<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000064493
<NAME> Medalist Industries, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1995
<PERIOD-END> JUN-30-1995
<CASH> 510
<SECURITIES> 0
<RECEIVABLES> 14962
<ALLOWANCES> 1017
<INVENTORY> 28896
<CURRENT-ASSETS> 47766
<PP&E> 27138
<DEPRECIATION> 11776
<TOTAL-ASSETS> 89968
<CURRENT-LIABILITIES> 19713
<BONDS> 7242
<COMMON> 3865
0
0
<OTHER-SE> 27032
<TOTAL-LIABILITY-AND-EQUITY> 89968
<SALES> 32285
<TOTAL-REVENUES> 32285
<CGS> 24151
<TOTAL-COSTS> 6602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1026
<INCOME-PRETAX> 506
<INCOME-TAX> 0
<INCOME-CONTINUING> 506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 506
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</TABLE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
_______________________________________________
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ____________________
Commission file number 1-6322
_______________________________________________________
Medalist Industries, Inc.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Wisconsin 39-0873294
_______________________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10850 West Park Place, Suite 150
Milwaukee, Wisconsin 53224
__________________________________________________________
(Address of principal executive offices)
(Zip Code)
(414) 359-3000
__________________________________________________________
(Registrant's telephone number, including area code)
__________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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.
[X] Yes [ ] No
Number of shares of common stock outstanding as of June 30, 1995:
3,864,898 par value $1.00 per share
</PAGE>
<PAGE> 2
PART I -- FINANCIAL INFORMATION
Item 1. Financial statements.
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, 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 condensed or 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 condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's latest Annual Report on Form 10-K.
Financial statements presented are:
Consolidated balance sheets -- June 30, 1995 and December 31, 1994.
Consolidated statement of operations for the three and six months ended
June 30, 1995 and 1994.
Consolidated statement of cash flows for the six months ended June 30,
1995 and 1994.
Notes to condensed consolidated financial statements -- June 30, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Revenues of $32.3 million for the second quarter ended June 30, 1995 were
down $2.3 million from the comparable period of 1994. However, last year's
results included $1.8 million of revenues from the Redi-Bolt operation,
included in the Company's Hardware Division, which was sold at year end 1994.
Revenues for the remaining operations in the Hardware Division were flat
period to period. The Industrial Fastener Division, adversely affected by
earlier than usual customer shutdowns in the automotive industry, experienced
a 3% decrease in quarterly revenues when compared to the same period in 1994.
The Company's C-Tech Division reported a 4% increase in quarterly revenues as
it began to benefit from the opening of two new branches during the second
quarter. However, it too was affected by early customer shut-downs and
reduced customer production levels during the last half of the quarter.
For the first six months of 1995 revenues of $66.7 million compared to
$69.2 million in 1994. Included in the $69.2 million was $3.4 million in
revenues from the Company's former Redi-Bolt operation which, as mentioned
above, was sold at the end of 1994. While the C-Tech Division's rapid growth
slowed during the second quarter its revenues for the first six months were
10% higher than for the same period in 1994. The Company's Hardware
operation reported a 6% increase while the Industrial Fastener Division
reported a 3% decrease during the first half of 1995.
Quarterly gross margins as a percentage of net sales increased 1.7% from
the second quarter 1994 level as the C-Tech Division's sales growth and the
Industrial Fastener Division's success in improving overall efficiencies
positively impacted gross margins. Gross margins for the first six months
were flat period to period.
Selling, general and administrative expenses for the second quarter were
16% lower than the second quarter of 1994. Although the Company's C-Tech
Division's operating expenses were higher this year, due to start up costs of
two additional branches and increased employment, the Industrial Fastener
Division reported a 16% decrease in expenses. This decrease reflects efforts
begun in the second quarter of 1994 to streamline the operations.
Interest expense for the second quarter was up 18% compared to the second
quarter of last year and up 25% for the first six months. This increase is
due entirely to higher interest rates as the level of bank borrowings is down
period to period.
Net income for the current quarter was $.5 million versus a net loss of
$.6 million for the same quarter last year. Approximately 45% of the second
quarter 1995 earnings were due to favorable non-operational accrual
adjustments. Net income for the six months was $1.0 million versus $.8
million for the comparable period last year. The Company had no provision for
income taxes in 1995 or 1994 due to utilization of net operating loss
carryforwards.
</PAGE>
<PAGE> 3
CHANGES IN FINANCIAL CONDITION
The Company's working capital decreased $1.7 million from December 31,
1994 to $28.1 million at June 30, 1995. A $1.3 million decrease in cash, used
to paydown long term debt, and a $1.2 million decrease in inventories were the
major contributors to the working capital decrease. Inventory decreases at
the Company's Industrial Fastener operation were partially offset by inventory
increases at the Company's C-Tech operation due to continued customer volume
growth. The Company had no material outstanding commitments for capital
expenditures at June 30, 1995. First half 1995 capital expenditures were $1.4
less than the same period a year ago.
Although the Company had significantly reduced its long term debt during
the first six months of the year, down almost $4.0 million from December 31,
1994, it was not able to meet its interest coverage ratio under the covenants
of its credit facility for the second quarter of 1995 and its leverage ratio
for the month of April 1995. The leverage ratio violation occurred due to an
earlier than normal retirement of subordinated debt. The Company's bank group
has issued waivers on both violations.
Management believes that the Company's ability to generate funds through
its operations and its existing credit facilities are sufficient to provide
the necessary funding to continue its growth plans and operations through the
end of 1995.
</PAGE>
<PAGE> 4
<TABLE>
Consolidated balance sheets
Dollars in thousands (unaudited)
==============================================================================
<CAPTION>
June 30, December 31,
1995 1994
____________ ____________
<S> <C> <C>
Assets
Current assets:
Cash $ 510 $ 1,765
Accounts receivable, less allowance
for doubtful accounts of $1,017 and $1,229 14,962 15,501
Inventories 28,896 30,066
Prepaid expenditures 3,180 2,625
Assets held for sale 218 255
____________ ____________
Total current assets 47,766 50,212
Other assets:
Intangibles less accumulated amortization
of $4,889 and $4,284 21,270 21,874
Other noncurrent assets 5,570 5,375
____________ ____________
Total other assets 26,840 27,249
Plant and equipment, at cost:
Land & buildings 593 590
Machinery and equipment 26,545 25,983
____________ ____________
Total 27,138 26,573
Less accumulated depreciation 11,776 10,330
____________ ____________
Net plant and equipment 15,362 16,243
____________ ____________
Total assets $ 89,968 $ 93,704
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 10,325 $ 10,967
Accrued liabilities 4,745 4,773
Current maturities of debt and capital leases 3,024 3,030
Liabilities of discontinued operations 1,619 1,675
____________ ____________
Total current liabilities 19,713 20,445
Long-term liabilities:
Long-term debt 28,703 32,140
Obligations under capital leases 40 49
Convertible subordinated debentures 7,242 7,760
Other liabilities 3,373 3,631
____________ ____________
Total long-term liabilities 39,358 43,580
</PAGE>
<PAGE> 5
Stockholders' equity
Common stock ($1.00 par value), authorized
10,000,000 issued 3,864,898 shares
June 30, 1995 and 3,837,054 shares
December 31, 1994 3,865 3,837
Capital in excess of par value 17,083 16,934
Retained earnings 9,949 8,908
____________ ____________
Total stockholders' equity 30,897 29,679
____________ ____________
Total liabilities and stockholders' equity $ 89,968 $ 93,704
============ ============
==============================================================================
</TABLE>
</PAGE>
<PAGE> 6
<TABLE>
Consolidated statement of operations
Dollars in thousands except per share data (unaudited)
==============================================================================
<CAPTION>
Periods ended June 30, 1995
__________________________________________
Three months Six months
___________________ ____________________
1995 1994 1995 1994
________ _______ _______ ________
<S> <C> <C> <C> <C>
Net sales $ 32,285 $ 34,552 $ 66,704 $ 69,222
Cost of products sold 24,151 26,440 50,070 52,117
Selling, general & administration 6,602 7,872 13,542 14,653
_________ ________ ________ ________
Operating income 1,532 240 3,092 2,452
Interest expense 1,026 870 2,051 1,647
_________ ________ ________ ________
Income (loss) before income taxes 506 (630) 1,041 805
Provision for income taxes 0 0 0 0
_________ ________ ________ ________
Net income (loss) $ 506 $ (630) $ 1,041 $ 805
========= ======== ======== ========
Earnings (loss) per share
(based on average outstanding
common stock and common stock equivalents)
Primary
Net income (loss) $ 0.13 $ (0.16) $ 0.27 $ 0.21
========= ======== ======== ========
Assuming full dilution
Net income (loss) $ 0.13 $ (0.16) $ 0.27 $ 0.21
========= ======== ======== ========
Average shares outstanding:
Primary 3,862,951 3,841,579 3,859,161 3,862,542
Full Dilution 3,864,650 3,841,579 3,859,557 3,862,542
==============================================================================
</TABLE>
</PAGE>
<PAGE> 7
<TABLE>
Consolidated statement of cash flows
Dollars in thousands (unaudited)
==============================================================================
<CAPTION>
Periods ended June 30
__________________________
Six months
__________________________
1995 1994
____________ ___________
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,041 $ 805
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 1,535 1,347
Amortization 605 739
(Gain)/loss on disposal of plant and equipment (4) 26
Changes in
Accounts receivable 539 (1,603)
Inventories 1,170 (1,310)
Other current assets (555) (341)
Accounts payable and accrued liabilities (670) 3,373
Noncurrent assets and liabilities (453) (886)
____________ ____________
Net cash provided by continuing operations 3,208 2,150
Cash flows used by discontinued operations (19) (427)
Cash flows from investing activities
Purchases of plant and equipment (710) (2,147)
Proceeds from disposal of plant and equipment 59 0
____________ ____________
Net cash used by investing activities (651) (2,147)
Cash flows from financing activities
Net bank debt increase (decrease) (3,443) 1,418
Net subordinate debenture increase (decrease) (518) (518)
Net capital lease increase (decrease) (9) (14)
Proceeds from sale of common stock 177 113
____________ ____________
Net cash provided (used) by
financing activities (3,793) 999
Net increase (decrease) in cash (1,255) 575
Cash at beginning of period 1,765 472
____________ ____________
Cash at end of period $ 510 $ 1,047
============ ============
Cash paid for:
Interest $ 1,655 $ 1,510
Income taxes $ 48 $ 116
</TABLE>
</PAGE>
<PAGE> 8
Notes to condensed financial statements
Dollars in thousands (unaudited)
==============================================================================
1. The statements presented herein reflect all normal recurring adjustments
which, in the opinion of management, are necessary for a fair statement of the
results of the interim periods shown. Operating results for the periods
ending June 30, 1995 are not necessarily indicative of the results that may
be expected for the entire year ending December 31, 1995.
2. Inventories are stated at the lower of last-in-first-out cost or market.
Inventory cost includes material, labor, and all work associated with
production. The major classes of inventory are not segregated on the books of
the Company as to raw materials, work in process, and finished products,
except at the date of a physical inventory, which are at interim dates for
most divisions. However, a reasonable estimate of these allocations of
inventory are as follows:
June 30, December 31,
1995 1994
___________ ___________
Raw materials $ 3,779 $ 3,955
Work in process 4,046 4,425
Finished product 21,071 21,686
___________ ___________
Total $ 28,896 $ 30,066
=========== ===========
</PAGE>
<PAGE> 9
3. The earnings per common share computation for the periods ended June 30,
are as follows:
Three months ended June 30,
_________________________________________
1995 1994
___________________ ___________________
Shares Earnings Shares Earnings
_________ ________ _________ ________
Average shares outstanding 3,862,951 3,820,203
Net income (loss) $ 506 $ (630)
Assumed issuance of stock upon
the exercise of stock options 0 0 21,376 0
_________ ________ _________ ________
Basis of primary computation 3,862,951 $ 506 3,841,579 $ (630)
========= ======== ========= ========
Earnings per share $ 0.13 $ (0.16)
======== ========
Fully diluted
Average shares outstanding 3,862,951 3,820,203
Net income (loss) $ 506 $ (630)
Assumed issuance of stock upon
the exercise of stock options 1,699 0 21,376 0
_________ ________ _________ ________
Basis of fully-diluted computation 3,864,650 $ 506 3,841,579 $ (630)
========= ======== ========= ========
Earnings (loss) per share $ 0.13 $ (0.16)
======== ========
Six months ended June 30,
_________________________________________
1995 1994
___________________ ___________________
Shares Earnings Shares Earnings
_________ ________ _________ ________
Average shares outstanding 3,858,703 3,819,045
Net income $ 1,041 $ 805
Assumed issuance of stock upon
the exercise of stock options 458 0 43,497 0
_________ ________ _________ ________
Basis of primary computation 3,859,161 $ 1,041 3,862,542 $ 805
========= ======== ========= ========
Earnings per share $ 0.27 $ 0.21
======== ========
Fully diluted
Average shares outstanding 3,858,703 3,819,045
Net income $ 1,041 $ 805
Assumed issuance of stock upon
the exercise of stock options 854 0 43,497 0
_________ ________ _________ ________
Basis of fully-diluted computation 3,859,557 $ 1,041 3,862,542 $ 805
========= ======== ========= ========
Earnings per share $ 0.27 $ 0.21
======== ========
</PAGE>
<PAGE> 10
PART II -- OTHER INFORMATION
Item 1. Legal proceedings. N/A
Item 2. Changes in securities. N/A
Item 3. Defaults upon senior securities. N/A
Item 4. Submission of Matters to a Vote of Security Holders. N/A
Item 5. Other Information. N/A
Item 6. Exhibits and reports on Form 8-K.
On April 27, 1995, Medalist reported on Form 8-K that James S.
Dahlke has joined the Company as President and Chief Executive Officer. He
assumed this responsibility effective May 15, 1995 reporting to the
Medalist Board of Directors.
On April 27, 1995, Medalist reported on Form 8-K the resignation of Bruce
M. Woodward, President of the Industrial Fastener Division.
EXHIBITS
(10.1) Employment and Non-competition Agreement dated April 27, 1995
between the Company and James S. Dahlke - filed herewith.
(99.1) Memoranda from Harris Bank, as agent for the Company's lenders, to
the Company regarding waiver of compliance with Section 7.10 (Leverage Ratio)
and Section 7.9 (Interest Coverage Ratio) of the Company's loan agreement.
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.
Medalist Industries, Inc.
By: /s/ James S. Dahlke 08/10/95 /s/ John T. Paprocki 08/10/95
___________________________________ ________________________________
James S. Dahlke Date John T. Paprocki Date
President and Chief Executive Officer Chief Financial Officer
</PAGE>
<PAGE>
(Exhibit (10.1) Employment and Non-competition Agreement between the Company
and James S. Dahlke)
MEDALIST INDUSTRIES, INC.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Employment and Noncompetition Agreement is entered into this 27th
day of April, 1995, by and between MEDALIST INDUSTRIES, INC., a Wisconsin
corporation (the "Company"), and James S. Dahlke ("Executive").
WHEREAS, during the course of employment, Executive will learn the
Company's plans and methods of doing business as well as the identities of the
Company's customers, their purchasing needs and habits and the names of the
personnel charged with purchasing responsibilities; and
WHEREAS, the Company's list of customers has been compiled by the Company
and the Company's plans and methods of doing business have been developed by
the company at considerable expense over a number of years; and
WHEREAS, but for his employment at the Company, Executive would not be
able to easily duplicate the Company's customer list or be thoroughly familiar
with its plans and methods of doing business; and
WHEREAS, the Company's customer list and the plans and methods of doing
business are of considerable economic value to the Company; and
WHEREAS, EXECUTIVE HAS REVIEWED THE MATTERS RECITED IN THE FOUR
PARAGRAPHS ABOVE AND CONFIRMS THAT HE AGREES WITH THOSE RECITALS;
NOW, THEREFORE,
In consideration of the mutual promises and covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is hereby agreed as follows:
1. Employment. The Company hereby employs Executive as its President and
Chief Executive Officer, and Executive hereby accepts employment with the
Company, in accordance with the terms and conditions set forth herein.
Executive agrees to devote his full time, skill, knowledge, and attention to
the business of the Company and the performance of his duties under this
Agreement.
2. Term. This Agreement shall commence on May 15, 1995 and continue until
May 15, 1997, and thereafter until terminated as provided herein; provided,
however, that this Agreement may be terminated earlier as provided in
paragraph 6.
3. Duties. During the term of this Agreement, Executive shall serve as the
chief executive officer of the Company, to supervise and direct the operations
of the Company as they are now or may hereafter be constituted. Executive
shall be titled as President and Chief Executive Officer and shall have such
powers and responsibilities as the Company's Board of Directors shall from
time to time assign to him. Executive shall serve also, without additional
compensation, in any additional offices of the Company to which he may be
elected or appointed by the Company's Board of Directors. If Company requires
Executive to serve principally at a place other than Milwaukee, Wisconsin or
its immediate suburban area, Executive shall be entitled to reimbursement of
relocation expenses in accordance with the Company's relocation program.
Executive shall not directly or indirectly render any material services of a
business, commercial or professional nature to any other person or
- 1 -
</PAGE>
<PAGE> 11
organization, whether for compensation or otherwise, without the prior written
consent of the Board of Directors of the Company.
4. Compensation. Executive shall receive compensation from the Company for
his employment hereunder as follows:
a. Base Salary. Executive's initial base, annual gross salary shall be
$225,000 payable in approximately equal installments at the usual and
customary times established by the Company. Executive's base salary shall be
reviewed annually by the Compensation Committee of the Board of Directors for
possible adjustment.
b. Incentive Compensation. In additional to receiving his base salary,
Executive shall be entitled to receive a one-time bonus of $25,000 promptly
after his employment begins. On an ongoing basis (pro rata for 1995),
Executive shall be entitled to participate in the incentive compensation
programs adopted by the Company for its executive officers, with such
incentive compensation currently targeted at 50% of base compensation for
achieving 100% of specified goals but permitting a maximum bonus of
approximately 98% of base compensation if the targets are exceeded by a
sufficient amount. Notwithstanding the foregoing, the bonus for 1995 shall
not be less than a pro rata bonus based on achieving 100% of the 1995 goals
(i.e., not less than (7 1/2 months divided by 12 months) times (50% of
$225,000), which is $70,312.50). Nothing herein shall prohibit the award of
additional incentive compensation to Executive in the discretion of the Board
of Directors.
c. Vacation/Holidays. Executive shall be entitled to four weeks of paid
vacation on an annualized basis, plus holidays as provided to other comparable
executive employees of the Company.
d. Expense Reimbursement. The Company shall pay, in accordance with the
Company's usual and ordinary practices and upon submission of appropriate
vouchers and supporting documentation, all expenses of Executive incurred in
connection with the rendering of services to the Company pursuant to this
Agreement, provided that such expenses are reasonable and necessary business
expenses of the Company.
e. Deductions. The Company shall deduct from the payments made to
Executive hereunder (including payments under Section 5) any federal, state or
local withholding or other taxes or charges which the Company is required to
deduct under applicable law, and all amounts payable to Executive under this
Agreement are stated before any such deductions. The Company shall have the
right to rely upon written opinions of counsel if any questions arise as to
any deductions.
5. Additional Benefits. Executive shall be entitled to the following
additional benefits:
a. Participation in the Company's employee benefit plans, which
currently include group term life insurance, group health insurance, long term
disability insurance, and a 401(K) plan.
b. A car allowance of $800 per month.
c. Maintenance of a membership at Merrill Hills Country Club.
- 2 -
</PAGE>
<PAGE> 12
d. A one-time grant of nonqualified options to purchase 45,000 shares of
the Company's common stock. The options shall have an exercise price equal to
the closing price reported on NASDAQ on May 15, 1995, shall be exercisable 1/3
on each May 15, 1996, May 15, 1997, and May 15, 1998, provided Executive
remains employed by the Company on each of those dates, and shall expire on
the earlier of three months after his termination of employment or May 15,
2005. Executive acknowledges that both the options and the shares issuable
pursuant thereto are subject to significant restrictions under applicable
securities laws, and that the Company shall have no obligation to assist in
his resale thereof. The certificates evidencing the shares may bear legends
referring to applicable resale restrictions. In addition, Executive shall be
eligible to participate in Medalist's stock option plans as approved by its
shareholders and administered by the Compensation Committee of the Board of
Directors.
6. Termination.
a. Events Causing Termination. Notwithstanding the term set forth in
paragraph 2 and any other provisions hereof, this Agreement may be terminated
by the Company prior to the expiration of such term as follows:
(i) In the event of Executive's death or retirement.
(ii) In the event of Executive's disability, and after expiration of
the ninety (90) day period described below.
(a) Executive shall be considered disabled if he is unable to
perform his normal duties under this Agreement for a continuous period of
ninety (90) consecutive days by reason of physical or mental incapacity.
Termination in accordance with this provision shall not affect Executive's
right, if any, to receive benefits otherwise available to him pursuant to any
disability insurance plan under which Executive is covered.
(b) If there is any dispute as to whether Executive is or was
physically or mentally disabled under this Agreement, or whether his
disability has ceased and he is able to resume duties, such question shall be
submitted to a licensed physician agreed upon by the parties, or if the
parties are unable to agree, a licensed physician appointed by the President
of the Medical Society of Milwaukee County, Wisconsin, at the request of
either party. Executive shall submit to such examinations and provide
information as such physician may request, and the determination of such
physician as to Executive's physical or mental condition shall be binding and
conclusive on the parties. The Company agrees to pay the cost of any such
physician and examinations.
(iii) At the option of the Company, with or without notice, in the
event that Executive shall commit any of the following acts:
(a) Personal dishonesty, incompetence, willful misconduct,
insubordination, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
material law, rule, or regulation (other than traffic violations or similar
offenses), serious neglect of duty, immoral or disreputable conduct, or
habitual use of alcohol or drugs which, in sole discretion of the Company's
Board of Directors, materially impairs Executive's ability to carry out his
duties;
- 3 -
</PAGE>
<PAGE> 13
(b) Failure to devote his full-time efforts to the Company or
intentional failure to perform stated duties; provided, however, that
Executive may engage in reasonable civic, charitable, or trade activities as
long as such activities do not interfere with the performance of his duties
hereunder;
(c) Rendering any material assistance, directly or indirectly,
to any person or entity in that person's or entity's competitive efforts with
the Company;
(d) Use of the Company's proprietary information or customer
lists for his own benefit or in a way adverse to the Company's interests;
(e) Failure to use his best efforts to promote the business of
the Company; or
(f) Material breach of any provision of this Agreement.
(iv) At any time, with or without notice, at the option of the
Company for any reason or no reason at all; provided, however, that upon
termination under this subparagraph 6.a(iv), Executive shall have the right to
receive continued medical benefits plus an amount equal to his base salary at
that time until the later of May 15, 1997 or one year following such
termination in exchange for his written release of any actual or potential
claims against the Company in such form as the Company may reasonably request.
(v) At any time after may 15, 1997, at the option of Executive,
with not less than eight weeks advance notice to the Company.
b. Payment Upon Termination. Upon termination of Executive's employment
under this paragraph 6, and except as otherwise provided by subparagraph
6.a(iv), the salary payable to Executive pursuant to subparagraph 4.a shall be
paid through the end of the week unless this Agreement expires earlier by its
terms. All other compensation and benefits shall cease as of the date of his
termination and no incentive compensation or bonus shall be payable for the
year in which Executive terminates employment.
c. Actions by the Company. For purposes of this paragraph 6, any action
on the part of the Company must be authorized by a majority of the Company's
Board of Directors.
d. Return of the Company's Materials. Upon termination, Executive shall
immediately return to the Company all files, credit cards, keys, instruments,
equipment, and other materials owned or provided by the Company.
7. Confidential Information. Executive acknowledges that through the
services to be performed for the Company, Executive will obtain confidential
information regarding the Company's business affairs, including matters of a
technical nature, such as research, development, product design, engineering
data, specification, systems processes, formulations, and manufacturing
operations or techniques, and matters of a business nature, such as planning,
purchasing, accounting, finance, selling, marketing, and customer relations,
and other information of a similar nature not available to the public. This
information may be oral or written and may reside in that which Executive
originates as well as that which otherwise comes into Executive's possession
or knowledge. Executive agrees that Executive will treat all matters relating
- 4 -
</PAGE>
<PAGE> 14
to the business and activities of the Company as confidential and will not
divulge or disclose any information gained in connection with Executive's
employment by the Company to any other person, firm, organization,
association, corporation, or entity, except upon the written request or
instruction of the Company or in the normal course of Executive's duties as an
officer of the Company. Executive agrees that all books, records, papers,
catalogs, compilations of information, drawings, correspondence, recording,
stored data, tools, instruments, equipment, and other physical items including
copies and duplicates, that Executive develops or which come into his
possession or control during Executive's employment by the Company, which
relate to or are a part of any of the Company's technical or business matters,
whether of a public nature or not, and not merely a personal item, shall be
and remain the property of the Company, and Executive will promptly deliver
all such materials to the Company on termination of Executive's employment, or
at any time the Company may so request.
8. Restrictive Covenants. During the term of Executive's employment
pursuant to this Agreement and for two years thereafter, Executive shall not,
without the prior written consent of the Company, knowingly be engaged in or
connected or concerned in any material fashion, directly or indirectly, with
any business or activity (other than as an inactive investor in a publicly
traded company) which competes with a business conducted by the Company in
which the Company has either significant profit, a significant investment or
trade secrets or proprietary processes, nor will he knowingly take part in any
activities materially detrimental to the best interest of the Company.
9. Remedies. In addition to other remedies provided by law or equity, upon
a breach by Executive of any of the covenants contained herein, the Company
shall be entitled to have a court of competent jurisdiction enter an
injunction against Executive or his affiliates prohibiting any further breach
of the covenants contained herein. The parties further agree that the
services to be performed hereunder are of a unique, special, and extra-
ordinary character. Therefore, in the event of any controversy concerning the
rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of competent jurisdiction at law or equity by a
decree of specific performance or, if the Company elects, by obtaining damages
or such other relief as the Company may elect to pursue. Such remedies,
however, shall be cumulative and nonexclusive and shall be in addition to any
other remedies which the Company may have.
10. Assignment. This Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of the Company, including any company
or corporation with which the Company may merge or consolidate or to which the
Company may transfer substantially all of its assets. Executive shall have no
power, without the prior written consent of the Company, to transfer, assign,
anticipate, mortgage or otherwise encumber in advance any of the payment
provided for herein nor shall said payments be subject to levy, seizure, or
sequestration for the payment of any debts, judgements, alimony or separate
maintenance owed by executive nor shall they be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise.
11. Notices. Any notice required or permitted hereunder shall be
sufficiently given if sent by registered mail, with postage and registration
fee prepaid, to the party to be notified at his or its last known address.
12. Severability. Nothing in this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there may be
any conflict between any provision of this Agreement and any statute,
- 5 -
</PAGE>
<PAGE> 15
ordinance, regulation, or other rule of law contrary to which the parties have
no legal right to contract, the latter shall prevail; but in such event the
provision of this Agreement so affected shall be curtailed and limited only to
the extent necessary to bring it within the requirements of such law. In no
event shall such illegality or invalidity affect the remaining parts of this
Agreement.
13. Applicable Law. This Agreement, executed in the State of Wisconsin,
shall be construed in accordance with and governed in all respects by the laws
of the State of Wisconsin.
14. Waiver. No amendment or modification of this Agreement shall be valid or
binding on the Company unless made in writing and signed by a duly authorized
officer of the Company or upon Executive unless made in writing and signed by
him. The waiver of a breach of any provision of this Agreement by either
party or the failure of either party to otherwise insist upon strict
performance of any provision hereof shall not constitute a waiver of any
subsequent breach or any subsequent failure to strictly perform.
15. Headings. Paragraph headings and numbers herein are included for
convenience or reference only, and this Agreement is not to be construed with
reference thereto. If there shall be any conflict between such numbers and
headings and the text of this Agreement, the text shall control.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Executive has duly executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized
officers and its corporate seal to be affixed hereunto, all as of the day and
year first above written.
MEDALIST INDUSTRIES, INC.
By: /s/ Harry S. Burker, Jr.
________________________________
Harry S. Burker, Jr.
Chairman, Executive Committee
ATTEST:
/s/ James G. Gumm
____________________________________
(Seal) James G. Gumm
/s/ James S. Dahlke
_______________________________
James S. Dahlke
- 6 -
</PAGE>
<PAGE> 16
FOR IMMEDIATE RELEASE
April 27, 1995
For further information, contact:
John T. Paprocki
414-359-3000
MEDALIST ANNOUNCES NEW CEO
Milwaukee, Wisconsin (April 27, 1995) - Medalist Industries, Inc.
(NASDAQ/NNM:MDIN) announced today that James S. Dahlke has joined the Company
as President and Chief Executive Officer. He will assume this responsibility
effective May 15, 1995 reporting to the Medalist Board of Directors.
Mr. Dahlke comes to Medalist from United Dominion Industries, Ltd., where
he has been President of its Waukesha Fluid Handling subsidiary since 1988.
While President, he combined four operating companies into one functional unit
and consolidated pump manufacturing in a new expanded operation in Delevan,
Wisconsin. Prior to that he was Director of Sales for Waukesha Pumps Division
of Waukesha Foundry, Inc. where he was responsible for developing their
worldwide distributor organization.
Mr. Dahlke is a graduate of the University of Wisconsin - Oshkosh. His
wife is a graduate of the University of Wisconsin and is a practicing
psychologist. The Dahlke's reside in Waukesha, Wisconsin with their two
daughters.
In a non-related matter, Medalist announced the resignation of Mr. Bruce
Woodward, President of its Industrial Fastener Division, to join Simon North
American Fire as President of its Simon Ladder Towers Division.
</PAGE>
<PAGE> 17
(Exhibit (99.1) Status of Waiver of Compliance with Loan Agreement)
July 21, 1995
Medalist Industries, Inc.
Two Park Plaza
10850 West park Place, Suite 150
Milwaukee, Wisconsin 53224
Attention: Chief Financial Officer
Re: Leverage Ratio
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of January 29,
1993 between Medalist Industries, Inc. (the "Company"), the Lenders and Harris
Trust and Savings Bank, as Agent for the Lenders, as amended by those certain
First, Second, Third and Fourth Amendments to Credit Agreement dated as of May
17, 1993, July 1, 1994, August 31, 1994 and January 17, 1995, respectively
(such Credit Agreement as so amended being referred to as the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
same meanings herein as they have in the Credit Agreement.
The Company has requested that the Lenders waive compliance with Section
7.10 of the Credit Agreement whereby the Company promises to maintain a
certain Leverage Ratio as set forth therein. Accordingly, the Lenders hereby
waive (but only for the period ending April 30, 1995) the Company's compliance
with Section 7.10 of the Credit Agreement. From and after May 1, 1995, the
Lenders expect and require that the Company comply with the express terms of
Section 7.10 of the Credit Agreement.
This waiver is limited to the matters expressly stated herein and shall
become effective only upon the Company's and the Lenders' acceptance hereof in
the manner provided below. By accepting this waiver, the Company agrees that
it remains obligated to comply with the terms of the Credit Agreement and
related documents, including without limitation Section 7.10 of the Credit
Agreement, and that the Lenders shall not be obligated in the future to waive
any provision of the Credit Agreement. Except as specifically waived hereby,
all of the terms and conditions of the Credit Agreement shall stand and remain
in full force and effect. This waiver shall be governed by the internal laws
of the State of Illinois.
Very truly yours,
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By /s/ Andrew K. Peterson
__________________________________
Its Vice President
</PAGE>
<PAGE> 18
Medalist Industries, Inc.
July 21, 1995
Page 2
LASALLE NATIONAL BANK
By /s/ Thomas J. Bieke
__________________________________
Its First Vice President
BANK ONE, MILWAUKEE, NA
By /s/ Jack V. West
__________________________________
Its Vice President
SHAWMUT CAPITAL CORPORATION (formerly
known as Barclays Business Credit, Inc.)
By /s/ Sandra J. Evans
__________________________________
Its Vice President
Accepted as of the date last written above.
MEDALIST INDUSTRIES, INC.
By /s/ John T. Paprocki
__________________________________
Its Vice President & CFO
</PAGE>
<PAGE> 19
(Exhibit (99.1) Status of Waiver of Compliance with Loan Agreement)
July 28, 1995
Medalist Industries, Inc.
Two Park Plaza
10850 West Park Place, Suite 150
Milwaukee, Wisconsin 53224
Attention: Chief Financial Officer
Re: Interest Coverage Ratio
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of January 29,
1993 between Medalist Industries, Inc. (the "Company"), the Lenders and Harris
Trust and Savings Bank, as Agent for the Lenders, as amended by those certain
First, Second, Third and Fourth Amendments to Credit Agreement dated as of May
17, 1993, July 1, 1994, August 31, 1994 and January 17, 1995, respectively
(such Credit Agreement as so amended being referred to as the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
same meanings herein as they have in the Credit Agreement.
The Company has requested that the Lenders waive compliance with Section
7.9 of the Credit Agreement whereby the Company promises to maintain a certain
Interest Coverage Ratio as set forth therein. Accordingly, the Lenders hereby
waive (but only for the period ending June 30, 1995) the Company's compliance
with Section 7.9 of the Credit Agreement. From and after July 1, 1995, the
Lenders expect and require that the Company comply with the express terms of
Section 7.9 of the Credit Agreement.
This waiver is limited to the matters expressly stated herein and shall
become effective only upon the Company's and the Lenders' acceptance hereof in
the manner provided below. By accepting this waiver, the Company agrees that
it remains obligated to comply with the terms of the Credit Agreement and
related documents, including without limitation Section 7.9 of the Credit
Agreement, and that the Lenders shall not be obligated in the future to waive
any provision of the Credit Agreement. Except as specifically waived hereby,
all of the terms and conditions of the Credit Agreement shall stand and remain
in full force and effect. This waiver shall be governed by the internal laws
of the State of Illinois.
Very truly yours,
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By /s/ Andrew K. Peterson
__________________________________
Its Vice President
</PAGE>
<PAGE> 20
Medalist Industries, Inc.
Page 2
LASALLE NATIONAL BANK
By /s/ Thomas J. Bieke
__________________________________
Its First Vice President
BANK ONE, MILWAUKEE, NA
By /s/ Jack V. West
__________________________________
Its Vice President
SHAWMUT CAPITAL CORPORATION (formerly
known as Barclays Business Credit, Inc.)
By /s/ Sandra J. Evans
__________________________________
Its Vice President
Accepted as of the date last written above.
MEDALIST INDUSTRIES, INC.
By /s/ John T. Paprocki
__________________________________
Its Vice President & CFO
</PAGE>
