI or the stockholders of Christiana:
(a) by mutual written consent of EVI and Christiana;
(b) by either EVI 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 EVI shall not approve the Merger at
the EVI 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 EVI determines that such termination is
appropriate in complying with its fiduciary obligations.
(c) by Christiana if (i) EVI 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 EVI or Sub at or
prior to such date of termination (provided such breach has not been
cured within 30 days following receipt by EVI 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 EVI
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 EVI 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 EVI MAE, assuming the effectiveness of the Merger; or (iii) the
Board of Directors of EVI 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 EVI 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
EVI 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 EVI 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 EVI 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 EVI 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 EVI, 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 EVI and Christiana, this
Agreement may be amended only as may be permitted by applicable provisions
of the DGCL and the WGCL. 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.
7.4 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 EVI 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
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to EVI or Sub:
EVI, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Bernard J. Duroc-Danner
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Curtis W. Huff
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 EVI 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 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 EVI Indemnified Party (as defined in the Logistic Purchase
Agreement) may be brought with respect to any claim for
indemnification by an EVI 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 EVI Indemnified Party may be
brought with respect to any claim for indemnification by an EVI
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, 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 EVI 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 EVI 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 EVI Disclosure Letter, executed by EVI as of the date
hereof, and delivered to Christiana on the date hereof, contains all
disclosure required to be made by EVI under the various terms and
provisions of this Agreement. Each item of disclosure set forth in
the EVI 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.
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.
EVI, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
CHRISTIANA ACQUISITION, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
CHRISTIANA COMPANIES, INC.
By: _________________________________
Name: William T. Donovan
Title: President
C2, Inc.
By: _______________________________
Name: William T. Donovan
Title: President
<PAGE>
EVI DISCLOSURE LETTER
Section 2.1(g) - Tax Matters
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
C2, INC.
____________________
ARTICLE 1
NAME
The name of the Corporation is C2, Inc.
ARTICLE 2
PURPOSE
The purposes for which the Corporation is organized are to engage in
any lawful activity within the purposes for which a Corporation may be
organized under the Wisconsin Business Corporation Law, Chapter 180 of the
Wisconsin Statutes.
ARTICLE 3
CLASSES OF STOCK
The total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is sixty million
(60,000,000) shares which shall be divided into two classes as follows:
(1) Ten million (10,000,000) shares of preferred stock, one dollar
($.01) par value (the "Preferred Stock"); and
(2) Fifty million (50,000,000) shares of common stock, one dollar
($.01) par value (the "Common Stock").
ARTICLE 4
RIGHTS OF STOCK
A statement of the voting powers and of the designations, preferences
and relative participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof, of each class of
stock of the Corporation is as follows:
(1) In General
To the fullest extent permitted under the Wisconsin Business
Corporation Law, the number of authorized shares of any class or
classes of stock may be increased or decreased without the approval
of such class or classes as a separate voting group, except to the
extent that, in the resolution or resolutions providing for the
issuance of a class or series of stock, the Board of Directors shall
specify that approval of the holders of one or more classes or series
of stock shall be required to increase or decrease the number of
authorized shares of such one or more classes or series of stock.
The ability of shareholders to demand a special meeting of
shareholders is restricted to the fullest extent permitted by the
Wisconsin Business Corporation Law, and the Board of Directors of the
Corporation has the authority to take any action necessary or
appropriate to carry out the intent of this sentence, including
without limitation adopting any Bylaw.
(2) Preferred Stock
The Preferred Stock may be issued from time to time in one or
more series, with such distinctive serial designations as may be
stated or expressed in the resolution or resolutions providing for
the issue of such stock adopted from time to time by the Board of
Directors; and in such resolution or resolutions providing for the
issue of shares of each particular series, the Board of Directors is
also expressly authorized, to the full extent permitted under the
Wisconsin Business Corporation Law, to fix: the consideration for
which the shares of such series are to be issued; the number of
shares constituting such series; the rate of dividends upon which and
the times at which dividends on shares of such series shall be
payable and the preference, if any, which such dividends shall have
relative to dividends on shares of any other class or classes or any
other series of stock of the Corporation; whether such dividends
shall be cumulative or noncumulative, and if cumulative, the date or
dates from which dividends on shares of such series shall be
cumulative; the voting rights, if any, to be provided for shares of
such series; the rights, if any, which the holders of shares of such
series shall have in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation; the rights, if any, which the holders of shares of such
series shall have to convert such shares into or exchange such shares
for shares of any other class or classes or any other series of stock
of the Corporation and the terms and conditions, including price and
rate of exchange, of such conversion or exchange; the redemption
price or prices and other terms of redemption, if any, for shares of
such series; and any and all other preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof pertaining to shares of such
series.
(3) Common Stock
Subject to preferences and rights to which holders of stock
other than the Common Stock may have become entitled by resolution or
resolutions of the Board of Directors as hereinbefore provided:
A. The holders of the Common Stock shall be entitled to such
dividends (payable in cash, stock or otherwise) upon the Common Stock
as may be declared from time to time by the Board of Directors and
paid out of funds legally available therefor.
B. In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, the holders of the Common Stock
shall be entitled to share ratably in all assets available for
distribution to the shareholders.
C. The holders of Common Stock shall be entitled to one vote
for each of the shares held by them of record at the time for
determining holders thereof entitled to vote.
ARTICLE 5
MATTERS RELATING TO BOARD OF DIRECTORS
(1) Power of the Board of Directors. The business and affairs of
the Corporation shall be managed under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred
by the laws of the State of Wisconsin, the Board of Directors is expressly
authorized:
A. to make, alter, amend or repeal the Bylaws of the
Corporation; provided, however, that no Bylaws hereafter adopted
shall invalidate any prior act of the Directors that would have been
valid if such Bylaws had not been adopted;
B. to determine the rights, power, duties, rules and
procedures that affect the power of the Board of Directors to direct
the business and affairs of the Corporation, including the power to
designate and empower committees of the Board of Directors, to elect,
appoint and empower the officers and other agents of the Corporation,
and to determine the time and place of, and the notice requirements
for, Board meetings, as well as quorum and voting requirements
(except as otherwise provided in these Amended and Restated Articles
of Incorporation) for, and the manner of taking, Board action; and
C. to exercise all such powers and do all such acts as may be
exercised by the Corporation, subject to the provisions of the laws
of the State of Wisconsin, these Amended and Restated Articles of
Incorporation, and any Bylaws of the Corporation.
(2) Number of Directors. The number of Directors constituting the
entire Board of Directors shall be not less than five (5) nor more than
ten (10). The specific number of Directors constituting the entire Board
of Directors shall be as authorized from time to time exclusively by the
Board of Directors by resolution adopted by a majority of the Board of
Directors. As used in these Amended and Restated Articles of
Incorporation, the term "entire Board of Directors" means the total
authorized number of Directors that the Corporation would have if there
were no vacancies.
(3) Nominations. Nominations for the election of Directors and
advance notice of other action to be taken at meetings of shareholders of
the Corporation shall be given in the manner provided in the Bylaws of the
Corporation.
(4) Vacancies. Subject to the rights of the holders of any series
of Preferred Stock or any other class of capital stock of the Corporation
(other than the Common Stock) then outstanding, any vacancies in the Board
of Directors for any reason and any newly created Directorships resulting
by reason of any increase in the number of Directors may be filled only by
the Board of Directors, acting by the affirmative vote of a majority of
the remaining Directors then in office, although less than a quorum, and
any Directors so elected shall hold office until the next election of the
class for which such Directors have been elected and until their
successors are elected and qualified.
(5) Removal of Directors. Subject to the rights of the holders of
any series of Preferred Stock or any other class of capital stock of the
Corporation (other than the Common Stock) then outstanding, any Director,
or the entire Board of Directors, may be removed from office at any time
prior to the expiration of his or their term of office, but only for cause
(as hereinafter defined) and only by the affirmative vote of the holders
of record of shares representing a majority of the outstanding shares of
capital stock of the Corporation then entitled to vote generally in the
election of Directors, voting together as a single class. As used herein,
"Cause" shall exist only if the director whose removal is proposed (i) has
been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal or (ii) has been adjudged
by a court of competent jurisdiction to be liable for willful misconduct
in the performance of his or her duties to the Corporation in a matter
that has a material adverse effect on the business of the Corporation and
such adjudication is no longer subject to direct appeal.
ARTICLE 6
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Amended and Restated Articles of
Incorporation in the manner now or hereafter prescribed by law, and all
rights and powers conferred herein on shareholders, directors and officers
are subject to this reserved power; provided that the affirmative vote of
the holders of record of a majority of the outstanding shares of capital
stock of the Corporation then entitled to vote generally in the election
of Directors, voting together as a single class, shall be required to
amend, alter, change or repeal, or adopt any provision or provisions
inconsistent with, Section (2) of Article 4, Article 5 and this Article 6
of these Amended and Restated Articles of Incorporation.
ARTICLE 7
REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the Corporation is 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, and the name of its
registered agent at such address is Foley & Lardner.
EXHIBIT 3.2
BYLAWS
of
C2, INC.
(a Wisconsin corporation)
<PAGE>
BYLAWS
OF
C2, INC.
(a Wisconsin corporation)
ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may have such
principal and other business offices, either within or without the State
of Wisconsin, as the Board of Directors may designate or as the business
of the corporation may require from time to time.
1.02. Registered Office. The registered office of the corporation
required by the Wisconsin Business Corporation Law to be maintained in the
State of Wisconsin may be, but need not be, identical with the principal
office in the State of Wisconsin, and the address of the registered office
may be changed from time to time by the Board of Directors or by the
registered agent. The business office of the registered agent of the
corporation shall be identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders
shall be held at such date and time as shall be fixed by or under the
authority of the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday
in the State of Wisconsin, such meeting shall be held on the next
succeeding business day.
2.02. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by the Wisconsin
Business Corporation Law, may be called by the Board of Directors, the
Chairman or the President. The corporation shall call a special meeting
of shareholders in the event that the holders of at least 10% of all of
the votes entitled to be cast on any issue proposed to be considered at
the proposed special meeting sign, date and deliver to the corporation one
or more written demands for the meeting describing one or more purposes
for which it is to be held. The corporation shall give notice of such a
special meeting within thirty days after the date that the demand is
delivered to the corporation.
2.03. Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Wisconsin, as the place
of meeting for any annual or special meeting of shareholders. If no
designation is made, the place of meeting shall be the principal office of
the corporation. Any meeting may be adjourned to reconvene at any place
designated by vote of the shares represented thereat.
2.04. Notice of Meeting. Written notice stating the date, time
and place of any meeting of shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days nor more than sixty days before the date
of the meeting (unless a different time is provided by the Wisconsin
Business Corporation Law or the articles of incorporation), either
personally or by mail, by or at the direction of the Chairman, the
President or the Secretary, to each shareholder of record entitled to vote
at such meeting and to such other persons as required by the Wisconsin
Business Corporation Law. If mailed, such notice shall be deemed to be
effective when deposited in the United States mail, addressed to the
shareholder at his or her address as it appears on the stock record books
of the corporation, with postage thereon prepaid. If an annual or special
meeting of shareholders is adjourned to a different date, time or place,
the corporation shall not be required to give notice of the new date, time
or place if the new date, time or place is announced at the meeting before
adjournment; provided, however, that if a new record date for an adjourned
meeting is or must be fixed, the corporation shall give notice of the
adjourned meeting to persons who are shareholders as of the new record
date.
2.05. Waiver of Notice. A shareholder may waive any notice
required by the Wisconsin Business Corporation Law, the articles of
incorporation or these bylaws before or after the date and time stated in
the notice. The waiver shall be in writing and signed by the shareholder
entitled to the notice, contain the same information that would have been
required in the notice under applicable provisions of the Wisconsin
Business Corporation Law (except that the time and place of meeting need
not be stated) and be delivered to the corporation for inclusion in the
corporate records. A shareholder's attendance at a meeting, in person or
by proxy, waives objection to all of the following: (a) lack of notice or
defective notice of the meeting, unless the shareholder at the beginning
of the meeting or promptly upon arrival objects to holding the meeting or
transacting business at the meeting; and (b) consideration of a particular
matter at the meeting that is not within the purpose described in the
meeting notice, unless the shareholder objects to considering the matter
when it is presented.
2.06. Fixing of Record Date. The Board of Directors may fix in
advance a date as the record date for the purpose of determining
shareholders entitled to notice of and to vote at any meeting of
shareholders, shareholders entitled to demand a special meeting as
contemplated by Section 2.02 hereof, shareholders entitled to take any
other action, or shareholders for any other purpose. Such record date
shall not be more than seventy days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed by the Board of Directors or by the
Wisconsin Business Corporation Law for the determination of shareholders
entitled to notice of and to vote at a meeting of shareholders, the record
date shall be the close of business on the day before the first notice is
given to shareholders. If no record date is fixed by the Board of
Directors or by the Wisconsin Business Corporation Law for the
determination of shareholders entitled to demand a special meeting as
contemplated in Section 2.02 hereof, the record date shall be the date
that the first shareholder signs the demand. Except as provided by the
Wisconsin Business Corporation Law for a court-ordered adjournment, a
determination of shareholders entitled to notice of and to vote at a
meeting of shareholders is effective for any adjournment of such meeting
unless the Board of Directors fixes a new record date, which it shall do
if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting. The record date for determining
shareholders entitled to a distribution (other than a distribution
involving a purchase, redemption or other acquisition of the corporation's
shares) or a share dividend is the date on which the Board of Directors
authorized the distribution or share dividend, as the case may be, unless
the Board of Directors fixes a different record date.
2.07. Shareholders' List for Meetings. After a record date for
a special or annual meeting of shareholders has been fixed, the
corporation shall prepare a list of the names of all of the shareholders
entitled to notice of the meeting. The list shall be arranged by class or
series of shares, if any, and show the address of and number of shares
held by each shareholder. Such list shall be available for inspection by
any shareholder, beginning two business days after notice of the meeting
is given for which the list was prepared and continuing to the date of the
meeting, at the corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be held. A
shareholder or his or her agent may, on written demand, inspect and,
subject to the limitations imposed by the Wisconsin Business Corporation
Law, copy the list, during regular business hours and at his or her
expense, during the period that it is available for inspection pursuant to
this Section 2.07. The corporation shall make the shareholders' list
available at the meeting and any shareholder or his or her agent or
attorney may inspect the list at any time during the meeting or any
adjournment thereof. Refusal or failure to prepare or make available the
shareholders' list shall not affect the validity of any action taken at a
meeting of shareholders.
2.08. Quorum and Voting Requirements. Shares entitled to vote
as a separate voting group may take action on a matter at a meeting only
if a quorum of those shares exists with respect to that matter. If the
corporation has only one class of stock outstanding, such class shall
constitute a separate voting group for purposes of this Section 2.08.
Except as otherwise provided in the articles of incorporation, any bylaw
adopted under authority granted in the articles of incorporation, or the
Wisconsin Business Corporation Law, a majority of the votes entitled to be
cast on the matter shall constitute a quorum of the voting group for
action on that matter. Once a share is represented for any purpose at a
meeting, other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes
of determining whether a quorum exists for the remainder of the meeting
and for any adjournment of that meeting unless a new record date is or
must be set for the adjourned meeting. If a quorum exists, except in the
case of the election of directors, action on a matter shall be approved if
the votes cast within the voting group favoring the action exceed the
votes cast opposing the action, unless the articles of incorporation, any
bylaw adopted under authority granted in the articles of incorporation, or
the Wisconsin Business Corporation Law requires a greater number of
affirmative votes. Unless otherwise provided in the articles of
incorporation, directors shall be elected by a plurality of the votes cast
by the shares entitled to vote in the election of directors at a meeting
at which a quorum is present. For purposes of this Section 2.08,
"plurality" means that the individuals with the largest number of votes
are elected as directors up to the maximum number of directors to be
chosen at the meeting. Though less than a quorum of the outstanding votes
of a voting group are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
2.09. Conduct of Meeting. The Chairman, and in his or her
absence, the President and in their absence, any Vice President or person
chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act as chairperson of the meeting, and the
Secretary of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer
may appoint any other person to act as secretary of the meeting.
2.10. Proxies. At all meetings of shareholders, a shareholder
may vote his or her shares in person or by proxy. A shareholder may
appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his or her attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or
other officer or agent of the corporation authorized to tabulate votes.
An appointment is valid for eleven months from the date of its signing
unless a different period is expressly provided in the appointment form.
2.11. Voting of Shares. Except as provided in the articles of
incorporation or in the Wisconsin Business Corporation Law, each
outstanding share, regardless of class, is entitled to one vote on each
matter voted on at a meeting of shareholders.
2.12. Action without Meeting. Any action required or permitted
by the articles of incorporation or these bylaws or any provision of the
Wisconsin Business Corporation Law to be taken at a meeting of the
shareholders may be taken without a meeting and without action by the
Board of Directors if a written consent or consents, describing the action
so taken, is signed by all of the shareholders entitled to vote with
respect to the subject matter thereof and delivered to the corporation for
inclusion in the corporate records.
2.13. Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in
good faith, may accept the vote, consent, waiver or proxy appointment and
give it effect as the act of a shareholder. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the name of a
shareholder, the corporation, if acting in good faith, may accept the
vote, consent, waiver or proxy appointment and give it effect as the act
of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary status
acceptable to the corporation is presented with respect to the vote,
consent, waiver or proxy appointment.
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation is presented with
respect to the vote, consent, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy appointment if
the Secretary or other officer or agent of the corporation who is
authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of
the corporation managed under the direction of, the Board of Directors.
The number of directors of the corporation shall be five (5) or such other
number as may be determined from time to time by the Board of Directors.
3.02. Tenure and Qualifications. Each director shall hold
office until the next annual meeting of shareholders and until his or her
successor shall have been elected and, if necessary, qualified, or until
there is a decrease in the number of directors which takes effect after
the expiration of his or her term, or until his or her prior death,
resignation or removal. A director may be removed by the shareholders
only at a meeting called for the purpose of removing the director, and the
meeting notice shall state that the purpose, or one of the purposes, of
the meeting is removal of the director. A director may be removed from
office with or without cause if the number of votes cast to remove the
director exceeds the number of votes cast not to remove such director. A
director may resign at any time by delivering written notice which
complies with the Wisconsin Business Corporation Law to the Board of
Directors, to the Chairman or the President or to the corporation. A
director's resignation is effective when the notice is delivered unless
the notice specifies a later effective date. Directors need not be
residents of the State of Wisconsin or shareholders of the corporation.
3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
after the annual meeting of shareholders and each adjourned session
thereof. The place of such regular meeting shall be the same as the place
of the meeting of shareholders which precedes it, or such other suitable
place as may be announced at such meeting of shareholders. The Board of
Directors may provide, by resolution, the date, time and place, either
within or without the State of Wisconsin, for the holding of additional
regular meetings of the Board of Directors without other notice than such
resolution.
3.04. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman, President,
Secretary or any two directors. The Chairman, President or Secretary may
fix any place, either within or without the State of Wisconsin, as the
place for holding any special meeting of the Board of Directors, and if no
other place is fixed the place of the meeting shall be the principal
office of the corporation in the State of Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.03) shall
be given by written notice delivered in person, by telegraph, teletype,
facsimile or other form of wire or wireless communication, or by mail or
private carrier, to each director at his business address or at such other
address as such director shall have designated in writing filed with the
Secretary, in each case not less than forty-eight hours prior to the
meeting. The notice need not describe the purpose of the meeting of the
Board of Directors or the business to be transacted at such meeting. If
mailed, such notice shall be deemed to be effective 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 effective when the
telegram is delivered to the telegraph company. If notice is given by
private carrier, such notice shall be deemed to be effective when
delivered to the private carrier. Whenever any notice whatever is
required to be given to any director of the corporation under the articles
of incorporation or these bylaws or any provision of the Wisconsin
Business Corporation Law, a waiver thereof in writing, signed at any time,
whether before or after the date and time of meeting, by the director
entitled to such notice shall be deemed equivalent to the giving of such
notice. The corporation shall retain any such waiver as part of the
permanent corporate records. A director's attendance at or participation
in a meeting waives any required notice to him or her of the meeting
unless the director at the beginning of the meeting or promptly upon his
or her arrival objects to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to action taken at
the meeting.
3.06. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the articles of incorporation or these
bylaws, a majority of the number of directors specified in Section 3.01 of
these bylaws shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors. Except as otherwise provided by
the Wisconsin Business Corporation Law or by the articles of incorporation
or by these bylaws, a quorum of any committee of the Board of Directors
created pursuant to Section 3.12 hereof shall consist of a majority of the
number of directors appointed to serve on the committee. A majority of
the directors present (though less than such quorum) may adjourn any
meeting of the Board of Directors or any committee thereof, as the case
may be, from time to time without further notice.
3.07. Manner of Acting. The affirmative vote of a majority of
the directors present at a meeting of the Board of Directors or a
committee thereof at which a quorum is present shall be the act of the
Board of Directors or such committee, as the case may be, unless the
Wisconsin Business Corporation Law, the articles of incorporation or these
bylaws require the vote of a greater number of directors.
3.08. Conduct of Meetings. The Chairman, and in his or her
absence, the President, and in their absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order
and shall act as chairperson of the meeting. The Secretary of the
corporation shall act as secretary of all meetings of the Board of
Directors but in the absence of the Secretary, the presiding officer may
appoint any other person present to act as secretary of the meeting.
Minutes of any regular or special meeting of the Board of Directors shall
be prepared and distributed to each director.
3.09. Vacancies. Except as provided below, any vacancy
occurring in the Board of Directors, including a vacancy resulting from an
increase in the number of directors, may be filled by any of the
following: (a) the shareholders; (b) the Board of Directors; or (c) if
the directors remaining in office constitute fewer than a quorum of the
Board of Directors, the directors, by the affirmative vote of a majority
of all directors remaining in office. If the vacant office was held by a
director elected by a voting group of shareholders, only the holders of
shares of that voting group may vote to fill the vacancy if it is filled
by the shareholders, and only the remaining directors elected by that
voting group may vote to fill the vacancy if it is filled by the
directors. A vacancy that will occur at a specific later date, because of
a resignation effective at a later date or otherwise, may be filled before
the vacancy occurs, but the new director may not take office until the
vacancy occurs.
3.10. Compensation. The Board of Directors, irrespective of
any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the corporation as directors
or may delegate such authority to an appropriate committee. The Board of
Directors also shall have authority to provide for or delegate authority
to an appropriate committee to provide for reasonable pensions, disability
or death benefits, and other benefits or payments, to directors, officers
and employees and to their estates, families, dependents or beneficiaries
on account of prior services rendered by such directors, officers and
employees to the corporation.
3.11. Presumption of Assent. A director who is present and is
announced as present at a meeting of the Board of Directors or any
committee thereof created in accordance with Section 3.12 hereof, when
corporate action is taken, assents to the action taken unless any of the
following occurs: (a) the director objects at the beginning of the
meeting or promptly upon his or her arrival to holding the meeting or
transacting business at the meeting; (b) the director dissents or abstains
from an action taken and minutes of the meeting are prepared that show the
director's dissent or abstention from the action taken; (c) the director
delivers written notice that complies with the Wisconsin Business
Corporation Law of his or her dissent or abstention to the presiding
officer of the meeting before its adjournment or to the corporation
immediately after adjournment of the meeting; or (d) the director dissents
or abstains from an action taken, minutes of the meeting are prepared that
fail to show the director's dissent or abstention from the action taken,
and the director delivers to the corporation a written notice of that
failure that complies with the Wisconsin Business Corporation Law promptly
after receiving the minutes. Such right of dissent or abstention shall
not apply to a director who votes in favor of the action taken.
3.12. Committees. The Board of Directors shall from time to
time designate an Audit Committee, a Compensation and Nominating
Committee, and a Finance Committee, each of which shall have and may
exercise the powers of the Board of Directors in the direction of the
business and affairs of the corporation in respect to the matters set
forth herein and to the extent set forth in one or more resolutions of the
Board of Directors adopted by a majority of the entire Board of Directors,
subject to the power of the Board of Directors to assign from time to time
to any other committees such powers in respect to specific matters as the
Board of Directors may deem desirable and subject to any limitations of
applicable law, the Amended and Restated Articles of Incorporation or
these By-Laws.
These three committees shall be the standing committees of the
corporation. The Board of Directors may, by resolution passed by a
majority of the entire Board of Directors, designate such other committees
as it from time to time may deem appropriate. The powers of each such
committee shall be limited to those specified in the resolution
designating the committee.
Each committee shall consist of not less than three directors
who shall, unless otherwise provided by the Board of Directors, serve at
the pleasure of the Board of Directors. In the case of standing
committees, members shall be elected annually by resolution passed by a
majority of the entire Board of Directors at the regular meeting of the
Board of Directors held in connection with the Annual Meeting.
Each committee shall fix its own rules of procedure and shall
meet where and as provided by such rules, but the presence of a majority
shall be necessary to constitute a quorum, unless otherwise provided by
these By-Laws. The Secretary of the corporation or a member of the
appropriate committee shall keep minutes of proceedings. Any action
required or permitted to be taken at any meeting of any committee may be
taken without a meeting if all the members consent thereto in writing and
such written consent is filed with the minutes of the proceedings of such
committee. Each committee shall make such reports to the Board of its
activities as the Board may request.
The Board may elect one or more of its members as alternate
members of any committee who may take the place of any absent member or
members at any meeting of such committee, upon request by the Chairman of
the corporation or upon request by the chairman of the committee or the
chairman of the meeting of any committee. Alternate members shall serve,
in the order in which the Board shall determine, when one or more members
of the committee shall be absent or disqualified. Alternate members may
attend committee meetings as observers, without the right to vote when all
members are present; when fewer than all are present, only an alternate
member serving in the place of an absent or disqualified member shall have
the right to vote. If no alternate is available, the committee member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in place of any absent
or disqualified member.
Unless otherwise provided by the Board of Directors, the duties
and responsibilities of the standing committees shall be as follows:
(a) Audit Committee. The Audit Committee shall be comprised
solely of three members of the Board who shall be independent of
management and free from any relationship that, in the opinion of the
Board, would interfere with their exercise of independent judgment as
committee members. The Audit Committee shall have the duties and
responsibilities as set forth in the Audit Committee Charter attached
hereto as Exhibit A.
(b) Compensation and Nominating Committee. The Compensation
and Nominating Committee shall be comprised solely of three members of the
Board who shall be independent of management and free from any
relationship that, in the opinion of the Board, would interfere with their
exercise of independent judgment as committee members. The Compensation
and Nominating Committee shall have the duties and responsibilities as set
forth in the Compensation and Nominating Committee Charter attached hereto
as Exhibit B.
(c) Finance Committee. The Finance Committee shall consist
of three members of the Board of Directors which shall include the
Chairman, the President and at least one independent director. All
members of the Board of Directors shall receive notice of the Finance
Committee meetings, may attend the committee meetings in person or by
telephone and shall have the right to vote. The Finance Committee shall
have the duties and responsibilities as set forth in the Finance Committee
Charter attached hereto as Exhibit C.
3.13. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
bylaws, members of the Board of Directors (and any committees thereof
created pursuant to Section 3.12 hereof) may participate in regular or
special meetings by, or through the use of, any means of communication by
which all participants may simultaneously hear each other, such as by
conference telephone. If a meeting is conducted by such means, then at
the commencement of such meeting the presiding officer shall inform the
participating directors that a meeting is taking place at which official
business may be transacted. Any participant 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 officer determines, in his or her
sole discretion, to be inappropriate under the circumstances for action at
a meeting held by such means. Such determination shall be made and
announced in advance of such meeting.
3.14. Action Without Meeting. Any action required or permitted
by the Wisconsin Business Corporation Law to be taken at a meeting of the
Board of Directors or a committee thereof created pursuant to Section 3.12
hereof may be taken without a meeting if the action is taken by all
members of the Board or of the committee. The action shall be evidenced
by one or more written consents describing the action taken, signed by
each director or committee member and retained by the corporation. Such
action shall be effective when the last director or committee member signs
the consent, unless the consent specifies a different effective date.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation shall
be a Chairman, a President, the number of Vice Presidents as authorized
from time to time by the Board of Directors, a Secretary, and a Treasurer,
each of whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected
or appointed by the Board of Directors. The Board of Directors may also
authorize any duly appointed officer to appoint one or more officers or
assistant officers. Any two or more offices may be held by the same
person.
4.02. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as is practicable. Each officer shall
hold office until his or her successor shall have been duly elected or
until his or her prior death, resignation or removal.
4.03. Removal. The Board of Directors may remove any officer
and, unless restricted by the Board of Directors or these bylaws, an
officer may remove any officer or assistant officer appointed by that
officer, at any time, with or without cause and notwithstanding the
contract rights, if any, of the officer removed. The appointment of an
officer does not of itself create contract rights.
4.04. Resignation. An officer may resign at any time by
delivering notice to the corporation that complies with the Wisconsin
Business Corporation Law. The resignation shall be effective when the
notice is delivered, unless the notice specifies a later effective date
and the corporation accepts the later effective date.
4.05. Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be
filled by the Board of Directors for the unexpired portion of the term.
If a resignation of an officer is effective at a later date as
contemplated by Section 4.04 hereof, the Board of Directors may fill the
pending vacancy before the effective date if the Board provides that the
successor may not take office until the effective date.
4.06. Chairman. The Chairman shall, when present, preside at
all meetings of the shareholders and of the Board of Directors. He or she
shall supervise and control the operation of the business and have
authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of the corporation 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 Chairman. He or she
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, 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 corporation's regular business, or
which shall be authorized by resolution of the Board of Directors; and,
except as otherwise provided by law or the Board of Directors, he or she
may authorize the President, 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 Chairman and such other
duties as may be prescribed by the Board of Directors from time to time.
4.07. President. The Presidents shall participate, together
with the Chairman, in the supervision and control of the business and
affairs of the Corporation. The President shall have authority to sign,
execute and acknowledge, on behalf of the corporation, 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 corporation's regular business, or which shall be authorized
by resolution of the Board of Directors; and, except as otherwise provided
by law or the Board of Directors, 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 the absence or inability to act of the Chairman, the President
shall exercise all his powers and duties. In general he or she shall
perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
4.08. The Vice Presidents. The Vice Presidents shall have such
duties and have such authority as from time to time may be delegated or
assigned to them by the Chairman, the President or the Board of Directors.
Any Vice President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation. The execution of any
instrument of the corporation by any Vice President shall be conclusive
evidence, as to third parties, of his or her authority to act.
4.09. The Secretary. The Secretary shall: (a) keep minutes of
the meetings of the shareholders and of the Board of Directors (and of
committees thereof) in one or more books provided for that purpose
(including records of actions taken by the shareholders or the Board of
Directors (or committees thereof) without a meeting); (b) see that all
notices are duly given in accordance with the provisions of these bylaws
or as required by the Wisconsin Business Corporation Law; (c) be custodian
of the corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d)
maintain a record of the shareholders of the corporation, in a form that
permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and
class or series of shares held by each shareholder; (e) sign with the
Chairman, President, or a Vice President, certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and have such other duties and
exercise such authority as from time to time may be delegated or assigned
by the Chairman, the President or by the Board of Directors.
4.10. The Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) maintain appropriate accounting records; (c) receive and
give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Section 5.04; and (d) 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 Chairman, the President or by the
Board of Directors. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his or her duties in such
sum and with such surety or sureties as the Board of Directors shall
determine.
4.11. Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors may from time to time authorize. The Assistant
Secretaries may sign with the Chairman, the President or a Vice President
certificates for shares of the corporation the issuance of which shall
have been authorized by a resolution of the Board of Directors. The
Assistant Treasurers shall respectively, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such
sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall
perform such duties and have such authority as shall from time to time be
delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman, the President or the Board of Directors.
4.12. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly
appointed officer of the corporation to appoint, any person to act as
assistant to any officer, or as agent for the corporation in his or her
stead, or to perform the duties of such officer whenever for any reason it
is impracticable for such officer to act personally, and such assistant or
acting officer or other agent so appointed by the Board of Directors or an
authorized officer shall have the power to perform all the duties of the
office to which he or she is so appointed to be an assistant, or as to
which he or she is so appointed to act, except as such power may be
otherwise defined or restricted by the Board of Directors or the
appointing officer.
4.13. Salaries. The salaries of the principal officers shall
be fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a
director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to specific
instances. In the absence of other designation, all deeds, mortgages and
instruments of assignment or pledge made by the corporation shall be
executed in the name of the corporation by the Chairman, the President and
any one of the Vice Presidents, the Secretary, an Assistant Secretary, the
Treasurer or an Assistant Treasurer; the Secretary or an Assistant
Secretary, when necessary or required, shall affix the corporate seal, if
any, thereto; and when so executed no other party to such instrument or
any third party shall be required to make any inquiry into the authority
of the signing officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such
indebtedness shall be issued in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such authorization
may be general or confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by or under the authority of a resolution
of the Board of Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of
Directors.
5.05. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by this corporation may be voted at any meeting of security
holders of such other corporation by the Chairman of this corporation if
he or she be present, or in his or her absence by the President or any
Vice President of this corporation who may be present, and (b) whenever,
in the judgment of the Chairman, or in his or her absence, of the
President or any Vice President, it is desirable for this corporation to
execute a proxy or written consent in respect to any shares or other
securities issued by any other corporation and owned by this corporation,
such proxy or consent shall be executed in the name of this corporation by
the Chairman, the President or one of the Vice Presidents of this
corporation, without necessity of any authorization by the Board of
Directors, affixation of corporate seal, if any, or countersignature or
attestation by another officer. Any person or persons designated in the
manner above stated as the proxy or proxies of this corporation shall have
full right, power and authority to vote the shares or other securities
issued by such other corporation and owned by this corporation the same as
such shares or other securities might be voted by this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES; TRANSFER OF SHARES
6.01. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form, consistent with the
Wisconsin Business Corporation Law, as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chairman, the
President or a Vice President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except as provided in Section 6.06.
6.02. Facsimile Signatures and Seal. The seal of the
corporation, if any, on any certificates for shares may be a facsimile.
The signature of the Chairman, the President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles if
the certificate is manually signed on behalf of a transfer agent, or a
registrar, other than the corporation itself or an employee of the
corporation.
6.03. Signature by Former Officers. The validity of a share
certificate is not affected if a person who signed the certificate (either
manually or in facsimile) no longer holds office when the certificate is
issued.
6.04. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may
treat the registered owner of such shares as the person exclusively
entitled to vote, to receive notifications and otherwise to have and
exercise all the rights and power of an owner. Where a certificate for
shares is presented to the corporation with a request to register for
transfer, the corporation shall not be liable to the owner or any other
person suffering loss as a result of such registration of transfer if (a)
there were on or with the certificate the necessary endorsements, and (b)
the corporation had no duty to inquire into adverse claims or has
discharged any such duty. The corporation may require reasonable
assurance that such endorsements are genuine and effective and compliance
with such other regulations as may be prescribed by or under the authority
of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of
any restriction imposed by the corporation upon the transfer of such
shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the owner
claims that certificates for shares have been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if
the owner (a) so requests before the corporation has notice that such
shares have been acquired by a bona fide purchaser, (b) files with the
corporation a sufficient indemnity bond if required by the Board of
Directors or any principal officer, and (c) satisfies such other
reasonable requirements as may be prescribed by or under the authority of
the Board of Directors.
6.07. Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible
or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts for services to be
performed or other securities of the corporation. Before the corporation
issues shares, the Board of Directors shall determine that the
consideration received or to be received for the shares to be issued is
adequate. The determination of the Board of Directors is conclusive
insofar as the adequacy of consideration for the issuance of shares
relates to whether the shares are validly issued, fully paid and
nonassessable. The corporation may place in escrow shares issued in whole
or in part for a contract for future services or benefits, a promissory
note, or other property to be issued in the future, or make other
arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until
the services are performed, the benefits or property are received or the
promissory note is paid. If the services are not performed, the benefits
or property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
6.08. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with law as it may deem expedient concerning the issue,
transfer and registration of shares of the corporation.
ARTICLE VII. TAXABLE YEAR
7.01. Taxable Year. The taxable year of the Corporation shall
commence on July 1 and end on June 30 of each
ARTICLE VIII. SEAL
8.01. The Corporation shall have no corporate seal, and the
words "NO CORPORATE SEAL" may be inserted in any document executed by the
Corporation where a corporate seal would otherwise properly be imprinted.
ARTICLE IX. INDEMNIFICATION
9.01. Provision of Indemnification. The corporation shall, to
the fullest extent permitted or required by Sections 180.0850 to 180.0859,
inclusive, of the Wisconsin Business Corporation Law, including any
amendments thereto (but in the case of any such amendment, only to the
extent such amendment permits or requires the corporation to provide
broader indemnification rights than prior to such amendment), indemnify
its Directors and Officers against any and all Liabilities, and advance
any and all reasonable Expenses, incurred thereby in any Proceeding to
which any such Director or Officer is a Party because he or she is or was
a Director or Officer of the corporation. The corporation shall also
indemnify an employee who is not a Director or Officer, to the extent that
the employee has been successful on the merits or otherwise in defense of
a Proceeding, for all reasonable Expenses incurred in the Proceeding if
the employee was a Party because he or she is or was an employee of the
corporation. The rights to indemnification granted hereunder shall not be
deemed exclusive of any other rights to indemnification against
Liabilities or the advancement of Expenses which a Director, Officer or
employee may be entitled under any written agreement, Board resolution,
vote of shareholders, the Wisconsin Business Corporation Law or otherwise.
The corporation may, but shall not be required to, supplement the
foregoing rights to indemnification against Liabilities and advancement of
Expenses under this Section 8.01 by the purchase of insurance on behalf of
any one or more of such Directors, Officers or employees, whether or not
the corporation would be obligated to indemnify or advance Expenses to
such Director, Officer or employee under this Section 9.01. All
capitalized terms used in this Article IX and not otherwise defined herein
shall have the meaning set forth in Section 180.0850 of the Wisconsin
Business Corporation Law.
ARTICLE X. AMENDMENTS
10.01. By Shareholders. These bylaws may be amended or
repealed and new bylaws may be adopted by the shareholders at any annual
or special meeting of the shareholders at which a quorum is in attendance.
10.02. By Directors. Except as otherwise provided by the
Wisconsin Business Corporation Law or the articles of incorporation, these
bylaws may also be amended or repealed and new bylaws may be adopted by
the Board of Directors by affirmative vote of a majority of the number of
directors present at any meeting at which a quorum is in attendance;
provided, however, that the shareholders in adopting, amending or
repealing a particular bylaw may provide therein that the Board of
Directors may not amend, repeal or readopt that bylaw.
10.03. Implied Amendments. Any action taken or authorized by
the shareholders or by the Board of Directors which would be inconsistent
with the bylaws then in effect but which is taken or authorized by
affirmative vote of not less than the number of shares or the number of
directors required to amend the bylaws so that the bylaws would be
consistent with such action shall be given the same effect as though the
bylaws had been temporarily amended or suspended so far, but only so far,
as is necessary to permit the specific action so taken or authorized.
SUBSCRIPTION TO PURCHASE SHARES OF COMMON STOCK OF C2, INC.
RETURN TO: FIRSTAR TRUST COMPANY
BY MAIL: BY HAND:
Firstar Trust Company Firstar Trust Company
Corporate Trust 1555 North River Center Drive
P. O. Box 2077 Suite 301
Milwaukee, WI 53201 Milwaukee, WI 53212
1. Number of Shares of C2, Inc. 2. Total Subscription Price (Line
subscribed for pursuant to 1 multiplied by $4.00
Additional Subscription Privilege: per share):
_________________ Shares of C2, Inc. $_____________
Please enclose a check for the amount set forth on Line 2 payable to
Firstar Trust Company.
AGREEMENT AND SIGNATURE
I hereby irrevocably subscribe for the number of Shares of C2,
Inc. indicated above upon the terms and conditions specified in the
Prospectus relating thereto. Receipt of the Prospectus is hereby
acknowledged.
DATED: _____________________, 1998
_____________________________ ______________________________________
Signature Signature of Joint Subscriber (if any)
(Please date and sign using the above two lines exactly as your name
appears on the enclosed check. Joint subscribers should each sign (please
execute using the above lines). If signing as an executor, administrator,
attorney, trustee or guardian, give title as such. If a corporation, sign
in full corporate name by authorized officer. If a partnership, sign in
the name of authorized person.)
TO BE EXECUTED ONLY BY NON-UNITED STATES RESIDENTS:
I hereby certify that the foregoing purchase of Common Stock has
been effected in accordance with the applicable laws of the jurisdiction
in which I reside.
DATED: _____________________, 1998
_____________________________ ______________________________________
Signature Signature of Joint Subscriber (if any)
PROXY AND ELECTION FORM
Christiana Companies, Inc.
700 North Water Street
Milwaukee, Wisconsin 53202
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Sheldon B. Lubar and William T. Donovan as
Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the
shares of common stock of Christiana Companies, Inc. (the "Common Shares")
held of record by the undersigned on ________________, 1998, at the
special meeting of shareholders to be held on ________________, 1998, and
any and all adjournments thereof.
You are encouraged to specify your choices by marking the appropriate
boxes (SEE BELOW) but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
[X] Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted FOR Proposal 1.
FOR AGAINST ABSTAIN
1. PROPOSAL TO APPROVE THE MERGER AGREEMENT [ ] [ ] [ ]
(which includes as a part thereof the
AGREEMENT PROVIDING FOR THE LOGISTIC
SALE), the terms and conditions of which
are described in the enclosed
Joint Proxy Statement/Prospectus.
2. In their discretion the Proxies are
authorized to vote upon such other
business as may properly come before the
meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY AND ELECTION FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign exactly as name appears below. When Common Shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. if a partnership, please sign in partnership name by
authorized person.
DATED ________________, 1998 ___________________ _____________________
Signature Signature if
held jointly
SEE REVERSE SIDE FOR INFORMATION REGARDING ELECTION TO PURCHASE
SHARES OF C2, INC. COMMON STOCK
FORM OF ELECTION TO PURCHASE C2, INC. SHARES
I understand (i) that I will receive approximately $3.50 for each share of
Christiana Common Stock that I own immediately prior to the Merger; (ii)
that I am entitled to purchase the same number of shares of C2, Inc.
("C2") Common Stock at $4.00 per share; and (iii) that I may purchase more
shares of C2, if they are available.
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."
AGREEMENT AND SIGNATURE
I hereby irrevocably subscribe for the number of shares of C2, Inc.
indicated above upon the terms and conditions specified in the C2, Inc.
Prospectus relating thereto. Receipt of the C2, Inc. Prospectus is hereby
acknowledged.
DATED: __________, 1998 _____________________ ______________________
Signature Signature For Joint
Subscriber (if any)
(Please date and sign using the above two lines exactly as your name
appears on the reverse side of this document. Joint subscribers should
each sign (using the above lines). If signing as an executor,
administrator, attorney, trustee or guardian, give title as such. If a
corporation, sign in full corporate name by authorized officer. If a
partnership, sign in the name of authorized person.)
TO BE EXECUTED ONLY BY NON-UNITED STATES RESIDENTS:
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.
DATED: ______________, 1998 ____________________ ____________________
Signature Signature For Joint
Subscriber (if any)
Exhibit 5.1
___________, 1998
C2, Inc.
700 North Water Street,
Suite 1200
Milwaukee, Wisconsin 53202
Gentlemen:
We have acted as counsel for C2, Inc., a Wisconsin corporation
(the "Company"), with respect to the preparation of the Company's
Registration Statement on Form S-1 (the "Registration Statement"),
including the prospectus constituting a part thereof (the "Prospectus"),
to be filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"), in
connection with the proposed sale by the Company of up to 5,202,664
shares (the "Shares") of the Company's Common Stock, $.01 par value (the
"Common Stock"), having a value upon filing of the Registration Statement
of $20,810,656 in the manner set forth in the Registration Statement
and Prospectus.
In connection with our representation, we have examined (i) the
Registration Statement, including the Prospectus; (ii) the Company's
Amended and Restated Articles of Incorporation and the Company's By-laws;
(iii) the resolutions of the Board of Directors of the Company relating to
the offering and sale of the Shares; and (iv) such other proceedings,
documents and records we deemed necessary to enable us to render this
opinion.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Company is a corporation validly existing under the
laws of the State of Wisconsin.
2. The Shares that are to be offered and sold by the Company,
when issued and paid for in the manner contemplated in the Registration
Statement and Prospectus, will be validly issued, fully paid and
nonassessable (except as provided in Section 180.0622(2)(b) of the
Wisconsin Business Corporation Law).
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm therein. In
giving our consent, we do not admit that we are "experts" within the
meaning of Section 11 of the Securities Act or within the category of
persons whose consent is required by Section 7 of the Securities Act.
Very truly yours,
FOLEY & LARDNER
EXHIBIT 10.3
C2, INC.
1998 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the C2, Inc. 1998 Equity Incentive Plan (the
"Plan") is to promote the best interests of C2, Inc. (the "Company") and
its shareholders by providing key employees of the Company and its
Affiliates (as defined below) and members of the Company's Board of
Directors who are not employees of the Company with an opportunity to
acquire a, or increase their, proprietary interest in the Company. It is
intended that the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the
long-range plans of the Company and securing the Company's continued
growth and financial success. Also, by encouraging stock ownership by
non-employee directors, the Company seeks to attract and retain on its
Board of Directors persons of exceptional competence and to furnish an
added incentive for them to continue their association with the Company.
It is intended that certain of the options issued pursuant to the Plan
will constitute incentive stock options within the meaning of Section 422
of the Internal Revenue Code ("Incentive Stock Options") and the remainder
of the options issued under the Plan will constitute non-qualified stock
options.
Section 2. Definitions
As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company, including without limitation, all current or
future subsidiaries of the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share granted under the Plan.
(c) "Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award granted
under the Plan.
(d) "Change in Control" will be deemed to have occurred if:
(i) any entity not affiliated with the Company is or becomes the
beneficial owner of securities of the Company representing at least 25% of
the combined voting power of the Company's then outstanding securities;
(ii) there is consummated any business combination of the Company in which
the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's capital stock would be converted into cash,
securities or other property, other than a merger of the Company in which
the holders of the Company's capital stock immediately prior to the merger
have the same proportionate ownership of capital stock of the surviving
corporation immediately after the merger, or any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the consolidated assets of the Company; or
(iii) the shareholders of the Company approve any plan for the liquidation
or dissolution of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Commission" shall mean the Securities and Exchange
Commission.
(g) "Committee" shall mean the Compensation and Nominating
Committee of the Board of Directors of the Company (or any other committee
thereof designated by such Board to administer the Plan); provided that the
Committee shall be composed of not less than two directors, each of whom
is a "non-employee director" within the meaning of Rule 16b-3 and who are
"outside directors" within the meaning of Section 162(m) of the Code.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(i) "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other securities),
the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee.
(j) "IPO Effective Date" shall mean the date on which the
registration statement relating to the Company's initial public offering
of common stock under the Securities Act of 1933, as amended, is declared
effective by the Commission.
(k) "Incentive Stock Option" shall mean an option granted under
Section 5(b) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(l) "Independent Directors" shall mean then serving, elected or
appointed directors of the Company who are not employees of the Company.
(m) "Initial Director" shall mean the Independent Directors
serving immediately after the IPO Effective Date.
(n) "Key Employee" shall mean any officer or other key employee
of the Company or of any Affiliate who is responsible for or contributes
to the management, growth or profitability of the business of the Company
or any Affiliate as determined by the Committee in its discretion.
(o) "Non-Qualified Stock Option" shall mean an option granted
under Section 5(b) and Section 6(b) of the Plan that is not intended to be
an Incentive Stock Option.
(p) "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
(q) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Award under the Plan.
(r) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a performance goal or goals have been
established.
(s) "Performance Share" shall mean any right granted under
Section 5(e) of the Plan that will be paid out as a Share (which, in
specified circumstances, may be a Share of Restricted Stock).
(t) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization or government or political subdivision thereof.
(u) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed or
been waived.
(v) "Restricted Securities" shall mean Awards of Restricted
Stock or other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
(w) "Restricted Stock" shall mean any Share granted under
Section 5(d) of the Plan or, in specified circumstances, a Share paid in
connection with a Performance Share under Section 5(e) of the Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(y) "Shares" shall mean shares of common stock of the Company,
$.01 par value, and such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(b) of the
Plan.
(z) "Stock Appreciation Right" shall mean any right granted
under Section 5(c) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by
those members of the Board of Directors of the Company who qualify as
"non-employee directors" under Rule 16b-3 and who are "outside directors"
within the meaning of Section 162(m) of the Code. Subject to the terms of
the Plan and applicable laws and without limitation by reason of
enumeration, the Committee shall have full discretionary power and
authority to: (i) designate Participating Key Employees; (ii) determine
the type or types of Awards to be granted to each Participating Key
Employee under the Plan; (iii) determine the number of Shares to be
covered by (or with respect to which payments, rights or other matters are
to be calculated in connection with) Awards granted to Participating Key
Employees; (iv) determine the terms and conditions of any Award granted to
a Participating Key Employee; (v) determine whether, to what extent and
under what circumstances Awards granted to Participating Key Employees may
be settled or exercised in cash, Shares, other securities, other Awards or
other property, and the method or methods by which Awards may be settled,
exercised, canceled, forfeited or suspended; (vi) determine whether, to
what extent and under what circumstances cash, Shares, other Awards and
other amounts payable with respect to an Award granted to Participating
Key Employees under the Plan shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret
and administer the Plan and any instrument or agreement relating to, or
Award made under, the Plan (including, without limitation, any Award
Agreement); (viii) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable
for the administration of the Plan. Grants of options to Independent
Directors under the Plan shall be automatic and the amount and the terms
of such awards shall be determined in accordance with Section 6 hereof.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time or from time to time, and shall be
final, conclusive and binding upon all Persons, including the Company, any
Affiliate, any Participating Key Employee, any Independent Director, any
holder or beneficiary of any Award, any shareholder and any employee of
the Company or of any Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Awards may be granted under the Plan shall be
520,000 subject to the limitations set forth in Section 5(d)(i).
(ii) Accounting for Awards. The number of Shares covered
by an Award under the Plan, or to which such Award relates, shall be
counted on the date of grant of such Award against the number of
Shares available for granting Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee may, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares subject to the Plan and which thereafter may be made the subject of
Awards under the Plan; (ii) the number and type of Shares subject to
outstanding Awards; and (iii) the grant, purchase or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b) of the Code (or any successor
provision thereto); and provided further that the number of Shares subject
to any Award payable or denominated in Shares shall always be a whole
number.
Section 5. Awards to Key Employees
(a) Eligibility. Any Key Employee, including any executive
officer or employee-director of the Company or of any Affiliate, who is
not a member of the Committee shall be eligible to be designated a
Participating Key Employee.
(b) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions
as set forth below and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as the
Committee shall determine in its discretion.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 5 shall be determined by the
Committee; provided, however, that such exercise price shall not be
less than 100% of the Fair Market Value of a Share on the date of
grant of such Option.
(ii) Option Term. The term of each Option shall be fixed
by the Committee; provided, however, that in no event shall the term
of any Option exceed a period of ten years from the date of its
grant.
(iii) Exercisability and Method of Exercise. An Option
shall become exercisable in such manner and within such period or
periods and in such installments or otherwise as shall be determined
by the Committee. The Committee also shall determine the method or
methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities, other Awards, other
property or any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made
or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code (or any successor provision
thereto) and any regulations promulgated thereunder. Notwithstanding
any provision in the Plan to the contrary, no Incentive Stock Option
may be granted hereunder after the tenth anniversary of the adoption
of the Plan by the Board of Directors of the Company.
(c) Stock Appreciation Right Awards. The Committee is hereby
authorized to grant Stock Appreciation Rights to Key Employees. Subject
to the terms of the Plan and any applicable Award Agreement, a Stock
Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the
Fair Market Value of one Share on the date of exercise over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of
the Plan, the grant price, term, methods of exercise, methods of
settlement (including whether the Participating Key Employee will be paid
in cash, Shares, other securities, other Awards, or other property or any
combination thereof), and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee in its
discretion. The Committee may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate,
including, without limitation, restricting the time of exercise of the
Stock Appreciation Right to specified periods as may be necessary to
satisfy the requirements of Rule 16b-3.
(d) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Restricted Stock to Key Employees; provided, however, that
the aggregate number of Shares of Restricted Stock granted under the
Plan to all Participating Key Employees as a group shall not exceed
50,000 Shares (provided that such number of Shares subject to
adjustment in accordance with the terms of Section 4(b) hereof) of
the total number of Shares available for Awards under Section
4(a)(i).
(ii) Restrictions. Shares of Restricted Stock granted to
Participating Key Employees shall be subject to such restrictions as
the Committee may impose in its discretion (including, without
limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or
property), which restrictions may lapse separately or in combination
at such time or times, in such installments or otherwise, as the
Committee may deem appropriate in its discretion.
(iii) Registration. Any Restricted Stock granted under
the Plan to a Participating Key Employee may be evidenced in such
manner as the Committee may deem appropriate in its discretion,
including, without limitation, book-entry registration or issuance of
a stock certificate or certificates. In the event any stock
certificate is issued in respect of Shares of Restricted Stock
granted under the Plan to a Participating Key Employee, such
certificate shall be registered in the name of the Participating Key
Employee and shall bear an appropriate legend (as determined by the
Committee) referring to the terms, conditions and restrictions
applicable to such Restricted Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted to
a Participating Key Employee, one or more stock certificates for the
appropriate number of Shares, free of restrictions imposed under the
Plan, shall be delivered to the Participating Key Employee or, if the
Participating Key Employee received stock certificates representing
the Restricted Stock at the time of grant, the legends placed on such
certificates shall be removed.
(v) Forfeiture. Except as otherwise determined by the
Committee in its discretion, upon termination of employment of a
Participating Key Employee (as determined under criteria established
by the Committee in its discretion) for any reason during the
applicable restriction period, all Shares of Restricted Stock still
subject to restriction shall be forfeited by the Participating Key
Employee; provided, however, that the Committee may, when it finds
that a waiver would be in the best interests of the Company, waive in
whole or in part any or all remaining restrictions with respect to
Shares of Restricted Stock held by a Participating Key Employee.
(e) Performance Share Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Performance Shares to Key Employees.
(ii) Performance Goals and Other Terms. The Committee
shall determine in its discretion, the Performance Period, the
performance goal or goals (and the performance level or levels
related thereto) to be achieved during any performance period, the
proportion of payments, if any, to be made for performance between
the minimum and full performance levels for any performance goal and,
if applicable, the relative percentage weight given to each of the
selected performance goals, the restrictions applicable to shares of
restricted stock received upon payment of performance shares if
payment is made in such manner, and any other terms, conditions and
rights relating to the grant of performance shares. The Committee
may select from various performance goals, including return on
equity, return on investment, return on net assets, economic value
added, earnings from operations, pre-tax profits, net earnings, net
earnings per share, working capital as a percent of net sales, net
cash provided by operating activities, market price for the Common
Stock and total shareholder return. In conjunction with selecting
the applicable performance goal or goals, the Committee will also fix
the relevant performance level or levels (e.g., a 15% return on
equity) which must be achieved with respect to the goal or goals in
order for the performance shares to be earned by the key employee.
(iii) Rights and Benefits During the Performance
Period. The Committee may provide that, during a Performance Period,
a Participating Key Employee shall be paid cash amounts, with respect
to each Performance Share held by such Participating Key Employee, in
the same manner, at the same time, and in the same amount paid, as a
cash dividend on a Share. Participating Key Employees shall have no
voting rights with respect to Performance Shares held by them.
(iv) Adjustments with Respect to Performance Shares. Any
other provision of the Plan to the contrary notwithstanding, the
Committee may in its discretion at any time or from time to time
adjust performance goals (up or down) and minimum or full performance
levels (and any intermediate levels and proportion of payments
related thereto), adjust the manner in which performance goals are
measured, or shorten any Performance Period or waive in whole or in
part any or all remaining restrictions with respect to Shares of
Restricted Stock issued in payment of Performance Shares, if the
Committee determines that conditions, including but not limited to,
changes in the economy, changes in competitive conditions, changes in
laws or governmental regulations, changes in generally accepted
accounting principles, changes in the Company's accounting policies,
acquisitions or dispositions by the Company or its Affiliates, or the
occurrence of other unusual, unforeseen or extraordinary events, so
warrant.
(v) Payment of Performance Shares. As soon as is
reasonably practicable following the end of the applicable
Performance Period, one or more certificates representing the number
of Shares equal to the number of Performance Shares payable shall be
registered in the name of and delivered to the Participating Key
Employee; provided, however, that any Shares of Restricted Stock
payable in connection with Performance Shares shall, pending the
expiration, lapse, or waiver of the applicable restrictions, be
evidenced in the manner as set forth in Section 5(d)(iii) hereof.
(f) General.
(i) No Consideration for Awards. Awards shall be granted
to Participating Key Employees for no cash consideration unless
otherwise determined by the Committee.
(ii) Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement in such form (consistent
with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution
for, any other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to, or in
tandem with, other Awards, or in addition to, or in tandem with,
awards granted under any other plan of the Company or any Affiliate,
may be granted either at the same time as or at a different time from
the grant of such other Awards or awards.
(iv) Forms of Payment Under Awards. Subject to the terms
of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise or payment of an Award to a Participating Key Employee may
be made in such form or forms as the Committee shall determine, and
may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee in its discretion. Such rules and
procedures may include, without limitation, provisions for the
payment or crediting of interest on installment or deferred payments.
(v) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable or transferable by a Participating
Key Employee otherwise than by will or by the laws of descent and
distribution (or, in the case of an Award of Restricted Securities,
to the Company); provided, however, that a Participating Key Employee
at the discretion of the Committee may be entitled, in the manner
established by the Committee, to designate a beneficiary or
beneficiaries to exercise his or her rights, and to receive any
property distributable, with respect to any Award upon the death of
the Participating Key Employee. Each Award, and each right under any
Award, shall be exercisable, during the lifetime of the Participating
Key Employee, only by such individual or, if permissible under
applicable law, by such individual's guardian or legal
representative. No Award (other than Released Securities), and no
right under any such Award, may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.
(vi) Term of Awards. Except as otherwise provided in the
Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vii) Rule 16b-3 Six-Month Limitations. To the extent
required in order to comply with Rule 16b-3 only, any equity security
offered pursuant to the Plan may not be sold for at least six months
after acquisition, except in the case of death or disability, and any
derivative security issued pursuant to the Plan shall not be
exercisable for at least six months, except in case of death or
disability of the holder thereof. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the
meanings, if any, assigned or attributed to them under Rule 16b-3.
(viii) Share Certificates; Representation. In addition
to the restrictions imposed pursuant to Section 5(c) and Section 5(d)
hereof, all certificates for Shares delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations and other
requirements of the Commission, the Nasdaq SmallCap Market or any
other stock exchange or other market upon which such Shares are then
listed or traded, and any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such
restrictions. The Committee may require each Participating Key
Employee or other Person who acquires Shares under the Plan by means
of an Award originally made to a Participating Key Employee to
represent to the Company in writing that such Participating Key
Employee or other Person is acquiring the Shares without a view to
the distribution thereof.
Section 6. Automatic Option Grants to Independent Directors
(a) Options to Independent Directors. The Company shall grant
automatically Non-Qualified Stock Options to Independent Directors on the
terms and conditions as set forth below:
(i) Grant of Options. On the IPO Effective Date, each
Initial Director shall be granted automatically Non-Qualified Stock
Options to purchase [______] Shares. Each Independent Director newly
elected or appointed to the Board of Directors after the IPO
Effective Date and during the term of the Plan shall be granted
automatically, on the date of such election or appointment, Non-
Qualified Stock Options to purchase [______] Shares. In addition to
the foregoing, on the date of each annual meeting of shareholders of
the Company, beginning with the Company's 1998 annual meeting of
shareholders, each then serving and continuing Independent Director
shall be granted automatically Non-Qualified Stock Options to
purchase [_____] Shares.
(ii) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(b) shall be equal to (i) in
the case of grants to Initial Directors, the initial public offering
price per Share (without deduction for underwriting discounts or
commissions) and (ii) in all other cases, the closing sale price per
Share of the Shares on the Nasdaq SmallCap Market (or such other
exchange or system on which the Shares are then trading) of the
Common Stock on the date of grant.
(iii) Option Term. The term of each Option shall end
on the sooner to occur of five years from the date of its grant or
one year from the date the Independent Director ceases to be an
Independent Director for any reason.
(iv) Vesting. Each initial grant of Non-Qualified Stock
Options to Independent Directors hereunder (whether upon the IPO
Effective Date or thereafter upon an Independent Director's initial
election or appointment to the Board) will vest ratably over an
approximate five-year period (i.e., one-fifth on the Company's first
annual shareholders meeting date occurring at least 12 months after
the initial grant and one-fifth on each of the next four succeeding
annual shareholders meetings); 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.
The annual grants of Non-Qualified Stock Options to Independent
Directors on the date of each annual meeting of Company shareholders
(beginning with the Company's 1998 annual meeting) will vest in full
on the six month anniversary of the annual meeting on which such Non-
Qualified Stock Options were granted, provided, that the Independent
Director remains a member of the Board of Directors on such six month
anniversary date. Notwithstanding the aforementioned vesting
provisions, all outstanding Non-Qualified Stock Options granted to an
Independent Director under the Plan will vest immediately and in full
upon a Change in Control, the death or disability of such Independent
Director, provided, that the Independent Director continues to serve
as a member of the Board of Directors on the date of such occurrence.
(v) Exercisability and Method of Exercise. Non-Qualified
Stock Options granted to Independent Directors shall be exercisable
during their term subject only to the vesting provisions above and
the termination provisions below. The Committee may determine the
method or methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities, other property or any
combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price, in which payment of the
exercise price with respect to any Non-Qualified Stock Option granted
to an Independent Director may be made or deemed to have been made.
(vi) Termination of Options. Unexercised Non-Qualified
Stock Options granted to Independent Directors shall terminate on the
earlier of: (i) five years after the date of grant or (ii) one year
after the Independent Director ceases to be an Independent Director
for any reason.
(b) General.
(i) No Consideration for Granting Options. Non-Qualified
Stock Options shall be granted to Independent Directors for no cash
consideration unless otherwise determined by the Committee.
(ii) Option Agreements. Options granted under Section 6(a)
of the Plan shall be evidenced by an Option Agreement in such form
(consistent with the terms of the Plan) as shall have been approved
by the Committee.
(iii) Limits on Transfer of Options. No Non-Qualified
Stock Options granted under Section 6(a) and no right under any such
Option shall be assignable, alienable, saleable or transferable by an
Independent Director otherwise than by will or by the laws of descent
and distribution; provided, however, that an Independent Director at
the discretion of the Committee may be entitled, in the manner
established by the Committee, to designate a beneficiary or
beneficiaries to exercise his or her rights, and to receive any
property distributable, with respect to any Option upon the death of
the Independent Director. Failing any designation, the Independent
Director's personal representative may exercise such rights and
receive such property. Each Non-Qualified Stock Option granted under
Section 6(a) hereof, and each right under any such Option, shall be
exercisable, during the lifetime of the Independent Director, only by
such individual or, if permissible under applicable law, by such
individual's guardian or legal representative. No Non-Qualified
Stock Option granted under Section 6(a) hereof, and no right under
any such Option, may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the
Company or any Affiliate.
(iv) Rule 16b-3 Six-Month Limitations. To the extent
required in order to comply with Rule 16b-3 only, any Shares issued
to an Independent Director pursuant to the Plan may not be sold for
at least six months after acquisition, except in the case of death or
disability, and any Option issued to an Independent Director pursuant
to the Plan shall not be exercisable for at least six months, except
in case of death or disability of the holder thereof. Terms used in
the preceding sentence shall, for the purposes of such sentence only,
have the meanings, if any, assigned or attributed to them under Rule
16b-3.
(v) Share Certificates; Representation. All certificates
for Shares delivered to an Independent Director under the Plan
pursuant to the exercise of an Option granted thereto shall be
subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations
and other requirements of the Commission, the Nasdaq SmallCap Market
or any other stock exchange or other market upon which such Shares
are then listed or traded, and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions. The Committee may require any Independent Director who
acquires Shares by exercising an Option granted under the Plan to
represent to the Company in writing that such Independent Director is
acquiring the Shares without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of
Defects and Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend,
discontinue or terminate the Plan; provided, however, that shareholder
approval of any amendment of the Plan shall also be obtained if otherwise
required by: (i) the rules and/or regulations promulgated under Section 16
of the Exchange Act (in order for the Plan to remain qualified under Rule
16b-3); (ii) the Code or any rules promulgated thereunder (in order to
allow for Incentive Stock Options to be granted under the Plan); or (iii)
the listing requirements of the Nasdaq SmallCap Market or any other
principal securities exchange or market on which the Shares are then
traded (in order to maintain the listing of the Shares thereon).
Termination of the Plan shall not affect the rights of Participating Key
Employees or Independent Directors with respect to Awards previously
granted to them, and all unexpired Awards shall continue in force and
effect after termination of the Plan except as they may lapse or be
terminated by their own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may in its discretion correct any defect, supply any omission or
reconcile any inconsistency in any Award or Award Agreement in the manner
and to the extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key
Employee, Independent Director or other Person shall have any claim to be
granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Key Employees, Participating Key Employees or
holders or beneficiaries of Awards under the Plan. The terms and
conditions of Awards need not be the same with respect to each
Participating Key Employee.
(b) Withholding. No later than the date as of which an amount
first becomes includable in the gross income of a Participating Key
Employee for federal income tax purposes with respect to any Award under
the Plan, the Participating Key Employee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations arising with respect to Awards to
Participating Key Employees under the Plan may be settled with Shares
previously owned by the Participating Key Employee; provided, however,
that the Participating Key Employee may not settle such obligations with
Shares that are part of, or are received upon exercise of, the Award that
gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and
the Company and any Affiliate shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due to the
Participating Key Employee. The Committee may establish such procedures
as it deems appropriate for the settling of withholding obligations with
Shares, including, without limitation, the establishment of such
procedures as may be necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from
adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participating Key Employee the
right to be retained in the employ of the Company or any Affiliate.
Further, the Company or any Affiliate may at any time dismiss a
Participating Key Employee from employment, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement. Except for rights accorded under the Plan and
under any applicable Award Agreement, Participating Key Employees shall
have no rights as holders of Shares as a result of the granting of Awards
hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined
by the Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall
not establish any fiduciary relationship between the Company or the
Committee and any Participating Key Employee, Independent Director or
other Person. To the extent any Person holds any right by virtue of a
grant under the Plan, such right (unless otherwise determined by the
Committee) shall be no greater than the right of an unsecured general
creditor of the Company.
(f) Governing Law. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the internal laws of the State of Wisconsin
and applicable federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal
or unenforceable in any jurisdiction, or as to any Person or Award, or
would disqualify the Plan, any Award Agreement or any Award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any Award Agreement
or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award, and the remainder of the Plan, any such Award Agreement
and any such Award shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other
securities shall be issued or delivered pursuant to the Plan, any Award
Agreement or any Award, and the Committee shall determine (except as
otherwise provided in the Plan) whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or
any rights thereto shall be canceled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the IPO Effective Date, provided
that, the Plan is adopted by the shareholders prior thereto but less than
12 months following the date of adoption of the Plan by the Board of
Directors, and all Awards granted under the Plan prior to the date of
effectiveness shall be subject to such effectiveness and the effective
date of such Award grants shall be deemed to be the date of such
effectiveness of the Plan.
Section 10. Term of the Plan
No Award shall be granted under the Plan following the tenth
anniversary of its effective date. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond such date and, to the extent set
forth in the Plan, the authority of the Committee to amend, alter, adjust,
suspend, discontinue or terminate any such Award, or to waive any
conditions or restrictions with respect to any such Award, and the
authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond such date.
Exhibit 21.1
Subsidiaries
Total Logistic Control, LLC, a Delaware limited liability company
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.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
February 10, 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> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 100
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 100
<TOTAL-LIABILITY-AND-EQUITY> 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
<EPS-DILUTED> 0
</TABLE>
