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, 1996
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)
A Wisconsin Corporation 95-1928079
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202
(Address of principal executive office) (Zip Code)
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 13, 1996 closing price) of
voting stock less stock owned by all executive officers and directors as a
group: $38,514,602.12
Number of Shares of Common Stock Outstanding at September 13, 1996:
5,136,630
Documents incorporated by reference:
Registrant's definitive Proxy Statement for its 1996 annual meeting of
shareholders to be held on October 29, 1996, is incorporated by
reference in Part III.
The Exhibit Index is located on page 37.
<PAGE>
PART 1
Item 1. Business
At June 30, 1996, Christiana is engaged in providing public
refrigerated and non-refrigerated warehousing and logistic services;
refurbishing and selling of residential housing in San Diego; and owning
1,948,731 shares of Energy Ventures, Inc. common stock representing 10.3%
ownership of the then outstanding shares (see Note K, Subsequent Events,
to the Consolidated Financial Statements).
REFRIGERATED WAREHOUSING AND LOGISTICS
Operations in this line of business have been conducted through two
wholly owned subsidiaries, Wiscold, Inc. and The TLC Group, Inc. In
fiscal 1996 the operations and management structure of these companies
were combined to form Total Logistic Control, Inc. ("TLC").
On September 1, 1992, Christiana acquired the assets of Wiscold,
Inc., a Wisconsin corporation, formed in 1915, which was engaged in
providing public refrigerated warehousing services, vegetable processing
and individual quick freeze (IQF) services, automated vegetable poly bag
and bulk packaging services, and transportation services into and out of
its facilities.
On January 4, 1994, Christiana acquired The TLC Group, Inc., a
Zeeland, Michigan-based firm engaged in providing fully integrated third
party logistic services, including warehouse, distribution and
transportation services in both refrigerated and non-refrigerated
facilities.
Total Logistic Control now provides full service public and
contract warehousing and logistic services in all ranges of refrigerated
and ambient temperatures. TLC's transportation and distribution services
include full service truckload, less-than-truckload and pooled
consolidation in both temperature controlled and dry freight equipment,
dedicated fleet services and specialized store-door delivery formats.
Transportation and logistic services are provided utilizing company-owned
equipment as well as through carrier management services utilizing third
party common carriers. Integrated logistic services generally combine
transportation, warehousing and information services to manage the
distribution channel for a customer's products from the point of
manufacturer to the point of consumption. The Company also provides a
full range of international freight management services, fully
computerized inventory management, kitting, repackaging and just-in-time
production supply services.
TLC's customers consist primarily of national, regional and local
firms engaged in food processing, consumer product manufacturing,
wholesale distribution and retailing. During fiscal 1996, TLC's top 10
customers accounted for approximately 40% of total revenues. TLC serves
approximately 1,250 customers.
Total Logistic Control is the nation's seventh largest provider of
public refrigerated warehouse services. All of the Company's refrigerated
facilities with the exception of a downtown Milwaukee facility are modern
and efficient single story buildings at dock height elevation and fully
insulated. The downtown Milwaukee facility, known as Wisconsin Cold
Storage, is a 10 story building originally constructed in the early 1900s.
TLC's refrigerated distribution centers are:
- Rochelle Cold Storage, located in Rochelle, Illinois, is
TLC's newest and largest refrigerated facility, initially
constructed in 1986. Currently this facility is comprised
of 14,100,000 cubic feet of capacity after undergoing four
capacity expansions in 1988, 1990, 1993 and 1996. All
space is capable of temperatures of -20 degrees Fahrenheit to
ambient. Rochelle Cold Storage is strategically located at
the intersection of two main line East-West railroads, the
Burlington Northern and the Chicago Northwestern, and the
cross roads of two interstate highway I 39 and I 88.
- Badger Cold Storage, located in Beaver Dam, Wisconsin, was
originally 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 for vegetable processors
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, located in Wauwatosa, Wisconsin, 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 degrees Fahrenheit to +40 degrees
Fahrenheit 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 company owned refrigerated
and processing space 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 in the early 1900s, 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.
- Taylor Logistic Center, located in Holland, Michigan, has
undergone a number of expansions over the years, with a
major reconstruction in 1983 after a fire destroyed
approximately 50 percent of the facility. Today, this
refrigerated facility comprises 2,100,000 cubic feet of
storage capacity of which 1,300,000 cubic feet is freezer
capacity, 400,000 cubic feet is cooler capacity and 400,000
cubic feet is convertible capacity between freezer and
cooler. Taylor services both distribution customers as
well as blueberry growers in the West Michigan area. This
location is situated on a CSX rail spur with two
refrigerated rail docks. This facility is held under a
long term lease.
- Kalamazoo Logistic Center campus is located in Kalamazoo,
Michigan, and has two distribution centers at this
location. Facility #1 is a 3,300,000 cubic foot facility
with 1,100,000 cubic feet of freezer capacity, 400,000
cubic feet of cooler capacity and 1,800,000 cubic feet of
dry storage capacity. This location services a number of
distribution customers in the Midwest and is strategically
located at the I 94 and US 31 crossroads in Michigan, equal
distance between Chicago and Detroit.
- Facility #2 is located adjacent to Facility #1 and is
comprised of 2,800,000 cubic feet of capacity. This
facility contains 1,500,000 cubic feet of cooler capacity
and 1,300,000 cubic feet of freezer capacity. Two large
distribution customers utilize 75% of this space. These
facilities are held under long term leases.
- Also located at the Kalamazoo Logistic Center is a company owned
10,000 square foot transportation equipment maintenance center.
Approximately 50% of TLC's fleet of over-the-road transportation
units is domiciled in Kalamazoo, Michigan.
In addition to the refrigerated distribution centers described above,
TLC operates a national network of owned and leased dry (non-refrigerated)
distribution centers comprising over 1.5 million square feet of storage
capacity. Dry distribution centers are located in Zeeland (2), Grand
Rapids (2) and Kalamazoo, Michigan; Munster, Indiana; South Brunswick, New
Jersey; Sparks, Nevada; Atlanta, Georgia; and Bayamon, Puerto Rico.
Competition in integrated logistic services is on both a national and
local basis with a predominant emphasis on transportation services. At
present, there are no direct competitors providing the full scope
warehousing and transportation services across the full range of
temperatures in TLC's market. However, each of TLC's individual business
segments is highly fragmented with many local, regional and national
competitors, especially in the transportation and dry warehousing
industries. TLC's competitive edge is its ability to provide fully
integrated logistic services designed to its customers' distribution needs
and utilizing its network of strategically located refrigerated and dry
distribution centers. TLC's revenues and earnings can be affected by
changes in competitive pricing, particularly at the local level, harvest
yields of certain vegetable and fruit crops grown in the Upper Midwest,
and general economic conditions.
TLC holds a trademark on its name and logo. No other trademarks,
patents, licenses, franchises or concessions are considered material to
its business.
Expenditures for research and development and compliance with
environmental regulation have not been, and are not anticipated to be,
significant.
ENERGY VENTURES, INC.
The Company owns 1,948,731 shares of Energy Ventures, Inc. ("Energy
Ventures" or "EVI") representing at June 30, 1996 an approximate 10.3%
ownership interest (see Note K, Subsequent Events, to the Consolidated
Financial Statements). The Company's holdings in Energy Ventures resulted
from the June 30, 1995 merger of Prideco, a former majority owned
subsidiary of the Company, with a subsidiary of EVI and a $13.2 million
cash investment to purchase additional EVI shares in connection with the
merger transaction. The Company accounts for its investment in EVI using
the equity method (see Note B to the Consolidated Financial Statements).
Energy Ventures, a New York Stock Exchange listed firm, is an
international manufacturer and supplier of oilfield equipment and contract
drilling services. The oilfield equipment segment manufacturers high
performance tubulars and a complete line of artificial lift equipment as
well as completion tools. Energy Venture's contract drilling segment
consists of barge rigs used by major and large independent oil and gas
companies for the exploration and development of natural gas primarily in
the U.S. Gulf Coast area.
Tubular products are provided through Energy Ventures' Grant Prideco
tubular products division. This division's products consist of
proprietary drill pipe and premium tubulars. Grant Prideco also designs,
manufactures and markets proprietary premium threaded connections for
tubing and casing used in oil and gas wells. Grant Prideco's products,
particularly its premium tubulars, are used primarily in connection with
natural gas exploration and production. Energy Ventures believes that
Grant Prideco is the largest manufacturer and supplier of drill pipe in
the world and is one of the largest manufacturers of premium tubulars in
North America.
Artificial lift and completion tool equipment is provided through
Energy Ventures' newly formed EVI Oil Tools division through the
consolidation of the Highland and Production Oil Tool businesses. EVI Oil
Tools manufactures and services artificial lift and completion tool
equipment and parts used for the production of crude oil. EVI Oil Tools
provides a wide variety of proprietary and patented products. Energy
Ventures believes that EVI Oil Tools is one of the two largest
manufacturers and distributors of sucker rod lift equipment in the world.
Energy Ventures further believes that in this class of lift, EVI Oil Tools
provides the only integrated product line from the above ground equipment
to the tools submersed in the producing reservoir.
Contract drilling services are provided through Energy Ventures'
Mallard drilling division. Mallard has 35 barge rigs operating in the
U.S. Gulf Coast area or available for operation in that market. Mallard's
domestic barge fleet is complemented by six offshore platform workover and
drilling units. Internationally, Mallard operates one barge rig in
Nigeria and has an agreement to acquire two additional barges which will
be operated in Nigeria under a long term contract with a major oil
company. Mallard also operates two platform rigs in Peru. Mallard owns
four land rigs that are currently operated under contract in Argentina.
Mallard owns a 49% interest in a joint venture that owns two land rigs in
Peru.
The principal customers of Energy Ventures are both domestic and
international oil and gas companies and the companies that service them.
Energy Ventures' business is highly competitive. Revenues and earnings
can be affected by changes in competitive prices, fluctuations in the
level of activity in major markets, general economic conditions and
governmental regulations. Energy Ventures competes with a large number of
companies, some of which have greater resources and more extensive and
diversified operations.
REAL ESTATE
At June 30, 1996 Christiana owned 12 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,
originally developed and built by the Company, 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.
During fiscal 1996, the Company completed the sale of 71 condominium
units as part of a phased program to refurbish and sell 366 company-owned
condominium homes. This year's sales included 30 homes which were sold to
a single buyer in as-is condition, without the Company incurring
refurbishment expense. Real estate sales in fiscal 1996 generated pretax
gains of $2,818,000 and produced $4,400,000 of after-tax cash flow.
Since commencement of the retail sales program of 366 homes in
August, 1991 through June 30, 1996, sales of 354 homes have been completed
and an additional 8 homes were under contract for sale pending scheduled
closings in the first quarter of fiscal 1997.
PRIDECO
Until June 30, 1995, Prideco was a 60% owned subsidiary of the
Company. Prideco, headquartered in Houston, Texas, manufactured downhole
tubular products used in the exploration and production of oil and gas
wells. Prideco's products included drill pipe, drill collars, heavy
weight pipe and premium casing.
On June 30, 1995, Christiana completed a tax free merger of Prideco
with Grant Acquisition Company, a wholly owned subsidiary of Energy
Ventures, Inc. In the merger transaction Christiana exchanged its
ownership in Prideco for 1,035,858 shares of EVI common stock.
EMPLOYEES
The following table shows the number of fulltime Christiana, Wiscold
and TLC employees at the dates indicated.
Fulltime Employees at August 31,
1994 1995 1996
Christiana 30 23 14
Wiscold 207 253 292
The TLC Group 316 413 389
Prideco* 277 - -
--- --- ---
TOTAL 830 689 695
______________
* On June 30, 1995 Prideco was merged with an
operating unit of Energy Ventures, Inc. (NYSE:EVI).
The decrease in Christiana employees from 23 in 1995 to 14 in 1996 is
due to the near completion of condominium refurbishment and sales
activities in fiscal 1996. At August 31, 1996, Wiscold had 39 more
fulltime employees than at the same date a year ago due to the expansion
at Rochelle Cold Storage. The decrease in employees at The TLC Group is
primarily related to initiatives to improve productivity in warehouse
operations, the elimination of excess administrative overhead, and
reductions in operating personnel in transportation.
Item 2. Properties
Refrigerated Warehousing Facilities
At June 30, 1996, Total Logistic Control operated seven public
refrigerated warehouse facilities located in Wisconsin (3), Michigan (3),
and Illinois (1). Other than Wisconsin Cold Storage, located in downtown
Milwaukee, TLC's refrigerated facilities are large single-story buildings
constructed at dock height with full insulation and vapor barrier
protection. Refrigeration is provided by screw-type compressors in
ammonia-based cooling systems. The facilities are strategically located
and well served by rail and truck.
TLC's refrigerated warehouse facilities are described in the
following table:
Total Storage Space
Location (cubic feet in Type of Facility
millions)
Rochelle, Illinois 14.1 Distribution
Beaver Dam, Wisconsin 7.2 Production/Distribution
Wauwatosa, Wisconsin 4.3 Distribution
Holland, Michigan * 2.1 Distribution /Production
Kalamazoo, Michigan *
Building # 1** 3.3 Distribution
Building #2 2.8 Distribution
Milwaukee, Wisconsin 1.0 Distribution
----
TOTAL 34.8
====
______________
* Leased facility.
** Includes 1.8 million cubic feet of dry storage capacity.
At both the Rochelle and Beaver Dam facilities the Company owns
substantial additional acreage available for expansion.
At June 30, 1996, TLC operated 10 public non-refrigerated or dry
warehouse distribution facilities located in Michigan (5), Georgia,
Indiana, Nevada, New Jersey and Puerto Rico. Zeeland Distribution Center
II, located in Zeeland, Michigan and its recent expansion is a company
owned facility. All other dry facilities are held under leases. Lease
terms generally match underlying contracts with major customers served at
each facility. These facilities are single story block or metal
construction buildings. All dry facilities are constructed at dock height
and are approved as food grade storage facilities.
TLC's dry warehouse facilities are described on the following table:
<TABLE>
<CAPTION>
Total Storage
Space
(sq ft. in
Facility Location thousands) Type of Facility
<S> <C> <C> <C>
Zeeland Distr. Center I* Zeeland, MI 202 Public
Zeeland Distr. Center II Zeeland, MI 220 Public
Kraft Avenue Distr. Ctr.* Grand Rapids, MI 36 Public
Grand Rapids Distr. Ctr. I* Grand Rapids, MI 97 Public
Michigan Distr. Ctr. I* Kalamazoo, MI 88 Public
Central Distr. Center * Munster, IN 571 Contract/Public
East Coast Distr. Center I* So. Brunswick, NJ 200 Contract/Public
West Coast Distr. Center I* Sparks, NV 152 Contract/Public
Puerto Rico Warehouse* Bayamon, PR 30 Contract
South East Distr. Center* Atlanta, GA 66 Public
-----
TOTAL 1,662
-----
* Leased facility.
</TABLE>
TLC owns and operates a 10,000 square foot truck maintenance facility
located at the Kalamazoo Logistic Center. This facility is used for the
maintenance of TLC transportation equipment. In addition, the facility is
used to perform limited outside maintenance on non-TLC vehicles.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
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, 1993 through September 13, 1996.
<TABLE>
<CAPTION>
1996 1995 1994 1993
Quarter Ended Low High Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31 22 1/4 24 3/4 30 1/8 31 3/4 25 1/2 27 5/8 29 7/8 36
June 30 20 1/8 24 1/4 25 1/8 30 24 5/8 34 5/8 24 29 7/8
September 30* 21 22 3/8 24 3/4 27 1/2 29 1/2 34 1/2 22 5/8 27 1/4
December 31 - - 22 28 1/4 30 34 1/4 22 7/8 29 3/8
* Ten weeks ended September 13, 1996.
</TABLE>
At September 13, 1996, there were approximately 976 shareholders of
record. There have been no dividends paid since 1981, and based on the
Company's strategic business plan of reinvesting cash flow and
acquisitions, none are anticipated in the foreseeable future.
Item 6. Selected Financial Data.
Selected Financial Data is provided under the caption "Five Year
Financial Information" is included on page 34.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following table reflects the components of the Company's net
earnings, after adjusting for minority interest, for each of the past
three fiscal years:
<TABLE>
<CAPTION>
Contribution to Net Earnings
Fiscal Year Ended June 30 1996 1995 1994
Per Per Per
$ Share $ Share $ Share
(In thousands, except for per share data)
<S> <C> <C> <C> <C> <C> <C>
Christiana, including Corporate $ 971 $0.19 $1,528 $0.29 $2,923 $0.55
Refrigerated Warehousing and Logistics 1,536 0.29 2,563 0.49 994 0.19
Energy Ventures * 1,096 0.21 -- -- -- --
Prideco, net of Minority Interest -- -- 971 0.18 741 0.14
Non-Operating Writedown -- -- -- -- (1,537) (0.29)
------ ----- ------ ----- ------- -----
Net Earnings $3,603 $0.69 $5,062 $0.96 $3,121 $0.59
====== ===== ===== ===== ===== =====
_________
* Net of deferred taxes.
</TABLE>
Fiscal Year Ended June 30, 1996
The Company's consolidated revenues for fiscal 1996 were $77,170,000
compared to $126,881,000 reported for fiscal 1995. Consolidated revenues
in fiscal 1996 all of which were derived from the Refrigerated Warehousing
and Logistics segment were lower this year due entirely to the June 30,
1995 merger of Prideco. Prior to the merger, Prideco's operations were
included in Christiana's financial statements. In fiscal 1995, Prideco
contributed $55,239,000, or 43.5% of the Company's consolidated revenues.
In fiscal 1996, revenues of Christiana's operating business, Total
Logistic Control, grew 8% to $77,170,000 compared to revenues of
$71,642,000 for the previous year. The gain is primarily attributable to
increased warehouse capacity and integrated logistic services.
Selling, general and administrative expenses are lower by $4,208,000
compared to the previous year, of which approximately $3,800,000 is
attributable to the deconsolidation of Prideco.
Operating income for fiscal 1996 was $4,221,000 compared to
$10,324,000 in fiscal 1995. The prior year included $4,225,000 from
Prideco. Excluding Prideco and before non-recurring expenses of $310,000
associated with consolidating the operations of Wiscold and The TLC Group,
operating income for fiscal 1996 was down $1,568,000 from the prior year
to $4,531,000. The decline was the result primarily of lower vegetable
processing and freezing volumes, increased labor expenses associated with
the startup of high volume distribution accounts and high operating costs
in transportation stemming from less than optimal utilization of equipment
due to lower demand, high maintenance expense and price pressures related
to general market conditions. In addition, during the year Total Logistic
Control incurred expenses associated with the construction and initial
occupancy of two new distribution centers without the benefit of
concurrent revenues.
Interest income in fiscal 1996 was $531,000, down from $942,000 the
prior year due primarily to the use of $13,291,000 of cash to purchase
additional Energy Ventures common stock in connection with the Prideco
merger on June 30, 1995.
The decline in interest expense of $1,746,000 in fiscal 1996 compared
to the previous year is mainly related to the deconsolidation of Prideco
which had $1,577,000 of interest expense in fiscal 1995.
The Company's effective tax rate in fiscal 1996 increased to 40% from
37% primarily because of the absence of tax exempt interest and increased
state taxes due to year to year changes in the relative state components
of the Company's earnings.
Consolidated net earnings for fiscal 1996 were $3,603,000 or $.69 per
share, down $1,459,000 from net earnings in fiscal 1995 of $5,062,000 or
$.96 per share. Before the effects of the consolidation charges, net
income was $3,789,000 or $.73 per share, a decline of 25% compared to
fiscal 1995. Equity in earnings of Energy Ventures totaled $1,096,000
after providing for deferred taxes. In fiscal 1995, Prideco's operations
contributed net earnings of $971,000. Real estate sales in fiscal 1996
totaled 71 condominium homes contributing net earnings of $1,712,000
compared to sales of 48 homes last year which generated earnings of
$1,850,000. In fiscal 1996, 30 homes were sold to a single buyer in an
as-is condition without the Company incurring refurbishment expense. At
year end, Christiana had 12 condominium homes available for sale, of which
8 were under contract awaiting scheduled closings during the first quarter
of 1997.
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 primarily to higher
absorption factors resulting from near full capacity production levels.
Product pricing in Prideco's industry was intensely competitive throughout
fiscal 1995 reflecting the 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, vegetable
processing and IQF capacity all of which generally produce higher 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. 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, with Grant Acquisition Company, a subsidiary of
Energy Ventures, Inc. In the merger transaction Christiana received
1,035,858 shares of EVI common stock in exchange for its ownership in
Prideco. The investment in Energy Ventures, Inc. is accounted for under
the equity method.
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
$5,062,000 or $0.96 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.
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 decreased in fiscal 1995 to 37% from
38% last year primarily resulting from tax exempt interest.
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.
Year Ended June 30
1995 1994
Revenues $71,642,000 $67,572,000
Net earnings 4,173,000 2,998,000
Earnings per share $.079 $0.56
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.
Financial Condition, Liquidity and Capital Resources
Cash equivalents and short-term investments totaled $4,478,000 at
June 30, 1996 compared to $3,197,000 at June 30, 1995. The Company's
working capital at June 30, 1996 was $2,189,000 compared to $2,111,000 at
June 30, 1995.
Operating activities in fiscal 1996 provided cash of $8,563,000
derived primarily from net earnings, depreciation and amortization.
Capital expenditures in fiscal 1996 totaled $19,715,000, the major
components of which were: $11.4 million to construct and equip a new 3.5
million cubic foot refrigerated distribution and logistic center in
Rochelle, Illinois; $2.2 million to construct and equip a new dry
distribution center in Zeeland, Michigan; $2.3 million of transportation
equipment additions and replacements, net of disposals; and $2.3 million
in condominium home refurbishments.
Financing activities in fiscal 1996 provided $3,648,000 consisting of
$5.4 million of increased long term debt, net of repayments, issued to
partially fund the two new warehouse additions. During fiscal 1996 the
Company acquired 59,000 shares of its common stock in two transactions for
a total cost of $1,236,000.
The Company's balance sheet at June 30, 1996, reflects $23,631,000 as
its carrying value for 1,948,731 shares of Energy Ventures common stock.
At June 30, 1996 these shares had a market value of $63,334,000 or $32.50
per share. EVI has not paid dividends on its common stock since 1984 and
it is anticipated, for the foreseeable future, that its earnings will be
retained for the development of its business.
During fiscal 1996 the Company refinanced a revolving credit
agreement which was originally organized in 1994 to partially fund the
acquisition of Wiscold, Inc. The Company established a new $40 million 5
year revolving credit agreement to fund the $11.4 million facility
expansion in Rochelle, Illinois and to refinance the $29.8 million
existing outstanding balance under the former agreement. Borrowings under
the new revolving credit agreement are now unsecured and carry a 50 basis
point lower rate of interest. At June 30, 1996 borrowings under this
agreement totaled $35,248,000.
At June 30, 1996, the Company had in place a $15 million unsecured
line of credit for general corporate purposes. Borrowings under this line
of credit bear interest on a floating rate of LIBOR plus 125 basis points
or prime at the Company's option. At June 30, 1996, there were no
borrowings under this facility.
As otherwise described in this report, the Company has been engaged
in refurbishing and selling its condominium homes. Sales of the remaining
12 homes whose refurbishment is substantially completed are anticipated in
the first quarter of fiscal 1997. At June 30, 1996, 8 of the 12 homes
available for sale were in escrow awaiting scheduled closings.
The Company's current sources of capital include: cash generated
from operations, the sale of 12 condominium homes, sale of existing
mortgage portfolio, and borrowings under its revolving credit agreement
and line of credit. The Company believes that current reserves of cash
and short-term investments, access to existing credit facilities and
internally generated cash from operations are sufficient to finance the
projected cash requirements of its current operations.
The Company continues to evaluate new acquisitions in areas strategic
to existing operations as well as new lines of business. Future
acquisitions may be funded through cash flow from operations, liquidation
of mortgage notes receivable, liquidation of Energy Ventures stock,
borrowings under its existing line of credit and other facilities, and
equity issuance if desirable.
As of June 30, 1996, the Company had no material capital commitments.
Item 8. Financial Statement and Supplementary Data.
See Index to Financial Information on page 16.
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 1996 Proxy Statement is
incorporated herein by reference.
Item 11. Executive Compensation.
The material in Section IV of the 1996 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 1996 Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The material in Section IV of the 1996 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 16.
Exhibits:
See Index on page 37.
Reports on Form 8-K:
Registrant filed a report on Form 8-K dated June 11, 1996 that
disclosed the change in accounting for the investment in EVI.
<PAGE>
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 13, 1996 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 13, 1996 by the
following persons on behalf of the Registrant and in the capacity
indicated.
Signature
/s/ Sheldon B. Lubar Chairman, Chief Executive
Sheldon B. Lubar Officer and a Director
/s/ Gary R. Sarner President, Chief Operating
Gary R. Sarner Officer and a Director
/s/ William T. Donovan Executive Vice President, Chief
William T. Donovan Financial Officer and a Director
/s/ Raymond F. Logan Vice President- Real Estate and
Raymond F. Logan a Director
/s/ Betty J. White Treasurer, Controller and
Betty J. White Assistant Secretary
/s/ Nicholas F. Brady Director
Nicholas F. Brady
/s/ David J. Lubar Director
David J. Lubar
/s/ Albert O. Nicholas Director
Albert O. Nicholas
<PAGE>
CHRISTIANA COMPANIES, INC.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1996
CHRISTIANA COMPANIES, INC.
Index to financial information
Page No.
Consolidated Statements of Earnings for the years
ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . 17
Consolidated Balance Sheets as June 30, 1996 and June 30, 1995 . . 18
Consolidated Statements of Shareholders' Equity for the
years ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . 19
Consolidated Statements of Cash Flows for the years
ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . 20
Report of Independent Public Accountants . . . . . . . . . . . . . 21
Notes to Consolidated Financial Statements . . . . . . . . . . . . 22
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 34
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended June 30
1996 1995 1994
Revenues:
Product Sales $ - $55,239,000 $46,428,000
Warehousing, Rental and
Related Services 77,170,000 71,642,000 43,725,000
---------- ----------- ----------
77,170,000 126,881,000 90,153,000
---------- ----------- ----------
Cost and Expenses:
Cost of Product Sales - 47,134,000 39,840,000
Warehousing, Rental and
Related Expenses 65,418,000 57,684,000 35,136,000
Selling, General &
Administrative Expenses 7,531,000 11,739,000 8,755,000
----------- ----------- ----------
72,949,000 116,557,000 83,731,000
----------- ----------- ----------
Earnings From Operations 4,221,000 10,324,000 6,422,000
----------- ----------- ----------
Other Income (Expense):
Interest Income 531,000 942,000 896,000
Interest Expense (3,096,000) (4,842,000) (3,710,000)
Gain on Sales of Real Estate 2,818,000 3,083,000 5,615,000
Equity in Earnings of Energy
Ventures 1,745,000 - -
Other Income (Expense), Net (208,000) (367,000) (3,316,000)
---------- ---------- ----------
1,790,000 (1,184,000) (515,000)
---------- ---------- ----------
Earnings Before Income Taxes
and Minority Interest 6,011,000 9,140,000 5,907,000
Income Tax Provision 2,408,000 3,394,000 2,256,000
---------- ---------- ----------
Net Earnings Before Minority
Interest 3,603,000 5,746,000 3,651,000
Minority Interest - (684,000) (530,000)
---------- ---------- ----------
Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000
========== ========== ==========
Earnings Per Share $0.69 $0.96 $0.59
========== ========== ==========
Weighted Average Number of
Shares Outstanding 5,186,679 5,275,947 5,320,876
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30
1996 1995
ASSETS
Current Assets:
Cash and Cash Equivalents $3,728,000 $ 375,000
Short-Term Investments 750,000 2,822,000
Accounts Receivable, Net 8,294,000 8,260,000
Inventories, Prepaids and Other 1,732,000 2,298,000
---------- ----------
Total Current Assets 14,504,000 13,755,000
---------- ----------
Long-Term Assets:
Investment in Energy Ventures 23,631,000 21,886,000
Mortgage Notes Receivable 3,314,000 3,205,000
Rental Properties, Net 867,000 3,610,000
Fixed Assets, Net 81,283,000 71,104,000
Goodwill 5,749,000 5,906,000
Other Assets 1,670,000 2,276,000
----------- -----------
Total Long-Term Assets 116,514,000 107,987,000
----------- -----------
TOTAL ASSETS $131,018,000 $121,742,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 5,294,000 $ 2,774,000
Accrued Liabilities 4,072,000 5,347,000
Short-Term Debt 1,354,000 1,844,000
Current Portion of Long-Term Debt 1,295,000 1,679,000
------------ ------------
Total Current Liabilities 12,015,000 11,644,000
------------ ------------
Long-Term Liabilities:
Long-Term Debt 44,013,000 38,256,000
Deferred Income Taxes 12,674,000 11,866,000
Other Liabilities 1,239,000 1,266,000
------------ ------------
Total Long-Term Liabilities 57,926,000 51,388,000
------------ ------------
Total Liabilities 69,941,000 63,032,000
------------ ------------
Shareholders' Equity:
Preferred Stock - -
Common Stock 17,218,000 17,218,000
Treasury Stock at Cost (1,236,000) -
Retained Earnings 45,095,000 41,492,000
------------ ------------
Total Shareholders' Equity 61,077,000 58,710,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $131,018,000 $121,742,000
=========== ===========
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY (1) (2)
<CAPTION>
Additional
Common Stock Treasury Stock Paid-in Retained
Shares Amount Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Net Earnings for the Year - - - - - 5,062,000 5,062,000
--------- --------- ------ -------- ---------- ---------- ----------
Balance, June 30, 1995 5,195,630 $5,196,000 - - $12,022,000 $41,492,000 $58,710,000
Purchase of Treasury
Stock - - (59,000) $(1,236,000) - - $(1,236,000)
Net Earnings for the Year - - - - - 3,603,000 3,603,000
--------- --------- ------ -------- ---------- ---------- ----------
Balance, June 30, 1996 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $45,095,000 $61,077,000
========= ========= ====== ========= ========== ========== ==========
(1) Preferred stock: $10 par value, 1,000,000 shares authorized, none
issued.
(2) Common stock: $1 par value, 12,000,000 shares authorized.
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30
1996 1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000
Adjustments to Reconcile Net
Earnings to Net Cash Provided
By Operating Activities:
Depreciation and Amortization 7,159,000 8,207,000 6,255,000
Gain on Sale of Assets (3,024,000) (3,213,000) (5,607,000)
Deferred Income Tax (Benefit)
Provision (1,084,000) 1,462,000 (483,000)
Minority Interest - 684,000 530,000
Equity in Earnings of EVI (1,745,000) - -
Changes in Assets and
Liabilities:
(Increase) in Accounts
Receivable (34,000) (2,240,000) (2,436,000)
(Increase) Decrease in
Inventories (191,000) 2,566,000 (5,337,000)
(Increase) Decrease in
Prepaids and Other Assets 788,000 (485,000) 4,058,000
Increase in Payables and
Accruals 3,091,000 396,000 779,000
---------- ---------- ----------
Net Cash Provided By Operating
Activities 8,563,000 12,439,000 880,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from (Purchase of)
Short-Term Investments, Net
Investments, Net 2,072,000 11,742,000 (11,064,000)
Capital Expenditures (19,715,000) (10,931,000) (7,285,000)
Business Acquisitions, Net of
Cash Acquired - (13,291,000) (5,630,000)
(Increase) Decrease in Mortgage
Notes Receivable (109,000) 356,000 1,131,000
Decrease in Cash due to Merger
of Prideco - (533,000) -
Proceeds from Sale of Assets 8,894,000 6,954,000 11,538,000
----------- --------- ----------
Net Cash Used In Investing
Activities (8,858,000) (5,703,000) (11,310,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings (Payments) on Line
of Credit, Net (489,000) 501,000 1,533,000
Stock Repurchase (1,236,000) (3,805,000) -
Proceeds from Notes Payable 9,011,000 4,125,000 5,000,000
Payments of Notes and
Mortgages Payable (3,638,000) (11,111,000) (4,983,000)
---------- ----------- ----------
Net Cash Provided By (Used In)
Financing Activities 3,648,000 (10,290,000) 1,550,000
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,353,000 (3,554,000) (8,880,000)
BEGINNING CASH AND CASH
EQUIVALENTS, JULY 1 375,000 3,929,000 12,809,000
---------- ---------- -----------
ENDING CASH AND CASH EQUIVALENTS,
JUNE 30 $ 3,728,000 $ 375,000 $ 3,929,000
========== ========== ===========
Supplemental Disclosures of Cash
Flow Information:
Interest Paid $ 3,228,000 $ 4,612,000 $ 3,829,000
Income Taxes Paid $ 2,579,000 $ 2,950,000 $ 1,570,000
See notes to consolidated financial statements.
<PAGE>
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, 1996
and 1995, 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, 1996, as restated (See Note B). 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, 1996 and 1995, and
the results of its consolidated operations and its cash flows for each of
the three years in the period ended June 30, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
August 2, 1996
<PAGE>
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Three years ended June 30, 1996)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business: At June 30, 1996, Christiana is engaged in
providing public refrigerated and dry (non-refrigerated) warehousing and
logistic services; refurbishing and selling of residential housing in San
Diego; and owning 1,948,731 shares of Energy Ventures, Inc. common stock
which represented a 10.3% ownership interest at that date.
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.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Short-Term Investments: As of June 30, 1996 and 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, which approximates cost.
Accounts Receivable: Accounts receivable are presented net of a
reserve for bad debts of $253,000, $120,000 and $94,000 at June 30, 1996,
1995, and 1994, respectively. The provision for bad debts was $227,000,
$85,000 and $88,000 for the years ended June 30, 1996, 1995, and 1994,
respectively. Deductions from the reserve were $94,000, $59,000 and
$122,000 for the years ended June 30, 1996, 1995, and 1994, respectively.
Investment in Energy Ventures, Inc.: At June 30, 1996, the Company
owned 1,948,731 shares of Energy Ventures, Inc. (NYSE:EVI) which
represented 10.3% of the then outstanding common stock. Based on the
facts and circumstances associated with the Investment in EVI, including
the Company's Board representation, and in accordance with the Accounting
Principles Board Opinion No. 18 the Company accounts for this investment
under the equity method of accounting. At June 30, 1996, these shares had
a market value of $63,334,000.
Mortgage Notes Receivable: At June 30, 1996, mortgage notes
receivable, derived from condominium sales, totaled $3,314,000 and accrue
interest at rates ranging from 6.5% to 9.125%.
The principal balance of mortgage notes receivable matures as follows:
Year Ended June 30
1997 $ 33,000 2000 $ 66,000
1998 54,000 2001 44,000
1999 129,000 Thereafter 2,988,000
During the years ended June 30, 1996 and 1995, mortgage notes
receivable of $286,000 and $928,000, respectively, 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:
At June 30, Estimated
1996 1995 Useful Lives
Rental Properties $ 1,029,000 $ 4,504,000 20-40 years
Less: Accumulated
Depreciation (162,000) (894,000)
---------- ----------
$867,000 $3,610,000
========== ==========
Fixed Assets:
Land 3,416,000 3,416,000 -
Machinery and Equipment 54,314,000 46,081,000 5-7 years
Buildings and Improvements 41,394,000 34,033,000 30-32 years
Construction-In-Progress 12,000 140,000 -
Less: Accumulated
Depreciation (17,853,000) (12,566,000)
---------- ----------
$81,283,000 $71,104,000
========== ==========
Goodwill: Goodwill is amortized on a straight-line basis over 40 years
($157,000 in 1996 and $214,000 in 1995). The accumulated amortization at
June 30, 1996 and 1995 was $409,000 and $252,000, respectively. The
Company continually evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life may warrant
revision or that the remaining balance of goodwill may not be recoverable.
Other Assets: Other Assets primarily represent deferred charges and
cash surrender value of officer's life insurance. At June 30, 1995, Other
Assets included a partnership interest which represented 5% ownership in a
Chicago office building. This asset was written down to $230,000 in 1994
to reflect its realizable value.
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.
Cash and Cash Equivalents: The Company considers all highly liquid
investments with original maturities of less than ninety days to be cash
equivalents.
Reclassifications: Certain reclassifications have been made in the
1994 and 1995 statements to conform with 1996 presentation.
B. RESTATEMENTS:
The Company has restated its previously issued June 30, 1995 financial
statements to reflect adjustments required to account for the Company's
investment in Energy Ventures, Inc. under the equity method of accounting
instead of the cost method, as was previously reported. After
reevaluating all of the facts and circumstances, the Company has
determined that the equity method is the appropriate accounting for this
investment under generally accepted accounting principles.
The restated Consolidated Statement of Earnings for the year ended
June 30, 1995 excludes the "Gain on Merger of Prideco" in the amount of
$10,050,000 (pre-tax) that was originally reported, along with the related
income tax effects.
The restated June 30, 1995 Balance Sheet no longer reports the
Investment in EVI as an available for sale security. Accordingly, the
originally reported "Unrealized Investment Gain, Net of Tax" of $1,909,000
and the related deferred tax components have been removed from the
restated June 30, 1995 Balance Sheet.
The impact of the restatement is as follows:
Year Ended
June 30, 1995
Earnings Before Income Taxes and
Minority Interest
As previously reported $19,190,000
As restated $ 9,140,000
Net Earnings
As previously reported $10,445,000
As restated $ 5,062,000
Earnings Per Share
As previously reported $1.98
As restated $0.96
Shareholders' Equity
As previously reported $66,002,000
As restated $58,710,000
C. 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. (NYSE: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. 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.
Concurrent 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 4, 1994, the Company acquired, by way of merger, The TLC
Group, Inc., a Zeeland, Michigan-based firm which provides fully
integrated logistic services including refrigerated and dry 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 fiscal year 1994.
Year Ended Year Ended
June 30 June 30
1995 1994
Revenues $71,642,000 $67,572,000
Net Earnings 4,173,000 2,998,000
Earnings Per Share $0.79 $0.56
Pro forma results are not necessarily indicative of results that would
have occurred had the purchase been made at the beginning of the
respective period, or of results which may occur in the future.
D. INDEBTEDNESS:
The following is a summary of consolidated indebtedness:
At June 30,
1996 1995
Christiana Corporate
Notes Payable $ 2,286,000 $2,286,000
Wiscold, Inc.
Revolving Credit Agreement 35,248,000 30,273,000
The TLC Group, Inc.
Line of Credit 1,354,000 1,844,000
Notes Payable, Equipment
Related 6,010,000 5,612,000
Subordinated Note 1,764,000 1,764,000
---------- ----------
Subtotal 46,662,000 41,779,000
Less: Current Portion of Long-
Term Debt (1,295,000) (1,679,000)
Short-Term Debt (1,354,000) (1,844,000)
---------- ----------
Long-Term Debt $44,013,000 $38,256,000
========== ==========
Christiana has a $15,000,000 unsecured line of credit, renewable
annually. Borrowings under this line bear interest at either the London
Interbank Offered Rate ("LIBOR") plus 125 basis points, or prime at the
Company's option. No compensating balances are required under the terms
of this credit facility.
Notes payable attributable to Christiana Corporate are amounts due as
a result of repurchased common stock.
Wiscold, Inc. has a new revolving credit agreement that provides for
borrowings at June 30, 1996 up to $40,000,000. This new credit facility
replaces a $44 million credit facility which was organized in conjunction
with the acquisition of Wiscold. The new revolving credit was organized
to partially fund the construction of a new refrigerated distribution
center in Rochelle, Illinois and to refinance the former credit facility.
Borrowings under this agreement mature on March 31, 2001 and bear
interest, payable monthly at either LIBOR plus 125 basis points, or a
floating rate at the bank's prime rate (6.7% at June 30, 1996) and are
unsecured. At June 30, 1995 Wiscold's borrowings under its original
revolving credit were priced at LIBOR plus 175 basis points or prime
(7.10% at June 30, 1995) and were secured by Wiscold's assets. The new
revolving credit agreement 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.
In fiscal 1993, 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. The Swap was issued with respect to principal
in the original amount of $30,000,000 declining with scheduled reductions
and matures on December 31, 1997. At June 30, 1996, $20,750,000 of
borrowings were covered by the swap thereby fixing the rate on this amount
at 6.55%.
The TLC Group has a bank line of credit which permits borrowings up to
$5,000,000. Borrowings bear interest at either LIBOR plus 200 basis
points, or the bank's prime rate, at TLC's option (7.48% and 8.06% at June
30, 1996 and 1995, 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
9.37%. 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.
Future maturities of consolidated indebtedness are as follows:
<TABLE>
<CAPTION>
Year Ended
June 30 Wiscold TLC Group Christiana Total
<C> <C> <C> <C> <C>
1997 - $1,295,000 - $ 1,295,000
1998 $ 248,000 1,469,000 $2,286,000 4,003,000
1999 5,000,000 2,919,000 - 7,919,000
2000 5,000,000 212,000 - 5,212,000
2001 25,000,000 151,000 - 25,151,000
Thereafter - 1,728,000 - 1,728,000
</TABLE>
The weighted average interest rate paid on short term borrowings, all
of which was attributable to TLC, was 8.21% and 7.69% for fiscal 1996 and
1995, respectively. The carrying value of the Company's debt approximates
fair value.
E. INCOME TAXES:
The Income Tax Provision consists of the following:
Year Ended June 30
1996 1995 1994
Current
Federal $3,029,000 $1,866,000 $2,372,000
State 463,000 66,000 367,000
Deferred (1,084,000) 1,462,000 (483,000)
--------- ---------- ---------
$2,408,000 $3,394,000 $2,256,000
========= ========== =========
The components of Deferred Income Taxes are:
At June 30
1996 1995
Deferred Tax Assets:
Alternative Minimum Tax $1,255,000 $1,279,000
Other 1,431,000 817,000
--------- ---------
Total Deferred Tax Asset $ 2,686,000 $ 2,096,000
--------- ---------
Deferred Tax Liabilities:
Condemnation Proceeds $ 5,259,000 $ 5,259,000
Tax Over Book Depreciation 7,311,000 6,752,000
Investment in Joint Venture - 1,730,000
Equity in Earnings of EVI 649,000 -
Installment Sale 676,000 418,000
Other 1,083,000 1,313,000
---------- ----------
Total Deferred Tax Liability $14,978,000 $15,472,000
---------- ----------
Net Deferred Tax Liability $12,292,000 $13,376,000
========== ==========
A reconciliation of the statutory Federal income tax rate to the
Company's effective tax rate follows:
Year Ended June 30
1996 1995 1994
Statutory Federal Income Tax Rate 34% 34% 34%
Increase (Reduction) in Taxes
Resulting From:
State Income Tax, Net 5 3 3
Municipal Bond Interest - (1) -
Other 1 1 1
---- ---- ----
40% 37% 38%
==== ==== ====
F. 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 1996, options for a
total of 100,000 shares were granted at an exercise price of $24.25.
During fiscal 1995, options for a total of 5,000 shares were granted at an
exercise price of $28.8125 per share. At June 30, 1996 and 1995, 23.5%
and 27.4%, respectively, of total options granted were exercisable. The
remaining options are exercisable over the next eight years.
Changes in stock options outstanding are summarized as follows:
Number of Exercise Price
Options Per Option
Balance, June 30, 1993 116,250 33.500 - 34.375
Options Granted 35,000 26.000 - 27.125
------- ---------------
Balance, June 30, 1994 151,250 26.000 - 34.375
Options Granted 5,000 28.8125
Options Canceled 5,000 27.125
------- ---------------
Balance, June 30, 1995 151,250 26.000 - 34.375
Options Granted 100,000 24.250
Options Canceled 7,500 27.125 - 34.375
------- ---------------
Balance, June 30, 1996 243,750 24.250 - 34.375
======= ===============
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.
G. COMMITMENTS:
The TLC Group has operating leases for warehousing and office
facilities. Rental expense under these leases was $5,479,000, $5,100,000
and $3,135,000 in fiscal 1996, 1995 and 1994, respectively. At June 30,
1996, future minimum lease payments under these operating leases are as
follows:
Year Ended June 30
1997 $ 4,896,000
1998 2,712,000
1999 2,471,000
2000 2,124,000
2001 1,894,000
Thereafter 13,682,000
H. ACCOUNTING STANDARDS:
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of" and Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation." The Company has adopted these
statements effective July 1, 1996. The Company elected to adopt only the
disclosure requirements of SFAS No. 123. The adoption of SFAS No. 121 is
not expected to have a material impact on the financial statements.
I. 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. On June 30, 1995,
the Company's manufacturing segment, Prideco, was merged with a unit of
Energy Ventures, Inc.
<TABLE>
<CAPTION>
Year Ended June 30
1996 1995 1994
<S> <C> <C> <C>
REVENUES
Industrial Products $ - $ 55,239,000 $ 46,428,000
Warehousing and Rental Operations 77,170,000 71,642,000 43,725,000
----------- ----------- -----------
Total $ 77,170,000 $126,881,000 $ 90,153,000
=========== =========== ===========
EARNINGS FROM OPERATIONS
Industrial Products $ - $ 4,226,000 $ 3,222,000
Warehousing and Rental Operations 5,580,000 7,533,000 4,858,000
Corporate Expenses (1,359,000) (1,435,000) (1,658,000)
----------- ----------- -----------
Total $ 4,221,000 $ 10,324,000 $ 6,422,000
=========== =========== ===========
ASSETS
Industrial Products $ - $ - $ 30,372,000
Warehousing and Rental Operations 98,370,000 91,992,000 95,538,000
Corporate 32,648,000 29,750,000 21,655,000
----------- ----------- -----------
Total $131,018,000 $121,742,000 $147,565,000
=========== =========== ===========
CAPITAL EXPENDITURES
Industrial Products $ - $ 682,000 $ 979,000
Warehousing and Rental Operations 19,715,000 10,249,000 6,306,000
----------- ----------- -----------
Total $ 19,715,000 $ 10,931,000 $ 7,285,000
=========== =========== ===========
DEPRECIATION AND AMORTIZATION
Industrial Products $ - $ 1,256,000 $ 1,240,000
Warehousing and Rental Operations 7,144,000 6,885,000 4,950,000
Corporate 15,000 66,000 65,000
----------- ----------- -----------
Total $ 7,159,000 $ 8,207,000 $ 6,255,000
=========== =========== ===========
</TABLE>
There were no intersegment sales. Corporate assets consist primarily
of cash equivalents, short-term investments, marketable securities and
residential real estate.
J. ENERGY VENTURES, INC. SUMMARY FINANCIAL INFORMATION:
The following represents summarized financial information for Energy
Ventures, Inc. The Company's investment is accounted for under the equity
method. Energy Ventures fiscal year ends on December 31, 1995. For more
information regarding Energy Ventures' financial condition and operations,
reference is made to the Energy Ventures Form 10-K filed with the
Securities and Exchange Commission.
Summarized Balance Sheets
At December 31,
(In Thousands) 1995 1994
Current Assets $249,574 $164,803
Noncurrent Assets 241,486 185,885
------- -------
Total Assets $491,060 $350,688
======= =======
Current Liabilities $ 97,116 $ 70,465
Noncurrent Liabilities 165,878 169,310
Stockholders' Equity 228,066 110,913
------- -------
$491,060 $350,688
======= =======
Summarized Income Statements
For Year Ended December 31,
1995 1994 1993
(In Thousands)
Revenues $ 351,587 $ 248,537 $246,017
Expenses (319,147) (229,068) (227,462)
Other Expenses, Net (16,049) (13,021) (5,744)
-------- -------- --------
Income Before Taxes 16,391 6,448 12,811
Taxes (5,080) (1,806) (4,864)
-------- -------- --------
Income from Continuing
Operations 11,311 4,642 7,947
Discontinued Operations, Net
of Taxes - - (2,057)
-------- -------- --------
Income before Extraordinary
Item 11,311 4,642 5,890
Extraordinary Item - (3,784) -
-------- -------- --------
Net Income $ 11,311 $ 858 $ 5,890
======== ======= =======
The Company's share of undistributed net earnings of EVI included in
retained earnings was $1,096,000 at June 30, 1996.
K. SUBSEQUENT EVENTS:
In July 1996, mortgage notes receivable of $1,305,000 were sold or
prepaid. Principal proceeds received were approximately $1,284,000.
In July 1996, EVI issued 3.45 million additional shares of stock at
$31.125 raising $102 million of equity capital. The share issuance
reduced Christiana's ownership percentage from 10.3% to 8.7%. The effect
of this issuance will result in an increase in the Company's investment in
EVI of approximately $6.7 million. This increase will be recorded through
an increase to shareholders' equity, net of tax, during the first quarter
of fiscal 1997.
CHRISTIANA COMPANIES, INC.
L. 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, 1996 and 1995
At June 30,
1996 1995
ASSETS:
Current Assets:
Cash Equivalents and Short-Term
Investments $ 4,444,000 $ 2,823,000
Accounts Receivable and Other Current
Assets 1,309,000 1,590,000
Long-Term Assets:
Investment in EVI 23,631,000 21,886,000
Investments in and Advances to
Subsidiaries 34,071,000 34,418,000
Fixed Assets, Net 11,330,000 11,395,000
Other Assets 1,035,000 987,000
---------- ----------
TOTAL ASSETS $75,820,000 $73,099,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued
Liabilities $ 1,884,000 $ 2,515,000
Long-Term Liabilities:
Deferred Income Taxes 9,711,000 8,714,000
Other Liabilities 3,148,000 3,160,000
---------- ----------
Total Liabilities 14,743,000 14,389,000
---------- ----------
Total Shareholders' Equity 61,077,000 58,710,000
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $75,820,000 $73,099,000
========== ==========
<PAGE>
CHRISTIANA COMPANIES, INC.
Parent Company Only Statements
Condensed Statement of Operations
For the Years Ended June 30, 1996, 1995 and 1994
Fiscal Year Ended June 30,
1996 1995 1994
Revenues:
Warehousing, Rentals and
Related Services $11,432,000 $10,943,000 $9,600,000
---------- ---------- ----------
11,432,000 10,943,000 9,600,000
---------- ---------- ----------
Costs and Expenses:
Warehousing, Rentals and
Related Expenses 7,692,000 6,682,000 4,506,000
Selling, General and
Administrative Expenses 1,504,000 1,582,000 3,369,000
---------- ---------- ----------
9,196,000 8,264,000 7,875,000
---------- ---------- ----------
Earnings From Operations 2,236,000 2,679,000 1,725,000
Other Income (Expense):
Interest Income (Expense),
Net (426,000) 2,000 163,000
Equity in Earnings of EVI 1,745,000 - -
Other Income (Expense) (3,129,000) (2,683,000) (4,888,000)
---------- ---------- ----------
Total Other Income
(Expense) (1,810,000) (2,681,000) (4,725,000)
---------- ---------- ----------
Earnings Before Income Taxes 426,000 (2,000) (3,000,000)
Income Tax Provision
(Benefit) 167,000 (648,000) (1,200,000)
---------- ----------- -----------
Net Earnings (Loss) Before
Equity in Undistributed
Net Earnings of
Subsidiaries 259,000 646,000 (1,800,000)
Equity in Undistributed Net
Earnings of Subsidiaries 3,344,000 4,416,000 4,921,000
---------- ---------- ---------
Net Earnings $ 3,603,000 $ 5,062,000 $3,121,000
========== ========== =========
<PAGE>
CHRISTIANA COMPANIES, INC.
Parent Company Only Statements
Statement of Cash Flows
For the Years Ended June 30, 1996, 1995 and 1994
Fiscal Year Ended June 30,
1996 1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000
Adjustments to Reconcile Net
Earnings to Net Cash
Provided By (Used In)
Operating Activities:
Equity in Earnings of EVI (1,745,000) - -
Equity in Undistributed Net
Income of Subsidiaries (3,344,000) (4,416,000) (4,921,000)
Depreciation and
Amortization 859,000 828,000 762,000
Deferred Income Tax
Provision 997,000 1,348,000 710,000
Net Changes in Assets and
Liabilities (410,000) 1,868,000 (2,402,000)
--------- --------- ----------
Net Cash Provided By (Used In)
Operating Activities (40,000) 4,690,000 (2,730,000)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from (Purchase of) 2,072,000 11,742,000 (11,064,000)
Short-Term Investments
Capital Expenditures (793,000) (143,000) (583,000)
Investment In Subsidiaries 3,691,000 (2,546,000) 5,183,000
Investment In Energy Ventures,
Inc. - (13,291,000) -
---------- ----------- -----------
Net Cash Provided By (Used In)
Investing Activities 4,970,000 (4,238,000) (6,464,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Stock Repurchase/Purchase of
Treasury Stock (1,236,000) (3,805,000) -
---------- --------- -----------
Net Cash Used In Financing
Activities (1,236,000) (3,805,000) -
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,694,000 (3,353,000) (9,194,000)
BEGINNING CASH AND CASH
EQUIVALENTS, JULY 1 1,000 3,354,000 12,548,000
---------- ----------- ----------
ENDING CASH AND CASH EQUIVALENTS,
JUNE 30 $ 3,695,000 $ 1,000 $ 3,354,000
========== =========== ==========
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC.
QUARTERLY FINANCIAL INFORMATION
(unaudited)
<CAPTION>
Quarter Ended
September December March June Total
<S> <C> <C> <C> <C> <C>
Fiscal 1996
Warehousing, Logistics and
Rental Revenue $19,937,000 $19,651,000 $19,416,000 $18,166,000 $77,170,000
Earnings From Operations 2,053,000 1,053,000 810,000 305,000 4,221,000
Earnings Before Taxes 2,694,000 1,249,000 1,510,000 558,000 6,011,000
Net Earnings 1,638,000 760,000 918,000 287,000 3,603,000
Earnings Per Share $0.32 $0.14 $0.18 $0.05 $0.69
Fiscal 1995
Product Sales $12,900,000 $12,790,000 $14,221,000 $15,328,000 $ 55,239,000
Warehousing, Logistics 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 1,474,000 9,140,000
Net Earnings 2,515,000 1,030,000 741,000 776,000 5,062,000
Earnings Per Share $0.46 $0.20 $0.14 $0.16 $0.96
</TABLE>
<TABLE>
FIVE YEAR FINANCIAL INFORMATION
<CAPTION>
Year Ended June 30
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Revenues:
Product Sales - $ 55,239,000 $46,428,000 $29,299,000 $36,196,000
Warehousing, Logistics and
and Rental Revenues 77,170,000 71,642,000 43,725,000 17,464,000 3,110,000
---------- ----------- ----------- ---------- ----------
77,170,000 126,881,000 90,153,000 46,763,000 39,306,000
Net Earnings 3,603,000 5,062,000 3,121,000 2,941,000 5,218,000
Earnings Per Share $0.69 $0.96 $0.59 $0.57 $1.01
Total Assets 131,018,000 121,742,000 147,565,000 122,832,000 85,894,000
Long-Term Liabilities 57,926,000 51,388,000 67,154,000 61,585,000 29,293,000
Shareholders' Equity 61,077,000 58,710,000 60,088,000 51,461,000 47,862,000
</TABLE>
<PAGE>
CHRISTIANA COMPANIES, INC.
CORPORATE INFORMATION
DIRECTORS
Sheldon B. Lubar, Chairman and Raymond F. Logan, Vice
Chief Executive Officer President - Real Estate
Nicholas F. Brady, Chairman of David J. Lubar, President,
Darby Advisors, Inc. Lubar & Co., Incorporated
William T. Donovan, Executive Albert O. Nicholas, President
Vice President and Chief of Nicholas Company, Inc.
Financial Officer
Gary R. Sarner, President and
Chief Operating Officer
OFFICERS
Sheldon B. Lubar, Chairman and Raymond F. Logan, Vice
Chief Executive Officer President - Real Estate
Gary R. Sarner, President and Betty J. White, Treasurer,
Chief Operating Officer Controller and Assistant
Secretary
William T. Donovan, Executive David E. Beckwith, Secretary
Vice President and Chief
Financial Officer
TRANSFER AGENT AND REGISTRAR EXCHANGE LISTING
Firstar Trust Company Christiana Companies, Inc.
P.O. Box 2077 common stock is listed on the
Milwaukee, Wisconsi 53201 New York Stock Exchange (Symbol
CST).
ANNUAL MEETING CORPORATE HEADQUARTERS
Christiana Companies, Inc. Annual 777 East Wisconsin Avenue
Meeting of shareholders will be Suite 3380
held at 9:00 a.m. on October 29, Milwaukee, WI 53202
1996 at the Galleria Conference Telephone: (414) 291-9000
Room, Firstar Center, 777 East Facsimile: (414) 291-9061
Wisconsin Avenue, Milwaukee,
Wisconsin. Proxy material will
be mailed to shareholders of
record at September 13, 1996.
<PAGE>
CHRISTIANA COMPANIES, INC.
EXHIBITS
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1996
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
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 March 21, 1996, by Firstar Bank Milwaukee,
N.A., Harris Trust and Savings Bank, Bank One,
Milwaukee, NA, as the Banks and Firstar Bank
Milwaukee, N.A. as Agent for the Banks to
Wiscold, Inc.
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.
10G Employment Agreement dated September 1, 1992
between Registrant and Gary R. Sarner.
10H Stock Option Agreement dated February 26, 1996
between Registrant and John R. Patterson.
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.
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of March 21, 1996
by and among
WISCOLD, INC.,
as the Company
and
BANK ONE, MILWAUKEE, NA,
FIRSTAR BANK MILWAUKEE, N.A., and
HARRIS TRUST AND SAVINGS BANK
as the Banks
and
FIRSTAR BANK MILWAUKEE, N.A.
as the Agent for the Banks
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting and Financial Determinations . . . . . . . . . . 11
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 11
1.4 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2 AMOUNTS AND TERMS OF LOANS . . . . . . . . . . . . . . . . 12
2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Interest After Default . . . . . . . . . . . . . . . . . . 14
2.3 Funding Procedures . . . . . . . . . . . . . . . . . . . . 14
2.4 Loan Account . . . . . . . . . . . . . . . . . . . . . . . 15
2.5 Payment on Nonbusiness Days; Payment Credit. . . . . . . . 16
2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 16
2.7 Effect of Regulatory Change. . . . . . . . . . . . . . . . 16
2.8 No Obligation to Extend or Forbear . . . . . . . . . . . . 16
SECTION 3 REPRESENTATIONS, WARRANTIES
AND ACKNOWLEDGMENTS OF THE COMPANY . . . . . . . . . . . . 17
3.1 Organization, Qualification and Subsidiaries . . . . . . . 17
3.2 Financial Statements . . . . . . . . . . . . . . . . . . . 18
3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Absence of Conflicting Obligations . . . . . . . . . . . . 18
3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Absence of Litigation . . . . . . . . . . . . . . . . . . . 19
3.7 Accuracy of Information . . . . . . . . . . . . . . . . . . 19
3.8 Ownership of Property . . . . . . . . . . . . . . . . . . . 19
3.9 Federal Reserve Regulations . . . . . . . . . . . . . . . . 20
3.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Investment Company Act . . . . . . . . . . . . . . . . . . 20
3.12 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . 20
3.13 Environmental Laws . . . . . . . . . . . . . . . . . . . . 21
3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4 CONDITIONS PRECEDENT TO LOANS . . . . . . . . . . . . . . . 21
4.1 Initial Loans . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Subsequent Loans . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 22
5.1 Corporate Existence, Properties, Etc . . . . . . . . . . . 23
5.2 Maintenance of Property . . . . . . . . . . . . . . . . . . 23
5.3 Financial Statements . . . . . . . . . . . . . . . . . . . 23
5.4 Inspection of Properties and Records . . . . . . . . . . . 25
5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Environmental Compliance . . . . . . . . . . . . . . . . . 26
5.9 Fees and Costs . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 27
6.1 Sale of Assets, Consolidation, Merger, Etc . . . . . . . . 28
6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Loans, Investments . . . . . . . . . . . . . . . . . . . . 30
6.7 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 30
6.8 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . 30
6.9 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . 30
6.10 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 31
6.11 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Events of Default Defined . . . . . . . . . . . . . . . . . 31
7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . 33
SECTION 8 RELATIONSHIP OF AGENT AND BANKS . . . . . . . . . . . . . 35
8.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Action on Instructions of Banks . . . . . . . . . . . . . . 35
8.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Application of Payments . . . . . . . . . . . . . . . . . . 37
8.6 General Immunity . . . . . . . . . . . . . . . . . . . . . 37
8.7 No Responsibility for Loans, Recitals, Etc . . . . . . . . 37
8.8 Employment of Agents and Counsel . . . . . . . . . . . . . 38
8.9 Reliance on Documents . . . . . . . . . . . . . . . . . . . 38
8.10 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 38
8.11 Agent's Reimbursement and Indemnification . . . . . . . . . 38
8.12 Rights as a Lender . . . . . . . . . . . . . . . . . . . . 39
8.13 Bank Credit Decision . . . . . . . . . . . . . . . . . . . 39
8.14 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 39
8.15 Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Expenses and Attorneys' Fees . . . . . . . . . . . . . . . 40
9.2 Assignability; Successors . . . . . . . . . . . . . . . . . 40
9.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 40
9.5 Counterparts; Heading . . . . . . . . . . . . . . . . . . . 40
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 41
9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 42
9.9 Further Assurances . . . . . . . . . . . . . . . . . . . . 42
9.10 Conflicts and Ambiguities . . . . . . . . . . . . . . . . . 42
9.11 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.12 Submission to Jurisdiction . . . . . . . . . . . . . . . . 43
9.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 43
9.14 Assignments; Participations . . . . . . . . . . . . . . . . 43
9.15 CST Not a Party. . . . . . . . . . . . . . . . . . . . . . 44
List of Exhibits
A Guaranty of TSI
B Guaranty of WRS
C Guaranty of CST
D Reaffirmation of Guaranty of TSI
E Reaffirmation of Guaranty of WRS
F Reaffirmation of Guaranty of CST
G Note
H Opinion of Counsel
List of Schedules
3.1 Subsidiaries
3.8 Requirements of Law
6.3 Permitted Liens
<PAGE>
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made and
entered into as of this 21st day of March, 1996, by and among WISCOLD,
INC. (f/k/a 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
ill East Wisconsin Avenue, Milwaukee, Wisconsin, FIRSTAR BANK MILWAUKEE,
N.A. (f/k/a FIRST WISCONSIN NATIONAL BANK OF MILWAUKEE) ("Firstar"), 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 Firstar, as Agent for the Banks
("Agent").
RECITALS
A. The Company, the Banks and the Agent entered into that certain
Revolving Credit Agreement dated as of September 1, 1992, as amended
pursuant to the First Amendment to Revolving Credit Agreement dated
September 11, 1992 (the "Original Credit Agreement").
B. The Company has requested that the Banks extend to it a credit
not to exceed $40,000,000.
C. The Company has further requested that the Banks amend and
restate the Original Credit Agreement as provided herein. The Banks have
agreed to extend credit to the Company and to amend and restate the
Original Credit Agreement upon all of the terms and conditions of this
Agreement.
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
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 Amended and Restated Revolving
Credit Agreement, as amended, supplemented or modified from time to time.
"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.
"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:
Bank One $12,000,000
Firstar $14,000,000
Harris Bank $14,000,000
"CST" shall mean Christiana Companies, Inc. (f/k/a The
Christiana Companies, Inc.), a Wisconsin 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.
"Current Debt" shall mean, with respect to the Wiscold Business
Unit, all Indebtedness for borrowed money which by its terms or by the
terms of any instrument or agreement relating thereto matures on demand or
within one year (including any payment required because of the reductions
of the Loan Commitment contemplated hereunder but excluding (i) the
outstanding principal amount of the Loans to be paid on March 31, 2001 and
(ii) the debt subordinated pursuant to the Subordination Agreement dated
September 1, 1992, from CST in favor of the Banks and any other
subordinated debt permitted under Section 6.2(b)(ii)) and is not directly
or indirectly renewable or extendible at the option of the debtor to a
date more than one year from the date of the creation thereof.
"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 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,
WRS and CST each dated September 1, 1992, copies of which are attached
hereto as Exhibits A, B and C, 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.
"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.
"LIBOR Index Rate" shall mean with respect to a LIBOR Rate Loan
for any LIBOR 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 LIBOR Loan Period (rounded up to the next whole multiple of
1/100 of it) 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 LIBOR 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 LIBOR Loan Period in immediately available funds in United
States dollars are offered to the Agent two Business Days prior to the
beginning of such LIBOR 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 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 six months thereafter, as the Company may elect in the notice of
borrowing under Section 2.1(c), provided that (a) any LIBOR 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 LIBOR Loan Period
would thereby be extended into the next calendar month, in which case the
preceding Business Day, and (b) no LIBOR Loan Period shall extend beyond
the Termination Date for the Loans.
"LIBOR Rate" for any LIBOR Loan Period shall mean a rate per
annum equal to the sum of (a) the quotient of the LIBOR Index 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
LIBOR 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 LIBOR Loan Period) that is specified on the first
day of such LIBOR 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 1.25% per annum.
"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 Property.
"Loan Commitment" shall mean an aggregate principal amount not
to exceed $40,000,000 from the date hereof through March 31, 1998,
$35,000,000 from April 1 , 1998 through March 31, 1999, $30,000,000 from
April 1 , 1999 through March 31, 2000, and $25,000,000 from April 1 ,
2000 through the Termination Date.
"Loans" shall mean the loans to the Company pursuant to Section
2.1 evidenced by the Notes.
"Make Whole Payment" shall mean an amount equal to the present
value of (i) the interest that would have accrued on the amount prepaid at
the applicable Term Rate, minus (ii) the interest that would have accrued
on the amount prepaid at the Treasury Rate, discounted at the Treasury
Rate. In both cases, interest will be calculated from the prepayment date
to the maturity date of the applicable Term Rate Loan being prepaid. In
no event shall the prepayment indemnification payment be less than zero.
"Material Adverse Change" shall mean a Default or a material
adverse change in the business, prospects or condition (financial or
otherwise) of the Wiscold Business Unit or in the Property.
"Material Subsidiary" shall mean, as of any time of
determination thereof, any Subsidiary (i) whose assets or liabilities
constitute five percent (5%) or more of the Wiscold Business Unit or (ii)
whose net income constituted five percent (5%) or more of the Net Income
of the Wiscold Business Unit for the then most recently completed fiscal
year.
"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 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 obligations) 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.
"Prime Rate" shall mean the interest rate publicly announced by
Firstar 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 Firstar 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 Firstar .
"Prime Rate Loans" shall mean Loans for which the Company has
selected the Prime Rate as the base rate of interest under Section 2.1.
"Property" shall mean any interest of any kind in property or
assets, whether real, personal, mixed, tangible or intangible, wherever
located, and whether now owned or subsequently acquired or arising and in
the products, proceeds, additions and accessions thereof or thereto.
"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.
"Reaffirmations" shall mean the Reaffirmations of the Guaranties
of TSI, WRS and CST in the form of Exhibits C, D and E, respectively.
"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 a Bank of making or maintaining the Loans or reduces the rate of
return to a Bank (by reduction of principal, interest or otherwise) on the
Loans by subjecting a 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 a Bank or any corporation controlling a Bank, or imposing
on a Bank any other condition affecting the Loans or a Bank's obligation
to make the Loans.
"Related Documents" shall mean the Notes, the Guaranties, the
Reaffirmations of Guaranties 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.
"Requirements 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, where applicable, any
interpretation thereof by any Governmental Authority.
"Seller" shall mean the "Seller" under the Purchase Agreement,
(f/k/a Wiscold, Inc).
"Subordinated Debt" shall mean the $3,000,000 of subordinated
debt of the Company purchased by CST as part of the Related Transactions.
"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 in accordance with GAAP
and mean the excess, if any, of the assets of the Wiscold Business Unit
over all liabilities of the Wiscold Business Unit, excluding (a) from
assets of the Wiscold Business Unit 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.
"Term Loan Period" shall mean with respect to each Term Rate
Loan, the period commencing on the date of such Term Rate Loan and ending
no earlier than three (3) years and no later than five (5) years after the
date of such Loan, as the Company may elect in the notice of borrowing
under Section 2.1(c), provided that (a) any Term Loan Period which would
otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day and (b) no Term Loan Period shall extend
beyond the Termination Date.
"Term Rate" shall mean for any Term Loan Period a rate of
interest per annum equal to (a) the Ask Yield, one Business Day prior to
the first day of the Term Loan Period for the applicable Term Rate Loan,
on U.S. Treasury Bills, Notes or Bonds, selected by the Agent, in its sole
discretion, having a maturity comparable to or as close thereto as
possible to the Term Loan Period of the applicable Term Rate Loan, plus
(b) 1.40% per annum.
"Term Rate Loans" shall mean Loans for which the Company has
selected the Term Rate as the base rate of interest under Section 2.1.
"Termination Date" shall mean March 31, 2001 or such earlier
date on which the Loans shall terminate as provided in Section 7.2.
"Treasury Rate" shall mean the Ask Yield, one Business Day prior
to the date of prepayment, on U.S. Treasury Bills, Notes, or Bonds,
selected by the Agent, in its sole discretion, having a maturity
comparable to or as close thereto as possible to the Term Loan Period of
the applicable Term Rate Loan being prepaid.
"TSI" shall mean TIERRASANTA, INC. , a Delaware corporation,
which is a wholly-owned Subsidiary of CST.
"TSI Note" shall mean the promissory note dated September 1,
1992 from TSI to the Company in the original stated principal amount of
$12,500,000.
"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 September 1, 1992.
"WRS" shall mean Wisconsin Refrigerated Services, Inc., a
Wisconsin corporation .
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 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.
(b) The Loans made by each of the Banks shall be evidenced
by an amended and restated 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, 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, (ii) the
Prime Rate on Loans which are Prime Rate Loans and (iii) the Term
Rate on Loans which are Term 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 March 31, 2001.
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 and Term 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 or Term Rate
Loans and, if so, the requested LIBOR Loan Period or Term Loan
Period, as the case may be, 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 less than $1,500,000 per request or Term Rate Loans in
an amount less than $5,000,000 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
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 Firstar.
(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). Loans which
are not Term Rate Loans may be converted into Term 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 LIBOR
Loan Period, LIBOR Rate Loans shall become Prime Rate Loans unless
and until the Company converts such Loans to LIBOR Rate Loans or Term
Rate Loans. At the end of each respective Term Loan Period, Term
Rate Loans shall become Prime Rate Loans unless and until the Company
converts such Loans to LIBOR Rate Loans or Term 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 LIBOR 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.
2.2 Interest After Default. After an Event of Default, any
amounts not paid when due to the Banks 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 Prime 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 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 a Bank to the contrary within 30 days of the
mailing of such statement by a 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.
(a) Optional Prepayments. The Company may, at its option,
at any time and from time to time, prepay the 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. There shall be no prepayment premium
except: (i) as provided in Section 2.1(g); and (ii) the Company
shall upon prepayment or partial prepayment of any Term Rate Loan
(whether upon mandatory or optional redemption, acceleration or
maturity) pay the Agent, for the ratable account of the Banks, the
Make Whole Payment on the date of such prepayment. The Company
agrees that the Make Whole Payment constitutes a reasonable method of
measuring the Banks' estimated loss in the event of a prepayment,
that it is not a penalty, and that the Agent's determination of the
Make Whole Payment, in the absence of manifest error, shall be
conclusive, final, and binding on the Company.
(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 immediately available funds, together with interest accrued
on the amount of the payment.
2.7 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 increases the cost
of the Loans to the Company (including interest) by more than one percent
(1%) per annum.
2.8 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 the Termination Date, 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 the Termination Date without further
demand.
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
and its Subsidiaries, 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 and
its Subsidiaries, 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 to the extent failure to
obtain or maintain any license, permit or franchise would not cause a
Material Adverse Change. The Company and its Subsidiaries, 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 .
Except as set forth on Schedule 3.1 (a) the Company has no Subsidiaries,
(b) 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 and
(c) there are no outstanding options, warrants or other rights to
subscribe for or purchase from the Company any capital stock of the
Company or securities convertible into or exchangeable for capital stock
of the Company.
3.2 Financial Statements.
(a) The Company has furnished the Banks year-end audited
financial statements of CST for its fiscal years ended June 30, 1995
and June 30, 1994, audited by Arthur Andersen & Co., and the
financial statements prepared by CST for the six-month period ended
December 31, 1995. All such financial 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 the interim financial statements are
subject to normal year-end adjustments) consistently applied
throughout the applicable periods, and present fairly the financial
condition of CST as of such dates and the results of its operations
for the periods then ended. There has been no material adverse
change in the business, properties or condition, financial or
otherwise, of the Wiscold Business Unit since the date of the latest
of such statements. The Company's fiscal year ends on June 30.
(b) The financial forecasts dated February, 1996 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 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 the Company, CST, TSI and WRS each have the corporate
power and authority to enter into the Related Documents to which it is a
party.
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 Requirements of Law or any covenant, indenture,
lease, contract, agreement or instrument to which the Company or any of
its Subsidiaries, CST, TSI or WRS is a party or by which it is bound.
3.5 Taxes. The Company and its Subsidiaries, 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 and its Subsidiaries, 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 or its
Subsidiaries, 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. The
federal income tax liability for CST, on a consolidated basis, has been
finally determined by the Internal Revenue Service and satisfied for all
taxable years up to and including the taxable year ended June 30, 1990.
3.6 Absence of Litigation. None of the Company or its
Subsidiaries, TSI, CST or WRS is a party to, nor so far as is known to the
Company, TSI, CST or 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 or 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 or WRS which
can reasonably be expected to cause a Material Adverse Change which 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 and each of its
Subsidiaries, TSI, CST and WRS each have good and marketable title to all
of the Property of the Wiscold Business Unit, including, without
limitation, the Property of the Wiscold Business Unit reflected in the
balance sheets referred to in Section 3.2. There are no Liens of any
nature on any of the Property of 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 Company's knowledge complies with all applicable
Requirements of Law. The Company and its Subsidiaries, 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 of the proceeds of the Loans to: (a)
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); (b) extend credit to other Persons for
any such purpose or to refund indebtedness originally incurred for any
such purpose; or (c) otherwise take or permit any action which would
involve a violation of Section 7 of the Securities Exchange Act of 1934,
as amended, or any regulation of the Board of Governors of the Federal
Reserve System.
3.10 ERISA. Except to the extent noncompliance would not cause
a Material Adverse Change, the Company and its Subsidiaries, 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 and its Subsidiaries or the plan sponsor has timely filed
all returns and reports required to be filed for each Employee Plan.
3.11 Investment Company Act. The Company is not (a) an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended, or
(b) a "holding company" or a "subsidiary" of a "holding company" or an
"affiliate" of a "holding company" or a "subsidiary" of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
3.12 No Defaults. None of the Company, any Subsidiary or the
Wiscold Business Unit is in default under or in violation of (i) any
Requirements 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, any Subsidiary or the Wiscold
Business Unit is a party or by which the Company, any Subsidiary or the
Wiscold Business Unit is bound, or to which any Property is 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.
3.13 Environmental Laws. Except as set forth on Schedule 3.8,
the business of the Company, its Subsidiaries and the Wiscold Business
Unit, has been operated in full compliance with the Environmental Laws and
none of the Company, any Subsidiary or the Wiscold Business Unit is
subject to any Environmental Liability relating to the conduct of its
business or the ownership of its Property 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 Liability. No notice has been served on the Company, its
Subsidiaries, WRS, CST or TSI relating to the Wiscold Business Unit
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.
3.14 Labor Matters. There are no labor disputes between the
Company or any Subsidiary, CST, WRS or TSI and any of its employees which
individually or in the aggregate, if resolved in a manner adverse to the
Company or any Subsidiary, would result in a Material Adverse Change.
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 items in form, detail and
content satisfactory to the Banks:
(a) the executed Notes;
(b) the executed Reaffirmations;
(c) corporate borrowing resolutions, together with a
certificate of the Secretary of each of TSI, the Company, CST 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 TSI, the Company, CST and WRS;
(d) the opinion of counsel for the Company, TSI, CST and
WRS in the form of Exhibit H;
(e) for each of TSI, CST, 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;
(f) certificates of insurance evidencing the insurance
required to be carried under this Agreement;
(g) evidence satisfactory to the Banks that there are no
Liens of record on the Property of the Company, TSI and WRS and on
the Property of CST included in the Wiscold Business Unit, other than
Permitted Liens (including UCC information searches in the names of
the Company, TSI, WRS and CST of the filing records in the office of
the Wisconsin Secretary of State and all other jurisdictions
reasonably requested by the Agent); and
(h) 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 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 and the Agent are paid in
full:
5.1 Corporate Existence, Properties, Etc. The Company shall
and shall cause its Subsidiaries, TSI, CST and WRS to: (a) maintain its
corporate existence, (b) maintain its licenses, permits, 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 Business Unit that of
the Company, its Subsidiaries, TSI and WRS; (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 with good, reputable and financially sound
insurance underwriters 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 may be reasonably required in writing by the Agent. Each policy 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 to the Agent 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.
5.2 Maintenance of Property. The Company shall and shall cause
its Subsidiaries, TSI, CST and WRS to : 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 shall and shall cause
its Subsidiaries, TSI, CST and WRS to: 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 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 and 6.9 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
"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 (except for quarterly statements
of cash flow) consolidated and consolidating basis in accordance with
GAAP.
5.4 Inspection of Properties and Records. The Company shall
and shall cause its Subsidiaries, CST, TSI and WRS to permit
representatives of the Agent to visit any of the Property of the Wiscold
Business Unit or the Company and examine any of the books and records and
to discuss affairs, finances and accounts relating to the Wiscold Business
Unit and the Company and each Subsidiary 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 for general corporate purposes of the Company only.
5.6 Bank Accounts. The Company shall and shall cause its
Subsidiaries to maintain all of their principal deposit accounts and
operating accounts with the Banks.
5.7 Indemnity. The Company hereby agrees to indemnify each of
the Banks and the Agent 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 or the Agent 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 disposition of Property) 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 of the Loans 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 or the
Agent 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 shall and shall cause its Subsidiaries,
CST, TSI and WRS to 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 shall and shall cause its Subsidiaries,
CST, TSI and WRS to 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, any Subsidiary,
TSI or 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 or any Subsidiary, 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 or any
Subsidiary, 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
and/or the Wiscold Business Unit, CST, TSI or WRS with 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, Subsidiary 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
Related Documents, 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 its reasonable costs including, but not limited to, audit or
inspection fees, interest rate swap fees and wire transfer or other
charges pertaining to the transfer of funds.
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
shall not and shall cause each Subsidiary, TSI, CST and WRS to not
directly or indirectly (a) sell, lease, transfer or otherwise dispose of
Property of the Wiscold Business Unit having an aggregate net book value
in excess of $1,000,000 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 September 1, 1992 of real estate leased to
the Company 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 dated September 1,
1992 between the Company and CST and except that the Company may convert
such subordinated debt to equity; or (e) create or permit any Subsidiary
to create a new Subsidiary; or (f) permit any Subsidiary listed on
Schedule 3.1 other than WRS to hold assets .
6.2 Indebtedness. The Company shall not and shall cause its
Subsidiaries, TSI, WRS and CST with respect to the Wiscold Business Unit
to 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; (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 $1,000,000 in excess
of the limitations prescribed by Sections 6.2(i), (ii), (iii), (iv), (v)
and (vi).
6.3 Liens. The Company shall not and shall cause its
Subsidiaries, TSI, WRS and CST with respect to the Wiscold Business Unit
to 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 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 ; (v) 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 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, the Company shall not
and shall cause its Subsidiaries, TSI and WRS to 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 shall not and shall cause its
Subsidiaries, TSI and WRS to 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 shall not and shall cause
its Subsidiaries, TSI and WRS to 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 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;
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) above, upon the request of the Agent is
pledged and delivered to the Agent.
6.7 Compliance with ERISA. The Company shall not and shall
cause its Subsidiaries, TSI and WRS to 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 shall not permit Tangible
Net Worth of the Wiscold Business Unit, for any fiscal quarter as of the
end of such quarter, to be less than (a) $23,000,000 plus (b) 50% of Net
Income for each fiscal year of the Wiscold Business Unit ending after June
30, 1996 on a cumulative basis.
6.9 Debt Service Coverage Ratio. The Company shall not permit
the ratio of the Wiscold Business Unit's Net Income plus interest expense
, taxes, depreciation expense and amortization expense to the interest
expense and Current Debt, to be less than 1.30 to 1, for any fiscal
quarter, tested at the end of each such quarter, calculated on a four-
quarter rolling basis.
6.10 Affiliates. The Company shall not and shall cause its
Subsidiaries, TSI and WRS to 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 dated September 1,
1992 between TSI and the Company, (c) the transactions contemplated by the
subordinated debt purchase agreement dated September 1, 1992 between CST
and the Company, (d) the transactions contemplated by the CST Note and the
TSI Note, and (e) the transactions pursuant to the Management Agreement
dated September 1, 1992 between the Company and CST, without amendment.
6.11 Leases. The Company shall not and shall cause its
Subsidiaries, TSI and WRS to not pay or become liable with respect to any
lease or rental of real or personal property, except for leases dated
September 1, 1992 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 shall fail to perform the covenants
contained in Sections 6.8 and 6.9 and such default shall continue for
a period of ten days after the due date of the financial statements
or officer's certificate showing the default ;
(c) the Company shall fail to observe or perform or shall
fail to cause its Material Subsidiaries, CST, TSI or WRS to perform
any of the covenants, agreements or conditions contained in Sections
5.1(a), 5.4, 5.6, or any provision of Section 6 other than Sections
6.8 and 6.9;
(d) the Company shall fail to observe or perform or the
Company shall fail to cause its Material Subsidiaries, CST, TSI or
WRS 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
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,
a Subsidiary, TSI or WRS which singularly or when added to another
final judgment (or judgments) against the Company, a Subsidiary, 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, a Material Subsidiary, 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;
(h) the Company, a Material Subsidiary, TSI, CST or WRS
adopts a plan of liquidation of its assets;
(i) the Company, a Subsidiary, 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, a Subsidiary, 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, a Subsidiary, TSI, CST or WRS is
contesting such default in good faith and the Banks agree, that the
Company, a Subsidiary, 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 the Company, TSI or 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 $1,000,000 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,
(iii) default under the subordinated debt purchase agreement dated
September 1, 1992 between CST and the Company or (iv) fail to observe
to perform, or take any action to revoke, its Guaranty;
(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 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), (1) or (m)
above which is continuing, the Agent shall upon the direction of
Banks whose Commitments aggregate at least 51% 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 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. Firstar 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 9.8 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 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;
(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 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 Property) of this Agreement or the
Related 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 Property) 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. Firstar 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. Firstar 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 Property. 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 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 and the Loans 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 Property) 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.
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; Heading. 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 Christiana Companies, Inc.
Suite 3380
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. William T. Donovan, Executive
Vice President and Chief Financial Officer
with a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Emory Ireland
if to the Agent: Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Ms. Caroline V. Krider,
Vice President
if to the Banks: Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Eric L. Thomas,
Vice President
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Ms. Caroline V. Krider,
Vice President
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603
Attn: Mr. Andrew K. Peterson,
Vice President
with copies to: Michael, Best & Friedrich
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Jonathan D. Kron, Esq.
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.
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. 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 credit balance or other money now or
hereafter owed it by any of the Banks, 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. RACE 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 SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; (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; (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; (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 (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. 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 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 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.
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.
WISCOLD, INC. HARRIS TRUST AND SAVINGS BANK
By /s/ William T. Donovan By /s/ Andrew K. Peterson
William T. Donovan, Andrew K. Peterson,
Vice President, Treasurer, Vice President
and Secretary
FIRSTAR BANK MILWAUKEE, N.A. FIRSTAR BANK MILWAUKEE, N.A.,
as Agent
By /s/ Caroline V. Krider By /s/ Caroline V. Krider
Caroline V. Krider, Caroline V. Krider,
Vice President Vice President
BANK ONE, MILWAUKEE, NA
By /s/ Eric L. Thomas
Eric L. Thomas,
Vice President
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of September 1992 by and among
WI Acquisition Corp., a Wisconsin corporation (which as promptly as
practicable after the date hereof intends to change its name to "Wiscold,
Inc.") ("Sub"), The Christiana Companies, Inc., a Delaware corporation and
the parent company of Sub ("Parent") and Gary R. Sarner (the "Executive").
W I T N E S S E T H :
WHEREAS, Parent, Sub and other subsidiaries of Parent are this day
acquiring the business and substantially all of the property and assets
(collectively, the "Business") of Wiscold, Inc., a Wisconsin corporation
(the "Company");
WHEREAS, the Executive as been employed by the Company for many
years, most recently as President of the Company;
WHEREAS, Parent and Sub recognize that the Executive's contribution
as an executive of the Company has been substantial and Parent and Sub
desire to assure Sub of the Executive's employment to manage the portion
of the Business acquired by Parent and Sub; and
WHEREAS, the Executive is desirous of committing himself to serve as
an employee of Sub on the terms herein provided.
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, and as an inducement to Parent and Sub to
close the purchase of the Business, the parties hereto agree as follows:
1. Employment and Duties. Sub hereby agrees to employ the
Executive as the President and Chief Executive Officer of Sub having
equivalent responsibility to manage the portion of the Business acquired
by Parent, all on the terms and conditions set forth herein, and the
Executive hereby agrees to such employment on such terms and conditions.
The Executive shall serve as a director or in such additional offices of
Sub or any of its affiliates (including Parent) to which the Executive may
be duly appointed or elected. The Executive shall perform such duties as
are consistent with his position and responsibility described above as
shall be assigned to him from time to time by the Board of Directors of
Sub or, unless Parent waives such right by notice to Sub, by the Chief
Executive Officer of Parent. The Executive agrees to devote his full
business time and effort to the diligent and faithful performance of such
duties.
2. Term. Subject to Section 4 hereof, the employment of the
Executive by Sub as provided in this Agreement shall commence on the date
hereof and shall continue through the period ending on the fifth
anniversary of the date hereof (such period, as it may be extended from
time to time hereunder, is herein referred to as the "Term"); provided,
however, that the Term shall be automatically extended for one additional
year unless at least three hundred sixty (360) days prior to the last day
of the Term either (a) the Executive shall have delivered to Sub written
notice that the Term shall not be extended, or (b) the Board of Directors
of Sub or an executive officer of Parent shall have delivered to the
Executive written notice that the Term shall not be extended.
3. Compensation. As compensation for his performance of services
hereunder, Executive shall be entitled to receive an annual base salary at
the rate of not less than One Hundred Fifty Thousand Dollars ($150,000)
payable, as nearly as practicable, in equal semimonthly installments. The
Executive's base salary shall be subject to annual review by the Board of
Directors of Sub. The Executive shall be eligible to participate in a
discretionary bonus plan which the Board of Directors of Sub will use its
best efforts to develop and implement by December 31, 1992 and which will,
among such other factors as the Board of Directors deems relevant, take
account of the financial performance of the Business. The Executive shall
also be entitled to receive such other benefits as are generally available
to executive officers of Sub.
4. Termination of Employment.
a. The Executive's employment shall terminate, or be subject
to termination, prior to the term specified in Section 2 hereof, as
follows:
(i) Death. The Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. In the event the Executive becomes physically
or mentally disabled so as to become unable, for more than ninety (90)
days in the aggregate during any twelve-month period, to perform his
duties hereunder on substantially a full-time basis, or becomes so
disabled such that it is reasonably likely that Executive will not be able
to perform his duties on such basis for such period, Sub may, at its
option, terminate the Executive's employment hereunder upon not less than
twenty (20) days' written notice.
(iii) Cause. Sub may, at any time, terminate the
Executive's employment hereunder for Cause. For the purposes of this
Agreement, Sub shall have "Cause" to terminate the Executive's employment
hereunder upon (A) the Executive engaging in acts of fraud or dishonesty
and resulting or intended to result, directly or indirectly, in gain to,
or personal enrichment of, the Executive at the expense of Parent or Sub
or any affiliate of Parent or Sub, (B) the violation of the Executive of
any of the provisions of this Agreement or the Noncompetition Agreement
(as hereinafter defined), or (C) the Executive's engaging in intentional
misconduct which results in material injury, monetary or otherwise, to
Parent or Sub or any affiliate of Parent or Sub (it being understood that
no conduct on the Executive's part shall be considered "intentional"
unless such conduct was not in good faith and without the reasonable
belief that such conduct was in the best interests of Sub and its
affiliates).
(iv) Without Cause. Sub may, at any time, terminate the
Executive's employment hereunder without cause and without the requirement
of any reason or justification.
(v) By Executive. Executive may, within thirty (30) days after
a Change in Control, terminate his employment. A "Change in Control"
shall be deemed to occur at any time that Parent and the affiliates of
Parent who are entities own less than a 50% equity interest in the
Business as the same may change hereafter, except that no Change in
Control shall occur if at such time common stock of Sub is publicly traded
unless a person and its affiliates other than Parent and its affiliates
has the right to vote a greater percentage of the votes in elections for
directors of Sub (but not less than 25% of the votes) than Parent and its
affiliates.
b. Cessation of Salary and Benefits after Termination. In the
event of the termination of the Executive's employment, all payments of
salary and benefits under Paragraph 3 hereof shall cease, and the
Executive shall not be entitled to receive any compensation, payment
(including damages) or benefits from any person on account of such
termination, except as provided in the following sentence and except that
(I) the Executive shall be entitled to receive those benefits which by
their terms continue after termination of employment in accordance with
the terms of such benefits applicable after termination of employment, and
(ii) the Executive shall be entitled, upon notice given to Parent within
thirty (30) days after such termination (sixty (60) days in the case of a
termination under Paragraph 4 (a) (ii)), to purchase for cash any life
insurance then maintained on the life of the Executive for which Sub is
the beneficiary at a price equal to the sum of the net cash surrender
value of such insurance at the time the purchase is made (which shall be
as promptly as practicable after the Executive's notice) plus any premiums
paid on such insurance during the relevant thirty (30) or sixty (60) day
period; provided, however, that the Executive shall only be entitled to
purchase such life insurance if he is living at the time the purchase is
made; and provided, further, Executive's right to make such purchase shall
be subject to the consent of any lender to Sub whose consent is required
therefor. In the event of the termination of the Executive's emloyment
pursuant to Paragraph 4(a) (iv) hereof, the Executive shall be entitled to
receive, in lieu of any other compensation or payment (including damages)
from any person as a result of such termination, (i) severance payments
from Sub in an amount equal to the payments of his base salary that would
have been made under Paragraph 3, at the time such payments would have
been made, for the remaining portion of the Term at the time of such
termination (such portion, the "Remaining Term") and (ii) the continuation
for the Remaining Term of any medical insurance, disability insurance and
life insurance benefits being provided to the Executive and his dependents
at the time of such termination. It is understood that the payments and
benefits to the Executive described in the preceding sentence shall not be
reduced on account of any compensation that the Executive may earn after
such termination of employment or any benefits provided to the Executive
in connection with such compensation.
5. Notices. For the purposes of this Agreement, notices and all
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Gary R. Sarner
11430 W. Burleigh Street
Wauwatosa, Wisconsin 53226
If to Parent or Sub:
The Christiana Companies, Inc.
777 East Wisconsin Avenue
Suite 3380
Milwaukee, Wisconsin 53202
Attention: Sheldon B. Lubar
William T. Donovan
With a copy of notice
to Parent or Sub to:
Jere D. McGaffey
Foley & Lardner
777 East Wisconsin Avenue
Suite 3600
Milwaukee, Wisconsin 53202
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
6. Miscellaneous. No provisions of this Agreement may be amended
unless such amendment, modification or discharge is agreed to in writing
signed by the parties hereto. This Agreement, the Noncompetition
Agreement and the Assignment of Noncompetition Agreement of even date
herewith (collectively, the "Noncompetition Agreement") constitute the
entire agreement of the parties on the subject matter hereof and no
agreements or representations, oral or otherwise, expressed or implied,
with respect to the subject matter hereof have been made by either party
which are not set forth expressly in this Agreement. This agreement shall
be binding upon and inure to the benefit of Sub and its successors and
assigns (Sub's right to assign this Agreement being subject to Executive's
right to terminate his employment under Paragraph 4(a) (v) hereof), and
Executive and his heirs, executors, administrators and legal
representatives. Parent shall have no obligations under this Agreement,
but it shall inure to the benefit of Parent and its successors and
assigns. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Wisconsin
applicable to contracts made and to be performed therein between residents
thereof. This Agreement supersedes that certain Employment Agreement
between the Company and the Executive dated January 1, 1990.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
/s/ Gary R. Sarner
Gary R. Sarner
WI Acquisition Corp.
By: /s/ William T. Donovan
William T. Donovan
Vice President
THE CHRISTIANA COMPANIES, INC.
By: /s/ William T. Donovan
William T. Donovan
Vice President
STOCK OPTION AGREEMENT
This Agreement is made February 26, 1996 in Milwaukee,
Wisconsin, between Christiana Companies, Inc. ("Company") and John R.
Patterson ("Optionee"). The Company desires, by affording Optionee an
opportunity to purchase shares of its $1.00 par value common stock
("Stock") as hereinafter provided, to carry out the purpose of its 1995
Stock Option Plan ("Plan").
1. Grant of Option. The Company hereby grants to Optionee the
right and option ("Option") to purchase from the Company all or any part
of a total of 100,000 shares ("Option Shares") of Stock on the terms set
forth herein and in the Plan.
2. Plan. The Option is granted pursuant to the Plan, which is
incorporated herein by reference, and Optionee's rights hereunder are
subject to all of the restrictions and limitations contained in the Plan.
Optionee acknowledges that he has received and read a copy of the Plan.
Capitalized terms used herein, and not otherwise defined, have the same
meaning as in the Plan.
3. Purchase Price. The purchase price of the Option Shares
shall be $24.25 per share.
4. Term and Exercisability of Option. The term of the Option
shall commence on the date hereof and expire on the tenth anniversary of
the date hereof. The Option may be exercised, however, only with respect
to the following number of shares of Stock during the respective periods
of time set forth opposite such number of shares (provided that the
Optionee is still then employed), unless otherwise set forth in
paragraph 6 or otherwise determined by the Committee:
Period of Exercisability
Number of
Cumulative Shares From To and Including
20,000 2/26/97 2/26/2006
40,000 2/26/98 2/26/2006
60,000 2/26/99 2/26/2006
80,000 2/26/2000 2/26/2006
100,000 2/26/2001 2/26/2006
Except as provided in paragraph 5, the Option may not be exercised unless
Optionee has been continuously employed from the date hereof to the date
of such exercise. Optionee shall not have any of the rights of a
stockholder with respect to any Option Shares except to the extent that
such shares have been issued upon exercise of the Option.
5. Extensions of Right to Exercise. Except as provided in the
next sentence, if Optionee's employment is terminated for any reason, the
Option, to the extent then exercisable as provided in the table in
paragraph 4 or as accelerated pursuant to paragraph 6, shall remain
exercisable after such termination for a period of (a) three months after
termination but not after the term hereof, with respect to all portions of
the Option being exercised which constitute an "incentive stock option"
under Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or (b) 12 months after the termination but not later than the
term hereof, with respect to all portions of the Option which constitute a
nonqualified stock option. If Optionee's employment is terminated because
he dies or becomes permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code, the Option, to the extent then exercisable
as provided in the table in paragraph 4 or as accelerated pursuant to
paragraph 6, shall remain exercisable after such termination for a period
of 12 months (but not after the term hereof) by him or by his estate,
personal representative or beneficiary who has acquired the Option by will
or by the laws of descent and distribution.
6. Acceleration of Exercisability.
(a) Notwithstanding the schedule of exercisability set forth in
paragraph 4, the Option shall become immediately exercisable for all
Option Shares not yet acquired if (A) the Optionee's employment is
terminated as a result of (i) the Optionee's involuntary termination by
the Company without "cause"; (ii) the Optionee's "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code; (iii) the
Optionee's death; or (iv) voluntary termination by the Optionee for "good
reason"; or (B) the Lubar family reduces its beneficial ownership of the
Stock of the Company by reason of a sale of Stock by member(s) of the
Lubar family or as a result of a sale or merger of the Company, in either
case, resulting in a change in excess of 20% in the Lubar family's
beneficial ownership of the then outstanding Stock of the Company. For
purposes of this Agreement, termination by the Company for "cause" shall
mean termination by the Company as a result of conduct of the Optionee
involving a criminal offense injurious to or not in the best interests of
the Company, fraud, dishonesty or moral turpitude, as determined by the
Committee or the Company's Board of Directors, and termination for "good
reason" means voluntary termination by the Optionee as a result of (i) a
significant reduction in Optionee's responsibilities or authority while
employed; (ii) a change by the Company of the location of Optionee's
primary office site to a location more than 20 miles from the Company's
current office site in the Zeeland, Michigan area; or (iii) a reduction in
Optionee's base salary.
(b) Notwithstanding the schedule of exercisability set forth in
paragraph 4, if the Optionee voluntarily terminates his employment without
good reason, the Option shall be exercisable for all Option Shares then
otherwise subject to purchase in accordance with the schedule of
exercisability in paragraph 4, plus such additional number of Option
Shares with respect to which the Option would have otherwise been
exercised if the termination occurred two years after the actual date of
termination.
7. "Employment" Defined. References to Optionee's
"employment" or being "employed" are to his employment by the Company or a
Subsidiary or an Affiliate.
8. Method of Exercise. The Option shall be exercised by
written notice to the Company, stating the election to exercise the Option
and the number of shares as to which it is being exercised. Such notice
shall be accompanied by payment of the full purchase price of such shares
in cash or shares of stock valued at their Fair Market Value on the date
of exercise, and, subject to the terms of this Agreement, the Company
shall deliver a certificate representing such shares as soon as
practicable after such notice has been received.
9. Securities Law Compliance. The Option Shares have not been
and are not intended to be registered under the Securities Act of 1933 or
any state securities law, and it is intended that the acquisition of such
shares by Optionee shall be exempt from registration as a "private
placement" or the like. Optionee recognizes that for that reason (among
others) the immediate disposition of Option Shares after the acquisition
thereof may be impossible or impractical. Optionee hereby represents that
any shares purchased upon exercise of the Option will be purchased for
investment and not with a view to the distribution thereof. If requested
by the Company, he will also submit a written statement, in form and
content satisfactory to counsel for the Company, of the type customarily
required of purchasers of securities in non-public transactions.
10. Notices. Any notice given by Optionee shall be sent to the
Company at Suite 3380, 777 East Wisconsin Avenue, Milwaukee, Wisconsin or
such other address as the Company shall have designated in writing to him.
Any notice given by the Company to Optionee shall be delivered personally
or sent to his address then shown on the Company's records.
11. Benefit. This Agreement shall be binding upon and inure to
the benefit of the heirs, legatees, distributees and personal
representatives of Optionee and the successors in interest of the Company.
12. ISO; NOO. The Option is intended to the maximum extent
allowable to meet the requirements for "incentive stock options" under
Section 422 of the Code and this Agreement shall be interpreted in
accordance with that intent; provided, however, that to the extent that
the aggregate Fair Market Value (as determined on the date hereof) of
Option shares with respect to which this Option may be exercised for the
first time under paragraphs 4 or 6 in any calendar year exceeds $100,000
in contravention of Section 422(d) of the Code, the Option for Option
Shares in excess of such amount shall be treated as a nonqualified stock
option not entitled to the benefits of an incentive stock option meeting
the requirements of Section 422 of the Code.
IN WITNESS WHEREOF, the parties have signed this Agreement on
the day and year first above written.
CHRISTIANA COMPANIES, INC.
/s/ John R. Patterson By: /s/ William T. Donovan
John R. Patterson, Optionee William T. Donovan,
Executive Vice President
CHRISTIANA COMPANIES, INC.
EXHIBIT 21 - SUBSIDIARIES
This exhibit sets forth all of Registrant's corporate subsidiaries at June
30, 1996 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.
Jurisdiction of
Name Incorporation
Christiana Community Builders California
CST Financial, Inc. Delaware
Martinique Holdings, Inc. California
Tierrasanta, Inc. Delaware
The TLC Group, Inc. Michigan
Wiscold, Inc. Wisconsin
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 3,728,000
<SECURITIES> 750,000
<RECEIVABLES> 8,547,000
<ALLOWANCES> 253,000
<INVENTORY> 439,000
<CURRENT-ASSETS> 14,504,000
<PP&E> 100,165,000
<DEPRECIATION> 18,015,000
<TOTAL-ASSETS> 131,018,000
<CURRENT-LIABILITIES> 12,315,000
<BONDS> 43,713,000
17,218,000
0
<COMMON> 0
<OTHER-SE> 45,095,000
<TOTAL-LIABILITY-AND-EQUITY> 131,018,000
<SALES> 0
<TOTAL-REVENUES> 77,170,000
<CGS> 0
<TOTAL-COSTS> 72,949,000
<OTHER-EXPENSES> 208,000
<LOSS-PROVISION> 227,000
<INTEREST-EXPENSE> 3,096,000
<INCOME-PRETAX> 6,011,000
<INCOME-TAX> 2,408,000
<INCOME-CONTINUING> 3,603,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,603,000
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
