<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM __________ TO ____________
COMMISSION FILE NUMBER 1-8009
UNR INDUSTRIES, INC.
(DELAWARE)
332 South Michigan Avenue
Chicago, Illinois 60604-4385
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (312) 341-1234
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 whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X No
--- ---
<TABLE>
<CAPTION>
Outstanding as of
November 7, 1994
-----------------
<S> <C>
Common Stock $.01 par value........................ 50,798,437
Warrants to purchase Common Stock.................. 1,472,505
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT 30 NINE MONTHS ENDED SEPT 30
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $94,169 $81,235 $270,039 $229,079
Cost of products sold 73,468 62,592 212,068 178,179
------- ------- -------- --------
Gross Profit 20,701 18,643 57,971 50,900
Selling, general & admin.
expenses 10,603 9,779 31,197 29,393
------- ------- -------- --------
Operating Income 10,098 8,864 26,774 21,507
Interest (expense), net (93) (318) (819) (1,045)
------- ------- -------- --------
Income from continuing operations
before income taxes 10,005 8,546 25,955 20,462
Income tax provision 4,000 2,400 10,500 7,100
------- ------- -------- --------
Income from continuing operations 6,005 6,146 15,455 13,362
Discontinued operation:
Income (loss) from operation,
net of taxes ---- 156 295 (689)
Loss on disposition,
net of $1,500 tax benefit ---- ---- (2,500) ----
------- ------- -------- --------
NET INCOME $ 6,005 $ 6,302 $ 13,250 $ 12,673
======= ======= ======== ========
NET INCOME PER SHARE (NOTE 3):
Continuing operations $ .12 $ .13 $ .31 $ .29
Discontinued operation:
Income (loss) from operation ---- ---- .01 (.02)
Loss on disposition ---- ---- (.05) ----
------- ------- -------- --------
NET INCOME PER SHARE $ .12 $ .13 $ .27 $ .27
======= ======= ======== ========
Weighted average number of shares
outstanding 49,349 47,774 48,857 47,158
</TABLE>
1
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
ASSETS 1994 1993
------ ------------ -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 51,328 $ 1,226
Accounts, notes and other receivables, less allowance for doubtful
accounts of $3,297 in 1994 and $2,637 in 1993 51,998 41,036
Income tax refunds receivable ---- 53,000
Inventories:
Work-in-process and finished goods 41,671 37,177
Raw materials and supplies 27,871 20,232
Deferred income taxes 12,100 12,100
Prepaid expenses 2,658 2,750
-------- --------
TOTAL CURRENT ASSETS 187,626 167,521
-------- --------
PLANT AND EQUIPMENT, at cost 160,442 154,569
Less: Accumulated depreciation (97,005) (91,091)
-------- --------
TOTAL PLANT AND EQUIPMENT 63,437 63,478
-------- --------
OTHER ASSETS
Deferred income taxes 7,080 16,100
Net assets of discontinued operations 11,425 15,975
Other, primarily goodwill 6,490 7,157
-------- --------
TOTAL ASSETS $276,058 $270,231
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ ---- $ 5,100
Accounts payable 13,825 10,644
Accrued expenses 27,062 24,721
Current portion of long-term liabilities 3,455 4,261
Accrued income taxes 582 442
-------- --------
TOTAL CURRENT LIABILITIES 44,924 45,168
-------- --------
LONG-TERM LIABILITIES 23,476 21,940
-------- --------
WARRANTS 6,695 9,739
-------- --------
STOCKHOLDERS' EQUITY
Common stock 513 488
Capital surplus 129,406 117,011
Retained earnings 83,614 79,230
Treasury stock (2,751) (2,751)
Notes receivable from officers (9,100) ----
Unearned portion of restricted stock (719) (594)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 200,963 193,384
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $276,058 $270,231
======== ========
</TABLE>
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 13,250 $ 12,673
Adjustments for noncash items included in net income-
Depreciation and amortization 7,303 6,546
Deferred income taxes 9,020 6,400
Disposal of plant and equipment 1 ----
Provision for deferred employee compensation 253 148
Operating requirements-
Accounts receivable (increase) (10,962) (10,491)
Income tax refund receivable decrease 52,603 ----
Inventories (increase) (12,134) (7,512)
Prepaid expenses decrease 93 166
Accounts payable & accrued expenses increase 6,089 5,345
-------- ---------
Net cash provided by operating activities $ 65,516 $ 13,275
-------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Real Time Solutions, Inc. $ ---- $ (3,134)
Purchase of plant and equipment (6,593) (2,988)
Proceeds from the sale of plant and equipment 176 248
Proceeds from the sale of Midwest Steel and CATV assets ---- 13,756
(Increase) decrease in other assets (178) 88
Discontinued operations 4,549 (4,324)
Insurance proceeds ---- 4,000
-------- ---------
Net cash provided by (used for) investing activities $ (2,046) $ 7,646
-------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Increase (decrease) in debt and lease obligations $ 731 $ (2,796)
Payment of short-term borrowings (5,100) ----
Dividends paid (9,738) (102,517)
Loans to officers (9,100) ----
Issuance of common stock 9,839 5,487
-------- ---------
Net cash (used for) financing activities $(13,368) $ (99,826)
-------- ---------
Net increase (decrease) in cash and cash equivalents $ 50,102 $ (78,905)
Cash & cash equivalents, beginning of period 1,226 112,220
-------- ---------
Cash & cash equivalents, end of period $ 51,328 $ 33,315
-------- ---------
Cash paid during the period for interest $ 1,872 $ 1,936
-------- ---------
Cash paid during the period for income taxes $ 1,182 $ 2,136
-------- ---------
</TABLE>
3
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR
Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in consolidation.
(2) Income Taxes:
On December 21, 1992, the Internal Revenue Service issued final
regulations under Section 468B "Special Rules for Designated Settlement Funds".
The Section 468B regulations deal with the tax treatment of the Company's 1989
transfer of 29.4 million shares of UNR stock to the UNR Asbestos-Disease Claims
Trust. Based on these regulations, the Company and Trust have elected to treat
the Trust as a Qualified Settlement Fund on January 1, 1993, which entitled the
Company to a tax deduction equivalent to the value of the stock held by the
Trust on that date. This deduction substantially reduced the Company's 1993
income tax liability and generated tax loss carry-backs and carry-forwards. The
Company received a Federal income tax refund of approximately $48.1 million in
the first quarter of 1994 and a state income tax refund of approximately $4.6
million in the second quarter of 1994 as a result of these carry-backs.
At December 31, 1993, the Company had available approximately $102.0
million of net operating loss carry-forwards to offset future taxable income
through 2008. The Company also has general business tax credits of $3.0 million
which are available to reduce future Federal income taxes through 2002. A
portion of these credits begin to expire starting in 1997. Alternative minimum
tax (AMT) credits of approximately $5.5 million are available to reduce future
taxable income over an indefinite period.
On August 10, 1993, the President signed the "Omnibus Budget
Reconciliation Act of 1993" into law. One provision of this new law that
impacted the Company was the increase in the regular income tax rate from 34 to
35% retroactive to January 1, 1993. The impact of this provision has been
recorded in the 1993 third quarter income tax provision as a benefit of
approximately $1.1 million. This is due primarily to the positive effect of the
law change on the value of the Company's NOL carryforward.
(3) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding warrants and options were exercised, is not significant to the net
income per share computation.
(4) Treasury Stock:
In 1990, the Company announced that its Board of Directors had authorized
the acquisition, through both negotiated transactions involving large blocks and
open market purchases, of up to 1.5 million shares of its common stock to be
held as treasury shares and be available to meet requirements of its Key
Executives' Stock Option Plan and other corporate purposes. As of September 30,
1994, 1,133,565 shares have been purchased.
(5) Dividends Declared:
On April 1, 1994, the Company paid a regular cash dividend of $.20 per
share to stockholders of record as of the close of business on March 18, 1994.
On December 1, 1993, the Company paid an extraordinary cash dividend of $1.20
per share to stockholders of record as of the close of business on November 16,
1993. On February 1, 1993, the Company paid a regular cash dividend of $.20 and
an extraordinary cash dividend of $2.00 per share to stockholders of record as
of the close of business on January 15, 1993.
4
<PAGE>
(6) Inventories:
The interim determination of inventories under the LIFO method is based on
management's estimates of the expected year-end inventory levels and costs, and
as such, interim financial results are subject to final year-end inventory
amounts. Inventories as presented on the Balance Sheets are net of a reserve
for LIFO valuation of $8.6 million at September 30, 1994 and $7.2 million at
December 31, 1993.
(7) Postretirement Benefits:
In December, 1990, the Financial Accounting Standards Board issued a new
standard on accounting for postretirement benefits other than pensions,
primarily related to health care and dental benefit coverage. The new standard
requires that the expected cost of these benefits must be charged to expense
during the years that the employees render service. The Company has no material
liability for postretirement benefits other than pensions.
In November, 1992, the Financial Accounting Standards Board issued a new
standard on accounting for postemployment benefits. The new standard requires
that the expected cost of benefits provided to former or inactive employees
after employment but before retirement be recognized on the accrual basis of
accounting. The company has no material liability for postemployment benefits.
(8) Discontinued Operations:
In June of 1994, the Company announced its intent to divest the industrial
storage rack business segment of the Material Handling Division. The net assets
of this operation have been reclassified to "Net assets of discontinued
operations" in the accompanying balance sheets. The $2.5 million provision for
estimated loss on disposition includes a write-down of these assets to estimated
net realizable values and the estimated costs of disposing this operation.
(9) Subsequent Event
In October of 1994, the Company finalized an expanded $35.0 million
short-term credit facility with interest payable at the prevailing prime rate or
LIBOR plus 1 1/4%, at the Company's option.
(10) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report and Form 10-K for the year ended December 31, 1993.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair statement of the results of operations for
the three and nine month periods ended September 30, 1994 and 1993. Results of
operations for interim periods are not necessarily indicative of results to be
expected for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1993 Annual Report and Form 10-K contain management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1993. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1993 and the
Company's financial position at that date. Trends are discussed to the extent
known and considered relevant. The analysis of results of operations compares
the three and nine month periods ended September 30, 1994 with the corresponding
period of 1993.
5
<PAGE>
RESULTS OF OPERATIONS
Third quarter of 1994 versus third quarter of 1993:
Net sales increased 15.9% to $94.2 million from $81.2 million in the prior
year. Operating income was $10.1 million for the third quarter of 1994 versus
$8.9 million for the same period last year or an increase of 13.9%. Net income
was $6.0 million or $.12 per share versus $6.3 million or $.13 per share last
year, or a decrease of 4.7%. The 1993 third quarter results included a
non-recurring tax benefit of $1.1 million or $.02 per share.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30
1994 1993
------- -------
<S> <C> <C>
NET SALES:
Industrial $43,721 $39,795
Commercial 50,448 41,440
------- -------
Total $94,169 $81,235
======= =======
OPERATING INCOME:
Industrial $ 4,164 $ 5,328
Commercial 7,188 5,071
Corporate Expense (1,254) (1,535)
------- -------
Total $10,098 $ 8,864
======= =======
</TABLE>
The Industrial segment (principal products of this segment are steel
tubing and computerized warehouse control systems) reported net sales of $43.7
million for the third quarter of 1994 versus $39.8 million reported in the same
period last year, or an increase of 9.9%. The increase in sales is due entirely
to increases in prices and volume at the steel tube division.
Operating income of the Industrial segment decreased 21.8% to $4.2 million
for the third quarter of 1994 versus $5.3 million for the same period last year.
This decrease is due primarily to delays in closing on installation contracts
for computerized warehouse control systems compared with the same period last
year.
The Commercial segment (principal products of this segment are shopping
carts, steel towers and shelters for the communications industry, and stainless
steel sinks) reported net sales of $50.4 million for the third quarter of 1994
versus $41.4 million reported in the same period last year or an increase of
21.7%. This increase in sales is due mainly to volume increases of the tower
division, although the shopping cart division showed a slight increase also.
Operating income for the Commercial segment was $7.2 million for the third
quarter of 1994 versus $5.1 million for the same period last year or an increase
of 41.7%. This increase is due primarily to the tower division.
6
<PAGE>
Selling, general and administrative expenses were $10.6 million or 11.3%
of sales for the third quarter of 1994 versus $9.8 million or 12.0% of sales in
the same period of 1993. This percentage reduction reflects cost cutting
measures taken throughout the Company and the resulting ability to produce
greater sales with less costs.
Net interest expense in both periods includes the interest earned on
short-term investments reduced by interest paid on secured debt. Net interest
expense is lower in the third quarter of 1994 versus the third quarter of 1993
due to increased levels of available cash in the third quarter of 1994 as a
result of both federal and state income tax refunds received in the first and
second quarters of 1994.
The decline in net income for the third quarter of 1994 is due to a higher
third quarter 1994 income tax provision than recorded in the same period last
year. The third quarter 1993 results also included a non-recurring tax benefit
of $1.1 million or $.02 per share.
RESULTS OF OPERATIONS
First nine months of 1994 versus first nine months of 1993:
Net sales increased 17.9% to $270.0 million from $229.1 million in the
prior year. Operating income was $26.8 million for the first nine months of
1994 versus $21.5 million in the same period last year or an increase of 24.5%.
Net income, after an after-tax provision of $2.5 million or $.05 per share made
for an estimated loss on the disposal of the industrial storage rack business,
was $13.3 million or $.27 per share versus $12.7 million or $.27 per share in
1993, or an increase of 4.6%. The 1993 third quarter results include the
previously mentioned tax benefit.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
1994 1993
-------- --------
<S> <C> <C>
NET SALES:
Industrial $134,957 $120,161
Commercial 135,082 108,918
-------- --------
Total $270,039 $229,079
======== ========
OPERATING INCOME:
Industrial $ 13,261 $ 14,896
Commercial 17,601 11,402
Corporate Expense (4,088) (4,791)
-------- --------
Total $ 26,774 $ 21,507
======== ========
</TABLE>
The Industrial segment reported net sales of $135.0 million for the first
nine months of 1994 versus $120.2 million reported in the same period last year,
or an increase of 12.3%. This increase is due entirely to increases in prices
and volume at the steel tube division.
Operating income for the Industrial segment decreased 11.0% to $13.3
million for the first nine months of 1994 versus $14.9 million reported for the
first nine months of 1993. This decrease, as noted previously, is due primarily
to delays in the closing of installation contracts for computerized warehouse
control systems.
7
<PAGE>
The Commercial segment reported net sales of $135.1 million for the first
nine months of 1994 versus $108.9 million reported in the same period last year
or an increase of 24.0%. Volume increases of the steel tower division accounted
for the majority of this increase. The shopping cart division also showed an
increase in sales over last year.
Operating income for the Commercial segment for the first nine months of
1994 was $17.6 million versus $11.4 million reported in the same period last
year or an increase of 54.4%. All divisions showed strong increases over last
year's results, with the tower division accounting for the majority of the
overall increase.
Selling, general and administrative expenses were $31.2 million or 11.6%
of sales for 1994 versus $29.4 million or 12.8% of sales in 1993.
Net income, which includes the previously mentioned $2.5 million after-tax
charge and the 1993 tax benefit of $1.1 million, increased 4.6% to $13.2 million
for the first nine months of 1994 from $12.7 million for the same period last
year.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at September 30,
1994 and December 31, 1993:
<TABLE>
<CAPTION>
Sept 30, 1994 December 31, 1993
------------- -----------------
<S> <C> <C>
Working Capital (in millions) $142.7 $122.4
Working Capital Ratio 4.2 to 1 3.7 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of the
third quarter of 1994, with working capital of $142.7 million at September 30,
1994 as compared to $122.4 million at December 31, 1993. The Company's working
capital ratio, a measure of short-term liquidity increased from 3.7 to 1 to 4.2
to 1. Both measures are considered strong indicators of liquidity. The Company
expects that it will meet its ongoing working capital and capital expenditure
requirements from operating cash flows and borrowings under a $35 million short
term credit facility. In addition, the Company's strong unleveraged balance
sheet allows it access to funds, if needed, from the capital markets.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 28, 1982, the Company and certain of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Illinois, Eastern Division ("Bankruptcy Court").
On March 15, 1989, the Company and certain of its subsidiaries filed a
Disclosure Statement and a Consolidated Plan of Reorganization ("Reorganization
Plan") with the Bankruptcy Court. An order confirming the Reorganization Plan
was entered by the Bankruptcy Court effective June 2, 1989 ("Confirmation
Order"). The Bankruptcy Court also entered orders establishing the UNR
Asbestos-Disease Claims Trust ("Trust Order") and permanently enjoining any
actions against the Company by asbestos-disease claimants ("Injunction").
Certain former employees of a predecessor company's Bloomington, Illinois plant
("Bloomington Workers") filed appeals from the Confirmation Order, the
Injunction and the Trust Order. Those appeals were dismissed by the District
Court, and the Bloomington Workers sought review by the United States Court of
Appeals for the Seventh Circuit ("Court of Appeals"). As reported in the Form
10-Q for the period ended June 30, 1994, the Court of Appeals affirmed the
decision of the District Court on April 5, 1994, and on May 27, 1994,
Bloomington Workers' Petition for Rehearing was denied. On August 25, 1994,
the Bloomington Workers filed a Petition for Writ of Certiorari in the United
States Supreme Court, and on October 21, 1994, the Company filed its opposition
to that Petition.
On July 28, 1992, the Bankruptcy Court entered an order holding that the
claims of certain Bloomington Workers to recover compensation under the Illinois
Workers' Occupational Diseases Act should be classified as both Class 2 Claims
(Workers' Compensation claims which are to be paid in full) and as Class 5
Claims (which claims are channeled to the UNR Asbestos-Disease Claims Trust)
under the Reorganization Plan. As reported in the Form 10-Q for the period
ended June 30, 1994, on June 14, 1994, the Bankruptcy Court entered an order
holding that the claims of the 256 former employees of a predecessor company's
Paterson, New Jersey plant should also be classified as both Class 2 Claims and
as Class 5 Claims. The Company filed an appeal to the District Court in both of
those matters, contending that these claims should be classified only as Class 5
claims. On September 22, 1994, the District Court reversed the decision of the
Bankruptcy Court in the Bloomington Workers' case and remanded that matter to
the Bankruptcy Court for further proceedings. The Paterson appeal remains
pending before a different judge in the District Court. Based upon the
Company's view of the merits of these claims and upon the advice of counsel, the
Company believes that Paterson Workers' claims and the Bloomington Workers'
claims will not have a material adverse effect on the Company's operations or
its financial condition.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
2. Plan of Reorganization incorporated herein by reference from Exhibit
A of the 1989 first quarter Form 10-Q.
4. Warrant Agreement (including form of warrant) issued pursuant to the
provisions of Article III of the Company's Consolidated Plan of
Reorganization incorporated herein by reference from Exhibit A of
the 1989 Form 10-K.
10. 1994 Stock Option Plan incorporated by reference from Exhibit A of
Proxy Statement dated October 11, 1994.
1994 Executive Stock Purchase Plan incorporated by reference from
Exhibit B of Proxy Statement dated October 11, 1994.
Form of Executive Stock Purchase Agreement with Thomas A. Gildehaus,
Henry Grey and Victor E. Grimm dated September 9, 1994.
11. The computation can be determined from the report.
15. None
18. None
19. None
22. None
23. None
24. None
27. None
(B) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements 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.
UNR INDUSTRIES, INC.
Dated: November 7, 1994 /s/ Henry Grey
- - - - ----------------------- --------------------------------------
Henry Grey
Senior Vice President & Chief Financial
Officer
Dated: November 7, 1994 /s/ John A. Saladino
- - - - ----------------------- --------------------
John A. Saladino
Controller & Assistant Secretary
10
<PAGE>
EXHIBIT 10.
UNR INDUSTRIES, INC.
EXECUTIVE STOCK PURCHASE AGREEMENT
____________
This Executive Stock Purchase Agreement (the "Agreement") is entered into
as of September 9, 1994, between UNR INDUSTRIES, INC., a Delaware corporation
(the "Company"), and a key executive of the Company (the "Executive"), pursuant
to the 1994 Executive Stock Purchase Plan of the Company (the "Plan").
1. The Executive hereby agrees to purchase from the Company shares of its
common stock, $.01 par value (the "Shares"), and the Company agrees to sell
such Shares to the Executive, subject to the following terms and conditions.
2. The date of the Executive's purchase ("Purchase Date") of the shares is
September 9, 1994.
3. The Executive's purchase price for the Shares shall be their "fair
market value" (the average of the average of the reported high and low sales
prices for the Shares on the National Association of Securities Dealers
Automated Quotations/National Market System, or, if the Shares are not so
traded, on the principal market where the Shares are traded (as reported in the
THE WALL STREET JOURNAL, Midwest Edition) on each of the five trading days
immediately preceding the relevant date, in this case the Purchase Date). On
the Purchase Date, the Executive shall pay to the Company the par value of the
Shares in cash, and deliver to the Company a promissory note or notes ("Notes")
in a principal amount equal to the fair market value of the Shares, less their
par value, along with stock power(s) endorsed in blank with respect to the
Shares.
4. The Notes shall be in the form of Exhibit A attached hereto, shall
mature three years from the date of purchase, shall be secured by the Shares as
herein provided and shall not bear interest (with certain exceptions, as
specified herein). If Shares are sold by the Executive prior to the maturity
date of the Notes, other than in connection with a "Change in Control" (as
defined in the Company's 1994 Stock Option Plan, as it may be amended from time
to time), interest shall be due from the Purchase Date, at the "applicable
federal rate" (as determined by Section 1274(d) of the Internal Revenue Code of
1986 or any successor provision). Any cash dividends paid on the Shares, less,
in the case of dividends taxable as ordinary income, the highest marginal
federal and Illinois individual income tax rates, shall be applied to reduce the
amounts outstanding under the Notes (principal and interest, if any). The Notes
shall be pre-payable in cash by the Executive in whole or in part, from time to
time, without penalty.
5. The Shares shall be held by the Company and kept in its possession as
security for repayment of the Notes. Except as otherwise provided in this
Agreement, the Shares may be sold by the Executive at any time after
securityholder approval of the Plan contemplated by Section 9 hereof, upon six
trading days notice to the Company. At the Company's option, all or any part of
the Shares specified in the notice may be purchased by the Company at their fair
market value as of the fifth trading day after such notice. If not so purchased
by the Company, the Company will promptly deliver certificates for the Shares
sold (or to be sold) as directed by the Executive, with instructions
satisfactory to the Company that it receive the sale proceeds. The proceeds of
any such sale, to the Company or otherwise, net of commissions or other costs of
sale (without giving any effect to income or capital gains taxes) in the case of
sales otherwise than to the Company, shall be applied to the amounts outstanding
under the Notes (principal and interest, if any). The balance of any proceeds
of sale shall be paid by the Company in cash to (or may be retained by) the
Executive. At maturity of the Notes, the Executive may pay all or any part of
the amount due in cash. To the extent not so paid, Shares shall be applied to
the amount due, at their fair market value on the Note maturity date, and any
remaining Shares shall be delivered by the Company to the Executive.
1
<PAGE>
6. The Executive shall be deemed to be the owner of the Shares for all
purposes, and the Executive shall be entitled to full voting rights and all
other rights of holders of Common Stock of the Company.
7. In the event of a merger or consolidation of the Company in which the
Shares are converted into any property other than cash, or in the event of any
dividend or distribution on the Shares consisting of property other than cash,
such property shall be promptly delivered by the Executive to, or withheld by,
the Company or its successor and treated as if it were Shares subject to the
terms of this Agreement. Cash received upon the conversion of Shares in a
merger or consolidation of the Company shall be first applied to reduce the
amounts outstanding under the Notes (principal and interest), and any balance
paid to the Executive.
8. The purchase of Shares shall not be construed to give the Executive the
right to be retained in the Company's (or any of its subsidiaries') service or
any benefits not specifically provided by this Agreement or the Plan, or to
affect in any manner the Company's right to modify, amend or terminate any of
the Company's or any subsidiary's pension or retirement plans.
9. The sale of Shares to the Executive hereunder is subject to approval of
the Plan by securityholders of the Company holding a majority of the voting
power of the outstanding Common Stock and Common Stock Purchase Warrants of the
Company, which approval may be by written consent. In the event such
securityholder approval is not obtained by May 31, 1995, the purchase and sale
of Shares hereunder shall be rescinded, and the purchase price (cash and Notes),
and any interest paid by the Executive to the Company, shall be repaid by the
Company to the Executive.
10. The Executive's personal liability for repayment of the Notes shall be
limited in the following respects:
(a) In the event of the death or disability (as defined in Section
22(e)(3) of the Internal Revenue Code of 1986 or any successor
provision) of the Executive or termination of the Executive's
employment by the Company without "cause," the Company shall
apply Shares at their fair market value on the date of such
event to the principal and interest, if any, on the Notes, with
any remaining Shares delivered to the Executive or his legal
representative, and the Company's only recourse with respect to
repayment of the Notes shall be the Shares, with no further
liability on the part of any party. Cause shall mean (i) an
act or acts of personal dishonesty by Executive which results
in personal enrichment of Executive at the expense of the
Company, (ii) violation by Executive of Executive's obligations
under any of his non-competition or non-disclosure agreements
with the Company which are not remedied to the reasonable
satisfaction of the Company in a reasonable period of time
after receipt of written notice from the Company, or (iii) the
conviction of the Executive of a felony;
(b) In the event of a "Change in Control" (as defined in the
Company's 1994 Stock Option Plan, as it may be amended from
time to time), the Company's only recourse with respect to
repayment of the Notes at maturity shall be the Shares, with no
further liability on the part of any party;
(c) In the event of the Executive's voluntary resignation from
employment by the Company or the Executive's termination of
employment by the Company for "cause", interest shall accrue at
the applicable federal rate from the Purchase Date of the
Shares, and the Company shall have the option to apply Shares
at their fair market value on the date of termination of
employment to the amounts of principal and interest (from the
Purchase Date) on the Notes, with any remaining Shares
delivered to the Executive by the Company. If the Company
exercises this option, it shall have no other recourse against
the Executive for repayment of the Notes. Any termination of
Executive's
2
<PAGE>
employment for cause shall be communicated by the Company to
the Executive in a notice of termination which shall set forth
in reasonable detail the facts and circumstances, if any,
claimed to constitute cause; and
(d) If the preceding Sections 10(a), (b) and (c) are not
applicable, and if the fair market value of the Shares securing
repayment of the Notes is insufficient to cover the amounts
owing on the Notes when they become due, the Executive shall be
personally liable to the Company for payment of the Notes only
to the extent that the deficiency exceeds 25% of the amounts
then owing on the Notes (before applying the Shares to their
partial repayment).
11. The Executive represents and warrants to the Company that he is
knowledgeable about equity investments in general and that:
(a) because of his high executive position with the Company, he has
intimate knowledge of the Company's financial condition and
prospects;
(b) he is able to afford the economic risk of his investment in the
Shares;
(c) he has had the opportunity to ask whatever questions he wished
concerning the Company, the Shares and their salability, and has
received answers he deems adequate to any such questions;
(d) he understands that the Shares may be issued to him by the
Company in reliance upon an exemption from registration under
the Securities Act of 1933, that substantial restrictions on
the re-sale of such Shares by him in the open market without
such registration exist, that action by the Company is required
to effect any such registration and that the Company is under
no obligation to take such action (except as provided in
Section 12 hereof); and
(e) he will not re-sell the Shares without such registration or an
exemption therefrom, and the Company may place restrictive
legends on the certificates for his Shares and otherwise take
steps necessary or desirable to satisfy itself that any
sales are being made in compliance with all applicable federal
and state securities laws.
12. If at any time during the period beginning three years after the
Purchase Date and ending two years after payment in full of the Notes, the
Executive notifies the Company of his wish to sell Shares to the public, and the
Executive is unable to sell the Shares publicly without registration under the
Securities Act of 1933, the Company agrees to use all reasonable efforts to
provide the Executive a prospectus covering the re-sale of such Shares included
in a registration statement filed by the Company on Form S-8 or Form S-3 (or any
successor to such forms). Sales of Shares by such a prospectus may be required
by the Company to be made pursuant to an organized secondary offering through
one or more underwriters designated by the Company, and the Executive agrees not
to use any such prospectus during a period when the Company advises the
Executive that the prospectus may be deficient or that its use would interfere
with a Company financing. The Company agrees to indemnify and hold the
3
<PAGE>
Executive harmless from any damages or other expenses the Executive may incur as
a consequence of defending a claim that the prospectus pursuant to which any of
Executive's Shares were sold contained any misstatement or omission (other than
a misstatement or omission based on information supplied by the Executive to the
Company).
13. This Agreement shall be binding upon the successors and assigns of the
parties hereto. The rights of the Executive hereunder are not assignable. The
Company shall require any successor to it by merger or consolidation, or any
purchaser of all or a majority of its assets, to assume the Company's
obligations under this Agreement.
This Agreement is entered into as of the date first above written.
UNR Industries, Inc. Executive
By___________________________ ___________________________
Name: Name:
Title:_____________________
4
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<PAGE>
<ARTICLE> 5
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<NAME> UNR INDUSTRIES, INC
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
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0
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