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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 1-3846
CHRISTIANA COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
A Wisconsin Corporation 95-1928079
(State of other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202
(Address of principal executive office) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (414) 291-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock - $1.00 par Value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value (based on September 15, 1995 closing price) of
voting stock less stock owned by all executive officers and directors as a
group: $49,409,882.50
Number of Shares of Common Stock Outstanding at September 15, 1995: 5,195,630
Documents incorporated by reference:
Registrant's definitive Proxy Statement for its 1995 annual meeting of
shareholders to be held on October 31, 1995, is incorporated by reference
in Part III.
The Exhibit Index is located on page 35.
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PART 1
ITEM 1. BUSINESS
At June 30, 1995, Christiana is engaged in providing public
refrigerated and non-refrigerated warehousing and logistic services; renting,
refurbishing and selling of residential housing in San Diego; and owning
1,948,731 shares of Energy Ventures, Inc. common stock representing 13.1%
ownership of the then outstanding shares.
REFRIGERATED WAREHOUSING AND LOGISTICS
Operations in this line of business are conducted through two wholly
owned subsidiaries, Wiscold, Inc. and The TLC Group, Inc.
WISCOLD, INC.
On September 1, 1992, Christiana acquired the assets of Wiscold,
Inc., a Wisconsin corporation, formed in 1915, which is engaged in providing
public refrigerated warehousing services, vegetable processing and individual
quick freeze (IQF) services and automated vegetable poly bag and bulk services.
Customers include food processors, wholesalers, distributors and retailers
servicing the central United States.
Wiscold owns and operates four facilities serving separate and
distinct markets. In total, Wiscold's frozen storage capacity is approximately
200 million pounds. All of the Company's facilities with the exception of the
downtown Milwaukee facility are single story concrete buildings constructed at
dock height elevation and fully insulated. The downtown Milwaukee facility is
a 10 story building. Wiscold's refrigerated warehouse facilities are:
- Rochelle Cold Storage is located in Rochelle, Illinois. This is
Wiscold's newest and largest facility, initially constructed in
1986. Currently this facility is comprised of 10,600,000 cubic
feet of capacity after undergoing three capacity expansions in
1988, 1990 and 1993. All space is capable of temperatures of
-20 degree F to ambient. Rochelle Cold Storage is strategically
located at the intersection of two main line railroads and two
interstate highways.
- Badger Cold Storage is located in Beaver Dam, Wisconsin. The
facility was constructed in 1975. Since 1975, this facility has
undergone three freezer additions, the most recent in 1991, and
today is comprised of 7,200,000 cubic feet of freezer storage
space. Badger Cold Storage serves distribution related customers
as well as vegetable and cranberry processors. This facility's
unique capabilities involve value added services including IQF,
blanching, slicing, dicing and packaging operations. Badger's
IQF tunnels have the capacity to freeze 85,000 pounds of product
per hour.
- Mohawk Cold Storage is located in Wauwatosa, Wisconsin. This
facility was originally constructed in 1954. There have been six
expansions of this facility and today the Mohawk 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 degree F to +40 degree F and daily blast freezing capacity
of 750,000 pounds. This location has a 7-car private rail
siding. An additional 3 million cubic feet of refrigerated and
processing space owned by Wiscold
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adjacent to the Mohawk facility is leased on a long term basis to
a third party retail grocery company.
- Wisconsin Cold Storage is located in Milwaukee, Wisconsin.
Constructed between 1900 and 1915, it has 1,000,000 cubic feet of
storage capacity comprised of 900,000 cubic feet of freezer space
and 100,000 cubic feet of cooler space.
Wiscold is the nation's seventh largest provider of public
refrigerated warehouse services. In addition to providing full service
multi-temperature storage, other supplemental services related to the
refrigerated storage business include fully computerized inventory management,
production services such as blanching and blast freezing, packaging and
repackaging, and logistic services, including services via company owned motor
carrier, consolidated shipping services via common carriers, and intermodal
services with the Burlington Northern and Chicago & Northwestern railroads.
Wiscold's customers consist primarily of national, regional and
local frozen food processing firms, wholesalers and large retailers. Wiscold
serves approximately 600 customers. In fiscal 1995, Wiscold's three largest
customers accounted for approximately 33% of revenues. Wiscold had no single
customer accounting for more than 15% of its total revenues.
Competition in the public refrigerated warehouse industry in the
United States is on a national, regional and local basis. In the United
States, there are four public refrigerated warehouse companies which compete on
a national level. On a regional and local level there are many small warehouse
operators. Wiscold's competitive edge is the ability to provide its customers
with significantly reduced distribution costs through its consolidation and
distribution center concept as well as a unique capacity to process and IQF
freeze large volumes of vegetables and cranberries.
Wiscold holds no patents, trademarks, licenses, franchises or
concessions which are material to its business.
Expenditures for research and development and compliance with
environmental regulations have not been, and are not anticipated to be,
significant.
THE TLC GROUP, INC.
Christiana acquired The TLC Group, Inc. ("TLC") a Zeeland,
Michigan-based firm on January 3, 1994. TLC provides fully integrated third
party logistic services that include warehouse, distribution and transportation
services. TLC also markets and provides these services individually.
Customers can utilize TLC's fully integrated services to handle their product
from the point of manufacture to its final destination. The full spectrum of
integrated services also includes picking, repackaging, freight consolidation,
just-in-time ("JIT") production supply, electronic data interchange ("EDI")
transmissions and customized inventory management reporting of inventory
quantity and shipments.
Warehouse services include full service public and contract
warehousing in both the refrigerated and ambient temperature ranges. In
addition, TLC provides ancillary warehouse services such as kitting, rail
transloading and cross dock services. TLC's transportation and distribution
services include full service truckload and less-than-truckload temperature
controlled and dry freight, dedicated fleet service, and specialized
store-door delivery. These services are provided utilizing its own fleet as
well as brokered carrier equipment. The
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Company's other services include truck part sales and repairs and international
freight management.
TLC's customers consist of national, regional and local firms,
mainly in the food, office equipment and health and beauty aid channels.
During fiscal 1995, TLC's three largest customers accounted for approximately
40% of its revenue. TLC's largest customer accounted for approximately 27% of
its total revenues.
TLC's competition in all sectors of its business is on a national
and local basis. Each of TLC's individual business segments is in highly
fragmented industries with many local and regional competitors and a few
companies that have national presence. In most cases, except for long haul
truckload and less-than-truckload freight, services are marketed on a local or
regional basis. TLC's competitive edge is its ability to provide fully
integrated innovative and flexible solutions to meet its customers'
distribution needs and to improve efficiency within customers' supply chains.
TLC is unique in its ability to provide its wide array of service offerings
from one source utilizing its own facilities and equipment.
TLC holds a perpetual license to its current warehouse software
programs. TLC also holds a trademark on its name and logo. TLC holds no other
patents, trademarks, licenses, franchises or concessions which are material to
its business.
Expenditures for research and development and compliance with
environmental regulations have not been, and are not anticipated to be,
significant.
REAL ESTATE
At June 30, 1995, Christiana owned 82 condominium homes in Villa
Martinique located in the Tierrasanta section of San Diego, California.
Tierrasanta is approximately 10 miles northeast of downtown San Diego. It is
essentially a suburban community built during the 1970s and early 1980s with a
present population of about 20,000.
Villa Martinique consists of 55 two-story, wood-frame and stucco,
eight-plex condominium structures, for a total of 440 residential units. The
project is between 15-20 years old. At June 30, 1995, Christiana owned 82
homes and, other than those offered for sale and those scheduled for
refurbishment the homes were leased out through an onsite rental office.
Tenants are required to sign a month-to-month lease agreement. This technique
has enabled Christiana to maintain rents at current market rates and keeps the
units not offered for sale fully occupied.
At June 30, 1995, 25 of these units are available for rental and are
leased. The other 57 units are either models, in escrow or offered for sale.
During fiscal 1995, the Company completed sales of 48
condominium units generating pre-tax gains of $3,083,000 or $64,000 per unit.
These sales were part of a phased program to refurbish and sell company-owned
condominium homes. Since commencement of the sales program in August 1991
through June 30, 1995, sales of 284 homes have been completed and an additional
10 homes were under contract for sale pending scheduled closings. Completion
of the sales program is expected in fiscal 1996.
PARTNERSHIP AND JOINT VENTURES
As discussed in Note A Other Assets, the Company holds a partnership
interest which represented 5% ownership of a 1.15 million square foot Class A
office building in
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downtown Chicago. Ownership in the building was surrendered by the partnership
for payment in the amount of $2,300,000 and in lieu of foreclosure. The amount
of the payment attributable to Christiana's interest was approximately equal to
its carrying value of $230,000. Due to the book/tax difference in the basis of
this holding, deferred taxes in the amount of $1,730,000 are included in
current accrued liabilities and are expected to be paid in fiscal 1996.
PRIDECO
Until June 30, 1995, Prideco was a 60% owned subsidiary of the
Company. Prideco manufacturers downhole tubular products used in the
exploration and production of oil and gas wells. These products which include
drill pipe, drill collars, heavy weight pipe and premium casing are sold
worldwide.
On June 30, 1995, Christiana completed a tax free merger of Prideco
with Grant Acquisition Company, a wholly owned subsidiary of Energy Ventures,
Inc. ("EVI"), a New York Stock Exchange listed firm. In the merger transaction
Christiana exchanged its ownership in Prideco for 1,035,858 shares of EVI
common stock which had a market value at June 30, 1995 of $18,645,000.
EMPLOYEES
The following table shows the number of fulltime Christiana, Wiscold
and TLC employees at the dates indicated.
<TABLE>
<CAPTION>
FULLTIME EMPLOYEES AT AUGUST 31,
-----------------------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Christiana 40 30 23
Wiscold 239* 207* 253*
TLC -- 316 413
Prideco 230 277 -- **
---- ---- ----
TOTAL 509 830 689
</TABLE>
*In addition, Wiscold employs approximately 80 seasonal workers
working varying hours.
**On June 30, 1995 Prideco was merged with an operating unit of
Energy Ventures, Inc. (NYSE:EVI).
The decrease in Christiana employees from 30 in 1994 to 23 in 1995
is due to the slower pace of home refurbishment activities in fiscal 1995. At
August 31, 1995, Wiscold had 46 more fulltime employees then at the same date a
year ago due to higher handling and order selection activities at Rochelle Cold
Storage and Mohawk Cold Storage. The increase in employees at TLC is related
to increased handling and order selection activities at various warehouses and
increases in the transportation fleet.
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ITEM 2. PROPERTIES
REFRIGERATED WAREHOUSING FACILITIES
At the end of fiscal 1995, Wiscold owned and operated four public
refrigerated warehouse facilities located in Wisconsin (3) and Illinois (1).
Other than Wisconsin Cold Storage, located in downtown Milwaukee, Wiscold's
facilities are large single-story buildings constructed at dock height with
full insulation and vapor barrier protection. Refrigeration is provided by
screw-type compressors in ammonia-based cooling systems. The facilities are
strategically located and well served by rail and truck.
Wiscold's refrigerated warehouse facilities are described on the
following table:
<TABLE>
<CAPTION>
TOTAL STORAGE SPACE
LOCATION (CUBIC FEET IN MILLIONS) TYPE OF FACILITY
--------------------- -------------------------- ---------------------
<S> <C> <C>
Rochelle, Illinois 10.6 Distribution
Beaver Dam, Wisconsin 7.2 Distribution & Production
Wauwatosa, Wisconsin 4.3 Distribution
Milwaukee, Wisconsin 1.0 Distribution
----
TOTAL 23.1
====
</TABLE>
At both the Rochelle and Beaver Dam facilities the Company owns
substantial additional acreage available for expansion.
At the end of fiscal 1995, TLC operated 13 public refrigerated and
dry warehouse (general merchandise) facilities located in Michigan (8), Georgia
(1), Indiana (1), Nevada (1), New Jersey (1) and Puerto Rico (1). The newest
dry warehouse located in the Company's headquarters in Zeeland, Michigan is
owned. All other facilities are under short or long term leases. With the
exception of the Taylor Freezer Plant, the refrigerated facilities are single
story buildings constructed at dock height with full insulation and vapor
barrier protection. Refrigeration is provided by screw-type compressors in
ammonia-based cooling systems. The dry facilities (10) are single story block
or metal construction buildings. All dry facilities are constructed at dock
height and are approved as food grade storage facilities. The Michigan
Distribution Center I is a multi-temperature facility that encompasses freezer
(1.1 million cubic feet), cooler (0.4 million cubic feet) and dry (88 thousand
square feet) space. One refrigerated and three dry facilities are served by
rail.
TLC's warehouse facilities are described on the following table:
REFRIGERATED FACILITIES
<TABLE>
<CAPTION>
TOTAL STORAGE
SPACE
(CUBIC FEET IN YEAR
FACILITY LOCATION MILLIONS) TYPE OF FACILITY BUILT
------------------------- --------------- ------------------ --------------------- ----------
<S> <C> <C> <C> <C>
Taylor Freezer Plant * Holland, MI 2.1 Distr./Prod. 1983
Michigan Distr. Center I Kalamazoo, MI 3.3 Distribution 1977
Michigan Distr. Center II Kalamazoo, MI 2.0 Distribution 1989
---
TOTAL 7.4
</TABLE>
* Serviced by rail.
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DRY FACILITIES
<TABLE>
<CAPTION>
TOTAL STORAGE
SPACE
(SQ FT. IN YEAR
FACILITY LOCATION THOUSANDS) TYPE OF FACILITY BUILT
- --------------------------- --------------- ------------------- ----------------- -----------
<S> <C> <C> <C> <C>
Zeeland Distr. Center I Zeeland, MI 202 Public 1988
Zeeland Distr. Center II Zeeland, MI 115 Public 1994
Central Avenue Warehs. Holland, MI 4 Contract 1955
Grand Rapids Distr. Ctr I Grand Rapids, MI 97 Public 1991
Michigan Distr. Ctr I Kalamazoo, MI 88 Public 1977
Central Distr. Center * Munster, IN 565 Contr./Public 1976
East Coast Distr. Center I So. Brunswick, NJ 200 Contr./Public 1989
West Coast Distr. Ctr I * Sparks, NV 152 Contr./Public 1991
Puerto Rico Warehouse Bayamon, PR 30 Contract 1987
South East Distr. Ctr * Atlanta, GA 66 Public 1974
-------------
TOTAL 1,519
</TABLE>
* Serviced by rail.
TLC owns and operates a 10,000 square foot truck maintenance
facility. This facility is used primarily for the maintenance of TLC
transportation equipment. In addition, the facility is used to perform outside
maintenance on non-TLC vehicles as well as sales of truck parts to the public.
ITEM 3. LEGAL PROCEEDINGS.
(Not Applicable)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(Not Applicable)
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
The common stock of the Company is listed on the New York Stock
Exchange. The table below sets forth the reported high and low sales prices as
reported by the New York Stock Exchange for Christiana Companies common stock
for quarters ended March 31, 1991 through September 15, 1995.
<TABLE>
<CAPTION>
1995 1994 1993 1992
-------------------------------------------------------------------------------------
QUARTER ENDED LOW HIGH LOW HIGH LOW HIGH LOW HIGH
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31 30 1/8 31 3/4 25 1/2 27 5/8 29 7/8 36 28 3/4 34 1/2
June 30 25 1/8 30 24 5/8 34 5/8 24 29 7/8 28 3/4 33 3/8
September 30* 24 3/4 27 1/2 29 1/2 34 1/2 22 5/8 27 1/4 27 29 1/2
December 31 - - 30 34 1/4 22 7/8 29 3/8 28 3/4 36 3/4
</TABLE>
* Ten weeks ended September 15, 1995.
At September 15, 1995 there were approximately 1,015 shareholders of
record. There have been no dividends paid since 1981 and based on the Company's
strategic business plan of reinvesting cash flow none are anticipated in the
foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA.
The material under "Five Year Financial Information" is included on
page 32.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Net earnings, after adjusting for minority interest, for each of the
past three fiscal years are shown in the table below:
<TABLE>
<CAPTION>
CONTRIBUTION TO NET EARNINGS
--------------------------------------------------------------------------
Fiscal Year Ended June 30 1995 1994 1993
------------------ ----------------------- ----------------------
(In thousands, except for per share data) $ PER SHARE $ PER SHARE $ PER SHARE
------ --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Christiana, including Corporate $6,911 $1.31 $2,923 $0.55 $3,079 $0.59
Refrigerated Warehousing and
Logistics 2,563 0.49 994 0.19 585 0.11
Prideco, net of Minority Interest 971 0.18 741 0.14 (665) (0.12)
Chicago Gear Works -- -- -- -- (85) (0.01)
Non-Operating Writedown -- -- (1,537) (0.29) -- --
------- ----- ------ ----- ------ -----
Net Earnings $10,445 $1.98 $3,121 $0.59 $2,914 $0.57
======= ===== ====== ===== ====== =====
</TABLE>
FISCAL YEAR ENDED JUNE 30, 1995
Christiana Companies consolidated revenues for fiscal 1995 increased
40.7% from $90,153,000 to $126,881,000 due primarily to higher volume in
Refrigerated Warehousing and Logistics operations which in fiscal 1995 included
The TLC Group for a full twelve month period versus six months in fiscal 1994,
as well as increased demand for Prideco's downhole premium tubular products.
Within the Refrigerated Warehousing and Logistics business segment in fiscal
1995 both Wiscold and TLC increased revenues on a comparable period basis
through higher utilization of warehousing facilities, vegetable processing and
IQF operations. Revenues within this segment increased 67.7%. Warehousing,
rental and related expenses increased primarily due to increased volume at both
Wiscold and The TLC Group as well as the inclusion of TLC for a full 12 month
period. Prideco's revenues increased 19% in fiscal 1995 to $55,239,000 as it
operated at virtually full capacity for much of the year. Increased demand for
all of Prideco's products resulted from a sustained level of drilling activity
throughout the year and the depletion of surplus inventories of used tubular
products. Selling prices of Prideco's products were modestly higher, however
increased steel prices more than offset these gains. Prideco's gross margin
increased marginally from 14.2% in fiscal 1994 to 14.7% in fiscal 1995 due
entirely to higher absorption factors resulting from near full capacity
production levels. Product pricing in Prideco's industry remained intensely
competitive throughout fiscal 1995 reflecting the continued existence of
significant excess manufacturing capacity. Rental revenues from Christiana's
real estate operations were lower in fiscal 1995 due entirely to fewer units
being available for rent as a result of planned vacating of units in
preparation for sale.
Consolidated earnings from operations were $10,324,000 in fiscal
1995 compared to $6,422,000 in fiscal 1994, reflecting a 60.8% increase.
Growth in operating earnings was primarily attributable to higher volume in
Refrigerated Warehousing and Logistics. Within this business segment both
Wiscold and TLC had higher utilization of warehousing,
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vegetable processing and IQF capacity all of which generate high marginal
contribution with increased volume once breakeven levels have been surpassed.
During the year Wiscold commenced a new poly bag vegetable packaging operation
at its Beaver Dam facility. Focused marketing and sales strategies within this
segment resulted in increased revenues derived from integrated logistic
services which generally produce higher margins than discrete warehousing or
transportation services. At Prideco, earnings from operations increased 31.2%
compared to the previous year as a result of higher volume.
On June 30, 1995 Christiana completed a tax free merger of Prideco,
a 60% owned subsidiary, Energy Ventures, Inc. In the merger transaction
Christiana received 1,035,858 shares of EVI common stock in exchange for its
ownership in Prideco. This transaction resulted in Christiana recognizing a
pretax gain of $10,050,000. After providing for deferred taxes, the Prideco
merger contributed net earnings of $5,383,000 or $1.02 per share.
Interest income was marginally higher in fiscal 1995 due to higher
rates available on short term investments. Interest expense increased 30.5% in
fiscal 1995 to $4,842,000 due primarily to the inclusion of TLC's operations
for the full twelve months this year and to a lesser extent higher short-term
interest rates during the year which impacted Prideco's borrowings, most of
which were priced on a floating rate basis indexed to prime.
Consolidated net earnings for the year ended June 30, 1995 were
$10,445,000 or $1.98 per share compared to $3,121,000 or $0.59 per share for
the previous fiscal year. Refrigerated Warehousing and Logistics contributed
$2,563,000 or $0.49 per share versus $994,000 or $0.19 per share in fiscal
1994. The improvement in net earnings in fiscal 1995 was primarily
attributable to improved utilization of Wiscold's warehousing, vegetable
processing and IQF operations and to a lesser extent the inclusion of The TLC
Group for a full twelve month period.
Prideco contributed net earnings, after minority interest, of
$971,000 or $0.18 per share compared to $741,000 or $0.14 per share contributed
in fiscal 1994. As previously discussed, the Prideco merger transaction
contributed net earnings of $5,383,000 or $1.02 per share after providing for
deferred taxes.
Real estate sales in fiscal 1995 totaled 48 homes and contributed
net earnings of $1,850,000 or $0.35 per share versus 84 home sales in fiscal
1994 which contributed net earnings of $3,369,000 or $0.63 per share.
Christiana's effective tax rate increased in fiscal 1995 to 42% from
38% last year as a result of deferred taxes related to the Prideco merger. The
higher rate is primarily attributable to the book/tax difference of
Christiana's basis in Prideco.
The following summarizes the unaudited consolidated pro forma
operating results of the Company as if the merger of Prideco, the acquisition
of EVI shares and the acquisition of The TLC Group had occurred at the
beginning of the fiscal year ended June 30, 1994.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------------------
1995 1994
----------- -------------
<S> <C> <C>
Revenues $71,642,000 $67,572,000
Net earnings $ 3,612,000 $ 2,892,000
Earnings per share $0.68 $0.54
</TABLE>
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Inflation in fiscal 1995 was a meaningful factor at Prideco which
experienced a substantial increase in steel prices throughout the period. Due
to competitive industry conditions these increases were not able to be entirely
recovered in the selling price of Prideco's products.
FISCAL YEAR ENDED JUNE 30, 1994
Christiana Companies consolidated financial results in fiscal year
1994 included the full year operations of Wiscold, Prideco, real estate and
those of The TLC group for the six month period commencing January 4, 1994, the
date of its acquisition.
Consolidated revenues for fiscal 1994 increased 93% to $90,153,000
due primarily to the inclusion of TLC and improvement in the demand for
Prideco's products and, to a lesser extent, a full twelve month period for
Wiscold versus 10 months of operations in fiscal 1993. Rental revenues from
Christiana's residential real estate were lower, due entirely to volume as
fewer units were available for rent as a result of condominium home sales and
refurbishment activities preparing homes for sale. Prideco's revenues
increased 72% to $46,428,000 due principally to volume related factors
resulting from increased levels of drilling activity, particularly in the Gulf
of Mexico, and the near full consumption of surplus used tubular products.
Selling prices for Prideco's products remained virtually unchanged from 1993
and reflected highly competitive conditions.
Consolidated earnings from operations in fiscal 1994 increased to
$6,422,000 due primarily to the improvement and return to consistently
profitable operations at Prideco as higher capacity utilization and continued
tight cost control facilitated improved margins, and to a lesser extent,
increased volume at Refrigerated Warehousing and Logistics attributable to the
inclusion of The TLC Group for six months and Wiscold's full twelve month
period of operations.
Interest income declined 22% in fiscal 1994 due primarily to the use
of $5,630,000 of Christiana's cash resources in the acquisition of The TLC
Group, and to a lesser extent, lower rates on short-term high quality
investments. Interest expense increased $427,000, or 13%, due primarily to
higher borrowings at Prideco used to fund additional investment in working
capital needed to support its growth and the assumption of interest bearing
liabilities at TLC. Interest expense at Wiscold and Christiana's real estate
operations declined due to lower debt levels as free cash flow from each
operation was allocated to reduce acquisition and mortgage-related obligations,
respectively.
Other income (expense), net included a non-operating writedown in
the amount of $2,562,000 to value a 5% interest in a Chicago office building at
its realizable value of $230,000.
The Company's effective tax rate decreased to 38% from 42% in fiscal
1993 due principally to the inclusion of the TLC Group which operated in states
with lower tax rates.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided cash of $12,439,000. Concurrently with
the Prideco merger, Christiana invested $13,291,000 of cash to purchase
additional shares of Energy Ventures. Capital expenditures in fiscal 1995
totaled $10,931,000, and were largely concentrated in Refrigerated Warehousing
and Logistics. Major expenditures in 1995 included: at TLC a new warehouse
facility and related equipment ($2.3 million) and replacement and additions of
transportation equipment ($2.9 million); at Wiscold a new poly
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bag vegetable packaging operation was completed ($1.1 million); at Prideco
equipment upgrades and maintenance related investment ($0.7 million); and
refurbishments of condominium homes at Martinique totaled $1.8 million.
Financing activities in fiscal 1995 used $10,290,000 which consisted
primarily of debt reduction in the amount of $6,000,000 at Wiscold and
$3,170,000 at Prideco; TLC increased borrowings $2,252,000 in fiscal 1995
primarily to fund a new distribution facility in Zeeland, Michigan; and at
Christiana corporate, $3,805,000 was used to fund the repurchase of stock.
Christiana's consolidated balance sheet at June 30, 1995 reflects
the effect of the Prideco merger which resulted in the elimination of Prideco's
assets and liabilities, the additional purchase of Energy Ventures shares, the
continuing process of converting real estate holdings to cash, and the
operating cash flows attributable to the Refrigerated Warehousing and Logistics
business unit.
At June 30, 1995 Christiana's holdings in Energy Ventures totaled
1,948,731 shares of which 1,035,858 shares were received in exchange for its
ownership in Prideco and 912,873 shares were purchased for $13,291,000 directly
from EVI and Prideco's minority shareholders. The average price of these
shares at financial statement cost is $16.40 per share although the Company's
cash cost of these shares is $9.74 per share. The financial statement cost
will be adjusted quarterly based on the market value of the shares. The market
value of these shares at June 30, 1995 was $18.00 per share or $35,077,000
resulting in an unrealized investment gain for financial statement purposes of
$1,909,000, net of tax.
Accounts receivable, inventories and prepaids were lower year to
year due to the Prideco merger. The increase in deferred taxes is primarily
the result of deferred taxes related to the Prideco transaction.
As otherwise described in this report, the Company is engaged in the
phased refurbishment and sale of its condominium homes to individual buyers.
Sale of the remaining 82 homes is expected to be completed in the next fiscal
year. This program is a net provider of cash, and due to the full retirement
of mortgage-related debt, increased levels of liquidity and capital resources
are expected to be derived from these sales over the next fiscal year.
As discussed in Item 1, in fiscal 1996 Christiana anticipates
liquidating a partnership interest which represented 5% of the ownership of a
downtown Chicago office building for approximately its carrying value of
$230,000. As a result, deferred taxes of approximately $1,730,000 are
classified as currently payable.
As of fiscal year end, the Company had no material capital
commitments and believes with its cash reserves, earnings, cash flow together
with existing lines of credit and the capability of debt or equity issuance,
that it will have sufficient resources to pursue its strategic plan, fund
internal business expansion and future acquisitions. The Company anticipates
building at least two new facilities in fiscal 1996 to support customer growth.
However, no firm commitments have been made at this time.
ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.
See Index to Financial Information on page 15.
11
<PAGE> 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
The material in Section III of the 1995 Proxy Statement is
incorporated herein by reference. All of Registrant's executive officers are
also nominees for directors of Registrant.
ITEM 11. EXECUTIVE COMPENSATION.
The material in Section IV of the 1995 Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The material in Section II and III of the 1995 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The material in Section IV of the 1995 Proxy Statement is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Financial Statement and Schedules:
See Index on page 15.
Exhibits:
See Index on page 35.
Reports on Form 8-K:
Registrant filed a report on Form 8-K dated June 30, 1995 with
respect to the merger of Prideco, Inc., a majority-owned subsidiary
of the Registrant, with Grant Acquisition Company, a wholly-owned
subsidiary of Energy Ventures, Inc. The items reported therein were
Item 2. (Acquisition of Disposition of Assets) and Item 7 (Financial
Statements). The latter included pro forma consolidated balance
sheet as of March 31, 1995; pro forma consolidated statement of
earnings for the year ended June 30, 1995; and pro forma
consolidated statement of earnings for the nine months ended March
31, 1995.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirement of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Christiana Companies, Inc.
Date: September 15, 1995 By: /s/ Sheldon B. Lubar
-------------------------
Sheldon B. Lubar, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934
this 10-K report has been signed below on September 15, 1995 by the following
persons on behalf of the Registrant and in the capacity indicated.
Signature
<TABLE>
<S> <C>
/s/ Sheldon B. Lubar Chairman, Chief Executive Officer and
----------------------- a Director
Sheldon B. Lubar
/s/ Gary R. Sarner President, Chief Operating Officer and a
- ------------------------ Director
Gary R. Sarner
/s/ William T. Donovan Executive Vice President, Chief Financial
----------------------- Officer and a Director
William T. Donovan
/s/ Betty J. White Treasurer, Controller and Assistant
----------------------- Secretary
Betty J. White
/s/ David J. Lubar Director
-----------------------
David J. Lubar
/s/ Albert O. Nicholas Director
-----------------------
Albert O. Nicholas
</TABLE>
13
<PAGE> 14
CHRISTIANA COMPANIES, INC.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1995
14
<PAGE> 15
CHRISTIANA COMPANIES, INC.
Index to financial information
Page No.
Consolidated Statements of Earnings for the years
ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 16
Consolidated Balance Sheets as June 30, 1995 and June 30, 1994 . . . . . 17
Consolidated Statements of Shareholders' Equity for the
years ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . 18
Consolidated Statements of Cash Flows for the years
ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . 19
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 21
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . 32
15
<PAGE> 16
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------------------------------
1995 1994 1993
------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Product Sales $55,239,000 $46,428,000 $29,299,000
Warehousing, Rental and Related Services 71,642,000 43,725,000 17,464,000
-------------------------------------------------------
126,881,000 90,153,000 46,763,000
-------------------------------------------------------
Cost and Expenses:
Cost of Product Sales 47,134,000 39,840,000 26,722,000
Warehousing, Rental and Related Expenses 57,684,000 35,136,000 9,936,000
Selling, General & Administrative Expenses 11,739,000 8,755,000 8,653,000
-------------------------------------------------------
116,557,000 83,731,000 45,311,000
-------------------------------------------------------
Earnings From Operations 10,324,000 6,422,000 1,452,000
-------------------------------------------------------
Other Income (Expense):
Interest Income 942,000 896,000 1,144,000
Interest Expense (4,842,000) (3,710,000) (3,283,000)
Gain on Sales of Real Estate 3,083,000 5,615,000 5,151,000
Gain on Merger of Prideco 10,050,000 -- --
Other Income (Expense), Net (367,000) (3,316,000) (119,000)
-------------------------------------------------------
8,866,000 (515,000) 2,893,000
-------------------------------------------------------
Earnings Before Income Taxes and
Minority Interest 19,190,000 5,907,000 4,345,000
Income Tax Provision 8,061,000 2,256,000 1,812,000
-------------------------------------------------------
Net Earnings Before Minority Interest 11,129,000 3,651,000 2,533,000
Minority Interest (684,000) (530,000) 408,000
-------------------------------------------------------
Net Earnings $10,445,000 $3,121,000 $ 2,941,000
-------------------------------------------------------
Earnings Per Share $1.98 $0.59 $0.57
=======================================================
Weighted Average Number of Shares Outstanding 5,275,947 5,320,876 5,203,233
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
CHRISTIANA COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
---------------------------------
1995 1994
---------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 375,000 $ 3,929,000
Short-Term Investments 2,822,000 14,564,000
Accounts Receivable 8,260,000 14,924,000
Inventories 248,000 15,351,000
Prepaids and Other 2,050,000 1,610,000
-------------------------------
Total Current Assets 13,755,000 50,378,000
-------------------------------
Long-Term Assets:
Investment in EVI 35,077,000 --
Mortgage Notes Receivable 3,205,000 3,538,000
Rental Properties, Net 3,610,000 4,566,000
Fixed Assets, Net 71,104,000 77,049,000
Goodwill 5,906,000 8,302,000
Other Assets 2,276,000 3,732,000
-------------------------------
Total Long-Term Assets 121,178,000 97,187,000
-------------------------------
TOTAL ASSETS $134,933,000 $147,565,000
===============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 2,774,000 $ 6,905,000
Accrued Liabilities 5,347,000 4,486,000
Short-Term Debt 1,844,000 1,343,000
Current Portion of Long-Term Debt 1,679,000 4,803,000
-------------------------------
Total Current Liabilities 11,644,000 17,537,000
-------------------------------
Long-Term Liabilities:
Long-Term Debt 38,256,000 53,458,000
Deferred Income Taxes 17,765,000 12,495,000
Other Liabilities 1,266,000 1,201,000
-------------------------------
Total Long-Term Liabilities 57,287,000 67,154,000
-------------------------------
Total Liabilities 68,931,000 84,691,000
-------------------------------
Minority Shareholders' Interest -- 2,786,000
-------------------------------
Shareholders' Equity:
Preferred Stock -- --
Common Stock 17,218,000 23,658,000
Unrealized Investment Gain, Net of Tax 1,909,000 --
Retained Earnings 46,875,000 36,430,000
-------------------------------
Total Shareholders' Equity 66,002,000 60,088,000
-------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $134,933,000 $147,565,000
===============================
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY (1) (2)
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK ADDITIONAL INVESTMENT
-------------------- PAID-IN GAIN, RETAINED
SHARES AMOUNT CAPITAL NET OF TAX EARNINGS TOTAL
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1992 5,186,630 $5,187,000 $12,307,000 -- $30,368,000 $47,862,000
Issuance of Stock 20,000 20,000 638,000 -- -- 658,000
Net Earnings for the Year -- -- -- -- 2,941,000 2,941,000
------------------------------------------------------------------------------------------
Balance, June 30, 1993 5,206,630 $5,207,000 $12,945,000 -- $33,309,000 $51,461,000
Issuance of Stock 234,269 234,000 5,272,000 -- -- 5,506,000
Net Earnings for the Year -- -- -- -- 3,121,000 3,121,000
------------------------------------------------------------------------------------------
Balance, June 30, 1994 5,440,899 $5,441,000 $18,217,000 -- $36,430,000 $60,088,000
Repurchase of Stock (245,269) (245,000) (6,195,000) -- -- (6,440,000)
Change in Unrealized
Appreciation on EVI -- -- -- 1,909,000 -- 1,909,000
Net Earnings for the Year -- -- -- -- 10,445,000 10,445,000
------------------------------------------------------------------------------------------
Balance, June 30, 1995 5,195,630 $5,196,000 $12,022,000 $1,909,000 $46,875,000 $66,002,000
==========================================================================================
</TABLE>
(1) Preferred stock: $10 par value, 1,000,000 shares authorized, none issued.
(2) Common stock: $1 par value, 12,000,000 shares authorized.
See notes to consolidated financial statements.
18
<PAGE> 19
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------------------------------
1995 1994 1993
----------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Earnings $ 10,445,000 $ 3,121,000 $ 2,941,000
Adjustments to Reconcile Net Earnings to Net
Cash Provided By Operating Activities:
Depreciation and Amortization 8,207,000 6,255,000 4,331,000
Gain on Sales/Merger of Assets (13,263,000) (5,607,000) (5,090,000)
Deferred Income Tax (Benefit) Provision 6,129,000 (483,000) (103,000)
Minority Interest 684,000 530,000 (408,000)
Changes in Assets and Liabilities:
(Increase) Decrease in Receivables (2,240,000) (2,436,000) 1,476,000
(Increase) Decrease in Inventories 2,566,000 (5,337,000) 646,000
(Increase) Decrease in Other Assets (485,000) 4,058,000 (396,000)
Increase in Payables and Accruals 396,000 779,000 1,175,000
---------------------------------------------
Cash Provided By Operating Activities 12,439,000 880,000 4,572,000
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds (Purchase) of Short-Term Investments 11,742,000 (11,064,000) 13,838,000
Capital Expenditures (10,931,000) (7,285,000) (10,873,000)
Business Acquisitions, Net of Cash Acquired (13,291,000) (5,630,000) (57,568,000)
Decrease in Mortgage Notes Receivable 356,000 1,131,000 4,397,000
Decrease in Cash due to Merger of Prideco (533,000) -- --
Proceeds from Sale of Assets 6,954,000 11,538,000 8,675,000
---------------------------------------------
Cash Used In Investing Activities (5,703,000) (11,310,000) (41,531,000)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Sale of Subsidiary Common Stock -- -- 180,000
Borrowings (Payments) on Line of Credit, Net 501,000 1,533,000 (2,443,000)
Stock Repurchase (3,805,000) -- --
Proceeds of Notes Payable 4,125,000 5,000,000 39,373,000
Payments of Notes and Mortgages Payable (11,111,000) (4,983,000) (3,714,000)
----------------------------------------------
Cash Provided By (Used In) Financing Activities (10,290,000) 1,550,000 33,396,000
NET DECREASE IN CASH AND CASH
EQUIVALENTS (3,554,000) (8,880,000) (3,563,000)
BEGINNING CASH AND CASH EQUIVALENTS, JULY 1 3,929,000 12,809,000 16,372,000
---------------------------------------------
ENDING CASH AND CASH EQUIVALENTS, JUNE 30 $ 375,000 $ 3,929,000 $ 12,809,000
==============================================
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 4,612,000 $ 3,829,000 $ 3,063,000
Income Taxes Paid $ 2,950,000 $ 1,570,000 $ 2,549,000
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS AND SHAREHOLDERS OF
CHRISTIANA COMPANIES, INC.:
We have audited the accompanying consolidated balance sheets of
Christiana Companies, Inc. (a Wisconsin corporation) as of June 30, 1995 and
1994, and the related consolidated statements of earnings, shareholders' equity
and cash flows for each of the years in the three-year period ended June 30,
1995. 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 general 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, evidence
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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Christiana Companies, Inc. as of June 30, 1995 and 1994, and the
results of its consolidated operations and cash flows for each of the years in
the three-year period ended June 30, 1995, in conformity with generally
accepted accounting principles.
As explained in Note A to the consolidated financial statements,
effective July 1, 1994, the Company changed its method of accounting for
investment securities.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
August 4, 1995
20
<PAGE> 21
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Three years ended June 30, 1995)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Christiana Companies, Inc., ("Christiana") and its
majority-owned subsidiaries (together with Christiana referred to as the
"Company"). All material intercompany transactions have been eliminated.
SHORT-TERM INVESTMENTS: As of June 30, 1995 short-term investments are
classified as "available for sale" and include U.S. Treasury securities
maturing in less than one year. These investments are carried at market value.
At June 30, 1994 short-term investments include U.S. Treasury securities
maturing in less than one year and are carried at cost which approximates
market.
ACCOUNTS RECEIVABLE: Accounts receivable are presented net of a
reserve for bad debts of $120,000, $94,000 and $128,000 at June 30, 1995, 1994,
and 1993 respectively. The provision for bad debts was $85,000, $88,000 and
$8,000 for the years ended June 30, 1995, 1994, and 1993, respectively.
Deductions from the reserve were $59,000, $122,000 and $25,000 for the years
ended June 30, 1995, 1994, and 1993, respectively.
INVESTMENT IN EVI: At June 30, 1995, Investment in EVI consists of
1,948,731 shares of Energy Ventures, Inc. common stock which is classified as
"available for sale". Effective August 1, 1994, the Company adopted Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The impact of adoption was not material.
Accordingly, investment securities classified as available for sale at June 30,
1995 are carried at fair value with fair value adjustments, net of their
related income tax effects, reported as a component of shareholders' equity.
The gross unrealized gain on these securities was $3,141,000 at June 30, 1995.
INVENTORIES: Inventories are stated at cost, principally determined on a
first-in, first-out (FIFO) basis but not in excess of net realizable value.
Inventory cost includes material, labor and manufacturing overhead. Inventories
are comprised of the following:
<TABLE>
<CAPTION>
AT JUNE 30,
-------------------------------
1995 1994
-------------------------------
<S> <C> <C>
Raw Materials and Work-In-Process $ -- $11,278,000
Finished Products 248,000 4,073,000
-------------------------------
Total Inventories $ 248,000 $15,351,000
===============================
</TABLE>
MORTGAGE NOTES RECEIVABLE: At June 30, 1995 mortgage notes receivable,
derived principally from condominium sales, totaled $3,205,000 and accrue
interest at rates ranging from 6.5% to 9.25%.
21
<PAGE> 22
The principal balance of mortgage notes receivable matures as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-----------------------------------------------------------
<S> <C> <C> <C>
1996 $ 24,000 1999 $ 109,000
1997 27,000 2000 204,000
1998 29,000 Thereafter 2,812,000
</TABLE>
During the years ended June 30, 1995 and 1994, $928,000 and $1,459,000,
respectively, of mortgage notes receivable were sold or prepaid.
RENTAL PROPERTIES AND FIXED ASSETS: Rental properties, consisting
principally of residential condominium homes, and 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. A summary of the cost of rental properties and fixed assets and the
estimated useful lives for financial reporting purposes is as follows:
<TABLE>
<CAPTION>
AT JUNE 30,
----------------------------- ESTIMATED
1995 1994 USEFUL LIVES
----------------------------- ------------
<S> <C> <C> <C>
Rental Properties $ 4,504,000 $ 5,769,000 20-40 years
Less: Accumulated Depreciation (894,000) (1,203,000)
------------------------------
$ 3,610,000 $ 4,566,000
==============================
Fixed Assets:
Land 3,416,000 4,418,000 --
Machinery and Equipment 46,081,000 49,664,000 5-7 years
Buildings and Improvements 34,033,000 33,463,000 30-32 years
Construction-In-Progress 140,000 1,181,000 --
Less: Accumulated Depreciation (12,566,000) (11,677,000)
------------------------------
$ 71,104,000 $77,049,000
==============================
</TABLE>
GOODWILL: Goodwill is amortized on a straight-line basis over 40 years
($214,000 in 1995 and $141,000 in 1994). The accumulated amortization at June
30, 1995 and 1994 was $252,000 and $362,000, respectively. The Company
continually evaluates whether events and circumstances, subsequent to its
acquisition, have occurred that indicate the remaining estimated useful life
may warrant revision or that the remaining balance of goodwill may not be
recoverable.
OTHER ASSETS: At June 30, 1995, Other Assets includes a partnership
which represented a 5% interest in a Class A office building in Chicago. This
asset was written down to $230,000 in 1994 to reflect its realizable value.
The balance of Other Assets primarily represents deferred charges and cash
surrender value of officer's life insurance.
INCOME TAXES: Deferred income taxes are provided on the temporary
differences in the carrying values of assets and liabilities for financial
reporting and income tax purposes.
EARNINGS PER SHARE: Earnings per share is computed on the basis of the
weighted average number of common shares outstanding.
22
<PAGE> 23
CASH FLOWS: For purposes of the Statements of Cash Flows, the Company
considers all highly liquid debt instruments, principally U.S. Treasury bills,
municipal bonds and commercial paper which mature in less than ninety days to
be cash equivalents.
The operating activities of Prideco are included in the Company's
Statements of Cash Flows through June 30, 1995, the date of the merger, while
the effects of the merger are excluded as non-cash transactions. Also in 1995,
the Company issued a three year note in the amount of $2,286,000 as partial
consideration for the acquisition of treasury stock.
RECLASSIFICATIONS: Certain reclassifications have been made in the 1994
statements to conform to 1995 presentation.
B. ACQUISITIONS:
On June 30, 1995, Prideco, Inc. ("Prideco"), a majority-owned subsidiary
of the Company, merged with Grant Acquisition Company, a wholly-owned
subsidiary of Energy Ventures, Inc. ("EVI"). In the merger, the Company's
shares of Prideco were converted into 1,035,858 shares of Common Stock, $1.00
par value, of EVI. EVI's common stock is listed and traded on the New York
Stock Exchange. Accordingly, the individual accounts of Prideco have been
eliminated from the Company's June 30, 1995 Balance Sheet which reflects the
effect of the merger. Prideco's results of operations are included in the
Company's Consolidated Statement of Earnings through June 30, 1995, the date of
the merger. Concurrently with the merger, the Company acquired an additional
912,873 shares of EVI common stock directly from EVI and the minority
shareholders of Prideco for an aggregate cash price of $13,291,000. The
1,948,731 shares of EVI common stock acquired by the Company in the
transactions referred to above represented 13.1% of the then outstanding shares
of EVI common stock.
On January 3, 1994, the Company acquired, by way of merger, The TLC
Group, Inc. ("TLC), a Zeeland, Michigan-based firm which provides fully
integrated logistic services including warehousing, transportation and
information services. The purchase price consisted of approximately
$5,630,000, the issuance of 234,269 shares of Christiana common stock, an 8%
subordinated note in the amount of $1,764,000 and the assumption of its
liabilities. As part of this acquisition, the assets of The TLC Group were
revalued to their fair market value with the excess of purchase price over fair
value amounting to $5,991,000 being recorded as goodwill. This acquisition
was accounted for as a purchase and accordingly, the results of TLC's
operations are included in the consolidated financial statements of the Company
since the date of acquisition.
During fiscal 1995, the Company repurchased the 234,269 shares issued
in the TLC acquisition for $3,805,000 and a three year note in the amount of
$2,286,000.
The following summarizes the unaudited consolidated pro forma operating
results of the Company as if the merger of Prideco, the acquisition of EVI
shares and the acquisition of The TLC Group had occurred at the beginning of
the fiscal year ended June 30, 1994.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues $71,642,000 $67,572,000
Net Earnings 3,612,000 2,892,000
Earnings Per Share $0.68 $0.54
</TABLE>
23
<PAGE> 24
Pro forma results are not necessarily indicative of results that would
have occurred had the purchase been made at the beginning of the respective
periods, or of results which may occur in the future.
C. INDEBTEDNESS:
The following is a summary of consolidated indebtedness:
<TABLE>
<CAPTION>
AT JUNE 30,
----------------------------------
1995 1994
---------- -----------
<S> <C> <C>
Christiana Corporate
Mortgage Loans $ -- $ 68,000
Notes Payable 2,286,000 --
Wiscold, Inc.
Revolving Credit Agreement 30,273,000 36,273,000
The TLC Group
Line of Credit 1,844,000 1,343,000
Notes Payable, Equipment Related 5,612,000 3,359,000
Subordinated Note 1,764,000 1,764,000
Prideco, Inc.
Revolving Credit Agreement -- 11,533,000
Other -- 5,264,000
----------- -----------
41,779,000 59,604,000
Less: Current Portion of Long-Term Debt (1,679,000) (4,803,000)
Short-Term Debt (1,844,000) (1,343,000)
----------- -----------
Long-Term Debt $38,256,000 $53,458,000
=========== ===========
</TABLE>
The Company has a $15,000,000 unsecured line of credit, renewable
annually. Borrowings under this line bear interest at prime. No amounts were
drawn on this line during the year. No compensating balances are required
under the terms of this credit facility.
Notes payable attributable to Christiana Corporate relate to amounts due
as a result of the repurchase of common stock.
Wiscold has a step down revolving credit agreement that provides for
borrowings at June 30, 1995 up to $34,750,000. This credit facility was
organized in conjunction with the acquisition of Wiscold. Borrowings under
this agreement mature on December 31, 1997 and bear interest, payable monthly
at either the London Interbank Offered Rate ("LIBOR") plus 1.75% or a floating
rate at the bank's prime rate (7.10% and 7.07% at June 30, 1995 and 1994,
respectively) and are secured by Wiscold's assets. Under the terms of this
agreement, the interest rate decreases as Wiscold's leverage ratio declines.
It requires, among other things, that Wiscold maintain defined levels of net
worth and debt service coverage and restricts certain of Wiscold's activities
including limitation on new indebtedness and the disposition of assets. No
compensating balances are required under the terms of this credit facility.
24
<PAGE> 25
In connection with this agreement Wiscold entered into an interest rate
swap agreement ("Swap") which effectively fixed the interest rate payable by
Wiscold at 5.3% plus the LIBOR spread which is subject to reduction based on
decreases in Wiscold's leverage ratio. The Swap was issued with respect to
principal in the original amount of $30,000,000 declining pro rata with
scheduled principal reductions of this agreement and matures on December 31,
1997.
The TLC Group has a bank line of credit which permits borrowings up to
$5,000,000. Borrowings bear interest at either a LIBOR-based rate plus 2.00%
or the bank's prime rate, at TLC's option (8.06% and 7.25% at June 30, 1995 and
1994, respectively), and are secured by TLC accounts receivable. Notes payable
relate to specific equipment purchases, primarily transportation and material
handling equipment and a new distribution facility, and are secured by
specified assets. These notes bear interest on both fixed and floating terms
ranging from 6.375% to 9.75%. No compensating balances are required under the
terms of these credit arrangements. TLC's subordinated note bears interest at
8% and was incurred in the redemption of a former shareholder's ownership
coincident with the sale to Christiana. This obligation is guaranteed by
Christiana.
The 1994 consolidated balance sheet includes borrowings related to
Prideco. As discussed in Note B, the Company disposed of its investment in
Prideco on June 30, 1995.
Future maturities of consolidated long-term indebtedness are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30 WISCOLD TLC GROUP CHRISTIANA TOTAL
---------- ------- --------- ---------- -----
<S> <C> <C> <C> <C>
1996 -- $1,679,000 -- $ 1,679,000
1997 $ 4,123,000 765,000 -- 4,888,000
1998 26,150,000 908,000 $2,286,000 29,344,000
1999 -- 2,011,000 -- 2,011,000
2000 -- 161,000 -- 161,000
Thereafter -- 1,852,000 -- 1,852,000
</TABLE>
The weighted average interest rate paid on short term borrowings, all of
which was attributable to TLC, was 7.69% and 6.62% for fiscal 1995 and 1994,
respectively.
D. INCOME TAXES:
The Income Tax Provision consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------------------------
1995 1994 1993
---------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 1,866,000 $ 2,372,000 $ 1,384,000
State 66,000 367,000 531,000
Deferred 6,129,000 (483,000) (103,000)
----------------------------------------------
$ 8,061,000 $ 2,256,000 $ 1,812,000
==============================================
</TABLE>
25
<PAGE> 26
The components of Deferred Income Taxes are:
<TABLE>
<CAPTION>
AT JUNE 30
----------------------------
1995 1994
----------------------------
<S> <C> <C>
Deferred Tax Assets:
Alternative Minimum Tax $ 1,279,000 $ 1,131,000
Other 817,000 719,000
----------------------------
Total Deferred Tax Asset $ 2,096,000 $ 1,850,000
----------------------------
Deferred Tax Liabilities:
Condemnation Proceeds $ 5,259,000 $ 5,259,000
Tax Over Book Depreciation 6,752,000 5,581,000
Investment in Joint Venture 1,730,000 1,730,000
Prideco Merger Transaction 4,667,000 --
Installment Sale 418,000 433,000
Unrealized Securities Gains 1,232,000 --
Other 1,313,000 1,172,000
----------------------------
Total Deferred Tax Liability $21,371,000 $14,175,000
----------------------------
Net Deferred Tax Liability $19,275,000 $12,325,000
============================
</TABLE>
A reconciliation of the statutory Federal income tax rate to the
Company's effective tax rate follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------
1995 1994 1993
-------------------------
<S> <C> <C> <C>
Statutory Federal Income Tax Rate 34% 34% 34%
Increase (Reduction) in Taxes Resulting From:
State Income Tax, Net 5 3 8
Municipal Bond Interest (1) -- (1)
Tax on Prideco book/tax basis difference 3 -- --
Other 1 1 1
-------------------------
42% 38% 42%
=========================
</TABLE>
E. EMPLOYEE BENEFIT PLANS:
The Company has 295,000 shares of its common stock reserved for issuance
under a stock option plan, which permits the granting of options as well as
appreciation rights and awards. During fiscal 1995, options for a total of
5,000 shares were granted to a Christiana employee at an exercise price of
$28.8125. During fiscal 1994, options for a total of 35,000 shares were
granted to seven TLC, Wiscold and Christiana executives at exercise prices
ranging from $26.00 to $27.125 per share. At June 30, 1995 and 1994, 27.4% and
15.4%, respectively, of total options granted were exercisable. The remaining
options are exercisable over the next nine years.
26
<PAGE> 27
Changes in stock options outstanding are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
OPTIONS PER OPTION
-------- ---------------
<S> <C> <C>
Balance, June 30, 1992 -0-
Options Granted 116,250 $33.50 - 34.375
-------- ---------------
Balance, June 30, 1993 116,250 33.50 - 34.375
Options Granted 35,000 26.00 - 27.125
-------- ---------------
Balance, June 30, 1994 151,250 26.00 - 34.375
Options Granted 5,000 28.8125
Options Canceled 5,000 27.125
-------- ---------------
Balance, June 30, 1995 151,250 26.00 - 34.375
======== ===============
</TABLE>
The Company has 401(k) plans covering Christiana, Wiscold and TLC
employees. The costs under these plans have not been material. The Company does
not provide post employment medical or life insurance benefits.
F. COMMITMENTS:
The TLC Group has operating leases for warehousing and office facilities.
Rental expense under these leases was $5,100,000 in 1995. At June 30, 1995,
future minimum lease payments under these operating leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-----------------------
<S> <C>
1996 $ 5,756,000
1997 4,667,000
1998 2,503,000
1999 2,330,000
2000 2,121,000
</TABLE>
27
<PAGE> 28
G. MARKET SEGMENT INFORMATION
The Company was engaged in primarily two distinct lines of business,
namely, the manufacture of industrial products and the operation of
warehousing, logistic services and rental properties.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------------------------------
1995 1994 1993
---------------------------------------------------
<S> <C> <C> <C>
REVENUES
Industrial Products $ 55,239,000 $ 46,428,000 $ 29,299,000
Warehousing and Rental Operations 71,642,000 43,725,000 17,464,000
---------------------------------------------------
Total $ 126,881,000 $ 90,153,000 $ 46,763,000
===================================================
EARNINGS FROM OPERATIONS
Industrial Products $ 4,226,000 $ 3,222,000 $ (770,000)
Warehousing and Rental Operations 7,533,000 4,858,000 3,807,000
Corporate Expenses (1,435,000) (1,658,000) (1,585,000)
---------------------------------------------------
Total $ 10,324,000 $ 6,422,000 $ 1,452,000
===================================================
ASSETS
Industrial Products * $ -- $ 30,372,000 $ 22,698,000
Warehousing and Rental Operations 91,992,000 95,538,000 85,638,000
Corporate 42,941,000 21,655,000 14,496,000
---------------------------------------------------
Total $ 134,933,000 $ 147,565,000 $ 122,832,000
===================================================
CAPITAL EXPENDITURES
Industrial Products $ 682,000 $ 979,000 $ 575,000
Warehousing and Rental Operations 10,249,000 6,306,000 10,298,000
---------------------------------------------------
Total $ 10,931,000 $ 7,285,000 $ 10,873,000
===================================================
DEPRECIATION AND AMORTIZATION
Industrial Products $ 1,256,000 $ 1,240,000 $ 1,085,000
Warehousing and Rental Operations 6,885,000 4,950,000 3,187,000
Corporate 66,000 65,000 59,000
---------------------------------------------------
Total $ 8,207,000 $ 6,255,000 $ 4,331,000
===================================================
</TABLE>
* On June 30, 1995 Prideco was merged with a unit of Energy Ventures, Inc.
There were no intersegment sales. Corporate assets consist primarily of
cash equivalents, short-term investments and marketable securities.
28
<PAGE> 29
CHRISTIANA COMPANIES, INC.
H. PARENT COMPANY ONLY STATEMENTS
Following are the Parent Company only condensed Balance Sheet,
Statement of Operations and Statement of Cash Flows:
PARENT COMPANY ONLY STATEMENTS
CONDENSED BALANCE SHEET
AS OF JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash Equivalents and Short-Term Investments $ 2,823,000 $17,918,000
Accounts Receivable and Other Current Assets 1,590,000 1,329,000
Long-Term Assets:
Investment in EVI 35,077,000 --
Investments in and Advances to Subsidiaries 34,418,000 39,914,000
Manufacturing Fixed Assets, Net 11,395,000 12,084,000
Other Assets 987,000 1,622,000
----------- -----------
TOTAL ASSETS $86,290,000 $72,867,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 2,515,000 $ 3,385,000
Long-Term Liabilities:
Deferred Federal and State Income Taxes 14,613,000 8,598,000
Other Liabilities 3,160,000 796,000
----------- -----------
Total Liabilities 20,288,000 12,779,000
----------- -----------
Total Shareholders' Equity 66,002,000 60,088,000
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $86,290,O00 $72,867,000
=========== ===========
</TABLE>
29
<PAGE> 30
CHRISTIANA COMPANIES, INC.
PARENT COMPANY ONLY STATEMENTS
CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Revenues:
Product Sales $ -- $ -- $ 2,266,000
Warehousing, Rentals and Related Services 10,943,000 9,600,000 6,912,000
----------- ------------- ------------
10,943,000 9,600,000 9,178,000
----------- ------------- -----------
Costs and Expenses:
Cost of Sales -- -- 1,777,000
Warehousing, Rentals and Related Expenses 6,682,000 4,506,000 3,462,000
Selling, General and Administrative Expenses 1,582,000 3,369,000 2,611,000
------------ ------------ -----------
8,264,000 7,875,000 7,850,000
------------ ------------ -----------
Earnings From Operations 2,679,000 1,725,000 1,328,000
Other Income (Expense):
Interest Income (Expense), Net (1,304,000) (1,111,000) (862,000)
Other Income (Expense) 8,673,000 (3,614,000) (226,000)
----------- ----------- -----------
Total Other Income (Expense) 7,369,000 (4,725,000) (1,088,000)
---------- ----------- ----------
Earnings Before Income Taxes 10,048,000 (3,000,000) 240,000
Income Tax Provision (Benefit) 4,019,000 (1,200,000) 154,000
---------- ---------- ----------
Net Earnings (Loss) Before Equity in Undistributed
Net Earnings of Subsidiaries 6,029,000 (1,800,000) 86,000
Equity in Undistributed Net Earnings of
Subsidiaries 4,416,000 4,921,000 2,855,000
------------ ------------ -----------
Net Earnings $ 10,445,000 $ 3,121,000 $ 2,941,000
============ =========== ============
</TABLE>
30
<PAGE> 31
CHRISTIANA COMPANIES, INC.
PARENT COMPANY ONLY STATEMENTS
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 10,445,000 $ 3,121,000 $ 2,941,000
Adjustments to Reconcile Net Income to Net Cash
Provided By (Used In) Operating Activities:
Equity in Undistributed Net Income of
Subsidiaries (4,416,000) (4,921,000) (2,855,000)
Gain on Merger of Prideco (10,050,000) -- --
Depreciation and Amortization 828,000 762,000 611,000
Loss on Sale of Chicago Gear Works -- -- 60,000
Deferred Income Tax Expenses (Benefit) 6,015,000 710,000 (413,000)
Changes in Assets and Liabilities 1,868,000 (2,402,000) 5,092,000
----------- ----------- -----------
Net Cash Provided (Used) By Operating Activities 4,690,000 (2,730,000) 5,436,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Short-Term Investments 11,742,000 (11,064,000) 11,297,000
Capital Expenditures (143,000) (583,000) (3,989,000)
Investment In Subsidiaries (2,546,000) 5,183,000 (16,780,000)
Investment In Energy Ventures, Inc. (13,291,000) -- 460,000
----------- ----------- -----------
Net Cash Used In Investing Activities (4,238,000) (6,464,000) (9,012,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock Repurchase (3,805,000) -- --
----------- ----------- -----------
Net Cash Used In Financing Activities (3,805,000) -- --
NET DECREASE IN CASH AND CASH
EQUIVALENTS (3,353,000) (9,194,000) (3,576,000)
BEGINNING CASH AND CASH EQUIVALENTS, JULY 1 3,354,000 12,548,000 16,124,000
----------- ----------- -----------
ENDING CASH AND CASH EQUIVALENTS, JUNE 30 $ 1,000 $ 3,354,000 $12,548,000
=========== =========== ===========
</TABLE>
31
<PAGE> 32
CHRISTIANA COMPANIES, INC.
QUARTERLY FINANCIAL INFORMATION
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
SEPTEMBER DECEMBER MARCH JUNE TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FISCAL 1995
Product Sales $12,900,000 $12,790,000 $14,221,000 $15,328,000 $55,239,000
Warehousing and
Rental Revenue 19,169,000 17,408,000 17,356,000 17,709,000 71,642,000
Earnings From Operations 3,973,000 2,355,000 2,007,000 1,989,000 10,324,000
Earnings Before Taxes and
Minority Interest 4,391,000 1,850,000 1,425,000 11,524,000 19,190,000
Net Earnings 2,515,000 1,030,000 741,000 6,159,000 (1) 10,445,000
Earnings Per Share $0.46 $0.20 $0.14 $1.18 $1.98
FISCAL 1994
Product Sales $10,769,000 $10,695,000 $12,271,000 $12,693,000 $46,428,000
Warehousing and
Rental Revenue 5,761,000 5,496,000 16,030,000 16,438,000 43,725,000
Earnings From Operations 1,550,000 1,407,000 1,693,000 1,772,000 6,422,000
Earnings Before Taxes and
Minority Interest 1,735,000 2,577,000 2,012,000 (417,000)(2) 5,907,000
Net Earnings 987,000 1,487,000 1,069,000 (422,000) 3,121,000
Earnings Per Share $0.19 $0.29 $0.20 ($0.09) $0.59
</TABLE>
(1) On June 30, 1995 Prideco was merged with a unit of Energy Ventures, Inc.
(2) Includes the non-operating writedown of $2,562,000 on a Chicago office
building.
FIVE YEAR FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-----------------------------------------------------------------------------------
1995 (1) 1994 1993 1992 1991
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product Sales $ 55,239,000 $46,428,000 $ 29,299,000 $ 36,196,000 $ 34,645,000
Warehousing and
Rental Revenues 71,642,000 43,725,000 17,464,000 3,110,000 3,955,000
------------ ----------- ------------ ------------ ------------
126,881,000 90,153,000 46,763,000 39,306,000 38,600,000
Net Earnings 10,445,000 3,121,000 2,941,000 5,218,000 11,917,000
Earnings Per Share $1.98 $0.59 $0.57 $1.01 $2.30
Total Assets 134,933,000 147,565,000 122,832,000 85,894,000 85,135,000
Long-Term Liabilities 57,287,000 67,154,000 61,585,000 29,293,000 31,073,000
Shareholders' Equity 66,002,000 60,088,000 51,461,000 47,862,000 42,644,000
</TABLE>
(1) On June 30, 1995 Prideco was merged with a unit of Energy Ventures, Inc.
32
<PAGE> 33
CHRISTIANA COMPANIES, INC.
CORPORATE INFORMATION
<TABLE>
<CAPTION>
DIRECTORS
<S> <C>
SHELDON B. LUBAR, Chairman and Chief RAYMOND F. LOGAN, Vice President -- Real
Executive Officer Estate
NICHOLAS F. BRADY, Chairman of Darby DAVID J. LUBAR, President, Lubar & Co.,
Advisors, Inc. Incorporated
PAUL A. CAMERON, Corporate Director ALBERT O. NICHOLAS, President of Nicholas
Company, Inc.
WILLIAM T. DONOVAN, Executive Vice GARY R. SARNER, President and Chief
President and Chief Financial Officer Operating Officer
OFFICERS
SHELDON B. LUBAR, Chairman and Chief RAYMOND F. LOGAN, Vice President -- Real
Executive Officer Estate
GARY R. SARNER, President and Chief BETTY J. WHITE, Treasurer, Controller and
Operating Officer Assistant Secretary
WILLIAM T. DONOVAN, Executive Vice DAVID E. BECKWITH, Secretary
President and Chief Financial Officer
TRANSFER AGENT AND REGISTRAR EXCHANGE LISTING
Firstar Trust Company Christiana Companies, Inc. common stock is listed on
P.O. Box 2077 the New York Stock Exchange (Symbol CST).
Milwaukee, Wisconsin 53201
ANNUAL MEETING CORPORATE HEADQUARTERS
The Christiana Companies, Inc. Annual Meeting of 777 East Wisconsin Avenue
Shareholders will be held at 9:00 a.m. on October 31, Suite 3380
1995, at the Galleria Conference Room, Firstar Center, Milwaukee, WI 53202
777 East Wisconsin Avenue, Milwaukee, Wisconsin. Proxy Telephone: (414) 291-9000
material will be mailed to shareholders of record at Facsimile: (414) 291-9061
September 15, 1995.
</TABLE>
33
<PAGE> 34
CHRISTIANA COMPANIES, INC.
EXHIBITS
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1995
34
<PAGE> 35
INDEX TO EXHIBITS
EXHIBIT NO. BRIEF DESCRIPTION OF EXHIBIT
3A Registrant's Articles of Incorporation as modified by
Articles of Merger. Incorporated by reference to
Exhibit 19 of Registrant's Form 10-Q for the quarter
ended September 30, 1992.
3B Registrant's current bylaws. Incorporated by
reference to Exhibit 19A of Registrant's Form 10-Q
for the quarter ended September 30, 1992.
9 Voting Trust Agreement dated December 29, 1992 among
Sheldon B. Lubar, as voting trustee, et al.
Incorporated by reference to Exhibit 9 of
Registrant's Form 10-K for the year ended June 30,
1993.
10A The Wiscold Asset Purchase Agreement, dated August
12, 1992, by and among The Christiana Companies,
Inc., Tierrasanta, Inc., WI Acquisition Corp.,
Wiscold, Inc. and the equity holders of Wiscold, Inc.
Incorporated by reference to Exhibit 2.1 of
Registrant's Form 8-K dated September 15, 1992.
10B The Wiscold Amendment No. 1 to Asset Purchase
Agreement, dated August 18, 1992, by and among The
Christiana Companies, Inc., Tierrasanta, Inc., WI
Acquisition Corp., Wisconsin Refrigerated Services,
Inc., Wiscold, Inc. and the equity holders of
Wiscold, Inc. Incorporated by reference to Exhibit
2.2 of Registrant's Form 8-K dated September 15,
1992.
10C The Wiscold Revolving Credit Agreement, dated as of
September 1, 1992, by and among the WI Acquisition
Corp., Tierrasanta, Inc., The Christiana Companies,
Inc., Bank One, Milwaukee, N.A., Harris Trust and
Savings Bank, First Bank Milwaukee, N.A. and Firstar
Bank Milwaukee, N.A., as agent for the Banks.
10D Registrant's 1985 Stock Option Plan, as amended to
date. Incorporated by reference to Exhibit 10B to
Registrant's Form 10-Q for quarter ended December 31,
1992.
10E The TLC Group Agreement and Plan of Reorganization
dated as of November 24, 1994 by and among Christiana
Companies, Inc., TLC Acquisition Corp., TLC Group,
Inc. and certain equity holders of TLC Group, Inc.
Incorporated by reference to Exhibit 2.1 of
Registrant's Form 8-K dated January 18, 1994.
10F The Prideco, Inc. Agreement and Plan of Merger dated
May 22, 1995 by and among Prideco, Inc., the equity
holders of Prideco, Inc., Energy Ventures, Inc. and
Grant Acquisition Company and Amendment No. 1
thereto. Incorporated by reference to Exhibits 2.1
and 2.2 of Registrant's Form 8-K dated July 17,
1995.
19 Letter Agreement dated August 24, 1993 between
Registrant and Raymond F. Logan. Incorporated by
reference to Exhibit 19 of Registrant's Form 10-K for
the year ended June 30, 1993.
21 Registrant's Subsidiaries.
27 Financial Data Schedule.
28 Form 10-K of Energy Ventures, Inc. *
* To be filed when available.
35
<PAGE> 1
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made and entered into as of
this _____ day of September, 1992, by and among WI ACQUISITION CORP. (the
"Company"), a Wisconsin corporation, which has its principal office at Suite
3380, 777 East Wisconsin Avenue, Milwaukee, Wisconsin, BANK ONE, MILWAUKEE, NA
("Bank One"), a national banking association, which has its principal office at
111 East Wisconsin Avenue, Milwaukee, Wisconsin, FIRST WISCONSIN NATIONAL BANK
OF MILWAUKEE ("First Wisconsin Bank"), a national banking association, which
has its principal office at 777 East Wisconsin Avenue, Milwaukee, Wisconsin,
and HARRIS TRUST AND SAVINGS BANK ("Harris Bank"), an Illinois banking
corporation, which has its principal office at 111 West Monroe Street, Chicago,
Illinois (individually, each of the banks shall be referred to as a "Bank," and
collectively the banks shall be referred to as the "Banks"), and First
Wisconsin Bank, as Agent for the Banks ("Agent").
RECITALS
The Company, TSI and CST have entered into the Purchase
Agreement, pursuant to which the Company, TSI and CST will purchase the assets
of the Seller. The Company has also created WRS to hold certain assets
acquired from the Seller. The Company has requested that the Banks extend a
credit not to exceed $44,000,000 in principal amount to permit the Company to
consummate its transactions under the Purchase Agreement and to loan funds to
TSI and CST to consummate their transactions under the Purchase Agreement, and
to provide the Company with working capital. The Banks have agreed to extend
credit to the Company, provided that (a) the Company fulfills all the terms and
conditions set forth in this Agreement and in the Related Documents, and (b)
simultaneously upon the disbursement of the initial proceeds of the Loans, the
Company consummates the Related Transactions.
NOW, THEREFORE, in consideration of the above recitals, the
mutual agreements contained herein and other good and valuable consideration,
the parties hereto agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
<PAGE> 2
1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"Affiliate" shall mean any Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, another Person. A Person shall be deemed to control another
Person for the purposes of this definition if the controlling Person directly
or indirectly, either individually or together with (in the case of an
individual) his spouse, lineal descendants and ascendants and brothers or
sisters by blood or adoption or spouses of such descendants, ascendants,
brothers and sister, owns 10% or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, common directors, trustees
or officers, by contract or otherwise.
"Agreement" shall mean this Revolving Credit
Agreement, as amended, supplemented or modified from time to time.
"Assignment of Indemnity" shall mean an assignment to
the Agent of the Seller's indemnification of the Company, TSI, CST and WRS
pursuant to the Purchase Agreement, acknowledged by and consented to by the
Seller.
"Borrowing Date" shall have the meaning assigned
thereto in Section 2.1(d).
"Business Day" shall mean a day other than a Saturday
or Sunday on which banks are open for business in Milwaukee, Wisconsin and
Chicago, Illinois, provided, however, that for purposes of LIBOR Rate Loans,
the term "Business Day" shall mean only those days on which dealings in U.S.
dollar deposits are carried out by U.S. financial institutions in the London
interbank market.
"Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"Collateral" means all of the Company's assets
granted to the Banks (or the Agent on behalf of the Banks) as collateral by the
Related Documents.
"Collateral Assignments" shall mean the collateral
assignments from the Company to the Agent of (a) the mortgages granted by TSI
to the Company to secure the TSI Note with all real estate acquired by TSI from
the
-2-
<PAGE> 3
Seller, (b) the assignment of leases and rents granted by TSI to the Company to
secure the TSI Note with the leases of all real estate acquired by TSI from the
Seller, (c) the security agreement and financing statements granted by CST to
the Company to secure the CST Note with all of the assets acquired by CST from
the Seller, (d) the subordinated debt purchase agreement of even date herewith
between CST and the Company, and (e) the management contract of even date
herewith between the Company and CST.
"Commitment" shall mean the obligation of the Banks
to make aggregate Loans of up to the Loan Commitment to the Company and the
separate and independent obligation of each Bank to make Loans to the Company
in not more than the following amounts reduced ratably among the Banks as the
Loan Commitment reduces and subject to adjustment pursuant to Section 9.14(b):
<TABLE>
<S> <C>
Bank One $14,000,000
First Wisconsin Bank $11,500,000
Harris Bank $18,500,000
</TABLE>
"CST" shall mean The Christiana Companies, Inc., a
Delaware corporation.
"CST Note" shall mean the nonrecourse promissory note
of even date herewith from CST to the Company in the original stated principal
amount of $25,500,000, which shall be pledged by the Company to the Agent under
the Pledge Agreement.
"Default" shall mean an Event of Default or an event
which with the giving of notice or the passage of time or both would constitute
an Event of Default.
"Employee Plan" shall mean any savings, profit
sharing, or retirement plan or any deferred compensation contract or other plan
maintained for employees of the Company and covered by Title IV of ERISA,
including any "multiemployer plan" as defined in ERISA.
"Environmental Law" shall mean any local, state or
federal law or other statute, law, ordinance, rule, code, regulation, decree or
order governing, regulating or imposing liability or standards of conduct
concerning the use, treatment, generation, storage, disposal or other handling
or release of any Hazardous Substance.
"Environmental Liability" shall mean any and all
liability arising under, resulting from or imposed by any Environmental Law.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of similar import,
together with the regulations and published
-3-
<PAGE> 4
interpretations thereunder, in each case as in effect from time to time.
"Event of Default" shall have the meaning assigned
thereto in Section 7.1.
"GAAP" shall mean those generally accepted accounting
principles and practices which are recognized as such by the American Institute
of Certified Public Accountants acting through its Accounting Principles Board
or by the Financial Accounting Standards Board or through other appropriate
boards or committees thereof and which are consistently applied for all periods
so as to properly reflect the financial condition, and the results of
operations and changes in financial position, of a Person.
"Government Authority" shall mean 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, and any corporation or other entity
owned or controlled through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty" or "Guaranties" shall mean the guaranties
of TSI and WRS in the form of Exhibits A and B, respectively, of the Company's
obligations to the Banks hereunder, including repayment of the Loans and
payment and performance under the Related Documents (other than TSI's and WRS'
guaranties).
"Hazardous Substances" shall mean any pollutant,
contaminant, waste or toxic or hazardous chemicals, wastes or substances,
including, without limitation, asbestos, urea formaldehyde insulation,
petroleum, PCB's, air pollutants, water pollutants, and other substances
defined as hazardous substances or toxic substances in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9061 et seq., Hazardous Materials Transportation Act, 49 U.S.C.
Section 1802, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., the Toxic Substance Control Act of 1976, as amended, 15 U.S.C.
Section 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C. Section 3251 et
seq., the Clean Air Act, 42 U.S.C. Section 1857 et seq., the Clean Water Act,
33 U.S.C. Section 1251 et seq, Chapter 144 of the Wisconsin Statutes, or any
other statute, rule, regulation or order of any Government Authority having
jurisdiction over the control of such wastes or substances, including but not
limited to the United States Environmental Protection Agency, the United States
Nuclear Regulatory Agency, the Wisconsin Department of Natural Resources and
the State of Illinois.
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"Indebtedness" shall mean at a particular time all
liabilities or obligations of a Person which would, in accordance with GAAP, be
included on the liability portion of a balance sheet, and shall include, to the
extent not included under GAAP all (i) indebtedness for borrowed money; (ii)
indebtedness for the deferred purchase price of property or services in respect
of which the Person is liable, contingently or otherwise, as obligor or
otherwise; (iii) any commitment by which the Person assures a creditor against
loss, including contingent reimbursement obligations with respect to letters of
credit; (iv) obligations which are evidenced by notes, acceptances or other
instruments; (v) indebtedness guaranteed in any manner by the Person, including
guaranties in the form of an agreement to repurchase or reimburse; (vi)
obligations under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases in respect of which obligations the Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations the Person assures a creditor against loss; (vii)
any unfunded obligation of the Person to an Employee Plan; and (viii) all
liabilities secured by any Lien on any Property owned by the Person even though
it has not assumed or otherwise become liable for the payment thereof.
"Leverage Ratio" shall mean the ratio of the Wiscold
Business Unit's Indebtedness less Subordinated Debt to Tangible Net Worth.
"LIBOR Index Rate" shall mean with respect to a LIBOR
Rate Loan for any Loan Period and determined for the Agent's portion of the
LIBOR Rate Loan, the rate of interest per annum determined by the Agent to be
the average offered rate for deposits in U.S. dollars for the applicable Loan
Period (rounded up to the next whole multiple of 1/100 of 1%) which appear on
the Reuters Screen LIBO 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) for the day two
Business Days prior to the first day of the applicable Loan Period. If fewer
than two offered rates appear for a Loan Period, then the applicable LIBOR Rate
shall be the average of the rates per annum (rounded up to the next whole
multiple of 1/100 of 1%) at which deposits for a period of time equal or
comparable to the applicable Loan Period in immediately available funds in
United States dollars are offered to the Agent two Business Days prior to the
beginning of such Loan Period by at least four major banks in the London
interbank eurodollar market as at or about 11:00 a.m. London time for delivery
on the first day of such Loan Period.
"LIBOR Rate" for any Loan Period shall mean a rate
per annum equal to the sum of (a) the quotient of the LIBOR Index
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<PAGE> 6
Rate divided by the difference (expressed as a decimal) computed by subtracting
the LIBOR Reserve Requirement from one, plus (b) the LIBOR Spread.
"LIBOR Rate Loans" shall mean Loans for which the
Company has selected the LIBOR Rate as the base rate of interest under Section
2.1.
"LIBOR Reserve Requirement" shall mean, with respect
to each Loan Period, the stated rate of all reserve requirements (including all
basic, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements
during such Loan Period) that is specified on the first day of such Loan Period
by the Board of Governors of the Federal Reserve System for determining the
reserve requirement with respect to eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board of Governors)
applicable to the Bank with the highest reserve requirement.
"LIBOR Spread" shall mean an amount equal to 2% per
annum, which may be reduced on each October 1 commencing October 1, 1993 (based
upon the financial statements for the preceding fiscal year end) or increased
at any time (based upon the most recent quarterly financial statements), to 2%
per annum so long as the Leverage Ratio is 2 to 1 or greater, 1.75% per annum
so long as the Leverage Ratio is less than 2 to 1 but equal to or greater than
1.5 to 1, 1.5% per annum so long as the Leverage Ratio is less than 1.50 to 1
but equal to or greater than 1.25 to 1, and 1.25% per annum so long as the
Leverage Ratio is less than 1.25 to 1.
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), deed of trust, charge, encumbrance, preference, priority, security
interest or other security agreement or preferential arrangement of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Loan Account" shall mean an account on the books of
each Bank in which will be recorded pursuant to Section 2.4 Loans and advances
made by the Banks to the Company, payments made upon such Loans and other
debits and credits pertaining to the Loans or the Collateral.
"Loan Commitment" shall mean an aggregate principal
amount not to exceed $44,000,000 from the date hereof through
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December 30, 1992, $43,500,000 from December 31, 1992 through March 30, 1993,
$43,200,000 from March 31, 1993 through June 29, 1993, $42,700,000 from June
30, 1993 through September 29, 1993, $41,200,000 from September 30, 1993
through December 30, 1993, $40,050,000 from December 31, 1993 through March 30,
1994, $39,550,000 from March 31, 1994 through June 29, 1994, $39,050,000 from
June 30, 1994 through September 29, 1994, $36,900,000 from September 30, 1994
through December 30, 1994, $35,750,000 from December 31, 1994 through March 30,
1995, $35,250,000 from March 31, 1995 through June 29, 1995, $34,750,000 from
June 30, 1995 through September 29, 1995, $32,600,000 from September 30, 1995
through December 30, 1995, $31,450,000 from December 31, 1995 through March 30,
1996, $30,950,000 from March 31, 1996 through June 29, 1996, $30,450,000 from
June 30, 1996 through September 29, 1996, $28,300,000 from September 30, 1996
through December 30, 1996, $27,150,000 from December 31, 1996 through March 30,
1997, $26,650,000 from March 31, 1997 through June 29, 1997, $26,150,000 from
June 30, 1997 through September 29, 1997, $24,000,000 from September 30, 1997
through December 30, 1997, $0 after December 30, 1997.
"Loan Period" shall mean with respect to each LIBOR
Rate Loan, the period commencing on the date of such Loan and ending one, two,
three or four months thereafter, as the Company may elect in the notice of
borrowing under Section 2.1(c), provided that (a) any Loan Period which would
otherwise end on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless the Loan Period would thereby be extended
into the next calendar month, in which case the preceding Business Day, and (b)
no Loan Period shall extend beyond the Termination Date for the Loans.
"Loans" shall mean the loans to the Company pursuant
to Section 2.1 evidenced by the Notes.
"Material Adverse Change" shall mean a Default or a
material adverse change in the business, prospects or condition (financial or
otherwise) of the Wiscold Busines Unit or in the Property of the Wiscold
Business Unit.
"Maximum Available Commitment" shall mean at any
particular time, an amount equal to the excess (if any) of the Loan Commitment,
less the aggregate unpaid principal amount outstanding at such time of all
Loans made by the Banks.
"Net Income" shall mean, for any period, the net
after-tax income (or net loss) of a Person on a consolidated basis determined
in accordance with GAAP, without deducting interest accruing to CST on the
Subordinated Debt and excluding the after-tax effect of the sum of (a) any net
earnings of any Subsidiary
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unavailable for the payment of dividends, (b) interest in any net earnings of
Persons in which a Person has an ownership interest, other than Subsidiaries,
not actually received, (c) gains or losses arising from a write-up of assets,
(d) gains or losses arising from the acquisition of any securities of the
Person or any subsidiary, (e) gains or losses (net of any tax effect) resulting
from the sale of any capital assets, (f) amortization of any deferred credit
arising from the acquisition of any Person or in the property or assets of any
Person, (g) earnings of any Subsidiary prior to the date it became a
Subsidiary, (h) earnings acquired by the Person or any Subsidiary through
purchase, merger or consolidation or otherwise for any period prior to the date
of acquisition, (i) proceeds of any life insurance policies payable to the
Person or any Subsidiary.
"Notes" shall mean the Notes described in Section
2.1(b) and any note(s) or obligation(s) issued in substitution, replacement or
renewal thereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Liens" shall have the meaning assigned
thereto in Section 6.3.
"Person" shall mean an individual, partnership,
corporation, firm, enterprise, business trust, joint stock company, trust,
unincorporated association, joint venture, Government Authority or other entity
of whatever nature.
"Pledge Agreement" shall mean the pledge agreement
dated as of the date hereof between the Company and the Agent in the form of
Exhibit C.
"Prime Rate" shall mean the interest rate publicly
announced by the First Wisconsin Bank from time to time in Milwaukee, Wisconsin
as its prime rate for interest rate determinations, which is solely a reference
rate and may be at, above or below the rate or rates at which the First
Wisconsin Bank lends to other Persons. Any change in the Prime Rate shall
become effective as of the opening of business on the day on which such change
is publicly announced by the First Wisconsin Bank.
"Property" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
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<PAGE> 9
"Pro Rata" shall mean ratably among the Banks in
proportion to the ratio that their respective Commitments bear to the aggregate
Commitment.
"Purchase Agreement" shall mean the asset purchase
agreement dated August 12, 1992 between the Company, TSI, CST and the Seller, a
true and complete copy of which, including all schedules and exhibits thereto,
was delivered by the Company to the Banks.
"Regulatory Change" shall mean the adoption or
amendment, after the date of this Agreement, of any federal or state law,
regulation, interpretation, direction, policy, guideline or court decision
applicable to a Bank or the London interbank eurodollar market which increases
the cost to the Bank of making or maintaining the Loans or reduces the rate of
return to the Bank (by reduction of principal, interest or otherwise) on the
Loans by subjecting the Bank to any tax, duty or other charge with respect to
the Loans, imposing any reserve requirement (except any reserve requirement
reflected in the LIBOR Index Rate), affecting the treatment of any Loan for
purposes of calculating the appropriate amount of capital to be maintained by
the Bank or any corporation controlling the Bank, or imposing on the Bank any
other condition affecting the Loans or the Bank's obligation to make the Loans.
"Related Documents" shall mean the Notes, the
Guaranties, the Security Agreements, the Collateral Assignments, the Pledge
Agreement and each other certificate, resolution, or other document required or
contemplated to be made or addressed to the Agent or the Banks hereunder.
"Related Transactions" shall mean (a) consummation of
the transactions contemplated by the Purchase Agreement, (b) the purchase for
cash of no less than $1,975,000 of common stock of the Company by TSI, (c) the
purchase for cash of the Subordinated Debt by CST, (d) consummation of the
initial transactions evidenced by the TSI Note and the CST Note, and (e) the
execution of an employment agreement between the Company and Gary Sarner
reasonably acceptable to the Banks.
"Required Banks" shall mean Banks whose Commitments
aggregate 100% of the aggregate Commitments.
"Requirement of Law" shall mean as to any matter or
Person, the Certificate or Articles of Incorporation and Bylaws or other
organizational or governing documents of such Person, and any law (including
any Environmental Law), ordinance, treaty, rule, regulation, order, decree,
determination or other requirement having the force of law relating to such
matter or Person and,
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where applicable, any interpretation thereof by any Governmental Authority.
"Security Agreements" shall mean the Security
Agreements in the form of Exhibits D and E, respectively, between the Company
and the Agent and between WRS and the Agent each dated as of the date hereof,
as amended, supplemented or modified from time to time.
"Seller" shall mean Wiscold, Inc., a Wisconsin
corporation.
"Subordinated Debt" shall mean the $3,000,000 of
subordinated debt of the Company purchased by CST as part of the Related
Transactions.
"Subordination Agreement" shall mean the debt
subordination agreement among the Company, CST and the Agent in the form of
Exhibit F.
"Subsidiary" shall mean as to any Person, a
corporation of which shares of stock having ordinary voting power (other than
stock having such power only by reason of the happening of a contingency that
has not occurred) to elect a majority of the board of directors or other
managers of such corporation 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.
"Tangible Net Worth" shall be determined on an
unconsolidated basis in accordance with GAAP and mean the excess, if any, of
the assets of a Person over all liabilities of the Person, excluding (a) from
assets of the Person any goodwill, patents, trademarks, trade names,
copyrights, operating rights, organizational or developmental expenses,
unamortized debt discount or expense, unamortized deferred charges, and other
assets properly classified as intangible assets (including noncompetition
covenants), and any write-ups of assets subsequent to the date of this
Agreement, and (b) in the case of the Wiscold Business Unit, from liabilities,
the Subordinated Debt.
"Termination Date" shall mean December 31, 1997 or
such earlier date on which the Loans shall terminate as provided in Section
7.2.
"TSI" shall mean Tierrasanta, Inc., a Delaware
corporation which is a wholly-owned Subsidiary of CST.
"TSI Note" shall mean the promissory note of even
date herewith from TSI to the Company in the original stated
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<PAGE> 11
principal amount of $12,500,000, which shall be pledged by the Company to the
Agent under the Pledge Agreement.
"UCC" shall mean the Uniform Commercial Code as the
same may from time to time be in effect in the State of Wisconsin.
"Wiscold Business Unit" shall mean the consolidated
cold storage business, operations, assets and liabilities of the Company, WRS,
TSI, and CST, including the business and assets acquired from the Seller
pursuant to the Purchase Agreement and operated by the Company, WRS, TSI and
CST from and after the date hereof.
"WRS" shall mean Wisconsin Refrigerated Services,
Inc., a Wisconsin corporation which is a wholly-owned subsidiary of the
Company.
1.2 Accounting and Financial Determinations. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be
made, for the purpose of this Agreement, such determination or calculation
shall be made on an unconsolidated basis so as to include only a Person and not
its Subsidiaries, if any, in each such calculation and, to the extent
applicable and except as otherwise specified in this Agreement, shall be made
in accordance with GAAP; provided, however, that if any change in GAAP from
those applied in the preparation of the financial statements referred to in
Section 5.3 is occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting
Standards Board or the Accounting Principles Board of the American Institute of
Certified Public Accountants (or successors thereto or agencies with similar
functions), the initial announcement of which change is made after the date
hereof, results in a change in the method of calculation of financial
covenants, standards or terms found in Section 6, the parties hereto agree to
enter into good faith negotiations in order to amend such provisions so as to
reflect such changes with the desired result that the criteria for evaluating
the Company's financial condition shall be the same after such changes as if
such changes had not been made; and provided, further, that until such time as
the parties hereto agree upon such amendments, such financial covenants,
standards and terms shall be construed and calculated as though such change had
not taken place. When used herein, the term "financial statement" shall
include the notes and schedules thereto.
1.3 Interpretation. The words "hereof," "herein" and
"hereunder" and words of a similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Section, Schedule and
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Exhibit references contained in this Agreement are references to sections,
schedules and exhibits in or to this Agreement unless otherwise specified. Any
reference in any Section or definition to any clause is, unless otherwise
specified, to such clause of such Section or definition.
1.4 Other Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP, and all other terms contained in this Agreement (and which are not
otherwise specifically defined herein) shall have the meanings provided in the
UCC to the extent the same are used or defined therein unless the context
otherwise requires. Terms defined in other sections of this Agreement shall
have the meanings set forth therein.
SECTION 2 AMOUNTS AND TERMS OF LOANS
2.1 Revolving Loans.
(a) Prior to the Termination Date and so long as
no Default shall have occurred and be continuing, the Banks agree
separately and independently (and not jointly), on the terms and
conditions set forth in this Agreement, to extend to the Company
revolving credit loans (the "Loans") from time to time in amounts not
to exceed in the aggregate at any one time outstanding the Loan
Commitment. Loans shall be made by the Banks Pro Rata. Subject to
the terms of this Agreement, the Company may borrow, repay (in whole
or in part) and reborrow the Loans prior to the Termination Date. No
more than $4,000,000 of the Loans outstanding at any time may be Loans
which are not LIBOR Rate Loans. Notwithstanding the preceding
sentence, the Company may have more than $4,000,000 of Loans which are
not LIBOR Rate Loans outstanding at one time (i) to the extent the
Company is unable to obtain LIBOR Rate Loans as a result of the Banks'
action under Section 2.1(f), or (ii) during any period in which either
the Prime Rate exceeds the LIBOR Rate (for a Loan Period of 90 days)
or the Company pays the Banks additional interest on such Loans at a
rate per annum equal to the excess of the LIBOR Rate (for a Loan
Period of 90 days) over the Prime Rate.
(b) The Loans made by each of the Banks shall be
evidenced by a promissory note of the Company, in the form of Exhibit
G hereto with appropriate insertions (individually, a "Note" and
collectively, the "Notes"), payable to the order of that Bank. Each
Note shall (i) be dated the date hereof, (ii) be stated to mature on
the Termination Date, (iii) bear interest on the unpaid principal
amount as provided herein,
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and (iv) be in the aggregate principal amount of each Bank's maximum
Pro Rata share of the Loan Commitment, notwithstanding that the
Company shall be obligated to pay only the unpaid principal amount
thereof from time to time outstanding together with accrued interest
thereon.
(c) The Company will pay all accrued and unpaid
interest on the Loans on the first day of each month. Prior to an
Event of Default, interest shall accrue on the aggregate unpaid
principal amount from time to time outstanding under the Notes at a
rate per annum equal to (i) the LIBOR Rate on the LIBOR Rate Loans,
and (ii) the Prime Rate on Loans which are not LIBOR Rate Loans.
Interest shall be computed and adjusted daily based on the actual
number of days elapsed in a year of 360 days. All outstanding unpaid
principal and accrued interest of the Loans shall be due and payable
on December 31, 1997. The Agent may debit to the Company's Loan
Account all interest payments when due without prior notice to or
consent of the Company.
(d) The Company may obtain Loans by making a
request therefor to the Agent, orally or in writing. Such request
shall specify a Business Day prior to the Termination Date on which
such Loans are to be made (the "Borrowing Date"), shall be received by
the Agent by Noon three Business Days before the Borrowing Date in the
case of LIBOR Rate Loans or otherwise by Noon of the Borrowing Date,
and shall specify the amount of the Loans requested, whether the Loans
are to be LIBOR Rate Loans and, if so, the requested Loan Period;
provided, however, that within three days after any oral request for a
Loan, the Agent shall receive from the Company a written confirmation
in form acceptable to the Agent confirming the Company's Loan request,
and the Banks' obligation to make further Loans hereunder shall be
suspended until such confirmation has been received by the Agent. The
Company shall be obligated to repay all Loans notwithstanding the
failure of the Agent to receive such confirmation, and notwithstanding
the fact that the person requesting the Loan was not in fact
authorized to do so. Each Loan shall be in the principal amount of
the lesser of (i) $500,000 or a multiple thereof or (ii) the Maximum
Available Commitment; provided, however, that the Company may not
request LIBOR Rate Loans in an amount of less than $1,500,000 per
request. The Agent shall promptly inform each Bank of each Loan
request. Not later than 3:00 p.m. Milwaukee time on the Borrowing
Date, each Bank shall make available to the Agent at its principal
office in Milwaukee, Wisconsin, in immediately available funds, the
amount of such Bank's Pro Rata share of such Loans. Upon receipt by
the Agent of the amount of a Bank's Loan, and fulfillment of the
conditions specified in Section 4.2, the
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<PAGE> 14
Agent shall make available to the Company the amount of such Loan by
promptly depositing the amount thereof in the general deposit account
of the Company maintained at the First Wisconsin Bank.
(e) Loans which are not LIBOR Rate Loans may be
converted into LIBOR Rate Loans by notice from the Company to the
Agent in the form of, and meeting the requirements of, Section 2.1(d).
At the end of each respective Loan Period, LIBOR Rate Loans shall
become Loans which are not LIBOR Rate Loans unless and until the
Company converts such Loans to LIBOR Rate Loans.
(f) Any Bank may require any LIBOR Rate Loans to
be repaid and may refuse to make LIBOR Rate Loans in the event the
Bank determines that (i) maintenance of the LIBOR Rate Loans would
violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, or (ii) the interest rate on the LIBOR
Rate Loans does not accurately reflect the cost of making such Loans.
(g) In the event any Bank shall incur any loss,
cost or expense (including, without limitation, any loss (including
loss of profit), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired or contracted to
be acquired by such Bank to fund or maintain LIBOR Rate Loans or the
relending or reinvesting of such deposits or other funds or amounts
paid or prepaid to such Bank), as a result of:
(i) any payment of any LIBOR Rate Loans
on a date other than the last day of the then applicable Loan
Period for any reason, whether before or after default, and
whether or not such payment is required by any provisions of
this Agreement; or
(ii) any failure by the Company to borrow,
continue or effect by conversion any LIBOR Rate Loans on the
date specified in a notice given pursuant to this Agreement;
then upon the demand of such Bank, the Company shall pay to such Bank
such amount as will reimburse such Bank for such loss, cost or
expense. If a Bank requests such a reimbursement it shall provide the
Company with a certificate setting forth the computation of the loss,
cost or expense giving rise to the request for reimbursement in
reasonable detail and such certificate shall be deemed correct in the
absence of manifest error.
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2.2 Interest After Default. After an Event of Default, any
amounts not paid when due to the Bank shall bear interest at the rate of 2% per
annum in excess of the applicable rates set forth above; provided, that in the
case of a LIBOR Rate Loan the maturity of which is accelerated, such LIBOR Rate
Loan shall bear interest for the remainder of the applicable Loan Period, at a
rate equal to 2% plus the higher of the rate on the LIBOR Rate Loan or the rate
on Loans which are not LIBOR Rate Loans. In no event shall the interest rate
under the Notes exceed the highest rate permitted by law.
2.3 Funding Procedures. Unless the Company or a Bank, as
the case may be, notifies the Agent prior to the date on which it is scheduled
to make payment to the Agent of (i) in the case of a Bank, the proceeds of a
Loan or (ii) in the case of the Company, a payment of principal, interest or
fees to the Agent for the account of the Banks, that it does not intend to make
such payment, the Agent may assume that such payment has been made. The Agent
may, but shall not be obligated to, make the amount of such payment available
to the intended recipient in reliance upon such assumption. If such Bank or
the Company, as the case may be, has not in fact made such payment to the
Agent, the recipient of such payment shall, on demand by the Agent, repay to
the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Bank, the federal funds
rate for such day (as determined by the Agent) together with such other
compensatory amounts as may be required to be paid by such Bank to the Agent
(for its account) pursuant to the Rules for Interbank Compensation of the
Council of International Banking or the Clearinghouse Compensation Committee,
as the case may be, as in effect from time to time or (ii) in the case of
payment by the Company, the interest rate applicable to the relevant Loan. A
statement of the Agent submitted to the Company or any Bank with respect to any
amounts owing under this Section 2.3 shall be conclusive, in the absence of
manifest error. Notwithstanding the compensation set forth above, if any
amount due is not in fact made available to the Agent by any Bank within three
Business Days after the date of funding, the Agent shall be entitled to recover
such amount, with interest thereon at the rate per annum then applicable to the
Loans not made by such Bank until such amount is recovered, upon demand, from
the Bank. Nothing in this Section 2.3 shall be deemed to relieve any Bank from
its obligation to fulfill its Commitments hereunder or to prejudice any rights
which the Company or the Agent may have against any Bank as a result of any
default by that Bank hereunder. Moreover, the failure of one of the Banks to
make any Loan shall not relieve any other Bank of its obligation to lend
hereunder, and in no event shall such other Banks or the Agent be liable in any
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way whatsoever for such failure of any Bank to make any Loan hereunder absent a
Default.
2.4 Loan Account. Each Bank will enter as a debit to the
Company's Loan Account the aggregate principal amount of the Loans as disbursed
or issued from time to time by that Bank. Each Bank shall also record in the
Company's Loan Account, in accordance with the Bank's customary accounting
practices, accrued interest and all other charges, expenses and other items
properly chargeable to the Company hereunder or under the Related Documents to
which the Company is a party; all payments made by the Company on account of
indebtedness with respect to Loans, if any; and all other appropriate debits
and credits. The debit balance of the Company's Loan Account shall reflect the
amount of the Company's indebtedness to the Bank from time to time by reason of
the Loans and other appropriate charges hereunder. On the written request of
the Company, but not more frequently than once each month, each Bank shall
render a statement of account of the Company's Loan Account, which statement
shall be considered correct and accepted by the Company and conclusively
binding upon the Company in the absence of manifest error unless the Company
notifies the Bank to the contrary within 30 days of the mailing of such
statement by the Bank to the Company.
2.5 Payment on Nonbusiness Days; Payment Credit. Whenever
any payment to be made hereunder or under the Loans shall be stated to be due
on a day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest on the Notes. Payments made
by the Company to the Agent after 1:00 p.m. Central Time shall be credited on
the next Business Day.
2.6 Prepayments. The Company may not prepay LIBOR Rate
Loans. Subject to the prepayment premium set forth in Section 2.7:
(a) Optional Prepayments. The Company may, at
its option, at any time and from time to time, prepay the Loans
hereunder which are not LIBOR Rate Loans, in whole or in part together
with accrued interest to such date on the amount prepaid. Partial
prepayments shall be in the principal amount of $150,000 or a multiple
thereof.
(b) Mandatory Prepayments. At any time that the
aggregate principal amount of Loans outstanding hereunder exceeds the
Loan Commitment, the Company shall immediately pay the amount of such
excess in good funds, together with interest accrued on the amount of
the payment.
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2.7 Prepayment Premium. In the event the Company fully
prepays the Loans (as provided in Section 2.6 or upon acceleration following an
Event of Default) and the Loan Commitment is terminated, the Company shall pay
the Agent for the account of the Banks a prepayment premium equal to one-half
percent of the Loan Commitment if the Loans are prepaid before October 1, 1993
or one-quarter percent of the Loan Commitment if the Loans are repaid after
September 30, 1993 but before October 1, 1994.
2.8 Effect of Regulatory Change. In the event of a
Regulatory Change reasonably deemed by a Bank to be material and following
notice by the Bank to the Company (reasonably soon after the Bank becomes aware
of the effect of the Regulatory Change on the cost of making or maintaining the
Loan) of such Regulatory Change, within ten days after demand from the Bank the
Company shall pay to the Bank such amounts as will compensate the Bank for the
increase in the cost of making or maintaining the Loans or the reduction in the
rate of return to the Bank on the Loans resulting from the Regulatory Change.
Notwithstanding the provisions of Section 2.7, the Company may prepay the Loans
without premium in the event a Regulatory Change has occurred and is continuing
which has the effect of increasing the cost of the Loans to the Company
(including interest) by more than one percent (1%).
2.9 Security. Payment of all principal and interest under
the Notes, the costs of collection and all other obligations of the Company to
the Banks hereunder and under the Related Documents shall be secured by a first
lien on all of the Property of the Company and WRS of whatever kind and nature,
wherever located, whether now owned or subsequently acquired or arising (other
than margin stock with a current market value not to exceed $100,000 at any
time), and in the products, proceeds, additions and accessions thereof or
thereto, in accordance with this Agreement and the Related Documents.
2.10 NO OBLIGATION TO EXTEND OR FORBEAR. THE COMPANY
ACKNOWLEDGES AND AGREES THAT (i) THE BANKS, UPON EXECUTION HEREOF, WILL HAVE NO
DUTY OR OBLIGATION OF ANY KIND TO, AND HAVE MADE NO REPRESENTATIONS OF ANY KIND
OR NATURE THAT THEY OR ANY ONE OF THEM WILL, EXTEND CREDIT OR ANY OTHER KIND OF
FINANCIAL ACCOMMODATIONS TO THE COMPANY AFTER DECEMBER 31, 1997, OR FORBEAR
FROM THE EXERCISE OF ANY OF THEIR RIGHTS OR REMEDIES UNDER THIS AGREEMENT AND
THE RELATED DOCUMENTS AFTER THE DATE HEREOF, AND (ii) THE BANKS MAY, IN THEIR
SOLE DISCRETION, EXERCISE WHATEVER RIGHTS AND REMEDIES THE BANKS MAY HAVE UNDER
THIS AGREEMENT AND THE RELATED DOCUMENTS, AND UNDER APPLICABLE LAW, AT ANY
TIME. ALL INDEBTEDNESS AND OTHER OBLIGATIONS OF THE COMPANY TO THE AGENT AND
THE BANKS SHALL BE DUE IN FULL ON DECEMBER 31, 1997 WITHOUT FURTHER DEMAND.
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SECTION 3 REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGMENTS OF THE COMPANY
In order to induce the Banks to enter into this Agreement and
make the Loans as herein provided, the Company hereby represents, warrants and
acknowledges to the Banks as follows:
3.1 Organization, Qualification and Subsidiaries. The
Company, TSI and WRS are each corporations duly organized and validly existing
under the laws of the State of Wisconsin; CST is a corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware (provided that its state of incorporation may be changed to
Wisconsin); and each of the Company, TSI, WRS and CST has the corporate power
and authority and all licenses, permits and franchises to own the assets and
conduct the business of the Wiscold Business Unit, except (a) to extent failure
to obtain or maintain any license, permit or franchise would not cause a
Material Adverse Change, (b) for warehousing and food handling permits which
have been applied for and will be issued within 90 days after the date hereof
(the Company having been informally advised by personnel in the appropriate
Wisconsin and Illinois agencies having authority to issue such permits that
such agencies do not contemplate taking action against the Company due to the
absence of such permits), and (c) for trucking permits which cannot be issued
prior to the consummation of the transactions contemplated by the Purchase
Agreement, but which will be issued within 90 days after the date hereof. The
Company, TSI, WRS and CST are each duly licensed or qualified to do business
and in good standing in all jurisdictions where failure to qualify could cause
a Material Adverse Change. All of the issued and outstanding capital stock of
the Company, TSI, WRS and CST has been validly issued and is fully paid and
non-assessable except as provided in Section 180.0622(2)(b) of the Wisconsin
Statutes. The Company is a wholly-owned Subsidiary of TSI, which is a
wholly-owned subsidiary of CST. Except for the Subsidiaries set forth on
Schedule 3.1 which have no assets other than their names, the Company has no
Subsidiaries other than WRS and the Company does not own, directly or
indirectly, more than 1% of the total outstanding shares of any class of
capital stock of any Person other than WRS.
3.2 Financial Statements.
(a) The Company has furnished the Banks year-end
audited financial statements of the Seller for its fiscal years ended
December 31, 1990 and December 31, 1991, audited by Deloitte & Touche,
and the financial statements prepared by the Seller for the
seven-month period ended July 31, 1992. To the best of the Company's
knowledge, all such financial
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statements (balance sheets, statements of earnings, statements of
stockholders' equity, statements of changes in financial position and
the notes and schedules thereto) are accurate and complete and were
prepared in accordance with GAAP (except as set forth on Schedule
3.2(a) and except the interim financial statements are subject to
normal year-end adjustments) consistently applied throughout the
applicable periods, and present fairly the financial condition of the
Seller as of such dates and the results of its operations for the
periods then ended. To the best of the Company's knowledge, as of the
date hereof there has been no material adverse change in the business,
properties or condition, financial or otherwise, of the Seller since
the date of the latest of such statements. To the best of the
Company's knowledge, the Purchase Agreement accurately discloses all
material assets of Seller that will be acquired by the Company, TSI
and CST. The Purchase Agreement provides in Section 2.1 thereof the
liabilities, direct or contingent, of the Seller that will be assumed
by the Company, TSI and CST. The Wiscold Business Unit has no other
liabilities except as disclosed on attached Schedule 3.2(b), except
expenses incurred in connection with consummating the Related
Transactions and the Loans which shall not exceed $500,000. The
Company's fiscal year ends on June 30.
(b) The financial forecasts dated August 7, 1992
and furnished to the Banks by the Company were prepared in good faith
on the basis of information and assumptions that the Company believed
to be reasonable as of the date of such information, and which
assumptions are believed to be reasonable as of the date hereof.
3.3 Authorization. The making, execution, delivery and
performance of this Agreement and the Related Documents to which they are party
by the Company, CST, TSI and WRS have each been duly authorized by all
necessary corporate action. The execution and delivery of this Agreement and
the Related Documents, and the transactions contemplated hereby and thereby, is
not and will not be subject to the approval or consent of any Government
Authority. The Company has the corporate power and authority to borrow
hereunder and each of the Company, CST, TSI and WRS has the corporate power and
authority to enter into the Related Documents to which they are party and to
grant the liens and security interests and consents provided for in the Related
Documents.
3.4 Absence of Conflicting Obligations. The making,
execution and performance of this Agreement and the Related Documents and
compliance with their respective terms do not violate or constitute a default
under any presently existing Requirement of Law or any covenant, indenture,
lease, contract, agreement or
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<PAGE> 20
instrument to which the Company, TSI, CST or WRS is a party or by which it is
bound.
3.5 Taxes. The Company, TSI, CST and WRS have filed all
federal, state, foreign and local tax returns which were required to be filed,
except those returns for which the due date has been validly extended. The
Company, TSI, CST and WRS have paid or made provisions for the payment of all
taxes owed, and no tax deficiencies have been proposed or assessed against the
Company, TSI, CST or WRS which could cause a Material Adverse Change. There
are no pending or, to the knowledge of the Company, TSI, CST and WRS,
threatened tax controversies or disputes as of the date hereof.
3.6 Absence of Litigation. None of the Company, TSI, CST
and WRS is a party to, nor so far as is known to the Company, TSI, CST and WRS
is there any threat of, any litigation or administrative proceeding at law or
in equity which would, if adversely determined, cause a Material Adverse
Change, and, to the best of the knowledge of the Company, TSI, CST and WRS
after diligent inquiry, there are no presently existing facts or circumstances
likely to give rise to any such litigation or administrative proceeding.
3.7 Accuracy of Information. All information, certificates
or statements given by the Company, TSI, CST and WRS to any of the Banks in, or
pursuant to, this Agreement were accurate, true and complete in all material
respects when given, continue to be accurate, true and complete as of the date
hereof, and do not contain any untrue statement or omission of a material fact
necessary to make the statements therein not misleading. There is no fact
known to the Company, TSI, CST and WRS which can reasonably be expected to
cause a Material Adverse Changewhich has not been set forth in this Agreement,
the Related Documents or other documents, certificates or statements furnished
to the Banks by or on behalf of the Company, TSI, CST and WRS in connection
with the transactions contemplated hereby.
3.8 Ownership of Property. The Company, TSI, CST and WRS
each have good and marketable title to all of the assets and properties of the
Wiscold Business Unit, including the properties and assets purchased from the
Seller. There are no Liens of any nature on any of the assets or properties of
the Company or the Wiscold Business Unit except Permitted Liens. Except to the
extent noncompliance could not reasonably be expected to cause a Material
Adverse Change and except as set forth on Schedule 3.8, all Property useful or
necessary in the business of the Company and the Wiscold Business Unit, whether
leased or owned, is in good condition, repair and working order (ordinary wear
and tear excepted) and, to the best of the knowledge of the Company, TSI, CST
and WRS, complies with all applicable Requirements of Law. The Company, TSI,
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<PAGE> 21
CST and WRS, complies with all applicable Requirements of Law. The Company,
TSI, CST and WRS own (or are licensed to use) and possess all such patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, and copyrights necessary for the conduct of
the businesses of the Wiscold Business Unit as now conducted without,
individually or in the aggregate, any infringement upon rights of other
Persons which could cause a Material Adverse Change.
3.9 Federal Reserve Regulations. The Company will not,
directly or indirectly, use any Loan to purchase or carry more than $100,000 of
any "margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 C.F.R. 221, as amended) or extend credit to
other Persons for any such purpose or to refund indebtedness originally
incurred for any such purpose.
3.10 ERISA. Except to the extent noncompliance would not
cause a Material Adverse Change, the Company, CST, TSI and WRS are in
compliance with provisions of ERISA applicable with respect to the Wiscold
Business Unit and (i) no "prohibited transaction" as defined in Section 406 of
ERISA or Section 4975 of the Code has occurred; (ii) there has not been any
"reportable event" as defined in Section 4043 of ERISA; (iii) no "accumulated
funding deficiency" as defined in Section 302 of ERISA (whether or not waived)
has occurred; (iv) there are no unfunded vested liabilities of any Employee
Plan administered by the Company; and (v) the Company or the plan sponsor has
timely filed all returns and reports required to be filed for each Employee
Plan.
3.11 Security Interest. The Banks have a legal, valid and
perfected first priority security interest in the property of the Company and
WRS described in the Related Documents to the extent such perfection and
priority can be obtained by filing, by possession of Collateral held by the
Agent or any Bank or by notation of the security interest on motor vehicle
titles, and the property subject to the Related Documents shall be free and
clear of all other Liens whatsoever, except Permitted Liens. The obligations
of TSI and CST to the Company which shall be collaterally assigned to the Agent
under the Collateral Assignments and the Pledge Agreement are the valid and
binding obligations of TSI and CST, enforceable in accordance with their terms
and free from any offset, defense, recoupment or counterclaim, in law or in
equity, of any kind or nature and are secured by valid, perfected and
enforceable security interests in the assigned Collateral and subject only to
Permitted Liens.
3.12 Places of Business. The principal place of business
and chief executive office of the Company is located in Wisconsin, and the
books and records of the Company and all records
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of account are located and hereafter shall continue to be located at 11430 West
Burleigh Street, Wauwatosa, Wisconsin.
3.13 Other Names. Within the last five years, the business
conducted by the Company has not been conducted under any corporate, trade or
fictitious name other than the names set forth on Schedule 3.13 and following
the date hereof the Company will not conduct its business under any other trade
or fictitious name unless the Company shall have delivered prior written notice
to the Banks of such name change and executed and delivered such documents as
the Agent may request to maintain or protect the perfection of its security
interests in the Collateral.
3.14 Investment Company Act. The Company is not an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended.
3.15 No Defaults. Neither the Company nor the Wiscold
Business Unit is in default under or in violation of (i) any Requirement of Law
except as set forth on Schedule 3.8, (ii) any indenture, deed, lease,
agreement, mortgage, deed of trust, note or any other instrument to which the
Company is a party or by which the Company is bound, or to which the Company or
its assets are subject, or (iii) any Indebtedness, or if any such default or
violation described in subsections (i) through (iii) exists, the failure to
cure such default or violation would not result in a Material Adverse Change,
or cause the termination of any material agreement with respect to the Wiscold
Business Unit.
3.16 Environmental Laws. Except as set forth on Schedule
3.8, the businesses of the Company and the Wiscold Business Unit and, to the
best of the knowledge of the Company, TSI, CST and WRS after reasonable
investigation (including Phase I environmental assessments of the real estate
purchased from the Seller), the business of the Seller have been operated in
full compliance with the Environmental Laws and the Company is not subject to
any Environmental Liability relating to the conduct of its business or the
ownership of its Properties which could reasonably be expected to cause a
Material Adverse Change and no facts or circumstances presently exist which
could reasonably be expected to give rise to such Environmental Liabilities.
No notice has been served on the Company, or, to the best of the Company's
knowledge, on the Seller claiming any violation of Environmental Laws which
could reasonably be expected to cause a Material Adverse Change, asserting
Environmental Liability or demanding payment or contribution for Environmental
Liability or violation of Environmental Laws except as set forth on Schedule
3.8.
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3.17 Representations and Warranties Under Purchase Agreement.
The representations and warranties of the Company and, to the best of the
Company's knowledge, the Seller contained in the Purchase Agreement are true
and correct (in all material respects in the case of the Seller) on the date
hereof as if made on the date hereof.
3.18 Values, Etc. On the date hereof, after giving effect to
the Related Transactions, (i) the Company's assets, at fair valuation, will
exceed the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of the Company, (ii) the Company will have sufficient
cash flow to enable it to pay its debts as they mature, and (iii) the Company
will not have an unreasonably small capital with which to engage in its
anticipated business.
SECTION 4 CONDITIONS PRECEDENT TO LOANS
4.1 Initial Loans. In addition to the terms and conditions
otherwise contained herein, the obligation of the Banks to make the initial
Loans is conditioned on the Banks receiving, prior to or on the date of such
Loans, each of the following:
(a) the executed Notes;
(b) the executed Security Agreements;
(c) officially stamped acknowledgment copies of
financing statements or other evidence satisfactory to the Banks to
show that financing statements have been filed in each jurisdiction
where such filing is necessary to perfect the security interests of
the Banks created by the Security Agreements, the Collateral
Assignments and the Pledge Agreement;
(d) the Pledge Agreement, executed by duly
authorized officers of the Company, together with the collateral
pledged thereunder and such consents of CST and TSI to the collateral
pledge as the Banks shall reasonably require;
(e) the executed documents underlying the
Collateral Assignments, Collateral Assignments and such consents to
the Collateral Assignments as the Banks shall reasonably require;
(f) the executed Guaranties;
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(g) corporate borrowing resolutions, together
with a certificate of the Secretary of each of CST, TSI, the Company
and WRS as to the accuracy of a copy of the resolutions and Bylaws of
each attached thereto and as to the incumbency of the officers of each
of CST, TSI, the Company and WRS;
(h) the opinions of counsel for the Company, TSI,
CST and WRS in the form of Exhibit H;
(i) for each of CST, TSI, the Company and WRS, a
certificate of status and a certified copy of the Articles of
Incorporation for the Company, issued by the Office of the Secretary
of State of incorporation as of a recent date;
(j) certificates of insurance evidencing that the
Agent has been named as a loss payee under the insurance required to
be carried under this Agreement and under all insurance carried by
CST, TSI and WRS for the Wiscold Business Unit;
(k) evidence satisfactory to the Banks that there
are no Liens of record in the Property of the Company, TSI and WRS and
in the Property of CST included in the Wiscold Business Unit, other
than Permitted Liens;
(l) the Certification as to Financial and Closing
Matters, including a certification of compliance with all of the terms
and conditions contained herein, in the form of Exhibit I, executed by
the Company;
(m) the initial installment of the Agent's fee
under Section 5.9;
(n) evidence satisfactory to the Banks of the
completion of the Related Transactions;
(o) the Subordination Agreement, executed by the
Company and CST; and
(p) such additional supporting documents and
materials as the Agent may reasonably request.
4.2 Subsequent Loans. In addition to the terms and
conditions otherwise contained herein, the obligation of each of the Banks to
make subsequent Loans is subject to the satisfaction, on the date of making
each such Loan, of the following conditions:
(a) All of the representations, warranties and
acknowledgments of the Company contained in this Agreement
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shall be true and accurate on and as of the date of such Loan as if
made on such date except to the extent the representations, warranties
and acknowledgments relate solely to an earlier date, and each request
for a Loan shall constitute an affirmation by the Company that such
representations and warranties are then true and accurate;
(b) There shall not exist on such date any
Default;
(c) The aggregate principal amount of all Loans
outstanding, together with the amount of any Loan requested shall not
exceed the Loan Commitment; and
(d) The Agent shall have received executed loan
requests for all Loans previously requested by the Company and the
matters certified therein and herein shall have been true and correct
on the date thereof and shall continue to be true and correct on the
date of the requested Loans or other obligations.
SECTION 5 AFFIRMATIVE COVENANTS
From and after the date of this Agreement and until the
Termination Date and the entire amount of principal of and interest due on the
Loans and all other obligations to the Banks are paid in full:
5.1 Corporate Existence, Properties, Etc. The Company, TSI,
CST and WRS shall each: (a) maintain its corporate existence, (b) maintain its
rights and franchises to the extent failure to maintain such rights and
franchises would result in a Material Adverse Change, or cause the termination
of any material agreement with respect to the Wiscold Business Unit; (c) comply
in all material respects with all Requirements of Law; (d) not engage in any
line of business other than any line of business now conducted and proposed to
be conducted by the Wiscold Business Unit provided that CST may engage in any
business apart from the Wiscold Busines Unit; (e) pay before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
other government charges against it and any Property of the Wiscold Business
Unit, and all other liabilities except to the extent and so long as the same
are being contested in good faith by appropriate proceedings, with adequate
reserves having been provided or to the extent failure to pay such liabilities
would not result in a Material Adverse Change; and (f) maintain insurance for
the Wiscold Business Unit of such nature and in such amounts as is customarily
maintained by companies engaged in the same or similar business and such other
insurance as may be required by law or as
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may be reasonably required in writing by the Agent. Each policy providing
liability coverage for the Wiscold Business Unit shall name the Agent as an
additional insured, and each policy insuring the Property of the Wiscold
Business Unit shall name the Agent as loss payee, as its interest appears, and
all policies shall require the insurer to give the Agent 30 days' prior written
notice of the modification, cancellation or nonrenewal of the policy. The
Company will furnish copies of all such insurance policies in compliance with
the requirements of this paragraph on the date hereof and on each renewal date
of such policies. To the extent the Agent receives proceeds of insurance, the
Required Banks may, in their discretion, apply such proceeds to reduce the
outstanding balance of the Loans and to permanently reduce the Loan Commitment
or deliver the proceeds to the Company, CST, TSI or WRS to repair, restore or
replace the Collateral. Notwithstanding the foregoing, the Required Banks
shall upon the request of the Company direct the Agent to deliver insurance
proceeds to repair, restore or replace the Collateral so long as such proceeds
do not exceed $5,000,000, no Event of Default has occurred and is continuing,
and no Default will occur as a result of the casualty giving rise to the
insurance proceeds.
5.2 Maintenance of Property. The Company, TSI, CST and WRS
shall each: keep all Property useful and necessary in the business of the
Wiscold Business Unit, whether leased or owned, in good condition, repair
(ordinary wear and tear excepted), and working order and condition and from
time to time make or cause to be made all needed and proper repairs, renewals,
replacements, betterments and improvements so that the business carried on in
connection therewith may be conducted to the best economic advantage at all
times.
5.3 Financial Statements. The Company, TSI, CST and WRS
shall each: maintain a standard and modern system of accounting in accordance
with sound accounting practice, and furnish to each of the Banks such
information respecting the business, assets and financial condition of the
Company and the Wiscold Business Unit as they may reasonably request and,
without request furnish to each of the Banks:
(a) within 45 days after the end of each of the
first three quarters of the Company's fiscal year, financial
statements for the Wiscold Business Unit on a consolidated basis only
including the balance sheets for the Wiscold Business Unit as of the
end of each such quarter and statements of income, retained earnings
and cash flow of the Wiscold Business Unit for each such quarter and
for that part of the fiscal year ending with such quarter, setting
forth in each case, in comparative form, figures for the corresponding
periods in the preceding fiscal year if available and a
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comparison of actual cash flow, income and capital expenditures with
amounts budgeted for such period, all in reasonable detail and
certified as true and correct, subject to review and normal year-end
adjustments, by the chief financial officer of the Company;
(b) as soon as available, and in any event within
90 days after the close of each fiscal year, a copy of the detailed
annual audit report for such year and accompanying financial
statements for CST as of the end of such year, containing balance
sheets and statements of income, retained earnings and cash flows for
such year and for the previous fiscal year together with supplemental
consolidating schedules, with consolidating balance sheet and income
statements for the Wiscold Business Unit and of CST other than the
Wiscold Business Unit, as audited by an independent certified public
accountant of recognized standing selected by CST and satisfactory to
the Banks, which report shall be accompanied by (i) the unqualified
opinion of such accountants to the effect that the statements present
fairly, in all material respects, the financial position of CST as of
the end of such year and the results of operations and cash flows for
the year then ended in conformity with GAAP; and (ii) a certificate of
such accountants stating that their review disclosed no Default or
that their review disclosed a Default and specifying the same and the
action taken or proposed to be taken with respect thereto;
(c) with the financial statements described in
(a) and (b) above, the certificate of the president or chief financial
officer of the Company (i) to the effect that a review of the
activities of the Company during such period has been made under his
supervision with a view to determining whether the Company has
observed, performed and fulfilled each and every covenant and
condition in this Agreement and the Related Documents, and no Default
has occurred (or if such Default has occurred, specifying the nature
thereof and the period of existence thereof and the steps, if any,
being undertaken to correct the same); and (ii) showing compliance
with the covenants contained in Sections 6.8 through 6.11 and the
computation thereof; and
(d) promptly upon learning of the occurrence of
any of the following, written notice thereof, describing the same and
the steps being taken with respect thereto: (i) the occurrence of any
Default, (ii) the institution of, or any adverse determination or
materially adverse development in, any litigation, arbitration
proceeding or governmental proceeding in which an adverse
determination could cause a Default or result in the modification or
termination of this Agreement or any Related Document, (iii) the
occurrence of a
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"reportable event" under, or the institution of steps by the Company
to withdraw from, or the institution of any steps to terminate, any
Employee Plan as to which the Company may have liability in an amount
of $250,000 or more, or (iv) any event which could reasonably be
expected to cause a Material Adverse Change or have a material adverse
effect on the ability of the Company to perform its obligations under
this Agreement or the Related Documents.
All financial statements referred to herein shall be complete and correct in
all material respects and shall be prepared in reasonable detail and (except as
otherwise provided above) on a consolidated and (except for statements of cash
flow) consolidating basis in accordance with GAAP.
5.4 Inspection of Properties and Records. The Company, CST,
TSI and WRS shall permit representatives of the Agent to visit any of the
Properties of the Wiscold Business Unit or the Company and examine any of its
books and records and to discuss affairs, finances and accounts relating to the
Wiscold Business Unit and the Company with its officers and independent
certified public accountants (in the presence of an officer of the Company but
only so long as such officer does not interfere with such discussions with the
accountants), all at any reasonable time following reasonable notice and as
often as may be reasonably desired, and facilitate such inspection and
examination. The Company shall pay for the ordinary and necessary expenses
incurred by the Agent in connection with any inspection pursuant to this
Section, including travel and administration expenses incurred by
representatives of the Agent.
5.5 Use of Proceeds. The Company shall use the entire
proceeds of the Loans to acquire the assets of the Seller, to make the loans to
TSI and CST evidenced by the TSI Note and the CST Note respectively, to make
loans to TSI secured by notes and mortgages pledged to the Banks solely to
enable TSI to repair, maintain, expand or improve the assets acquired from the
Seller, and for general corporate purposes of the Company only.
5.6 Bank Accounts. The Company shall maintain its principal
deposit accounts with the Banks.
5.7 Indemnity. The Company hereby agrees to indemnify each
of the Banks against any and all losses, claims, damages, liabilities,
obligations, penalties, actions, judgments, suits, costs and expenses of any
kind or nature whatsoever, including reasonable attorneys' fees and expenses,
incurred by any Bank arising out of, in any way connected with, or as a result
of (i) this Agreement or the Related Documents or the transactions contemplated
hereby or the enforcement (including collection or
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disposition of Collateral) of any of the terms hereof or of the Related
Documents, (ii) any acquisition or attempted acquisition of stock or assets of
another Person or entity by the Company, (iii) the use of any of the proceeds
of any loans made hereunder by the Company for the making, or furtherance of,
any such acquisition or attempted acquisition, (iv) the execution and delivery
of this Agreement by the parties hereto and the performance of their respective
obligations hereunder, or (v) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not any of the Banks
is a party thereto; provided, however, that such indemnity shall not apply to
any such losses, claims, damages, liabilities or related expenses arising from
(A) any breach by a Bank of its obligations under this Agreement, (B) any
commitment made by a Bank to any Person other than the Company which would be
breached by the performance of the Bank's obligations under this Agreement, or
(C) any gross negligence or willful misconduct of a Bank.
5.8 Environmental Compliance.
(a) The Company, CST, TSI and WRS shall obtain
and maintain at all times throughout the term of this Agreement all
permits, licenses and other authorizations required under
Environmental Laws, and comply in all respects with all terms and
conditions of the required permits, licenses and authorizations and
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws to the extent failure to obtain
such authorizations or to comply with Environmental Laws would result
in a Material Adverse Change;
(b) The Company, CST, TSI and WRS shall notify
the Banks promptly upon obtaining knowledge that (i) any real property
or other facility previously owned or presently owned or operated by
the Company, TSI, WRS or the Wiscold Business Unit is the subject of
an environmental investigation by any Government Authority having
jurisdiction over the enforcement of Environmental Laws, or (ii) the
Company, TSI or WRS has been or can be reasonably expected to be named
as a responsible party subject to Environmental Liability under any
Environmental Laws. If the Company, TSI, CST or WRS is notified of
any event described in (i) or (ii) above, the Company shall
immediately undertake to hire a firm or firms of geotechnical
engineers and/or environmental consultants approved by the Banks,
which approval shall not be unreasonably withheld, to determine as
soon as is practicably possible whether there has been a violation of
an Environmental Law and the nature and extent thereof and the
potential dollar liability of the Company or the Wiscold Business Unit
with
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respect thereto, and the Banks shall be provided with all studies and
reports compiled by such firms as soon as such studies and reports
become available; provided, that if any Government Authority shall
undertake to make the determinations described above, the Company
shall not be required to hire any engineers or consultants but shall
provide the Banks with all reports and findings of such Government
Authority as soon as such reports and findings are made available to
the Company and shall fully cooperate with such Government Agency in
the conduct of its investigation; and
(c) The Company shall indemnify the Agent and the
Banks against any and all losses, claims, damages, liabilities and
expenses (including costs and reasonable attorneys' fees) incurred by
the Agent or any of the Banks resulting from any violation of
Environmental Law by the Company or by any Property of the Wiscold
Business Unit as well as any cost or expense incurred by the Agent or
any of the Banks for the remediation of such condition. The foregoing
indemnities shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of
the transactions contemplated by this Agreement, the repayment of the
Loans made hereunder, the invalidity or unenforceability of any term
or provision of this Agreement or of the Notes, any investigation made
by or on behalf of the Banks or the Company, and the content or
accuracy of any representation or warranty made under this Agreement.
NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS AGREEMENT, OR IN THE
RELATED DOCUMENTS, OR IN THE ENFORCEMENT OF THIS AGREEMENT OR THE RELATED
DOCUMENTS, SHALL CONSTITUTE OR BE CONSTRUED AS GRANTING OR PROVIDING THE RIGHT,
POWER OR CAPACITY TO THE AGENT OR THE BANKS TO EXERCISE (a) DECISION MAKING
CONTROL OF THE COMPANY'S COMPLIANCE WITH ANY ENVIRONMENTAL LAW, OR (b) DAY TO
DAY DECISION MAKING OF THE COMPANY WITH RESPECT TO (i) COMPLIANCE WITH
ENVIRONMENTAL LAWS OR (ii) ALL OR SUBSTANTIALLY ALL OF THE OPERATIONAL ASPECTS
OF THE COMPANY, OTHER THAN COMPLIANCE WITH ENVIRONMENTAL LAWS.
5.9 Fees and Costs. The Company shall pay the Agent for its
account an agency fee of $25,000 on the date hereof and $10,000 on each August
1 hereafter and its additional reasonable costs including, but not limited to,
audit or inspection fees, appraisal fees under Section 5.11, interest rate swap
fees under Section 5.10, wire transfer or other charges pertaining to the
transfer of funds, lockbox fees and charges arising from returned or dishonored
checks of any account debtor.
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5.10 Rate Swap. Within 90 days after the date of this
Agreement, the Company shall enter into a five-year interest rate swap
agreement with the Banks upon terms and conditions reasonably satisfactory to
the Banks and reasonably available from financial institutions of similar size
and credit quality in an amount not less than $30,000,000 and all of the
Company's obligations under such agreement shall be secured by the Related
Documents.
5.11 Appraisals. If and to the extent required at any time
of any Bank by any Government Authority or Requirement of Law, permit an
independent appraiser selected by the Agent to conduct appraisals, at the
Company's expense, of all real estate, equipment and other tangible assets
acquired from the Seller by the Company, TSI and CST. The Company shall
facilitate such appraisals and may obtain copies of, but may not rely, on such
appraisals for any purpose.
SECTION 6 NEGATIVE COVENANTS
From and after the date of this Agreement and until the
Termination Date and the entire amount of principal of and interest due on the
Loans and all other obligations to the Banks are paid in full:
6.1 Sale of Assets, Consolidation, Merger, Etc. The
Company, TSI, CST and WRS shall not directly or indirectly (a) sell, lease,
transfer or otherwise dispose of assets or properties of the Wiscold Business
Unit having an aggregate net book value in excess of $250,000 in any fiscal
year, whether in one or in a series of transactions except to the extent
proceeds result from a transaction with a Person who is not an Affiliate at
fair market value as agreed upon by the Banks and are applied to pay the Loans
and permanently reduce the Loan Commitment and except for disposal of obsolete
equipment; (b) consolidate or merge with or into any other Person; (c) except
with respect to the leases dated of even date herewith of real estate acquired
from the Seller by TSI, enter into any agreement, directly or indirectly, to
sell or transfer any Property, real or personal, used or useful in the business
of the Wiscold Business Unit, and thereafter lease such property or other
property which it intends to use for substantially the same purposes; (d) sell,
issue or otherwise distribute any security of the Company, TSI or WRS,
including any shares of capital stock, except as provided in the subordinated
debt purchase agreement of even date herewith between the Company and CST and
except that the Company may convert such subordinated debt to equity; (e)
create or permit any Subsidiary to create a new Subsidiary; or (f) permit any
Subsidiary listed on Schedule 3.1 to hold assets or incur Indebtedness.
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6.2 Indebtedness. CST shall not with respect to the Wiscold
Business Unit and the Company, TSI and WRS shall not in any manner issue,
create, incur, assume or otherwise become liable with respect to (or agree to
issue, create, incur, assume or otherwise become liable with respect to), or
permit to remain outstanding, any Indebtedness except (i) Indebtedness to the
Banks under this Agreement and the Related Documents; (ii) Indebtedness which
has been subordinated to the Banks in form and substance satisfactory to the
Required Banks (including the Subordinated Debt); (iii) liabilities (other than
for borrowed money) incurred in the ordinary course of business which are not
more than 90 days overdue, unless being contested in good faith and with due
diligence; (iv) Indebtedness secured by Liens within the limitations permitted
under Section 6.3; (v) Indebtedness disclosed in Section 2.1 of the Purchase
Agreement and Schedule 3.2(b); (vi) Indebtedness for deferred taxes,
obligations owed to employees for services actually performed and unfunded
liabilities pursuant to Employee Plans; or (vii) Indebtedness in an aggregate
amount of not more than $250,000 in excess of the limitations prescribed by
Sections 6.2(i), (ii), (iii), (iv), (v) and (vi).
6.3 Liens. CST shall not with respect to the Wiscold
Business Unit and the Company, TSI and WRS shall not in any manner create or
permit to be created or allow to exist any Lien except Permitted Liens upon or
interest in any Property or assets now owned or hereafter acquired other than
margin stock. For purposes herein, Permitted Liens shall mean: (i) liens for
taxes, assessments, or governmental charges, carriers', warehousemen's,
repairmen's, mechanics', materialmen's and other like liens, which are either
not delinquent or are being contested in good faith by appropriate proceedings
which will prevent foreclosure of such liens, and against which adequate cash
reserves have been provided; (ii) easements, restrictions, minor title
irregularities and similar matters which have no material adverse effect upon
the ownership and use of the affected Property; (iii) liens or deposits in
connection with worker's compensation, unemployment insurance, social security
or other insurance or to secure customs duties, public or statutory obligations
in lieu of surety, stay or appeal bonds, or to secure performance of contracts
or bids, other than contracts for the payment of money borrowed, or deposits
required by law as a condition to the transaction of business or other liens or
deposits of a like nature made in the ordinary course of business; (iv) liens
in favor of the Banks pursuant to the Related Documents and the documents
securing the CST Note and the TSI Note; (v) additional conditional sales,
purchase money mortgages or other title retention agreements on machinery and
equipment acquired in the ordinary course of business and otherwise permitted
to be acquired hereunder created at the time of the acquisition of such
property solely for the purposes of securing the Indebtedness incurred to
finance the cost of such property, provided no such
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Lien shall extend to any property other than the property so acquired and
identifiable proceeds; and (vi) Liens described in Schedule 6.3.
6.4 Guaranty. Except for the Guaranties and except for
letters of credit or banker's acceptances issued by the Agent on behalf of and
with the consent of the Banks, the Company, TSI and WRS shall not guaranty or
otherwise in any way become or be responsible for obligations of any other
Person, whether by an agreement to purchase the indebtedness of any other
Person, or agreement for the furnishing of funds to any other Person through
the purchase of goods, supplies or services (or by way of stock purchase,
capital contribution advanced or loaned) for the purpose of paying or
discharging the indebtedness of any Person, or otherwise, except for the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
6.5 Dividends. The Company, TSI and WRS shall not declare
any dividends on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, retirement or
other acquisition of, any shares of any class of stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof
(including, but not limited to, the payment of management fees to any
Affiliate), either directly or indirectly, whether in cash or property or
otherwise.
6.6 Loans, Investments. The Company, TSI and WRS shall not
make or commit to make advances, loans, extensions of credit or capital
contributions to, or purchase of any stock, bonds, notes, debentures or other
securities of, or make any other investment in, any Person except: (a)
accounts, chattel paper, and notes receivable, created in the ordinary course
of business; (b) advances in the ordinary course of business to suppliers,
employees and officers of the Wiscold Business Unit in an aggregate amount at
any time outstanding of not more than $250,000; (c) investments in bank
certificates of deposit (but only with FDIC-insured commercial banks having a
combined capital and surplus in excess of $20,000,000), open market commercial
paper maturing within one year sold by the money center of any of the Banks or
having the highest rating of either Standard & Poors Corporation or Moody's
Investors Services, Inc., U.S. Treasury Bills subject to repurchase agreements
and short-term obligations issued or guaranteed by the U.S. Government or any
agency thereof; (d) investments in open-end diversified investment companies of
recognized financial standing investing solely in short-term money market
instruments consisting of securities issued or guaranteed by the United States
government, its agencies or instrumentalities, time deposits and certificates
of deposit issued by domestic banks or London branches of domestic
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banks, bankers acceptances, repurchase agreements, high grade commercial paper
and the like; (e) margin stock with a current market value not to exceed
$100,000; (f) loans made to CST and TSI pursuant to the CST Note, the TSI Note
and Section 5.5; (g) additional equity investments in the Company by TSI; and
(h) the initial capital contribution on the date hereof by the Company to WRS
to enable WRS to purchase trucks from the Seller; provided, that for (a)
through (d) above, each such investment has a maturity date not later than 180
days after the date of purchase or making thereof and, except for (b), (g) and
(h) above, upon the request of the Agent is pledged and delivered to the Agent.
6.7 Compliance with ERISA. The Company, TSI and WRS shall
not to the extent it would cause a Material Adverse Change, (a) terminate any
Employee Plan; (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Employee Plan; or (c) incur or suffer
to exist any "accumulated funding deficiency" (as defined in Section 302 of
ERISA).
6.8 Tangible Net Worth. The Company, CST, TSI and WRS shall
not permit the Tangible Net Worth of the Wiscold Business Unit to be less than
$17,500,000 at any time from the date hereof through June 29, 1993, $18,500,000
at any time from June 30, 1993 through June 29, 1994, $20,500,000 at any time
from June 30, 1994 through June 29, 1995, $23,000,000 at any time from June 30,
1995 through June 29, 1996, $26,000,000 at any time from June 30, 1996 through
June 29, 1997, or $29,500,000 at any time after June 29, 1997; or permit the
sum of Tangible Net Worth plus Indebtedness which is fully subordinated to the
Banks (in form and substance acceptable to the Banks) of the Company, CST, TSI
or WRS to be less than $1.
6.9 Leverage Ratio. The Company, CST, TSI and WRS shall not
permit the Leverage Ratio to exceed 2.80 to 1 at any time.
6.10 Debt Service Ratio. The Company, CST, TSI and WRS shall
not permit the ratio of the Wiscold Business Unit's Net Income plus interest
expense, depreciation expense and amortization expense, deferred taxes and
other noncash charges to the required payments of principal and interest on the
Loans to be less than 1.20 to 1 (a) at the end of the ten-month period ending
June 30, 1993, or (b) at the end of any fiscal quarter thereafter calculated on
a four-quarter rolling basis.
6.11 Net Income. The Company, CST, TSI and WRS shall not
permit Net Income of the Wiscold Business Unit for any fiscal year to be less
than $1.
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6.12 Affiliates. The Company, TSI and WRS shall not permit
any transaction with any Affiliate, except (a) on terms not less favorable than
would be usual and customary in similar transactions with Persons who are not
Affiliates, (b) the transactions permitted under the real estate leases of even
date herewith between TSI and the Company, (c) the transactions contemplated by
the subordinated debt purchase agreement of even date herewith between CST and
the Company, (d) the transactions contemplated by the CST Note and the TSI
Note, (e) the advances to CST and TSI permitted under Section 5.5, and (f) the
transactions pursuant to the Management Agreement of even date herewith between
the Company and CST, without amendment.
6.13 Leases. The Company, TSI and WRS shall not pay or
become liable with respect to any lease or rental of real or personal property,
except for leases dated of even date herewith for rental of real property
acquired from the Seller by TSI, provided that the terms thereof shall not be
supplemented or amended in a manner adverse to the Company, except for any
operating lease or rental obligation as lessee of personal property required in
the business of the Wiscold Business Unit and entered into in the ordinary
course of business. In no event will the aggregate annual obligations for
leased or rented property of the Wiscold Business Unit exceed $1,500,000,
excluding leases between the Company, TSI and WRS and CST (solely with respect
to the Wiscold Business Unit).
SECTION 7 DEFAULT
7.1 Events of Default Defined. The following events shall
be "Events of Default" as used herein:
(a) the Company shall fail to pay any
Indebtedness to the Banks, including the Notes and amounts due under
Sections 2.6(b) and 5.9, when and as the same shall become due and
payable, whether upon demand, at maturity or by acceleration or
otherwise, which default shall remain uncured for a period of five
days;
(b) the Company, CST, TSI or WRS shall fail to
perform the covenants contained in Sections 6.8 through 6.11 and such
default shall continue for ten days after the due date of the
financial statements or officer's certificate showing the default.
(c) the Company, CST, TSI or WRS shall fail to
observe or perform any of the covenants, agreements or
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conditions contained in Section 5.1(a), 5.4, 5.6, or any provision of
Section 6 other than Sections 6.8 through 6.11;
(d) the Company, CST, TSI or WRS shall fail to
observe or perform any of the other covenants, agreements or
conditions contained in this Agreement, the Related Documents, the TSI
Note, the CST Note, or the documents securing the TSI Note or the CST
Note and such default shall continue for thirty days after written
notice thereof is given by the Agent to the Company;
(e) any representation or warranty made by the
Company, CST, TSI or WRS herein or in any certificate, document or
financial statement delivered to the Banks pursuant hereto shall prove
to have been incorrect in any material adverse respect as of the time
when made or given;
(f) a final judgment shall be entered against the
Company, TSI or WRS which singularly or when added to another final
judgment (or judgments) against the Company, TSI and WRS exceeds the
aggregate amount of $250,000 or a final judgment shall be entered
against CST which singularly or when added to another final judgment
(or judgments) against CST could result in a Material Adverse Change,
and such judgment (or judgments) shall remain outstanding and
unsatisfied, unbonded and unstayed after thirty days from the date of
entry thereof;
(g) the Company, TSI, CST or WRS shall take or
fail to take any action which constitutes an admission of inability to
pay its debts as they mature; or make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any
tribunal for the appointment of a custodian, receiver or any trustee
for it or a substantial part of its respective assets, or shall
commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; or if
there shall have been filed any such petition or application, or any
such proceeding shall have been commenced against it, in which an
order for relief is entered or which remains undismissed for a period
of thirty days or more; or it by any act or omission shall indicate
its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial part of
any of its properties, or shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of
thirty days or more;
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(h) the Company, TSI, CST or WRS adopts a plan of
liquidation of its assets;
(i) the Company, TSI or WRS shall default (as
principal or guarantor or otherwise) either in the payment of the
principal of or interest on any other Indebtedness aggregating
$250,000 or more, or CST shall default (as principal or guarantor or
otherwise) either in the payment of the principal of or interest on
any other Indebtedness and such default could result in a Material
Adverse Change, or the Company, TSI, CST or WRS shall default with
respect to any of the provisions of any evidence of such Indebtedness
or any agreement under which such evidence of Indebtedness may have
been issued, and such default shall continue for more than any period
of grace, if any, specified in such instrument, unless the Company,
TSI, CST or WRS is contesting such default in good faith and the Banks
agree, that the Company, TSI, CST or WRS is so contesting such
default;
(j) any federal, state or local government agency
or any geotechnical engineer or environmental consultant hired by the
Company, TSI or CST shall determine that the potential uninsured
liability of CST with respect to the assets of the Wiscold Business
Unit or of the Company, TSI or WRS for damages caused by the discharge
of any Hazardous Substance, including liability for real property
damage or remedial action related thereto or liability for personal
injury claims, exceeds $250,000 and the Company, TSI, CST or WRS is
unable to provide for such liability in a manner reasonably acceptable
to the Banks;
(k) CST shall (i) cease to own a majority of each
class of voting stock of TSI, (ii) default in the payment of the CST
Note, or (iii) default under the subordinated debt purchase agreement
of even date herewith between CST and the Company;
(l) TSI shall (i) default in the payment of the
TSI Note, (ii) fail to observe or perform, or take any action to
revoke, its Guaranty, or (iii) cease to own a majority of each class
of voting stock of the Company; or
(m) WRS shall fail to observe or perform, or take
any action to revoke, its Guaranty.
7.2 Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default
specified in clauses 7.1(g) or (h) above, then, without presentment,
notice, demand or action of any kind by the Agent
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or any Bank, all of which are hereby waived: (i) the Commitments and
the obligations of the Banks to make any Loans hereunder shall
automatically and immediately terminate; and (ii) the entire amount of
unpaid principal of and accrued and unpaid interest on the Notes and
the Indebtedness to the Banks and all other obligations to the Banks
shall become automatically accelerated and immediately due and
payable.
(b) Upon the occurrence of an Event of Default
specified in clause 7.1(a) above which is continuing, the Agent shall,
upon the request of any Bank, without presentment, notice, demand or
action of any kind by the Agent or any Bank, all of which are hereby
waived: (i) immediately notify the Company and each of the Banks to
terminate the Commitments and the Banks' obligation to make any Loans,
and the same shall immediately terminate; and (ii) declare the entire
amount of the unpaid principal of and accrued and unpaid interest on
the Notes and the Indebtedness to the Banks and all other obligations
to the Banks immediately accelerated, due and payable.
(c) Upon the occurrence of an Event of Default
specified in clauses 7.1(b), (c), (d), (e), (f), (i), (j), (k), (l) or
(m) above which is continuing, the Agent shall upon the direction of
Banks whose commitments aggregate at least 57% of the aggregate
commitments, without presentment, notice, demand or action of any kind
by the Agent or any Bank, all of which are hereby waived: (i)
immediately notify the Company and each of the Banks to terminate the
Commitments and the Banks' obligation to make any Loans, and the same
shall immediately terminate; and (ii) declare the entire amount of the
unpaid principal of and accrued and unpaid interest on the Notes and
the Indebtedness to the Banks and all other obligations to the Banks
immediately accelerated, due and payable.
(d) In addition to the foregoing remedies upon
the occurrence of an Event of Default and termination of the
Commitment, the Agent shall have all of the rights and remedies
provided to the Banks by the Related Documents, at law or in equity,
and no remedy herein conferred upon the Agent or any Bank is intended
to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. In the event of any Default, the Company shall
pay all costs and expenses which may be incurred by the Banks and the
Agent with respect thereto, including reasonable attorneys' fees, and
all such sums shall be and become a part of the Indebtedness of the
Company to the Banks. In addition
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to and not in lieu of any other right or remedy they might have, the
Agent or the Banks at any time and from time to time at their election
may (but shall not be required to) do or perform or comply with or
cause to be done or performed or complied with anything which the
Company may be required to do or comply with and the Company shall
reimburse the Agent and the Banks upon demand for any cost or expense
which the Agent or the Banks may incur in such respect, together with
interest thereon at the rate equal to the rate set forth in the Notes
from the date of such demand until paid. No failure or delay on the
part of the Agent or any Bank in exercising any right or remedy
hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude other or further
exercise thereof or the exercise of any other right or remedy.
SECTION 8 RELATIONSHIP OF AGENT AND BANKS
8.1 Appointment. First Wisconsin Bank is hereby appointed
Agent hereunder and under the Related Documents, and each of the Banks
irrevocably authorizes the Agent to act as the agent of such Bank. The Agent
agrees to act as such upon the express conditions contained in this Section 8.
The Agent shall not have a fiduciary relationship in respect of any Bank by
reason of this Agreement.
8.2 Powers. The Agent shall have and may exercise such
powers hereunder as are specifically delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Banks, or any obligation to the Banks
to take any action hereunder except any action specifically provided by this
Agreement to be taken by the Agent.
8.3 Action on Instructions of Banks.
(a) The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with written instructions signed by the Required Banks, and
such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks and on all holders of
Notes. The Agent may at any time request instructions from the Banks
with respect to any action or approval that, by the terms of this
Agreement, the Agent is permitted or required to take or to grant, and
if such instructions are requested, the Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval
and shall not be under any liability whatsoever to
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any Person for refraining from any action or withholding any approval
under this Agreement until it shall have received such instructions by
the Required Banks; provided, however, that the Agent shall not in any
event be required to comply with any instructions given it by the
Required Banks if the Agent determines that such compliance would
expose it to a material personal liability or is contrary to law or to
the terms of this Agreement, but the Banks shall in all events
indemnify the Agent from any action taken by it in accordance with the
instructions of the Required Banks. No Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with instructions by
the Required Banks.
(b) Without limitation of the foregoing, the
Agent shall not be required to take any action with respect to any
Default except in accordance with Section 7.2 and this Section. The
Agent shall be entitled to assume that no Default has occurred and is
continuing unless the Agent has actual knowledge of such facts or has
received notice from a Bank in writing that such Bank considers that a
Default has occurred and is continuing, and which specifies the nature
thereof. In the event that the Agent shall acquire actual knowledge
of any Default, the Agent shall promptly notify (either orally or in
writing) the Banks, and the Company of such Default, and, if directed
by the Banks to the extent required under Section 7.2, the Agent shall
take such action and assert such rights as are contemplated under this
Agreement and the Related Documents.
8.4 Amendments. The Required Banks (or the Agent with the
consent in writing of the Required Banks) and the Company may enter into
agreements supplemental hereto for the purpose of adding or modifying any
provisions of this Agreement or the Related Documents or changing in any manner
the rights of the Banks or the Company hereunder or waiving any Default
hereunder; provided, however, that no such supplemental agreement shall,
without the consent of all of the Banks:
(a) Extend the maturity of any Note or reduce the
principal amount thereof, or reduce the rate or change the time of
payment of interest or fees thereon;
(b) Reduce the percentage specified in the
definition of Required Banks;
(c) Extend the Termination Date, or increase the
amount of the Commitment of any Bank hereunder except as provided in
Section 9.14(b), or permit the Company to assign its rights under this
Agreement;
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(d) Release any of the collateral under the
Related Documents (except as provided in Section 6.1(a));
(e) Amend any provision of this Agreement
requiring a Pro Rata sharing among the Banks;
(f) Amend this Section 8.4; or
(g) Amend Section 7 (Defaults) of this Agreement.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent.
8.5 Application of Payments. All payments of principal and
interest hereunder and under the Notes shall be made to the Agent in
immediately available funds for the ratable account of the Banks. The Agent
shall promptly distribute to each Bank, Pro Rata, the amount of (a) principal
and interest received by the Agent, (b) each Bank's Pro Rata share of any fees,
expenses or charges collected by Agent, and (c) all amounts received by the
Agent upon realization from collateral for the Loans (including any insurance
proceeds). Any payment in good funds to the Agent for the account of a Bank
hereunder shall constitute a payment by the Company to such Bank of the amounts
so paid to the Agent, and any Notes or portions thereof so paid shall not be
considered outstanding for any purpose after the date of such payment in good
funds to the Agent. All payments or prepayments of principal and interest
shall be made Pro Rata in accordance with the amounts of the Notes then
outstanding. In the event any Bank shall receive from the Company or any other
source (other than the sale of a participation to another commercial lender to
the extent permitted in Section 9.14(a)) any payment of, on account of, or for
an obligation of the Company hereunder or under the Notes (whether pursuant to
the exercise of any right of setoff, banker's lien, realization upon any
security held for or appropriated to such obligation, counterclaim or
otherwise) other than as provided above, then such Bank shall immediately
purchase, without recourse and for cash, an interest in the obligations of the
same nature held by the other Banks so that each Bank shall thereafter have a
percentage interest in all of such obligations equal to the percentage interest
which such Bank held in the Notes outstanding immediately before such payment;
provided, if any payment so received shall be recovered in whole or in part
from such purchasing Bank, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest. The
Company specifically acknowledges and consents to the preceding sentence.
8.6 General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Banks or any
Bank for any action taken or omitted to be taken by it
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or them hereunder or in connection herewith except for its or their own gross
negligence or willful misconduct.
8.7 No Responsibility for Loans, Recitals, Etc. The Agent
shall not be responsible to the Banks for any recitals, reports, statements,
warranties or representations herein or in any Related Document or be bound to
ascertain or inquire as to the truth or accuracy of the statements or reports
of the Company with regard to the performance or observance of any of the terms
of this Agreement.
8.8 Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under the Related Documents by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Banks, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder. The Company shall be responsible for all costs and expenses
of the Agent, including reasonable attorneys' fees of in-house and outside
counsel but excluding attorneys' fees for litigation among the Banks to which
the Company is not a party.
8.9 Reliance on Documents, Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons, and,
in respect to legal matters, upon the opinion of counsel selected by the Agent,
which counsel may be employees of the Agent.
8.10 Inspections. At the request of the Banks from time to
time, the Agent shall conduct its customary review of the Company's financial
and collateral records and the collateral in accordance with Section 5.4. To
assist each Bank in its own investigation of the Company and the collateral,
each Bank may send representatives to accompany the Agent's personnel on such
inspections.
8.11 Agent's Reimbursement and Indemnification. The Banks
agree to reimburse and indemnify the Agent Pro Rata (i) for any amounts not
reimbursed by the Company for which the Agent (as Agent and not as a Bank under
this Agreement) is entitled to reimbursement by the Company under this
Agreement or the Related Documents, (ii) for any other expenses incurred by the
Agent on behalf of the Banks, in connection with the preparation, execution,
delivery, administration and enforcement (including collection or disposition
of Collateral) of this Agreement or the Related
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<PAGE> 43
Documents and (iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or
any other document delivered in connection with this Agreement or the
transactions contemplated hereby or the enforcement (including collection or
disposition of Collateral) of any of the terms hereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent.
8.12 Rights as a Lender. First Wisconsin Bank shall have
the same rights and powers hereunder as any Bank the same as though it were not
the Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. First Wisconsin Bank
may accept deposits from, lend money to, and generally engage in any kind of
banking or trust business with CST, TSI, the Company or any Subsidiary as if it
were not the Agent. Each Bank acknowledges that the other Banks may continue
to accept deposits from, lend money to, and generally engage in any kind of
banking or trust business with CST, TSI, the Company or any Subsidiary
independent of the Loans or this Agreement; provided, however, that the
Company's or any Subsidiary's obligations to a Bank from such independent
banking activities shall not be secured by the Collateral. Notwithstanding the
foregoing or Section 8.5, any fees or other income received by any Bank
directly from such independent banking activities are not to be shared with any
other Bank or the Agent.
8.13 Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank and
based on the financial statements prepared by the Company and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Related
Documents. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Related Documents.
8.14 Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company, and the Agent may
be removed at any time with or without cause by written notice received by the
Agent from the Required Banks. Upon any such resignation or removal, the
Required Banks shall have the right to appoint, on behalf of the Company and
the Banks, a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks and shall have accepted such
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<PAGE> 44
appointment within thirty days after the retiring Agent's giving notice of
resignation, then the retiring Agent may appoint, on behalf of the Company and
the Banks, a successor Agent. Such successor Agent shall be one of the Banks
or a permitted participant under Section 9.14 having capital and retained
earnings of at least $25,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, 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 hereunder arising after the date of retirement. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Section 8 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent hereunder.
8.15 Noteholders. The Agent may treat the payee of any Note
as the holder thereof until written notice of transfer shall have been filed
with the Agent, signed by such payee and in form satisfactory to the Agent.
SECTION 9 MISCELLANEOUS
9.1 Expenses and Attorneys' Fees. The Company shall pay all
reasonable fees and expenses incurred by the Banks and the Agent with respect
to this Agreement, the Related Documents, the. Loans and the security interests
granted to the Banks, and any amendments thereof, supplements thereto, or any
other collateral documents connected therewith, including without limitation
appraisal fees, environmental inspection fees and the reasonable fees of
in-house and outside counsel in connection with the preparation and negotiation
of this Agreement, the Related Documents and all amendments thereto (and any
waivers of the terms and provisions thereof) and the consummation of the
transactions contemplated herein, and protection or enforcement (including
collection and disposition of Collateral) of the Banks' rights under this
Agreement and the Related Documents, but excluding attorneys' fees for
litigation among the Banks to which the Company is not a party.
9.2 Assignability; Successors. The Company's rights and
liabilities under this Agreement are not assignable in whole or in part without
the prior written consent of the Banks. The Banks' rights under this Agreement
are not assignable without the consent of the Company except as provided in
Section 9.14. The provisions of this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the parties hereto.
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<PAGE> 45
9.3 Survival. All agreements, representations and
warranties made herein, in the Related Documents or in any document delivered
pursuant hereto shall survive the execution and delivery of this Agreement and
the Related Documents and the making of the Loans.
9.4 Governing Law. This Agreement and the Related Documents
shall be governed by the laws of the State of Wisconsin.
9.5 Counterparts; Headings. This Agreement may be executed
in several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement. The
section headings in this Agreement are inserted for convenience of reference
only and shall not constitute a part hereof.
9.6 Entire Agreement. This Agreement, the Exhibits attached
hereto, and the Related Documents contain the entire understanding of the
parties with respect to the subject matter hereof, and supersede all other
understandings, oral or written, with respect to the subject matter hereof. No
statement or writing subsequent to the date hereof purporting to modify, alter
or amend any portion hereof, including the Company's obligation to pay the
amount due hereunder (whether at maturity, by reason of acceleration or
otherwise), shall be effective unless consented to in a writing, which makes
specific reference to this Agreement, and which has been signed by the party
against which enforcement thereof is sought and in accordance with Section 8.4.
Any amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
9.7 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have
been given or made when delivered in hand or sent by facsimile or three days
after deposit in the mail. Communications or notices shall be delivered
personally or by certified or registered mail, postage prepaid, or by facsimile
and addressed as follows, unless and until either of such parties notifies the
other in accordance with this section of a change of address:
if to the Company: c/o The Christiana Companies, Inc.
Suite 3380
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. William T. Donovan,
Vice President
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<PAGE> 46
with a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Emory Ireland
if to the Agent: First Wisconsin National Bank
of Milwaukee
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Scott Roeper,
Vice President
if to the Banks: Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Eric L. Thomas,
Vice President
First Wisconsin National Bank of
Milwaukee
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Scott Roeper,
Vice President
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603
Attn: Ms. Kit C. Thomas,
Assistant Vice
President
with copies to: Michael, Best & Friedrich
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Mr. David R. Olson
9.8 Severability. Any provision of this 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 or affecting the validity or
enforceability of such provision in any other jurisdiction.
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<PAGE> 47
9.9 Further Assurances. The Company agrees to do such
further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Banks may at any
time reasonably request in connection with the administration or enforcement of
this Agreement or the Related Documents or in order better to assure and
confirm unto the Banks their rights, powers and remedies hereunder.
9.10 Conflicts and Ambiguities. In the event of any
ambiguity or conflict as between the terms of this Agreement, the Related
Documents or any other document executed and delivered pursuant to this
Agreement, the terms of this Agreement shall control.
9.11 Setoff. As additional security for payment of the
Company's obligations hereunder, the Company grants to the Banks and the Agent
a security interest in and lien on any credit balance or other money now or
hereafter owed it by any of the Banks. In addition, the Company agrees that
the Banks and the Agent may, at any time after acceleration of the Loans,
without prior notice or demand, set off against any such credit balance or
other money all or any part of the Company's obligations hereunder.
9.12 SUBMISSION TO JURISDICTION. THE AGENT AND THE BANKS
MAY ENFORCE ANY CLAIM ARISING OUT OF THIS AGREEMENT OR THE RELATED DOCUMENTS IN
ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN
MILWAUKEE, WISCONSIN. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED
WITH RESPECT TO ANY SUCH CLAIM, THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS. NOTHING HEREIN CONTAINED SHALL PRECLUDE THE AGENT
OR THE BANKS FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY
OTHER COUNTRY, STATE OR PLACE HAVING JURISDICTION OVER SUCH ACTION. THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY COURT LOCATED IN MILWAUKEE,
WISCONSIN AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
9.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO EXPRESSLY (i)
ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT
THAT THIS RIGHT MAY BE WAIVED: (ii) HEREBY KNOWINGLY, VOLUNTARILY AND WITHOUT
COERCION, WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF
OR IN RELATION TO THIS AGREEMENT OR ANY RELATED DOCUMENT TO WHICH IT IS A
PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM
ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
DOCUMENT, AND AGREES THAT ANY
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<PAGE> 48
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY;
4c(iii) ACKNOWLEDGES THAT THE WAIVER OF THE RIGHT TO TRIAL BY JURY IS NOT
EFFECTIVE UNLESS SUCH WAIVER IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY
WAIVING SUCH RIGHT; 4c(iv) ACKNOWLEDGES THAT IT HAS BEEN GIVEN THE OPPORTUNITY
TO CONSULT WITH COUNSEL AND OTHER ADVISORS OF ITS CHOICE, AND AFTER CONSULTING
WITH SUCH COUNSEL AND ADVISORS, KNOWINGLY, VOLUNTARILY AND WITHOUT DURESS,
COERCION, UNLAWFUL RESTRAINT, INTIMIDATION OR COMPULSION, ENTERS INTO THIS
AGREEMENT, BASED UPON SUCH ADVICE AND COUNSEL AND IN THE EXERCISE OF ITS
BUSINESS JUDGMENT; 4c(v) ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT HAS BEEN
ENTERED INTO IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE ACKNOWLEDGED; AND 4c(vi) ACKNOWLEDGES AND AGREES THAT
IT HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS
AGREEMENT AND IS NOT RELYING ON THE OPINION OR ADVICE OF THE BANKS, THE AGENT
OR ANY OF THEIR AGENTS OR REPRESENTATIVES IN ENTERING INTO THIS AGREEMENT.
9.14 Assignments; Participations.
(a) Any Bank may at any time sell to one or more
banks or other entities who are affiliated with such Bank or who are
approved in writing by the Company and the Required Banks
("Participants") participating interests in any Loan owing to such
Bank, any Note held by such Bank, any Commitment of such Bank or any
other interest of such Bank hereunder. In the event of any such sale
by a Bank of participating interests to a Participant, such Bank's
obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the
holder of any such Note for all purposes under this Agreement and the
Company and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under
this Agreement. The Company agrees that if amounts outstanding under
this Agreement or the Notes are due and unpaid, or shall have been
declared to be or shall have become due and payable upon the
occurrence of any Event of Default each Participant shall be deemed to
have the right of setoff in respect of its participating interest in
amounts owing under this Agreement or any Note to the same extent as
if the amount of its participating interest were owing directly to it
as a Bank under this Agreement or any Note; provided, that such right
of setoff shall be subject to the obligations of such Participant to
share with the Banks, and the Banks agree to share with such
Participant, as provided in Section 8.5. The Company authorizes each
Bank to disclose to any Participant and any such prospective
Participant any and all financial information in such Bank's
possession concerning the Company and its Subsidiaries which has been
delivered to
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<PAGE> 49
such Bank by or on behalf of the Company pursuant to this Agreement or
which has been delivered to such Bank by or on behalf of the Company
in connection with such Bank's credit evaluation of the Company and
its Subsidiaries prior to becoming a party to this Agreement.
(b) First Wisconsin Bank shall upon satisfaction
of all obligations owed to it by Prideco, Inc. purchase a portion of
the Commitment of Harris Bank in an amount sufficient to give First
Wisconsin Bank 35.23% Pro Rata Share of the Commitment and shall pay
Harris Bank an amount of the Loans outstanding to the Company at par
sufficient to adjust such Pro Rata Share. To the extent the Loans
purchased by First Wisconsin Bank from Harris Bank are LIBOR Rate
Loans, the purchase shall not be consummated until the end of the
respective LIBOR Rate Period. Upon purchase of any Commitment
hereunder, the Company agrees to issue new Notes to First Wisconsin
Bank and Harris Bank evidencing their respective Commitments.
9.15 CST Not a Party. CST is not a party to this Agreement,
and notwithstanding anything to the contrary herein, nothing contained in this
Agreement shall be deemed to create any indebtedness, obligation or liability
of CST to the Agent or any Bank.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
WI ACQUISITION CORP. HARRIS TRUST AND SAVINGS BANK
By____________________________ By___________________________
Title:________________________ Title:_______________________
FIRST WISCONSIN NATIONAL FIRST WISCONSIN NATIONAL
BANK OF MILWAUKEE OF MILWAUKEE, as Agent
By____________________________ By___________________________
Title:________________________ Title:_______________________
BANK ONE, MILWAUKEE, NA
By____________________________
Title:________________________
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<PAGE> 1
CHRISTIANA COMPANIES, INC.
EXHIBIT 21 - SUBSIDIARIES
This exhibit sets forth all of Registrant's corporate subsidiaries at June 30,
1995 and the state of incorporation of each. All subsidiaries doing business
do so under their own corporate name, and all are included in the Consolidated
Financial Statement. All subsidiaries are directly or indirectly 100% owned by
Registrant.
<TABLE>
<CAPTION>
JURISDICTION OF
NAME INCORPORATION
----------------------------- -------------
<S> <C>
Christiana Community Builders California
CST Financial, Inc. Delaware
Martinique Holdings, Inc. California
Tierrasanta, Inc. Delaware
The TLC Group, Inc. Michigan
Wiscold, Inc. Wisconsin
</TABLE>
36
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000020104
<NAME> CHRISTIANA COMPANIES, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 375,000
<SECURITIES> 2,822,000
<RECEIVABLES> 8,380,000
<ALLOWANCES> 120,000
<INVENTORY> 248,000
<CURRENT-ASSETS> 13,755,000
<PP&E> 88,174,000
<DEPRECIATION> 13,460,000
<TOTAL-ASSETS> 134,933,000
<CURRENT-LIABILITIES> 11,644,000
<BONDS> 38,256,000
<COMMON> 17,218,000
0
0
<OTHER-SE> 1,909,000
<TOTAL-LIABILITY-AND-EQUITY> 134,933,000
<SALES> 55,239,000
<TOTAL-REVENUES> 126,881,000
<CGS> 47,134,000
<TOTAL-COSTS> 116,557,000
<OTHER-EXPENSES> 367,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,842,000
<INCOME-PRETAX> 19,190,000
<INCOME-TAX> 8,061,000
<INCOME-CONTINUING> 10,445,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,445,000
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 1.98
</TABLE>
