As filed with the Securities and Exchange Commission on March 23, 1998
Registration No. 333-46027
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
___________________
C2, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1915787
(State of incorporation) (Primary Standard (I.R.S. Employer
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. [_]
____________________________
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Each Class of Amount To Proposed Maximum Proposed Maximum Amount of
Securities Be Offering Aggregate Offering Registration
To Be Registered Registered Price Per Unit Price(1) Fee(1)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value . 5,202,664 $4.00 $20,810,656 $6,139.14
Rights to Purchase Common Stock -- -- -- --
(1) Estimated in accordance with Rule 457(o) under the Securities Act of
1933 solely for the purpose of calculating the registration fee pursuant
to Section 6(b) thereunder.
</TABLE>
______________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
5,202,664 Shares Subject to Completion
March __, 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") have a right ("Right") to subscribe
for their pro rata share of Common Stock offered hereby. Each Right
consists of a "Basic Subscription Privilege" and an "Additional
Subscription Privilege." The Rights are not represented by a certificate
or other evidence of ownership and are non-transferable. The "Basic
Subscription Privilege" entitles each Christiana Shareholder to purchase
one share of Common Stock for each share of Christiana Common Stock held
immediately prior to the Effective Time. 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 have an
"Additional Subscription Privilege" to subscribe for the remaining shares
of Common Stock 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.
Sheldon B. Lubar, David J. Lubar and certain members of the Lubar
family (collectively the "Lubar Family") have committed, pursuant to an
agreement between the Company and Sheldon B. Lubar, 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,
which will allow the Company to have sufficient funds to complete the
Acquisition (the "Lubar Commitment"). The exercise of this Basic
Subscription Privilege by the Lubar Family will result in the Lubar Family
purchasing a minimum of 2,718,000 shares of Common Stock in the Offering.
In the event all Christiana Shareholders exercise their Basic Subscription
Privilege in full, the Lubar Family will own approximately 52% of the
outstanding shares of Common Stock.
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 7 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)
Amount Per Share . . . $4.00 $4.00
Maximum Amount . . . . $20,810,656 $20,810,656
Minimum Amount . . . . $10,852,000(2) $10,852,000
(1) Before deducting expenses of the offering, payable by the Company,
estimated at $170,000.
(2) Assumes that only 2,718,000 shares of Common Stock are purchased by
the Lubar Family pursuant to the Lubar Commitment.
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 space. 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>
Six Months Ended December 31, Year Ended June 30,
1997 1996 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Revenues $46,714 $40,821 $84,208 $76,976 $71,029
Earnings from operations 3,648 3,636 6,311 5,689 7,555
Net earnings 1,704(2) 316 12,181(3) 1,536 2,562
EBITDA(1) 6,862 7,177 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. Since all companies do not calculate
EBITDA uniformly, it may not be an accurate measure of comparison.
(2) Net earnings for the six months ended December 31, 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 six month period ended December 31, 1996 (during which TLC was a
C-Corporation) would have been $497 absent a provision for income taxes of $181.
(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 MERGER AND THE ACQUISITION
The Merger will result in Christiana becoming a wholly-owned
subsidiary of EVI. Pursuant to the Merger, each outstanding share of
Christiana Common Stock will be converted into a right to receive
- 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;
- 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
- 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").
Immediately prior to the Effective Time of the Merger,
Christiana will complete the Acquisition by selling two-thirds of its
interest in TLC to the Company for approximately $10.7 million. The
Acquisition will be effected pursuant to the terms of an Agreement, dated
December 12, 1997, by and among the Company, TLC, Christiana and EVI (the
"Purchase Agreement") and the Agreement and Plan of Merger, dated as of
December 12, 1997, by and among EVI, Christiana Acquisition Co., a
wholly-owned subsidiary of EVI ("Sub"), Christiana and the Company
pursuant to which the Merger will be effected (the "Merger Agreement").
Approximately $10.7 million of the net proceeds from the Offering will be
utilized to fund the Acquisition.
Pursuant to the Merger, 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. See "Risk Factors -
Substantial Leverage; Deficit of Earnings to Fixed Charges" and "Pro Forma
Summary Combined Financial Data." In addition, the Purchase Agreement
provides that the Company will assume, pay and discharge when due all
liabilities known or unknown, fixed or contingent (including all expenses
related to the Merger) ("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 relating to any historical business
operations or assets of TLC ("TLC Historic Business"). See "Risk Factors
- Assumed Liabilities and Indemnification Obligations of the Company and
TLC."
As soon as possible after the Effective Time, but no later than
30 days thereafter (the "Payment Date"), the parties to the Merger
Agreement will calculate and agree upon the Cash Consideration
(anticipated to be approximately $3.50 per share of Christiana Common
Stock), and the Contingent Cash Consideration (approximately $1.92 per
share of Christiana Common Stock). On the Payment Date, EVI will pay the
Cash Consideration due each Christiana Shareholder to Firstar Trust
Company (the "Subscription Agent") (which will also act as escrow agent in
the Merger), and the Subscription Agent will promptly distribute such cash
to each Christiana Shareholder, unless the Christiana Shareholder has
requested that all or a portion of the Cash Consideration be applied to
the purchase of Common Stock of the Company, in which case such Cash
Consideration will be so applied. Such a request must be made by a
Christiana Shareholder pursuant to the Letter of Transmittal, provided as
part of the Joint Proxy Statement/Prospectus of Christiana and EVI (the
"Merger Proxy Statement") in connection with the Merger (the "Letter of
Transmittal"). See "The Offering." The Contingent Cash Consideration
will be retained by EVI for a period of at least five years. EVI will pay
the Contingent Cash Consideration as determined as of such future date and
issue the payment to the Christiana Shareholders of record as of the
record date fixed by Christiana in connection with its Special Meeting of
Shareholders described in the Merger Proxy Statement.
No fraction of a share of EVI Common Stock will be issued in the
Merger. In lieu thereof, all fractional shares of EVI Common Stock that
would otherwise be issuable in the Merger will be rounded to the nearest
whole share of EVI Common Stock.
The following diagram sets forth the organizational structure
and stock ownership of the Company, TLC, Christiana and EVI following the
Merger and the Acquisition.
[BEFORE AND AFTER DIAGRAM]
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. The
Subscription Price was determined by the
Company's Board of Directors and is not
based on an independent valuation of the
Company.
Rights . . . . . . . . . . Each Christiana Shareholder has a Right,
consisting of the Basic Subscription
Privilege and the Additional Subscription
Privilege.
Basic Subscription Privilege Each Christiana Shareholder has 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). In the event all
allocation preferences ranking prior to
the general public's ability to purchase
Common Stock are exercised in full, there
will be no shares available to the general
public. The Additional Subscription
Privilege is nontransferable.
Subscription Procedure for
Christiana Shareholders . The Basic Subscription Privilege may be
exercised by delivery of a properly
completed Letter of Transmittal delivered
to Christiana Shareholders in connection
with the Merger. Christiana Shareholders
wishing to exercise their Basic
Subscription Privilege will automatically,
upon completion and delivery of the Letter
of Transmittal, have the exercise price
paid directly by the Subscription Agent.
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 Letter of
Transmittal. 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 Letter of Transmittal must be
delivered to the Subscription Agent
following the Effective Time and 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 following the Effective
Time and on or before the Expiration Date.
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.
Risk Factors . . . . . . . Certain risk factors should be considered
in evaluating an investment in the Common
Stock, including, without limitation, the
Company's dependence on a single line of
business and significant customers;
competition in TLC's industry; TLC's
substantial leverage; the assumed
liabilities and indemnification obligation
of the Company and TLC; and other risks
described more fully under "Risk Factors."
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 (414) 291-9000.
________________________
(1) Represents the Lubar Commitment. The minimum percentage of ownership
of outstanding Common Stock following the Offering by the Lubar
Family will be 52% and the maximum percentage of ownership by the
Lubar Family following the Offering (assuming no other Christiana
Shareholders exercise their Basic Subscription Privilege and that TLC
management and the general public do not purchase shares of Common
Stock in the Offering) is 100%.
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 the TLC Dividend and to pay to Christiana in
full the entire principal amount of $3,000,000 advanced to Wiscold
pursuant to 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 $9 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 including minority interest at
December 31, 1997 was 65% 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 $738,000 for the year ended June
30, 1997 and net earnings of $20,000 for the six months ended December 31,
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 to
which any 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 heretofore and 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 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 will experience dilution
as a result of the Acquisition to the extent of intangible assets
purchased in the Acquisition, which, at December 31, 1997, was $5,514,000,
or $1.06 per share assuming the Offering is fully subscribed.
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 the Merger
of Sub with and into Christiana.
Each outstanding share of Christiana Common Stock will be converted
in the Merger into a right to receive (i) 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 definitive calculation of Cash Consideration will be
made by the parties to the Merger Agreement no later than thirty (30) days
following the Effective Time.
The "Christiana Net Cash" will be equal to (i) the sum of
- $20,000,000 obtained in connection with the TLC Dividend;
- $10,666,667 to be obtained by Christiana in connection with the
Acquisition;
- $3,000,000 obtained in connection with payment in full by TLC of
the entire principal amount of the Wiscold Note;
- the cash received from the exercise of Christiana stock options;
and
- all of the cash on hand of Christiana as of the Effective Time,
minus (ii) the sum of
- an amount of cash necessary to pay the Assumed Liabilities
(which include, without limitation, all expenses relating to the
Merger) in full without giving effect to the use or application
of any tax deductions relating to the exercise of options or any
tax benefits that may be realized as a result of amended tax
returns of Christiana (such Assumed Liabilities are described
more fully herein under "Risk Factors - Assumed Liabilities and
Indemnification Obligations of the Company and TLC" and "Pro
Forma Combined Financial Data"); and
- $10,000,000 (the initial amount of the Contingent Cash
Consideration).
Based on the current capitalization of Christiana and the assets and
Liabilities of Christiana as of December 31, 1997, and after giving effect
to the estimated expenses of the Merger payable by Christiana, the Cash
Consideration per share is anticipated to be approximately $3.50 and the
Contingent Cash Consideration, assuming no reductions for indemnity
payments during the five year period following the Effective Time, is
anticipated to be $1.92 per share.
Christiana Shareholders purchasing shares of Common Stock pursuant to
the Basic Subscription Privilege, will, upon proper completion and
delivery of the Letter of Transmittal 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 December 31, 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
a minimum 2,718,000 shares of Common Stock pursuant to the Lubar
Commitment and a fully subscribed offering 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."
December 31, 1997
As Adjusted
Fully
Pro Forma Minimum Subscribed
(Amounts in thousands, except per share
data)
Short-term debt:
Short-term obligations(1) $ - $ - $ -
Current maturities of
long-term debt(1) 1,245,000 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) 56,617,000 56,617,000 56,617,000
Minority interest 7,647,000 7,647,000 7,647,000
Shareholders' equity:
Preferred Stock, par value
$0.01 per share,
10,000,000 shares
authorized; none issued
or outstanding - - -
Common Stock, par value
$0.01 per share,
50,000,000 shares
authorized, none issued
and outstanding; pro forma
2,718,000 (minimum) and
5,202,689 fully subscribed
shares issued and
outstanding, as
adjusted(2) - 27,000 52,000
Additional paid-in capital - 10,675,000 20,589,000
Retained earnings 2,729,000 2,729,000 2,729,000
---------- ---------- ----------
Total shareholders' equity 2,729,000 13,431,000 23,370,000
---------- ---------- ----------
Total capitalization
including minority
interest $78,905,000 $78,940,000 $88,879,000
========== ========== ==========
(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 six months ended
December 31, 1997 and as of December 31, 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 six months ended December 31, 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 December 31, 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 $ 388,000 $ - $388,000 $20,641,000 (8) $10,362,000
(10,667,000)(9)
Other current assets 10,194,000 71,000 (4) 10,265,000 10,265,000
Total long-term assets 78,852,000 2,279,000 (4) 81,131,000 81,131,000
---------- --------- ---------- ---------- -----------
Total assets $89,434,000 $2,350,000 $91,784,000 $9,974,000 $101,758,000
========== ========= ========== ========== ===========
Total current liabilities $9,628,000 $1,525,000 (4) $11,153,000 $11,153,000
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 - 1,819,000 (6) 1,819,000 1,819,000
Long-term debt 33,617,000 20,000,000 (3) 56,617,000 56,617,000
3,000,000 (2)
Other liabilities 350,000 842,000 (4) 1,192,000 1,192,000
---------- ---------- ---------- ---------- ----------
Total liabilities 46,595,000 34,853,000 81,448,000 (10,667,000) 70,781,000
Minority interest - 7,607,000 (5) 7,607,000 7,607,000
Preferred stock -
Common Stock - 52,000 (8) 52,000
Additional paid-in capital - 20,589,000 (8) 20,589,000
Retained earnings - 2,729,000 2,729,000
Members' equity 42,839,000 (20,000,000)(3)
(7,607,000)(5)
(17,000)(4)
(1,819,000)(6)
(10,667,000)(7)
---------- ---------- ---------- ---------- -----------
Total shareholders' equity 42,839,000 (40,110,000) 2,729,000 20,641,000 23,370,000
---------- ---------- ---------- ---------- -----------
Total liabilities and
shareholders' equity $89,434,000 $2,350,000 $91,784,000 $9,974,000 $101,758,000
========== ========== ========== ========== ===========
</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 $ 71,000
Other long-term assets 2,279,000
LIABILITIES:
Accrued liabilities $(1,525,000)
Other long-term liabilities (842,000)
----------
Equity adjustment related to
asset/liability transfer $ (17,000)
==========
(5) Represents the establishment of Minority Interest for the one-third
interest in TLC not owned by the Company. Minority Interest
represents one-third of TLC's Members equity subsequent to the
adjustment for the TLC Dividend and contribution of certain
Christiana assets and liabilities.
(6) Represents the establishment of a deferred income tax liability
attributed to temporary differences between the purchase price and
carryover basis of TLC assets and liabilities.
(7) 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.
PRO FORMA SUMMARY COMBINED STATEMENTS OF EARNINGS
For the Year Ended June 30, 1997
Pro Forma Pro Forma
Historical TLC Adjustments C2, Inc.
Revenues $84,208,000 $ - $84,208,000
Operating expenses 77,897,000 1,240,000 (1) 79,137,000
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 (3,174,000) (1,469,000)
Provision for (benefit
from) income taxes 695,000 (1,187,000)(3) (492,000)
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 (12,919,000) (738,000)
Primary and fully
diluted net loss per
share of common stock $ (0.14)
For the Six Months Ended December 31, 1997
Historical Pro Forma Pro Forma
TLC Adjustments C2, Inc.
Revenues $46,714,000 $ - $46,714,000
Operating expenses 43,066,000 500,000 (1) 43,566,000
Interest expense 1,560,000 967,000 (2) 2,527,000
Other (income) expense,
net 384,000 - 384,000
Earnings before minority
interest and income
taxes 1,704,000 (1,467,000) 237,000
Provision for income taxes - (13,000)(3) (13,000)
Minority interest expense - (204,000)(5) (204,000)
Net earnings (loss) 1,704,000 (1,684,000) (20,000)
Primary and fully diluted
net earnings per share
of common stock -
NOTES TO PRO FORMA SUMMARY
COMBINED STATEMENTS OF EARNINGS
(1) Represents (i) additional operating expenses resulting from corporate
expenses, including officers' salaries, occupancy expenses,
professional, legal, public company and other corporate related
expenses and (ii) the elimination of the management fee paid to
TLC by Christiana:
For the Six
For the Year Months Ended
Ended June December 31,
30, 1997 1997
Officers salaries $390,000 $195,000
Occupancy expenses 150,000 75,000
Other corporate expenses 460,000 230,000
Elimination of TLC management
fee income 240,000 120,000
--------- ---------
$1,240,000 $ 500,000
(2) Represents (i) the additional interest expense on the $20 million of
additional debt incurred immediately prior to the Acquisition and
(ii) the increase in interest expense related to higher borrowing
rates on the new revolving credit facility as follows:
For the Six
For the Year Months Ended
Ended December 31,
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 $786,000
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 362,000 181,000
--------- ---------
$1,934,000 $967,000
(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 and
as of December 31, 1997 and 1996 and for the six months then ended. 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 and as of December 31, 1997 and 1996 and for the six months then
ended 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>
Selected Historical TLC Financial Data
(Amounts in thousands, except per membership unit data)
<CAPTION>
Six months ended
December 31 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 $46,714 $40,821 $84,208 $76,976 $71,029 $42,355 $15,190
Earnings from operations 3,648 3,636 6,311 5,689 7,555 4,611 3,273
Interest expense 1,560 1,703 3,216 3,176 3,378 3,003 2,356
Net earnings 1,704(6) 316 12,181(5) 1,536 2,562 995 585
Net earnings per membership
unit(3) 1,704 316 12,181 1,536 2,562 995 585
Other Data:
Capital Expenditures 980 1,476 3,294 17,646 7,552 3,146 8,017
Depreciation and amortization 3,398 3,891 7,186 6,971 6,684 4,671 2,795
EBITDA(4) 6,982 7,177 13,143 12,552 14,218 9,303 6,097
<CAPTION>
As of December 31 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 $89,434 $94,823 $90,140 $97,923 $88,731 $87,079 $65,417
Total Debt 37,862 45,595 40,394 47,671 42,788 46,035 42,374
Total Member's Equity 42,839 36,786 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. Since all companies do not
calculate EBITDA uniformly, it may not be an accurate measure of comparison.
(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 six months ended December 31, 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 six month period ended
December 31, 1996 (during which TLC was a C-Corporation) would have been $497 absent a provision for income taxes of
$181.
</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:
<TABLE>
<CAPTION>
Percentage of Revenues
June 30, Percentage Change
1996 1995
1997 1996 1995 to 1997 to 1996
<S> <C> <C> <C> <C> <C>
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)%
Earnings from operations 7.5% 7.4% 10.6% 10.9% (24.7)%
</TABLE>
Comparison of Six Months Ended December 31, 1997 to the Six Months Ended
December 31, 1996 for TLC
For the six months ended December 31, 1997, revenues increased
$5,893,000 or 14.4% to $46,714,000 from $40,821,000 for the period ended
December 31, 1996. Transportation operations had strong sales growth of
$4,978,000 over the prior year from the operation of an expanded fleet and
continued heavy demand for freight. Growth in Refrigerated Warehousing
operations of $3,513,000 was 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 period of
$2,126,000, resulting from the closure at the end of fiscal 1997 of two
dry warehouses and a substantial volume reduction in the Munster, Indiana
facility. The balance of the change in revenue for the six months ended
December 31, 1997 came from reduced volume in the area of international
freight forwarding.
Gross profit for the six months increased $490,000 or 7.1% to
$7,398,000 compared to the same period for the prior year. Gross profit
attributable to Transportation operations for the first half of fiscal
1998 increased $1,126,000, up 186%, primarily as a result of an expanded
transportation fleet and more efficient utilization thereof. Gross profit
for Refrigerated Warehousing operations increased $162,000, up 3.5% due to
improved capacity utilization and higher processing revenue from the
Beaver Dam Logistic Center. Gross profit for Dry Warehousing operations
decreased $777,000 or 52.3%, due to the closure of two facilities and a
substantial decline in utilization in the Munster, Indiana facility. The
remaining change in gross profit is attributable to a decrease in
international freight forwarding operations.
Selling, general and administrative expenses, which includes
marketing and advertising expenses, increased $478,000 or 14.6% for the
first six months of fiscal 1998 compared to the same period for the prior
year. The increase was primarily attributable to sales and marketing
activities designed to develop and grow the logistics business.
Earnings from operations for the six months ended December 31, 1997
increased $12,000 or 0.3% to $3,648,000 compared to $3,636,000 for the
same period in the prior year. Increased margin from Transportation
operations was the primary reason for this improvement.
Interest expense for the first half of the fiscal year declined by
$143,000 to $1,560,000 compared to $1,703,000 for the same period in the
prior year. The reduction resulted from a combination of lower rates and
lower borrowings outstanding during the period.
Pre-tax earnings for the first six months ended December 31, 1997,
was $1,704,000, an increase of $1,207,000 or 243%. Stronger capacity
utilization and efficiencies in Refrigerated Warehousing and
Transportation operations contributed to these results. The pre-tax
results for the prior year were reduced by the loss of $1,036,000 for the
disposal of special freezing equipment in connection with securing a
long-term contract for vegetable processing, IQF freezing and warehouse
services with a major customer of the Beaver Dam Logistics Center. No
provision for income taxes was recorded for the six months ended
December 31, 1997, because TLC was a limited liability company for this
period. For the six months ended December 31, 1996 TLC recorded an income
tax provision of $181,000.
Net earnings increased $1,388,000 or 439% to $1,704,000 for the six
months ended December 31, 1997 compared to $316,000 for the same period in
1996, primarily as the result of the non-recurring charge related to the
loss in disposal of fixed assets and the elimination of the provision for
income taxes as TLC was a limited liability company during this period.
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 $11,171,000 was made to add to income the
deferred income taxes that resulted from a change in TLC's tax status from
a C-corporation to a limited liability company.
Net 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 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 39.1%, 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
40.0% 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 $11,043,000 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 considering the elimination of $11,171,000 of
income related to an adjustment of deferred income taxes resulting from a
change in TLC's tax status from a C-Corporation to a limited liability
company. Net cash provided from operating activities was $10,180,000 for
fiscal 1995.
Net cash used in investing activities for TLC for the fiscal year
ended June 30, 1997 decreased to $1,822,000 from $16,262,000 in fiscal
1996. The decrease between years is predominantly the result of a
decrease in capital expenditures, most notably $11,422,000 related to a
major expansion of a refrigerated warehouse facility during fiscal 1996.
TLC anticipates capital expenditures to be approximately $4,000,000 per
year over the next two fiscal years.
Net cash used in financing activities for the fiscal year ended June
30, 1997 was $7,277,000. During fiscal 1996, TLC provided cash from
financing activities of $4,883,000. TLC issued $9,011,000 of long-term
debt during fiscal 1996 to fund the capital expansion of a refrigerated
warehouse facility. During fiscal 1997, no additional debt was issued.
Additionally, total payments on TLC's line of credit and long-term debt
were $3,149,000 higher in fiscal 1997 than the previous fiscal year.
In January 1997, TLC increased its transportation fleet by assuming
the leases for 60 additional tractors and 75 additional trailers from one
of its customers. The addition of these tractors and trailers represented
an approximately 50% increase in TLC's transportation fleet.
During fiscal 1997, TLC evaluated and developed a plan to address the
impact of the Year 2000 and beyond on its computer systems. TLC's plan is
being managed by a team of internal staff. The team's activities are
designed to ensure that TLC's transactions with customers, suppliers and
financial institutions are compatible with the Year 2000 and beyond. TLC
recently began to explore the plans of its significant suppliers to
determine their ability to remediate the Year 2000 problems and the
effects or TLC'S vulnerability if these entities fail to become Year 2000
compliant. While TLC believes its plan is adequate to address its Year
2000 concerns, there can be no guarantee that the systems of other
companies on which TLC's systems rely will be converted on a timely basis
and will not have a material effect on TLC. The cost of the TLC's plan is
not expected to be material to TLC's ongoing results of operations.
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 $9
million of additional available borrowings under its credit facility.
As of June 30, 1997, TLC had no significant capital commitments.
TLC believes the future cash generated from operations will be more
than adequate to service its debt requirements and future capital
expenditures for the foreseeable future.
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, estimated to be $9 million as of
the completion of this Offering, will be available for working capital and
general corporate purposes, including the issuance of letters of credit of
up to $3.5 million outstanding at any one time.
The Credit Agreement will be secured by liens or security interests
on all or substantially all of the assets of TLC, other than certain
transportation equipment, and mortgages on its real estate.
The initial interest rate on borrowings under the Credit Agreement is
expected to be, at the option of TLC, LIBOR plus 225 basis points or the
prime rate. These rates will vary over the term of the Credit Agreement
pursuant to a pricing grid based on the ratio of Consolidated Funded Debt
to Consolidated EBITDA (the "Consolidated Funded Debt Ratio"), all as
defined in the Credit Agreement, in accordance with the following table:
APPLICABLE PERCENTAGES
Applicable
Percentage Applicable Applicable
for Percentage Percentage
Consolidated Eurodollar for for
Pricing Funded Debt Revolving Prime Rate Letter of
Level Ratio Loans Loans Credit Fee
7 >4.5:1.0 2.25 0.00 1.25
6 <4.5:1.0 but >4.0:4.0 2.00 (0.25) 1.25
5 <4.0:1.0 but >3.5:1.0 1.75 (0.25) 1.25
4 <3.5:1.0 but >3.5:1.0 1.50 (0.50) 1.25
3 <3.0:1.0 but >2.5:1.0 1.25 (0.50) 1.25
2 <2.5:1.0 but >2.0:1.0 1.00 (0.50) 1.25
1 <2.0:1.0 0.75 (1.00) 1.25
The Credit Agreement also contains provisions requiring TLC to reimburse
the Banks for increases in certain taxes, revenue requirements and other
costs incurred by the Banks.
Loans made under the Credit Agreement may be prepaid in whole or in
part without premium or penalty, except for reimbursement of the Banks for
any losses the Banks suffer as a result of repayment of LIBOR-based loan
prices to the last day of that applicable interest period.
The Credit Agreement contains representations and warranties,
including without limitation those relating to financial statements,
ownership of properties, liens and encumbrances, corporate existence,
compliance with law, legal authorization and enforceability, absence of
default, litigation, ERISA, environmental and tax matters, use of
proceeds, solvency, accuracy of information and the matters set forth in
the merger and divestiture documents.
The Credit Agreement also contains conditions precedent (or in
certain instances concurrent) to the initial funding at the Closing, which
will include, without limitation, those relating to the following:
(i) satisfactory financing documentation; (ii) the obtaining of certain
approvals and agreements; (iii) consummation of the Merger;
(iv) satisfactory proforma and other financial statements;
(v) environmental reports; (vi) certain appraisals and business
valuations; (vii) the absence of a material adverse change; and (viii) the
delivery of customary closing documents. The conditions to all borrowings
include requirements relating to prior notice of borrowing, the accuracy
of representations and warranties, the absence of any default or potential
event of default and the absence of a material adverse change in TLC's
business.
The Credit Agreement also contains affirmative and negative covenants
(including, where appropriate, certain exceptions and baskets mutually
agreed upon), including but not limited to furnishing financial and other
information payment of obligations, conduct of business, maintenance of
existence, maintenance of property, insurance, inspection of property,
books and records, notices, environmental laws, additional subsidiary
guarantors, bank accounts, indebtedness, liens, nature of business,
consolidation, merger, sale or purchase of assets, advances, investments
and loans guarantee obligations, transactions with affiliates, ownership
of subsidiaries, fiscal year, prepayment of indebtedness and dividends.
The Credit Agreement also contains the following financial covenants:
minimum consolidated tangible net worth; maximum consolidated funded debt
ratio; minimum cash flow coverage ratio; and positive annual earnings.
Events of default under the Credit Agreement, include without
limitation, those relating to: (i) non-payment of interest, principal or
fees payable under the Credit Agreement; (ii) inaccuracy of
representations or warranties in the loan documents; (iii) non-performance
of covenants; (iv) cross-default to other material debt of the Company and
its subsidiaries; (v) bankruptcy or insolvency; (vi) judgments in excess
of specified amounts; (vii) certain ERISA events; (viii) impairment of
security interests in collateral; (ix) invalidity of guarantees;
(x) materially inaccurate or false representations or warranties; and
(xi) a change in control.
BUSINESS
General
The Company was formed on December 11, 1997 and has conducted no
operations to date other than in connection with the Acquisition.
Following this Offering and the Acquisition, the Company's only non-cash
asset will be its ownership interest in TLC. The Company intends to
pursue acquisitions of businesses which may or may not relate to the
third-party logistics business of TLC. As of the date hereof, the Company
has not identified any acquisition candidates.
Immediately prior to the Merger, the Company will acquire 666.667
Membership Units of TLC (representing two-thirds of the outstanding
ownership interests of TLC) from Christiana pursuant to the Purchase
Agreement. For additional information concerning the Merger and the
Acquisition, see "Summary of Certain Terms of the Merger" and "The
Purchase Agreement."
TLC was formed on June 30, 1997 through a combination of the
operations of two wholly-owned subsidiaries of Christiana, Wiscold and
Total Logistic Inc. On September 1, 1992, Christiana acquired the assets
of Wiscold, a company formed in 1915, which engaged in providing public
refrigerated warehousing services, vegetable processing and individual
quick freeze (IQF) services, automated vegetable poly bag and bulk
packaging services, and transportation services into and out of its
facilities. On January 4, 1994, Christiana acquired Total Logistic Inc.
(formerly known as The TLC Group, Inc.), a Zeeland, Michigan-based firm
engaged in providing fully integrated third-party logistic services, which
includes warehouse, distribution and transportation services in both
refrigerated and non-refrigerated facilities.
TLC provides third-party logistic services as well as full service
public and contract warehousing in all ranges of frozen refrigerated and
ambient temperatures. Integrated logistic services generally combine
transportation, warehousing and information services to manage the
distribution channel for a customer's products from the point of
manufacturer to the point of consumption. TLC's transportation and
distribution services include full service truckload, less-than-truckload
and pooled consolidation in both temperature controlled and dry freight
equipment, dedicated fleet services and specialized store-door delivery
formats. Transportation and logistic services are provided utilizing
company-owned equipment as well as through carrier management services
utilizing third party common and contract carriers. TLC also provides a
full range of international freight management services, fully
computerized inventory management, kitting, repackaging and just-in-time
production supply services.
TLC's transportation fleet is comprised of 175 tractors, 97 of which
are 0-3 years old; 78 of which are 4-6 years old; and none of which are
older than 6 years.
TLC's customers consist primarily of national, regional and local
firms engaged in food processing, consumer product manufacturing,
wholesale distribution and retailing. During fiscal 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 space. All of TLC's refrigerated facilities are
modern and efficient single story buildings at dock height elevation and
fully insulated.
Prior to the Merger, Christiana will contribute certain assets and
liabilities to TLC for no consideration. See "Pro Forma Combined
Financial Data." On the asset side, these 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. Asset-based services are
generally considered to include warehousing and transportation related
activities provided through TLC's owned or leased assets. Non-asset based
services utilize warehouses and transportation equipment owned by others
for which TLC contracts on a one-time or short-term basis. TLC believes
that its asset base of refrigerated and dry warehouses and fleet
operations, together with its expertise in logistics strategy and
solutions, provides it with an advantage over its competitors which
generally offer only asset or non-asset based services. Where others are
selling individual services such as warehousing, transportation, or
freight forwarding, TLC is providing those services in an integrated
fashion, providing more efficient distribution programs and reduced
inventory for its customers. It is the goal of TLC to continue to enhance
the services that it provides to its customers by continuing to develop
solutions involving multiple services throughout the entire supply chain
from the manufacturer to end consumer.
TLC's focus on its third-party logistic services is based on its
belief that competitive market forces are dictating that corporations
focus on core competencies leading more and more corporations to outsource
logistic services and distribution functions. In addition, TLC believes
that corporations are recognizing, on an increasing basis, that properly
provided logistic services will provide enhanced inventory management,
more responsive information systems and more efficient use of fleet
capacity.
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.
Revenues
(Dollars in Millions)
1997 1996 1995
Amount % Amount % Amount %
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%
==== ==== ==== ==== ==== ====
TLC's services target the consumer goods industries; industries in
which logistics performance is important to success. Nearly 75% of TLC's
revenues come from food manufacturers, food wholesalers and food
retailers. Because of its unique storage and distribution needs, the food
industry has launched broad industry-wide initiatives, such as Efficient
Consumer Response (ECR) and Efficient Foodservice Response (EFR), that are
formulated on high quality logistic services. The basis of ECR is to
reduce the cost of delivering products from the place of manufacture to
the point of sale. TLC believes that its one of only a few companies
which have the capabilities and range of service offerings to sufficiently
address these initiatives.
While TLC's top 15 customers, all of which participate in the food
industry, account for 60% of revenues, no one customer represents more
than 10% of TLC's business. Beyond the food industry, the balance of
TLC's customer base is spread across a broad base of industries including
pharmaceuticals, automotive suppliers, building supplies and office
furniture.
Competition
Competition in the logistic services industry is very fragmented.
Leonard's Guide, a leading industry publication, lists more than 1500
companies competing in the United States marketplace. TLC believes that
competitors can be characterized as either asset or non-asset based
providers and single or integrated service providers. Asset-based
companies, such as Exel, Americold 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.
Government Regulations
TLC's transportation operations in interstate commerce are regulated
by the Interstate Commerce Commission ("ICC") and the operations of TLC in
intrastate commerce are regulated by various state agencies. These
regulatory authorities have broad authority, including the power to
authorize motor carrier operations, approve rates, charges and accounting
systems, require periodic financial reporting, and approve certain merger,
consolidations and acquisitions. TLC is also subject to safety
requirements prescribed by the United States Department of
Transportation ("DOT"). Such matters as weight and dimension of equipment
and load are also subject to federal and state regulations.
TLC's operations related to refrigerated food storage are subject to
regulations promulgated by the United States Department of
Agriculture ("USDA").
TLC believes it is in compliance in all material respects with
applicable regulatory requirements relating to its operations. The
failure of TLC to comply with the regulations of the ICC, DOT, USDA or
state agencies could result in substantial fines or revocation of TLC's
operating authority.
Properties
As of 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 #1 10.6 Distribution
Center I
Rochelle Logistic Rochelle, Illinois #2 3.5 Distribution
Center II
Beaver Dam Beaver Dam, Wisconsin 7.2 Distribution
Logistic Center /Production
Milwaukee Wauwatosa, Wisconsin 4.3 Distribution
Logistic Center
Holland Logistic Holland, Michigan* 2.1 Distribution
Center /Production
Kalamazoo Kalamazoo Logistic #1** 3.3 Distribution
Logistic Center I
Kalamazoo Kalamazoo Logistic #2 2.8 Distribution
Logistic Center
II
Wisconsin Milwaukee, Wisconsin 1.0 Distribution
Logistic Center
----
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.
Purchase Price and Assumption of Liabilities
The Purchase Agreement provides that, prior to the Effective Time of
the Merger, the Company will complete the Acquisition by purchasing
666.667 Membership Units of TLC for an aggregate purchase price of
$10,666,667. The Purchase Agreement provides that the purchase price is
payable no later than thirty (30) days following the Effective Time of the
Merger. During this thirty (30) day period, the Christiana Shareholders
will mail to the Subscription Agent (which will also act as exchange agent
for the Merger) Letters of Transmittal electing one of the following:
- To purchase no shares of Common Stock
- To purchase as many shares of Common Stock as possible
using the Cash Consideration to be received in the Merger
(estimated to be $3.50)
- To purchase a stated number of shares of Common Stock
using a portion of the Cash Consideration
- To purchase all shares of Common Stock to which such
Christiana Shareholder is entitled using the Cash Consideration,
together with an additional payment
- To purchase all shares of Common Stock to which such
Christiana Shareholder is entitled, plus a stated number of
additional shares (subject to availability) using the Cash
Consideration and an additional payment.
All Letters of Transmittal must be received by the Subscription Agent
on or prior to the Expiration Date (expected to be ________________,
1998). Once received, EVI will pay to the Subscription Agent the Cash
Consideration due to such Christiana Shareholder and the Subscription
Agent will apply such Cash Consideration in the manner directed by the
Letter of Transmittal submitted by such Christiana Shareholder.
In connection with the Merger, the Company and TLC have agreed to
assume the Assumed Liabilities. See "Risk Factors-Assumed Liabilities and
Indemnification Obligations of the Company and TLC."
Christiana "Put" and Participation Rights
The Purchase Agreement also provides that at any time after the fifth
anniversary of the Effective Time of the Merger, Christiana has the option
to sell to the Company or TLC, and the Company or TLC will be obligated to
purchase, Christiana's 333.333 Membership Unit for $7 million. In
addition, if 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.
Indemnification Obligations
TLC and the Company have 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, 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:
- any breach of any covenant or agreement of TLC or the
Company contained in the Purchase Agreement or any other
agreement contemplated thereby;
- the acts or omissions of Christiana or any Christiana
Affiliate on or before the Effective Time;
- 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;
- the Assumed Liabilities;
- 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;
- 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;
- 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;
- 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;
- 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;
- 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;
- 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;
- 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;
- 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
- 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
Rights
Each Christiana Shareholder has a Right to subscribe for their pro
rata share of Common Stock in the Offering. This Right consists of the
Basic Subscription Privilege and the Additional Subscription Privilege.
Basic Subscription Privilege
The Basic Subscription Privilege entitles each Christiana Shareholder
to purchase one share of Common Stock for $4.00 per share for each share
of Christiana Common Stock held immediately prior to the Effective Time.
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
Commitment ensures 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 Letter of Transmittal provided pursuant to the Merger Proxy
Statement delivered simultaneously herewith to Christiana Shareholders.
Christiana Shareholders wishing to exercise their Basic Subscription
Privilege will automatically upon completion and delivery of the Letter of
Transmittal, have the Subscription Price paid on the Effective Time by the
Subscription Agent from the Cash Consideration received from EVI. For a
description of the Cash Consideration, see "Summary of Certain Terms of
the Merger - Cash Consideration to be Received in the Merger." Because
the Cash Consideration per share 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 Letter of Transmittal,
the Additional Subscription Privilege, together with full payment of the
aggregate Subscription Price, to be paid in the form of check made payable
to "Firstar Trust Company." To the extent the Cash Consideration at the
Determination Date is greater than $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 Letter of Transmittal and/or the Subscription Agreement, as the
case may be, by check payable to "Firstar Trust Company", as Subscription
Agent at or prior to 5:00 p.m., Central Standard Time, on the Expiration
Date.
COMPLETED LETTERS OF TRANSMITTAL, SUBSCRIPTION AGREEMENTS AND THE
RELATED PAYMENT SENT TO THE OFFICE OF THE SUBSCRIPTION AGENT MUST BE
RECEIVED BEFORE 5:00 P.M. CENTRAL STANDARD TIME, ON THE EXPIRATION DATE.
DO NOT SEND ELECTION FORMS, SUBSCRIPTION AGREEMENTS OR PAYMENTS TO THE
COMPANY, CHRISTIANA, TLC, SUB OR 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 LETTER OF TRANSMITTAL AND/OR SUBSCRIPTION AGREEMENTS TO THE
SUBSCRIPTION AGENT.
THE METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL, SUBSCRIPTION
AGREEMENTS AND PAYMENT OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT
WILL BE AT THE ELECTION AND RISK OF THE SUBSCRIBER, NOT THE COMPANY,
CHRISTIANA, TLC, SUB, EVI, THE SUBSCRIPTION AGENT, OR ANY AFFILIATES
THEREOF. IF SENT BY MAIL, IT IS RECOMMENDED THAT THE LETTER OF
TRANSMITTAL AND/OR SUBSCRIPTION AGREEMENT BE SENT BY REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT
NUMBER OF DAYS BE ALLOWED TO ENSURE RECEIPT BY THE SUBSCRIPTION AGENT
PRIOR TO 5:00 P.M., CENTRAL STANDARD TIME, ON THE EXPIRATION DATE.
Proration. In the event of a proration of shares of Common Stock to
persons exercising the Additional Subscription Privilege as described
above under "- Additional Subscription Privilege," the Subscription Agent
will promptly refund, without interest, the amount of any overpayment as
described above under "- Additional Subscription Privilege." The
instructions that accompany the Letter of Transmittal and Subscription
Agreement should be read carefully and followed in detail.
Brokers, Trusts and Depositaries. Record holders of shares of
Christiana Common Stock, such as brokers, trusts or depositaries for
securities, who hold the shares for the account of others, should notify
the respective beneficial owners of the shares as soon as possible to
ascertain the beneficial owners' intentions and instructions with respect
to the related Basic Subscription Privilege and Additional Subscription
Privilege. Based upon the instructions received from the beneficial
holders, the record holders should complete the Letter of Transmittal
and/or Subscription Agreements and submit them with the applicable
payment.
Company Discretion with Respect to Offering. All questions regarding
the timeliness, validity, form and eligibility of any exercise of the
Basic Subscription Privilege will be determined by the Company, in its
sole discretion, whose determination will be final and binding. The
Company reserves the absolute right to reject any subscription if such
subscription is not in proper form or if the acceptance thereof or the
issuance of shares of Common Stock pursuant thereto could be deemed
unlawful. The Company, in its sole discretion may waive any defect or
irregularity, permit a defect or irregularity to be corrected within such
time as it may determine or reject the purported exercise of any
allocation preferences or the exercise of any Additional Subscription
Privilege. Subscriptions will not be deemed to have been received or
accepted until all irregularities have been waived or cured within such
time as the Company determines in its sole discretion. The Company and
the Subscription Agent will not be under any duty to give notification of
any defect or irregularity in connection with the submission of Letters of
Transmittal, or Subscription Agreements nor will any of them incur any
liability for failure to give such notification.
Delivery of Certificates
Certificates for shares of Common Stock issuable on exercise of the
Basic Subscription Privilege and/or the Additional Subscription Privilege
will be mailed as soon as practicable after the subscriptions have been
accepted by the Subscription Agent, but not prior to the Expiration Date.
Certificates for shares of Common Stock issued pursuant to the exercise of
the Basic Subscription Privilege and the Additional Subscription Privilege
will be registered in the name of the person exercising such privilege.
Subscription Agent
The Subscription Agent is Firstar Trust Company. The address to
which Letters of Transmittal and Subscription Agreements should be
delivered, whether by hand, by mail or by overnight courier, is:
Firstar Trust Company
1555 North River Center Drive
Suite 301
Milwaukee, Wisconsin 53212
Any questions or requests for assistance concerning the method of
subscribing for shares of Common Stock should be directed to the
Subscription Agent at (414) 905-5000.
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. Duroc-Danner 44 Director
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, who will be paid $150,000, $120,000 and
$120,000, respectively.
1998 Equity Incentive Plan
The 1998 Plan authorizes the granting of: (i) stock options, which
may be either incentive stock options meeting the requirements of Section
422 of the Code or nonqualified stock options; (ii) stock appreciation
rights ("SARs"); (iii) restricted stock; (iv) performance shares; and (v)
stock option grants to directors who are not employees of the Company
("Independent Directors"). The 1998 Plan is designed to provide the
Compensation and Nominating Committee with broad flexibility and
discretion to deal with the ever changing executive compensation
environment. In general, the terms and conditions of key employee awards
under the 1998 Plan will be left to the discretion of the Compensation and
Nominating Committee. This will allow the Compensation and Nominating
Committee to structure varying incentive compensation awards from time to
time in order to best achieve the purposes of the 1998 Plan. The 1998
Plan provides that up to a total of 520,000 shares of Common Stock will be
available for issuance pursuant to the granting of awards thereunder, with
no more than 50,000 shares issuable as restricted stock.
As of the date of the Prospectus, no awards have been granted under
the 1998 Plan, except automatic grants to Independent Directors on the
effective date of this Offering, as described under "Director
Compensation" below.
Director Compensation
The directors of the Company will receive no compensation for service
as members of either the Board of Directors or committees thereof other
than option grants pursuant to 1998 Plan. Effective after this Offering,
Independent Directors will be entitled to reimbursement of out-of-pocket
expenses.
In addition, under the 1998 Plan, on the effective date of this
Offering, each then serving Independent Director will be granted
non-qualified stock options under the 1998 Plan to purchase ______ 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
Beneficially Shares Beneficially
Owned Prior to Owned After
Offering 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
6Sheldon 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 December 31,
1997 and June 30, 1997 (unaudited) . . . . . . . . . . . . . F-16
Condensed Statements of Earnings for the
three months ended December 31, 1997
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . F17
Condensed Statements of Earnings for the
six months ended December 31, 1997 and
1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . F-18
Condensed Statements of Cash Flows for the
six months ended December 31, 1997 and
1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . F-19
Notes to Condensed Financial Statements
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholder of C2, Inc.
We have audited the accompanying balance sheet of C2, Inc. (a Wisconsin
corporation), as of December 31, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of C2, Inc. as of December
31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 6, 1998
<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. The Acquisition is contingent upon the consummation of the
merger between Christiana and EVI, Inc. discussed elsewhere in this
Prospectus.
Under the Agreement, the company agreed to indemnify Christiana for
certain liabilities of Christiana. Christiana further has the right to
require the Company to purchase all of Christiana's 333.333 Membership
Units in TLC for a price equal to $7 million. See "The Purchase
Agreement" included elsewhere in the Prospectus.
D. Stock Options
The Company's shareholder has approved the 1998 Equity Incentive Plan (the
"1998 Plan") under which a total of 520,000 shares of Common Stock are
reserved for awards to officers, directors and key employees as stock
options, stock appreciation rights, restricted stock and performance
shares. As of December 31, 1997, no awards have been granted under the
1998 Plan.
E. Events Subsequent to Date of Report of Independent Public Accountants
(Unaudited):
(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.
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
TOTAL LOGISTIC CONTROL, LLC
BALANCE SHEETS
AS OF JUNE 30
ASSETS 1997 1996
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 $ 12,181 $ 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. Tires related to new
equipment are included in the capitalized equipment lost and
depreciated using the same methods as equipment. Replacement tires
are expenses when placed in service. A summary of the cost of fixed
assets, accumulated depreciation and the estimated useful lives for
financial reporting purposes is as follows:
Estimated
Useful
1997 1996 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. When factors indicate that goodwill
should be evaluated for possible impairment, TLC uses an estimate of
the undiscounted cash flows over the remaining life of the goodwill
measuring whether the goodwill is 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.
Long-lived assets: During fiscal 1997, TLC adopted statement of
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Live-Lived Assets and Assets to be Disposed of." Adoption of this
standard did not have a material impact on the Company's financial
position or results of operations.
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
long-term debt (1,245,000) (1,595,000)
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. The carrying amount of
TLC's floating rate debt was assumed to approximate its fair value.
The fair value of TLC's fixed-rate, long-term notes payable was based
on the market value of debt with similar maturities and interst
rates. The fixed-rate subordinated note that was given to a former
owner of TLC was negotiated in the overall context of the
acquisition. TLC believes it is impracticable to obtain the current
fair value of this note because of the excessive costs that would
have to be incurred to obtain this information.
D. INCOME TAXES:
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 $11,171,000 during fiscal
1997. The $695,000 provision for income taxes for fiscal 1997
represents the combined Federal and state income tax provision for
the period during the fiscal year that TLC was a C-Corporation.
Year Ended June 30
1997 1996 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 April 15, 2003, and be secured
by substantially all of the assets of TLC.
(2) Christiana will sell 666.667 Membership Units (two-thirds) of
TLC to C2, Inc. (a newly formed corporation) for $10,667,000.
(3) TLC will agree to indemnify Christiana for certain liabilities
of Christiana. See "The Purchase Agreement" included elsewhere
in this prospectus.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
CONDENSED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1997 AND JUNE 30, 1997
December 31,
1997 June 30, 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $388,000 $224,000
Accounts receivable, net 9,258,000 7,552,000
Inventories, prepaids and other
assets 936,000 532,000
---------- ----------
Total current assets 10,582,000 8,308,000
LONG-TERM ASSETS:
Fixed assets, net 73,261,000 75,501,000
Goodwill 5,514,000 5,592,000
Other assets 77,000 739,000
---------- ----------
Total long-term assets 78,852,000 81,832,000
---------- ----------
Total assets $89,434,000 $90,140,000
========== ==========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $1,245,000 $1,245,000
Accounts payable 4,684,000 2,868,000
Accrued liabilities 3,699,000 3,056,000
--------- ---------
Total current liabilities 9,628,000 7,169,000
DUE TO PARENT COMPANY 3,000,000 3,000,000
LONG-TERM LIABILITIES:
Long-term debt 33,617,000 36,149,000
Other liabilities 350,000 361,000
---------- ----------
Total long-term liabilities 33,967,000 36,510,000
---------- ----------
Total liabilities 46,595,000 46,679,000
---------- ----------
MEMBER'S EQUITY 42,839,000 43,461,000
---------- ----------
Total liabilities and member's
equity $89,434,000 $90,140,000
========== ==========
The accompanying notes are an integral part of these condensed balance
sheets.
<PAGE>
TOTAL LOGISTIC CONTROL, LLC
CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
1997 1996
REVENUES:
Warehousing and logistic services $23,667,000 $20,341,000
OPERATING EXPENSES:
Warehousing and logistic expenses 20,115,000 16,612,000
Selling, general and administrative
expenses 1,791,000 1,856,000
---------- ----------
21,906,000 18,468,000
---------- ----------
Earnings from operations 1,761,000 1,873,000
OTHER INCOME (EXPENSES):
Interest expense (787,000) (819,000)
Loss on disposal of assets - (1,086,000)
Other expense, net (133,000) (283,000)
---------- ----------
(920,000) (2,188,000)
---------- ----------
NET EARNINGS (LOSS) BEFORE INCOME TAXES 841,000 (315,000)
BENEFIT FROM INCOME TAXES - (128,000)
---------- ----------
NET EARNINGS (LOSS) $ 841,000 $ (187,000)
========== ==========
BASIC AND DILUTED NET EARNINGS (LOSS)
PER MEMBERSHIP UNIT $ 841 $ (187)
========== ==========
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 EARNINGS
(UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
REVENUES:
Warehousing and logistic services $46,714,000 $40,821,000
OPERATING EXPENSES:
Warehousing and logistic expenses 39,316,000 33,913,000
Selling, general and administrative
expenses 3,750,000 3,272,000
---------- ----------
43,066,000 37,185,000
---------- ----------
Earnings from operations 3,648,000 3,636,000
OTHER INCOME (EXPENSES):
Interest expense (1,560,000) (1,703,000)
Loss on disposal of assets - (1,086,000)
Other expense, net (384,000) (350,000)
---------- ----------
(1,944,000) (3,139,000)
---------- ----------
NET EARNINGS BEFORE INCOME TAXES 1,704,000 497,000
PROVISION FOR INCOME TAXES - 181,000
---------- ----------
NET EARNINGS $1,704,000 $316,000
========== ==========
BASIC AND DILUTED NET EARNINGS PER
MEMBERSHIP UNIT $1,704 $316
========== ==========
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 SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $1,704,000 $316,000
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating
Activities:
Depreciation and amortization 3,398,000 3,891,000
Loss on sale of assets - 1,086,000
Deferred income tax provision - 141,000
Changes in Assets and Liabilities:
Increase in accounts receivable (1,706,000) (591,000)
Decrease in inventories, prepaids and
other assets 158,000 627,000
Increase (decrease) in accounts payable
and accrued liabilities 2,448,000 (1,587,000)
---------- ----------
Net cash provided by operating
activities 6,002,000 3,883,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (980,000) (1,476,000)
Profits from sale of fixed assets - 149,000
---------- ----------
Net cash used in investing activities (980,000) (1,327,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit, net - 80,000
Payment of long-term debt (2,532,000) (2,157,000)
Dividend distribution to Parent Company (2,326,000) -
---------- ----------
Net cash used in financing activities (4,858,000) (2,077,000)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 164,000 479,000
BEGINNING CASH AND CASH EQUIVALENTS 224,000 29,000
---------- ----------
ENDING CASH AND CASH EQUIVALENTS $388,000 $508,000
========== ==========
Supplemental Disclosures of Cash Flow
Information:
Interest paid $1,450,000 $1,654,000
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)
DECEMBER 31, 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. Effective December 1997, TLC adopted Statement of
Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
Under SFAS No. 128 presentation of both basic and diluted earnings
per membership unit is required.
As TLC does not have any outstanding dilutive financial instruments,
there is no difference between basic and diluted earnings per
membership unit as 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,
provisions for income taxes for the three and six months ended
December 31, 1997 are not required. The provisions for income taxes
for the three and six month periods ended December 31, 1996 represent
the combined Federal and state income tax provisions for the periods
during the fiscal year that TLC was a C-Corporation.
4. Distribution to Parent Company:
During the six month period ended December 31, 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.
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
_________________________
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Milwaukee, and State of Wisconsin, on this 23rd day of March,
1998.
C2, INC.
By: /s/ William T. Donovan
William T. Donovan, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on March 23, 1998.
Signature Title Date
Chairman (Principal
/s/ William T. Donovan Executive Officer and March 23, 1998
William T. Donovan Principal Financial and
Accounting Officer)
/s/ David J. Lubar* President and Director March 23, 1998
David J. Lubar
/s/ Nicholas F. Brady* Director March 23, 1998
Nicholas F. Brady
/s/ Albert O. Nicholas* Director March 23, 1998
Albert O. Nicholas
/s/ Sheldon B. Lubar* Director March 23, 1998
Sheldon B. Lubar
By: /s/ William T. Donovan
* Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
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 Letter of Transmittal.
5.1 Opinion of Foley & Lardner regarding the
legality of securities being offered.*
10.1 Form of Credit Agreement, by and among the TLC,
Firstar Bank Milwaukee, N.A., individually and
as agent, and the lenders that are a party
thereto. This agreement will be executed and
become effective on the Effective Date.
10.2 Form of First Amended and Restated Operating
Agreement, by and among the Company and
Christiana, Incorporated by reference to Annex B
of this Registration Statement. This agreement
will be executed and become effective on the
Effective Date.*
10.3 C2, Inc. 1998 Equity Incentive Plan.*
21.1 List of Subsidiaries of the Company.*
23.1 Consent of Arthur Andersen LLP, independent
public accountants.
23.2 Consent of Foley & Lardner (included in Exhibit
5.1).*
24.1 Power of Attorney (included on the signature
page to the Registration Statement).*
27.1 Financial Data Schedule.*
_________________________
*Previously filed.
**To be filed by amendment.
CHRISTIANA COMPANIES, INC.
LETTER OF TRANSMITTAL
Background. This letter of transmittal serves two purposes. First,
it is to accompany certificates representing the Common Stock, par value
$1.00 per share, of Christiana Companies, Inc. ("Christiana") when
submitted in connection with the merger of Christiana Acquisition, Inc., a
wholly-owned subsidiary of EVI, Inc. ("EVI") with and into Christiana.
Second, this letter of transmittal is the means by which a Christiana
shareholder may make an election to purchase Common Stock in C2, Inc.
("C2") as described in the C2 Prospectus, dated __________.
TO BE EFFECTIVE IN MAKING AN ELECTION WITH RESPECT TO THE PURCHASE OF
COMMON STOCK OF C2, THIS FORM LETTER OF TRANSMITTAL, PROPERLY COMPLETED
AND SIGNED IN ACCORDANCE WITH THE INSTRUCTIONS HEREIN, TOGETHER WITH
CERTIFICATES FOR THE COMMON SHARES OF CHRISTIANA COMPANIES, INC. COVERED
HEREBY, MUST BE DELIVERED TO FIRSTAR TRUST COMPANY NO LATER THAN 5 P.M.
CENTRAL TIME, ON _________________, 1998 AT THE APPROPRIATE ADDRESS SET
FORTH BELOW.
The address for Firstar Trust Company is Firstar Trust Company,
Attention: Corporate Trust Department (by mail: P.O. Box 2077, Milwaukee,
Wisconsin 53201-2077) or if by hand 1555 North RiverCenter Drive, Suite
301, Milwaukee, Wisconsin.
Questions regarding the Election procedure to purchase shares of C2,
Inc. may be directed to William T. Donovan, President of Christiana
Companies, Inc., at telephone number (414) 291-9000.
PLEASE READ CAREFULLY THE INSTRUCTIONS INCLUDED HEREIN
Name and Address of Registered Owner
(Fill in exactly as name appears on Certificate(s); please
print clearly or type)
TO: FIRSTAR TRUST COMPANY
1. Christiana Stock. In connection with the merger (the "Merger")
of Christiana Acquisition, Inc., a wholly-owned subsidiary of EVI with and
into Christiana, the undersigned hereby submits the certificate(s) listed
below representing Common Stock, par value $1.00 per share, of Christiana
("Christiana Common Stock"):
CERTIFICATE INFORMATION
(Attach additional sheets if necessary)
Total Number of Shares Represented
Certificate Number by Certificate
Total Shares:
2. C2 Stock. The undersigned hereby makes the following election
regarding the purchase of C2 Stock:
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."
It is understood that such Election is subject to (i) the Instructions
included herein, (ii) the C2 Prospectus, receipt of which is hereby
acknowledged, and (iii) the terms, conditions and limitations of the
Agreement and Plan of Merger among EVI, Subsidiary, Christiana and C2
dated December 12, 1997 (the "Merger Agreement"), which appears in the
Joint Proxy Statement/Prospectus dated ________________, 1998, relating to
the Merger (the "Proxy Statement"), receipt of which is hereby
acknowledged.
3. General. The undersigned hereby represents and warrants (and if
more than one, each undersigned represents and warrants jointly and
severally) to Firstar Trust Company that the undersigned has full power
and authority to assign and transfer the shares of Christiana Common Stock
made subject to this Form Letter of Transmittal and to make the Election
made herein, and that there is no lien, restriction, charge or encumbrance
against the shares of Christiana Common Stock made subject hereto.
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 9)
To be completed ONLY if
To be completed ONLY if certificates and any check
certificates and any check are to issued in the name of the
be issued in the name of someone undersigned are to be sent to
other than the registered owner(s) someone other than the
of the Christiana Common Stock undersigned or to the
undersigned at an address other
than that shown above.
Name ______________________________
(Please Print or Type)
Name ___________________________
Address ___________________________ (Please Print or Type)
(Street)
Address _________________________
___________________________________ (Street)
(City) (State) (Zip Code)
_________________________________
__________________________________ (City) (State) (Zip Code)
(Social Security Number)
PLEASE SIGN HERE SIGNATURE(S) GUARANTEED,
(See Instruction 7) IF REQUIRED
(See Instructions 7 and 9)
Firm _____________________________
(Please Print or Type)
_________________________________
(Signature(s) of Owner(s)) _______________________________
(Authorized Signature)
Date ____________________, 1995 Title ____________________________
(____) ________________________ Address __________________________
(Area Code and Telephone (Street)
Number)
__________________________________
_______________________________ (City) (State) (Zip Code)
Tax Identification or Social
Security Number
TO BE EXECUTED ONLY BY NON-UNITED STATES RESIDENTS:
(See Instruction 11)
I hereby certify that the foregoing purchase of C2, Inc. Common Stock
has been effected in accordance with the applicable laws of the
jurisdiction in which I reside.
__________, 1998 ____________________ ______________________________
Dated Signature Signature for Joint Subscriber
(if any)
<PAGE>
See Instruction 13 for instructions concerning the completion of the
Substitute Form W-9 below.
Substitute
Form W-9
(Rev. Give form
December to the
1996) Request for Taxpayer requester.
Identification Number and Certification Do NOT
Department send to
of the the IRS.
Treasury
Internal
Revenue
Service
Name (If a joint account or you changed your name, see Specific
instructions on page 2.)
Business name, if different from above. (See Specific Instructions
on page 2.)
Check appropriate box [_] Individual/Sole proprietor [_]
Corporation [_] Partnership [_] Other ________________
Address (number, street, and Apt. or suite Requester's name and
no.) address (optional)
City, state and ZIP code
Part I Taxpayer Identification Number (TIN) List account
number(s) here
Enter your TIM in the appropriate Social (optional)
box. For individuals, this is security
your social security number number
(SSN). However, if you are a
resident alien OR a sole
proprietor, see the instructions
on page 2.
For other entities, it is your PART
employer identification number II For Payees
(EIN). If you do not have a Exempt From
number, see How To Get a TIN on Backup
OR
page 2. Withholding
(See the
instructions on
page 2.)
NOTE: If the account is in more Employer
than one name, see the chart on
identification
page 2 for guidelines on whose number
number to enter.
Part III Certification
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions.- You must cross out item 2 above if you
have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends
on your tax return. For real estate transactions, item 2 does not
apply. For mortgage interest paid, acquisition or abandonment of
secured property, cancellation of debt, contributions to an individual
retirement arrangement (IRA), and generally, payments other than
interest and dividends, you are not required to sign the Certification,
but you must provide your correct TIN. (See the instructions on page
2.)
Sign
Here Signature Date
<PAGE>
INSTRUCTIONS
1. Time in Which to Elect. This form or a facsimile thereof
should be submitted, accompanied by the certificates representing shares
of Christiana Common Stock described on the front hereof, to Firstar Trust
Company at the appropriate address set forth on the front hereof, no later
than 5:00 P.M., Central Time, on ________________, 1998. Holders of
Christiana Common Stock whose Form Letters of Transmittal and certificates
are not so delivered will not be entitled to make an Election to Purchase
C2 Shares, but will be entitled to receive the consideration provided for
Christiana shareholders in the Merger.
2. Change or Revocation Letter of Transmittal. Any record holder
of Christiana Common Stock may change an Election by delivering a written
notice accompanied by a properly completed, revised Form Letter of
Transmittal to Firstar Trust Company prior to 5:00 P.M., Central Standard
Time, on _________________, 1998. Similarly, an Election may be revoked
by delivering a written notice to Firstar Trust Company prior to such time
or by withdrawing prior to such time the certificates previously deposited
with Firstar Trust Company.
3. Nullification of Election. All Form Letters of Transmittal will
be void and deemed to be of no effect if the Merger is not consummated,
and certificates submitted therewith shall be returned to the persons
submitting the same as promptly as practicable. The undersigned directs
Firstar Trust Company to issue in exchange for the Christiana Common Stock
subject hereto the certificates representing the EVI Common Stock and a
check for the Cash Consideration into which such EVI Common Stock will be
converted in the Merger in the name(s) of the registered owner(s) of the
shares of Christiana Common Stock subject hereto, unless otherwise
indicated under the "Election to Purchase C2, Inc. Shares" and/or "Special
Issuance Instructions" boxes herein. The undersigned directs Firstar
Trust Company, unless otherwise indicated under the "Election to Purchase
C2, Inc. Shares" and/or "Special Delivery Instructions" boxes herein, to
mail such certificates and check to the undersigned at the address shown
above.
4. Receipt of Checks and EVI Common Stock. As soon as possible
after the date of the Merger, but no later than 30 days thereafter (the
"Payment Date"), the parties to the Merger Agreement shall calculate and
agree upon the Cash Consideration (anticipated to be approximately $3.50
per share of Christiana Common Stock based upon the terms of the Merger
Agreement as described more fully on the cover page of the Joint Proxy
Statement/Prospectus) and the Contingent Cash Consideration (approximately
$1.92 per share of Christiana Common Stock, based upon the terms of the
Merger Agreement as described more fully on the cover page of the Joint
Proxy Statement/Prospectus). On the Payment Date, EVI will pay the Cash
Consideration due each Christiana Shareholder to Firstar Trust Company who
shall promptly distribute such cash to each Christiana Shareholder;
provided, however, that if the Firstar Trust Company has authorization
from the Christiana Shareholders pursuant to this Form to apply all or a
portion of the Cash Consideration to the purchase of C2 stock, such cash
shall be so applied. Firstar Trust Company shall, following instructions
from the Christiana Shareholders, either transmit such funds to C2 to
purchase C2 shares or transmit such funds to the Christiana Shareholders.
The Contingent Cash Payment shall be made in about 5 years to the
Shareholder at the address indicated on the first page.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF
THE SHAREHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, PROPERLY INSURED,
IS SUGGESTED.
5. Inadequate Space. If there is insufficient space to list all
certificates being submitted to Firstar Trust Company or to respond to any
other information, please attach a separate sheet hereto.
6. Signatures. The signature (or signatures, in the case of
certificates owned by two or more joint holders) on the Form Letter of
Transmittal should correspond exactly with the name(s) as written on the
face of the certificates unless the shares of Christiana Common Stock
described on the Form Letter of Transmittal have been assigned by the
registered holder(s), in which event the Form Letter of Transmittal should
be signed in exactly the same form as the name of the last transferee
endorsed on the certificates or on accompanying stock powers. In
addition, in the event of such assignment, the certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the
name(s) of the registered owner(s) appear on the certificate and such
signature(s) must be GUARANTEED as provided in Instruction 9.
If the Form Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, officer of a corporation, attorney-in-fact or in
any other representative or fiduciary capacity, the person signing must
give such person's full title in such capacity, and appropriate evidence
of authority to act in such capacity must be forwarded with the Form
Letter of Transmittal. For a corporation, appropriate evidence of
authority of an officer would include a certified board resolution, a form
of which is included herewith.
If shares of Christiana Common Stock are registered in different
names on several certificates, it will be necessary to complete, sign and
submit as many separate Form Letters of Transmittal as there are different
registrations of certificates.
7. Checks and New Certificates in Same Name. If checks or
certificates representing EVI Common Stock are to be payable to the order
of or registered in exactly the same name that appears on the certificates
representing shares of Christiana Common Stock being submitted herewith,
the shareholder will not be required to endorse the old certificates or to
make payment of transfer taxes.
8. Checks and New Certificates in Different Names. If checks or
stock certificates representing EVI Common Stock are to be payable to the
order of or registered in other than exactly the name that appears on the
certificates submitted herewith, the certificates submitted must be
endorsed, or accompanied by appropriate, signed stock powers, and the
SIGNATURE GUARANTEED by a member of a national securities exchange or of
the National Association of Securities Dealers, Inc. ("NASD") or by a
commercial bank or trust company in the United States. Additionally, in
such case all requisite stock transfer tax stamps must be affixed to the
certificates submitted.
9. Lost Certificates. If a holder is not able to locate his
certificates representing shares of Christiana Common Stock, he should
contact Christiana for advice on the procedure to be followed to obtain
replacement certificates. Such holder should note that it may take in
excess of two weeks to obtain such replacement certificates.
10. Non-United States Residents. Non-United States residents
purchasing shares of C2 must verify by proper execution of the statement
made in the signature box entitled "To Be Executed Only By Non-United
States Residents".
11. Important Tax Information. Federal income tax law requires
that each holder of Christiana Common Stock certify to the Exchange Agent
such holder's correct Taxpayer Identification Number ("TIN") and to
indicate that the holder is not subject to backup withholding. If such
holder is an individual, the TIN is his or her social security number.
Payments that are made to such holder with respect to such Cash
Consideration are subject to backup withholding if such holder fails to
make such certification on the enclosed Substitute Form W-9.
If backup withholding applies, the Exchange Agent is required to
withhold 31% on payments for Christiana Common Stock made to the holder
pursuant to the Merger. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in
an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service. Certain holders (including, among others, all
corporations and certain foreign individuals) are exempt from the backup
withholding and reporting requirements. In order for a holder who is a
foreign individual to qualify as an exempt recipient, such holder must
submit a statement on the appropriate form, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements
can be obtained from the Exchange Agent.
If the holder has not been issued a TIN or intends to apply for a TIN
in the near future, the holder should write "Applied For" in the space for
the TIN. If the Exchange Agent is not provided with a TIN before the
effective time of the Merger, the Exchange Agent will withhold 31% on all
payments for any Christiana Common Stock made to the holder pursuant to
the Merger.
12. Miscellaneous. A single check or a single stock certificate
will be issued for all shares subject to each Form Letter of Transmittal
unless written instructions to the contrary are attached hereto.
All questions with respect to this Form Letter of Transmittal, these
Instructions and the Election (including, without limitation, questions
relating to the timeliness or effectiveness of revocation of any Election
and computations as to proration) will be determined by Firstar Trust
Company in accordance with the terms of the Merger Agreement and C2
Prospectus.
Additional copies of this Form Letter of Transmittal may be obtained
from Firstar Trust Company.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December ___, 1997 (the "Credit
Agreement"), is by and among TOTAL LOGISTIC CONTROL, LLC, a Delaware
limited liability company (the "Borrower"), the several lenders identified
on the signature pages hereto and such other lenders as may from time to
time become a party hereto (the "Lenders"), and FIRSTAR BANK MILWAUKEE,
N.A., as agent for the Lenders (in such capacity, the "Agent".
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$65,000,000 reducing revolving credit facility for the purposes
hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit
facility available to the Borrower on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION I.
DEFINITIONS
A. Definitions. As used in this Credit Agreement, the following
terms shall have the meanings specified below unless the context otherwise
requires:
"Additional Credit Party" means the each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement
in accordance with Section 7.11.
"Affiliate" means, with respect to any Person, any other Person
(i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly
or indirectly owning or holding ten percent (10%) or more of the
equity interest in such Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agent" means Firstar Bank Milwaukee, N.A. as administrative
agent in such capacity hereunder, and any successors and assigns in
such capacity.
"Aggregate Revolving Committed Amount" means the aggregate
amount of all of the Revolving Commitments in effect from time to
time.
"Applicable Percentage" means, for any day, the rate per annum
set forth opposite the applicable pricing level then in effect as
shown on Schedule 2.1(d), it being understood that the Applicable
Percentage for (i) Eurodollar Loans shall be the percentage set forth
under the column "Applicable Percentage for Eurodollar Loans,"
(ii)Prime Rate Loans shall be the percentage set forth under the
column "Applicable Percentage for Prime Rate Loans," and (iii) Letter
of Credit Fee shall be the percentage set forth under the column
"Letter of Credit Fee." The Applicable Percentage shall, in each
case, be determined and adjusted quarterly by the Agent as soon as
practicable (but in any event within 5 days) after delivery of the
annual financial information required by Section 7.1 or the monthly
financial information required by Section 7.2 (each an "Interest
Determination Date") based on the information contained in such
financial information, with the first such determination and
adjustment hereunder to be made upon the Agent's receipt of financial
information for the quarter ended June 30, 1998. Such Applicable
Percentage shall be effective from an Interest Determination Date
until the next such Interest Determination Date. The Agent shall
determine the appropriate pricing level promptly upon its receipt of
the foregoing financial information and promptly notify the Borrower
and the Lenders of any change thereof. Such determinations by the
Agent shall be conclusive absent manifest error. The initial
Applicable Percentages shall be based on pricing level 7. The term
"pricing level" shall be as referenced in Schedule 2.1(d).
"Borrower Operating Agreement" means the Operating Agreement of
Borrower dated June 13, 1997, and all amendments thereto through the
effective date of the Merger Transactions and the Divestiture,
including all exhibits thereto, pursuant to the Delaware Limited
Liability Company Act, Title 6, Chapter 18, Del. Stats.
"Borrowing Date" means in respect of any Loan, the date such
Loan is made.
"Business" is defined in Section 6.10(b).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Wisconsin, Illinois or
Michigan are closed, except that, when used in connection with a rate
determination, borrowing or payment in respect of a Eurodollar Loan,
such day shall also be a day on which dealings between banks are
carried on in U.S. dollar deposits in London, England and Nassau,
Bahamas.
"CST" means Christiana Companies, Inc., a Wisconsin corporation.
"Calculation Date" is defined in the definition of Interbank
Offered Rate.
"Capital Expenditures" means all expenditures which in
accordance with GAAP would be classified as capital expenditures,
including, without limitation, Capital Lease Obligations.
"Capital Lease" means any lease of property, real or personal,
the obligations with respect to which are required to be capitalized
on a balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" means the capital lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and surplus in
excess of $500,000,000 or (iii) any bank whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank
being an "Approved Lender"), in each case with maturities of not more
than 364 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Lender (or by the
parent company thereof) or any variable or fixed rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within six months of the
date of acquisition, (d) repurchase agreements with a bank or trust
company (including any of the Lenders) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States
of America in which the Borrower shall have a perfected first
priority security interest (subject to no other Liens) and having, on
the date of purchase thereof, a fair market value of at least 100% of
the amount of the repurchase obligations, (e) obligations of any
State of the United States or any political subdivision thereof, the
interest with respect to which is exempt from federal income taxation
under Section 103 of the Code, having a long term rating of at least
Aa-3 or AA- by Moody's or S&P, respectively, (f) investments in
municipal auction preferred stock (i) rated AAA or the equivalent
thereof) or better by S&P or Aaa (or the equivalent thereof) or
better by Moody's and (ii) with dividends that reset at least once
every 365 days and (g) investments, classified in accordance with
GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended,
which are administered by reputable financial institutions having
capital of at least $100,000,000 and the portfolios of which are
limited to investments of the character described in the foregoing
subdivisions (a) through (f).
"Cash Flow Coverage Ratio" means for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense and Principal
Amortization.
"Closing Date" means the date on which all of the conditions set
forth in Section 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" means the Revolving Commitment and the LOC
Commitment, individually or collectively, as appropriate.
"Commitment Fee" is defined in Section 3.4(c).
"Commitment Percentage" means the Revolving Commitment
Percentage and/or the LOC Commitment Percentage, as appropriate.
"Commitment Transfer Supplement" means a Commitment Transfer
Supplement, substantially in the form of Exhibit 11.6(c).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated EBITDA" means for any period, the aggregate of (i)
the sum of Consolidated Net Income plus Consolidated Interest Expense
plus all provisions for any federal, state or other income taxes for
such period plus depreciation, amortization and other noncash charges
for the Borrower and its Subsidiaries on a consolidated basis for
such period, determined in each case in accordance with GAAP applied
on a consistent basis. Except as expressly provided otherwise, the
applicable period shall be for the four consecutive quarters ending
as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Borrower and
its Subsidiaries on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Funded Debt Ratio" means, as of the last day of
any fiscal quarter, the ratio of Consolidated Funded Debt on such day
to Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of such day.
"Consolidated Interest Expense and Principal Amortization" means
for any period, all interest expense and principal amortization,
including the amortization of debt discount and premium, the interest
and principal component under Capital Leases, and the amortization of
principal of all Indebtedness (including without limitation the
mandatory prepayment of Revolving Loans under this Credit Agreement;
but excluding any amortization of principal in respect of
Indebtedness permitted under Section 8.1(e) hereof) for the Borrower
and its Subsidiaries on a consolidated basis determined in accordance
with GAAP applied on a consistent basis. The applicable period shall
be for the four consecutive quarters ending as of the last date of
such period, except that for the fiscal quarters ending prior to June
30, 1998, Consolidated Interest Expense and Principal Amortization
shall be determined by annualizing the components thereof for fiscal
quarters ending after June 30, 1997 such that Consolidated Interest
Expense and Principal Amortization for the first complete fiscal
quarter thereafter ending on September 30, 1997 would be multiplied
by four (4), the first two complete fiscal quarters thereafter ending
on December 31, 1997 would be multiplied by two (2), and the first
three complete fiscal quarters thereafter ending on March 31, 1998
would be multiplied by one and one-third (1-1/3).
"Consolidated Net Income" means for any period, the net income
of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis, but
excluding for purposes of determining the Consolidated Funded Debt
Ratio and the Interest Coverage Ratio any extraordinary gains or
losses (including, without limitation, gains or losses on disposal of
property, plant and equipment relating to discontinued operations),
and any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses. The applicable
period shall be for the four consecutive quarters ending as of the
date of computation, except that for the fiscal quarters ending prior
to June 30, 1998, Consolidated Net Income shall be determined by
annualizing the components thereof for fiscal year 1998 such that
Consolidated Net Income for the first complete fiscal quarter in
fiscal year 1998 (ending on September 30, 1997) would be multiplied
by four (4), the first two complete fiscal quarters in fiscal year
1998 (ending on December 31, 1997) would be multiplied by two (2),
and the first three complete fiscal quarters in fiscal year 1998
(ending on March 31, 1998) would be multiplied by one and one-third
(1-1/3).
"Consolidated Net Worth" means total stockholders' equity of the
Borrower and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP applied on a consistent basis.
"Consolidated Subsidiaries" means Subsidiaries whose financial
statements are consolidated with those of the Borrower in accordance
with GAAP.
"Consolidated Tangible Net Worth" means the total of all assets
properly appearing on the consolidated balance sheet of the Borrower
and its Subsidiaries in accordance with GAAP, less the sum of the
following:
(i) the book amount of all such assets which would be
treated as intangibles under GAAP, including, without
limitation, all such items as organization costs, good will,
trademarks, trademark rights, trade names, tradename rights,
brands, copyrights, patents, patent rights, licenses and
unamortized debt discount and expense,
(ii) any write-up in the book value of any such
assets resulting from a revaluation thereof subsequent to the
Closing Date,
(iii) all reserves, including reserves for
depreciation, obsolescence, depletion, insurance, and inventory
valuation, but excluding contingency reserves not allocated for
any particular purpose and not deducted from assets,
(iv) the amount, if any, at which any shares of stock
of the Borrower or any Subsidiary appear on the asset side of
such balance sheet,
(v) all liabilities of the Borrower and its
Subsidiaries shown on such consolidated balance sheet, and
(vi) all investments in foreign affiliates and
nonconsolidated domestic affiliates.
"Consolidated Total Assets" means total assets of the Borrower
and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP applied on a consistent basis.
"Continuing Director" is defined in Section 9(h).
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any
of its property is bound.
"Core Interest Owners" means those Persons set forth on Schedule
1.1(c).
"Credit Documents" means this Credit Agreement, the Notes, any
Joinder Agreement, the Security Agreement, the General Intangibles
Mortgage, the Real Estate Mortgages, any Letter of Credit Document,
and all other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means, individually, the Borrower and any
Additional Credit Party.
"Credit Party Obligations" means, without duplication, all of
the obligations of the Borrower and the other Credit Parties to the
Lenders, the Agent and the Issuing Lender (including the obligations
to pay principal of and interest on the Loans, to pay LOC
Obligations, to pay all Fees, to provide cash collateral in respect
of Letters of Credit, to pay certain expenses and the obligations
arising in connection with various indemnities) whenever arising,
under this Credit Agreement, the Notes or any other of the Credit
Documents to which the Borrower or any other Credit Party is a party.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means at any time, any Lender that, at such
time (a) has failed to make a Loan or advance required pursuant to
the terms of this Credit Agreement, including the funding of a
Participation Interest in accordance with the terms hereof, (b) has
failed to pay to the Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement, or (c) has
been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Divestiture" means, collectively, the transactions contemplated
by the Divestiture Documents.
"Divestiture Documents" means the documents identified as the
Divestiture Documents on Schedule 5.1(c).
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Domestic Lending Office" means the office or branch of the
Lender identified on Schedule 11.2, or such other office or branch as
the Lender may identify by written notice to the Borrower and the
Agent.
"Eligible Transferee" means and includes a commercial bank,
financial institution or other "accredited investor" as defined in
Regulation D of the Securities Act of 1933, (as amended).
"Environmental Laws" means any and all applicable foreign,
federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority (or other Requirement of Law including common
law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as
now or may at any time be in effect during the term of this Credit
Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and the rulings issued thereunder.
"Eurodollar Lending Office" means the office or branch of the
Lender identified on Schedule 11.2, or such other office or branch as
the Lender may identify by written notice to the Borrower and the
Agent.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined, whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefit of
credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" is defined in Section 9.
"EVI" means EVI, Inc., a Delaware corporation.
"Execution Date" means the date as of which the parties hereto
have executed this Credit Agreement.
"Existing Credit Agreement" means the Amended and Restated
Revolving Credit Agreement dated as of March 21, 1996 by and among
the Borrower (as successor to Wiscold, Inc., a former Wisconsin
corporation), the several lenders identified on the signature pages
thereto and such other lenders as may from time to time become a
party thereto, and Firstar, as agent for the lenders, as amended from
time to time.
"Existing Letters of Credit" means those Letters of Credit
outstanding on the Closing Date and identified on Schedule 1.1(a).
"Extension of Credit" means as to any Lender, the making of a
Loan by such Lender or the issuance of, or participation in, a Letter
of Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole
multiple of 1/100 of 1%) equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (A) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Business Day and (B) if no
such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to
the Agent on such day on such transactions as determined by the
Agent.
"Fee" means any fee payable pursuant to Section 3.4.
"FIRREA" means the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time, and the
regulations promulgated and the rulings issued thereunder.
"First America Credit Agreement" means the [describe the
existing First of America credit agreement].
"First America" means First of America Bank-Michigan, N.A.
"Firstar" means Firstar Bank Milwaukee, N.A.
"Funded Debt" means, for any Person, (i) all Indebtedness of
such Person for borrowed money (including, without limitation,
indebtedness evidenced by promissory notes, bonds, debentures and
similar instruments and further any portion of the purchase price for
assets or acquisitions permitted hereunder which may be financed by
the seller and Guarantee Obligations by such Person of Funded Debt of
other Persons), (ii) all purchase money Indebtedness of such Person,
(iii) the principal portion of Capital Lease Obligations, and (iv)
all preferred stock issued by such Person and required by the terms
thereto to be redeemed, or for which mandatory sinking fund payments
are due, by a fixed date. Funded Debt shall include payments in
respect of Funded Debt which constitute current liabilities of the
obligor under GAAP. For purposes hereof, Funded Debt shall not
include any Indebtedness owing in respect of LOC Obligations up to a
maximum aggregate amount of $3,300,000 at any one time.
"GAAP" means generally accepted accounting principles in effect
in the United States of America applied on a consistent basis.
"General Intangibles Mortgage" means the General Intangibles
Mortgage and Security Agreement dated as of the Closing Date given by
the Borrower and the Guarantors to the Agent covering substantially
all of the intangible personal property owned by the Borrower and the
Guarantors, in form and substance satisfactory to the Agent and the
Lenders, as amended, supplemented or otherwise modified from time to
time.
"Government Acts" is defined in Section 3.14(a).
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee Obligation" means, as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person
or (b) another Person (including, without limitation, any bank under
any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counter indemnity or
similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
(the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantor" means each Additional Credit Party which has
executed a Joinder Agreement, together with their successors and
permitted assigns.
"Guaranty" means the guaranty of the Guarantors set forth in
Section 4.
"Indebtedness" means, of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services other than trade liabilities
incurred in the ordinary course of business and not restructured
thereafter for credit reasons, (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital Leases,
(d) all obligations of such Person in respect of acceptances issued
or created for the account of such Person, (e) all liabilities
secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the
payment thereof, (f) all obligations of such Person under conditional
sale or other title retention agreements relating to property
purchased by such Person other than customary reservations or
retentions of title under agreements with suppliers entered into in
the ordinary course of business), (g) all obligations of such Person
under take-or-pay or similar arrangements or under commodities
agreements, (h) all Guarantee Obligations of such Person, (i) all
obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity
price hedging agreements, (j) the maximum amount of all letters of
credit issued or bankers' acceptances created for the account of such
Person and, without duplication, all drafts drawn thereunder to the
extent not theretofore reimbursed, (k) all preferred stock issued by
such Person and required by the terms thereto to be redeemed, or for
which mandatory sinking fund payments are due, by a fixed date, (l)
all other obligations which would be shown as a liability on the
balance sheet of such Person, and (m) the outstanding balance of the
purchase price of uncollected accounts receivable of such Person
subject at such time to a sale of receivables or other similar
transaction, regardless of whether such transaction is effected
without recourse to such Person or in a manner which would not be
reflected on the balance sheet of such Person in accordance with
GAAP; but specifically excluding from the foregoing (x) trade
payables, (y) obligations for advances by customers for the purchase
of goods or services from the Borrower and its Subsidiaries, and
(z) other obligations, expenses and reserves (whether classified as
long term or short term) arising or incurred in the ordinary course
of business. For purposes hereof, Indebtedness shall include
Indebtedness of any partnership in which such Person is a general
partner (except for any such Indebtedness with respect to which the
holder is limited to the assets of such partnership or joint
venture).
"Indemnified Liabilities" is defined in Section 11.5.
"Insolvency" means with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term
as used in Section 4245 of ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interbank Offered Rate" means, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the per annum rate
of interest determined by the Agent (each such determination to be
conclusive and binding absent manifest error) to be the average
(rounded up, if necessary, to the nearest one-sixteenth (1/16) of one
percent) of the offered rates for deposits in U.S. dollars for the
applicable Interest Period which appear on the Reuters Screen LIBOR
Page (or such other page on which the appropriate information may be
displayed), on the electronic communications terminals in the Agent's
money center as of 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period (the "Calculation Date"),
except as provided below. If fewer than two offered rates appear for
the applicable Interest Period or if the appropriate screen is not
accessible as of such time, the term "Interbank Offered Rate" shall
mean the per annum rate of interest determined by the Agent (each
such determination to be conclusive and binding absent manifest
error) to be the average (rounded up, if necessary, to the nearest
one-sixteenth (1/16) of one percent) as the effective rate at which
deposits in immediately available funds in Dollars are being, have
been, or would be offered or quoted by major banks to the Agent in
the applicable interbank market for Eurodollar deposits at 11:00 a.m.
(Milwaukee, Wisconsin) on the Business Day which is the second
Business Day immediately preceding the first day of such Interest
Period, for a term comparable to such Interest Period and in the
amount of the requested Eurodollar Loan. If no such offers or quotes
are generally available for such amount, then the provisions of
Section 3.6 shall apply.
"Interest Payment Date" means (a) as to any Prime Rate Loan, the
last day of each month and the Revolving Termination Date or the Term
Termination Date, as applicable, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an Interest
Period of more than three months, the day which is three months after
the first day of such Interest Period and the last day of such
Interest Period. Whenever any Interest Payment Date shall be stated
to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to
accrual of interest and Fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would
cause the payment to be made in the next following calendar month,
then such payment shall instead be made on the next preceding
Business Day as provided in Section 3.13.
"Interest Period" means with respect to any Eurodollar Loan,
(i) initially, the period commencing on the Borrowing Date
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two or three months thereafter,
as selected by the Borrower in the notice of borrowing or notice
of conversion given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the immediately preceding Interest Period applicable to such
Eurodollar Loan and ending one, two or three months thereafter,
as selected by the Borrower by irrevocable notice to the Agent
not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that the foregoing provisions are subject to the following:
(A) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Business Day;
(B) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on
the last Business Day of the relevant calendar month;
(C) if the Borrower shall fail to give notice as provided
above, the Borrower shall be deemed to have selected a Prime
Rate Loan to replace the affected Eurodollar Loan;
(D) any Interest Period that would otherwise extend beyond
the Revolving Termination Date shall end on the Revolving
Termination Date; and
(E) no more than six (6) Eurodollar Loans may be in effect
at any time. For purposes hereof, Eurodollar Loans with
different Interest Periods shall be considered as separate
Eurodollar Loans, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be
combined at the end of existing Interest Periods to constitute a
new Eurodollar Loan with a single Interest Period.
"Issuing Lender" means as to the Existing Letters of Credit, the
Issuing Lenders identified on Schedule 1.1(a), and as to Letters of
Credit issued after the Closing Date, Firstar.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit 7.11, executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 7.11.
"Lenders" means each of the Persons identified as a "Lender" on
the signature pages hereto, and each Person which may become a Lender
by way of assignment in accordance with the terms hereof, together
with their successors and permitted assigns.
"Letter of Credit" means any Existing Letter of Credit and any
letter of credit issued for the account of a Credit Party by an
Issuing Lender as provided in Section 2.3, as such letter of credit
may be amended, supplemented, extended or otherwise modified from
time to time.
"Letter of Credit Fees" is defined in Section 3.4(a).
"Lien" means any mortgage, pledge, hypothecation, assignment for
security purposes, security interest, encumbrance, lien (statutory or
otherwise) or charge of any kind including any agreement to give any
of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under
the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction (or other similar recording or notice statute, and any
lease in the nature thereof), except a filing for precautionary
purposes made with respect to a true lease or other true bailment.
"Loan" means a Revolving Loan.
"LOC Commitment" means the commitment of the Issuing Lender to
issue Letters of Credit and with respect to each Lender, the
commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender's LOC Committed Amount as
specified in Schedule 2.1(a) (subject to adjustment on account of
assignment pursuant to the provisions of Section 11.6(c) hereof), as
such amount may be reduced from time to time in accordance with the
provisions hereof.
"LOC Commitment Percentage" means for each Lender, the
percentage identified as its LOC Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.6(c).
"LOC Committed Amount" means, collectively, the aggregate amount
of all of the LOC Commitments of the Lenders to issue and participate
in Letters of Credit as referenced in Section 2.3(a) and,
individually, the amount of each Lender's LOC Commitment as specified
in Schedule 2.1(a) (subject to adjustment on account of assignment
pursuant to the provisions of Section 11.6(c) hereof).
"LOC Documents" means with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to
be drawn under Letters of Credit then outstanding, assuming
compliance with all requirements for drawings referred to in such
Letters of Credit plus (ii) the aggregate amount of all payments
made, or drafts accepted for subsequent payments to be made, under
Letters of Credit honored by the Issuing Lender but not theretofore
reimbursed.
"Logistic Acquisition" means Logistic Acquisition, LLC, a
Wisconsin limited liability company.
"Logistic Acquisition Operating Agreement" means the Operating
Agreement of Logistic Acquisition dated _________, 1997, and all
amendments thereto through the effective date of the Merger
Transactions and the Divestiture, including all exhibits thereto,
pursuant to the Wisconsin Limited Liability Company Act, Chapter 183,
Wis. Stats.
"Logistic Managing Member" means _________________.
"Mandatory Borrowing" is defined in Section 2.3(e).
"Material Adverse Effect" means a material adverse effect on (a)
the business, operations, property or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole
(excluding the effect on the Borrower's financial condition as of the
Closing Date resulting from the Merger Transactions and the
Divestiture), (b) the ability of the Borrower or the other Credit
Parties to perform their obligations, when such obligations are
required to be performed, under this Credit Agreement or any of the
other Credit Documents or (c) the validity or enforceability of this
Credit Agreement, any of the Notes or any of the other Credit
Documents or the rights or remedies of the Agent or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Merger Documents" means the documents identified as the Merger
Documents on Schedule 5.1(c).
"Merger Transactions" means the merger of Sub with and into CST
and the other transactions contemplated by the Merger Documents.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means the gross cash proceeds including cash by
way of deferred payment pursuant to a promissory note, receivable or
otherwise, (but only as and when received) received from the sale,
lease, conveyance, disposition or other transfer of assets, or from a
Recovery Event or from the sale, issuance or placement of equity
securities, Indebtedness for borrowed money or Subordinated Debt to
or from a Person other than a Credit Party, net of (i) transaction
costs payable to third parties, (ii) the estimated taxes payable with
respect to such proceeds (including, without duplication, withholding
taxes), (iii) Indebtedness (other than Indebtedness of the Lenders
pursuant to the Credit Documents) which is secured by the assets
which are the subject of such event to the extent such Indebtedness
is paid with a portion of the proceeds therefrom, and (iv) any and
all cash costs which may occur as a result of discontinuing
operations, shut-downs or otherwise resulting from, the disposition
of such assets.
"Non-Excluded Taxes" is defined in Section 3.9.
"Non-Guarantor Subsidiaries" is defined in Section 7.11.
"Note" or "Notes" means the Revolving Notes, individually or
collectively, as appropriate.
"Notice of Borrowing" means the written notice of borrowing as
referenced and defined in Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion as referenced and defined in Section 3.2.
"Obligations" means collectively, Loans and LOC Obligations.
"Participant" and "Participants" are defined in Section 11.6.
"Participation Interest" means the purchase by a Lender of a
participation interest in Letters of Credit as provided in Section
2.3.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, and any successor thereto.
"Permitted CST Distribution" means a distribution paid by the
Borrower to CST on the Closing Date in respect of CST's ownership of
interest in the Borrower in an amount not to exceed $20,000,000.
"Permitted Guarantee Obligations" means (i) a Guaranty and (iii)
Guarantee Obligations of the Borrower and its Subsidiaries relating
to Indebtedness of the Borrower or a Subsidiary otherwise permitted
under Section 8.1.
"Permitted Investments" means (i) cash and Cash Equivalents,
(ii) receivables owing to the Borrower or any of its Subsidiaries for
trade credit, in each case if created, acquired or made in the
ordinary course of business, (iii) loans and advances in the
ordinary course of business to officers, directors, employees,
Affiliates and suppliers in an aggregate amount not to exceed
$250,000 at any time outstanding, (iv) investments (including debt
obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business,
(v) investments, acquisitions or transactions permitted under Section
8.4(b), (vi) with respect to any pension trust maintained for the
benefit of any present or former employees of the Borrower or any
Subsidiary, such loans, advances and/or investments as the trustee or
administrator of the trust shall deem advisable pursuant to the terms
of such trust, (vii) investments in wholly-owned Subsidiaries of the
Borrower up to a maximum aggregate outstanding amount of all such
investments not to exceed 10% of Consolidated Tangible Net Worth at
any one time, (viii) investments of a nature not contemplated by the
foregoing clauses hereof that are outstanding as of the Execution
Date and set forth on Schedule 1.1(b), and (ix) additional loan
advances and/or investments of a nature not contemplated by the
foregoing clauses hereof provided that such loans, advances and/or
investments made pursuant to this clause (ix) shall not exceed an
aggregate amount of $250,000 outstanding at any one time and further
provided that no such loans, advances and/or investments shall be
used to acquire all or substantially all of the voting stock of any
corporation the board of directors of which has not approved such
acquisition. As used herein, "investment" means all investments, in
cash or by delivery of property made, directly or indirectly in, to
or from any Person, whether by acquisition of shares of capital
stock, property, assets, indebtedness or other obligations or
securities or by loan advance, capital contribution or otherwise.
"Permitted Liens" means
(i) Liens created by or otherwise existing, under or in
connection with this Credit Agreement or the other Credit Documents
in favor of the Agent for the benefit of the Lenders;
(ii) Liens in favor of a Lender hereunder as the provider of
interest rate protection relating to the Loans hereunder, but only
(A) to the extent such Liens secure obligations under such interest
rate protection agreements permitted under Section 8.1, (B) to the
extent such Liens are on the same collateral as to which the Agent
for the benefit of the Lenders also has a Lien, (C) if such provider
and the Agent for the benefit of the Lenders shall have agreed to
share pari passu in the collateral subject to such Liens, up to a
maximum aggregate amount of 5% of the proceeds of such collateral for
such provider and all other providers hereunder, and thereafter all
such providers' Liens shall be subordinate to the Liens in favor of
the Agent for the benefit of the Lenders, and (D) if such provider
shall have agreed, pursuant to an agreement reasonably satisfactory
in form and substance to the provider, the Borrower and the Agent, to
pay to the Agent, for the pro rata benefit of the Lenders, an amount
equal to the amount of any payment made to such provider by or on
behalf of a Credit Party after a default by reason of the amendment,
conversion, buy-out or termination of such interest rate protection
agreements;
(iii) purchase money Liens securing purchase money
indebtedness (and refinancings thereof) and Capital Lease
Obligations, to the extent permitted under Section 8.1(c);
(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of grace,
if any, related thereto has not expired or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics', material-men's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids, trade
contracts, (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(viii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses; provided that such
extension, renewal or replacement Lien shall be limited to all or a
part of the property which secured the Lien so extended, renewed or
replaced (plus improvements on such property);
(ix) easements, rights of way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not material in amount and which do not
in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of the Borrower or any Subsidiary;
(x) Liens in existence on the date hereof listed on
Schedule 8.2, securing Indebtedness permitted by Section 8.1(b),
provided that no such Lien is spread to cover any additional property
(other than proceeds of the collateral originally subject to such
Lien in accordance with the instrument creating such Lien) after the
Closing Date and that the amount of Indebtedness secured thereby is
not increased;
(xi) Liens on the property or assets of a corporation which
becomes a Subsidiary after the Closing Date securing Indebtedness
permitted by Section 8.1(i), provided that (A) such Liens existed at
the time such corporation became a Subsidiary and were not created in
anticipation thereof, and (B) no such Lien is spread to cover any
additional property (other than proceeds of the collateral originally
subject to such Lien in accordance with the instrument creating such
Lien) after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;
(xii) Liens in the nature of licenses that arise in the
ordinary course of business and consistent with past practice;
(xiii) Liens incurred in connection with Indebtedness
permitted by Section 8.1(h), provided that no such Lien shall be
spread to cover any additional property after the Closing Date and
the amount of Indebtedness secured thereby shall not be increased;
(xiv) leases and subleases otherwise permitted hereunder
granted to others not interfering in any material respect in the
business of the Borrower or any Subsidiary;
(xv) attachment or judgment Liens, where the attachment
or judgment which gave rise to such Liens does not constitute an
Event of Default hereunder; and
(xiv) Liens in favor of an Issuing Lender under any LOC
Documents, but only (A) to the extent such Liens secure LOC
Obligations permitted under Section 2.2, and (B) to the extent such
Liens are on collateral in the possession of such Issuing Lender.
"Permitted Repurchase of Management Interests" means the
Borrower's purchase of any limited liability company interest in the
Borrower held by an employee of the Borrower upon the termination of
such employee's employment, provided that the cumulative aggregate
amount expended by the Borrower for all such purchases from its
employees shall not exceed $250,000 in any fiscal year of the
Borrower, net of cash proceeds received by the Borrower in such year
on account of the sale of any limited liability company interest in
the Borrower to any employee(s) of the Borrower.
"Permitted Sale-Leaseback Transaction" means a trans-action
pursuant to which a Credit Party sells an item of equipment to a
financial institution and concurrently with such sale (i) leases such
item of equipment back from such financial institution and (ii)
subleases such item of equipment to a customer of the Credit Party
pursuant to a sublease agreement under which such customer obtains an
option to purchase such item of equipment at or before the end of
such sublease.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means at any particular time, any employee benefit plan
which is covered by Title IV of ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means, for any day, the higher of (i) the per annum
rate of interest established from time to time by the Agent at its
principal office in Milwaukee, Wisconsin as its Prime Rate, or
(ii) the Federal Funds Rate plus 1%. Any change in the interest rate
resulting from a change in the Prime Rate shall become effective as
of 12:01 a.m. of the Business Day on which each change in the Prime
Rate is announced by the Agent. The Prime Rate is a reference rate
used by the Agent in determining interest rates on certain loans and
is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"Prime Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Prime Rate.
"Properties" is defined in subsection 6.10(a).
"Purchasing Lender" is defined in Section 11.6(c).
"Real Estate Mortgages" means the Real Estate Mortgages dated
as of the Closing Date given by the Borrower and the Guarantors to
the Agent covering the Properties owned by the Borrower and the
Guarantors, in form and substance satisfactory to the Agent and the
Lenders, as amended, supplemented or otherwise modified from time to
time.
"Recovery Event" means the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award
payable by reason of theft, loss, physical destruction or damage,
taking or similar event with respect to any of their respective
property or assets.
"Register" is defined in Section 11.6(d).
"Reorganization" means with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning
of such term as used in Section 4241 of ERISA.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders" means Lenders holding in the aggregate at
least 66-2/3% of the sum of (i) all Obligations then outstanding at
such time and (ii) the aggregate unused Commitments at such time
(treating for purposes hereof in the case of LOC Obligations and the
Issuing Lender, only the portion of the LOC Obligations of the
Issuing Lender which is not subject to the Participation Interests of
the other Lenders and, in the case of the Lenders other than the
Issuing Lender, the Participation Interests of such Lenders in LOC
Obligations hereunder as direct Obligations); provided, however, that
if any Lender shall be a Defaulting Lender at such time, then there
shall be excluded from the determination of Required Lenders the
Obligations (including Participation Interests) of such Defaulting
Lender and such Defaulting Lender's Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to
such Defaulting Lender.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
to which any of its material property is subject.
"Revolving Commitment" means with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to such Lender's
Revolving Committed Amount as specified in Schedule 2.1(a) (subject
to adjustment on account of assignment pursuant to the provisions of
Section 11.6(c) hereof), as such amount may be reduced from time to
time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means for each Lender, the
percentage identified as its Revolving Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section
11.6(c).
"Revolving Commitment Period" means the period from and
including the Closing Date to but not including the Revolving
Termination Date.
"Revolving Committed Amount" means collectively, the aggregate
amount of all of the Revolving Commitments as referenced in Section
2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a) (subject to adjustment on
account of assignment pursuant to the provisions of Section 11.6(c)).
"Revolving Loans" is defined in Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes
of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be
amended, modified, supplemented, extended, renewed or replaced from
time to time.
"Revolving Termination Date" means January 15, 2003 or the
earlier termination in full of the Revolving Commitments pursuant to
this Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of
such division in the business of rating securities.
"Security Agreement" means that Security Agreement dated as of
the Closing Date given by the Borrower and the Guarantors to the
Agent covering substantially all of the tangible personal property
owned by the Borrower and the Guarantors, in form and substance
satisfactory to the Agent and the Lenders, as amended, supplemented
or otherwise modified from time to time.
"Single Employer Plan" means any Plan which is not a Multi-
Employer Plan.
"Solvent" means, with respect to any Credit Party as of a
particular date, that on such date (i) such Credit Party is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Credit Party does not intend to,
and does not believe that it will, incur debts or liabilities beyond
such Credit Party's ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Credit Party is not
engaged in a business or a transaction, and is not about to engage in
a business or a transaction, for which such Credit Party's property
would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which
such Credit Party is engaged or is to engage, (vi) the fair value of
the property of such Credit Party is greater than the total amount of
liabilities, including, without limitation, contingent liabilities,
of such Credit Party and (v) the present fair saleable value of the
assets of such Credit Party is not less than the amount that will be
required to pay the probable liability of such Credit Party on its
debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, 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.
"Specified Sales" means (i) the sale, transfer, lease or other
disposition of inventory, materials and equipment consisting of
rolling stock in the ordinary course of business, (ii) the sale,
transfer, lease or other disposition of machinery, parts, equipment
and real estate no longer useful in the conduct of the business of
the Borrower or any of its Subsidiaries, as appropriate, (iii) the
sale, transfer, lease or other disposition of assets for cash,
provided, however, that 100% of the net after-tax proceeds of which
shall be paid to the Agent as a prepayment of Revolving Loans under
Section 3.3(c), as the Borrower shall direct without application of
the minimum prepayment amounts set forth therein, and provided
further, that if any such prepayment shall be made with respect to
Revolving Loans, the Revolving Committed Amount shall be
automatically, immediately, and permanently reduced by an amount
equal to the prepayment applied to the Revolving Loans under Section
3.3( a), and (iv) in addition to the transactions described in
subsections (i), (ii) and (iii), any other sale, transfer, lease or
other disposition of assets where the proceeds of such disposition do
not exceed $1,000,000 during any fiscal year.
"Sub" means Christiana Acquisition Co., a Wisconsin corporation
and wholly-owned subsidiary of EVI.
"Subordinated Debt" is defined in Section 8.10.
"Subsidiary" means, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Credit
Agreement shall refer to a Subsidiary or Subsidiaries of the
Borrower.
"Threshold Requirement" is defined in Section 7.11.
"Transfer Effective Date" is defined in the Commitment Transfer
Supplement.
"Transferee" is defined in Section 11.6(f).
"Type" means, as to any Loan, its nature as a Prime Rate Loan or
a Eurodollar Loan, as the case may be.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all capitalized
definitional terms defined in this Credit Agreement shall have the
defined meanings when used in the Notes or other Credit Documents or
any certificate or other document made or delivered pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Credit Agreement shall refer to
this Credit Agreement as a whole and not to any particular provision
of this Credit Agreement, and Section, subsection, Schedule and
Exhibit references are to this Credit Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
(d) For purposes of computation of periods of time
hereunder, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding".
1.3 Accounting Terms and Determinations. Unless otherwise specified
herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public accountants
or otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. During the Revolving Commitment
Period, subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("Revolving Loans")
to the Borrower from time to time for the purposes hereinafter set
forth; provided, however, that (i) with regard to each Lender
individually, the sum of such Lender's share of outstanding Revolving
Loans plus such Lender's LOC Commitment Percentage of LOC Obligations
shall not exceed such Lender's Revolving Committed Amount, and
(ii) with regard to the Lenders collectively, the sum of the
aggregate amount of outstanding Revolving Loans plus the aggregate
amount of LOC Obligations shall not exceed SIXTY-FIVE MILLION DOLLARS
($65,000,000) (as such aggregate maximum amount may be reduced from
time to time as provided herein). Revolving Loans may consist of
Prime Rate Loans or Eurodollar Loans, or a combination thereof, as
the Borrower may request, and may be repaid and reborrowed in
accordance with the provisions hereof. Eurodollar Loans shall be
made by each Lender at its Eurodollar Lending Office and Prime Rate
Loans at its Domestic Lending Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request
a Revolving Loan borrowing by written notice (or telephone
notice promptly confirmed in writing which confirmation may be
by fax) to the Agent not later than 10:30 A.M. (Milwaukee,
Wisconsin time) on the Business Day of the requested borrowing
in the case of Prime Rate Loans, and on the third Business Day
prior to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing (which shall
be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of
Prime Rate Loans, Eurodollar Loans or a combination thereof, and
if Eurodollar Loans are requested, the Interest Period(s)
therefor. A form of Notice of Borrowing a ("Notice of
Borrowing") is attached as Exhibit 2.1(b)(i). If the Borrower
shall fail to specify in any such Notice of Borrowing (I) an
applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a request for
a Prime Rate Loan hereunder. The Agent shall give notice to
each Lender (promptly upon receipt of each Notice of Borrowing,
and in any event not later than 12:00 noon, Milwaukee, Wisconsin
time, with respect to any Notice of Borrowing delivered to the
Agent pursuant to this section) of the contents thereof and each
such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing
shall be: (A) if a Prime Rate Loan, in a minimum aggregate
amount of $500,000 and integral multiples of $500,000 in excess
thereof; and (B) if a Eurodollar Loan, in a minimum aggregate
amount of $1,500,000 and integral multiples of $500,000 in
excess thereof (or, in either case, the remaining amount of the
Revolving Commitment, if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available
to the Agent for the account of the Borrower at the office of
the Agent specified in Schedule 11.2, or at such other office as
the Agent may designate in writing, by 1:30 P.M. (Milwaukee,
Wisconsin time) on the date specified in the applicable Notice
of Borrowing in Dollars and in funds immediately available to
the Agent. Such borrowing will then be made available to the
Borrower by the Agent by crediting the account of the Borrower
on the books of such office with the aggregate of the amounts
made available to the Agent by the Lenders and in like funds as
received by the Agent by the close of Agent's business on such
date.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Revolving Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
Revolving Loans shall bear interest as follows:
(i) Prime Rate Loans. During such periods as
Revolving Loans shall be comprised of Prime Rate Loans, each
such Prime Rate Loan shall bear interest at a per annum rate
equal to the sum of the Prime Rate plus the Applicable
Percentage as of the commencement of the Interest Period
applicable thereto;
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised of Eurodollar Loans, each
such Eurodollar Loan shall bear interest at a per annum rate
equal to the sum of the applicable Eurodollar Rate plus the
Applicable Percentage as of the commencement of the Interest
Period applicable thereto; and
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
(e) Revolving Notes. The Revolving Loans shall be
evidenced by a duly executed promissory note of the Borrower to each
Lender in the original principal amount of each such Lender's
Revolving Committed Amount in substantially the form of Exhibit
2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof
and of the LOC Documents, if any, and provided that no Default or
Event of Default shall have occurred and be continuing, and further
subject to any other terms and conditions which the Issuing Lender
may reasonably require, during the Revolving Commitment Period the
Issuing Lender shall issue, and the Lenders shall participate in,
Letters of Credit for the account of a Credit Party from time to time
upon request in a form acceptable to the Issuing Lender; provided,
however, that (i) the aggregate amount of LOC Obligations shall not
at any time exceed THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($3,500,000) (the "LOC Committed Amount") and (ii) the sum of the
aggregate amount of Revolving Loans plus the aggregate amount of LOC
Obligations shall not at any time exceed the aggregate Revolving
Committed Amount. No Letter of Credit as originally issued or as
extended shall have an expiry date extending beyond the Revolving
Termination Date, except that prior to the Revolving Termination Date
a Letter of Credit may be issued or extended with an expiry date
extending beyond the Revolving Termination Date if, and to the extent
that the Borrower shall provide cash collateral to the Issuing Lender
on the date of issuance or extension in an amount equal to the
maximum amount available to be drawn under such Letter of Credit.
Each Letter of Credit shall comply with the related LOC Documents.
The issuance and expiry date of each Letter of Credit shall be a
Business Day. In the case of a conflict in the terms of the LOC
Documents and this Credit Agreement, the terms of this Credit
Agreement shall control.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender and the
Agent on such prior notice as the Issuing Lender and Borrower shall
agree. The Issuing Lender will, at least quarterly and more
frequently upon request, provide to the Agent (who shall promptly
disseminate to the Lenders and the Borrower) a detailed report
specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the Agent
promptly upon request copies of the Letters of Credit. The Issuing
Lender will provide to the Agent prompt notice of any changes in LOC
Obligations issued by it, and more frequently upon request, a summary
report of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender, with respect to the
Existing Letters of Credit, hereby purchases a participation interest
in such Existing Letters of Credit and with respect to Letters of
Credit issued on or after the Closing Date, upon issuance of a Letter
of Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and
the obligations arising thereunder and any collateral relating
thereto, in each case in an amount equal to its LOC Commitment
Percentage of the obligations under such Letter of Credit and shall
absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its LOC Commitment Percentage
of the obligations arising under such Letter of Credit. Without
limiting the scope and nature of each Lender's participation in any
Letter of Credit, to the extent that the Issuing Lender has not been
reimbursed as required hereunder or under any LOC Document, each such
Lender shall pay to the Issuing Lender its LOC Commitment Percentage
of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute
and unconditional and shall not be affected by the occurrence of a
Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrower and the Agent. The Borrower shall reimburse the Issuing
Lender on the first Business Day following notice of payment under
any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds as provided herein
or in the LOC Documents, together with interest on the amount of such
payment at the Prime Rate from the date of payment until the date of
reimbursement. Unless the Borrower shall notify the Issuing Lender
and the Agent on the date Borrower receives notice of a payment of
its intent to otherwise reimburse the Issuing Lender, the Borrower
shall be deemed to have requested a Revolving Loan in the amount of
the payment as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
set-off, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including, without limitation, any defense based on any failure of
the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the other Lenders of the amount of any
unreimbursed payment and each Lender shall promptly pay to the Agent
for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's LOC Commitment
Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Lender from the Issuing
Lender if such notice is received at or before 2:00 P.M. (Milwaukee,
Wisconsin time), otherwise such payment shall be made at or before
12:00 P.M. (Milwaukee, Wisconsin time) on the Business Day next
succeeding the day such notice is received. If such Lender does not
pay such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the
Issuing Lender interest on the unpaid amount during the period from
the date of such payment until such Lender pays such amount to the
Issuing Lender in full at a rate per annum equal to, if paid within
two (2) Business Days of the date of such request, the Federal Funds
Rate and thereafter at a rate equal to the Prime Rate. Each Lender's
obligation to make such payment to the Issuing Lender, and the right
of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the Obligations hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which
the Borrower shall be deemed to have requested a Revolving Loan to
reimburse a drawing under a Letter of Credit, the Agent shall give
notice to the Lenders that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of
Credit, in which case a Revolving Loan borrowing comprised entirely
of Prime Rate Loans (each such borrowing, a "Mandatory Borrowing")
shall be immediately made (without giving effect to any termination
of the Commitments pursuant to Section 9) pro rata based on each
Lender's respective Revolving Commitment Percentage (determined
before giving effect to any termination of the Commitments pursuant
to Section 9) and in the case of both clauses (i) and (ii) the
proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing
in the amount and in the manner specified in the preceding sentence
and on the same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 5.2 are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) failure for any
such request or deemed request for Revolving Loan to be made by the
time otherwise required in Section 2.1(b), (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving Committed
Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing
should be less than the minimum amount for borrowings of Revolving
Loans otherwise provided in Section 2.1(b)(ii), the Borrower shall
pay to the Agent for its own account an administrative fee of $500.
In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each such Lender
hereby agrees that it shall forthwith fund (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and
prior to such purchase) its Participation Interests in the
outstanding LOC Obligations; provided, further, that in the event any
Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount of
such Lender's unfunded Participation Interest therein shall bear
interest payable to the Issuing Lender upon demand, at the rate equal
to, if paid within two (2) Business Days of any such request, the
Federal Funds Rate, and thereafter at a rate equal to the Prime Rate.
(f) Modification, Extension. The issuance of any
supplement, modification, amendment, renewal, or extension to any
Letter of Credit shall, solely for purposes of this Agreement, be
treated in all respects the same as the issuance of a new Letter of
Credit, but without duplication in computing the aggregate
outstanding amount of LOC Obligations.
(g) Uniform Customs and Practices. The Issuing Lender
shall have the Letters of Credit be subject to The Uniform Customs
and Practice for Documentary Credits, as published as of the date of
issue by the International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects
to be a part thereof, with such exceptions thereto as the beneficiary
may request and the Issuing Lender and account party may approve.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate. Upon the occurrence, and during the continuance,
of an Event of Default, the principal of and, to the extent permitted by
law, interest on the Loans and any other amounts owing hereunder or under
the other Credit Documents shall bear interest, payable on demand, at a
per annum rate which is equal to the rate which would otherwise be
applicable (or if no rate is applicable, whether in respect of interest,
fees or other amounts, then the Prime Rate) plus 2%.
3.2 Extension and Conversion. The Borrower shall have the option,
on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another
Type; provided, however, that (i) except as provided in Section 3.7,
Eurodollar Loans may be converted into Prime Rate Loans only on the last
day of the Interest Period applicable thereto, (ii) Eurodollar Loans may
be extended, and Prime Rate Loans may be converted into Eurodollar Loans,
only if no Default or Event of Default is in existence on the date of
extension or conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such minimum
amounts as provided in Section 2.l(b)(ii) and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify
an Interest Period shall be deemed to be a request for an Interest Period
of one month. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion in the form of Exhibit
3.2 (or telephone notice promptly confirmed in writing) to the Agent prior
to 10:30 A.M. (Milwaukee, Wisconsin time) on the Business Day of, in the
case of the conversion of a Eurodollar Loan into a Prime Rate Loan and on
the third Business Day prior to, in the case of the extension of a
Eurodollar Loan as, or conversion of a Prime Rate Loan into, a Eurodollar
Loan, the date of the proposed extension or conversion, specifying the
date of the proposed extension or conversion, the Loans to be so extended
or converted, the Types of Loans into which such Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto.
Each request for extension or conversion shall constitute a representation
and warranty by the Borrower of the matters specified in paragraphs (a)
and (b), and in (c) or (d), of Section 5.2. In the event the Borrower
fails to request extension or conversion of any Eurodollar Loan in
accordance with this Section, or any such conversion or extension is not
permitted or required by this Section, then such Loans shall be
automatically converted into Prime Rate Loans at the end of their Interest
Period. The Agent shall give each Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any
Loan.
3.3 Reductions in Commitments and Prepayments.
(a) Voluntary Reduction in Revolving Commitment. The Borrower may
from time to time permanently reduce the aggregate amount of the Revolving
Commitments in whole or in part without premium or penalty except as
provided in Section 3.10 upon three (3) Business Days' prior written
notice to the Agent; provided that after giving effect to any such
voluntary reduction the sum of Revolving Loans plus LOC Obligations then
outstanding shall not exceed the Aggregate Revolving Committed Amount, as
reduced. Except as otherwise specified herein, partial reductions in the
aggregate Revolving Commitment shall in each case be in a minimum
aggregate amount of $1,000,000 and integral multiples of $500,000 in
excess thereof.
(b) Mandatory Prepayment on Revolving Loans. If at any time the sum
of the aggregate amount of Revolving Loans plus LOC Obligations then
outstanding shall exceed the Aggregate Revolving Committed Amount, as
reduced from time to time, the Borrower shall immediately make payment on
the Revolving Loans and then, if necessary, to a cash collateral account
in respect of the LOC Obligations, in an amount sufficient to eliminate
the deficiency. Any such payments shall be applied first to Prime Rate
Loans and then to Eurodollar Loans in direct order of their Interest
Period maturities.
(c) Voluntary Prepayments. Loans may be prepaid in whole or in part
without premium or penalty except as provided in Section 3.10. Any
partial prepayment shall be in a minimum aggregate principal amount of
$1,000,000 and integral multiples of $500,000 in excess thereof. Except
as otherwise specified herein, amounts prepaid on the Revolving Loans may
be reborrowed in accordance with the provisions hereof.
3.4 Fees.
(a) Letter of Credit Fee. In consideration of the issuance of
Letters of Credit hereunder, the Borrower agrees to pay to the Agent for
the ratable benefit of the Lenders a fee with respect to each Letter of
Credit (the "Letter of Credit Fee") equal to the Applicable Percentage per
annum on the average daily maximum amount available to be drawn under such
Letter of Credit from the date of issuance calculated for the term of
availability thereof. The Letter of Credit Fee shall be payable quarterly
in arrears with respect to each Letter of Credit on the last day of each
calendar quarter and on the Revolving Termination Date and shall be in
lieu of any other fees in connection with the issuance of Letters of
Credit hereunder, except for such standard and customary fees, costs and
expenses incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit as
the Borrower and the Issuing Lender may mutually agree.
(b) Commitment Fee. In consideration of the Commitments by the
Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee the "Commitment Fee") in an amount
equal to 0.15% of the Revolving Committed Amount. One-half of the
Commitment Fee has been fully-earned and shall be payable on the earlier
of the Execution Date or December 31, 1997 and one-half of the Commitment
Fee shall be payable on the Closing Date.
(c) Administrative Fees. The Borrower agrees to pay to the Agent,
for its own account, the administrative and structuring fee (the "Agent's
Fee") referred to in that certain Agent's fee letter dated October 10,
1997.
3.5 Capital Adequacy. If any Lender has reasonably determined that
the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy made after the date hereof, or any change
therein made after the date hereof, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof made after the date hereof, or compliance by such Lender or its
parent company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency made after the date hereof, has or would have
the effect of reducing the rate of return on such Lender's or its parent
company's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance
(taking into consideration the policies of such Lender and its parent
company with respect to capital adequacy), then, within 10 Business Days
after the Borrower's receipt of the certificate referred to in the next
sentence, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender and its parent company for such
reduction; provided that no such amounts shall be payable with respect to
reduction in rate of return incurred more than three (3) months before
such Lender demands compensation under this Section 3.5. A certificate as
to the amount of such reduction in rate of return, the good faith basis
therefor and setting forth in reasonable detail the calculations used by
the applicable Lender to arrive at the amount or amounts claimed to be
due, shall be submitted to the Borrower and the Agent. Each determination
by a Lender of amounts owing under this Section shall be rebuttably
presumptive evidence of the matters set forth therein. No demand for
payment under this Section shall be made unless the Lender shall make
comparable demands of other similarly situated borrowers. The provisions
of this Section shall survive termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
3.6 Inability To Determine Interest Rate. If prior to the first day
of any Interest Period, the Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable thereafter.
If such notice is given (a) any Eurodollar Loans requested to be made on
the first day of such Interest Period shall be made as Prime Rate Loans,
(b) any Loans that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Loans shall be converted to
or continued as Prime Rate Loans and (c) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Prime
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Prime Rate Loans to Eurodollar Loans.
3.7 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Closing Date
shall make it unlawful for any Lender to make or maintain Eurodollar Loans
as contemplated by this Credit Agreement, (a) such Lender shall promptly
give written notice of such circumstances to the Borrower and the Agent
(which notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Prime Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Prime Rate
Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period
as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 3.10.
3.8 Requirements of Law. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof
applicable to any Lender, or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority, in each case made subsequent to the
Closing Date (or, if later, the date on which such Lender becomes a
Lender):
(i) shall subject such Lender to any tax of any kind
whatsoever on or in respect of any Letter of Credit, letter of credit
application or any Eurodollar Loans made by it or its obligation to
make Eurodollar Loans, or change the basis of taxation of payments to
such Lender in respect thereof except for Non-Excluded Taxes covered
by Section 3.9 (including Non-Excluded Taxes imposed solely by reason
of any failure of such Lender to comply with its obligations under
Section 3.9(b)) and changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch,
or any affiliate thereof); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar condition or requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce
any amount receivable hereunder in respect thereof, then, in any such
case, upon notice to the Borrower from such Lender, through the Agent, in
accordance herewith, the Borrower shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable, provided that, in any
such case, the Borrower may elect to convert the Eurodollar Loans made by
such Lender hereunder to Prime Rate Loans by giving the Agent at least one
Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 3.10. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (a) that one of the events described in this
Section 3.8 has occurred and describing in reasonable detail the nature of
such event, (b) as to the increased cost or reduced amount resulting from
such event and (c) as to the additional amount demanded by such Lender and
a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this
subsection shall be submitted by such Lender, through the Agent, to the
Borrower and shall be conclusive in the absence of manifest error. No
demand for payment under this Section shall be made unless the Lender
shall make comparable demands of other similarly situated borrowers. This
covenant shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
3.9 Taxes.
(a) Except as provided below in this subsection, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each
case imposed in lieu of net income taxes, imposed: (i) by the jurisdiction
under the laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal executive
office is located, or any nation within which such jurisdiction is located
or any political subdivision thereof; or (ii) by reason of any connection
between the jurisdiction imposing such tax and such Lender, applicable
lending office, branch or affiliate other than a connection arising solely
from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or any Notes.
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or
under any Notes, (A) the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified
in this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes
and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection whenever any Non-Excluded
Taxes are payable by the Borrower, and (B) as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall
survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) At least five Business Days prior to the first day on which
interest or Fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of
America, or a state thereof, agrees that it will deliver to each of the
Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Borrower and the Agent two additional
copies of such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments
under this Credit Agreement and the Notes without deduction or withholding
of any United States federal income taxes, unless an event (including,
without limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to
it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deductions or withholding of
United States federal income tax.
3.10 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or
willful misconduct) as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance
with the provisions of this Credit Agreement, (b) default by the Borrower
in making any prepayment of a Eurodollar Loan after the Borrower has given
a notice thereof in accordance with the provisions of this Credit
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto.
Such indemnification may include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from
the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided for herein
over (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market, provided, however, that the amount of such
lost interest, if any, shall be discounted to a present value as of the
date of the indemnification payment, using as the applicable discount
rate(s) the rate(s) of per annum interest used by such Lender in making
the computations pursuant to the foregoing clause (ii). This covenant
shall survive the termination of this Credit Agreement and the payment of
the Loans and all other amounts payable hereunder.
3.11 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) Loans. Each Loan, each payment or prepayment of
principal of any Loan, each payment of interest on the Loans, each
payment of Fees (other than the Fee to the Agent pursuant to Section
3.4(d)), each reduction of the Revolving Committed Amount and each
conversion or extension of any Loan, shall be allocated pro rata
among the Lenders in accordance with the respective Commitment
Percentages relating to such respective Loans and Participation
Interests.
(b) Advances. Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its Commitment Percentage of
such borrowing available to the Agent, the Agent may assume that such
Lender is making such amount available to the Agent, and the Agent
may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the
Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Agent, on demand, such amount
with interest thereon at a rate equal to the Federal Funds Rate for
the period until such Lender makes such amount immediately available
to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the
Agent by such Lender within two business Days of the date of the
related borrowing, (i) the Agent shall notify the Borrower of the
failure of such Lender to make such amount available to the Agent and
the Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Prime Rate Loans
hereunder, on demand, from the Borrower and (ii) then the Borrower
may, without waiving any rights it may have against such Lender, (x)
request the Lender serving as Agent to increase its Revolving
Commitment Percentage and make such borrowing available, which
request such Lender may in its sole discretion approve or deny, and
(y) if the Lender serving as Agent shall deny a request submitted to
it pursuant to the foregoing clause (x), borrow a like amount on an
unsecured basis from any commercial bank for a period ending on the
date upon which such Lender does in fact make such borrowing
available; provided, however, that at the time any such replacement
borrowing is made and at all times while such amount is outstanding
the Borrower would be permitted to borrow such amount pursuant to
Section 2.1 of this Credit Agreement.
3.12 Sharing of Payments. The Lenders agree among themselves that,
in the event that any Lender shall obtain payment in respect of any Loan
or any other obligation owing to such Lender under this Credit Agreement
through the exercise of a right of setoff, banker's lien or counterclaim,
or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as provided for in
this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a participation in such Loans and other obligations in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance
with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to
a Lender obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have
shared the benefit of such payment shall, by repurchase of a participation
theretofore sold, return its share of that benefit (together with its
share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The
Borrower agrees that any Lender so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
participation as fully as if such Lender were a holder of such Loan or
other obligation in the amount of such participation. Except as otherwise
expressly provided in this Credit Agreement, if any Lender or the Agent
shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to
this Credit Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date
such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section
3.12 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.12 to share in the benefits of
any recovery on such secured claim.
3.13 Place and Manner of Payments. Except as otherwise specifically
provided herein, all payments hereunder shall be made to the Agent in
Dollars in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind, at its offices at the Agent's
office specified in Schedule 11.2 not later than 1:00 P.M. (Milwaukee,
Wisconsin time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day.
The Agent may, at the Borrower's request, debit the amount of any such
payment which is not made by such time to Account No. _________ maintained
by the Borrower with the Agent or any other account which may be
maintained by the Borrower with the Agent and designated for such purpose
by the Borrower. The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Loans, Fees or other
amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails so to specify, or if such
application would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Lenders in such manner as the Agent may
determine to be appropriate in respect of obligations owing by the
Borrower hereunder, subject to the terms of Section 3.11). The Agent will
distribute such payments to such Lenders, if any such payment is received
prior to 1:00 p.m. (Milwaukee, Wisconsin time) on a Business Day in like
funds as received prior to the end of such Business Day and otherwise the
Agent will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due on
a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day (subject to accrual of interest and
Fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in
the next following calendar month, then such payment shall instead be made
on the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made on
the basis of actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing, but exclude
the date of payment.
3.14 Indemnification: Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.3,
the Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of the Issuing Lender to
honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority (all such acts
or omissions, herein called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. The Issuing Lender
shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of a Letter of Credit to comply
fully with conditions required in order to draw upon a Letter of
Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay in
the transmission or otherwise of any document required in order to
make a drawing under a Letter of Credit or of the proceeds thereof;
and (vii) for any consequences arising from causes beyond the control
of the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting
of the Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith, shall not put such Issuing Lender under any resulting
liability to the Borrower. It is the intention of the parties that
this Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in
the issuance of the Letters of Credit, all of which risks are hereby
assumed by the Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or wrongful, of any
present or future Government Acts. The Issuing Lender shall not, in
any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the Issuing
Lender.
(d) Nothing in this Section 3.14 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.3(d)
hereof. The obligations of the Borrower under this Section 3.14
shall survive the termination of this Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in
any way affect or impair the rights of the Issuing Lender to enforce
any right, power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in
this Section 3.14, the Borrower shall have no obligation to indemnify
any Issuing Lender in respect of any liability incurred by such
Issuing Lender arising out of the gross negligence or willful
misconduct of the Issuing Lender (including action not taken by an
Issuing Lender) or to reimburse the Issuing Lender for payments made
by such Issuing Lender on a Letter of Credit with respect to which
the drafts and accompanying documents do not reasonably appear to
comply with the terms of the Letter of Credit, as determined by a
court of competent jurisdiction.
3.15 Transfers at Borrower's Request. In the event that any Lender
requests payment by the Borrower of any additional amounts pursuant to
Section 3.5, 3.7, 3.8 or 3.9, then, provided that no Default or Event of
Default has occurred and is continuing at such time, the Borrower may, at
its own expense (such expense to include any transfer fee payable to the
Agent under Section 11.6(b)), and in its sole discretion require such
Lender to transfer and assign in whole or in part, without recourse (in
accordance with and subject to the terms and conditions of Section
11.6(b)), all or part of its interests, rights and obligations under this
Credit Agreement to an Eligible Transferee which shall assume such
assigned obligations; provided that (i) the other Lenders may, by written
notice to the Agent, the Lenders and the Borrower, in their respective
discretion, elect to assume such Lender's Revolving Commitment and LOC
Commitment, pro rata based upon the respective Revolving Commitment
Percentages of the other Lenders so electing to assume such Lender's
Commitments hereunder, (ii) such Eligible Transferee which is not a Lender
shall be reasonably acceptable to the Required Lenders, (iii) such
assignment shall not relieve the Borrower from its obligations to pay such
additional amounts that may be due in accordance with Section 3.5, 3.7,
3.8 or 3.9, (iv) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority and
(v) the Borrower or such Eligible Transferee shall have paid to the
assigning Lender in immediately available funds the principal of and
interest accrued to the date of such payment on the Loans made by it
hereunder and all accrued Fees and other amounts owed to it hereunder.
SECTION 4
GUARANTY
4.1 The Guaranty. Each of the Credit Parties hereby jointly and
severally guarantees to each Lender, the Agent and the Issuing Lender as
hereinafter provided the prompt payment of the Credit Party Obligations in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly
in accordance with the terms thereof. The Credit Parties hereby further
agree that if any of the Credit Party Obligations are not paid in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise), the
Credit Parties will, jointly and severally, promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension of
time of payment or renewal of any of the Credit Party Obligations, the
same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, the obligations of each Credit Party
hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable
provisions of any applicable state law.
4.2 Obligations Unconditional. The obligations of the Credit
Parties under Section 4.1 hereof are joint and several, absolute and
unconditional, irrespective of the value, genuineness, validity or
enforceability of any of the Credit Documents, or any other agreement or
instrument referred to therein, or any substitution, release or exchange
of any other guarantee of or security for any of the Credit Party
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of
the Credit Parties hereunder shall be absolute and unconditional under any
and all circumstances other than indefeasible payment in full. Without
limiting the generality of the foregoing, it is agreed that the occurrence
of any one or more of the following shall not alter or impair the
liability of any Credit Party hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Credit Party, the time for any performance of or compliance with any
of the Credit Party Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument referred
therein shall be done or omitted;
(iii) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents or any other agreement or instrument
referred to therein shall be waived or any other guarantee of any of
the Credit Party Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Credit Party Obligations
shall fail to attach or be perfected; or
(v) any of the Credit Party Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit
of any creditor of any Credit Party) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Credit Party).
With respect to its obligations hereunder, each Credit Party hereby
expressly waives diligence, presentment, demand of payment, protest and
all notices whatsoever, and any requirement that the Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any
of the Credit Documents or any other agreement or instrument referred to
therein, or against any other Person under any other guarantee of, or
security for, any of the Credit Party Obligations.
4.3 Reinstatement. The obligations of the Credit Parties under this
Section 4 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect of the
Credit Party Obligations is rescinded or must be otherwise restored by any
holder of any of the Credit Party Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each Credit
Party agrees that it will indemnify each of the Agent and each Lender on
demand for all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by the Agent or such
Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers. Without limiting the generality of
the provisions of any other Section of this Section 4, each Credit Party
further agrees that it shall have no right of recourse to security for the
Credit Party Obligations. Each of the Credit Parties further agrees that
it shall have no right of subrogation, reimbursement or indemnity, nor any
right of recourse to security, if any, for the Credit Party Obligations
until indefeasible payment in full of all such obligations shall have been
made.
4.5 Remedies. The Credit Parties agree that, as between the Credit
Parties, on the one hand, and the Agent, the Lenders and the Issuing
Lender, on the other hand, the Credit Party Obligations may be declared to
be forthwith due (and payable as provided in Section 9 hereof and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 9) for purposes of Section 4.1 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Credit Party Obligations from becoming
automatically due and payable) as against any other Person and that, in
the event of such declaration (or such Credit Party Obligations being
deemed to have become automatically due and payable), such Credit Party
Obligations whether or not due and payable by any other Person) shall
forthwith become due and payable by the Credit Parties for purposes of
said Section 4.1.
4.6 Continuing Guarantee. The guarantee in this Section 4 is a
continuing guarantee, and shall apply to all Credit Party Obligations
whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing Date. This Credit Agreement shall close
upon satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Agent shall have received
(i) multiple counterparts of this Credit Agreement for each Lender,
executed by a duly authorized officer of each party hereto, (ii) for
the account of each Lender a Revolving Note, (iii) multiple
counterparts of the Security Agreement for each Lender and UCC
financing statements relating thereto executed by a duly authorized
officer of each party thereto, (iv) multiple counterparts of the
General Intangibles Mortgage executed by a duly authorized officer of
each party thereto, and (v) multiple counterparts of the Real Estate
Mortgages executed by a duly authorized officer of each party
thereto, in each case conforming to the requirements of this Credit
Agreement and executed by a duly authorized officer of the Borrower
and the Guarantors, if any.
(b) Liability and Casualty Insurance. The Agent shall have
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements
set forth herein and in the Security Agreement and Real Estate
Mortgages.
(c) Sub Merger with CST; Divestiture of Borrower. The
Agent shall have received true and complete copies of the Merger
Documents and the Divestiture Documents, which Merger Documents and
Divestiture Documents shall be in form and substance reasonably
satisfactory to the Agent and the Required Lenders, together with
evidence that (i) consummation of the Merger Transactions and the
Divestiture has occurred, or will occur contemporaneously with the
funding of the initial Extensions of Credit hereunder, in accordance
with the terms of the Merger Documents and Divestiture Documents,
(ii) the corporate structure of the Borrower and its Subsidiaries
after giving effect to the Merger Transactions and the Divestiture
shall not differ in any material respect from that set forth in
Schedule 5.1(c)(ii), and (iii) all consents and approvals, if any,
necessary in connection with consummation of the Merger Transactions
and the Divestiture (including compliance with the Hart-Scott-Rodino
Antitrust Improvements Act) shall have been obtained.
(d) Proforma Financial Statements; Certificate of Financial
Condition. The Agent shall have received a proforma balance sheet
for the Borrower and its Subsidiaries estimated as of the Closing
Date after giving effect to the Merger Transactions and the
Divestiture reflecting estimated purchase accounting adjustments,
prepared in good faith upon reasonable assumptions by the Borrower
and indicating a Consolidated Tangible Net Worth of at least
$16,000,000 and a Certificate of Financial Condition in the form of
Exhibit 5.1(d) with appropriate insertions and attachments.
(e) Financial Information. The Agent shall have received
copies of audited consolidated financial statements for CST and its
Subsidiaries for the year ended June 30, 1997 and interim quarterly
company-prepared consolidated financial statements for the Borrower
and its Consolidated Subsidiaries for each fiscal quarter ended
thereafter until the Closing Date, together with such other financial
information as any Lender may reasonably request.
(f) Corporate Documents. The Agent shall have received each
of the following:
(i) Articles of Organization. Copies of the
certificate of formation, articles of incorporation or charter
documents of the Borrower and each of the other Credit Parties
certified to be true and complete as of a recent date by the
appropriate governmental authority of the state of its
organization.
(ii) Resolutions. Copies of resolutions of the member
of the Borrower and the member(s) or board of directors, as the
case may be, of each of the other Credit Parties approving and
adopting the Credit Documents, the transactions contemplated
therein and authorizing execution and delivery thereof,
certified by the manager (in the case of a limited liability
company) or a secretary or assistant secretary (in the case of a
corporation) as of the Closing Date to be true and correct and
in force and effect as of such date.
(iii) Operating Agreements and Bylaws. A copy of the
Borrower Operating Agreement, the Logistic Acquisition Operating
Agreement, the limited liability company agreement and/or
operating agreement (in the case of a limited liability
company), and the bylaws (in the case of a corporation) of each
of the other Credit Parties certified by the manager (in the
case of a limited liability company) or a secretary or assistant
secretary (in the case of a corporation) as of the Closing Date
to be true and correct and in force and effect as of such date.
(iv) Good Standing. Copies of certificates of good
standing, existence or its equivalent with respect to the
Borrower and each of the other Credit Parties certified as of a
recent date by the appropriate Governmental Authorities of the
state of organization and each other state in which the failure
to so qualify and be in good standing would have a material
adverse effect on the business or operations of the Borrower or
other Credit Party in such state.
(g) Officer's Certificate. The Agent shall have received,
with a counterpart for each Lender, a certificate of a duly
authorized manager or officer of each of the Borrower and each of the
other Credit Parties dated the Execution Date, substantially in the
form of Exhibit 5.1(g) with appropriate insertions and attachments.
(h) Legal Opinion of Counsel. The Agent shall have
received, with a copy for each Lender, an opinion of Foley & Lardner,
counsel for the Borrower and the Guarantors, dated the Closing Date
and addressed to the Agent and the Lenders, in form and substance
satisfactory to the Agent and the Lenders.
(i) Fees. The Agent shall have received all Fees owing
pursuant to Section 3.4.
(j) Subsection 5.2 Conditions. The conditions specified in
subsections 5.2(a) and (b) shall be satisfied on the Closing Date as
if Loans were to be made on such date.
(k) Environmental Reports. The Agent shall have received
copies of environmental assessment reports and other environmental
documentation relating to the Properties, which reports and
documentation shall be in form and substance reasonably satisfactory
to the Agent and the Lenders.
(l) Landlord Waivers. The Agent shall have received
landlord waivers in the form of Exhibit 5.1(l), with appropriate
insertions and attachments, in favor of the Agent for the benefit of
the Lenders with respect to the Properties which are leased, except
for such of the Properties as may be leased from Craig Hall.
(m) Appraisals. The Agent shall have received appraisals
of the Properties owned by the Borrower or a Subsidiary, which
appraisals shall comply with FIRREA and be reasonably satisfactory in
form and substance to the Agent and the Lenders.
(n) Business Valuation. The Agent shall have received a
going-concern valuation of the business of the Borrower and its
Subsidiaries, which valuation shall be reasonably satisfactory in
form and substance to the Agent and the Lenders.
(O) Additional Matters. All other documents and legal
matters in connection with the transactions contemplated by this
Credit Agreement shall be reasonably satisfactory in form and
substance to the Agent and the Lenders.
5.2 Conditions to All Extensions of Credit. The obligation of each
Lender to make any Extension of Credit hereunder (including the initial
Loans to be made hereunder) is subject to the satisfaction of the
following conditions precedent on the date of making such Extension of
Credit:
(a) Representations and Warranties. Except as modified
pursuant to Section 6.16, the representations and warranties made by
the Borrower and the other Credit Parties herein, in the Security
Agreement, the General Intangibles Mortgage, the Real Estate
Mortgages, or which are contained in any certificate furnished at any
time under or in connection herewith shall be true and correct on and
as of the date of such Extension of Credit as if made on and as of
such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date
unless such Default or Event of Default shall have been waived in
accordance with this Credit Agreement.
(c) Additional Conditions to Revolving Loans. If such Loan
is made pursuant to subsection 2.1, all conditions set forth in such
subsection shall have been satisfied.
(d) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to subsection 2.2 all conditions
set forth in such subsection shall have been satisfied.
Each request for Extension of Credit and each acceptance by the
Borrower of an Extension of Credit shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such
Extension of Credit that the applicable conditions in paragraphs (a) and
(b), and in (c) or (d), as applicable, of this subsection have been
satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
the Extensions of Credit herein provided for, each of the Credit Parties
hereby represents and warrants to the Agent and to each Lender that as of
the Closing Date, after giving effect to the Merger Transactions and the
Divestiture, and at all times thereafter (except as specifically set forth
below in this Section 6):
6.1 Financial Statements. Prior to the Closing Date the Borrower
has or will have furnished to the Lenders (a) the audited consolidated
balance sheet of CST and its consolidated Subsidiaries as of June 30,
1997, and related audited statements of income, shareholders' equity and
cash flows for the year ended on that date, together with an unqualified
opinion thereon by Arthur Andersen, LLP, and (b) the unaudited
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of June 30, 1997 and September 30, 1997 and related
statements of income, shareholders' equity and cash flows for the periods
ended on such date, prepared by the Borrower. Such financial statements
were prepared in accordance with GAAP consistently applied throughout the
periods involved, are correct and complete and fairly present the
consolidated financial condition of the Borrower and such Subsidiaries as
of such dates and the results of their operations for the periods ended on
such dates, subject, in the case of the unaudited interim statements, to
the absence of footnotes, audit and normal year-end adjustments. Since
June 30, 1997 there has been no development or event which has had a
Material Adverse Effect.
6.2 Ownership of Properties; Liens and Encumbrances. Each of the
Borrower and its Subsidiaries has good and marketable title to all
property, real and personal, reflected on the most recent financial
statement of the Borrower furnished to the Lenders, and all property
purported to have been acquired since the date of such financial
statement, except property sold or otherwise disposed of in the ordinary
course of business subsequent to such date; and all such property is free
of any Lien except Permitted Liens. Except as set forth on Schedule 6.2,
all owned and leased buildings and equipment of the Borrower used in the
Borrower's business are in good operating condition, repair and working
order and, to the Borrower's knowledge, conform to all applicable laws,
ordinances and regulations the violation of which would have a Material
Adverse Effect. The Borrower possesses adequate trademarks, trade names,
copyrights, patents, service marks and licenses, or rights thereto, for
the present and planned future conduct of its business substantially as
now conducted, without any known conflict with the rights of others which
would result in a Material Adverse Effect.
6.3 Corporate Existence; Compliance with Law. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing (or similar concept under applicable law, including, without
limitation, the concept of active status under the laws of the State of
Wisconsin) under the laws of the jurisdiction of its organization, (b) has
the limited liability company or corporate power and authority and the
legal right to own and operate all its material property, to lease the
material property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign limited
liability company or corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification except to the
extent that the failure to so qualify or be in good standing would not, in
the aggregate, have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. Each
of the Borrower and the other Credit Parties has full power and authority
and the legal right to make, deliver and perform the Credit Documents to
which it is party and has taken all necessary limited liability company or
corporate action to authorize the execution, delivery and performance by
it of the Credit Documents to which it is party. No consent or
authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person is required in connection
with the borrowings hereunder or with the execution, delivery or
performance of any Credit Document by the Borrower or the other Credit
Parties (other than those which have been obtained or in connection with
the perfection of Liens in favor of the Agent and Lenders hereunder) or
with the validity or enforceability of any Credit Document against the
Borrower or the Guarantors (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit
Documents). Each Credit Document to which it is a party has been duly
executed and delivered on behalf of the Borrower or the other Credit
Parties, as the case may be. Each Credit Document to which it is a party
constitutes a legal, valid and binding obligation of the Borrower or the
Guarantors, as the case may be, enforceable against the Borrower or the
other Credit Parties, as the case may be, in accordance with its terms.
6.5 No Legal Bar; No Default. The execution, delivery and
performance of the Credit Documents, the borrowings thereunder and the use
of the proceeds of Extensions of Credit will not violate any Requirement
of Law the violation of which would reasonably be expected to have a
Material Adverse Effect or any Contractual Obligation of the Borrower or
its Subsidiaries the violation of which would reasonably be expected to
have a Material Adverse Effect (except those as to which waivers or
consents have been obtained), and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation other than the Liens arising under or contemplated in
connection with the Credit Documents. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
6.6 No Material Litigation. Except as set forth on Schedule 6.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of the
Borrower and the other Credit Parties, threatened by or against the
Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to the Credit Documents
or any Loan or any of the transactions contemplated hereby, or (b) which,
if adversely determined, would reasonably be expected to (i) cause an
adverse financial effect on the Borrower or any of its Subsidiaries in
excess of $250,000 or (ii) have a Material Adverse Effect.
6.7 Investment Company Act. Neither the Borrower nor any of the
other Credit Parties is an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company
Act of 1940, as amended.
6.8 Federal Regulations. No part of the proceeds of any Loan
hereunder will be used directly or indirectly for any purpose which
violates, or which would be inconsistent with, the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. The Borrower and
its Subsidiaries taken as a group do not own "margin stock" except margin
stock which is a Permitted Investment, but only to the extent otherwise
permitted by this Agreement.
6.9 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" within the meaning of Section 412 of the Code (or Section 302
of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such
occurrence or failure to comply would not reasonably be expected to have a
Material Adverse Effect. No termination of a Single Employer Plan has
occurred resulting in any liability that has remained underfunded, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year
period which would reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as
determined in accordance with GAAP, would reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Commonly Controlled
Entity is currently subject to any liability for a complete or partial
withdrawal from a Multiemployer Plan which would reasonably be expected to
have a Material Adverse Effect. For purposes of this Section 6.9 only,
the parties hereto agree that "Material Adverse Effect" shall include any
event referred to in this Section 6.9 which would or could be reasonably
expected to cause a reduction in Consolidated Net Worth of five percent
(5%) or more.
6.10 Environmental Matters. Except as set forth on Schedule 6.10 and
except to the extent that all of the following, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Borrower and the other
Credit Parties, the facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries (the
"Properties") do not contain any Materials of Environmental Concern
in amounts or concentrations which (i) constitute a violation of, or
(ii) could give rise to liability under, any Environmental Law.
(b) To the best knowledge of the Borrower and the other
Credit Parties, the Properties and all operations at the Properties
are in compliance, and have in the last five years been in
compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about
the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business").
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
Properties or the Business, nor do the Borrower nor the other Credit
Parties have knowledge or reason to believe that any such notice will
be received or is being threatened.
(d) To the best knowledge of the Borrower and the other
Credit Parties, Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in
a manner or to a location which could give rise to liability under
any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or
under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the Borrower
and the other Credit Parties, threatened, under any Environmental Law
to which the Borrower or any Subsidiary is or will be named as a
party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(f) To the best knowledge of the Borrower and the other
Credit Parties, there has been no unremediated release or threat of
release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of the
Borrower or any Subsidiary in connection with the Properties or
otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under
Environmental Laws.
6.11 Use of Proceeds. Extensions of Credit hereunder may be used to
(i) repay all existing indebtedness owed by the Borrower under the
Existing Credit Agreement (ii) repay all existing indebtedness owed by the
Borrower under the First America Credit Agreement, (iii) pay the Permitted
CST Distribution, (iv) pay subordinated indebtedness owed by the Borrower
to CST, up to a maximum aggregate principal amount of $3,000,000 plus
accrued and unpaid interest thereon, (v) replace the Existing Letters of
Credit, and (vi) provide for working capital and other general corporate
purposes not prohibited by this Credit Agreement.
6.12 Subsidiaries. Set forth on Schedule 6.12 is a complete and
accurate list of all Subsidiaries of the Borrower. The outstanding
capital stock and other equity interests of all such Subsidiaries is
validly issued, fully paid and nonassessable and is owned, free and clear
of all Liens (other than those arising under or contemplated in connection
with the Credit Documents). None of the Subsidiaries owns any assets or
conducts any business operations.
6.13 Taxes. To the best knowledge of the Borrower and the other
Credit Parties, each of the Borrower and its Subsidiaries has filed, or
caused to be filed, all material tax returns (federal, state, local and
foreign) required to be filed and paid all taxes shown thereon to be due
(including interest and penalties) and has paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing or necessary
to preserve any Liens in favor of the Lenders by them, except for such
taxes (i) which are not yet delinquent or (ii) as are being contested in
good faith and by proper proceedings, and against which adequate reserves
are being maintained in accordance with GAAP. The Borrower is not aware
of any proposed material tax assessments against it or any of its
Subsidiaries. The most recent completed audit of the Borrower's federal
income tax returns was for the Borrower's income tax year ending
[____________], and all taxes shown by such returns (together with any
adjustments arising out of such audit, if any) have been paid.
6.14 Solvency. The Borrower, individually, and the Borrower and its
Subsidiaries, collectively, are and, after execution of this Credit
Agreement on the Execution Date and after giving effect to the
Indebtedness and Guarantee Obligations incurred hereunder and consummation
of the Merger Transactions and the Divestiture on and after the Closing
Date, will be Solvent.
6.15 Accuracy of Information. All information furnished by the
Borrower to the Lenders is correct and complete in all material respects
as of the date furnished and does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
6.16 Amendments to Schedule 6.12. To the extent otherwise permitted
by this Agreement, the Borrower may, from time to time, amend Schedule
6.12 by delivering (effective upon receipt) to the Agent and each Lender a
copy of such amended Schedule 6.12 which shall (i) be dated the date of
delivery, (ii) be certified by a duly authorized officer of the Borrower
as true, complete and correct as of such date as delivered in replacement
for the Schedule 6.12 previously in effect, and (iii) show in reasonable
detail (by blacklining or other appropriate graphic means) the changes
from the predecessor Schedule 6.12.
6.17 Merger Transactions and Divestiture. The representations and
warranties contained in the Merger Documents and the Divestiture Documents
(true and correct copies of which, together with all exhibits and
schedules thereto, have been delivered to the Lenders as of the Closing
Date) are true and correct in all respects as of the Closing Date and
thereafter, except where, upon consummation of the Merger Transactions and
the Divestiture, the failure to be so true and correct could not
reasonably be expected to have a Material Adverse Effect. As of the date
of the Merger Transactions and the Divestiture, (i) the Borrower shall
have taken all necessary corporate actions to authorize the Merger
Transactions and the Divestiture, and (ii) no representation made by EVI,
Sub, CST, Logistic Acquisition or the Borrower in any notices or filings
with their shareholders, with the Securities and Exchange Commission or
any applicable state securities commissions or with any governmental
authority, including, without limitation, any representations concerning
any agreement with, or financing provided by, the Lenders, 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
made therein, in light of the circumstances under which they made, not
misleading as of the time when made or delivered. Any representation or
warranty by the Credit Parties under this Section 6.17 as to any
representation or warranty of EVI and/or Sub contained in the Merger
Documents and the Divestiture Documents is made to the best knowledge of
the Borrower.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Credit Agreement is in
effect and until the Commitments have terminated, no Note or Letter of
Credit remains outstanding and unpaid and the Obligations, together with
interest, Fees and all other amounts owing to the Agent or any Lender
hereunder, are paid in full, the Borrower shall, and in the case of
subsections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 shall cause each of its
Subsidiaries, to:
7.1 Annual Financial Statement. Furnish to the Agent within 90 days
after the end of each fiscal year of the Borrower a copy for each Lender
of a balance sheet of the Borrower as of the close of such fiscal year and
related statements of income, retained earnings and cash flows for such
year, setting forth in each case in comparative form corresponding figures
from the preceding annual audit, prepared in accordance with GAAP applied
on a consistent basis, audited by a nationally recognized firm of
independent certified public accountants selected by the Borrower, and
accompanied by an unqualified opinion thereon by such accountants to the
effect that such financial statements present fairly, in all material
respects, the financial position of the Borrower and all Consolidated
Subsidiaries as of the end of such fiscal year, and the results of their
operations and their cash flows for such fiscal year, in accordance with
GAAP, and that such audit was conducted in accordance with generally
accepted auditing practices. Each such annual statement shall be
accompanied by a written statement from the accountants stating whether or
not the Borrower is in compliance with the financial covenants contained
in Sections 7.9 and 7.10 hereof and certifying that in making the
examination necessary for their certification of such financial statement,
they obtained no knowledge of any Default or Event of Default or, if such
accountants shall have obtained knowledge of any Default or Event of
Default, they shall disclose in such statement the Default or Event of
Default. Each such annual statement shall be accompanied by a certificate
of an authorized financial officer of the Borrower containing the
calculations demonstrating the Borrower's compliance or noncompliance with
the financial covenants contained in Sections 7.9 and 7.10 hereof. The
Borrower will furnish to the Agent within 90 days after the end of each
fiscal year of the Borrower a copy for each Lender of a statement of
income, including statements of revenues and expenses for each of the
Borrower's business segments and corporate charges. All such financial
statements, and the financial statements referred to in Section 7.2
hereof, except as provided herein, shall be furnished in consolidated form
for the Borrower and all Consolidated Subsidiaries which it may at the
time have.
7.2 Interim Financial Statements.
(a) Furnish to the Agent within 45 days after the end of
each fiscal quarter of each fiscal year of the Borrower, and within
30 days after the end of each month through and including the month
ending May 31, 1998, a copy for each Lender of a balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of each such
period and related statements of income (including a statement of
revenues and expenses for each of the Borrower's business segments
and corporate charges), shareholders' equity and cash flows for the
period from the beginning of the fiscal year to the end of such
quarter and month, prepared in the manner set forth in Section 7.1
hereof for the annual statements, certified to be accurate and
complete by an authorized financial officer of the Borrower, subject
to audit, footnotes and normal year-end adjustments, and accompanied
by the certificate of such officer (i) to the effect that there
exists no Default or Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of
existence thereof and what action the Borrower proposes to take with
respect thereto, and (ii) containing the calculations demonstrating
the Borrower's compliance or noncompliance with the financial
covenants contained in Sections 7.9 and 7.10 hereof.
(b) Furnish to the Agent, (i) contemporaneously with the
filing or mailing thereof, copies for each Lender of all material of
a financial nature filed with the Securities Exchange Commission or
sent to the shareholders of the Borrower, (ii) prior to the end of
the first fiscal quarter of each fiscal year of the Borrower, budgets
prepared by the Borrower for such fiscal year, and (iii) such other
financial information as any Lender may from time to time reasonably
request (including monthly financial statements for any months ending
after June 30, 1998).
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be,
in accordance with industry practice (subject, where applicable, to
specified grace periods) all its material obligations of whatever nature
and any additional costs that are imposed as a result of any failure to so
pay, discharge or otherwise satisfy such obligations (including, without
limitation, obligations to pay taxes), except when the amount or validity
of such obligations and costs is currently being contested in good faith
by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Borrower
or its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Except as
otherwise permitted by Section 8.4, continue to engage in business of the
same general type as now conducted by it on the date hereof and preserve,
renew and keep in full force and effect its corporate existence and take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; comply with
all Contractual Obligations and Requirements of Law applicable to it
except to the extent that failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all material property
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted); maintain with financially sound and
reputable insurance companies insurance (including insurance against
claims and liabilities arising out of the manufacture or distribution of
any products or the provision of any services) with respect to its
properties and businesses in at least such amounts and against at least
such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the
Agent, upon written request, full information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made
of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable
notice by the Agent, the Agent and, after the occurrence and during the
continuance of a Default or an Event of Default, any of the Lenders to
visit and inspect any of its properties and examine and make abstracts
from any of its books and records (other than materials protected by the
attorney-client privilege and materials which the Borrower may not
disclose without violation of a confidentiality obligation binding upon
it) at any reasonable time and as often as may reasonably be desired, and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified
public accountants.
7.7 Notices. Give notice to the Agent (which shall promptly
transmit such notice to each Lender) of:
(a) immediately (and in any event within two (2) Business
Days) after the Borrower knows or has reason to know thereof, the
occurrence of any Default or Event of Default;
(b) promptly, any default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries or
the Borrower which would reasonably be expected to have a Material
Adverse Effect;
(c) promptly, any litigation, or any investigation or
proceeding (including, without limitation, any environmental
proceeding) known to the Borrower, affecting the Borrower or any of
its Subsidiaries or the Borrower which, if adversely determined,
would reasonably be expected to have a Material Adverse Effect;
(d) as soon as possible and in any event within 30 days
after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Borrower or any
Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan; and
(e) promptly, any other development or event which would
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a responsible officer setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take
with respect thereto.
7.8 Environmental Laws.
(a) Comply in all material respects with, and ensure
compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply in
all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws
except to the extent that, with respect to all of the above, failure
to do so would not reasonably be expected to have a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that
the same are being contested in good faith by appropriate proceedings
and the pendency of such proceedings would not reasonably be expected
to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, officers and
directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries
or the Properties, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without
limitation, reasonable attorneys' fees and consultant's fees,
investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. The agreements in this paragraph
shall survive repayment of the Notes and all other amounts payable
hereunder.
7.9 Financial Covenants.
(a) Consolidated Funded Debt Ratio. There shall be
maintained as of the end of each fiscal quarter to occur during the
periods shown below a Consolidated Funded Debt Ratio of not greater
than:
Period
From the Closing Date through
June 30, 1998 5.00:1.0
July 1, 1998 through
June 30, 2000 4.25:1.0
July 1, 2000 and thereafter 3.50:1.0
(b) Cash Flow Coverage Ratio. There shall be maintained as
of the end of each fiscal quarter to occur during the periods shown
below an Cash Flow Coverage Ratio of not less than:
Period
From Closing Date through
December 31, 1998 1.40:1.0
January 1, 1999 through
June 30, 1999 1.45:1.0
July 1, 1999 and thereafter 1.50:1.0
7.10 Consolidated Tangible Net Worth. Consolidated Tangible Net
Worth shall not be less, as of the end of any fiscal quarter of the
Borrower, than the sum of (a) 95% of Consolidated Tangible Net Worth shown
on the proforma balance sheet for the Borrower and its Subsidiaries as of
the Closing Date delivered to the Agent pursuant to Section 5.1(d) hereto,
plus (b) 50% of Consolidated Net Income for each fiscal quarter ending
after the Closing Date on a consolidated basis.
7.11 Additional Subsidiary Guarantors.
(a) If a Subsidiary of the Borrower which is not a
Guarantor hereunder (a "Non-Guarantor Subsidiary") shall at any time
constitute more than either
(i) 5% of Consolidated Total Assets, or
(ii) 5% of Consolidated EBITDA,
then the Borrower will promptly notify the Agent thereof, and promptly
cause such Non-Guarantor Subsidiary to become a Guarantor hereunder by way
of execution of a Joinder Agreement. The Guarantee Obligations of any
such Additional Credit Party shall be secured by, among other things, the
assets of such Additional Credit Party.
(b) In addition to the requirements set forth in the
foregoing clause (a), if the Non-Guarantor Subsidiaries shall, as a
group, at any time constitute in the aggregate more than either
(i) 5% of Consolidated Total Assets, or
(ii) 5% of Consolidated EBITDA,
(collectively, the "Threshold Requirement"), then the Borrower will
promptly notify the Agent thereof, and promptly cause one or more of the
Non-Guarantor Subsidiaries to become a Guarantor hereunder by way of
execution of a Joinder Agreement, such that immediately after the joinder
of such Subsidiaries as Guarantors hereunder, the remaining Non-Guarantor
Subsidiaries shall not, as a group, exceed the Threshold Requirement. The
Guarantee Obligations of any such Additional Credit Party shall be secured
by, among other things, the assets of such Additional Credit Party.
7.12 Positive Annual Earnings. The Borrower and its Subsidiaries
shall have Consolidated Net Income, and the Borrower shall have
unconsolidated net income, determined in accordance with GAAP applied on a
consistent basis, for each fiscal year ending after the Closing Date and
before the Revolving Termination Date, of not less than $1.00.
7.13 Bank Accounts. The Borrower and its Subsidiaries shall maintain
all of their principal deposit accounts and operating accounts with one or
more of the Lenders.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Credit Agreement is in
effect and until the Commitments have terminated, no Note or Letter of
Credit remains outstanding and unpaid and the Obligations, together with
interest, Fees and all other amounts owing to the Agent or any Lender
hereunder, are paid in full, the Borrower shall, and shall cause each of
its Subsidiaries and the Borrower, to:
8.1 Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement
and the other Credit Documents;
(b) Indebtedness existing as of the Execution Date and set out
in Schedule 8.1(b) and renewals, refinancings or extensions thereof
in a principal amount not in excess of that outstanding as of the
date of such renewal, refinancing or extension;
(c) Indebtedness incurred after the Execution Date
consisting of Capital Leases or Indebtedness incurred to provide all
or a portion of the purchase price or cost of construction of an
asset provided that (i) such Indebtedness when incurred shall not
exceed the purchase price or cost of construction of such asset; (ii)
no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of
such refinancing; and (iii) the total aggregate principal amount of
all such Indebtedness of the Borrower and its Subsidiaries, as a
group, shall not exceed $2,500,000 at any time outstanding;
(d) Unsecured intercompany Indebtedness between a Credit
Party and another Credit Party or between a Credit Party and another
Subsidiary;
(e) Indebtedness and obligations relating to currency
protection agreements and commodity purchase or option agreements
entered into with a Lender in order to manage existing or anticipated
interest rate, exchange rate or commodity price risks and not for
speculative purposes;
(f) Subordinated Debt of the Borrower or other Credit Party
the terms of subordination and other terms and provisions of which
are acceptable to the Required Lenders in their reasonable
discretion;
(g) Permitted Guarantee Obligations;
(h) Indebtedness permitted under Section 3.11;
(i) Indebtedness secured by Permitted Liens, except as
otherwise limited by this Section; and
(j) other Indebtedness of the Borrower and its
Subsidiaries, as a group, which does not exceed $1,000,000 in the
aggregate at any time outstanding.
8.2 Liens. The Borrower will not, nor will it permit any Subsidiary
to, contract, create, incur, assume or permit to exist any Lien with
respect to any of its property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or hereafter
acquired, except for Permitted Liens.
8.3 Nature of Business. Except as otherwise permitted by Section
8.4, the Borrower will not, nor will it permit any Subsidiary to, alter
the character of its business in any material respect from that conducted
as of the Closing Date.
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer,
lease or otherwise dispose of any substantial part of its property or
assets outside of the ordinary course of business or agree to do so
at a future time except the following, without duplication, shall be
expressly permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition of
property or assets not in the ordinary course of business (other
than Specified Sales), where and to the extent that such
transaction is the result of a Recovery Event and the Net
Proceeds therefrom are used to repair or replace damaged
property or to purchase or otherwise acquire new assets or
property provided that such purchase or acquisition is committed
to within 120 days of receipt of the Net Proceeds from the
Recovery Event and such purchase or acquisition is consummated
within 180 days of such receipt; and
(iii) the sale, lease or transfer of property or assets
by a Credit Party other than the Borrower to a domestic Credit
Party.
As used herein, "substantial part" shall mean property and assets, the
book value of which, when added to the book value of all other assets
sold, leased or otherwise disposed of by the Borrower and its Subsidiaries
(other than in the ordinary course of business), shall in any fiscal year
exceed 10% of Consolidated Net Worth, in each case determined as of the
end of the immediately preceding fiscal year; or
(b) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any
substantial part of the property or assets of any Person other than
purchases or other acquisitions of inventory, leases, materials,
property and equipment in the ordinary course of business, (except as
otherwise limited or prohibited herein), or enter into any
transaction of merger or consolidation, except for (i) investments or
acquisitions permitted pursuant to Section 8.5, (ii) the merger or
consolidation of the Borrower with or into another Credit Party,
provided that in any such case the Borrower shall be the surviving
entity, (iii) the merger or consolidation of any wholly-owned
Subsidiary with or into any other wholly-owned Subsidiary, and (iv)
the merger or consolidation of any wholly-owned Subsidiary with or
into the Borrower provided that in any such case the Borrower shall
be the surviving entity.
8.5 Advances, Investments and Loans. The Borrower will not, nor
will it permit any Subsidiary to, lend money or extend credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution
to, any Person except for Permitted Investments.
8.6 Guarantee Obligations. The Borrower will not, nor will it
permit any Subsidiary to, contract, create, incur, assume or permit to
exist any Guarantee Obligations, except Permitted Guarantee Obligations.
8.7 Transactions with Affiliates. Except as permitted in subsection
(iii) of the definition of Permitted Investments or as set forth on
Schedule 8.7, the Borrower will not, nor will it permit any Subsidiary to,
enter into any transaction or series of transactions, whether or not in
the ordinary course of business, with any officer, director, shareholder
or Affiliate (other than a Credit Party) other than on terms and
conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder or Affiliate.
8.8 Ownership of Subsidiaries. The Borrower will not, nor will it
permit any Subsidiary to, create, form or acquire a Subsidiary, unless any
such Subsidiary shall become an Additional Credit Party, if required, in
accordance with the provisions of Section 7.11.
8.9 Fiscal Year. The Borrower will not, nor will it permit any
Subsidiary to, change its fiscal year, except with the prior written
consent of the Required Lenders; provided, however, on or about the
Closing Date the Borrower and its Subsidiaries may change their fiscal
year end to December 31.
8.10 Prepayments of Indebtedness, etc. The Borrower will not, nor
will it permit any Subsidiary to,
(a) after the issuance thereof, amend or modify, or permit
the amendment or modification of, any of the terms of subordination
or other terms or provisions relating to any Subordinated Debt;
(b) make (or give notice with respect thereto) any
voluntary or optional payment or prepayment or redemption or
acquisition for value including, without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due) or exchange of any
Subordinated Debt permitted pursuant to Section 8.1; or
(c) make any prepayment, redemption, acquisition for value
of (including, without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due) refund, refinance or exchange of any
Subordinated Debt.
As used herein, "Subordinated Debt" means any indebtedness for borrowed
money which by its terms is, or upon the happening of certain events may
become, subordinated in right of payment to the Obligations hereunder and
other amounts owing hereunder or in connection herewith.
8.11 Dividends. Other than the Permitted CST Distribution on the
Closing Date and the Permitted Repurchase of Management Interests, the
Borrower will not, nor will it permit any non-wholly-owned Subsidiaries
to, make any payment, distribution or dividend (other than a dividend or
distribution payable solely in stock or equity interest of the Person
making the dividend or distribution) on or any payment on account of the
purchase, redemption or retirement of, or any other distribution on, any
partnership interest, limited liability company interest, share of any
class of stock or other ownership interest in such Person; provided,
notwithstanding the foregoing, Borrower 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 the Borrower,
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 [this section
may be revised with respect to permitted tax distributions].
SECTION 9
EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each an "Event of
Default"):
(a) The Borrower shall fail to pay any principal on any
Note when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to reimburse the Issuing Lender for any LOC
Obligations when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Note or any Fee or
other amount payable hereunder when due in accordance with the terms
thereof or hereof and such failure shall continue unremedied for five
(5) Business Days or any Guarantor shall fail to pay on the Guaranty
in respect of any of the foregoing or in respect of any other
Guarantee Obligations thereunder; or
(b) Any representation or warranty made or deemed made by
the Borrower or other Credit Party herein, in the Security Agreement,
the Real Estate Mortgages or in any of the other Credit Documents or
which is contained in any certificate, document or financial or other
statement furnished by the Borrower or other Credit Party at any time
under or in connection with this Agreement shall prove to have been
incorrect, false or misleading in any material respect on or as of
the date made or deemed made; or
(c) The Borrower shall (i) default in the due performance
or observance of Section 7.1, 7.2, 7.9, 7.10, 7.12, 8.4, 8.10 or
8.11, or (ii) default in the observance or performance of any other
term, covenant or agreement contained herein, in the Security
Agreement, the Real Estate Mortgages or in any of the other Credit
Documents (other than as described in subsections 9(a), 9(b) or
9(c)(i) above), and such default shall continue unremedied for a
period of 30 days or more after written notice thereof from the Agent
or the Required Lenders; or
(d) The Borrower or any of its Subsidiaries shall
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Notes) in a principal amount outstanding
of at least $250,000 in the aggregate for the Borrower and its
Subsidiaries or in the payment of any matured Guarantee Obligation in
a principal amount outstanding of at least $250,000 in the aggregate
for the Borrower and its Subsidiaries beyond the period of grace (not
to exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee Obligation was created and
such Indebtedness or Guarantee Obligation has matured by its terms or
is accelerated or is overtly threatened to be accelerated (except any
such Indebtedness or Guarantee Obligations which the Borrower and its
Subsidiaries are disputing in good faith and for which they have
established adequate reserves); or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness in a principal amount outstanding of at least $250,000
in the aggregate for the Borrower and its Subsidiaries or Guarantee
Obligation in a principal amount outstanding of at least $250,000 in
the aggregate for the Borrower and its Subsidiaries or contained in
any instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or the holder
or holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries shall cause or
overtly threaten to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; or
(e) (i) The Borrower or any other Credit Party shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any other Credit
Party shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or
any other Credit Party any case, proceeding or other action of a
nature referred to in clause (i) above which (X) results in the entry
of an order for relief or any such adjudication or appointment or
(Y) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against the Borrower or any
other Credit Party any case, proceeding other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) the Borrower or any other Credit
Party shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
other Credit Party shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
(f) One or more judgments or decrees shall be entered
against the Borrower or any other Credit Party and such judgments or
decrees shall not have been paid and satisfied, vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof
and involve in the aggregate a liability (to the extent not paid when
due or covered by insurance) of $250,000 or more; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower, any of its Subsidiaries or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, any
Multiemployer Plan or (vi) any other similar event or condition shall
occur or exist with respect to a Plan; and in each case in clauses
(i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
(h) (i) any Person or group of Persons other than Logistic
Acquisition which is unacceptable to the Required Lenders obtains
control of more than 50% of the issued and outstanding limited
liability company interests of the Borrower, (ii) any Person or group
of Persons other than Logistic Acquisition which is unacceptable to
the Required Lenders shall become the managing member of the
Borrower, (iii) any Person or group of Persons other than the Core
Interest Owners which is unacceptable to the Required Lenders obtains
control of more than 50% of the issued and outstanding limited
liability company interests of Logistic Acquisition, or (iv) any
Person or group of Persons other than the Logistic Managing Member
which is unacceptable to the Required Lenders shall become the
managing member of Logistic Acquisition; or
(i) The Guaranty or any provision thereof shall cease to be
in full force and effect or any Credit Party or any Person acting by
or on behalf of any Credit Party shall deny or disaffirm any Credit
Party's obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full
force and effect or to give the Agent and/or the Lenders the security
interests, liens, rights, powers and privileges reasonably purported
to be created thereby; or
(k) Any representation or warranty made or deemed made by
EVI and/or Sub in the Merger Documents or the Divestiture Documents
shall prove to have been incorrect, false or misleading on or as of
the date made or deemed made (without regard to the knowledge of any
of the Credit Parties), except where the same could not reasonably be
expected to have a Material Adverse Effect;
then, and in any such event, (A) if such event is an Event of Default
specified in paragraph (e) above, automatically the Commitments shall
immediately terminate and the Loans (with accrued interest thereon),
and all other amounts under the Credit Documents (including, without
limitation, the maximum amount of all contingent liabilities under
Letters of Credit which amount shall be paid to the Agent and held as
cash collateral therefor) shall immediately become due and payable,
and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the written consent
of the Required Lenders, the Agent may, or upon the written request
of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the written
consent of the Required Lenders the Agent may, or upon the written
request of the Required Lenders, the Agent shall, by notice of
default to the Borrower, declare the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the
Credit Documents to be due and payable forthwith and direct the
Borrower to pay to the Agent cash collateral as security for the LOC
Obligations for subsequent drawings under then outstanding Letters of
Credit an amount equal to the maximum amount which may be drawn under
Letters of Credit then outstanding, whereupon the same shall
immediately become due and payable. Except as expressly provided
above in this Section 9, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment. Each Lender hereby designates and appoints Firstar
Bank Milwaukee, N.A. as Agent hereunder of such Lender to act as specified
herein and in the other Credit Documents, and each such Lender hereby
authorizes the Agent as the agent for such Lender, to take such action on
its behalf under the provisions of this Credit Agreement and the other
Credit Documents and to exercise such powers and perform such duties as
are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere herein
and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Agent. The provisions of this Section
are solely for the benefit of the Agent and the Lenders and none of the
Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this
Credit Agreement and the other Credit Documents, the Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any other Credit Party.
10.2 Delegation of Duties. The Agent may execute any of its duties
hereunder or under the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning
all matters pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken
by it or such Person under or in connection herewith or in connection with
any of the other Credit Documents except for its or such Person's own
gross negligence or willful misconduct, or (ii) responsible in any manner
to any of the Lenders for any recitals, statements, representations or
warranties made by any of the Credit Parties contained herein or in any of
the other Credit Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent
under or in connection herewith or in connection with the other Credit
Documents, or enforceability or sufficiency herefor of any of the other
Credit Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be responsible
to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or
any of the other Credit Documents or for any representations, warranties,
recitals or statements made herein or therein or made by the Borrower or
any Credit Party in any written or oral statement or in any financial or
other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the
Agent to the Lenders or by or on behalf of the Credit Parties to the Agent
or any Lender or be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or
Event of Default or to inspect the properties, books or records of the
Credit Parties.
10.4 Reliance on Communications. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Agent and any of the Lenders, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may
deem and treat the Lenders as the owner of their respective interests
hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent in
accordance with Section 11.6(d). The Agent shall be fully justified in
failing or refusing to take any action under this Credit Agreement or
under any of the other Credit Documents unless it shall first receive such
advice or concurrence of the Required Lenders, or all Lenders, as the case
may be, as it deems appropriate. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under any
of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.1, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors
and assigns).
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder (other than the failure by the Borrower to pay any principal or
interest on any Note when due in accordance with the terms thereof or
hereof) unless the Agent has received notice from a Lender or a Credit
Party referring to the Credit Document, stating that a Default or Event of
Default exists, and specifying the particulars thereof. In the event that
the Agent receives such a notice or the Borrower fails to pay any
principal or interest on any Note when due, the Agent shall give prompt
notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be directed by the
Required Lenders, otherwise than an action that the Agent reasonably
believes would be a violation of law or otherwise prohibited by the Credit
Documents.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and made its own decision
to make its Loans hereunder and enter into this Credit Agreement. Each
Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or
creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-
fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably
according to their respective Commitment Percentages (or if the
Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation
Interests of the Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the termination of
this Credit Agreement) be imposed on, incurred by or asserted against the
Agent in its capacity as such in any way relating to or arising out of
this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the reasonable opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional
indemnity is furnished.
10.8 Agent in its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind
of business with the Borrower or any other Credit Party as though the
Agent were not Agent hereunder. With respect to its Loans and
Participation Interests, the Agent shall have the same rights, obligations
and powers under this Credit Agreement as any Lender and may exercise the
same as though they were not Agent, and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may, at any time, resign upon 20
days' written notice to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a
successor Agent (which shall be a Lender) with the prior written consent
of the Borrower, which consent shall not be unreasonably withheld. If no
successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the notice of
resignation, as appropriate, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a
commercial bank organized under the laws of the United States of America
or of any State thereof and has a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations as Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Amendments, Waivers and Release of Collateral. Neither this
Credit Agreement, nor any of the Notes, nor any of the other Credit
Documents, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this
subsection nor may collateral be released except as specifically provided
herein or in the Security Agreement or in accordance with the provisions
of this subsection. The Required Lenders may, or, with the written
consent of the Required Lenders, the Agent may, from time to time, (a)
enter into with the Borrower written amendments, supplements or
modifications hereto and to the other Credit Documents for the purpose of
adding, amending or deleting any provisions of this Credit Agreement or
the other Credit Documents or (b) waive, on such terms and conditions as
the Required Lenders may specify in such instrument, any of the
requirements of this Credit Agreement or the other Credit Documents or any
Default or Event of Default and its consequences or (c) release collateral
in accordance with the terms hereof or of the Security Agreement or on
such other terms and conditions as the Required Lenders may agree;
provided, however, that no such waiver and no such amendment, waiver,
supplement, modification or release shall (i) reduce the amount or extend
the scheduled date of maturity of any Loan or Note or any installment
thereon, or reduce the stated rate of any interest or fee payable
hereunder (other than interest at the increased post-default rate) or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Commitment, in each case
without the written consent of each Lender directly affected thereby, or
(ii) amend, modify or waive any provision of this Section 11.1 or reduce
the percentage specified in the definition of Required Lenders, or consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Credit Agreement, in each case without the written
consent of all the Lenders, or (iii) amend, modify or waive any provision
of Section 10 without the written consent of the then Agent, (iv) release
all or substantially all of the Guarantors or all or substantially all of
the Collateral without the written consent of all of the Lenders, or
(v) amend Section 3.12 without the written consent of all Lenders. Any
such waiver, any such amendment, supplement or modification and any such
release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the Borrower, the Lenders and the Agent
shall be restored to their former position and rights hereunder and under
the outstanding Loans and Notes and other Credit Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
11.2 Notices. Except as otherwise provided in Section 2, all
notices, requests and demands to or upon the respective parties hereto to
be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly
given or made (i) when delivered by hand, (ii) when transmitted via
telecopy (or other facsimile device) on a Business Day between the hours
of 8:30 A.M. and 5:00 P.M. (Milwaukee, Wisconsin time) or on the following
Business Day (if sent after 5:00 P.M. Milwaukee, Wisconsin time) to the
number set out herein, (iii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the
same is sent by first class mail, postage prepaid, in each case, addressed
as follows in the case of the Borrower and the Agent, and as set forth on
Schedule 11.2 in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto and any future
holders of the Notes:
The Credit Parties: c/o Total Logistic Control, LLC
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Phone: (414) 291-9000
Fax: (414) 291-9061
with a copy to:
Foley & Lardner
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Emory Ireland
Phone: (414) 297-5624
Fax: (414) 297-4900
The Agent: Firstar Bank Milwaukee, N.A.
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Caroline V. Krider
Phone: (414) 765-5971
Fax: (414) 765-4632
with a copy to:
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
Attn: Andrew M. Barnes
Phone: (414) 277-5105
Fax: (414) 271-3552
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Credit Agreement and the Notes
and the making of the Loans, provided that all such representations and
warranties shall terminate on the date upon which the Commitments have
been terminated and all amounts owing hereunder and under any Notes have
been paid in full.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agent for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of, and
any amendment, supplement or modification to, the Credit Documents and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, together
with the reasonable fees and disbursements of counsel to the Agent, (b) to
pay out-of-pocket expenses, including attorneys' fees, incurred by a
Lender in connection with the negotiation, preparation and execution of
the Credit Documents, not to exceed $2,500 for each Lender, and reasonable
expenses, including reasonable attorneys' fees, in connection with any
future amendments or modifications hereto, (c) to pay or reimburse each
Lender and the Agent for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Credit
Agreement and any other Credit Documents, including, without limitation,
the reasonable fees and disbursements of counsel to the Agent and to the
Lenders (including reasonable allocated costs of in-house legal counsel),
(d) on demand, to pay, indemnify, and hold each Lender and the Agent
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, which may be payable or determined
to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by,
or any amendment, supplement or modification of, or any waiver or consent
under or in respect of, the Credit Documents and any such other documents,
and (e) to pay, indemnify, and hold each Lender and the Agent and their
Affiliates, officers, directors, shareholders, employees and agents
harmless from and against, any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of the
Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, however, that the Borrower shall not
have any obligation hereunder to the Agent or any Lender with respect to
Indemnified Liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Lender, (ii) legal proceedings
commenced against or disputes among the Agent or any Lender by any other
Lender or its participants or the Agent, or (iii) the violation by the
Agent or any such Lender of an express provision of the Credit Documents,
if so determined by a final judgment of a court of competent jurisdiction.
The agreements in this Section 11.5 shall survive repayment of the Loans,
Notes and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of the Borrower, the Lenders, the Agent, all future
holders of the Notes and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights
or obligations under this Credit Agreement or the other Credit
Documents without the prior written consent of each Lender and no
Lender may assign or transfer any of its rights or obligations under
this Credit Agreement or the other Credit Documents without the prior
written consent of the Borrower, except as otherwise permitted by
this Section 11.6.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law and, so long
as no Event of Default has occurred and is continuing, with the
consent of the Borrower (which consent shall not be unreasonably
withheld), at any time sell to one or more banks or other entities
("Participant" or "Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Commitment of
such Lender, or any other interest of such Lender hereunder,
provided, however, that at all times such Lender shall retain for its
own account interests in Loans owing to such Lender in an aggregate
outstanding principal amount which, when added to the aggregate
outstanding principal amount of any interests in Loans sold by such
Lender to Participants who are Affiliates of such Lender, equals not
less than fifty percent (50%) of the aggregate principal amount of
all such Lender's outstanding Loans. In the event of any such sale
by a Lender of participating interests to a Participant, such
Lender's obligations under this Credit Agreement to the other parties
to this Credit Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this
Credit Agreement, and the Borrower and the Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement. No
Lender shall transfer or grant any participation under which the
Participant shall have rights to approve any amendment to or waiver
of this Credit Agreement or any other Credit Document except to the
extent such amendment or waiver would (i) extend the scheduled
maturity of any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend the
time of payment of interest or Fees thereon except in connection with
a waiver of interest at the increased post-default rate) or reduce
the principal amount thereof, or increase the amount of the
Participant's participation over the amount thereof then in effect it
being understood that a waiver of any Default or Event of Default
shall not constitute a change in the terms of such participation, and
that an increase in any Commitment or Loan shall be permitted without
consent of any Participant if the Participant's participation is not
increased as a result thereof, (ii) release all or substantially all
of the collateral, or (iii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Credit
Agreement. In the case of any such participation, the Participant
shall not have any rights under this Credit Agreement or any of the
other Credit Documents (the Participant's rights against such Lender
in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not sold such
participation, provided that each Participant shall be entitled to
the benefits of Sections 3.6, 3.7, 3.8, 3.9 and 11.5 with respect to
its participation in the Commitments and the Loans outstanding from
time to time; provided, that no Participant shall be entitled to
receive any greater amount pursuant to such Sections than the
transferor Lender would have been entitled to receive in respect of
the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell or assign to any Lender or any Affiliate thereof and with the
consent of the Agent and, so long as no Event of Default has occurred
and is continuing or at any time if any such sale or assignment would
increase any amount payable by the Borrower hereunder, the consent of
the Borrower (which consent shall not be unreasonably withheld), to
one or more additional banks or financial institutions ("Purchasing
Lenders"), all or any part of its rights and obligations under this
Credit Agreement and the Notes in minimum amounts of $10,000,000 (or,
if less, the entire amount of such Lender's obligations) if the
Purchasing Lender is not a Lender hereunder, or with no minimum
amount if the Purchasing Lender is a Lender hereunder, pursuant to a
Commitment Transfer Supplement, executed by such Purchasing Lender,
such transferor Lender (and, in the case of a Purchasing Lender that
is not then a Lender or an affiliate thereof so long as no Event of
Default has occurred and is continuing, by the Borrower and the
Agent), and delivered to the Agent for its acceptance and recording
in the Register. Upon such execution, delivery, acceptance and
recording, from and after the Transfer Effective Date specified in
such Commitment Transfer Supplement, (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in
such Commitment Transfer Supplement, have the rights and obligations
of a Lender hereunder with a Commitment as set forth therein, and (y)
the transferor Lender thereunder shall, to the extent provided in
such Commitment Transfer Supplement, be released from its obligations
under this Credit Agreement (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a
transferor Lender's rights and obligations under this Credit
Agreement, such transferor Lender shall cease to be a party hereto).
Such Commitment Transfer Supplement shall be deemed to amend this
Credit Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting
adjustment of Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Credit Agreement and
the Notes. On or prior to the Transfer Effective Date specified in
such Commitment Transfer Supplement, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for the
Note delivered to the Agent pursuant to such Commitment Transfer
Supplement a new Note to the order of such Purchasing Lender in an
amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, unless the transferor Lender has
not retained a Commitment hereunder, a new Note to the order of the
transferor Lender in an amount equal to the Commitment retained by it
hereunder. Except for the expense of executing and delivering such
new Note to the Agent pursuant to this Section, the Borrower shall
not be obligated to pay any transfer fees, costs or expenses to the
Agent or any Lender in connection with any such transfer. Such new
Note shall be dated the Closing Date and shall otherwise be in the
form of the Note replaced thereby. The Note surrendered by the
transferor Lender shall be returned by the Agent to the Borrower
marked "canceled."
(d) The Agent shall maintain at its address referred to in
Section 11.2 a copy of each Commitment Transfer supplement delivered
to it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to
time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
as the owner of the Loan recorded therein for all purposes of this
Credit Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Lender and a Purchasing Lender and, in the
case of a Purchasing Lender that is not then a Lender (or an
affiliate thereof, by the Borrower and the Agent) together with
payment to the Agent by the transferor Lender or the Purchasing
Lender, (as agreed between them) of a registration and processing fee
of $2,500 for each Purchasing Lender listed in such Commitment
Transfer Supplement, and the Notes subject to such Commitment
Transfer Supplement, the Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in
the Register and (iii) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender each, (a "Transferee") and any
permitted prospective Transferee any and all financial information in
such Lender's possession concerning the Borrower and its Affiliates
which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Credit Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Credit Agreement.
(g) At the time of each assignment pursuant to this Section
11.6 to a Person which is not already a Lender hereunder and which is
not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the
Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a U.S. Tax Compliance Certificate) described in Section
3.9.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under this Credit Agreement (including,
without limitation, any right to payment of principal and interest
under any Note) to any Federal Reserve Bank in accordance with
applicable laws.
11.7 Set-off. In addition to any rights and remedies of the Lenders
provided by law (including, without limitation, other rights of set-off),
each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon the occurrence and during the
continuance of any Event of Default, to setoff and appropriate and apply
any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
or any Affiliate, branch or agency thereof to or for the credit or the
account of the Borrower, or any part thereof in such amounts as such
Lender may elect, against and on account of the obligations and
liabilities of the Borrower to such Lender hereunder and claims of every
nature and description of such Lender against the Borrower, in any
currency, whether arising hereunder, under the Notes or under any
documents contemplated by or referred to herein or therein, as such Lender
may elect, whether or not such Lender has made any demand for payment.
The aforesaid right of set-off may be exercised by such Lender against the
Borrower or against any trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver or execution, judgment or
attachment creditor of the Borrower, or against anyone else claiming
through or against the Borrower or any such trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that
such right of set-off shall not have been exercised by such Lender prior
to the occurrence of any Event of Default. Each Lender agrees promptly to
notify the Borrower and the Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
11.8 Confidentiality. The Agent and each Lender shall hold in
confidence any material nonpublic information delivered or made available
to them by the Borrower. Notwithstanding the foregoing, nothing herein
shall prevent the Agent or any Lender from disclosing any information
delivered or made available to it by the Borrower (a) to such Lender's
Affiliates, the Agent or any Lender, (b) upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory
agency or authority, (d) which has been publicly disclosed other than as a
result of a disclosure by the Agent or any Lender which is not permitted
by this Agreement, (e) to the extent reasonably required in connection
with any litigation to which the Agent, any Lender, or any of their
respective affiliates may be a party, along with the Borrower, any
Subsidiary or any of their respective Affiliates, (f) to the extent
reasonably required in connection with the exercise of any right or remedy
under this Agreement, (g) to such Agent's or Lender's legal counsel and
financial consultants and independent auditors, and (h) to any Transferee
or permitted prospective Transferee and such Transferee or permitted
prospective Transferee agrees in writing to be bound by the duty of
confidentiality under this Section to the same extent as if it were a
Lender hereunder.
11.9 Table of Contents and Section Headings. The table of contents
and the Section and subsection headings herein are intended for
convenience only and shall be ignored in construing this Credit Agreement.
11.10 Counterparts. This Credit Agreement may be executed by one
or more of the parties to this Credit Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument. A set of the copies of this
Credit Agreement signed by all the parties shall be lodged with the
Borrower and the Agent.
11.11 Severability. Any provision of this Credit Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
11.12 Integration. This Credit Agreement, the Notes and the other
Credit Documents represent the agreement of the Borrower, the Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Agent, the
Borrower or any Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the Notes.
11.13 Governing Law. This Credit Agreement and the Notes and the
rights and obligations of the parties under this Credit Agreement and the
Notes shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of Wisconsin without giving effect to
its conflicts of law provisions.
11.14 Consent to Jurisdiction and Venue. All judicial proceedings
brought against the Borrower or any other Credit Party with respect to
this Credit Agreement, any Note or any of the other Credit Documents shall
be brought in any state or federal court of competent jurisdiction in the
State of Wisconsin, and, by execution and delivery of this Credit
Agreement, the Borrower and each of the other Credit Parties accepts, for
itself and in connection with its properties, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Credit Agreement from which no appeal has been taken
or is available. The Borrower, each of the other Credit Parties, the
Agent and the Lenders irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens which it may now or hereafter have to the bringing
of any such action or proceeding in any such jurisdiction. Nothing herein
shall limit the right of any Lender to bring proceedings against the
Borrower and each of the other Credit Parties in the court of any other
jurisdiction.
11.15 Acknowledgements. Each of the Credit Parties hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of each Credit Document;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Credit Parties arising out of or in
connection with this Credit Agreement and the relationship between
Agent and Lenders, on one hand, and the Credit Parties, on the other
hand, in connection herewith is solely that of debtor and creditor;
and
(c) no joint venture exists among the Lenders or among the
Credit Parties and the Lenders.
11.16 Waivers of Jury Trial. THE CREDIT PARTIES, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
11.17 Limitation of Liability. THE CREDIT PARTIES, THE AGENT AND
THE LENDERS HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR
RECOVER FROM THE OTHER PARTY ANY EXEMPLARY OR PUNITIVE DAMAGES AND, IN THE
CASE OF DAMAGES ARISING FROM THE ISSUANCE OR FAILURE TO ISSUE ANY LETTER
OF CREDIT OR THE HONORING OR FAILURE TO HONOR ANY DRAFT PRESENTED UNDER
ANY LETTER OF CREDIT, ANY CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and delivered as
of the date first above written.
BORROWER: TOTAL LOGISTIC CONTROL, LLC,
a Delaware limited liability company
By:________________________________
Title:_____________________________
LENDERS: FIRSTAR BANK MILWAUKEE, N.A.,
in its capacity as Agent and as a Lender
By:________________________________
Title:_____________________________
BANK ONE, WISCONSIN
as a Lender
By:________________________________
Title:_____________________________
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By:________________________________
Title:_____________________________
FIRST OF AMERICA BANK-MICHIGAN, N.A., as a
Lender
By:________________________________
Title:_____________________________
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
March 20, 1998
