<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ x ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
For the transition period from July 1, 1995 to April 30, 1996 File No. 1-11763
TRANSMONTAIGNE OIL COMPANY
Delaware 06-1052062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 Seventeenth Street, Suite 900
Denver, Colorado 80202
(Address, including zip code, of principal executive offices)
(303) 605-1798
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock; $.01 par value The American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 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 report), 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 ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value is computed by reference to the last
sale price of the Registrant's Common Stock, on the American Stock Exchange on
July 12, 1996, $11.125.
$46,703,250
Shares of Common Stock outstanding on July 12, 1996: 20,805,667.
<PAGE>
TABLE OF CONTENTS
Item Page No.
Part I 1. Business................................................ 2
2. Properties..............................................13
3. Legal Proceedings.......................................13
4. Vote of Security Holders................................13
Part II 5. Market for Common Stock.................................14
6. Selected Financial Data.................................15
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........16
8. Financial Statements and Supplementary Data.............23
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures................24
Part III 10. Directors and Executive Officers........................25
11. Executive Compensation..................................28
12. Security Ownership of Certain Beneficial
Owners and Management..................................33
13. Certain Relationships and Related Transactions..........36
Part IV 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K....................................38
1
<PAGE>
PART I
ITEM 1. BUSINESS
General
The Company is a holding company which pursues, through its subsidiaries,
business opportunities in the downstream sector of the petroleum industry. The
Company's principal operating subsidiary, Continental Ozark, Inc. ("COZ"), is
engaged in the transporting, storing and terminaling and the wholesale marketing
of refined petroleum products (primarily unleaded gasoline, No. 2 diesel oil and
jet fuel) in the mid-continent region of the United States and in the gathering,
storing and transporting of crude oil in east Texas.
TransMontaigne Oil Company ("Old TransMontaigne") merged (the "Merger") with
and into Sheffield Exploration Company, Inc. ("Old Sheffield"), effective June
4, 1996. Old Sheffield was incorporated in the state of Delaware in 1981. Old
Sheffield became the surviving corporation of the Merger, its name was changed
to "TransMontaigne Oil Company" ("the Company") and its fiscal year end was
changed to April 30. Under the terms of the Merger (i) each share of common
stock, $.10 par value per share, of Old TransMontaigne ("Old TransMontaigne
Common Stock") issued and outstanding immediately prior to the closing of the
Merger was converted at the closing into the right to receive one share of
common stock, $.01 par value per share, of the Company ("New Common Stock"),
(ii) each 2.432599 shares of Old Sheffield common stock issued and outstanding
immediately prior to the Effective Time ("Old Sheffield Common Stock") became
at the Effective Time one share of New Common Stock, and (iii) the number of
authorized shares of New Common Stock was increased to 40,000,000. After the
Merger, the previous holders of Old TransMontaigne Common Stock owned
approximately 93% of the outstanding New Common Stock, and designees of Old
TransMontaigne accounted for a majority of the Company's Board of Directors.
The Merger was accounted for as a reverse acquisition and therefore information
(except for stock prices) included herein is principally that of Old
TransMontaigne and, where relevant, that of the Company.
In February 1996, Old TransMontaigne participated with Old Sheffield in the
formation of Bear Paw Operating Company, LLC ("BPOC"), which is engaged in the
contract management and operation of downstream petroleum facilities, the owners
of which desire to reduce operating costs without disposing of their smaller
systems. BPOC is currently managing 15 such systems for a major interstate
pipeline company. Before the Merger, Old TransMontaigne and Old Sheffield each
owned 45% of BPOC. Since the Merger, the Company owns 90% of BPOC.
In April 1995, Old TransMontaigne privately placed $30 million of new common
equity, of which $20 million was invested in and used to pay down debt of its
wholly-owned subsidiary, COZ. In April 1996, Old TransMontaigne completed the
private placement of an additional $25 million of new common equity. The
Company plans to make further investments to support COZ's and BPOC's
businesses, as well as investments in other complementary businesses engaged in
the downstream sector of the petroleum industry.
The executive offices of the Company are located at 370 17th Street, Republic
Plaza, Suite 900, Denver, Colorado 80202, and its telephone number is (303)
605-1798.
2
<PAGE>
Business of COZ
General
The Company's principal operating subsidiary, COZ, is engaged in the
transporting, storing and terminaling and the wholesale marketing of refined
petroleum products (principally unleaded gasoline, No. 2 diesel oil and jet
fuel) in the mid-continent region of the United States and in the gathering,
storing and transporting of crude oil in east Texas. COZ owns and operates 741
miles of pipeline (the NORCO pipeline, the Razorback pipeline and the CETEX
pipeline) and ten storage or terminal facilities in seven states with a combined
tank storage capacity of 3,633,500 barrels, serving over 500 customers. A 65%
owned subsidiary of COZ also owns a 27.75% interest in Lion Oil Company ("Lion")
which owns a modern 65,000 BPD refinery in El Dorado, Arkansas, a 188-mile crude
oil transportation pipeline in east Texas, a 1,100-mile crude oil gathering and
transmission system, and two refined products terminals. COZ does not explore
for, or produce, crude oil or natural gas, and it owns no crude oil or natural
gas reserves.
Pipelines
COZ utilizes mid-continent refined petroleum product pipeline systems to
transport products to market destinations and to conduct exchange transactions
with major and independent petroleum companies. COZ owns and operates a 452-
mile refined petroleum products pipeline from Ft. Madison, Iowa through the
Greater Chicago area, to Toledo, Ohio (the "NORCO pipeline") and associated
storage facilities located at Hartsdale, Indiana and Toledo, Ohio. COZ also
owns a 60% interest in a 67-mile refined petroleum products pipeline operating
from Mt. Vernon, Missouri to Rogers, Arkansas (the "Razorback pipeline") and an
associated storage facility at Mt. Vernon. COZ also owns and operates a 220-
mile crude oil gathering pipeline system, with 807,500 barrels of tank storage
capacity, located in east Texas (the "CETEX pipeline").
The NORCO and Razorback pipelines are common carriers and are subject to tariff
regulation by the Federal Energy Regulatory Commission (the "FERC"). CETEX is
an intrastate common carrier subject to Texas Railroad Commission regulations.
Transportation through the pipelines as common carriers is available, under
published tariffs filed with the FERC or the Texas Railroad Commission, as
appropriate, to any shipper requesting such services and satisfying the
conditions and specifications set forth in the tariff. See "Rate Regulation" in
this Item 1.
In general, a shipper, including COZ, owns the refined petroleum products or
crude oil and transfers custody of the products to the NORCO or Razorback
pipelines or the crude oil to the CETEX pipeline for shipment to a delivery
location at which point custody again transfers. Tariffs for the transportation
service are charged by COZ to shippers based upon the origination point on the
pipelines to the point of product delivery. These tariffs do not include fees
for the storage of products at the storage facilities of the NORCO or Razorback
pipelines or crude oil at the CETEX pipeline storage facilities, or for the
terminaling and storage of products at COZ terminals, any of which fees are
separately charged if those facilities are utilized.
The refineries providing products shipped on the NORCO pipeline obtain their
supplies of crude oil primarily from Gulf Coast, mid-continent and Canadian
sources. The refineries providing products shipped on the Razorback pipeline
obtain their supplies of crude oil, to a substantial extent, from
3
<PAGE>
foreign sources and, to a lesser extent, from producing fields located in
Alaska, Oklahoma, Kansas and Texas. If operations at any one refinery were
discontinued, the Company believes (assuming unchanged demand for refined
petroleum products in the markets it serves) that any effect would be short-term
and that COZ's business would not be materially adversely affected over the long
term since such discontinued production could be replaced by other refineries or
by other sources.
COZ's pipeline business depends in large part on the level of demand for refined
petroleum products in the markets served by the pipelines and the ability and
willingness of refiners and marketers having access to the pipelines to supply
that demand by shipments through the pipelines. Pipelines are the safest and
lowest cost method for intermediate and long-haul overland transportation of
refined petroleum products. Several competing pipeline systems are located in
the NORCO pipeline service area, and those pipelines generally have capital and
financial resources substantially greater than COZ. The Razorback pipeline is
the only refined petroleum products pipeline providing transportation services
to northwest Arkansas. Competition is based primarily on pipeline operational
dependability, quality of customer service provided and proximity to end users,
although product pricing at either the origin or terminal destination on a
pipeline may outweigh transportation cost considerations. The Company believes
that high capital costs, tariff regulation, environmental considerations and
problems in acquiring rights-of-way make it unlikely that additional competing
pipeline systems comparable in size to the NORCO and Razorback pipelines will be
built in the near term, since the COZ pipelines have available capacity to
satisfy shipper product movement requirements and the tariffs are considered
competitive.
Terminals
The COZ-owned and operated terminals and storage facilities connect with
product transportation systems and product distribution locations. These
facilities are located in Rogers, Arkansas; Little Rock, Arkansas; Indianapolis,
Indiana; South Bend, Indiana; Bryan, Ohio; and Mt. Vernon, Missouri. The South
Bend, Indiana terminal is under renovation and is scheduled to be reactivated in
late 1996. The terminals receive products in bulk quantities via connecting
pipeline systems. Products are stored in bulk at the terminals and made
available to wholesale, shipment and exchange customers for transport by truck
to commercial and retail destinations, and then to the end user. COZ markets
refined petroleum products over truck loading racks at owned terminals, as well
as through exchanges with numerous companies at other non-owned terminals
located throughout the COZ distribution area. In addition, COZ-owned terminals
are used by major and independent petroleum companies to distribute products
outside their primary distribution systems.
In addition to refined petroleum products terminal and storage facilities owned
by independent operators such as COZ, major and independent petroleum companies
also own terminal and storage facilities. Although such facilities often may
have the same capabilities as those owned by independent operators, they
generally do not provide terminaling services to third parties. In many
instances, the major petroleum companies which own terminal and storage
facilities are also significant customers of independent terminal operators.
These major petroleum companies frequently provide strong demand for terminals
owned by independent operators, particularly when the independent terminals have
more cost effective locations near key transportation connections. The major
petroleum companies also utilize independent terminal storage when their
proprietary storage facilities are inadequate, either because of size
constraints, the nature of the products stored or specialized handling
requirements.
4
<PAGE>
Independent terminal and storage facility owners compete based on the location
and versatility of the facilities and services they provide. A well located
terminal will have access to cost effective transportation to and from the
terminal, including highways, railroads and pipelines.
Storage of refined petroleum products at COZ-owned terminals pending delivery is
considered by COZ to be an integral but separate segment of the refined
petroleum product handling service. Ancillary services, including injection of
shipper-furnished or COZ-furnished additives, are also available for a fee at
the COZ terminals. The terminal and storage facilities include automatic tank
alarm systems and have been designed with preventative structural measures to
minimize the occurrence and level of damage in the event of a spill or fire.
All loading areas, tanks, pipes and pumping areas are contained in order to
collect any spillage and water run-off. Routine maintenance is performed on a
regularly scheduled basis at the terminal and storage facilities.
Products Supply and Distribution
COZ's products supply and distribution activity involves the bulk purchase and
sale of refined petroleum products and the wholesale marketing of products at
terminal truck loading rack locations.
Prices of refined petroleum products depend largely upon factors beyond COZ's
control, including the supply of and demand for gasoline, distillates and other
refined products, which in turn are affected by domestic and foreign economies,
political affairs, production levels, availability of imports, marketing by
competitors, alternative fuels, energy conservation efforts and government
regulation. The prices received by COZ for refined petroleum products are also
affected by regional factors, such as local market conditions, transportation
costs and the operations of competitors.
COZ attempts to minimize its exposure to price volatility related to the
purchase and sale of refined petroleum products by selectively hedging with
futures and options contracts that are intended to offset the effects of price
fluctuations, as well as by using real-time inventory monitoring and pricing
computer programs which provide accurate and timely transactional and
forecasting information. COZ's risk management strategies are subject to
policies that control purchases and sales on a daily basis in order to maintain
designated inventory positions subject to price risk, achieve prevailing margins
and effectively hedge forward, when appropriate.
The Company's Risk and Product Management Committee reviews the total inventory
on a weekly basis in order to ensure compliance with the Company's inventory
management policies, including all hedging activity. The Company has adopted
policies whereby its net inventory position subject to price risk requires the
prior approval of the Risk and Product Management Committee.
There can be no assurance, however, that COZ's risk management strategies will
be effective in limiting any adverse effects of price fluctuations on the
Company's operations or its overall profitability.
Generally, when COZ purchases refined petroleum products, it also simultaneously
enters into corresponding sale or exchange transactions involving physical
deliveries of the refined petroleum product to a third party, or corresponding
sales of futures contracts on the NYMEX. This procedure gives COZ a stable and
reliable refined petroleum product supply which can be sold at prevailing market
prices to customers having recurring and spot purchase requirements. Exchange
agreements are
5
<PAGE>
generally for 30 days and month-to-month thereafter until terminated by either
party. The Company believes these short-term contracts minimize the effect of
volatile market prices and regional economic aberrations and considers them
essential in order to retain the flexibility to respond to local demands and to
changing market prices, conditions and seasonal variations. However, termination
of short-term contracts could result in a reduction of pipeline and terminal
volumes. COZ's operating policy imposes dollar limits on the acquisition of
refined petroleum products and futures contracts or other derivative products
for the purpose of price change trading.
Lion Oil Company Investment
In 1985, Continental Ozark Holding, Inc., a 65% subsidiary of COZ, purchased
27.75% of the shares of Lion, which owns a modern 65,000 BPD refinery in El
Dorado, Arkansas, a 188-mile crude oil transportation pipeline in east Texas
from Nederland on the U.S. Gulf Coast to Longview, a 1,100-mile crude oil
gathering system in south Arkansas and north Louisiana, and refined petroleum
products terminals located at Memphis and Nashville, Tennessee. Lion is
operated under a management contract. The manager, Ergon, Inc., owns a 48.6%
interest in Lion. The remaining 23.65% interest in Lion is owned by others.
The last dividend distribution made by Lion to its shareholders was in 1992.
Two officers of COZ are directors of Lion.
The Lion refinery generates a product mix of gasoline, diesel and heating oil
and asphalt. Lion owns and has access to pipeline systems which permit the
purchase and shipment of crude oil feedstocks to its refinery from regional
independent producers, as well as from reliable foreign sources of supply. In
recent years Lion has made substantial capital improvements to upgrade its
refining facilities resulting in reduced routine maintenance costs, increased
facility utilization and compliance with environmental and regulatory
requirements. COZ purchases refined petroleum products from Lion and sells
refined petroleum products to Lion.
An increase in crude oil prices could adversely affect Lion's operating margins
and sales volumes. Since the cost of crude oil and the prices of refined
products are subject to significant fluctuation, Lion's earnings and cash flow
have been and may continue to be adversely affected. The profitability of
Lion's operations is significantly influenced by the "crack spread," which is
the difference between the sales price of refined petroleum products and the
cost of associated feedstocks (principally crude oil) delivered to the refinery
for processing. Since COZ's interest in Lion is recorded for financial
statement purposes using the equity method of accounting, adverse fluctuations
in Lion's reported earnings will also have an adverse effect on the Company's
earnings.
Lion is subject to extensive regulation by local, state and federal
environmental laws, including the Clean Air Act, the Federal Water Pollution
Control Act, and the Resource Conservation and Recovery Act ("RCRA"). As a
result of the long history of operations at Lion's refinery, there has been some
impact on groundwater and soil. Lion has conducted and continues to conduct
studies to investigate the nature and extent of contamination at certain
locations on the refinery site. Remediation and corrective action are currently
being conducted. The continuing studies will determine the required additional
remediation and corrective action to be undertaken. While Lion's management
believes that the net cost of any remedial action will not have a material
adverse effect on Lion's financial condition or liquidity, there can be no
assurance that the impact of such matters on its results of operations for any
given reporting period will not be material.
6
<PAGE>
Environmental Regulation
General. The operations of COZ are subject to federal, state and local laws and
regulations relating to protection of the environment. Although the Company
believes that the operations of COZ are in general compliance with applicable
environmental regulations, and COZ has not budgeted any material amounts for
environmental compliance for the current fiscal year, risks of substantial costs
and liabilities are inherent in pipeline and terminal operations, and there can
be no assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws, regulations and enforcement policies thereunder, and claims
for damages to property or persons resulting from the operations of COZ, could
result in substantial costs and liabilities.
Water. The terminal and pipeline facilities are extensively regulated by the
Federal Water Pollution Control Act of 1972 ("FWPCA"), the Oil Pollution Act of
1990 ("OPA") and other statutes relating to prevention of and response to oil
spills. In order to prevent and respond appropriately to spills, the facilities
have Spill Prevention Control and Countermeasure Plans and OPA 1990 Spill
Response Plans, as required. In addition, certain of the pipelines are
regulated by the Department of Transportation under regulations entitled
Transportation of Hazardous Liquids by Pipeline, which contain safety standards
and reporting requirements for certain spills and other accidents. As part of
spill response procedures, the facilities have internal and external
notification procedures for field and corporate emergency response management
teams to ensure that management, contractors and governmental authorities are
properly notified. Contractual arrangements with emergency response contractors
are also in place.
OPA subjects owners of facilities to strict, joint and potentially unlimited
liability for removal costs and certain other consequences of an oil spill,
where such spill is into navigable waters, along shorelines or in the exclusive
economic zone. In the event of an oil spill into such locations, substantial
liabilities could be imposed upon COZ. States in which COZ operates have also
enacted similar laws. Regulations are currently being developed under OPA and
state laws that may also impose additional regulatory burdens.
COZ's pipelines cross several navigable rivers and streams. Some facilities are
also located near water bodies and sensitive areas, such as wetlands. The FWPCA
imposes strict controls against the discharge of oil and its derivatives into
navigable waters, provides possible penalties for any discharge of petroleum
products in reportable quantities, and imposes substantial potential liability
for the costs of removing an oil spill. Additionally, the OPA exposes parties
liable for spills to damages for loss of use or impairment of natural resources.
State laws for the control of water pollution also provide varying possible
civil and criminal penalties and liabilities in the case of a release of
petroleum.
Contamination resulting from spills or releases of refined petroleum products
are not unusual within the petroleum pipeline industry. Several facilities of
COZ have soil and groundwater contamination. COZ, however, is indemnified by
previous owners for most of the known contamination. Contamination resulting
from other spills has been handled in the normal course of business and is not
expected to have a material adverse effect on the Company, although there can be
no assurance that it will not have a material adverse effect on the Company.
Petroleum recovered from a spill site is typically transported to the nearest
company facility for further processing. If the
7
<PAGE>
recovered petroleum was required to be sent to a disposal site instead, costs of
addressing a spill would increase substantially.
In the purchase agreements for the Little Rock south terminal and the CETEX and
NORCO pipelines, the sellers agreed to be responsible for certain defined
contamination that might have existed at the time of the sale. Under the
purchase agreement for the NORCO pipeline, the seller has addressed, or is
currently addressing, contamination at several sites, including conducting
monitoring and remediation activities. There can be no assurance that the
sellers of any of these sites will not dispute coverage and refuse to accept
responsibility for any discovered contamination.
On September 15, 1993, after the purchase of the pipeline system by a subsidiary
of COZ, NORCO Pipeline, Inc., a leak occurred in DeKalb County, Indiana, when
the operator of the control center at that time, ARCO, ordered the field
personnel to begin pumping without first verifying that the pipeline valves were
properly aligned. As a result, a line ruptured in a soy bean and corn field
surrounded by agricultural and rural residential land and released approximately
660 barrels of diesel fuel, contaminating soil and groundwater in the field.
Some of the fuel followed a drainage ditch for approximately one-half mile,
where it entered Fish Creek. Cleanup operations recovered about one-half of the
diesel fuel. Soil and groundwater were impacted, and it is possible that
additional assessment and remediation could be required. In addition, the
Natural Resource Damage Assessment ("NRDA") Trustees for the U.S. Fish and
Wildlife Service and for the states of Indiana and Ohio alleged that the release
caused natural resource damages in Fish Creek. NORCO Pipeline, Inc. has made a
claim regarding this incident to its insurance carrier. The parties have
reached a settlement with the trustees, which is undergoing a public comment
period. The Company does not believe that its portion of the settlement will
have a material effect on the Company's financial condition.
Many of the facilities are subject to National Pollutant Discharge Elimination
System ("NPDES") permits regulating the discharge of pollutants into navigable
waters. To meet NPDES requirements, COZ has in place or access to wastewater
treatment systems, as needed. As those permits expire and are renewed, the
facilities can come under increasingly stringent requirements. The
Environmental Protection Agency ("EPA") and certain states have also
promulgated regulations that may trigger the need to apply for permits to
discharge storm water runoff. Where and as additional requirements become
applicable, modifications to NPDES permits and procurement of storm water
permits will be requested, as appropriate. Although no assurance in this regard
can be given, the Company believes that any such modifications or storm water
permits should not have a material effect on the Company's financial condition.
Regulation of Aboveground Storage Tanks. The states in which the facilities
operate regulate aboveground storage tanks containing liquid substances. While
state regulations require that such tanks be constructed and operated in
conjunction with industry standards that have been adopted by reference into
federal regulations, there is no uniform federal regulation of aboveground
storage tanks. However, bills have been introduced in the United States Senate
and House of Representatives this year which would require the administrator of
the Environmental Protection Agency to review existing regulations for
deficiencies and to issue a regulation that consolidates all environmental laws
and health and safety laws applicable to the design, construction, maintenance
and operation of aboveground storage tanks. These bills have been referred to
committee and it is not presently known if or when action will be taken. The
Company believes that it is in substantial compliance with all current
requirements applicable to aboveground storage tanks, and that the pending House
and Senate bills will not materially impact COZ's operations. Although no
assurance can be given, the Company believes
8
<PAGE>
that the future implementation of additional requirements applicable to
aboveground storage tank laws by either the states in which COZ operates or by
the federal government will not have a material adverse effect on the Company's
financial condition or results of operations.
Air Emissions. The operations of COZ are subject to the Federal Clean Air Act
and comparable state and local statutes. The Company believes that COZ's
operations are in substantial compliance with such laws in all states in which
it operates. The gasoline facilities generally are subject to an air permit
requirement. In addition, many of the facilities are required to have vapor
recovery or combustion units. To the extent that any terminals are nearing
volume limitations, permit modifications could be required. Although no
assurance in this regard can be given, the Company believes that any such
modifications should not have a material effect on its financial condition.
Amendments to the Federal Clean Air Act enacted in late 1990 will require most
industrial operations in the United States to incur future capital expenditures
in order to meet the air emission control standards that are to be developed and
implemented by the EPA and state environmental agencies during the next decade.
Pursuant to these Clean Air Act Amendments, those facilities that emit volatile
organic compounds ("VOC") or nitrogen oxides and are located in non-attainment
areas will be subject to increasingly stringent regulations, including
requirements that certain sources install reasonably available control
technology. Several gasoline facilities may also be subject to new source
performance standards. The EPA is also required to promulgate new regulations
governing the emissions of hazardous air pollutants. Some of the facilities are
included within the categories of hazardous air pollutant sources that may be
affected by these regulations. In order to comply with applicable air pollution
laws, COZ may have to install additional vapor control equipment as necessary to
comply with the regulations.
Solid Waste. RCRA governs the generation and disposal of solid wastes,
including hazardous wastes. In 1990, the EPA promulgated regulations expanding
the definition of characteristic hazardous waste by adding 25 organic
constituents that were not previously included in determining that a waste is
hazardous and by adding a new testing procedure called the Toxicity
Characteristic Leaching Procedure to detect the concentrations of those
constituents. These changes increase the costs of handling certain wastes
generated. Additional changes in the regulations or interpretation of these
regulations may result in increased capital expenditures or operating expenses.
Environmental Impact Statement. The National Environmental Policy Act of 1969
("NEPA") applies to certain extensions or additions to a pipeline system. Under
NEPA, if any project that would significantly affect the quality of the
environment requires a permit or approval from any federal agency, a detailed
environmental impact statement must be prepared. The effect of NEPA may be to
delay or prevent construction of new facilities or to alter their location,
design or method of construction.
9
<PAGE>
Rate Regulation
Interstate Regulation. The interstate petroleum product pipeline operations of
COZ are subject to regulation by the FERC under the Interstate Commerce Act (the
"ICA") which requires, among other things, that pipeline transportation rates be
"just and reasonable" and not unduly discriminatory. New and changed rates must
be filed with the FERC, which may investigate their lawfulness on shipper
protest or its own motion. The FERC may suspend the effectiveness of such rates
for up to seven months. If the suspension expires before completion of the
investigation, the rates go into effect, but the pipeline can be required to
refund to shippers, with interest, any difference between the level the FERC
determines to be lawful and the filed rates under investigation. Rates that
have become final and effective may be challenged by complaint to a court or the
FERC filed by a shipper or on the FERC's own initiative, and reparations may be
recovered by the party filing the complaint for the two year period prior to the
complaint if the FERC finds the rate to be unlawful.
In general, petroleum product pipeline rates are required to be cost based to be
deemed just and reasonable. Cost based rates are permitted to generate
operating revenues, based on projected shipment volumes, not greater than the
total of the following components: (i) operating expenses, (ii) depreciation and
amortization, (iii) "normalized" federal and state income taxes and (iv) an
overall allowed rate of return on the pipeline's "rate base." Generally, rate
base is a measurement of the investment in or value of the pipeline's assets.
The Energy Policy Act of 1992 (the "EP Act") mandated simplified procedures for
FERC rate regulation under the ICA. In response to the EP Act, the FERC has
adopted indexation as a simplified rate making methodology for pipeline rate
changes. Current indexation is based on the annual change in the Producer Price
Index less one percent.
Just and reasonable pipeline rates in effect on December 31, 1994 are the "Base
Rates" for indexation. A pipeline may increase its rates to the ceiling rate
calculated by indexing without filing a formal cost based justification and with
limited shipper rights to protest. The index is cumulative, applying to the
applicable ceiling rate and not to the actual rate charged. Thus, a rate that
is not increased to the ceiling level in any year may still be increased to the
cumulative indexed ceiling in a later year. A rate decrease may be required if
the index lowers the ceiling. Shippers are still permitted to protest rates,
even if the rate change does not exceed the index ceiling, if the shipper can
demonstrate that the "increase is so substantially in excess of the actual cost
increases incurred by the pipeline" that the proposed rate would be unjust and
unreasonable.
The indexing mechanism does not set initial rates for a pipeline, which still
generally must be cost based. However, a pipeline can file an initial rate
based upon the agreement of at least one non-affiliated shipper, without filing
full cost-of-service justification for the rate. If this negotiated rate is
protested by another shipper, the pipeline will be required to justify the
initial rate on a cost-of-service basis. The initial rate that is established
by a pipeline becomes the pipeline's "Base Rate" for indexation.
COZ's current rates are based on settlements with its then current shippers in
August 1995. The Company believes that COZ's current rates are just and
reasonable and would withstand challenge under the FERC's cost based rate
standards. Because of the complexity of rate making, however, the lawfulness of
any rate is never assured.
10
<PAGE>
The Company cannot predict how future regulation of interstate petroleum product
pipelines may change or what impact such changes will have.
Intrastate Regulation. The intrastate operations of the CETEX pipeline are
subject to regulation by the Texas Railroad Commission. Like interstate
regulation, the Texas regulation requires that proposed intrastate tariff
increases be filed with the Railroad Commission and allows shippers to challenge
such increases.
Business of BPOC
In February of 1996, Old TransMontaigne participated with Old Sheffield in the
formation of BPOC. Each company had a 45% interest in BPOC with the balance
held by BPOC's management. Since the Merger, the Company holds a 90% interest
in BPOC. BPOC is currently managing 15 small gathering systems for a major
interstate pipeline company. In addition to earning a fee for the management of
these systems it will be compensated for any additional volumes which it
connects to these systems.
The gathering, processing and marketing sector of the natural gas industry is
currently in a consolidation phase. As this consolidation takes place, it
becomes more difficult for many companies to earn acceptable returns on smaller
systems. Many producers that have operated their own facilities now realize
they lack the skills necessary to maximize the return on their investments and
prefer to monetize such assets in order to generate drilling capital.
The Company believes that additional opportunities, similar to BPOC's existing
operations, will become available. Additionally, the Company believes that with
the capital available to BPOC from the Company there will be opportunities to
acquire gathering, processing and marketing assets at competitive prices.
Quality customer service is a key objective of BPOC with new industry service
standards being targeted for smaller downstream facilities.
Risk Factors and Cautionary Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 such as the words or phrases
"believes", "is to be", "will depend", "will become" and "plans to" or similar
expressions. The Company wishes to advise readers that the forward-looking
statements in this report are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in or implied by
the statements, including, but not limited to, the following:
. the Company's thin margins on high volumes of products
. volatility in the price of the Company's products
. the risk that, to the extent the Company attempts to selectively hedge its
inventory positions, those hedges are not effective
. the risk that the Company could be required to recognize a financial statement
loss through a lower of cost or market write down of inventories
. compliance with current and possibly future environmental regulations
. potential changes in the rates which applicable federal and state agencies
allow the Company to charge for the use of its facilities
11
<PAGE>
Employees
The Company had 136 employees at July 16, 1996. No employees are subject to
representation by unions for collective bargaining purposes.
12
<PAGE>
ITEM 2. PROPERTIES
For information regarding the properties of COZ, see "Business of COZ",
"Pipelines" and "Terminals" sections under Item 1. For information regarding
the properties of Lion Oil Company, see "Lion Oil Company Investment" section
under Item 1.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders during the
quarter ended April 30, 1996.
The following matters were submitted to a vote of security holders subsequent to
April 30, 1996:
The stockholders of Old TransMontaigne acted by unanimous written consent to
approve and adopt the Restated Agreement and Plan of Merger between Old
Sheffield and Old TransMontaigne dated as of February 6, 1996 and the Merger
contemplated thereby.
At a special meeting on June 3, 1996, the stockholders of Old Sheffield voted to
approve and adopt the Restated Agreement and Plan of Merger between Old
Sheffield and Old TransMontaigne dated as of February 6, 1996 and the Merger
contemplated thereby. 3,459,512 shares were entitled to vote. 2,500,418
shares voted. The manner in which the votes were cast was:
For 2,478,308
Against or Withheld 17,557
Abstention 4,553
13
<PAGE>
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The Old Sheffield Common Stock had been traded on the American Stock Exchange
(Emerging Company Marketplace) since December 14, 1993 under the symbol "SHE."
There was no public market for Old TransMontaigne Common Stock. The shares of
New Common Stock have been listed on the American Stock Exchange (Primary List)
since completion of the Merger. The following table sets forth, for the periods
indicated, the range of high and low per share sale prices for Old Sheffield
Common Stock as reported on the American Stock Exchange (Emerging Company
Marketplace) prior to the Merger, adjusted for the reverse stock split
accomplished by the Merger, and the New Common Stock as reported on the American
Stock Exchange (Primary List) subsequent to the Merger:
<TABLE>
<CAPTION>
Periods Low High
----------------------------------- -----------------
<S> <C> <C>
Pre Merger
Three Month Periods Ended:
September 30, 1994 $4.57 $5.47
December 31, 1994 $3.36 $4.72
March 31, 1995 $2.89 $3.50
June 30, 1995 $3.04 $3.97
September 30, 1995 $3.65 $3.97
December 31, 1995 $3.36 $4.40
March 31, 1996 $3.04 $10.80
Period:
April 1, 1996 through June 3, 1996 $10.03 $17.94
Post Merger
Period:
June 5, 1996 through July 12, 1996 $11.00 $15.13
</TABLE>
No dividends have been declared or paid on the Company's New Common Stock to
date. No dividends were paid in 1996 or in 1995 on either the Old Sheffield
Common Stock or the Old TransMontaigne Common Stock. The Company has no
intention of paying dividends in the immediate future. The Company's current
revolving credit facility contains restrictions on the payment of dividends.
At July 12, 1996, there were 171 holders of record of the New Common Stock.
14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Effective June 4, 1996, Old TransMontaigne merged with and into Old Sheffield.
The Merger was accounted for as reverse acquisition. Therefore, this selected
financial data is that of Old TransMontaigne for its fiscal years ended April
30, 1996 and 1995, the seven months ended April 30, 1994, and the fiscal years
ended September 30, 1993, 1992 and 1991, and has been derived from the audited
consolidated financial statements of Old TransMontaigne. This selected
financial data should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations, Item 7, and the
consolidated financial statements and notes thereto of Old TransMontaigne
included in Item 8, "Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>
Seven months
Fiscal years ended ended
April 30, April 30, Fiscal years ended September 30,
------------------------ ----------------- ----------------------------------------
1996 1995 1994 1993 1992 1991
----------- ---------- ----------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATE:
REVENUE $533,106,747 324,591,409 296,086,981 507,936,810 515,547,695 417,834,881
OPERATING INCOME (LOSS) 6,548,953 406,042 (1,509,581) (1,710,242) (1,930,614) (3,368,105)
NET EARNINGS (LOSS) 4,617,969 (3,217,635) (2,853,609) (4,490,468) (4,200,922) (4,150,161)
EARNINGS (LOSS) PER SHARE $0.31 (1.32) (1.15) (1.85) (1.73) (1.62)
</TABLE>
<TABLE>
<CAPTION>
April 30, September 30,
--------------------------------------------- --------------------------------------------
1996 1995 1996 1993 1992 1991
------------- ------------ ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
WORKING CAPITAL $55,651,839 37,989,205 11,554,715 11,470,225 20,685,446 16,601,819
TOTAL ASSETS 120,962,976 104,220,346 75,470,266 86,334,703 76,336,971 69,240,513
LONG-TERM DEBT,
excluding current maturities 28,948,867 36,945,610 37,671,329 33,953,590 35,256,698 25,476,695
STOCKHOLDER'S EQUITY 57,819,191 28,470,702 2,480,835 5,334,500 9,825,060 14,026,063
</TABLE>
No common stock dividends were declared or paid during the periods presented.
15
<PAGE>
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
Effective June 4, 1996, Old TransMontaigne merged with and into Old Sheffield.
The Merger was accounted for as reverse acquisition. After the Merger, the
previous holders of Old TransMontaigne Common Stock owned approximately 93% of
the outstanding New Common Stock, and designees of Old TransMontaigne accounted
for a majority of the Company's Board of Directors. Therefore, the following
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes principally information for Old TransMontaigne and, where
relevant, current information relating to the Company.
The Company is, and Old TransMontaigne was, a holding company which pursues,
through its subsidiaries, business opportunities in the downstream sector of the
petroleum industry. The Company's principal operating subsidiary is COZ, which
is engaged in the transporting, storing and terminaling and the wholesale
marketing of refined petroleum products (primarily unleaded gasoline, No. 2
diesel oil and jet fuel) in the mid-continent region of the United States and in
the gathering, storing and transporting of crude oil in east Texas. COZ owns
and operates 741 miles of pipeline (the NORCO pipeline, the Razorback pipeline
and the CETEX pipeline) and ten storage or terminal facilities in seven states.
Old TransMontaigne recognized a $7,836,000 increase in net earnings to
$4,618,000 for the year ended April 30, 1996, primarily due to significantly
improved pipeline, terminal and products supply and distribution net operating
margins and related increases in volumes of product transported, handled and
sold at its principal operating locations, while also controlling general and
administrative expenses and reducing interest charges. Old TransMontaigne
incurred net losses from the year ended September 30, 1993 through the year
ended April 30, 1995, primarily due to the under-utilization of its pipelines
and terminals, realization of small or negative margins from bulk product sales
and wholesale marketing activities and a lack of adequate equity capital.
Pipeline utilization averaged 52% for the year ended April 30, 1996, 38% for
the year ended April 30, 1995, 40% for the seven months ended April 30, 1995 and
36% for the year ended September 30, 1993. Terminal utilization averaged 53%
for the year ended April 30, 1996, 50% for the year ended April 30, 1995, 50%
for the seven months ended April 30, 1994, and 55% for the year ended September
30, 1993. The under-utilization of the pipelines and terminals was primarily
the result of Old TransMontaigne's inability to finance the inventory required
to more fully utilize these facilities. Net operating margins were insufficient
to cover general and administrative expenses, depreciation and amortization, and
interest and other financing costs which were incurred to support and finance
its activities. Volatile market prices of refined petroleum products during
these periods also resulted in losses from inventory write-downs and from the
sales of products at prices lower than cost.
Subsequent to April 30, 1995, Old TransMontaigne established new inventory
management policies, procedures and operating controls, and also added
managerial personnel to supervise the products supply and distribution
operations in an effort to control inventory levels and related carrying costs,
and more effectively manage inventory price risks. The Company's Risk and
Product Management Committee reviews the total inventory on a weekly basis in
order to ensure compliance
16
<PAGE>
with the Company's inventory management policies, including all hedging
activity. The Company has adopted policies whereby its net inventory position
subject to price risk requires the prior approval of the Risk and Product
Management Committee.
There can be no assurance that these actions will serve to reduce the level of
inventory and successfully manage inventory price risks over the long term.
Liquidity and Capital Resources
The Company is continuing Old TransMontaigne's practice of securing sources of
long-term capital prior to committing to new projects. In April 1995, Old
TransMontaigne sold $30 million of common stock to institutional and individual
investors. $20 million of this amount was advanced to COZ to reduce its bank
debt. The remaining $10 million was invested in interest bearing instruments
pending identification of further investment opportunities.
In December 1995, Old TransMontaigne entered into a new bank credit agreement
with a money center bank which provides for revolving credit of up to $45
million, including cash advances and letters of credit. The credit agreement
has a final maturity date of November 30, 1999 and provides for interest at
either the bank's base rate or a designated premium over short-term Eurodollar
rates. As of April 30, 1996, approximately $25 million was outstanding under
the credit agreement.
In April 1996, Old TransMontaigne completed a private placement for $25 million
of common stock at $5.50 per share to existing stockholders and institutional
investors.
Since April 1995, Old TransMontaigne has raised $55 million in common equity and
established a new $45 million revolving loan facility to provide working capital
and to support letters of credit for COZ. At April 30, 1996, $55 million ($35
million in cash and $20 million of unused borrowing capacity) of this amount was
available to fund new capital expenditures and acquisitions in the downstream
petroleum industry.
Capital expenditures were $4,120,000, $750,000, $460,000 and $4,700,000 million
for the years ended April 30, 1996 and 1995, the seven months ended April 30,
1994 and the year ended September 30, 1993, respectively.
The Company has budgeted approximately $15,000,000 for capital expenditures for
the fiscal year ended April 30, 1997. Actual future capital expenditures will
depend on numerous factors, including the availability of appropriate
acquisitions; the demand for pipeline, terminaling and storage services; local,
state and federal governmental regulations; environmental compliance
requirements; fuel conservation efforts; and the availability of financing on
acceptable terms.
Old TransMontaigne had working capital of $55,650,000 at April 30, 1996.
Management believes the Company's current working capital position, future cash
provided by operating activities, borrowing capacity under its credit agreement
and its relations with institutional lenders and equity investors should enable
it to meet its future capital requirements, although there can be no assurance
that the Company will be able to obtain additional capital when needed on
acceptable terms.
17
<PAGE>
Results of Operations
Old TransMontaigne's revenues were derived primarily from three activities:
transporting refined petroleum products and crude oil in pipelines, storing and
terminaling refined petroleum products and refined petroleum products supply and
distribution. The Company's revenues are also derived primarily from these
activities.
Pipeline revenues are based on the volume of refined petroleum products or crude
oil transported and the distance from the origin point to the delivery point.
The NORCO and Razorback pipelines transport refined petroleum products and their
rates are regulated by the FERC. The CETEX pipeline transports crude oil and
its rates are not regulated.
Terminal revenues are based on the volume of refined petroleum products handled,
generally at a standard industry fee of 1/2 cent per gallon. Terminal fees are
not regulated. Storage fees are generally based on a per gallon rate, which
varies with the duration of the storage arrangement, the refined petroleum
product stored and special handling requirements. The operating costs of the
pipeline and terminal businesses include wages and employee benefits, utilities,
communications, maintenance and repairs, property taxes, rent, insurance,
vehicle expenses, environmental protection costs, materials and supplies.
The products supply and distribution business includes bulk sales of refined
petroleum products and the wholesale distribution of refined petroleum products
from terminals. Bulk purchase and sale transactions in quantities of 25,000
barrels to 50,000 barrels are common and are generally made at very small
margins. Wholesale distribution of refined petroleum products from proprietary
and nonproprietary terminal truck loading rack locations are primarily
represented by truck load sales of 8,000 gallons of refined petroleum product.
These sales are generally also made at small margins.
Year Ended April 30, 1996 Compared to Year Ended April 30, 1995.
Revenue and operating information for the year ended April 30, 1996 and 1995 is
summarized below.
<TABLE>
<CAPTION>
Products
Supply and
Pipeline Terminal Distribution
Operations Operations Operations Total
- ----------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
1996
- ----
Volumes (1) 18,902 587,000 958,000
Revenues $ 9,577 3,346 520,184 533,107
Net Operating Margin (2) 4,454 2,434 5,829 12,717
1995
- ----
Volumes (1) 13,721 547,000 620,000
Revenues $ 5,827 3,145 315,619 324,591
Net Operating Margin (2) 2,678 2,340 761 5,779
</TABLE>
(1) Pipeline volumes are expressed in barrels (42 gallons per barrel), and
terminal and products supply and distribution sales volumes are expressed
in gallons.
18
<PAGE>
(2) Net operating margin represents revenues less direct operating expenses for
pipeline and terminal operations, and revenues less cost of refined
petroleum products purchased for products supply and distribution
operations.
The net operating margin from pipeline operations increased 66% or $1,776,000,
to $4,454,000 for the year ended April 30, 1996 as compared to $2,678,000 for
the year ended April 30, 1995. This increase primarily was due to a 38%
increase in volumes shipped and increased utilization which resulted in a 64%
increase in revenues of $3,750,000 during the period. The increase in revenues
partially was offset by a 63% increase in operating costs of $1,974,000,
primarily due to incremental power costs due to increased volumes, additional
personnel costs and reductions in the reimbursement of certain costs previously
paid by third parties.
The net operating margin from terminal operations increased 4%, approximately
$94,000, to $2,434,000 in 1996. This increase resulted from a 7% increase in
volumes, primarily from the Little Rock, Arkansas terminal, offset in part by an
increase in terminal operating costs of 13% in 1996.
The net operating margin from product sales increased $5,068,000 during the year
ended April 30, 1996 compared to the year ended April 30, 1995, while net
revenues increased $204,565,000 on additional volume of 338,000,000 gallons
sold. The improved net margins were primarily due to increased bulk and rack
product sales volumes, and higher market prices for products sold in the peak
seasonal period of gasoline demand occurring in Old TransMontaigne's last fiscal
quarter ended April 30, 1996, during which period gasoline prices reached a five
year high of over $.70 per gallon.
During the year ended April 30, 1996, general and administrative expenses
increased approximately 18% over the year ended April 30, 1995, primarily due
to increases in salaries and related employee benefits costs associated with the
hiring of additional personnel.
Equity in earnings of affiliates primarily represent Old TransMontaigne's share
of the earnings of Lion Oil Company ("Lion"). Old TransMontaigne's 65% owned
subsidiary, Continental Ozark Holdings, Inc. ("COH"), owns a 27.75% interest in
Lion. Minority interest represents the other COH shareholders' interest in the
earnings of Lion. During the year ended April 30, 1996, equity in earnings of
affiliates (net of the related minority interests) increased to approximately
$605,000 from approximately $295,000 for the year ended April 30, 1995,
primarily due to improved crack spreads at Lion.
Interest expense represents interest on the revolving bank line of credit used
to finance inventory and accounts receivable and interest on the Company's
senior subordinated debentures. Interest expense decreased $588,074, or 19%,
primarily as a result of lower average balances outstanding under the line of
credit. Other financing costs include fees paid for letters of credit issued to
product suppliers and loan commitment fees paid in connection with the revolving
loan facility.
Interest income during the year ended April 30, 1996, was attributable to the
investment in interest bearing securities of approximately $10 million of cash
held for future investments during the period.
Primarily as a result of the increases in pipeline, terminal, and products
supply and distribution net operating margins, reduction in interest expense
and the increase in interest income, discussed above, net earnings for the year
ended April 30, 1996 increased $7,836,000 to $4,618,000 from a loss of
$3,218,000 for the year ended April 30, 1995.
19
<PAGE>
Year Ended April 30, 1995 Compared to the Seven Months Ended April 30, 1994 and
the Year Ended September 30, 1993.
Revenue and operating information for the year ended April 30, 1995, the seven
months ended April 30, 1994 and year ended September 30, 1993 are summarized
below:
<TABLE>
<CAPTION>
Products
Supply and
Pipeline Terminal Distribution
Operations Operations Operations Total
- ----------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
1995
- ----
Volumes (2) 13,721 547,000 620,000
Revenues $ 5,827 3,145 315,619 324,591
Net Operating Margin (3) 2,678 2,340 761 5,779
1994 (seven months)
- ----
Volumes (2) 8,654 321,100 645,000
Revenues $ 3,989 1,773 290,325 296,087
Net Operating Margin (loss) (3) 2,096 1,119 (1,902) 1,313
1993
- ----
Volumes (2) 12,245 433,200 941,000
Revenues $ 6,167 2,476 499,294 507,937
Net Operating Margin (loss) (3) 2,848 1,817 (2,077) 2,588
</TABLE>
(1) The NORCO pipeline system was acquired in November 1992.
(2) Pipeline volumes are expressed in barrels (42 gallons per barrel), and
terminal and products supply and distribution sales volumes are expressed
in gallons.
(3) Net operating margin represents revenues less direct operating expenses for
pipeline and terminal operations, and revenues less cost of refined
petroleum products purchased for products supply and distribution
operations.
Net operating margins from pipeline operations remained relatively constant over
the periods. Net operating margins were $2,678,000 for the year ended April 30,
1995, $2,096,000 for the seven months ended April 30, 1994 and $2,848,000 for
the year ended September 30, 1993.
Terminal operations generated net operating margins of $2,340,000 for the year
ended April 30, 1995, $1,119,000 for the seven months ended April 30, 1994 and
$1,817,000 for the year ended September 30, 1993. This increase in net
operating margins during these periods was due primarily to the increased
volumes and revenues attributable to the acquisition of the Little Rock south
terminal in May 1993 and the increased utilization of the Rogers terminal. As a
result, terminal operations volumes handled increased to 547,000,000 gallons for
the year April 30, 1995 from 433,200,000 gallons for the twelve months ended
September 30, 1993, and revenues increased to $3,145,000 from $2,476,000 for the
earlier period. Although terminal operations volumes increased significantly
during these periods, operating expenses remained relatively constant, thereby
increasing the net operating margins in these periods.
20
<PAGE>
Net operating margins (losses) on product sales were $761,000 for the year ended
April 30, 1995, $(1,902,000) for the seven months ended April 30, 1994 and
$(2,077,000) for the year ended September 30, 1993. During these periods, there
were significant fluctuations in refined petroleum product purchase and sale
prices reflecting the volatility of world-wide energy markets. In many cases
this resulted in reduced or negative margins on sales of refined petroleum
products and an inventory write-down. During the seven months ended April 30,
1994, Old TransMontaigne recorded a write-down of approximately $3,640,000 to
reduce inventories to the lower of cost or market. The write-down was a result
of a steep decline in refined petroleum product prices in the latter part of
1993.
Revenues from product sales also declined subsequent to April 30, 1994 as a
result of discontinuing the business of a limited partnership in which Old
TransMontaigne owned a one-third interest and was the managing general partner.
The partnership conducted trading operations primarily in the cash market by
purchasing and selling refined petroleum products and crude oil. While
significant revenues were generated during the seven months ended April 30, 1994
and the year ended September 30, 1993, the effect on net earnings (losses)
during these periods was not significant.
General and administrative expenses increased 32.1% from the year ended
September 30, 1993 through the year ended April 30, 1995 as a result of the
acquisition of the NORCO pipeline, the growth of the Razorback pipeline/Rogers
terminal operations, the acquisition of the Little Rock south terminal, and the
expansion of product supply and distribution activities, all of which increased
personnel costs and related supporting administrative expenses.
There was a 4.4% increase in depreciation and amortization expense from the year
ended September 30, 1993 through the year ended April 30, 1995, primarily due to
the 1993 acquisition of the Little Rock south terminal.
Equity in earnings (losses) of affiliates, net of the related minority interest,
was $295,000 in the year ended April 30, 1995, $479,000 in the seven months
ended April 30, 1994, and $(59,000) in the year ended September 30, 1993.
During these periods, the operating results of Lion fluctuated widely as a
result of volatile crude oil and refined petroleum products prices and crack
spreads. During periods of fluctuating prices, Lion experiences reductions in
crack spreads when market prices of refined petroleum products do not change in
correlation to increases in crude oil prices.
Interest expense during the periods from 1993 through 1995 fluctuated with
changes in the average outstanding loan balances and with changes in the
interest rates on the loans, which ranged from 7% to 9% during these periods.
The average outstanding loan balance increased from approximately $34,500,000
for the year ended September 30, 1993 to approximately $37,100,000 and
$35,700,000 for the seven months ended April 30, 1994 and the year ended April
30, 1995, respectively. Interest expense also includes interest on outstanding
senior subordinated debentures during these periods.
The loss on cancellation of aircraft lease of $287,000 recorded in the fourth
quarter of the year ended April 30, 1995 was a non-recurring expense in
connection with the termination of a long-term lease. The Company does not own
or have any lease obligations with respect to corporate aircraft.
Old TransMontaigne incurred net losses for the year ended April 30, 1995, the
seven months ended April 30, 1994, and the year ended September 30, 1993 of
$3,218,000, $2,854,000 and $4,490,000, respectively, primarily as a result of
the under-utilization of its pipeline and terminal
21
<PAGE>
facilities, a lack of adequate working capital to finance inventory requirements
and the fluctuations in the net operating margins, discussed above.
Accounting Standards
Statement of Financial Accounting Standards No. 121, "Accounting for Impairment
of Long-Lived Assets to be Disposed of" (SFAS 121) was issued in March, 1995, by
the Financial Accounting Standards Board. It requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS 121 is
required to be adopted for fiscal years beginning after December 15, 1995. The
adoption of this statement by the Company is not expected to have a significant
effect on the financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) was issued by the Financial Accounting Standards Board
in October 1995. This standard addresses the timing and measurement of stock-
based compensation expense. Entities electing to continue to follow Accounting
Principles Board Opinion No. 25 (APB 25) must make pro forma disclosures of
net income and earnings per share, as if the fair value based method of
accounting defined by SFAS 123 had been applied. SFAS 123 is applicable to
fiscal years beginning after December 15, 1995. The company has elected to
retain the approach of APB 25, (the intrinsic value method), for recognizing
stock-based compensation in the consolidated financial statements. The Company
will include the disclosures required by SFAS 123 in future financial
statements.
22
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
As a result of the reverse acquisition of Old Sheffield by Old TransMontaigne,
the historical financial statements of the Company required to be presented in
this Item 8 for periods prior to the Merger are those of Old TransMontaigne.
The consolidated financial statements of Old TransMontaigne are attached hereto
beginning on page F-1.
23
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
TransMontaigne Oil Company:
We have audited the accompanying consolidated balance sheets of TransMontaigne
Oil Company and subsidiaries as of April 30, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended April 30, 1996 and 1995, the seven months ended April 30, 1994
and the year ended September 30, 1993. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, 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 financial position of TransMontaigne Oil
Company and subsidiaries as of April 30, 1996 and 1995, and the results of their
operations and their cash flows for the years ended April 30, 1996 and 1995, the
seven months ended April 30, 1994 and the year ended September 30, 1993, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
June 20, 1996
F-1
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
April 30, 1996 and 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets 1996 1995
- ------ ------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 38,403,234 1,801,828
Trade accounts receivable 20,905,812 17,608,564
Amounts receivable under stock purchase agreements - 30,000,002
Inventories 23,609,136 21,361,341
Prepaid expenses and other 1,475,612 905,794
------------- -----------
84,393,794 71,677,529
------------- -----------
Property, plant and equipment:
Land 1,072,798 1,047,324
Plant and equipment 24,926,309 20,915,921
Accumulated depreciation (6,461,244) (5,360,082)
------------- -----------
19,537,863 16,603,163
------------- -----------
Investments and other assets:
Investments 15,830,006 14,798,228
Other assets 814,713 994,598
Deferred debt issuance costs, net 386,600 146,828
------------- -----------
17,031,319 15,939,654
------------- -----------
$ 120,962,976 104,220,346
============= ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ - 1,103,826
Trade accounts payable 10,698,199 22,365,444
Inventory due under exchange agreements 8,874,645 3,895,830
Excise taxes payable 6,483,756 4,649,599
Other accrued liabilities 2,685,355 1,673,625
------------- -----------
28,741,955 33,688,324
------------- -----------
Long-term debt, less current portion 28,948,867 36,945,610
Minority interests 5,452,963 5,115,710
Stockholders' equity:
Preferred stock, par value $.10; authorized
3,000,000 shares, none issued - -
Common stock, par value $.10 per share; authorized
27,000,000 shares, issued and outstanding 19,331,171
shares at April 30, 1996 and 14,780,715 shares
at April 30, 1995 1,933,117 1,478,071
Capital in excess of par value 61,187,476 36,912,002
Accumulated deficit (5,301,402) (9,919,371)
------------- -----------
57,819,191 28,470,702
------------- -----------
$ 120,962,976 104,220,346
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended April 30, 1996 and 1995, Seven Months Ended April 30, 1994
and Year Ended September 30, 1993
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Product sales, pipeline tariffs
and terminaling fees $ 533,106,747 324,591,409 296,086,981 507,936,810
Costs and expenses:
Product costs and direct
operating expenses 520,389,482 318,811,953 294,773,790 505,348,576
General and administrative 4,998,771 4,226,123 2,156,817 3,199,223
Depreciation and amortization 1,169,541 1,147,291 665,955 1,099,253
------------- ----------- ----------- -----------
526,557,794 324,185,367 297,596,562 509,647,052
------------- ----------- ----------- -----------
Operating income (loss) 6,548,953 406,042 (1,509,581) (1,710,242)
Other income (expenses):
Interest income 520,900 -- -- --
Equity in earnings (losses)
of affiliates 942,216 407,208 710,626 (136,511)
Minority interests (337,253) (112,555) (231,156) 77,802
Interest expense (2,530,945) (3,119,019) (1,524,473) (2,319,180)
Other financing costs (333,155) (393,031) (228,468) (354,195)
Cancellation of aircraft lease __ (286,735) -- --
------------- ----------- ----------- -----------
(1,738,237) (3,504,132) (1,273,471) (2,732,084)
------------- ----------- ----------- -----------
Earnings (loss) before
income taxes 4,810,716 (3,098,090) (2,783,052) (4,442,326)
Income taxes - current (192,747) (119,545) (70,557) (48,142)
------------- ----------- ----------- -----------
Net earnings (loss) $ 4,617,969 (3,217,635) (2,853,609) (4,490,468)
============= =========== =========== ===========
Weighted average common
shares outstanding 15,129,637 2,860,390 2,694,830 2,694,830
============= =========== =========== ===========
Earnings (loss) per common share $ 0.31 (1.32) (1.15) (1.85)
============= =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years Ended April 30, 1996 and 1995, Seven Months Ended April 30, 1994
and Year Ended September 30, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Redeemable Capital in
preferred Common excess of Accumulated
stock stock par value deficit Total
----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1992 $ 6,678,007 269,483 941,095 1,936,475 9,825,060
Preferred stock dividends (70,034 shares) 490,238 -- -- (490,330) (92)
Net loss -- -- -- (4,490,468) (4,490,468)
----------- --------- --------- --------- ----------
Balance at September 30, 1993 7,168,245 269,483 941,095 (3,044,323) 5,334,500
Preferred stock dividends (36,921 shares) 258,447 -- -- (258,503) (56)
Net loss -- -- -- (2,853,609) (2,853,609)
----------- --------- --------- --------- ----------
Balance at April 30, 1994 7,426,692 269,483 941,095 (6,156,435) 2,480,835
Preferred stock dividends (78,515 shares) 545,195 -- -- (545,301) (106)
Common stock issued in connection with
conversion of preferred stock (7,971,887) 295,255 7,676,632 -- --
Common stock issued in connection with stock
purchase agreements -- 833,333 29,166,669 -- 30,000,002
Common stock issued in connection with a merger -- 80,000 120,000 -- 200,000
Costs related to conversion of preferred stock and
issuance of common stock -- -- (992,394) -- (992,394)
Net loss -- -- -- (3,217,635) (3,217,635)
----------- --------- --------- --------- ----------
Balance at April 30, 1995 -- 1,478,071 36,912,002 (9,919,371) 28,470,702
Common stock issued for cash -- 455,046 24,558,462 -- 25,013,508
Costs related to issuance of common stock -- -- (282,988) -- (282,988)
Net earnings -- -- -- 4,617,969 4,617,969
----------- --------- --------- --------- ----------
Balance at April 30, 1996 $ -- 1,933,117 61,187,476 (5,301,402) 57,819,191
=========== ========= ========= ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended April 30, 1996 and 1995, Seven Months Ended April 30, 1994
and Year Ended September 30, 1993
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,617,969 (3,217,635) (2,853,609) (4,490,468)
Adjustments to reconcile net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,169,541 1,147,291 665,955 1,099,253
Equity in (earnings) losses of affiliates (942,216) (407,208) (710,626) 136,511
Minority interests 337,253 112,555 231,156 (77,802)
Dividends received from affiliates - 125,000 75,000 40,000
Loss on cancellation of aircraft lease - 286,735 - -
Write-off of noncurrent receivable - 190,000 - -
Loss (gain) on disposition of assets 167,459 (127,645) - (4,623)
Changes in operating assets and liabilities,
net of noncash activities:
Trade accounts receivable (3,297,248) 1,283,422 (10,201,357) 1,239,836
Inventories (2,247,795) (1,591,906) 23,107,751 (8,756,709)
Prepaid expenses and other (569,818) 169,196 (567,652) (63,513)
Trade accounts payable (10,979,599) (641,400) (12,845,989) 11,540,616
Inventory due under exchange
agreements 4,978,815 2,726,995 (1,801,431) 2,038,399
Excise taxes payable and other
accrued liabilities 2,845,886 (291,980) 2,713,551 2,302,687
------------ --------- --------- ---------
Net cash provided (used)
by operating activities (3,919,753) (236,580) (2,187,251) 5,004,187
------------ --------- --------- ---------
Cash flows from investing activities:
Purchases of property, plant and equipment (4,124,264) (747,774) (461,888) (4,730,726)
Proceeds from sale of assets 320,210 260,585 - 8,245
Decrease (increase) in other assets (377,323) 253,627 (579,181) 107,589
------------ --------- --------- ---------
Net cash used by investing
activities (4,181,377) (233,562) (1,041,069) (4,614,892)
------------ --------- --------- ---------
Cash flows from financing activities:
Borrowings (repayments) of long-term debt, net (9,100,568) 166,397 3,691,941 (1,315,608)
Deferred debt issuance costs (239,772) - - -
Cash dividends paid on preferred stock - (106) (56) (92)
Cash received in connection with merger - 200,000 - -
Common stock issued for cash 25,013,508 - - -
Stock subscription received in cash 30,000,002 - - -
Costs paid relating to conversion of preferred
stock and issuance of common stock (970,634) (304,748) - -
------------ --------- --------- ---------
Net cash provided (used) by
financing activities 44,702,536 61,543 3,691,885 (1,315,700)
------------ --------- --------- ---------
Increase (decrease) in cash
and cash equivalents 36,601,406 (408,599) 463,565 (926,405)
Cash and cash equivalents at beginning of period 1,801,828 2,210,427 1,746,862 2,673,267
------------ --------- --------- ---------
Cash and cash equivalents at end of period $ 38,403,234 1,801,828 2,210,427 1,746,862
============ ========= ========= =========
Supplemental disclosure of cash flow information -
Noncash investing and financing activities -
Costs accrued relating to conversion of
preferred stock and issuance of common stock $ - 687,646 - -
============ ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
April 30, 1996 and 1995
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
(a) Nature of Business and Basis of Presentation
TransMontaigne Oil Company ("the Company") is a holding company which
pursues, through its subsidiaries, business opportunities in the
downstream sector of the petroleum industry. The Company's principal
operating subsidiary is engaged in the business of pipelining,
terminaling, storing and selling refined petroleum products
principally in the Mid-Continent region of the United States.
Management makes various estimates and assumptions in determining the
reported amounts of assets, liabilities, revenues and expenses for
each period presented, and in the disclosures of commitments and
contingencies. Changes in these estimates and assumptions will occur
as a result of the passage of time and the occurrence of future
events, and actual results will differ from those estimates. The
Company provides short-term credit to its customers which, with the
exception of related parties, are generally all wholesale distributors
of these products. The Company requires collateral, such as letters of
credit, liens on products, and guarantees on a customer by customer
basis. The Company maintains allowances for potential uncollectible
accounts receivable, which historically have been minimal.
(b) Principles of Consolidation
The accompanying consolidated financial statements include,
collectively, the Company and its wholly owned subsidiary, Continental
Ozark, Inc. (COZ), and COZ's wholly owned subsidiaries and COZ's 65%
owned subsidiary, Continental Ozark Holding, Inc. (COH). All
significant intercompany accounts and transactions have been
eliminated in consolidation.
(c) Cash and Cash Equivalents
The Company considers all short-term investments with a maturity of
three months or less when acquired to be cash equivalents.
(d) Inventories
Inventories of refined products are stated at the lower of last-in,
first-out (LIFO) cost or market. Refined products due from third
parties under exchange agreements are included in inventory and
recorded at current replacement cost. Refined products due to third
parties under exchange agreements are recorded at current replacement
cost. Adjustments resulting from changes in current replacement cost
for refined products due to or from third parties under exchange
agreements are reflected in cost of products sold. The exchange
agreements are generally for a term of 30 days and are generally
settled by delivering product to or receiving product from the party
to the exchange.
F-6
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
(e) Property, Plant and Equipment
Depreciation of equipment is provided by the straight-line and double-
declining balance methods. Depreciation of all other assets is
provided by the straight-line method. Estimated useful lives are 25
years for plant, which includes buildings, storage tanks and pipelines
and 3 to 20 years for equipment. All items of property, plant and
equipment are carried at cost.
(f) Investment in Lion Oil Company
The Company's investment in Lion Oil Company ("Lion") is accounted for
using the equity method. Under this method, the investment, originally
recorded at cost, is adjusted to recognize the Company's share of the
net earnings or losses of Lion as incurred rather than as dividends or
other distributions are received.
(g) Recognition of Revenue
Revenue from the sale of refined petroleum products is recorded at the
time title and risk of ownership pass. Transfers of products to or
from third parties under exchange agreements do not culminate the
earnings process and are recorded as inventory and liability
transactions with no effect on income.
(h) Deferred Debt Issuance Costs
Deferred debt issuance costs related to senior subordinated debentures
and the long-term credit agreements are amortized on the interest
method over the term of the underlying debt instrument. Accumulated
amortization was $164,970 and $101,332 at April 30, 1996 and 1995,
respectively.
(i) Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes, as prescribed by Statement of Financial Accounting
Standards No. 109 (SFAS 109). Under this method, deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply in the years in which these temporary
differences are expected to be recovered or settled. Changes in tax
rates are recognized in income in the period that includes the
enactment date.
F-7
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
(j) Minority Interests
Minority interests consist of ownership interests in COH attributable
to shareholders other than the Company.
(k) Inventory Management
The Company manages the risk associated with fluctuations in the price
of refined petroleum products inventory and purchase and sales
commitments, and may selectively enter into futures contracts which
are designated as hedges of the products purchased or sold. Hedging
gains and losses are recorded in inventory and are recognized when the
inventory is sold. Since February 1996, the Company has also engaged
in the trading of futures contracts. Gains and losses from these
trading activities are recognized as they occur.
The Company's Risk and Product Management Committee reviews the total
inventory position on a weekly basis in order to ensure compliance
with the Company's inventory management policies, including all
hedging and trading activities. The Company has adopted policies
whereby its net inventory position subject to price risk requires the
prior approval of the Risk and Product Management Committee.
At April 30, 1996, the Company had no net open futures contracts
designated as hedges, and there were no deferred hedging gains or
losses.
In connection with its trading activities, the Company had outstanding
contracts to sell 50,000 barrels of products and contracts to purchase
50,000 barrels of product at April 30, 1996. The unrealized loss
relating to such contracts of approximately $267,000 has been charged
to operations for the year ended April 30, 1996. The net trading loss
on futures contracts of approximately $40,000 for the period from
the commencement of trading activities to April 30, 1996 has been
included in product costs and direct operating expenses in the
accompanying statements of operations.
Product futures contracts are traded on the New York Merchantile
Exchange (NYMEX). The change in market value of NYMEX-traded futures
contracts requires daily cash settlements in margin accounts with
brokers. NYMEX future contracts are guaranteed by the NYMEX and have
nominal credit risk. The Company is exposed to credit risk in the
event the counterparties to other third party agreements are not able
to perform their contractual obligations.
(l) Earnings (Loss) Per Common Share
Earnings (loss) per common share has been computed by application of
the treasury stock method, calculated based on the weighted average
number of common shares outstanding during the period after giving
effect to preferred stock dividends. The assumed conversion of the
outstanding shares of convertible preferred stock was anti-dilutive
for all periods presented prior to the conversion of all outstanding
shares of preferred stock into common stock effective April 26, 1995.
(m) Reclassifications
Certain amounts in the accompanying consolidated financial statements
for prior periods have been reclassified to conform to the
classifications used in 1996.
F-8
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(2) Inventories
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Refined petroleum products $ 12,387,371 12,929,837
Refined petroleum products due from
third parties under exchange agreements 11,208,859 8,421,611
Other 12,906 9,893
------------ ----------
$ 23,609,136 21,361,341
============ ==========
</TABLE>
During the seven months ended April 30, 1994, the Company recorded an
adjustment of approximately $3,640,000 to reduce inventories to the lower of
cost or market, calculated as of December 31, 1993.
If the lower of average or replacement cost method of accounting had been
used instead of the LIFO method for valuing refined petroleum products,
inventories would have been $5,779,000 and $5,996,000 greater than reported
at April 30, 1996 and 1995, respectively.
During the year ended April 30, 1995 and the seven months ended April 30,
1994 inventory quantities were reduced, which resulted in a liquidation of
LIFO inventory layers carried at costs which prevailed in prior years. The
effect of the liquidations was to decrease product costs and decrease the
net loss for the year ended April 30, 1995 by approximately $863,000 and
increase product costs and the net loss for seven months ended April 30,
1994 by approximately $904,000.
The Company's refined petroleum products inventory consists primarily of
gasoline and distillates. A significant portion of this inventory
represents line fill and tank bottoms. This portion of the inventory is
required for operating balances in the conduct of the Company's daily
distribution activities and is maintained both in tanks and pipelines owned
by the Company and pipelines owned by third parties.
(3) Property, Plant and Equipment
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 1,072,798 1,047,324
Terminals and equipment 6,230,696 5,764,874
Pipelines, rights of way and equipment 17,182,135 13,960,421
Other plant and equipment 1,513,478 1,190,626
----------- ----------
25,999,107 21,963,245
Less accumulated depreciation 6,461,244 5,360,082
----------- ----------
$19,537,863 16,603,163
=========== ==========
</TABLE>
F-9
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(4) Investment in Lion
The Company, through its 65% ownership of COH, effectively owns 18% of the
common stock of Lion. At April 30, 1996 and 1995, the Company's investment
in Lion was approximately $15,494,000 and $14,497,000, respectively, and the
minority interests were approximately $5,453,000 and $5,116,000,
respectively.
Summarized balance sheet information for Lion as of April 30, 1996 and 1995
is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Assets:
Current assets $ 94,403 95,610
Property, plant and equipment, net 68,436 71,186
Other assets 4,948 1,926
-------- -------
$167,787 168,722
======== =======
Liabilities and stockholders' equity:
Current liabilities $ 40,454 37,273
Long-term debt 62,140 71,239
Deferred income taxes 9,353 7,962
Stockholders' equity 55,840 52,248
-------- -------
$167,787 168,722
======== =======
</TABLE>
F-10
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
Summarized statement of operations information for Lion for the years ended
April 30, 1996, 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
(in thousands)
Net sales $ 566,812 525,037 477,573 493,244
Cost of sales 549,210 511,655 462,491 484,020
--------- ------- ------- -------
Gross profit 17,602 13,382 15,082 9,224
Selling, general and
administrative expenses 5,996 5,763 5,224 4,968
Management fees 1,467 532 1,166 55
--------- ------- ------- -------
Operating income 10,139 7,087 8,692 4,201
Interest expense and other
(income), net 4,260 4,939 4,002 3,944
--------- ------- ------- -------
Earnings before
income tax 5,879 2,148 4,690 257
Income tax expense 2,288 892 1,831 129
--------- ------- ------- -------
Net earnings $ 3,591 1,256 2,859 128
========= ======= ======= =======
</TABLE>
The Company has $2,600,000 of letters of credit outstanding to a bank to
assist Lion in obtaining financing. No outstanding obligations exist under
these letters of credit as of April 30, 1996.
(5) Long-term Debt
Long-term debt at April 30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
(in thousands)
<S> <C> <C>
12 3/4% senior subordinated debentures net
of discount (face amount $4,000,000) $ 3,948,867 3,938,468
Line of credit with a bank 25,000,000 33,000,000
Note payable to a bank at its prime rate
plus 1/2% repaid in May 1995 -- 1,100,000
Other -- 10,968
----------- ----------
28,948,867 38,049,436
Less current portion -- (1,103,826)
----------- ----------
$28,948,867 36,945,610
=========== ==========
</TABLE>
F-11
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(5) Long-term Debt (continued)
In March 1991, the Company issued 12 3/4% senior subordinated debentures
which are guaranteed by certain subsidiaries and are due December 15, 2000,
with interest payable semi-annually on June 15 and December 15. The
debentures are subject to a required redemption of $2,000,000 on December
15, 1999 and December 15, 2000. The debentures may be prepaid prior to
maturity at a premium, under certain circumstances. In conjunction with the
issuance of these debentures, the Company issued warrants to purchase
248,686 shares of the Company's common stock. The warrant exercise price was
reduced effective April 26, 1995 from $6.10 per share to $3.60 per share,
through December 15, 2000.
On December 7, 1995 the Company entered into a revolving line of credit with
a major bank ("the Credit Agreement"). The aggregate commitment for
outstanding letters of credit and revolving note advances is up to
$45,000,000 through November 30, 1999. The funds advanced under this line
are used principally to fund working capital requirements of the Company and
to issue letters of credit to persons with whom the Company and its
subsidiaries do business. Borrowings under the Credit Agreement bear
interest at a rate per year equal to the bank's announced base rate, or at
the Company's election, a Eurodollar interest rate option. The interest
rate at April 30, 1996 was 6.875%.
As of April 30, 1996, the Company had $25,000,000 outstanding under the
Credit Agreement and its subsidiary, COZ, had outstanding standby letters of
credit to product suppliers and a bank (see Note 4) totaling approximately
$3,200,000 at April 30, 1996. Actual obligations to such suppliers at April
30, 1996 are included in trade accounts payable.
The Credit Agreement contains a negative pledge covenant by the Company and
its subsidiaries and is secured by the stock of the subsidiaries. The
Credit Agreement contains financial ratio tests relating to consolidated
income from operations, consolidated funded debt, liquidity and consolidated
tangible net worth, working capital and tangible net worth. As of April,
1996, the Company was in compliance with all of such tests.
Maturities of long-term debt for fiscal years subsequent to 1996 are as
follows:
<TABLE>
<S> <C>
1997 $ --
1998 --
1999 --
2000 27,000,000
2001 1,948,867
-----------
$28,948,867
===========
</TABLE>
Cash payments for interest were approximately $2,994,000, $2,478,000,
$1,741,000 and $2,230,000 for the years ended April 30, 1996 and 1995, the
seven months ended April 30, 1994 and the year ended September 30, 1993,
respectively.
F-12
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
(6) Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each of on and off-balance sheet financial instruments, along with the
methods and assumptions used to estimate such fair values at April 30, 1996:
Cash and Cash Equivalents, Trade Receivables and Trade Accounts Payable
The carrying amount approximates fair value because of the short term
maturity of these instruments.
Long-term Debt
The carrying value of the line of credit approximates its fair value, as the
line bears interest at a variable rate.
The carrying value of the 12 3/4% senior subordinated debentures
approximates the estimated fair value of the debentures, as the effective
interest rate of the debentures approximates the current market rate for
similar debt instruments.
Futures Contracts
The carrying value and fair value of the futures contracts entered into for
trading purposes was a liability of approximately $267,000, based on the
quoted market price of the related futures contracts at April 30, 1996.
Limitations
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
F-13
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
(7) Redeemable Convertible Preferred Stock
In March 1991, the Company issued 857,143 shares of voting redeemable Series
A cumulative convertible preferred stock at $7.00 per share which had a
liquidation and mandatory redemption price of the same amount. This
preferred stock had one vote per share. Dividends on the preferred stock
were payable quarterly, at 7.15% per annum of the liquidation value
outstanding, in additional shares of preferred stock or, at the Company's
option, in cash.
Effective as of April 26, 1995 all outstanding shares of preferred stock
were converted into common stock.
(8) Shareholders' Equity
(a) Common Stock
Effective as of April 26, 1995, the Company (then Continental Ozark
Corporation) and TransMontaigne Oil Company, ("TransMontaigne") entered
into a Merger Agreement pursuant to which all of the outstanding shares
of common stock of TransMontaigne were converted into 800,000 shares of
common stock of Continental Ozark Corporation. Upon consummation of the
merger, the Company received $200,000 in cash and changed its name to
TransMontaigne Oil Company. The merger was accounted for as an
acquisition of TransMontaigne by the Company using the purchase method
of accounting. TransMontaigne had no operations prior to April 26,
1995. Concurrently, the Company entered into a series of Stock Purchase
Agreements and other related transactions, with certain institutional
and individual investors pursuant to which the Company issued 8,333,334
shares of the Company's common stock for $30,000,002.
Effective as of April 26, 1995, the Company and the holders of its
redeemable convertible preferred stock entered into a Conversion
Agreement pursuant to which all of the outstanding shares of preferred
stock of the Company were converted into 2,952,551 shares of common
stock of the Company.
Effective as of April 17, 1996 the Company completed a private placement
of 4,545,456 shares of common stock at $5.50 per share for proceeds of
$25,000,008.
F-14
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
(b) Stock Options
The Company has adopted two stock option plans, (the "1991 Plan" and the
"1995 Plan") under which stock options may be granted to key employees
of the Company. Under the 1991 Plan, the Company may grant options for
up to 300,000 shares of common stock at prices and for terms as
determined by the Administrative Committee of the 1991 Plan. The
Company has reserved 1,000,000 shares of common stock for options that
may be granted under the 1995 Plan. Options granted under the 1995 Plan
are exercisable at prices determined by the Incentive Plan Committee,
however, in no event shall the price be less than the fair market value
of the stock on the date of grant. Options under the 1995 Plan expire
at such time as the Incentive Plan Committee determines, but no later
than seven years from the date of grant.
Changes in stock options outstanding for the year ended April 30, 1996
and 1995, the seven months ended April 30, 1994 and the year ended
September 30, 1993 are as follows:
<TABLE>
<CAPTION>
1991 Plan 1995 Plan
----------------------- --------------------
Option Option
price per price per
Shares share Shares share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding at
September 30, 1992
and 1993 220,254 $3.50 - 6.10 -- $ --
Forfeited (124,500) 6.10 -- --
Granted -- -- 124,500 2.70
-------- ------------ ------- ------------
Outstanding at
April 30, 1994 95,754 3.50 - 6.10 124,500 2.70
Granted -- -- 358,000 2.70
-------- ------------ ------- ------------
Outstanding at
April 30, 1995 95,754 3.50 - 6.10 482,500 2.70
Granted -- -- 421,746 3.60 - 5.50
Exercised -- -- (5,000) 2.70
-------- ------------ ------- ------------
Outstanding at
April 30,1996 95,754 $3.50 - 6.10 899,246 $2.70 - 5.50
======== ============ ======= ============
Exercisable at
April 30, 1996 95,754 $3.50 - 6.10 718,373 $2.70 - 5.50
======== ============ ======= ============
</TABLE>
F-15
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
(9) Income Taxes
Income tax expense, consisting solely of state income taxes, was $192,747,
$119,545, $70,557 and $48,142 for the years ended April 30, 1996 and 1995,
the seven months ended April 30, 1994 and the year ended September 30, 1993,
respectively. Income tax expense differs from the amount computed by
applying the U.S. federal corporate income tax rate of 34% to pretax
earnings (loss) as a result of the following:
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computed "expected"
tax expense $ 1,636,000 (1,053,000) (946,000) (1,510,000)
Increase (reduction) in income
taxes resulting from:
Increase (decrease) in the
valuation allowance for
deferred tax assets
allocated to income tax
expense (1,785,000) 1,174,000 1,032,000 1,617,000
State income taxes, net of
federal income
tax benefit 127,000 79,000 47,000 40,571
Other, net 214,747 (80,455) (62,443) (99,429)
----------- --------- --------- ---------
Income tax expense $ 192,747 119,545 70,557 48,142
=========== ========= ========= =========
</TABLE>
F-16
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
(9) Income Taxes (continued)
The tax effects of temporary differences which give rise to significant
portions of the deferred tax assets and deferred tax liabilities at April
30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Inventories, principally due to difference
in costing method used for tax purposes $ 2,196,000 2,278,000
Unrealized commodity futures contract losss 102,000 426,000
Future deductible amounts for income tax
purposes resulting from a change in the
method of accounting for inventories -- 1,038,000
Net operating loss carryforwards 5,670,000 5,560,000
Alternative minimum tax credit carryforwards 24,000 24,000
---------- ----------
Total gross deferred tax assets 7,992,000 9,326,000
Less valuation allowance (4,474,000) (6,259,000)
---------- ----------
Net deferred tax assets 3,518,000 3,067,000
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation methods (2,994,000) (2,778,000)
Investments in affiliated company, principally
due to undistributed earnings (524,000) (289,000)
---------- ----------
Net deferred taxes $ -- --
========== ==========
</TABLE>
The Company changed its year-end for income tax purposes from December 31 to
April 30, effective in 1995. The Company also changed its method of
accounting for inventories for income tax purposes effective January 1,
1994. The effect of this change was approximately $8,200,000 at January 1,
1994, and, under the provisions of the Internal Revenue Code, this amount is
deductible over a 3-year period.
At April 30, 1996, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $14,923,000 which are available
to offset future federal taxable income, if any, through 2009. In addition,
the Company has alternative minimum tax credit carryforwards of
approximately $24,000 available to reduce future federal regular income
taxes, if any, which can be carried forward indefinitely.
F-17
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
Under SFAS 109, the Company provides for deferred income taxes on the
undistributed net earnings of Lion. Under the transition rules in SFAS
109, the Company is not required to recognize a deferred tax liability of
approximately $6,100,000 for the undistributed net earnings of Lion which
arose prior to the adoption of SFAS 109 because the Company currently does
not expect those undistributed earnings to become taxable to the Company
in the foreseeable future. A deferred tax liability will be recognized on
these undistributed earnings when the Company expects that it will recover
those undistributed earnings in a taxable manner, such as through the
receipt of dividends or the sale of the investment.
The Company paid state income taxes of approximately $106,000, $138,000,
and $45,000 for the years ended April 30, 1996 and 1995 and the seven
months ended April 30, 1994, respectively.
(10) Related Party Transactions
The Company had sales of $3,380,000, $884,000, $6,698,000 and $7,691,000
and purchases of $33,879,000, $28,997,000, $15,710,000 and $52,050,000 for
the years ended April 30, 1996 and 1995, the seven months ended April 30,
1994 and the year ended September 30, 1993, respectively, to companies
affiliated by common ownership.
Related party balances at April 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Accounts receivable $ 90,498 45,549
Accounts payable 84,034 1,270,335
</TABLE>
(11) New Accounting Standards
Statement of Financial Accounting Standards No. 121, Accounting for
Impairment of Long-Lived Assets to be Disposed of (SFAS 121) was issued in
March, 1995, by the Financial Accounting Standards Board. It requires that
long-lived assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS 121 is required to be adopted for fiscal years beginning
after December 15, 1995. The adoption of this statement by the Company is
not expected to have a significant effect on the financial statements.
F-18
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
- -------------------------------------------------------------------------------
Statement of Financial Accounting Standards No. 123, Accounting for Stock-
Based Compensation (SFAS 123) was issued by the Financial Accounting
Standards Board in October 1995. This standard addresses the timing and
measurement of stock-based compensation expense. Entities electing to
continue to follow Accounting Principles Board Opinion No. 25 Accounting
for Stock Issued to Employees, (APB 25) must make pro forma disclosures of
net income and earnings per share, as if the fair value based method of
accounting defined by SFAS 123 had been applied. SFAS 123 is applicable to
fiscal years beginning after December 15, 1995. The Company has elected to
retain the measurement approach of APB 25, (the intrinsic value method)
for recognizing stock-based compensation in the consolidated financial
statements. The Company will include the disclosures required by SFAS 123
in future financial statements.
(12) Subsequent Event
On June 4, 1996 the Company merged (the "Merger") with Sheffield
Exploration Company, Inc., a Delaware corporation ("Old Sheffield"),
pursuant to the Restated Agreement and Plan of Merger dated as of
February 6, 1996 between the Company and Old Sheffield (the "Merger
Agreement").
As a result of the Merger, the Company merged into Old Sheffield, which
became the surviving corporation of the Merger, and (i) each share of
common stock of the Company issued and outstanding immediately prior to
the closing of the Merger was converted at the closing into the right to
receive one share of common stock of the surviving corporation ("New
Common Stock"), (ii) each 2.432599 shares of Old Sheffield common stock
issued and outstanding immediately prior to the closing of the Merger
became one share of New Common Stock, (iii) the name of Old Sheffield was
changed to TransMontaigne Oil Company and (iv) the number of authorized
shares of New Common Stock was increased to 40,000,000.
The Merger constituted a reverse acquisition of Old Sheffield by the
Company, in that Old Sheffield survived the Merger, but is owned
approximately 93% by the former stockholders of the Company.
Pro forma results of the Company, assuming the Merger had occurred at the
beginning of fiscal 1996 or 1995, would not be materially different from
the results reported.
F-19
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Lion Oil Company and Subsidiary:
We have audited the accompanying consolidated balance sheets of Lion Oil Company
and subsidiary as of April 30, 1996 and 1995, and the related consolidated
statements of earnings, stockholders' equity and cash flows for each of the
years in the three-year period ended April 30, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, 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 financial position of Lion Oil Company and
subsidiary as of April 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the years in the three-year period ended April
30, 1996, in conformity with generally accepted accounting principles.
As discussed in notes 1 and 5 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, as of May 1, 1993.
KPMG Peat Marwick LLP
Jackson, Mississippi
July 19, 1996
<PAGE>
LION OIL COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
April 30, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,986,616 11,909,536
Trade accounts receivable, less allowance for
doubtful accounts of $50,000 in 1996 and 1995 25,590,926 26,812,439
Inventories 60,224,008 51,921,402
Refundable income taxes 145,796 1,564,965
Current portion of deferred income taxes 231,083 82,822
Prepaid expenses and other current assets 3,224,217 3,319,025
------------ -----------
Total current assets 94,402,646 95,610,189
------------ -----------
Property, plant and equipment 109,587,635 105,757,497
Less accumulated depreciation 41,151,991 34,571,855
------------ -----------
Net property, plant and equipment 68,435,644 71,185,642
------------ -----------
Deferred turnaround costs, less accumulated amortization
of $113,094 in 1996 and $3,193,435 in 1995 3,970,002 1,405,162
Other assets 978,230 520,911
------------ -----------
$167,786,522 168,721,904
============ ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Trade accounts payable $ 24,044,275 19,888,675
Current installments of long-term debt 3,142,857 3,142,857
Accrued expenses and other current liabilities 10,825,954 10,040,495
Inventory due under finished product exchange agreements 2,440,410 4,181,611
Income taxes currently payable -- 19,187
------------ -----------
Total current liabilities 40,453,496 37,272,825
------------ -----------
Long-term liabilities:
Long-term debt, excluding current installments 62,140,264 71,238,909
Deferred income taxes 9,353,122 7,961,907
------------ -----------
Total long-term liabilities 71,493,386 79,200,816
------------ -----------
Stockholders' equity:
Common stock of $.10 par value. Authorized
12,000,000 shares; issued 8,649,600 shares 864,960 864,960
Additional paid-in capital 8,572,140 8,572,140
Retained earnings 46,402,540 42,811,163
------------ -----------
Total stockholders' equity 55,839,640 52,248,263
------------ -----------
$167,786,522 168,721,904
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LION OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
Years ended April 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales $ 566,811,346 525,036,778 477,573,034
Cost of sales 549,209,750 511,654,771 462,491,358
-------------- ----------- -----------
Gross profit 17,601,596 13,382,007 15,081,676
Selling, general and administrative expenses 5,995,898 5,763,021 5,223,310
Management fees 1,466,715 531,946 1,166,099
-------------- ----------- -----------
Operating income 10,138,983 7,087,040 8,692,267
-------------- ----------- -----------
Other income (expense):
Interest and other financing costs (4,546,844) (5,214,396) (4,187,176)
Interest income 50,831 42,009 41,127
Miscellaneous, net 236,407 233,124 143,347
-------------- ----------- -----------
(4,259,606) (4,939,263) (4,002,702)
-------------- ----------- -----------
Earnings before income taxes 5,879,377 2,147,777 4,689,565
Income tax expense 2,288,000 891,500 1,830,887
-------------- ----------- -----------
Net earnings $ 3,591,377 1,256,277 2,858,678
============== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LION OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended April 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Common stock Additional Total
------------------------- paid-in Retained stockholders'
Shares Amount capital earnings equity
--------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance at April 30, 1993 8,649,600 $ 864,960 8,572,140 38,696,208 48,133,308
Net earnings for 1994 -- -- -- 2,858,678 2,858,678
--------- ------- --------- ---------- ----------
Balance at April 30, 1994 8,649,600 864,960 8,572,140 41,554,886 50,991,986
Net earnings for 1995 -- -- -- 1,256,277 1,256,277
--------- ------- --------- ---------- ----------
Balance at April 30, 1995 8,649,600 864,960 8,572,140 42,811,163 52,248,263
Net earnings for 1996 -- -- -- 3,591,377 3,591,377
--------- ------- --------- ---------- ----------
Balance at April 30, 1996 8,649,600 $ 864,960 8,572,140 46,402,540 55,839,640
========= ======= ========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LION OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended April 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Cash received from customers $ 570,221,293 520,302,240 490,889,065
Cash paid to suppliers and employees (555,154,833) (521,484,138) (448,637,782)
Interest and dividends received 50,831 42,009 41,127
Other operating income received 217,354 203,285 170,529
Interest paid (net of amount capitalized) (4,798,264) (5,034,862) (4,108,359)
Income taxes refunded (paid) 365,831 (1,992,419) 2,375,937
------------ ------------ ------------
Net cash provided (used) by
operating activities 10,902,212 (7,963,885) 40,730,517
------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures (4,653,406) (6,510,499) (12,458,711)
Deferred turnaround costs (4,083,095) -- --
Proceeds from sale of equipment 342,586 211,233 33,097
------------ ------------ ------------
Net cash used by investing activities (8,393,915) (6,299,266) (12,425,614)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from lines of credit 730,247,950 699,044,595 609,001,450
Principal payments on lines of credit (735,995,481) (716,299,571) (617,412,186)
Proceeds from long-term debt and note payable 15,303,648 42,199,862 232,287
Principal payments on long-term
debt and note payable (18,654,762) (15,468,199) (9,284,526)
Additions to debt issue costs (332,572) (495,910) (458,813)
------------ ------------ ------------
Net cash provided (used) by
financing activities (9,431,217) 8,980,777 (17,921,788)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (6,922,920) (5,282,374) 10,383,115
Cash and cash equivalents at beginning of year 11,909,536 17,191,910 6,808,795
------------ ------------ ------------
Cash and cash equivalents at end of year $ 4,986,616 11,909,536 17,191,910
============ ============ ============
</TABLE>
(Continued)
<PAGE>
2
LION OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Reconciliation of net earnings to net cash provided
(used) by operating activities:
Net earnings $ 3,591,377 1,256,277 2,858,678
Adjustments:
Depreciation and amortization 8,811,662 8,791,454 7,719,264
Deferred income taxes 1,242,953 (129,202) 464,852
Loss (gain) from sale of equipment 115,637 (62,584) (10,406)
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts
receivable 1,221,513 (7,165,548) 7,925,333
(Increase) decrease in inventories (8,302,606) (12,960,966) 21,251,812
(Increase) decrease in refundable income taxes 1,419,169 (1,561,960) 2,456,487
(Increase) decrease in prepaid expenses
and other current assets 94,809 (467,728) (50,615)
Increase in other assets (472,973) (25,000) --
Increase (decrease) in trade accounts payable 4,155,600 2,368,888 (3,802,728)
Increase in accrued expenses and other
current liabilities 785,459 307,671 2,183,208
Increase (decrease) in inventory due under
finished product exchange agreements (1,741,201) 2,922,103 (1,521,845)
Increase (decrease) in income taxes
currently payable (19,187) (1,237,290) 1,256,477
----------- ------------ -----------
Net cash provided (used) by
operating activities $10,902,212 (7,963,885) 40,730,517
=========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
April 30, 1996, 1995 and 1994
(1) Nature of Business and Summary of Significant Accounting Policies
-----------------------------------------------------------------
Lion Oil Company (the Company) is engaged in petroleum refining and
related lines of business. It owns and operates a petroleum refinery
and crude oil gathering pipelines, product terminals and related
equipment principally located in Arkansas, Louisiana and Mississippi.
(a) Basis of Financial Statement Presentation
-----------------------------------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, J. Christy Construction
Co., Inc. (J. Christy), a maintenance and construction business
located in El Dorado, Arkansas. All significant intercompany
balances and transactions have been eliminated in consolidation.
(b) Inventories
-----------
Inventories in the amount of $59,623,904 and $51,260,579 at April
30, 1996 and 1995, respectively, are stated at lower of
approximate cost (first-in, first-out) or market (net realizable
value). Inventories in the amount of $600,104 and $660,823,
respectively, are stated at lower of approximate cost (last-in,
first-out) or market (replacement cost). Had cost been determined
using the first-in, first-out method for all categories,
inventories would have been greater by approximately $322,000
and $284,000 at April 30, 1996 and 1995, respectively.
Finished petroleum products due from third parties under exchange
agreements are included in inventory and recorded at current
replacement cost. Finished petroleum products due to third
parties under exchange agreements are recorded at current
replacement cost. Adjustments resulting from changes in current
replacement cost for refined products due to or from third
parties under exchange agreements are reflected in cost of
products sold. The exchange agreements are generally short-term
and are generally settled by delivery product to or receiving
product from the party to the exchange.
(c) Property, Plant and Equipment
-----------------------------
Depreciation of plant and equipment is provided over the estimated
useful lives of the respective assets using the straight-line
method except for automotive equipment which is depreciated
using a declining-balance method. All property, plant and
equipment is carried at cost.
(Continued)
<PAGE>
2
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(d) Recognition of Revenue
----------------------
Revenues from the sale of finished products and exchanges of product
that culminate the earnings process are recorded at the time
title and risk of ownership pass.
Exchanges of product that do not culminate the earnings process
are recorded as inventory and liability transactions with no
effect on income. Inventories under product exchange agreements
consisted primarily of finished petroleum products at April
30, 1996 and 1995.
(e) Deferred Turnaround Costs
-------------------------
Turnaround costs for major production units of the refinery are
deferred and amortized over the three-year period benefited.
Minor turnaround costs are charged to expense as incurred.
(f) Income Taxes
------------
Effective May 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standard No. 109, Accounting for Income
Taxes (Statement 109), which requires the asset and liability
method of accounting for income taxes. The cumulative effect
of this change of accounting for income taxes was not significant
and was included in income tax expense in the 1994 consolidated
statement of earnings. Under the asset and liability method
of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(g) Cash Equivalents
----------------
The Company considers interest bearing accounts with an original
maturity of three months or less to be cash equivalents.
(Continued)
<PAGE>
3
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(h) Tax Credits
-----------
The Company uses the flow through method to account for tax credits.
(i) Debt Issue Costs
----------------
Debt issue costs are amortized using the straight line method over the term
of the related debt agreements.
(j) Use of Estimates
----------------
The prepararation 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.
(2) Inventories
-----------
A summary of inventories follows:
<TABLE>
<CAPTION>
April 30
--------------------
1996 1995
---- ----
<S> <C> <C>
Finished petroleum products $ 23,317,965 19,798,790
Finished petroleum products under exchange
agreements 1,735,450 5,140,396
Crude oil 21,581,919 20,308,300
Intermediates 12,381,499 5,571,607
Raw materials and supplies 1,207,175 1,102,309
------------- -----------
$ 60,224,008 51,921,402
============= ===========
</TABLE>
(Continued)
<PAGE>
4
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) Property, Plant and Equipment
-----------------------------
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
April 30
Estimated ------------------
useful life 1996 1995
----------- ---- ----
<S> <C> <C> <C>
Land -- $ 1,716,119 1,682,378
Buildings and improvements 25-30 years 824,005 824,005
Refinery and equipment 5-20 years 79,741,454 75,885,365
Pipelines and equipment 15 years 17,373,553 17,327,827
Terminals and equipment 5-15 years 2,353,110 2,353,110
Tractors, trailers and automobiles 5-7 years 3,280,103 3,097,647
Other plant and equipment 3-8 years 1,906,060 1,814,208
Construction in progress -- 2,393,231 2,772,957
------------ -----------
109,587,635 105,757,497
Less accumulated depreciation 41,151,991 34,571,855
------------ -----------
$ 68,435,644 71,185,642
============ ===========
</TABLE>
Construction in progress consists primarily of costs incurred for
refinery improvements. The Company estimates that it will cost
approximately $2,700,000 to complete projects in progress at April
30, 1996.
(4) Leased Assets and Lease Commitments
-----------------------------------
As of April 30, 1996, minimum lease payments due under noncancelable
operating leases are as follows:
<TABLE>
<CAPTION>
Year ending
April 30
-----------
<S> <C>
1997 $ 1,955,173
1998 1,377,008
1999 1,029,878
2000 944,623
2001 944,623
Thereafter 944,623
------------
Total minimum lease payments $ 7,195,928
============
</TABLE>
(Continued)
<PAGE>
5
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
Most of the Company's leases require the Company to pay taxes, maintenance
and insurance applicable to the leased property.
Rental expense under operating leases was approximately $2,458,000,
$1,339,000 and $1,744,000 in 1996, 1995 and 1994, respectively.
(5) Income Taxes
------------
As discussed in note 1, the Company adopted Statement 109 as of May 1,
1993. The cumulative effect of this change in accounting for income
taxes was determined as of May 1, 1993. This amount was not material,
and therefore is not shown separately in the 1994 consolidated
statement of earnings.
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
Federal State Total
------- ----- -----
<S> <C> <C> <C>
1996:
Current $ 933,428 111,619 1,045,047
Deferred 978,137 264,816 1,242,953
--------- ------- ---------
$ 1,911,565 376,435 2,288,000
========= ======= =========
1995:
Current $ 999,088 21,614 1,020,702
Deferred (263,455) 134,253 (129,202)
--------- ------- ---------
$ 735,633 155,867 891,500
========= ======= =========
1994:
Current $ 1,343,560 22,475 1,366,035
Deferred 206,610 258,242 464,852
--------- ------- ---------
$ 1,550,170 280,717 1,830,887
========= ======= =========
</TABLE>
Income tax expense of $2,288,000 for 1996 (effective rate of 38.9%),
$891,500 for 1995 (effective rate of 41.5%) and $1,830,887 for 1994
(effective rate of 39.0%) differs from the expected amounts (computed
by applying the U.S. Federal corporate rate of 34% to pretax earnings)
as follows:
(Continued)
<PAGE>
6
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(5), Continued
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Computed expected tax expense $ 1,998,988 730,244 1,594,452
Increases resulting from:
State income taxes (net for Federal
income tax benefit) 248,447 102,872 185,273
Other 40,565 58,384 51,162
--------- ------- ---------
Actual tax expense $ 2,288,000 891,500 1,830,887
========= ======= =========
</TABLE>
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilites are presented below:
<TABLE>
<CAPTION>
April 30
-----------------------
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Accounts receivable, due to allowance
for doubtful accounts $ 18,980 18,980
Inventories, principally due to additional costs
inventoried for tax purposes pursuant to the
Tax Reform Act of 1986 212,103 60,674
State net operating loss carryforward -- 3,167
Alternative minimum tax credit carryforward 1,600,013 1,193,762
----------- ----------
Total gross deferred tax assets 1,831,096 1,276,583
----------- ----------
Deferred tax liabilities:
Plant and equipment, principally due to differences
in depreciation (9,444,857) (8,622,268)
Deferred turnaround costs (1,503,129) (533,400)
Other (5,149) --
----------- ----------
Total gross deferred tax liabilities (10,953,135) (9,155,668)
----------- ----------
Net deferred tax liabilities $ (9,122,039) (7,879,085)
=========== ==========
</TABLE>
The Company has determined, based on its history of profitable operations and
expectations for the future, that the deferred tax assets will more likely
than not be fully realized and that no valuation allowance is necessary at
April 30, 1996.
(Continued)
<PAGE>
7
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
At April 30, 1995 the Company had State net operating loss carryforwards
for financial statement and income tax purposes of approximately
$80,000. These operating loss carryforwards were fully utilized in
1996.
The Internal Revenue Service (IRS) is presently auditing the Company's
Federal income and excise tax returns for fiscal 1992 through 1995.
IRS has proposed to assess additional excise taxes and penalties totaling
approximately $950,000 for 1993 through 1995 and has filed a notice
of additional income taxes of approximately $629,000 for 1992 and
1993. The Company has filed a protest regarding certain of the income
tax issues and is vigorously contesting the excise tax and other
issues. Because the excise tax audit is in its early stages and the
income tax assessment is being contested, it is not possible to
determine the amount, if any, of any additional taxes which may
ultimately be due. In the opinion of management, the resolution of
these matters will not have a material adverse effect on the financial
position of the Company.
(6) Long-term Debt
--------------
A summary of long-term debt follows:
<TABLE>
<CAPTION>
April 30
-----------------------
1996 1995
---- ----
<S> <C> <C>
Line of credit with NBD Bank (NBD) $ 46,925,157 52,672,688
Term note payable to The CIT Group/Equipment
Financing, Inc. (CIT) 17,809,524 21,214,285
Line of credit with Union Planters Bank 548,440 494,793
------------ ----------
65,283,121 74,381,766
Less current installments of long-term debt 3,142,857 3,142,857
------------ ----------
Long-term debt, excluding
current installments $ 62,140,264 71,238,909
============ ==========
</TABLE>
A summary of balances outstanding at April 30, 1996 under the Company's
line of credit with NBD Bank follows:
<TABLE>
<S> <C>
Line of credit available $ 75,000,000
Letters of credit outstanding (13,422,826)
Loan outstanding (46,925,157)
-------------
Unused portion of line of credit $ 14,652,017
=============
</TABLE>
(Continued)
<PAGE>
8
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
A summary follows of scheduled maturities of long-term debt at
April 30, 1996:
<TABLE>
<CAPTION>
Fiscal year Amount
----------- ------
<S> <C>
1997 $ 3,142,857
1998 50,616,454
1999 3,142,857
2000 3,142,857
2001 3,142,857
Thereafter 2,095,239
----------
$ 65,283,121
==========
</TABLE>
The line of credit with NBD provides for borrowings up to $75,000,000 with
interest payable on outstanding amounts at LIBOR plus 2.75% or the
greater of the prime rate or the federal funds rate plus 1% (floating
rate). The line is secured by cash, accounts receivable and
inventories, and by letters of credit in the amount of $13,542,000
obtained in favor of the Company by its stockholders. The effective
rate is set at the Company's discretion and may be changed
periodically. Each time the Company requests an advance under the line,
it must specify whether interest is to be calculated using LIBOR plus
2.75%, or the floating rate. At April 30, 1996 advances totaling
$20,000,000 were at LIBOR, at an effective rate of 8.226%, and advances
totaling $26,925,157 were under the floating rate, which was at the
prime rate of 8.25%. The Company is required to pay a commitment fee at
an annual percentage rate of 1/2% on the average daily unused amount of
the line of credit. These fees totaled approximately $154,000 for the
year ended April 30, 1996. Amounts due under the line of credit are not
due until August 30, 1997, the termination date of the related credit
agreement and, therefore, amounts outstanding at April 30, 1996 are
classified as long-term debt in the accompanying consolidated balance
sheet.
The Company had a line of credit with The First National Bank of Boston
which provided for borrowings up to $75,000,000, with the interest rate
floating at a stipulated percentage above the prime rate. Commitment
fees on the average daily unused amount of the line of credit accrued
at an annual percentage rate of 1/2% and totaled approximately $240,000
and $194,000 for the years ended April 30, 1995 and 1994. All amounts
due under the line were repaid and the line was canceled during the
year ended April 30, 1995.
<PAGE>
9
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
The term note payable to CIT is due in eighty-four monthly principal
installments of $261,905 through December 2001 and is secured by
a first lien on the refinery, equipment, certain inventories and
various pipelines and bears interest at either LIBOR plus 3% or
the prime rate plus 1%. The effective rate is set at the Company's
discretion and may be changed periodically. At April 30, 1996 the
interest rate on the note was 8.50%.
The line of credit with Union Planters Bank at April 30, 1996 was a
revolving line for $600,000 which was due on demand, was collateralized
by certain equipment and had an interest rate which floated at a
stipulated percentage above the prime rate. This line matured on May
15, 1996, and was subsequently renewed and extended with similar
terms and conditions until August 31, 1997. At April 30, 1996 the
Company had $548,440 outstanding under this line of credit.
The line of credit with NBD and note payable to CIT contain restrictive
covenants which, among other things, require the Company to maintain
stated levels of tangible net worth and working capital, stated ratios of
current assets to current liabilities and limit capital expenditures and
indebtedness (other than that under this agreement) to certain levels.
(7) Accrued Expenses
----------------
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Excise taxes payable $ 4,710,581 5,185,771
Management fees 1,466,715 531,946
Profit sharing contributions 1,049,404 847,507
Pipeline tariffs payable 818,102 829,427
Salaries 778,707 423,481
Ad valorem taxes 525,266 519,979
Other 1,477,179 1,702,384
------------ ----------
$ 10,825,954 10,040,495
============ ==========
</TABLE>
(Continued)
<PAGE>
10
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(8) Management Contract and Related Party Transactions
--------------------------------------------------
The Company is managed by Ergon, Inc. (Ergon), its largest stockholder,
under a management contract whereby Ergon is paid a management fee by
the Company. The fee is based on a percentage of earnings before income
taxes. In the event of termination of the management contract by the
Company without cause or by mutual agreement of the Company and Ergon,
Ergon has the right, at its option, to purchase common stock of the
Company equal to 20% of the total issued and outstanding capital stock
as of the date of such termination. The purchase price of such stock
would be the same as that of the original shares issued.
In the ordinary course of business the Company makes purchases from and
sales to Ergon and its subsidiaries as well as other stockholders of
the Company. Such transactions are at prevailing market prices.
A summary follows of material related party balances and transactions as
of and for the years ended April 30, 1996, 1995 and 1994 (approximate
amounts):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Ergon and its subsidiaries:
Asphalt sales $ 482,000 2,878,000 2,190,000
============ =========== ===========
Other sales $ 987,000 1,235,000 1,676,000
============ =========== ===========
Net purchases $ 8,056,000 3,350,000 1,482,000
============ =========== ===========
Transportation expenses $ 17,000 1,152,000 1,724,000
============ =========== ===========
Management fees $ 1,467,000 532,000 1,166,000
============ =========== ===========
Data processing fees $ 249,000 304,000 290,000
============ =========== ===========
Net amounts due from (to) Ergon at April 30 $ (3,288,000) 256,000 --
============ =========== ===========
Continental Ozark Inc.:
Sales, net of trades $ 33,442,000 27,974,000 26,895,000
============ =========== ===========
Purchases, net of trades $ 3,347,000 917,000 4,310,000
============ =========== ===========
Net amounts due from (to) Continental
Ozark Inc. at April 30 $ (149,000) 652,000 --
============ =========== ===========
</TABLE>
(Continued)
<PAGE>
11
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(8), Continued
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Shuler Drilling Company:
Purchases $ 676,000 786,000 824,000
========== ========= =========
Sales $ 22,000 18,000 19,000
========== ========= =========
Purchases $ 942,000 960,000 1,188,000
========== ========= =========
M. S. Delone:
Purchases $ 143,000 148,000 173,000
========== ========= =========
Ned Price:
Purchases $1,341,000 1,344,000 1,370,000
========== ========= =========
E. G. Bradberry
Purchases $ 36,000 37,000 41,000
========== ========= =========
El Dorado and Wesson Railroad Company:
Transportation expenses $ 36,500 -- --
========== ========= =========
</TABLE>
(9) Profit Sharing Plan
-------------------
The Company has a defined contribution profit sharing plan covering
substantially all permanent full-time employees. The Company makes annual
contributions to the plan in amounts determined by the Board of
Directors. As of April 30, 1996, 1995 and 1994, contributions of
$1,049,000, $848,000 and $743,000, respectively, had been authorized
and accrued.
(10) Litigation and Contingencies
----------------------------
The Company has pending legal claims incurred in the normal course
of business which, in the opinion of management, can be disposed
of without material adverse effect on the financial position of the
Company.
The Company is in the final stages of a required assessment of inactive
surface impoundments for compliance with environmental laws and
regulations. When the assessment is completed, the Company, its
consulting engineers and regulatory authorities will determine the
extent of any required remedial action. In the opinion of management,
the net cost of any remedial action will not have a material adverse
effect on the financial position of the Company.
(Continued)
<PAGE>
12
LION OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(11) Concentration of Credit
-----------------------
The Company sells a majority of its finished products to customers in the
oil and gas industry. The Company performs on-going credit evaluations of
its customers and generally does not require collateral on accounts
receivable. The Company believes it maintains adequate allowances for any
uncollectible accounts receivable, which historically have been minimal.
(12) Fair Value of Financial Instruments
-----------------------------------
Statement of Financial Accounting Standards No. 107, ``Disclosures about
Fair Value of Financial Instruments,'' requires that the Company disclose
estimated fair values for its financial instruments (as defined). The
Company's financial instruments principally consist of cash and cash
equivalents, short-term trade receivables and payables and various debt
instruments. Due to their short term nature, the fair value of trade
receivables and payables approximates their carrying value. The fair
value of the various debt instruments has been estimated using interest
rates currently offered to the Company for borrowings having similar
character, collateral and duration. The fair market value of such
financial instruments approximates the Company's carrying amounts.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not Applicable.
24
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and Executive Officers
The following table sets forth the names, dates of birth and titles of the
members of the Board of Directors and the executive officers of the Company:
<TABLE>
<CAPTION>
NAME DATE OF BIRTH POSITION
- -----------------------------------------------------------------------------------
<S> <C> <C>
Cortlandt S. Dietler September 19, 1921 Chairman, Chief
Executive Officer, President
and Director
Richard E. Gathright May 3, 1954 Executive Vice
President and Director
and President and Chief
Executive Officer of COZ
Harold R. Logan, Jr. October 28, 1944 Executive Vice
President/Finance,
Treasurer and
Director
Frederick W. Boutin July 14, 1955 Senior Vice President
John A. Hill January 31, 1942 Director
Bryan H. Lawrence July 26, 1942 Director
William E. Macaulay September 2, 1945 Director
Edwin H. Morgens June 15, 1941 Director
</TABLE>
Cortlandt S. Dietler has been the Chairman, Chief Executive Officer and
President of the Company since the Merger. Mr. Dietler was the Chairman, Chief
Executive Officer and President of Old TransMontaigne since April 1995. He was
the founder, Chairman, and Chief Executive Officer of Associated Natural Gas
Corporation prior to its 1994 merger with Panhandle Eastern Corporation (now
PanEnergy Corporation), on whose Board he serves as an Advisory Director. He
also serves as a Director of Hallador Petroleum Company, Key Production Company,
Inc., and Grease Monkey International, Inc. Industry affiliations include:
Member, National Petroleum Council; Director, American Petroleum Institute; past
Director, Independent Petroleum Association of America; Director, past President
& Life Member, Rocky Mountain Oil & Gas Association; Member, 25 Year Club of the
Petroleum Industry.
25
<PAGE>
Richard E. Gathright has been the Executive Vice President and a Director of
the Company since the Merger. Mr. Gathright was Executive Vice President and a
Director of Old TransMontaigne since April 1995. He joined COZ in December,
1993 and is currently President, Chief Executive Officer and a Director. From
1988 to 1993 he served as President and Director of North American Operations in
Denver, Colorado for Aberdeen Petroleum PLC, a London-based public company
engaged in international oil and gas operations, of which he was also a member
of the Board of Directors. Prior to joining Aberdeen, he held a number of
positions in the energy industry in the areas of procurement, operations and
management of oil and gas assets. Mr. Gathright is also Corporate Secretary and
a Director of Lion Oil Company. He received undergraduate and J.D. degrees from
the University of Arkansas.
Harold R. Logan, Jr. has been Executive Vice President/Finance and a Director of
the Company since the Merger. Mr. Logan was Executive Vice President/Finance
and a Director of Old TransMontaigne Oil Company since April 1995. Previously,
from 1985 to 1994, Mr. Logan was Senior Vice President/Finance and a Director of
Associated Natural Gas Corporation. Prior to joining Associated Natural Gas
Corporation, Mr. Logan was with Dillon, Read & Co. Inc. and Rothschild, Inc. In
addition, Mr. Logan is a Director of Suburban Propane Partners, L.P. He is a
graduate of Oklahoma State University with a B.S. in Economics and Columbia
University Graduate School of Business with an M.B.A. in Finance.
Frederick W. Boutin has been the Senior Vice President of the Company since the
Merger. Mr. Boutin was the Senior Vice President of Old TransMontaigne since
April 1995. Prior to his employment with Old TransMontaigne, Mr. Boutin was a
Vice President of Associated Natural Gas Corporation. Prior to joining
Associated Natural Gas Corporation in 1985, Mr. Boutin was with KPMG Peat
Marwick LLP for five years. Mr. Boutin graduated from Colorado State University
with a Masters Degree in Accountancy and a Bachelors Degree in Electrical
Engineering.
John A. Hill has been a Director of the Company since the Merger. Mr. Hill was
appointed a director of Old TransMontaigne in April 1995. Mr. Hill has been
Chairman of the Board of First Reserve Corporation since 1983. Mr. Hill is a
trustee of the Putnam Funds and is a director of Weatherford Enterra, Inc.,
Snyder Oil Corporation, Maverick Tube Corporation and PetroCorp, Incorporated.
Bryan H. Lawrence has been a Director of the Company since the Merger. Mr.
Lawrence was appointed a director of Old TransMontaigne in April 1991. He has
been employed by Dillon, Read & Co. Inc., a New York-based investment banking
firm, since January 1966 and is a Managing Director. Mr. Lawrence also serves
as a Director of Vintage Petroleum, Inc., D&K Wholesale Drug, Inc., Benson
Petroleum Ltd. (a Canadian public company), Hallador Petroleum Company, and
certain non-public companies in which affiliates of Dillon Read hold equity
interests including Meenan Oil Co., L.P., Fintube Limited Partnership,
Interenergy Corporation, Willbros Group, Inc., Cavell Energy Corporation,
PetroSantander Inc., and Strega Energy Inc. Mr. Lawrence is a graduate of
Hamilton College and also has an M.B.A. from Columbia University.
William E. Macaulay has been a Director of the Company since the Merger. Mr.
Macaulay was appointed a director of Old TransMontaigne in April 1995. Mr.
Macaulay has been President and Chief Executive Officer of First Reserve
Corporation since 1983. Mr. Macaulay is a director of Weatherford Enterra,
Inc., Maverick Tube Corporation and Hugoton Energy Corporation.
26
<PAGE>
Edwin H. Morgens was appointed a director of the Company in June 1996
effective with the consummation of the Merger of Old TransMontaigne and Old
Sheffield. Mr. Morgens has been a director of Old Sheffield since 1981 and
served as President of Old Sheffield from 1986 to September 1990. He has been
Chairman of Morgens, Waterfall, Vintiadis & Co., Inc., a financial services
firm, since 1970. Mr. Morgens is also a general partner of Morgens Waterfall
Income Partners, L.P., a New York investment limited partnership, and serves as
president of Prime, Inc., the corporate general partner of a Delaware investment
partnership, and as managing member of MW Management, L.L.C., a Delaware
investment limited liability corporation.
The By-laws of the Company provide that the number of directors shall be fixed
by the Board of Directors. The number of directors is presently fixed at seven,
and there are no vacancies. First Reserve Corporation has the right to appoint
two directors to the Board of Directors pursuant to an agreement between
affiliates of First Reserve Corporation and the Company dated April 17, 1996.
Mr. Hill and Mr. Macaulay are the directors appointed by First Reserve.
27
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Company
The Chief Executive Officer and the other executive officers of Old
TransMontaigne Oil Company became the Chief Executive Officer and the other
executive officers of the Company upon completion of the Merger. The Company
adopted Old TransMontaigne's benefit plans and compensation arrangements,
including its option plans. The following table sets forth certain information
regarding the annual and long-term compensation for services in all capacities
to Old TransMontaigne for the prior fiscal years ended April 30, 1996 and 1995
and the seven months ended April 30, 1994 for Old TransMontaigne's Chief
Executive Officer and other executive officers (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-------------------------- ------------------------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying Compen-
Salary Bonus sation Awards Options sation
Name and Principal Position Year ($)(1) ($) ($) ($) (#) ($)
- --------------------------- ------- -------- ----- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cortlandt S. Dietler (2) 1996 62,500 - - - 100,000 -
President & Chief Executive Officer 1995 - - - - - -
1994(6) - - - - - -
Harold R. Logan, Jr. (3) 1996 116,667 - - - 65,000 -
Executive Vice President/Finance & 1995 - - - - - -
Chief Financial Officer 1994(6) - - - - - -
Richard E. Gathright 1996 215,000 - - - - -
Executive Vice President 1995 192,000 - - - 250,000 -
1994(6) 66,000(4) - - - - -
Frederick W. Boutin (5) 1996 95,833 - - - 45,000 -
Senior Vice President 1995 - - - - - -
1994(6) - - - - - -
</TABLE>
(1) Includes salaries deferred under the Retirement Savings Plan pursuant to
Section 401(k) of the Internal Revenue Code ("401(k) Plan").
(2) Mr. Dietler became an officer of Old TransMontaigne in April 1995.
(3) Mr. Logan became an officer of Old TransMontaigne in April 1995.
(4) Mr. Gathright became an officer of Old TransMontaigne on December 1, 1993.
(5) Mr. Boutin became an officer of Old TransMontaigne in April 1995.
(6) The seven months ended April 30, 1994.
28
<PAGE>
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
% of Total
Number of Options
Securities Granted to Potential Realizable Value
Underlying Employees in Exercise at Assumed Annual Rates of
Options Fiscal Year Price Expiration Stock Price Appreciation for
Name Granted # (1) (2) ($/Share) Date Option Term (3)
- -------------------------- -------------- --------------- ----------- ------------ ----------------------------
5%($) 10%($)
-------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cortlandt S. Dietler 100,000 23.7% 5.50 3/14/03 223,905 521,794
Harold R. Logan, Jr. 65,000 15.4% 5.50 3/14/03 145,538 339,166
Frederick W. Boutin 45,000 10.7% 5.50 3/14/03 100,757 234,807
</TABLE>
(1) All options granted are incentive options within the meaning of Internal
Revenue Code Section 422. 50% of the options granted vested immediately
and 50% vest one year from the date of grant. All options were granted for
a term of seven years, subject to earlier termination in certain events.
The exercise price is equal to the fair market value of Old TransMontaigne
Common Stock on the date of grant.
(2) Based on 421,746 total options granted in the fiscal year ended April 30,
1996.
(3) The amounts shown are for illustrative purposes only. Potential gains are
net of the exercise price, but before taxes associated with the exercise.
These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of stock appreciation are provided in accordance with the
rules of the Securities and Exchange Commission. Actual gains, if any, on
stock option exercises are dependent upon the future financial performance
of the Company, overall market conditions and the option holders' continued
employment through the vesting period.
No outstanding options held by the Company's Named Executive Officers were
exercised in the fiscal year ended April 30, 1996. The following table sets
forth certain information with respect to unexercised options held by the Named
Executive Officers as of April 30, 1996:
Aggregated Options Outstanding at Prior Fiscal Year End
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Aggregate Value of
Underlying Unexercised Unexercised, In-the-Money
Options Options (1)
------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Cortlandt S. Dietler 50,000 50,000 - -
Harold R. Logan, Jr. 32,500 32,500 - -
Richard E. Gathright 250,000 0 $700,000 -
Frederick W. Boutin 22,500 22,500 - -
</TABLE>
(1) Value was computed as the difference between the individual option price
and the value of the Old TransMontaigne Common Stock on April 30, 1996,
$5.50 per share. The Old TransMontaigne Common Stock was not publicly
traded April 30, 1996. Only options with fair market value in excess of
xercise price are reflected in this column.
29
<PAGE>
Old Sheffield
During September 1990, Old Sheffield signed an agreement with Trinity Petroleum
Management, Inc. ("Trinity") providing for Trinity to furnish management
services to Old Sheffield. In conjunction with the agreement, some of Old
Sheffield's officers transferred to Trinity, maintaining their status as
officers of Old Sheffield, but being compensated by Trinity. Accordingly, Old
Sheffield paid no compensation other than grants of stock options to any officer
or employee during the 1993 and 1994 fiscal years and through the second quarter
of fiscal 1995. On December 31, 1994, however, Old Sheffield purchased all of
the outstanding stock of Trinity and, therefore, the management services
agreement with Trinity was discontinued and Old Sheffield officers began
receiving compensation directly from Old Sheffield. None of the officers of Old
Sheffield became officers of the Company after the June 4, 1996 Merger.
However, Old Sheffield's 401(k) Plan will survive until no later than December
31, 1996, and Old Sheffield's existing options will stay in effect for 90 days
after the Merger, adjusted to account for the reverse stock split accomplished
by the Merger.
The following tables sets forth the compensation of Old Sheffield's Chief
Executive Officer and Old Sheffield's other executive officers whose total
annual salary and bonus exceeded $100,000 for the ten months ended April 30,
1996:
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------ ------------------------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying Compen-
Salary Bonus sation Awards Options sation
Name and Principal Position Year ($)(1) ($) ($) ($) (#)(5) ($)(7)
- -------------------------------------- ------ --------- ---------- ------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Samuel Butler 1996(2) 108,330 65,000(3) - - 41,108 7,800
President & Chief Executive Officer 1995 65,000(4) 65,000(3) - - - -
1994(4) (4) (4) (4) (4) 20,554(6) (4)
Jerry D. Smothermon 1996(2) 83,330 25,000 - - 14,388 6,000
Vice President of Operations 1995 50,000(4) 15,000(3) (4) (4) - (4)
1994 (4) (4) (4) (4) 10,277(6) (4)
</TABLE>
(1) Includes salaries deferred under 401(k) Plan.
(2) 10 Months ended April 30, 1996
(3) In December, 1995 Mr. Butler received a bonus paid in 33,333 shares of Old
Sheffield Common Stock and received a $15,000 cash bonus. The market price
of the stock at the date of grant was $1.50 per share. In January 1995,
Mr. Butler was granted a cash bonus of $65,000 for the purpose of
exercising options to purchase 43,333 shares of Old Sheffield Common Stock
at $1.50 per share. Mr. Butler's bonus was granted in conjunction with Old
Sheffield's acquisition of Trinity. In January 1995 Mr. Smothermon was
issued 10,000 shares of Old Sheffield Common Stock. The market price of the
stock at the date of grant was $1.50 per share.
(4) Compensation was paid by Old Sheffield for the quarters ended March 31,
1995 and June 30, 1995. Compensation for the quarters ended September 30,
1994 and December 31, 1994 was paid by Management, Inc. Trinity Petroleum
(5) After conversion to New Common Stock with each 2.432599 options to purchase
Old Sheffield Common Stock converted to one option to purchase New Common
Stock. The options granted on January 15, 1996 replaced previously
granted options which had a higher exercise price. The number of shares
granted pursuant to the January 15, 1996 grant was exactly equal to the
number of shares underlying the canceled options granted in fiscal years
ended June 30, 1995 and 1994.
30
<PAGE>
(6) These options were canceled and replaced by options granted during the ten
months ended April 30, 1996. See Note 5 above.
(7) The other compensation paid relates to the cash value of Old Sheffield's
contributions to 401(k) plans during the ten months ended April 30, 1996.
Old Sheffield contributed 5,200 shares of Old Sheffield Common Stock and
4,000 shares of Old Sheffield Common Stock to Mr. Butler's and Mr.
Smothermon's 401(k) plans, respectively, when the fair market value of the
Old Sheffield Common Stock was $1.50 per share.
<TABLE>
<CAPTION>
Option/SAR Grants in the 10 Months Ended April 30, 1996 (Last Fiscal Year)
% of Total
Options
Granted to
Number of Employees
Securities during the 10 Exercise Potential Realizable Value at
Underlying months ended Price Assumed Annual Rates of
Options Granted April 30, ($/Share) Expiration Stock Price Appreciation for
Name #(1) 1996 (2) (3) Date Option Term (4)
- ------------------------------- ---------------- --------------- ---------- ------------ -----------------------------
5%($) 10%($)
-----------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Samuel Butler 41,108 58.1% 3.65 09/02/96 4,933 10,003
Jerry D. Smothermon 14,388 20.3% 3.65 09/02/96 1,727 3,501
</TABLE>
(1) After conversion to options to purchase New Common Stock with each 2.432599
options to purchase Old Sheffield Common Stock converted to one option to
purchase New Common Stock. All outstanding options vested March 14, 1996.
All options were originally granted for a term of five years. However, due
to the Merger, the options expire 90 days after the June 4, 1996 effective
date of the Merger, September 2, 1996. The exercise price, before the
conversion to New Common Stock, was equal to the fair market value of Old
Sheffield Common Stock on the date of grant. All options granted are
incentive options within the meaning of Internal Revenue Code Section 422.
(2) Based on 70,706 total options granted in the ten months ended April 30,
1996, as converted to New Common Stock with each 2.432599 options to
purchase Old Sheffield Common Stock converted to one option to purchase New
Common Stock.
(3) The exercise price to purchase shares of the New Common Stock. See Notes 1
and 2 above.
(4) The amounts shown are for illustrative purposes only. Potential gains are
net of the exercise price, but before taxes associated with the exercise.
Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term, The assumed
5% and 10% rates of stock appreciation are provided in accordance with the
rules of the Securities and Exchange Commission. Actual gains, if any, on
stock option exercises are dependent upon the future financial performance
of the Company, overall market conditions and the option holders' continued
employment through the vesting period.
31
<PAGE>
No outstanding options held by the Old Sheffield Chief Executive Officer and Old
Sheffield's other executive officers whose total annual salary and bonus
exceeded $100,000 for the ten months ended April 30, 1996 were exercised in the
ten months ended April 30,1996. The following table sets forth certain
information with respect to unexercised options held by these executive officers
as of April 30, 1996:
<TABLE>
<CAPTION>
Aggregated Options Outstanding at Prior Fiscal Year End and Fiscal Year End Option Values
Number of Securities Aggregate Value of
Underlying Unexercised Unexercised, In-the-Money
Options Options (1)
---------------------------- --------------------------
Name Exercisable(2) Unexercisable Exercisable Unexercisable
- --------------------------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
J. Samuel Butler 41,108 - $425,057 -
Jerry D. Smothermon 14,388 - 148,772 -
</TABLE>
(1) Value was computed as the difference between the individual option price as
converted to an equivalent exercise price of New Common Stock and the
closing sales price of the Old Sheffield Common Stock on April 30, 1996,
$5.75, converted to an equivalent price of New Common Stock ($13.99 a
share), with each 2.432599 options to purchase Old Sheffield Common Stock
converted to one option to purchase New Common Stock. The fair market value
of all the outstanding options of these executive officers was in excess of
the exercise price.
(2) The total number of options listed have been converted to options to
purchase to New Common Stock with each 2.432599 options to purchase Old
Sheffield Common Stock converted to one option to purchase New Common
Stock.
Compensation Commitee Interlocks and Insider Participation
During the 10 months ended April 30, 1996, the Old Shefffield Board of Directors
Compensation Committee ("the Committee") was comprised of McLain J. Forman,
Randall E. King, David A. Melman and Edwin H. Morgens. None of the members of
the Committee were, during the fiscal year, an officer or employee of Old
Sheffield or any of its subsidiaries. Randall E. King is a principal in the
investment banking firm of Petrie Parkman. Petrie Parkman received cash
payments totaling $100,000 plus 30,000 shares of Old Sheffield Common Stock for
the financial advisory services it provided to Old Sheffield related to the
Merger.
Compensation of Directors
Directors of the Company are paid their expenses for attending each meeting of
the Board of Directors that they attend. Directors who are employees or paid
officers of the Company do not receive additional cash compensation for serving
on the Board of Directors or any committee thereof. Non-employee directors are
paid an annual fee of $12,000, payable quarterly in arrears, beginning with the
fiscal year ending April 30, 1997.
Directors of Old Sheffield were paid a director's fee of $250 for each meeting
of the Board of Directors that they attended.
32
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the beneficial ownership of the New Common Stock
as of July 12, 1996, by each director of the Company, by each person who was
known to the Company to own more than 5% of the outstanding shares of the New
Common Stock, by the Company's Chief Executive Officer and the Company's other
executive officers, Old Sheffield's Chief Executive Officer and Old Sheffield's
other executive officers whose total annual salary and bonus exceeds $100,000.
Except as otherwise indicated below, the ownership reflects sole voting and
investment power by the beneficial owner. The information set forth below is
based solely upon information furnished by such individuals or contained in
filings made by such beneficial owners with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
Percent of
Name and Address Amount and Nature New
of Beneficial Owner Beneficial Owner (1)(2) Common Stock
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cortlandt S. Dietler 1,900,540 9.1%
Richard E. Gathright (3) 533,000 2.5%
Harold R. Logan, Jr. 343,056 1.6%
Frederick W. Boutin 237,500 1.1%
TransMontaigne Oil Company
370 Seventeenth Street, Suite 900
Denver, Colorado 80202
First Reserve Fund VI, 6,582,830 31.6%
Limited Partnership and other
partnerships managed by
First Reserve Corporation (4)
475 Steamboat Road
Greenwich, Connecticut 06830
Yorktown Energy Partners, L.P. 3,154,961 15.2%
and other venture capital funds managed
by, and shares owned by officers of
Dillon, Read & Co. Inc. (5)
535 Madison Avenue
New York, New York 10022
Waterwagon & Co.(6) 3,117,000 15.0%
c/o Merrill Lynch Growth Fund
800 Scudders Mill Road
Plainsborough, New Jersey 08536
Massachusetts Mutual Life 1,296,277 6.2%
Insurance Company and
funds managed by Massachusetts Mutual
Life Insurance Co.
1295 State Street
Springfield, Massachusetts 01111
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C>
John A. Hill (4) 6,582,830 31.6%
475 Steamboat Road
Greenwich, Connecticut 06830
Bryan H. Lawrence (5) 3,154,961 15.2%
535 Madison Avenue
New York, New York 10022
William E. Macaulay (4) 6,582,830 31.6%
475 Steamboat Road
Greenwich, Connecticut 06830
Edwin H. Morgens 46,144 *
10 East 50th Street
New York, New York 10022
J. Samuel Butler (7) 126,342 *
1801 Broadway, Suite 600
Denver, Colorado 80202
Jerry D. Smothermon 20,142 *
1801 Broadway, Suite 600
Denver, Colorado 80202
All Directors and Executive
Officers as a Group ( 8 Persons) (8) 12,798,031 60.5%
</TABLE>
_____________________
* Less than one percent.
(1) All shares are owned both of record and beneficially unless otherwise
specified by footnote to this table. Based solely upon information
furnished by such individuals or contained in filing made by such
beneficial owners with the Securities and Exchange Commission.
(2) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934, as amended. Under Rule 13d-3(d), shares not outstanding that are
subject to options, warrants, rights, or conversion privileges exercisable
within sixty days are deemed outstanding for the purpose of calculating the
number and percentage owned by such person, but not deemed outstanding for
the purpose of calculating the percentage owned by any other person.
(3) Includes 18,300 shares held by The Richard E. Gathright IRA Rollover
Account.
(4) First Reserve Corporation is an affiliate of John A. Hill and William E.
Macaulay, directors of the Company. Messrs. Hill and Macaulay disclaim
beneficial ownership of these shares.
(5) Yorktown Energy Partners, L.P. and Dillon, Read & Co. Inc. are affiliates
of Bryan H. Lawrence, a director of the Company. Mr. Lawrence owns 44,923
shares individually and disclaims beneficial ownership of the remaining
shares.
34
<PAGE>
(6) The Company has granted to Waterwagon & Co. the right to maintain its 15%
ownership of New Common Stock if the Company issues stock in the future.
(7) Includes 4,932 shares held in trust for Mr. Butler's grandchildren for
which Mr. Butler serves as Trustee, and 10,071 shares held in Mr. Butler's
401(k) profit sharing plan, for which Mr. Butler serves as Trustee. Mr.
Butler disclaims beneficial ownership of such 15,003 shares.
(8) Includes 9,692,868 shares held by affiliates, beneficial ownership of which
are disclaimed by the officers and directors.
35
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Old Sheffield adopted the Key Employee Retention Plan which covered all of the
then current employees of Old Sheffield. In connection with the Merger officers
and directors of Old Sheffield received consideration pursuant to the Key
Employee Retention Plan as set forth in the following table: (i) unvested
options to purchase shares of Old Sheffield Common Stock became vested on March
14, 1996, and (ii) cash payments were received from Old Sheffield.
<TABLE>
<CAPTION>
Options Vested
------------------------------ Cash
Name Old Sheffield Shares Price Payments
- ------------------------------------------ ----- --------
<S> <C> <C> <C>
J. Samuel Butler 100,000 $1.50 $78,125
David A. Melman 14,000 $1.50 None
McLain J. Forman 14,000 $1.50 None
David L. Milanesi 30,000 $1.50 $39,996
Jerry D. Smothermon 35,000 $1.50 $59,712
</TABLE>
The number of shares subject to options and the exercise prices were adjusted
upon completion of the Merger to reflect the reverse stock split accomplished by
the Merger.
Bryan H. Lawrence, a director of the Company, is a director of Interenergy
Corporation ("Interenergy") and also a director and an affiliate of the majority
shareholder of Interenergy which participates in a partnership formed with Old
Sheffield in 1991 for the purpose of purchasing certain gas gathering and
processing assets near Lignite, North Dakota. Day-to-day management of the
partnership is provided by Interenergy for a management fee of $15,000 per
month, while major decisions are made by a management committee consisting of
two members each from the Company and Interenergy. Interenergy purchased
$995,276 of gas from the partnership during the twelve month period ending June
30, 1996. The Company believes that the prices received by the partnership were
no less than the prices that would have been received from an independent third
party.
Certain relationships between Randall E. King, formerly a director of Old
Sheffield, the investment banking firm of Petrie Parkman and Old Sheffield are
described under "Compensation Committee Interlocks and Insider Participation" in
Item 11 above.
Cortlandt S. Dietler, the Chairman, Chief Executive Officer and President of Old
TransMontaigne and the Company, owned 14,623 shares of Old Sheffield Common
Stock before the Merger.
Effective April 17, 1996, Old TransMontaigne completed the private placement of
4,545,456 shares of Old TransMontaigne Common Stock at $5.50 a share for a total
consideration of
36
<PAGE>
$25,000,008. The following table indicates the acquisition of shares in the
private placement by executive officers and directors of Old TransMontaigne and
by each person known by the Company to own more than 5% of the outstanding
shares of New Common Stock.
<TABLE>
<CAPTION>
Name Shares Purchased
- -------------------------------------------------------------------
<S> <C>
Cortlandt S. Dietler 187,862
Richard E. Gathright 30,000
Harold R. Logan, Jr. 50,000
Frederick W. Boutin 10,000
First Reserve Fund VI,
Limited Partnership and other
partnerships managed by
First Reserve Corporation (1) 727,274
Waterwagon & Co. 3,117,000
John A. Hill (1) 727,274
William E. Macaulay (1) 727,274
</TABLE>
(1) First Reserve Corporation is an affiliate of John A. Hill and William E.
Macaulay, directors of the Company. Messrs. Hill and Macaulay disclaim
beneficial ownership of these shares.
Pursuant to agreements entered into in connection with the private placement,
(i) Waterwagon & Co., nominee for Merrill Lynch Growth Fund for Investment and
Retirement, has the right to maintain its 15% ownership of New Common Stock if
the Company issues stock in the future; (ii) First Reserve Fund VI, Limited
Partnership and other partnerships managed by First Reserve Corporation,
Yorktown Energy Partners, L.P. and other venture capital funds managed by, and
shares owned by, officers of Dillon, Read & Co. Inc., and Waterwagon & Co.,
nominee for Merrill Lynch Growth Fund for Investment and Retirement, have the
right to require the Company to register their shares under the Securities Act
of 1933; and (iii) the Company agreed to take all action necessary to cause two
directors designated by affiliates of First Reserve Corporation from time to
time to be elected to the Company's board of directors so long as their
collective ownership in the Company is at least 10%. The affiliates of First
Reserve Corporation have designated John A. Hill and William E. Macaulay as
their initial nominees for directors.
Richard Gathright, an Executive Vice President and a director of the Company and
the President and Chief Executive Officer of COZ, is Corporate Secretary and a
director of Lion. 27.75% of the stock of Lion is owned by a 65% owned
subsidiary of COZ. COZ had purchases of refined petroleum products of
$33,879,000 from Lion and sales of refined petroleum products to Lion of
$3,380,000 in the year ended April 30, 1996. All of the product purchases and
sales were made at market prices negotiated between COZ and Lion or through
independent brokers. The Company believes the prices COZ paid to Lion and
received from Lion were comparable to prices that would have been paid to or
received from independent third parties.
37
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report.
(1) Consolidated Financial Statements:
TransMontaigne Oil Company -
Independent Auditors' Report
Consolidated Balance Sheets as of April 30, 1996 and 1995
Consolidated Statements of Operations for the years ended
April 30, 1996 and 1995, the seven months ended April
30, 1994 and the year ended September 30, 1993
Consolidated Statements of Stockholders' Equity for the years
ended April 30, 1996 and 1995, the seven months ended
April 30, 1994 and the year ended September 30, 1993
Consolidated Statements of Cash Flows for the years ended April
30, 1996 and 1995, the seven months ended April 30, 1994
and the year ended September 30, 1993
Notes to Consolidated Financial Statements
Lion Oil Company -
Independent Auditors' Report
Consolidated Balance Sheets as of April 30, 1996 and 1995
Consolidated Statements of Earnings for the years ended
April 30, 1996, 1995 and 1994
Consolidated Statements Stockholders' Equity for the years ended
April 30, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
April 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules: Not Applicable
(3) Exhibits:
A list of the exhibits required by Item 601 of Regulation S-K to be
filed as part of this report :
Exhibit No. Description
----------- -----------
3.1 Restated Articles of Incorporation and Certificate of
Merger. FILED HEREWITH
38
<PAGE>
3.2 By-Laws. Incorporated by reference to Sheffield
Exploration Company, Inc.
10.1 The Sheffield Exploration Company, Inc. Amended and
Restated 1990 Stock Option Plan. Incorporated by
reference to Sheffield Exploration Company, Inc.
(Securities and Exchange Commission File No. 0-13201)
Form 10-K dated September 27, 1994.
10.2 The TransMontaigne Oil Company Amended and Restated 1991
Stock Option Plan. FILED HEREWITH
10.3 The TransMontaigne Oil Company Amended and Restated 1995
Stock Option Plan. FILED HEREWITH
10.4 Partnership agreement between the Company's wholly-owned
subsidiary, Sheffield Gas Processors, Inc., and
Interenergy. Incorporated by reference to Sheffield
Exploration Company, Inc. (Securities and Exchange
Commission File No. 0-13201) Form 8-K dated September
26, 1991.
10.5 Bear Paw LLC Operating Agreement dated January 1, 1996
between Sheffield Exploration Company, Inc.,
TransMontaigne Oil Company and BP Energy Operating LLC.
Incorporated by reference to Sheffield Exploration
Company, Inc. (Securities and Exchange Commission File
No. 333-03195) Form S-4 filed May 10, 1996.
10.6 Stock Purchase Agreement effective April 17, 1996
between TransMontaigne Oil Company and the investors
named therein. FILED HEREWITH
10.7 Anti-dilution Rights Agreement dated as of April 17,
1996 between TransMontaigne Oil Company and Waterwagon &
Co., nominee for Merrill Lynch Growth Fund for
Investment and Retirement. FILED HEREWITH
10.8 Agreement to Elect Directors dated as of April 17,
1996 between TransMontaigne Oil Company and the First
Reserve Investors named therein. FILED HEREWITH
10.9 Registration Rights Agreement dated as of April 17,
1996 between TransMontaigne Oil Company and the entities
named therein. FILED HEREWITH
21 Schedule of the Company's Subsidiaries. FILED HEREWITH
23.1 Consent of KPMG Peat Marwick LLP. FILED HEREWITH
24 Powers of Attorney. FILED HEREWITH
27 Financial Data Schedule. FILED HEREWITH
(b) Reports on Form 8-K
A Form 8-K dated June 4, 1996 was filed on June 6, 1996 reporting
change of control and completion of the Merger under Items 1 and 2,
respectively, and change in Registrant's fiscal year end to April 30
under Item 8.
A Form 8-K dated July 16, 1996 was filed on July 23, 1996 reporting a
change in Registrant's Certifying Accountant under Item 4.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRANSMONTAIGNE OIL COMPANY
By /s/ CORTLANDT S. DIETLER
----------------------------
Cortlandt S. Dietler
Chairman, President and Chief Executive Officer
Date: August 12, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report is signed below by the following persons on behalf of the Registrant and
in the capacities indicated on August 12, 1996.
Name and Signature Title
------------------ -----
(i) Principal executive officer:
/s/CORTLANDT S. DIETLER Chairman, President and
- ----------------------------------- Chief Executive Officer
Cortlandt S. Dietler
(ii) Principal financial officer:
/s/HAROLD R. LOGAN, JR. Executive Vice President/Finance
- ----------------------------------- and Treasurer
Harold R. Logan, Jr.
(iii) Principal accounting officer:
/s/FREDERICK W. BOUTIN Senior Vice President
- -----------------------------------
Frederick W. Boutin
(iv) Directors: *
CORTLANDT S. DIETLER
RICHARD E. GATHRIGHT
JOHN A. HILL
HAROLD R. LOGAN, JR.
BRYAN H. LAWRENCE
WILLIAM E. MACAULAY
EDWIN H. MORGENS
* Signed on behalf of each of these persons:
By /s/ CORTLANDT S. DIETLER
---------------------------------------
(Cortlandt S. Dietler, Attorney-in-Fact)
40
<PAGE>
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
SHEFFIELD EXPLORATION COMPANY, INC.
Sheffield Exploration Company, Inc. was originally incorporated as New Sheffield
Exploration Company, Inc. on November 27, 1990. This Restated Certificate of
Incorporation was adopted by the Board of Directors pursuant to Section 245 of
the Delaware General Corporation Law without a vote of the stockholders and only
restates and integrates and does not further amend the provisions of the
Corporation's Certificate of Incorporation as previously amended or
supplemented. No discrepancy exists between those provisions and the provisions
in this Restated Certificate of Incorporation.
ARTICLE I
This Corporation is being organized and will exist under Delaware law.
ARTICLE II
The name of the Corporation is Sheffield Exploration Company, Inc.
ARTICLE III
The address of the Corporation's registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New
Castle 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE IV
The nature of the business of the Corporation and the purposes for which it is
organized are
To engage in any business and in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware and
to possess and employ all powers and privileges now or hereafter granted or
available under the laws of the State of Delaware to such corporations.
ARTICLE V
<PAGE>
5.1 The total number of shares that the Corporation shall have authority to
issue is 12,000,000 shares, of which 10,000,000 shares shall be common stock,
each with a par value of $.01 ("Common Stock"), and 2,000,000 shares shall be
preferred stock, each with a par value of $.01 ("Preferred Stock").
5.2 Each holder of Common Stock shall be entitled to one vote for each share of
Common Stock held on all matters as to which holders of Common Stock shall be
entitled to vote. Except for and subject to those powers, preferences and
rights, if any, expressly granted to the holders of the Preferred Stock, or
except as may be provided by the laws of the State of Delaware, the holders of
Common Stock shall have exclusively all other rights of stockholders of the
Corporation, including, but not by way of limitation (i) the right to receive
dividends, when and as declared by the Board of Directors out of assets lawfully
available therefor, and (ii) in the event of any distribution of assets upon the
dissolution or winding up of the Corporation, the right to receive ratably and
equally all the assets of the Corporation remaining after the payment to the
holders of the Preferred Stock of the specific amounts, if any, which they are
entitled to receive as may be provided herein or pursuant hereto.
5.3 The board of directors of the Corporation is authorized, subject to
limitations prescribed by law, to provide by resolution or resolutions for the
issuance of the shares of preferred stock as a class or in series, and, by
filing a certificate of designations, pursuant to the Delaware General
Corporation Law, setting forth a copy of such resolution or resolutions, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of the class or of each such series and the qualifications, limitations and
restrictions thereof. The authority of the board of directors with respect to
the class or each series shall include, but not be limited to, determination of
the following:
(i) The number of shares constituting any series and the distinctive
designation of that series;
(ii) Whether the class or any series shall have the right to receive
dividends and, if so, the dividend rate on the shares of the class or of any
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of the class or of that series;
(iii) Whether the class or any series shall have voting
<PAGE>
rights, in addition to the voting rights, if any, provided by law, and, if so,
the terms of such voting rights;
(iv) Whether the class or any series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the board of directors shall
determine;
(v) Whether the shares of the class or of any series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates;
(vi) Whether the class or any series shall have a sinking fund for the
redemption or purchase of shares of the class or of that series, and, if so, the
terms and amount of such sinking fund;
(vii) The rights of the shares of the class or of any series in the event
of voluntary or involuntary dissolution or winding up of the corporation, and
the relative rights of priority, if any, of payment of shares of the class or of
that series;
(viii) Any other powers, preferences, rights, qualifications, limitations,
and restrictions of the class or of any series.
ARTICLE VI
6.1 The number of directors of the Corporation shall be fixed from time to time
in the manner provided in the bylaws and may be increased or decreased from time
to time in the manner provided in the bylaws.
6.2 Election of directors need not be by written ballot except and to the
extent provided in the bylaws of the Corporation.
ARTICLE VII
The board of directors of the Corporation is expressly authorized to make,
alter, or repeal the bylaws of the Corporation, but such authorization shall not
divest the stockholders of the power, nor limit their power, to adopt, amend, or
repeal bylaws.
ARTICLE VIII
<PAGE>
No director of the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except as to liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for violations of Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law hereafter is amended
to eliminate or limit further the liability of a director, then, in addition to
the elimination and limitation of liability provided by the preceding sentence,
the liability of each director shall be eliminated or limited to the fullest
extent provided or permitted by the amended Delaware General Corporation Law.
Any repeal or modification of this Article VIII shall not adversely affect any
right or protection of a director under this Article VIII, as in effect
immediately prior to such repeal or modification, with respect to any lability
that would have accrued, but for this Article VIII, prior to such repeal or
modification.
ARTICLE IX
The Corporation shall, to the fullest extent permitted by Delaware law as in
effect from time to time, indemnify any person against all liability and expense
(including attorneys' fees) incurred by reason of the fact that he is or was a
director or officer of the Corporation or, while serving as a director or
officer of the Corporation, he is or was serving at the request of the
Corporation as a director, officer, partner or trustee of, or in any similar
managerial or fiduciary position of, or as an employee or agent of, another
corporation, partnership, joint venture, trust association, or other entity.
Expenses (including attorneys' fees) incurred in defending an action, suit, or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding to the full extent and under the circumstances
permitted by Delaware law. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, fiduciary,
or agent of the Corporation against any liability asserted against and incurred
by such person in any such capacity or arising out of such person's position,
whether or not the Corporation would have the power to indemnify against such
liability under the provisions of this Article IX. The indemnification provided
by this Article IX shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under this certificate of incorporation, any
bylaw, agreement, vote of stockholders or disinterested directors, statute,
<PAGE>
or otherwise, and shall inure to the benefit of their heirs, executors, and
administrators. The provisions of this Article IX shall not be deemed to
preclude the Corporation from indemnifying other persons from similar or other
expenses and liabilities as the board of directors or the stockholders may
determine in a specific instance or by resolution of general application.
ARTICLE X
The Corporation shall have authority, to the fullest extent now or hereafter
permitted by the General Corporation Law of the State of Delaware, or by any
other applicable law, to enter into any contract or transaction with one or more
of its directors or officers, or with any corporation, partnership, joint
venture, trust, association, or other entity in which one or more of its
directors or officers are directors or officers, or have a financial interest,
notwithstanding such relationships and notwithstanding the fact that the
director or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or transaction.
IN WITNESS WHEREOF, The Corporation has caused this Restated Certificate of
Incorporation to be signed by its President or Vice President and attested by
its Secretary or Assistant Secretary this 30th day of November, 1995.
SHEFFIELD EXPLORATION COMPANY, INC.
By /s/
Name: J. Samuel Butler
Title: President
ATTEST:
By: /s/
Name: David L. Milanesi
Title: Secretary
CERTIFICATE OF MERGER
OF
TRANSMONTAIGNE OIL COMPANY
WITH AND INTO
SHEFFIELD EXPLORATION COMPANY, INC.
(UNDER SECTION 251 OF THE GENERAL
<PAGE>
CORPORATION LAW OF THE STATE OF DELAWARE)
SHEFFIELD EXPLORATION COMPANY, INC. hereby certifies that:
1. The name and state of incorporation of each of the constituent corporations
to the merger are:
(a) Sheffield Exploration Company, Inc., a Delaware corporation ("Sheffield");
and
(b) TransMontaigne Oil Company, a Delaware corporation ("TransMontaigne").
2. A Restated Agreement and Plan of Merger, dated February 6, 1996, by and
between Sheffield and TransMontaigne has been approved, adopted, certified,
executed and acknowledged by Sheffield and TransMontaigne in accordance with the
provisions of Section 251 of the General Corporation Law of the State of
Delaware.
3. The name of the corporation surviving the merger is Sheffield Exploration
Company, Inc.
4. The Restated Certificate of Incorporation of Sheffield, as in effect
immediately prior to the effective time of the merger and with the following
amendments, shall be the Certificate of Incorporation of the surviving
corporation until further amended as provided therein and under Delaware law:
(a) Article II of the Restated Certificate of Incorporation of the surviving
corporation shall be amended to read in its entirety as follows:
"The name of the Corporation is TransMontaigne Oil Company."
(b) Section 5.1 of Article V of the Restated Certificate of Incorporation of
the surviving corporation shall be amended to read in its entirety as follows:
"5.1 The total number of shares that the Corporation shall have
authority to issue is 42,000,000 shares, of which 40,000,000 shares
shall be common stock, each with a par value of $.01 ("Common Stock"),
and 2,000,000 shares shall be preferred stock, each with a par value
<PAGE>
of $.01 ("Preferred Stock").
5. An executed copy of the Restated Agreement and Plan of Merger, as amended,
is on file at the principal place of business of Sheffield at 1801 Broadway,
Suite 600, Denver, Colorado 80202. The merger shall be effective at 5:00 p.m.
Delaware time on June 4, 1996.
6. A copy of the Restated Agreement and Plan of Merger, as amended, will be
furnished by Sheffield, on request and without cost, to any stockholder of
Sheffield or TransMontaigne.
IN WITNESS WHEREOF, Sheffield has caused this certificate to be signed by a duly
authorized officer thereof, as of the 3rd day of June, 1996.
SHEFFIELD EXPLORATION COMPANY, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit 10.2
AMENDED AND RESTATED
EMPLOYER NONQUALIFIED STOCK OPTION PLAN OF
CONTINENTAL OZARK CORPORATION
1. Purpose.
This Employee Nonqualified Stock Option Plan (the "Plan") is intended as an
employment incentive and to encourage stock ownership by key employees or
individuals who may become key employees of Continental Ozark Corporation (the
"Corporation") and its Subsidiaries (as defined herein) in order to increase
their proprietary interest in the Corporation's success. Options granted under
the Plan are not intended to qualify as "Incentive Stock Options" under the
Internal Revenue Code of 1986, as amended.
2. Eligibility.
The individuals who shall be eligible to participate in the Plan shall be
key or potential key employees of the Corporation or of its Subsidiaries. A
corporation shall be considered a Subsidiary if the Corporation owns, directly
or indirectly, not less than 50% of the total combined voting power of all
classes of stock in such corporation. Such key or potential key employees shall
be personnel of the Corporation or any Subsidiary who have or will have
responsibility for the management, direction and financial success of the
Corporation. More than one option may be granted from time to time to any
employee.
The holders of options shall not be, or have any of the rights or
privileges of, a stockholder of the Corporation in respect of any shares
purchasable upon the exercise of any part of an option unless and until
certificates representing such shares shall have been issued by the Corporation
to such holders.
3. Stock.
Stock subject to options and other provisions of this Plan shall be shares
of authorized and unissued or re-acquired $.10 par value Common Stock of the
Corporation (the "Common Stock"). Subject to adjustment in accordance with the
provisions hereof, the total number of shares of Common Stock of the Corporation
which may be purchased by individuals pursuant to options granted under the Plan
shall not exceed, in the aggregate, more than 300,000 of the authorized Common
Stock of the Corporation.
<PAGE>
In the event that any outstanding option under the Plan expires or is
terminated for any reason, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to an option under the
Plan.
4. Terms and Conditions of Options.
Stock options granted pursuant to the Plan shall be evidenced by agreements
in such form and on such terms as the Committee of the Corporation administering
this Plan (the "Committee") shall from time to time approve, which agreements
shall comply with and be subject to the following terms and conditions:
a. Option Price: The option price shall be set by the Administrative
Committee.
b. Number of Shares: The option shall state the total number of shares
(subject to adjustment as provided herein) to which it pertains.
c. Term of Options: Each option granted under the Plan shall be for a
term to be set by the Administrative Committee.
d. Payment for Shares: Payment for shares of Common Stock purchased shall
be made in such manner as the Committee shall determine, but in any
event may be made in cash.
e. Other Provisions: Agreements or documents concerning grants of options
under the Plan may contain such other provisions as the Committee, in
its discretion, deems advisable.
5. Assignability.
No option shall be assignable or transferable unless specifically approved
by the Committee except by will or by the laws of descent and distribution.
During the lifetime of the optionee, an option shall be exercisable only by him,
or his legal representative on his behalf.
<PAGE>
6. Right of First Refusal.
a. Prior to Common Stock of the Company being publicly traded:
(1) No person, estate or entity (other than a then existing employee)
shall exercise any options issued (directly or indirectly)
hereunder without first offering, in writing, to the Company for
30 days, the opportunity to purchase the options proposed to be
exercised at the exercise price of the options plus any
percentage increase in the book value of the Company from the
time said options were issued. The book value calculations shall
be based upon the audited financial statements of the Company
preceding the issuance of the options and preceding the notice of
election to exercise the same. If the Company fails to accept
said offer to purchase, the option shall be exercised.
(2) No person, estate or entity shall sell and/or transfer shares of
the Corporation issued (directly or indirectly) hereunder unless
the Shareholder desiring to make the sale or transfer shall have
first offered in writing for a period of 30 days to the
Corporation the opportunity to purchase the stock under the same
terms and conditions as the proposed sale or transfer. If the
Transferor shall fail to make such transfer within thirty (30)
days following the expiration of the time herein provided for the
election by the Corporation such shares shall again become
subject to all restrictions hereof.
<PAGE>
b. Employment by the Corporation shall be deemed to include employment by
a Subsidiary. The Committee shall have the authority to determine
whether or not an optionee has terminated his employment with the
Corporation.
c. No option granted under the Plan may be exercised at any time after
its term.
7. Administration.
Unless otherwise provided, the Plan shall be administered by a Committee,
consisting of two or more members of the Corporation's Board of Directors. The
Committee shall have full power and authority to designate participants and to
interpret the provisions and supervise the administration of the Plan and shall
be deemed to be the Compensation Committee of the Corporation until changed by a
majority vote of the Board of Directors.
8. Recapitalization.
a. The existence of this Plan and options granted hereunder shall not
affect in any way the right or power of the Corporation or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business or any merger or
consolidation of the Corporation, or any issue of bonds, debentures or
preferred or prior preference stocks ahead of or affecting the Common
Stock or the rights thereof; or the dissolution or liquidation of the
Corporation; or any sale or transfer of all or any other corporate act
or proceeding, whether of a similar character or otherwise.
In the event of (i) any of the foregoing actions (except where the
sole purpose is to change the Corporation's domicile) pursuant to
which the Corporation is not
<PAGE>
to survive immediately following such actions, or (ii) any change of
control of the Corporation (as determined by the Committee in office,
prior to any action constituting a change of control) then,
notwithstanding any other provision herein to the contrary, all
unmatured installments of options outstanding shall thereupon
automatically be accelerated and exercisable in full without regard to
the provisions established under Section 4 hereof.
b. The aggregate number of shares of Common Stock which may be purchased
pursuant to any option granted hereunder and the consideration payable
per share upon exercise, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of common stock
resulting from a subdivision or consolidation of shares or other
capital adjustment, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of
consideration by the Corporation.
c. Subject to any required action by the stockholders, if the Corporation
shall be the surviving or resulting Corporation in any merger or
consolidation, any option granted hereunder shall pertain to and apply
to the securities or rights (including cash, property or assets) to
which a holder of the number of shares of Common Stock subject to the
option would have been entitled. In the event of any merger or
consolidation pursuant to which the Corporation is not the surviving
or resulting Corporation, there shall be substituted for the shares of
Common Stock subject to the unexercised portion of such outstanding
options, an appropriate number of shares
<PAGE>
of each class of stock or other securities of the amount of cash,
property or assets of the surviving or consolidated corporation in
respect of such shares of Common Stock, such outstanding options to be
thereafter exercisable for such stock, securities, cash or property in
accordance with their terms. Notwithstanding the foregoing however,
all such options may be canceled by the Corporation as of the
effective date of any such reorganization, merger or consolidation or
of any dissolution or liquidation of the Corporation by giving notice
to each holder thereof or his personal representative of its intention
to do so and by permitting the purchase during the thirty (30) day
period next preceding such effective date of all of the shares subject
to such outstanding options, without regard to any provisions under
Section 4 hereof.
9. Non-Adjustment.
Except as hereinbefore expressly provided, the issue by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor services either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to options granted pursuant to this Plan.
10. Computation of Adjustment.
Upon the occurrence of each event requiring an adjustment of the exercise
price or the number of shares purchasable pursuant to options granted pursuant
to the terms of this Plan, the Corporation shall mail forthwith to each optionee
a copy of its computation of such adjustment which shall be conclusive and shall
be binding upon each such optionee, except as to any optionee who
<PAGE>
contests such computation by written notice to the Corporation within
thirty (30) days after receipt thereof by such optionee.
11. Record Dates, Etc.
In case at any time after date of grant:
a. The Corporation shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable
otherwise than in cash, or any distribution in respect of the Common
Stock (including cash), pursuant to, without limitation, any spin-off,
split-off or distribution of the Corporation's assets; or
b. the Corporation shall take a record of the holders of its Common Stock
for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
c. of any classification, reclassification or other reorganization of the
capital stock of the Corporation, consolidation or merger of the
Corporation with or into another corporation, or conveyance of all or
substantially all of the assets of the Corporation; or
d. of the voluntary or involuntary dissolution, liquidation or winding up
of the Corporation;
then the Corporation shall mail to each optionee, at least thirty (30) days
prior thereto, a notice stating the date or expected date on which a record is
to be taken for the purpose of such dividend, distribution or rights, or the
date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, as the case may be. Such notice shall also specify the date or
expected date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to participate in said dividend, distribution or
<PAGE>
rights, or shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up, as the case may be.
12. Liquidation, Dissolution.
In case the Corporation shall at any time while any option under this Plan
shall be in force and remain unexpired, sell all or substantially all its
property or dissolve, liquidate or wind up its affairs, each optionee may
thereafter receive upon exercise hereof in lieu of each share of Common Stock of
the Corporation which such optionee would have been entitled to receive, the
same kind and amount of any securities of assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation or winding
up with respect to each share of Common Stock of the Corporation. In the event
that the Corporation shall at any time prior to the expiration of any option
make any partial distribution of its assets, in the nature of a partial
liquidation, whether payable in cash or in kind (but excluding the distribution
of a cash dividend payable out of earned surplus and designated as such) then in
such event the exercise prices then in effect with respect to each option, shall
be reduced, on the payment date of such distribution, in proportion to the
percentage reduction in the tangible book value of the shares of the
Corporation's Common Stock (determined in accordance with generally accepted
accounting principles) resulting by reason of such distribution.
13. Company Performance.
The Corporation will not, by amendment of its Certificate of Incorporation
or through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist, insofar as it is able, in the carrying out of all provisions hereof, and
in the taking of all other legally available action which may be necessary in
order to protect the rights of each optionee against dilution, subject to the
terms hereof. Without limiting the generality of the foregoing, the Corporation
agrees that it will not increase the par value of shares or its Common Stock
above the lowest exercise price then in effect, and that, before taking any
action which would cause an adjustment reducing any such exercise price below
the then par value of the shares of Common Stock, the
<PAGE>
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of its common Stock at the exercise
price as so adjusted.
14. Options in Substitution for Stock Options
Granted by Other Corporations.
Stock options may be granted under the Plan from time to time in
substitution for such options held by employees of a corporation who become or
are about to become key employees of the Corporation or Subsidiary as the result
of a merger or consolidation of the employing corporation with the Corporation
or a Subsidiary of the acquisition by the Corporation of a Subsidiary of stock
of the employing corporation as the result of which it becomes a Subsidiary. The
terms and conditions of the substitute options so granted may vary from the
terms and conditions set forth under Section 4 of this Plan to such extent as
the Committee at the time of grant may deem appropriate to conform, in whole or
in part, to the provisions of the options in substitution for which they are
granted.
15. Amendments.
The Committee or the Board of Directors of the Corporation may at any time,
by unanimous vote, without the consent of the optionees, alter, amend, revise,
suspend, or discontinue the Plan, provided that such action shall not adversely
affect options theretofore granted under the Plan. The Committee or the Board of
Directors may amend the Plan or modify the agreements evidencing same in order
to comply with any exemption from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended.
16. Application of Funds.
The proceeds received by the Corporation from the exercise of options and
the resultant sale of Common Stock pursuant thereto will be used for general
corporate purposes.
17. No Obligation to Exercise Option.
The granting of an option shall impose no obligation upon any optionee to
exercise such option.
18. Approval of Stockholders.
<PAGE>
The Plan shall be effective as of September 12, 1990, but subject to its
approval by the stockholders of the Corporation either prior to the effective
date or at a meeting held subsequent to the effective date of this Plan. In the
event stockholder approval is not obtained, this Plan shall thereupon terminate
and be rendered null and void. No shares of Common Stock shall be issued
pursuant to an option, prior to compliance with requirements under applicable
laws and regulations.
19. Governmental Regulations.
Notwithstanding any of the provisions hereof, or of any option granted
hereunder, the obligation of the Corporation to sell and deliver shares under
such options shall be subject to all applicable laws, rules and regulations and
to such approvals by any governmental agencies or national securities exchanges
as may be required, and the optionee shall agree that he will not exercise any
option granted hereunder, and that the Corporation will not be obligated to
issue any shares under any such option, if the exercise thereof or if the
issuance of such shares shall constitute a violation by the optionee or the
Corporation of any provision of any law or regulation of any governmental
authority.
20. Corporation Covenants.
a. To the extent the option price per share of Common Stock covered by
options pursuant to this Plan equals or exceeds par value per share,
all shares issued upon exercise of options granted pursuant to this
Plan and in accordance with the terms hereof, will be, upon issuance
and payment therefor, fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with
such issue).
b. During the term of the Plan, the Corporation will at all times have
authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of all shares under options granted
pursuant to this
<PAGE>
Plan.
c. So long as any Common Stock of the Corporation is listed on any
national securities exchange, the Corporation shall use its best
efforts to list on such exchange, upon official notice of issuance
upon exercise of options granted under the Plan, and to maintain the
listing of, all shares of Common Stock issuable upon the exercise of
options granted pursuant to the Plan; and the Corporation will use its
best efforts to list on said exchange and to maintain each listing of
any other securities of the Corporation which may be acquired upon
exercise of this option, if so adjusted or modified pursuant to the
terms of Section 8 hereof.
AMENDED AND RESTATED PLAN ADOPTED AND APPROVED by the Board of
Directors and Shareholders, March 26, 1991.
/s/
E. G. Bradberry,
Chairman
<PAGE>
Exhibit 10.3
TRANSMONTAIGNE OIL COMPANY
EMPLOYEES' STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. TRANSMONTAIGNE OIL COMPANY, a Delaware corporation,
hereby establishes the TRANSMONTAIGNE OIL COMPANY EMPLOYEES' STOCK OPTION PLAN
(the "Plan") for certain key employees. TRANSMONTAIGNE OIL COMPANY, together
with its affiliated corporations, as defined in Section 2.1(a) hereafter, are
referred to as the "Company," except where the context otherwise requires.
1.2 Purposes. The purposes of the Plan are to provide the key management
employees selected for participation in the Plan with added incentives to
continue in the long-term service of the Company and to create in such employees
a more direct interest in the future success of the operations of the Company by
relating incentive compensation to increases in stockholder value. The Plan also
is designed to attract key employees and to retain and motivate participating
employees by providing an opportunity for investment in the Company.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation or other entity
(including, but not limited to, a partnership) which is affiliated with
TRANSMONTAIGNE OIL COMPANY through stock ownership or otherwise and is treated
as a common employer under the provisions of Code Sections 414(b) and (c).
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
(d) "Effective Date" means the effective date of the Plan, which will be
the date of approval of the Plan by the Company's stockholders.
<PAGE>
(e) "Eligible Employees" means full-time key employees (including, without
limitation, officers and directors who also are employees of the Company) of the
Company or any Affiliated Corporation or any division thereof, whose judgment,
initiative and efforts are, or will be, important to the successful conduct of
its business.
(f) "Fair Market Value" means the Fair Market Value of the Stock on any
date as determined in good faith by the Incentive Plan Committee after such
consultation with outside legal, accounting and other experts as the Incentive
Plan Committee may deem advisable. If the Stock becomes publicly traded, the
Fair Market Value shall mean the officially quoted closing price of the Stock on
the NASDAQ National Market System or other listing exchange on a particular
date. If there are no Stock transactions on such date, the Fair Market Value
shall be determined as of the immediately preceding date on which there were
Stock transactions. If no such prices are reported on the NASDAQ National Market
System or other listing exchange, then Fair Market Value shall mean the average
of the high and low sale prices for the Stock (or if no sales prices are
reported, the average of the high and low bid prices) as reported by the
principal regional stock exchange, or if not so reported, as reported by NASDAQ
or a quotation system of general circulation to brokers and dealers.
(g) "Incentive Plan Committee" means a committee consisting of the Chairman
of the Board and at least one additional disinterested member of the Board who
are empowered hereunder to take actions in the administration of the Plan. The
Incentive Plan Committee shall be so constituted at all times as to permit the
Plan to comply with Rule 16b-3 or any successor rule promulgated under the
Securities Exchange Act of 1934 (the "1934 Act"). Members of the Incentive Plan
Committee shall be appointed from time to time by the Board, shall serve at the
pleasure of the Board, and may resign at any time upon written notice to the
Board.
(h) "Incentive Stock Option" means any Option designated as such and
granted in accordance with the requirements of Code Section 422.
(i) "Non-Statutory Option" means any Option which is granted other than an
Incentive Stock Option.
(j) "Option" means a right to purchase Stock at a stated price for a
specified period of time.
<PAGE>
(k) "Option Price" means the price at which shares of Stock subject to
an Option may be purchased, determined in accordance with section 6.2(b).
(l) "Option Holder" means an Eligible Employee of the Company
designated by the Incentive Plan Committee from time to time during the term of
the Plan to receive one or more Options under the Plan.
(m) "Plan Year" means each 12-month period beginning May 1 and ending
the following April 30, except that for the first year of the Plan the Plan Year
shall begin on the Effective Date and extend to the first April 30 following the
Effective Date.
(n) "Share" or "Shares" means a share or shares of Stock.
(o) "Stock" means the common stock of the Company.
2.2 Gender and Number. Except where otherwise indicated by the context,
the masculine gender also shall include the feminine gender, and the definition
of any term herein in the singular also shall include the plural.
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Incentive Plan Committee. In
accordance with the provisions of the Plan, the Incentive Plan Committee shall,
in its sole discretion, select the Eligible Employees to whom Options will be
granted, the form of each Option, the amount of each Option, and any other terms
and conditions of each Option as the Incentive Plan Committee may deem necessary
or desirable and consistent with the terms of the Plan. The Incentive Plan
Committee shall determine the form or forms of the agreements with Option
Holders, which shall evidence the particular provisions, terms, conditions,
rights and duties of the Company and the Option Holders with respect to Options
granted pursuant to the Plan, which provisions need not be identical except as
may be provided herein. The Incentive Plan Committee may from time to time adopt
such rules and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The Incentive Plan
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient
<PAGE>
and it shall be the sole and final judge of such expediency. No member of the
Incentive Plan Committee shall be liable for any action or determination made in
good faith, and all members of the Committee shall, in addition to their rights
as directors, be fully protected by the Company with respect to any such action,
determination or interpretation. The determinations, interpretations, and other
actions of the Incentive Plan Committee pursuant to the provisions of the Plan
shall be binding and conclusive for all purposes and on all persons.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. 1,000,000 Shares are authorized for issuance under
the Plan in accordance with the provisions of the Plan. Shares which may be
issued upon the exercise of Options shall be applied to reduce the maximum
number of Shares remaining available under the Plan. At all times during the
term of the Plan and while any Options are outstanding, the Company shall retain
as authorized and unissued stock, or as treasury stock, at least the number of
Shares from time to time required under the provisions of the Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an Option
under this Plan which are not used because the terms and conditions of the
Option are not met, including any Shares that are subject to an Option which
expires or is terminated for any reason, any Shares which are used for full or
partial payment of the purchase price of Shares with respect to which an Option
is exercised, and any Shares retained by the Company pursuant to Section 12.2
automatically shall become available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall
at any time increase or decrease the number of its outstanding Shares of Stock,
or change in any way the rights and privileges of such Shares by means of the
payment of a stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if such Shares had been issued and outstanding, fully paid and
nonassessable at the time
<PAGE>
of such occurrence: (i) the shares of Stock as to which Options may be granted
under the Plan; and (ii) the Shares of Stock then included in each outstanding
Option granted hereunder.
4.4 General Adjustment Rules. If any adjustment or substitution provided
for in this Section 4 shall result in the creation of a fractional Share under
any Option, the Company shall, in lieu of issuing such fractional Share, pay to
the Option Holder a cash sum in an amount equal to the product of such fraction
multiplied by the Fair Market Value of a Share on the date the fractional Share
otherwise would have been issued.
4.5 Determination by Incentive Plan Committee, Etc. Adjustments under this
Section 4 shall be made by the Incentive Plan Committee, whose determinations
with regard thereto shall be final and binding upon all parties.
SECTION 5
REORGANIZATION OR LIQUIDATION
In the event that the Company is merged or consolidated with another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification or
change of outstanding Shares), or if all or substantially all of the assets or
more than 50% of the outstanding voting stock of the Company is acquired by any
other corporation, business entity or person (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company), or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
7 do not apply, the Incentive Plan Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall have the power and
discretion to prescribe the terms and conditions for the exercise or
modification of any outstanding Options granted hereunder. By way of
illustration, and not by way of limitation, the Incentive Plan Committee may
provide for the complete or partial acceleration of the dates of exercise of the
Options, or may provide that such Options will be exchanged or converted into
options to acquire securities of the surviving or acquiring corporation, or may
provide for a payment or distribution in respect of outstanding Options (or the
portion thereof that currently is exercisable) in cancellation thereof. The
<PAGE>
Incentive Plan Committee may provide that Options granted hereunder must be
exercised in connection with the closing of such transaction, and that if not so
exercised such Options will expire. Any such determinations by the Incentive
Plan Committee may be made generally with respect to all Option Holders, or may
be made on a case-by-case basis with respect to particular Option Holders.
The provisions of this Section 5 shall not apply to any transaction undertaken
for the purpose of reincorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect the beneficial
ownership of the Company's capital stock.
<PAGE>
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. An Eligible Employee may be granted one or more
Options. The Incentive Plan Committee, in its sole discretion, shall designate
whether an Option is to be considered an Incentive Stock Option or a Non-
Statutory Option. The Incentive Plan Committee may grant both an Incentive Stock
Option and a Non-Statutory Option to the same Eligible Employee at the same time
or at different times. Incentive Stock Options and Non-Statutory Options,
whether granted at the same or different times, shall be deemed to have been
awarded in separate grants, shall be clearly identified, and in no event shall
the exercise of one Option affect the right to exercise any other Option or
affect the number of Shares for which any other Option may be exercised.
6.2 Option Agreements. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Eligible Employee to whom the Option is granted (the "Option
Holder"), and which shall contain the following terms and conditions, as well as
such other terms and conditions not inconsistent therewith, as the Incentive
Plan Committee may consider appropriate in each case. In the event of any
inconsistency between the provisions of the Plan and any such agreement entered
into hereunder, the provisions of the Plan shall govern.
(a) Number of shares. Each stock option agreement shall state that it
covers a specified number of Shares, as determined by the Incentive Plan
Committee. Notwithstanding any other provision of the Plan, the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Option Holder in any calendar year, under
the Plan or otherwise, shall not exceed $100,000. For this purpose, the Fair
Market Value of the Shares shall be determined as of the time an Option is
granted.
(b) Price. The price at which each Share covered by an Option may be
purchased shall be determined by the Incentive Plan Committee and set forth in
the stock option agreement. In no event shall the Option Price for each Share
covered by an Incentive Stock Option be less than the Fair Market Value of the
Stock on the date the Option is granted. The Option Price for each Share covered
by an Incentive Stock Option granted to an Eligible Employee who then owns stock
possessing more than 10% of the total combined voting power of
<PAGE>
all classes of stock of the Company must be at least 110% of the Fair Market
Value of the Stock subject to the Incentive Stock Option on the date the Option
is granted. The Option Price for each Share covered by a Non-Statutory Option
may be granted at any price less than Fair Market Value, in the sole discretion
of the Incentive Plan Committee.
(c) Duration of Options. Each stock option agreement shall state the
period of time, determined by the Incentive Plan Committee, within which the
Option may be exercised by the Option Holder (the "Option Period"). The Option
Period must expire, in all cases, not more than seven years from the date an
Option is granted; provided, however, that the Option Period of an Incentive
Stock Option granted to an Eligible Employee who then owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company must expire not more than five years from the date such Option is
granted. Each stock option agreement also shall state the periods of time, if
any, as determined by the Incentive Plan Committee, when incremental portions of
each Option shall vest. Notwithstanding any other provision of the Plan, any
Option Holder who is subject to Section 16 of the 1934 Act may not exercise any
portion of an Option during the first six months following the grant of such
Option, except that this limitation shall not apply in the event of the Option
Holder's death or disability during such six-month period.
(d) Termination of employment, Death, Disability, Etc. Except as otherwise
determined by the Incentive Plan Committee, each stock option agreement shall
provide as follows with respect to the exercise of the Option upon termination
of the employment or the death of the Option Holder:
(i) If the employment of the Option Holder is terminated within the
Option Period for cause, as determined by the Company, the Option thereafter
shall be void for all purposes. As used in this section, "cause" shall mean a
gross violation, as determined by the Company, of the Company's established
policies and procedures. The effect of this section shall be limited to
determining the consequences of a termination, and nothing in this section shall
restrict or otherwise interfere with the Company's discretion with respect to
the termination of any employee.
(ii) If the Option Holder dies, or if the Option Holder becomes
disabled (within the meaning of Code Section 22(e)) during the Option Period
while still employed, or within the three-month period referred to in (iii)
below, the Option may be exercised by those entitled to do so under the Option
Holder's will or
<PAGE>
by the laws of descent and distribution within twelve months following the
Option Holder's death or disability, but not thereafter. In any such case, the
Option may be exercised only as to the Shares as to which the Option had become
exercisable on or before the date of the Option Holder's death or disability.
(iii) If the employment of the Option Holder by the Company is
terminated (which for this purpose means that the Option Holder is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, disability, or the Option Holder's
death, the Option may be exercised by the Option Holder within three months
following the date of such termination (provided that such exercise must occur
within the Option Period), but not thereafter. In any such case, the Option may
be exercised only as to the Shares as to which the Option had become exercisable
on or before the date of termination of employment.
(e) Transferability. Each stock option agreement shall provide that
the Option granted therein is not transferable by the Option Holder except by
will or pursuant to the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in Code Section 414(p), and that
such Option is exercisable during the Option Holder's lifetime only by him or
her, or in the event of disability or incapacity, by his or her guardian or
legal representative.
(f) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the method for
exercising the Option granted therein shall be by delivery to the Corporate
Secretary of the Company of written notice specifying the particular Option (or
portion thereof) which is being exercised, the number of Shares with respect to
which such Option is exercised and including payment of the Option Price. Such
notice shall be in a form satisfactory to the Incentive Plan Committee. The
exercise of the Option shall be deemed effective upon receipt of such notice by
the Corporate Secretary and payment to the Company of the Option Price. The
purchase of such Stock shall take place at the principal offices of the Company
upon delivery of such notice, at which time the purchase price of the Stock
shall be paid in full by any of the methods or any combination of the methods
set forth in (ii) below. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder.
<PAGE>
(ii) The exercise price shall be paid by any of the following
methods or any combination of the following methods:
(A) in cash;
(B) by cashier's check payable to the order of the Company;
(C) by delivery to the Company of certificates representing the number of
Shares then owned by the Option Holder, the Fair Market Value of which equals
the purchase price of the Stock purchased pursuant to the Option, properly
endorsed for transfer to the Company; provided however, that Shares used for
this purpose must have been held by the Option Holder for such minimum period of
time as may be established from time to time by the Incentive Plan Committee.
The Fair Market Value of any Shares delivered in payment of the purchase price
upon exercise of the Option shall be the Fair Market Value as of the exercise
date and the exercise date shall be the day of the delivery of the certificates
for the Stock used as payment of the Option Price; or
<PAGE>
(D) by delivery to the Company of a properly executed notice of exercise
together with irrevocable instructions to a broker to deliver to the Company
promptly the amount of the proceeds of the sale of all or a portion of the Stock
or of a loan from the broker to the Option Holder necessary to pay the exercise
price.
(iii) In the discretion of the Incentive Plan Committee, the
Company may guaranty a third-party loan obtained by a Option Holder to pay part
or all of the Option Price of the Shares provided that such loan or the
Company's guaranty is secured by the Shares.
(g) Date of Grant. An option shall be considered as having been
granted on the date specified in the grant resolution of the Incentive Plan
Committee.
6.3 Stockholder Privileges. Prior to the exercise of the Option and the
transfer of Shares to the Option Holder, an Option Holder shall have no rights
as a stockholder with respect to any Shares subject to any Option granted to
such person under this Plan, and until the Option Holder becomes the holder of
record of such Stock, no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date such Option Holder becomes the holder of record of such Stock, except as
provided in Section 4.
SECTION 7
CHANGE IN CONTROL
7.1 Change in Control. In the event of a change in control of the Company,
as defined in Section 7.2, then the Incentive Plan Committee shall accelerate
the exercise date of any outstanding Options or make all such Options fully
vested and exercisable and, in its sole discretion, without obtaining
stockholder approval, to the extent permitted in Section 11, may take any or all
of the following actions: (a) grant a cash bonus award to any Option Holder in
an amount necessary to pay the Option Price of all or any portion of the Options
then held by such Option Holder; (b) pay cash to any or all Option Holders in
exchange for the cancellation of their outstanding Options in an amount equal to
the difference between the Option Price of such Options and the greater of the
tender offer price for the underlying Stock or the Fair Market Value of the
Stock on the
<PAGE>
date of the cancellation of the Options; and (c) make any other adjustments or
amendments to the outstanding Options.
<PAGE>
7.2 Definition. A "change in control" shall be deemed to have occurred if
(a) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the 1934 Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
more than 33-1/3% of the then outstanding voting stock of the Company; or (b) at
any time during any period of three consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of such period
constitute the Board (and any new director whose election by the Board or whose
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority thereof; or (c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
SECTION 8
RIGHTS OF EMPLOYEES AND OPTION HOLDERS
8.1 Employment. Nothing contained in the Plan or in any Option shall
confer upon any Eligible Employee any right with respect to the continuation of
his or her employment by the Company, or interfere in any way with the right of
the Company, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of such Employee from the rate in existence at the time of the
grant of an Option. Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of employment
shall be determined by the Incentive Plan Committee at the time.
<PAGE>
8.2 Nontransferability. No right or interest of any Option Holder in an
Option granted pursuant to the Plan shall be assignable or transferable during
the lifetime of the Option Holder, either voluntarily or involuntarily, or be
subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy, except for transfers pursuant to a qualified domestic relations
order as defined in Code Section 414(p). In the event or an Option Holder's
death, an Option Holder's rights and interests in Options shall, to the extent
provided in Section 6, be transferable by testamentary will or the laws of
decent and distribution. In the opinion of the Incentive Plan Committee, if an
Option Holder is disabled from caring for his affairs because of mental
condition, physical condition or age, such Option Holder's Options shall be
exercised by such person's guardian, conservator or other legal personal
representative upon furnishing the Incentive Plan Committee with evidence
satisfactory to the Incentive Plan Committee of such status.
SECTION 9
GENERAL RESTRICTIONS
9.1 Investment Representations. The Company may require any person to whom
an Option is granted, as a condition of exercising such Option or receiving
Stock under the Option, to give written assurances, in the substance and form
satisfactory to the Company and its counsel, to the effect that such person is
acquiring the Stock subject to the Option for his own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws. Legends evidencing
such restrictions may be placed on the certificates evidencing the Stock.
9.2 Compliance with Securities Laws. Each Option shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of the Shares subject to such Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance or purchase of Shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Incentive Plan Committee. Nothing
herein shall be deemed to require
<PAGE>
the Company to apply for or to obtain such listing, registration or
qualification.
9.3 Stock Restriction Agreement. The Incentive Plan Committee may provide
that shares of Stock issuable upon the exercise of an Option shall, under
certain conditions, be subject to restrictions whereby the Company has a right
of first refusal with respect to such shares or a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Option Holder's term of employment with the Company.
SECTION 10
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by an Option Holder as
a result of the exercise of an Option shall not constitute "earnings" with
respect to which any other employee benefits of such Option Holder are
determined, including without limitation benefits under any pension, profit
sharing, life insurance or salary continuation plan.
SECTION 11
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time-to-time may amend or
modify, the Plan; provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval otherwise is necessary
or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options theretofore granted under the Plan, without the
consent of the Option Holder holding such Options.
SECTION 12
WITHHOLDING
12.1 Withholding Requirement. The Company's obligations to deliver Shares
upon the exercise of an Option shall be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
<PAGE>
12.2 Withholding With Stock. At the time an Option is exercised by the
Option Holder, the Committee, in its sole discretion, may permit the Option
Holder to pay all such amounts of tax withholding, or any part thereof, by
transferring to the Company, or directing the Company to withhold from Shares
otherwise issuable to such Option Holder, Shares having a value equal to the
amount required to be withheld or such lesser amount as may be determined by the
Committee at such time. The value of Shares to be withheld shall be based on the
Fair Market Value of the Stock on the date that the amount of tax to be withheld
is to be determined.
SECTION 13
BROKERAGE ARRANGEMENTS
The Incentive Plan Committee, in its discretion, may enter into
arrangements with one or more banks, brokers or other financial institutions to
facilitate the disposition of shares acquired upon exercise of Stock Options,
including, without limitation, arrangements for the simultaneous exercise of
Stock Options and sale of the Shares acquired upon such exercise.
SECTION 14
NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to stockholders of the Company for approval shall be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company or any Affiliated Corporation now has lawfully put into
effect, including, without limitation, any retirement, pension, savings and
stock purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
SECTION 15
REQUIREMENTS OF LAW
15.1 Requirements of law. The issuance of Stock
<PAGE>
and the payment of cash pursuant to the Plan shall be subject to all applicable
laws, rules and regulations.
15.2 Federal Securities Law Requirements. With respect to persons subject
to Section 16 of the 1934 Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
15.3 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
SECTION 16
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Board of
Directors, and no Option shall be granted after such termination. If not sooner
terminated under the preceding sentence, the Plan shall fully cease and expire
at midnight on December 31, 2001. Options outstanding at the time of the Plan
termination may continue to be exercised in accordance with their terms.
<PAGE>
Exhibit 10.6
TRANSMONTAIGNE OIL COMPANY
__________________________
STOCK PURCHASE AGREEMENT
__________________________
Effective as of April 17, 1996
1
<PAGE>
TABLE OF CONTENTS
Page
1. Authorization of Issue and Sale of Stock........................... 1
Section 2. Sale and Purchase of Common Stock..................... 1
Section 3. Closing............................................... 2
Section 4. Conditions to Closing................................. 2
4.1. Representations and Warranties Correct................ 2
4.2. Performance; No Default............................... 2
4.3. Contemporaneous Transactions.......................... 2
4.4. Sale of Common Stock to Other Purchasers.............. 2
4.5. Governmental Consents and Regulatory Approvals........ 3
4.6. Compliance Certificate................................ 3
4.7. Opinion of Counsel.................................... 3
4.8. Legal Investment; Certificate......................... 3
4.9. Sale and Purchase Not Forbidden by Law................ 3
4.10. Proceedings and Documents............................. 3
4.11. Litigation............................................ 3
4.12. Funding Commitment of Purchaser....................... 4
Section 5. Representations and Warranties........................ 4
2
<PAGE>
5.1. Organization, Standing, etc. of the Company................... 4
5.2. Qualification................................................. 4
5.3. Capital Stock................................................. 4
5.4. Subsidiaries.................................................. 5
5.5. S-4; Financial Statements..................................... 5
5.6. Taxes......................................................... 5
5.7. Absence of Certain Changes or Events.......................... 6
5.8. Title and Related Matters..................................... 7
5.9. Commitments................................................... 7
5.10. Litigation and Proceedings.................................... 8
5.11. Agreements.................................................... 8
5.12. Compliance with Other Instruments, Etc.........................8
5.13. Regulatory Jurisdiction and Approvals..........................9
5.14. Absence of Material Adverse Changes........................... 9
5.15. Insurance..................................................... 9
5.16. Employee Plans................................................ 9
5.17. Environmental Matters.........................................10
5.18. Offer of Securities...........................................12
5.19. Investment Company Act and Investment Advisers Act
Status........................................................13
3
<PAGE>
5.20. Regulation G...................................................13
5.21. Foreign Credit Restraints......................................13
5.22. Brokers, etc...................................................13
5.23. Disclosure.....................................................13
5.24. Voting Provisions..............................................14
5.25. Approval of Stock Purchase Agreement...........................14
5.26. Permits; Compliance with Applicable Laws.......................14
5.27. Common Stock...................................................15
5.28. Transactions With Affiliates...................................15
5.29. Lion Oil Company...............................................15
5.30. Enforceability.................................................15
Section 6. Covenants of the Company.................................15
Section 7. Use of Proceeds..........................................16
Section 8. Financial Statements and Information.....................16
Section 9. Inspection...............................................18
Section 10. Amendment and Waiver.....................................18
Section 11. Communications...........................................18
4
<PAGE>
Section 12. Survival of Representations and Warranties, etc.........19
Section 13. Successors and Assigns; Rights of Other Holders.........19
Section 14. Purchase for Investment.................................20
Section 15. Governing Law; Jurisdiction.............................20
Section 16. Miscellaneous...........................................20
Section 17. Definitions.............................................21
Schedule 1(b) The Purchasers......................................1(b)-1
Exhibit 4.3(a) Joinder Agreement.................................4.3(a)-1
Exhibit 4.3(b) Registration Rights Agreement.....................4.3(b)-1
Exhibit 4.3(c) Antidilution Rights Agreement.....................4.3(c)-1
Exhibit 4.3(d) Agreement to Elect Directors......................4.3(d)-1
Exhibit 4.3(e) Consent of Stockholders...........................4.3(e)-1
Exhibit 4.7 Opinion of Holme Roberts & Owen LLC..................4.7-1
Schedule 5.3(a) COMMON STOCK OWNERSHIP AFTER CLOSING..............5.3(a)-1
Schedule 5.3(b) STOCK OPTIONS.....................................5.3(b)-1
5
<PAGE>
Schedule 5.4 Subsidiaries........................................5.4-1
6
<PAGE>
TRANSMONTAIGNE OIL COMPANY
370 17th Street
Republic Plaza, Suite 900
Denver, CO 80208
Effective as of April 17, 1996
To: The Investor listed on the Signature Page hereof
Ladies and Gentlemen:
TRANSMONTAIGNE OIL COMPANY, a Delaware corporation (the "Company"), agrees
with you as follows:
1. Authorization of Issue and Sale of Stock.
i. The Company has authorized the issue and sale of 25,000,008
shares of the Company's Common Stock (the "Common Stock").
ii. The Common Stock is to be issued under this Agreement and
separate Stock Purchase Agreements (the "Other Stock Purchase Agreements")
identical herewith (except as to the name and address of the purchasers, all of
whom are listed on Schedule 1(b) attached hereto (the "Purchasers")) being
entered into concurrently by the Company with the other purchasers (the "Other
Purchasers") named in Schedule 1(b). The issue of the Common Stock to you and
the issue of the Common Stock to each of the Other Purchasers are to be several
and separate transactions.
2. Sale and Purchase of Common Stock. The Company will issue and sell to
you and, subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Company contained herein, you will
7
<PAGE>
purchase from the Company, at the Closing specified in Section 3, such Common
Stock as is set forth on that portion of Schedule 1(b) hereto as is applicable
to you. The purchase price of the Common Stock shall be $5.50 per share of
Common Stock.
i. Subject only to the representations and warranties contained in
this Agreement, you hereby expressly acknowledge and declare that you are
purchasing the Common Stock upon your examination and judgment of the Company
and upon the representations contained herein and not upon any other warranties
or representations regarding the business of any nature, overt or by
implication, orally or in writing, as to the financial strength, location,
income, value, income potential, future value, physical condition or otherwise
by the Company or any of its agents or representatives.
3. Closing.
i. The closing of the sale and purchase of the Common Stock
hereunder (the "Closing") shall take place on April 17, 1996 or such later date
to which the parties may agree.
ii. At the Closing, the Company will deliver to you the Common Stock
to be purchased against payment of the purchase price therefor in immediately
available funds in accordance with wire transfer instructions to be provided by
the Company to you prior to the Closing. Delivery of the Common Stock to be
purchased by you shall be made in the form of one or more certificates for
shares of Common Stock, in such number of shares as you shall request, dated
April 17,
8
<PAGE>
1996 and registered in your name or in the name of any nominee designated by
you, bearing such restrictive legends as required by the Stockholders Agreement
dated May 10, 1995 (the "Stockholders Agreement").
4. Conditions to Closing. Your obligation to purchase and pay for the
Common Stock to be purchased by you hereunder is subject to the fulfillment,
prior to or at the Closing, of the following conditions:
a. Representations and Warranties Correct. The representations and
warranties made by the Company and the Subsidiaries in Section 5 shall have been
correct when made and shall be correct at and as of the time of the Closing,
except as affected by the transactions contemplated hereby and thereby.
b. Performance; No Default. The Company and the Subsidiaries shall
have performed all obligations and complied with all conditions contained herein
required to be performed or complied with by it or them prior to or at the
Closing.
c. Contemporaneous Transactions. At the time of the Closing, the
Company and each Purchaser who is not a party to the Stockholders Agreement
shall each have executed a Joinder Agreement in the form of Exhibit 4.3(a)
attached hereto (the "Joinder Agreement") to be effective as of the Closing.
Certain of the Purchasers shall have executed a Registration Rights Agreement in
the form of Exhibit 4.3(b) attached hereto (the "Registration Rights Agreement")
to
9
<PAGE>
be effective as of the Closing, Merrill Lynch Growth Fund shall have executed an
Antidilution Rights Agreement in the form of Exhibit 4.3(c) attached hereto (the
"Antidilution Rights Agreement") and the Purchasers that are affiliates of First
Reserve Corporation shall have executed an Agreement to Elect Directors in the
form of Exhibit 4.3(d) attached hereto (the "Agreement to Elect Directors"),
each to be effective as of the Closing. Stockholders of the Company owning in
excess of two-thirds of the Common Stock shall have executed a Consent of
Stockholders in the form of Exhibit 4.3(e) attached hereto (the "Consent of
Stockholders").
d. Sale of Common Stock to Other Purchasers. At the Closing, the
Company shall sell to the Other Purchasers the Common Stock to be purchased by
the Other Purchasers pursuant to the Other Stock Purchase Agreements, and shall
thereafter receive payment therefor as set forth in paragraph 3(b).
e. Governmental Consents and Regulatory Approvals. On or before the
Closing, the Company, its stockholders and its Subsidiaries shall have received
all required consents, approvals and authorizations of, and shall have made all
declarations and filings with, any governmental authority which are required as
a condition precedent to the valid execution and delivery of or the consummation
of the transactions contemplated by this Agreement, the Other Stock Purchase
Agreements,
10
<PAGE>
the Registration Rights Agreement, the Antidilution Rights Agreement, the
Agreement to Elect Directors, the Consent of Stockholders and the Joinder
Agreements (collectively, the "Transaction Documents") and the valid offer,
issue, sale and delivery of the Common Stock as contemplated hereby and thereby
and all such consents, approvals, authorizations, declarations and filings shall
be in full force and effect at the time of the Closing and none of the same
shall be subject to appeal or review.
f. Compliance Certificate. You shall have received (i) an Officers'
Certificate, dated the date of the Closing, certifying that the conditions
specified in Sections 4.1 to 4.5 inclusive have been fulfilled, and (ii)
certified copies of the resolutions adopted by the Board of Directors and
stockholders of the Company authorizing the execution, delivery and performance
of the Transaction Documents.
g. Opinion of Counsel. You shall have received the opinion of the law
firm of Holme Roberts & Owen LLC, special counsel to the Company, dated as of
the Closing, in the form attached as Exhibit 4.7.
h. Legal Investment; Certificate. At the time of the Closing, your
purchase of Common Stock hereunder shall be permitted under the laws and
regulations of any jurisdiction to which you are subject, and you shall, if
requested by you, have received an Officers' Certificate, dated the date of the
Closing, certifying as to such matters
11
<PAGE>
of fact as you may request to enable you to determine whether your purchase is
so permitted.
i. Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery of the Common Stock by the Company and the purchase of the Common Stock
to be purchased by you at the Closing shall not be prohibited by any law or
governmental regulation.
j. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and by the Other Stock
Purchase Agreements and all documents and instruments incident to such
transactions shall be satisfactory in substance and form to you, and you shall
have received all such counterpart originals or certified or other copies of
such documents as you may reasonably request.
k. Litigation. At the Closing, there shall not be any pending or, to
the Company's knowledge, threatened litigation in any court or any proceeding by
any governmental commission, board, or agency, with a view to seeking or in
which it is sought to restrain, enjoin, or prohibit consummation of this
transaction, or in which it is sought to obtain divestiture or rescission in
conjunction with this transaction, and no investigation by any governmental
agency shall be pending or threatened that might eventually result in any such
suit, action, or proceeding.
12
<PAGE>
l. Funding Commitment of Purchaser. The entities comprising the
Purchaser set forth on the signature page of this letter agreement shall have
received all required investments from the investors comprising each such
entity. Each such entity hereby represents and warrants that it has firm
commitments from each investor thereof to provide such funding and such entity
will use its best efforts to obtain such committed financing.
5. Representations and Warranties. The Company represents and warrants
that:
a. Organization, Standing, etc. of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties, to carry on its business as now conducted
and now proposed to be conducted, to enter into the Transaction Documents, to
issue and sell the Common Stock and to carry out the terms hereof and thereof.
No further approval of the stockholders of the Company or any class thereof is
required for the valid execution and delivery of the Transaction Documents, the
consummation of the transactions contemplated by the Transaction Documents, or
the valid offer, issue, sale and delivery of the Common Stock pursuant hereto
and thereto.
b. Qualification. The Company is duly qualified or licensed to do
business and in good standing in each
13
<PAGE>
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualification or licensing
necessary.
c. Capital Stock. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 3,000,000 shares of Preferred
Stock. After the consummation of the purchases of Common Stock contemplated
hereby and by the Other Stock Purchase Agreements, 19,331,171 shares of Common
Stock and no shares of Preferred Stock will be issued and outstanding. Of the
outstanding shares of Common Stock:
i. shares will have been issued as shown on Schedule 5.3(a);
ii. 1,000,000 shares (of which options to acquire shares have
been granted or allocated for grant as reflected in Schedule 5.3(b) hereto) have
been reserved for issuance pursuant to the Company's Employees' Stock Option
Plans, true and correct copies of which have been delivered to you;
iii. 248,686 shares have been reserved for issuance upon exercise
of existing warrants to purchase Company shares; and
Except as set forth above in this Section 5.3, there are no outstanding
rights, options, warrants or agreements for the purchase from, or sale or
issuance by, the Company of any capital stock or securities convertible into or
exchangeable for such stock. All of the outstanding shares of capital stock of
the Company are validly issued and outstanding, fully paid and nonassessable,
and not subject to preemptive rights on the part of the holders of any
14
<PAGE>
class of securities of the Company, except as contemplated by the Transaction
Documents.
d. Subsidiaries. The Subsidiaries of the Company on the date hereof
are set forth on Schedule 5.4 attached hereto. Each Subsidiary is owned,
directly or indirectly, by the Company as set forth on Schedule 5.4. Each
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation, and has
corporate power and authority to own, operate, and lease its property, and to
carry on its business as it is now being conducted. Each Subsidiary is duly
qualified as a foreign corporation to do business, and is in good standing in
each jurisdiction in the United States where the character of its properties
owned or held under lease or the nature of its activities make such
qualification necessary. Except as set forth in Schedule 5.4, all the
outstanding shares of capital stock of each wholly owned Subsidiary and, to the
knowledge of the Company, each partially owned Subsidiary are validly issued,
fully paid, and nonassessable, and are owned free and clear of all liens, claims
or encumbrances. Except as set forth in Schedule 5.4, there are no existing
options, calls, or commitments of any character, including preemptive rights,
relating to the issued or unissued capital stock or other securities of any
wholly owned Subsidiary. No wholly owned Subsidiary will issue any additional
stock after the date of this Stock Purchase Agreement. The Company has provided
you with
15
<PAGE>
copies of all stockholders agreements of which the Company has any knowledge for
the Subsidiaries.
e. S-4; Financial Statements. The draft Registration Statement on
Form S-4 of Sheffield Exploration Company, Inc. dated March 27, 1996 (the "S-
4"), as supplemented by this Agreement and the Exhibits and Schedules hereto,
does not contains any untrue statement of a material fact about the Company or
omit to state a material fact about the Company necessary in order to make the
statements contained herein and therein not misleading in the light of the
circumstances under which such statements were made. No such representation
regarding Sheffield is made, however, and there can be no assurance that the
merger contemplated by the S-4 will occur. It is not a condition to consummation
of the sale of Common Stock pursuant to this Agreement that such merger occur.
The audited financial statements (including the notes thereto) contained in
the S-4 are hereinafter referred to as the "Audited Statements." The Audited
Statements have been audited and reported on by KPMG Peat Marwick L.L.P.,
certified public accountants. The S-4 also contains an unaudited interim
consolidated balance sheet of the Company as of January 31, 1996 and unaudited
consolidated statements of operations, stockholders' equity and cash flows for
the nine months ended January 31, 1996 (the "Unaudited Statements"). The Audited
Statements and the Unaudited Statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. The Audited Statements and the Unaudited
Statements present
16
<PAGE>
fairly, as of their respective dates and for their respective periods, the
financial position and results of operations, stockholders' equity, and changes
in cash flows of the Company.
f. Taxes. The amounts set forth as provisions for current and
deferred taxes in the Audited Statements and the Unaudited Statements are
sufficient for the payment of all unpaid federal, state, county, local, foreign,
or other taxes (including any interest or penalties) of the Company or the
Subsidiaries, as the case may be, accrued for or applicable to the periods ended
on the respective dates of the Audited Statements and the Unaudited Statements
and all years and periods prior thereto and for which the Company or the
Subsidiaries, as the case may be, may at said dates have been liable in their
own right or as transferee of the assets of, or as successor to, any other
corporation or entity. All federal, state, and local tax returns, reports, and
declarations required to be filed by the Company or any Subsidiary, as the case
may be, have been duly prepared and filed in good faith for all past years and
all taxes (including any interest or penalties) that have become due and payable
have been paid or are reflected as a liability on the latest balance sheet
included in the Audited Statements and the Unaudited Statements. Any extensions
for the filing of federal and state tax returns are valid and meet all
applicable return filing requirements, and the proper federal and state tax
returns for which an extension was not filed will, at the Closing, have been
duly prepared and
17
<PAGE>
filed in good faith. No assessments, claims for collection, or deficiencies have
been proposed by the Internal Revenue Service (the "IRS") or any state or local
revenue authority, that have not been adequately provided for by the Company or
the Subsidiaries.
g. Absence of Certain Changes or Events. Except as set forth in the
S-4, since April 30, 1995, neither the Company nor any Subsidiary has (i)
issued, sold, or delivered (or agreed or become obligated in any manner to
issue, sell, or deliver) any stock, bonds, or other corporate securities
(whether authorized and unissued or held in the treasury), or granted or agreed
to grant any options, warrants, or other rights calling for the issue thereof;
(ii) borrowed or agreed to borrow any funds or incurred, or become subject to
any obligation or liability (absolute or contingent) except obligations and
liabilities incurred in the ordinary course of business, (iii) incurred or paid
any obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the balance sheet as of April 30, 1995,
referred to in Section 5.5, and current liabilities incurred since that date in
the ordinary course of business; (iv) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any kind
whatsoever to stockholders, or purchased or redeemed, or agreed to purchase or
redeem, any Common Stock; (v) except in the ordinary course of business, sold,
leased or transferred, or agreed to sell, lease or
18
<PAGE>
transfer, any of its assets, property, or rights, or canceled, or agreed to
cancel, any debts or claims; (vi) entered into or agreed to enter into any
agreement or arrangements granting any preferential rights to purchase any of
its assets, property, or rights, or requiring the consent of any party to the
transfer and assignment of any such assets, property, or rights; (vii) except in
the ordinary course of business, waived any right of material value; (viii)
except in the ordinary course of business, assigned, made, or permitted any
amendment or termination of any material contract, agreement, or license to
which it is a party; (ix) made any accrual or arrangement for, or payment of
bonuses or special compensation of, any kind or any severance or termination pay
to any present or former officer or employee; (x) increased the rate of
compensation payable or to become payable by it to any of its officers or
employees, other than normal salary increases made consistent with prior
practice, or made any increase in benefits or entered into any new profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to, for, or with any such
officers or employees; (xi) mortgaged, pledged, or subjected to lien, charge, or
other encumbrances any assets or properties, whether tangible or intangible,
other than in the ordinary course of business; (xii) changed any accounting
method or practice; (xiii) purchased or acquired or agreed to purchase or
acquire fixed assets or equipment
19
<PAGE>
costing in the aggregate in excess of $250,000; (xiv) suffered any loss of
employees or customers other than such losses as normally occur in the ordinary
course of business and which have not had a material adverse effect, taken as a
whole, on the Company; (xv) suffered any strikes, labor slow-down, or labor
stoppage, nor to the best of the Company's knowledge is any such activity
threatened by the Company's or any Subsidiary's employees, nor, to the best of
the Company's knowledge, has there been any new or heightened union
organizational activity; (xvi) entered into any transaction other than in the
ordinary course of business; or (xvii) entered into any agreement to do any of
the things described in subsections (i) through (xvi) above.
h. Title and Related Matters. Except as reflected in the S-4, the Company
and each of its Subsidiaries have good and marketable title to all the
properties, interest in properties and assets, real and personal, reflected in
the balance sheet as of April 30, 1995 referred to in Section 5.5, or acquired
after April 30, 1995 (except properties, interest, and assets sold or otherwise
disposed of since April 30, 1995, in the ordinary course of business), free and
clear of all mortgages, liens, pledges, charges, and other encumbrances and
imperfections except (i) mortgages and other encumbrances referred to in the
notes to such balance sheet, (ii) liens of current taxes not yet due and
payable, and (iii) such imperfections of title and easements as do not detract
from or
20
<PAGE>
interfere with the present use of the properties subject thereto or affected
thereby, or otherwise impair present business operations at such properties. To
the best of the Company's knowledge, the structures and equipment of the Company
and its Subsidiaries comply in all material respects with the requirements of
all applicable federal, state, and local laws, regulations, ordinances, or
orders of any governmental authority, including those relating to zoning,
building or use permits. To the best of the Company's knowledge, all such
structures and equipment material to the Company's businesses are in good repair
and operating order, ordinary wear and tear excepted. All leases pursuant to
which the Company or any of its Subsidiaries lease any real property or personal
property are valid and subsisting, and there is not as of the date of this Stock
Purchase Agreement under any of such leases any material default by the Company
or its Subsidiaries or by any other party, which default is known to the Company
or any Subsidiary or any event that, with the passage of time or the giving of
notice or both, would constitute such a material default. Copies of all such
leases have been made available to you by the Company.
i. Commitments. Except as reflected in the S-4, neither the Company nor
any Subsidiary is a party to any oral or written (i) contract for the employment
of any officer or employee that is not terminable on thirty days' (or less
notice); (ii) profit sharing, bonus, deferred
21
<PAGE>
compensation, stock option, severance pay, pension, or retirement plan,
agreement, or arrangement; (iii) agreement, commitment, contract, or indenture
relating to the borrowing of money by the Company or any Subsidiary other than
borrowings by any Subsidiary in the ordinary course of business; (iv) guaranty
of any obligation for the borrowing of money or otherwise, excluding
endorsements, guaranties, and other agreements and transactions in the ordinary
course of business; (v) agreement or contract with any third party for the
provision of data processing or other services to the Company or any Subsidiary
that involves payment by the Company or any Subsidiary of more than $50,000 per
annum and that (a) has more than six months to run from the date of this Stock
Purchase Agreement, or (b) may not be canceled by the Company or any Subsidiary,
as appropriate, on 180 days' notice or less without penalty; (vi) consulting or
other similar contract providing for the rendering of managerial or personal
services that involves payment by the Company or any Subsidiary in excess of
$75,000 per annum; (vii) collective bargaining agreement or other agreement with
any labor organization; (viii) agreement with any present or former officer,
director or shareholder of the Company or any Subsidiary; or (ix) other
contract, agreement or commitment not in the ordinary course of business
involving a payment by the Company or any Subsidiary, or delivery of property or
performance of services valued at more than $250,000 on the
22
<PAGE>
part of any party. In addition, the commodity futures positions of the Company
and its Subsidiaries are within the hedging guidelines described in the Audited
Statements. Complete and accurate copies of all contracts, plans, and other
items so described in the S-4 have been made available to you by the Company.
Between the date hereof and the Closing, the Company and the Subsidiaries will
not, without your prior written consent, enter into or amend any contract,
agreement, or other instrument of any of the types described in this Section
5.9.
j. Litigation and Proceedings. Except as reflected in the S-4, there is
no action, suit, proceeding, investigation or arbitration (whether or not
purportedly on behalf of the Company or any Subsidiary) pending or threatened
against or affecting the Company or any Subsidiary at law or in equity or before
or by any governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, or before any arbitrator of any kind, that
if adversely determined may result in any material adverse change in the
business, operations, prospects, properties, or assets, or in the conditions,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole,
nor has any such action, suit, proceeding, or investigation been pending during
the twelve-month period preceding the date hereof. Neither the Company nor any
Subsidiary is operating under, subject to, or in default with respect to any of
these, nor
23
<PAGE>
are any of them or any of their respective assets bound by or subject to, any
judgment, order, writ, injunction, decree, award, or administrative agreement of
or with any court, arbitrator, or governmental department, commission, board,
bureau, agency, or instrumentality. To the best of its knowledge, and except as
reflected in the S-4, the Company and each Subsidiary has complied in all
material respects with all applicable statutes, laws, regulations, and orders,
including those imposing taxes, of any applicable jurisdiction, that concern the
ownership of their properties and the conduct of their businesses.
k. Agreements. All material contracts, agreements, plans, leases, and
licenses to which the Company or any Subsidiary is a party or by which any of
their assets may be bound are valid and in full force and effect, and neither
the Company nor any Subsidiary has breached any material provision of, or
defaulted in any material respect under, the terms of any such contract,
agreement, lease, or license. Neither the Company nor any Subsidiary is a party
to any agreement or instrument, or subject to any charter or other restriction
or any judgment, order, writ, injunction, decree, award, or administrative
agreement that materially adversely affects, or in the future may (so far as the
Company and the Subsidiaries can reasonably foresee) materially adversely affect
the business, operations, prospects, properties, assets, or condition, financial
or otherwise, of the Company or any Subsidiary, taken as whole.
24
<PAGE>
l. Compliance with Other Instruments, Etc. Except as set forth in the
S-4, the Company is not in violation of any term of its charter or bylaws, or of
any agreement, instrument, judgment, decree, order, statute, or governmental
rule or regulation applicable to the Company in any way which materially
adversely affects the condition (financial or otherwise), operations, management
or prospects of the Company or has any material adverse effect upon the ability
of the Company to meet its obligations taken as a whole. The execution, delivery
and performance of each of the Transaction Documents, and the issuance of the
Common Stock will not result in any such violation or be in conflict with or
constitute a default under any such term, or result in the creation of any
mortgage, lien, charge or encumbrance upon any of the properties or assets of
the Company pursuant to any such term. There is no such term which materially
adversely affects the condition (financial or otherwise), operations, management
or prospects of the Company or its properties or assets taken as a whole.
m. Regulatory Jurisdiction and Approvals. No consent, approval or
authorization of, or declaration or filing with, the Federal Energy Regulatory
Commission ("FERC") the Texas Railroad Commission, or any other governmental
authority is required as a condition precedent to the valid execution and
delivery of and the consummation of the transactions contemplated by the
Transaction
25
<PAGE>
Documents, the valid offer, issue, sale and delivery of the Common Stock as
contemplated hereby and thereby, except for the filing of notices of sale (all
of which will have been made by the Company prior to the Closing) under
provisions of applicable blue sky or other state securities laws, and filings
incident to a registration under the Securities Act pursuant to Article IV of
the Stockholders Agreement and the Registration Rights Agreement.
n. Absence of Material Adverse Changes. Since April 30, 1995, the
business, operations, prospects, properties, and assets, and the condition,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole,
have not been materially adversely affected in any way, and the Company is
unaware of any events that are probable to occur in the future and that
reasonably can be expected to result in any material adverse change in the
business, operations, prospects, properties, or assets or the condition,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole.
o. Insurance. To the best of the Company's knowledge and belief, all
the insurable properties of the Company and the Subsidiaries are insured for
their respective benefits in reasonable amounts against all risks customarily
and usually insured against by persons operating similar properties in the
localities where such properties are located, under valid and enforceable
policies. The principal
26
<PAGE>
policies of fire, liability, and other forms of insurance held by the Company
and the Subsidiaries will be outstanding and in full force at all times from the
date hereof to the Effective Time, and the Company agrees that it will take, and
will cause each Subsidiary to take, such steps as may be necessary to ensure
that substantially equivalent coverage is in effect at and after the Effective
Time. Copies of all such policies have been made available to you by the
Company.
p. Employee Plans. Neither the Company nor any Subsidiary maintains for
the benefit of its employees any "employee benefit plans" (each a "Benefit
Plan"), as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or other profit-sharing, deferred
compensation, bonus, stock option, stock purchase, or employee benefit plans or
arrangements, except as set forth in the S-4 The Company has made available to
you a true and complete copy of each Benefit Plan and any related funding
agreements, including all amendments, supplements, and modifications thereto,
all of which are legally valid and binding and in full force and effect, and not
in default in any respect. The Company has made available to you a true and
complete copy of the most recent annual report and actuarial report, if any, for
each Benefit Plan, and the IRS determination letter, if any, for each Benefit
Plan and each amendment thereto. All contributions and premiums required to be
made to each Benefit Plan under
27
<PAGE>
the terms of that Benefit Plan, ERISA, or other applicable law have been timely
made and adequate reserves have been provided for in the Unaudited Statements
for any contributions or premiums attributable to service prior to the Closing.
In the case of each Benefit Plan that is subject to Title I, subtitle B, part 3
of ERISA, the net fair market value of the assets held to fund that Benefit Plan
exceeds the actuarial present value (based on the actuarial assumptions used by
the Company and its Subsidiaries for funding) of all accrued benefits, both
vested and nonvested, under that Benefit Plan. Each Benefit Plan complies
currently, and has complied in the past, in form and operation, with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended
(the "Code"), and other applicable law in all material respects. There have been
no "prohibited transactions" (as defined in IRC Sec. 4975(c)(1)) that would
subject any of the Benefit Plans, any fiduciary thereof, or any party dealing
with the Benefit Plan to the tax on prohibited transactions imposed by IRC Sec.
4975 or to a civil penalty imposed by Section 502 of ERISA. No amount is due or
owing from the Company and the Subsidiaries to the Pension Benefit Guaranty
Corporation (the "PBGC") under Title IV of ERISA for any reason. No event that
constitutes a "reportable event" as defined in Section 4043 of ERISA has
occurred with respect to any Benefit Plan that is covered by ERISA. Since April
30, 1994, the Company has not terminated any
28
<PAGE>
employee benefit plan subject to Title IV of ERISA for which a Notice of
Sufficiency has not been issued by the PBGC. There are no issues or disputes
with respect to any Benefit Plan, or the administration thereof, currently
existing between any trustee or other fiduciary thereunder, the Company or any
Subsidiary and any governmental agency, employee, former employee, or
beneficiary of any employee or former employee of the Company or any Subsidiary.
Neither the Company nor any Subsidiary has previously, currently, or will prior
to the Closing participate in or contribute to any "multi-employer plan" as such
term is defined in Section 4001(a) of ERISA. Except as set forth in the S-4, no
Benefit Plan provides welfare benefits to retirees, no Benefit Plan or agreement
exists which could result in the payment to any Company employee of any money or
other property or rights or which would accelerate or provide any other rights
or benefits to any employee as a result of the transactions contemplated by this
Stock Purchase Agreement, and no Benefit Plan provides for an increase of
benefits on or after the Closing.
q. Environmental Matters. Except as reflected in the S-4,
i. There are no Environmental Conditions (as defined below) or
Environmental Noncompliance (as defined below) known to the Company or any
Subsidiary or which should have been known to the Company or any Subsidiary if
the Company and its Subsidiaries followed good
29
<PAGE>
business practices, with respect to the Company or any Subsidiary, including,
but not limited to any pending or threatened notices of violation, inquiries,
investigations or arbitrations relating to Environmental Laws (as defined
below).
ii. There is no contamination by Hazardous Materials (as defined
below) known to the Company or any Subsidiary or which should have been known to
the Company or any Subsidiary if the Company and its Subsidiaries followed good
business practices, of the air, soil, groundwater or surface water at any of the
current or predecessor facilities of the Company or any Subsidiary
(collectively, the "Facilities").
iii. None of the following are known to the Company, or any Subsidiary
or which should have been know to the Company or any Subsidiary if the Company
and its Subsidiaries followed good business practices, to exist or to have
existed at any of the Facilities: (i) underground storage tanks, landfills,
sumps, catch basins or other below-grade methods of collecting, storing or
containing products or waste; (ii) asbestos-containing building materials; (iii)
urea formaldehyde foam insulation; or (iv) PCBs contained in any electrical
equipment or otherwise.
iv. Neither the Company nor any Subsidiary has assumed, by contract
or operation of law, any liability, fixed or contingent, for any Hazardous
Materials or under any Environmental Law.
v. Neither the Company nor any Subsidiary knows, or should know if
the Company and its Subsidiaries followed good business
30
<PAGE>
practices, that: any governmental authority has proposed or plans to propose a
change in any Environmental Law that would materially adversely affect the
condition (financial or otherwise), operations, management or prospects of the
Company or its properties or assets taken as a whole; or any permit, variance or
other authorization necessary for the legal operation of any equipment, process,
facility or any other activity necessary for the Company or any Subsidiary to
operate as it currently does will not be obtained or renewed, the absence of
which would materially adversely affect the condition (financial or otherwise),
operations, management or prospects of the Company or its properties or assets
taken as a whole.
vi. The following definitions shall apply: 1) "Hazardous Materials"
means hazardous wastes, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including but
not limited to substances defined as "hazardous wastes," "hazardous substances,"
toxic substances," "pollutants," "contaminants," "chemicals known to cause
cancer or reproductive toxicity", "radioactive materials," or other similar
designations in, or otherwise subject to regulation or giving rise to
31
<PAGE>
liability under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended by the Superfund Amendments and Reauthorization
Act of 1986 ("CERCLA"), 42 U.S.C. Sections 9601 et seq.; the Toxic Substances
Control Act ("TSCA"), 15 U.S.C. Sections 2501 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1802 et seq.; the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq.; the Clean Water Act
("CWA"), 33 U.S.C. Sections 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Sections 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Sections 7401 et
seq.; and in the plans, rules, regulations or ordinances adopted, or other
criteria and guidelines promulgated, pursuant to the preceding laws or other
similar laws, regulations, rules or ordinances now or hereafter in effect in the
United States or in any applicable state, local or foreign jurisdiction, and
under common law (collectively, the "Environmental Laws"); and any other
substances, constituents
32
<PAGE>
or wastes subject to environmental regulations under any applicable federal,
state, local or foreign law, regulation or ordinance now or hereafter in effect
including, without limitation, the following: (i) petroleum or fractions
thereof; (ii) waste oil or petroleum-based lubricants; (iii) asbestos (in any
form); (iv) urea formaldehyde foam insulation; (v) radionuclides; (vi)
polychlorinated biphenyls ("PCBs"); (vii) odors; (viii) noise; or (ix)
electromagnetic fields.
2) "Environmental Conditions" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, and present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting, escaping,
leaching, disposal or dumping (whether on or off of premises presently or
formerly owned or operated
33
<PAGE>
by the Company or any Subsidiary) of Hazardous Materials. With respect to claims
by employees, Environmental Conditions also includes the exposure of persons to
Hazardous Materials within the workplace.
3) "Environmental Noncompliance" means, but is not limited to:
a) the release of any Hazardous Materials into the environment,
including without limitation any storm drain, sewer, septic system or publicly
owned treatment works, in violation of any effluent or emission limitations,
standards or other criteria or guidelines established by any federal, state,
local or foreign laws, regulation, rules, ordinance, plan or order, or any lease
or easement or other instrument governing use or ownership of property;
b) any noncompliance of any physical structure, equipment, process or
facility with the requirements of building or fire codes, zoning or land use
regulations or ordinances, conditional use permits and the like or any lease or
easement or other
34
<PAGE>
instrument governing use or ownership of property;
c) any noncompliance with federal, state, local or foreign
requirements governing occupational safety and health;
d) any facility operations, procedures, designs, etc. which do not
conform to the statutory or regulatory requirements of CAA, CWA, TSCA, RCRA or
any other Environmental Laws intended to protect public health, welfare and the
environment;
e) the failure to have obtained permits, variances or other
authorizations necessary for the legal operation of any equipment, process,
facility or any other activity; and
f) the operations of any facility or equipment in violation of any
permit condition, schedule of compliance, administrative or court order and the
like.
In addition, the Company hereby represents and warrants that none of the
incidents listed in the S-4, individually or in the aggregate, could reasonably
be expected to result in any material adverse change in the business,
operations, prospects, properties or assets or the condition, financial or
otherwise, of the Company of any of its Subsidiaries,
35
<PAGE>
taken as a whole.
r. Offer of Securities. Neither the Company nor any Person acting on
its behalf has directly or indirectly offered the Common Stock or any part
thereof or any similar securities for issue or sale to, or solicited any offer
to buy any of the same from, anyone other than you and the Other Purchasers,
each of whom is an "accredited investor," as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act. Neither the Company nor any
Person acting on its behalf has taken or will take any action which would bring
the issuance and sale of the Common Stock within the provisions of Section 5 of
the Securities Act or the registration or qualification provisions of any
applicable blue sky or other securities laws, except for those provisions of
applicable blue sky or other state securities laws requiring the filing of
notices of sale (all of which filings will have been made by the Company prior
to the Closing).
s. Investment Company Act and Investment Advisers Act Status. The
Company is not an "investment company" or a company directly or indirectly
"controlled" by or acting on behalf of an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended, and is not an
"investment adviser" within the meaning of the Investment Advisers Act of 1940,
as amended.
t. Regulation G. The Company will not use all or any part of the
36
<PAGE>
proceeds of the sale of the Common Stock to acquire, nor does the Company have
any intention of acquiring with such proceeds any "margin stock" within the
meaning of Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System (herein called a "margin security"). The proceeds of the
sale of the Common Stock will be used as provided in Section 6. None of such
proceeds will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might constitute the transactions
contemplated hereby and by the Other Stock Purchase Agreements a "purpose
credit" within the meaning of said Regulation G or cause this Agreement to
violate Regulation G, Regulation T, Regulation U, Regulation X, or any other
regulation of the Board of Governors of the Federal Reserve System, or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), each as now in
effect.
u. Foreign Credit Restraints. Neither the consummation of the
transactions contemplated by the Transaction Documents nor the use of the
proceeds of the sale of the Common Stock nor any activity presently conducted or
proposed to be conducted by the Company will violate any provision of any
applicable statute, regulation or order of, or any restriction imposed by, the
United States of
37
<PAGE>
America or any authorized official, board, department, instrumentality or agency
thereof relating to the control of foreign or overseas lending, investment or
business.
v. Brokers, etc. Neither the Company nor any Person acting on its
behalf has entered into any agreement with any broker, finder, commission agent
or other Person in connection with the sales of the Common Stock under this
Stock Purchase Agreement or the Other Stock Purchase Agreements and neither the
Company nor any such Person is under any obligation to pay any broker's fee,
finder's fee or commission in connection with such transactions.
w. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to you by or on behalf of the Company in
connection with the transactions contemplated hereby and by the Other Stock
Purchase Agreements contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading in the light of the circumstances under which such
statements were made. There are no facts known to the Company which materially
adversely affect the condition (financial or otherwise), operations, management
or prospects of the Company taken as a whole, which have not been set forth in
this Agreement or in the other documents, certificates or statements furnished
to you by or on behalf of the Company prior to
38
<PAGE>
the date hereof in connection with the transactions contemplated hereby and
thereby.
x. Voting Provisions. The Company is not, nor to the best of the
Company's knowledge, is any stockholder of the Company, a party to any agreement
or subject to any requirement (other than the Stockholders Agreement and the
provisions of the Company's Second Amended and Restated Certificate of
Incorporation or the Amended and Restated Bylaws) which relates to the voting of
the Company's capital stock or contains any provision requiring a higher voting
requirement with respect to action taken by the Company's Board of Directors or
the holders of its capital stock than that which would apply in the absence of
such provision. Except as set forth in the S-4, no Subsidiary, nor to the best
of the Company's knowledge, no stockholder of any Subsidiary is a party to any
agreement or subject to any requirement which relates to the voting of the
Subsidiary's capital stock or contains any provision requiring a higher voting
requirement with respect to action taken by the Subsidiary's Board of Directors
or holders of its capital stock than that which would apply in the absence of
such provision. Copies of the Articles or Certificate of Incorporation and the
Bylaws of all of the Company's Subsidiaries have been provided to you by the
Company.
y. Approval of Stock Purchase Agreement. The Board of Directors of
the Company has approved the Transaction
39
<PAGE>
Documents and the transactions contemplated hereby and has authorized the
execution and delivery of the Transaction Documents and the issuance of the
Common Stock by, the Company. The Company has full power, authority, and legal
right to enter into this Stock Purchase Agreement and, upon satisfaction of all
the conditions to its obligations hereunder, to consummate the transactions
contemplated hereby.
z. Permits; Compliance with Applicable Laws. To the best of its
knowledge, said knowledge to include knowledge which the Company and its
Subsidiaries should have if the Company and its Subsidiaries followed good
business practices, the Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders, approvals and other authorizations of all
governmental entities, which are material to the operation of the businesses of
the Company and its Subsidiaries, taken as a whole (the "Permits"). To the best
of its knowledge, said knowledge to include knowledge which the Company and its
Subsidiaries should have if the Company and its Subsidiaries followed good
business practices, the Company and its Subsidiaries are in compliance with the
terms of the Permits, except where the failure so to comply would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
Except as disclosed in the S-4, to the best of its knowledge, said knowledge to
include knowledge which the Company and its Subsidiaries should have if the
Company and its Subsidiaries followed good business practices, the businesses of
the Company and its Subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any governmental entity except for possible
violations which individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, in the future will not, have a material adverse
effect on the Company and its Subsidiaries, taken as a whole. Except as
disclosed in the S-4, as of the date of this Agreement, to the knowledge of the
Company, no investigation or review by any governmental entity with respect to
the Company and any of its Subsidiaries is pending or, to the knowledge of the
Company, said knowledge to include knowledge which the
40
<PAGE>
Company and its Subsidiaries should have if the Company and its Subsidiaries
followed good business practices, threatened, nor has any governmental entity
indicated to the Company an intention to conduct the same, other than, in each
case, those the outcome of which, as far as reasonably can be foreseen, will not
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
aa. Common Stock. The unissued shares of Common Stock to be issued to
the Purchasers have been duly and validly authorized and, when delivered against
payment as provided in this Agreement will be validly issued and outstanding,
fully paid and nonassessable, and not subject to
41
<PAGE>
preemptive rights on the part of the holders of any class of securities of the
Company.
bb. Transactions With Affiliates. Other than as disclosed in the S-4,
neither the Company nor any Subsidiary is a party to any transaction with any
Affiliate (excluding the Subsidiaries and other Affiliates controlled by the
Company).
cc. Lion Oil Company. Except as set forth in the S-4, neither the
Company nor any Subsidiary is liable for any obligation of Lion Oil Company.
dd. Enforceability. This Agreement is a valid and binding agreement on
the part of the Company, enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws relating to
creditors' rights generally and general equitable principles. Performance of
this Agreement by the Company, and consummation of the transactions contemplated
hereby, will not result in a breach or violation of, or default under, (i) any
other agreement to which the Company is a party, (ii) the Company's certificate
of incorporation, by-laws or other organizational documents, or (iii) any law,
rule, judgment or judicial or administrative decree binding on the Company or
its property.
6. Covenants of the Company. The Company hereby covenants and agrees with
you that from the date hereof to the Closing, except as contemplated by the S-4:
42
<PAGE>
i. The Company will not declare any dividends on or make other
distributions in respect of the Company's Common Stock.
ii. The Company will not issue, authorize, or propose the issuance of,
or purchase or redeem, or propose the purchase or redemption of, any shares of
its capital stock or any class of securities convertible into, or rights,
warrants, or options to acquire, any such shares or other convertible
securities.
iii. The Company will not change the outstanding shares of common
stock or preferred stock into any different class by reason of any
reclassification, recapitalization, split, combination, exchange of shares, or
readjustment, or declare a stock dividend thereon.
iv. The Company and its Subsidiaries will not acquire or agree to
acquire by merging with, consolidating with, purchasing all or substantially all
of the stock or assets of, or otherwise, any corporation, partnership,
association, or other business organization or division thereof.
v. The Company shall not initiate or take any action which would
require stockholder approval.
7. Use of Proceeds.
i. The proceeds of the sale of the Common Stock will be used for such
Company purposes as may be determined by the Board of Directors.
ii. The Company will not, directly or indirectly, use any part of such
43
<PAGE>
proceeds for any purpose which would violate any provision of Regulation G,
Regulation T, Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System, or the Exchange Act, each as now in
effect, or any other applicable statute, regulation, rule, order or restriction.
8. Financial Statements and Information. The Company will furnish the
following to you in duplicate, so long as you shall be obligated to purchase the
Common Stock hereunder or shall hold the Common Stock or any Common Stock issued
upon exercise of any warrants and to each other holder from time to time of any
Common Stock or any Common Stock issued upon exercise of any warrants; provided
that if the Company becomes subject to the reporting requirements of either
Section 13 or Section 15(d) of the Exchange Act, the Company shall not be
required to deliver any of the following documents:
i. as soon as available and in any event within 45 days after the end
of the first, second and third quarterly accounting periods in each fiscal year
of the Company, consolidated (and, if otherwise prepared, consolidating) balance
sheets of the Company and its Subsidiaries, as at the end of such period and the
related consolidated statements of income, stockholders' equity and cash flows
for such period and for the portion of such fiscal year ended on the last day of
such period, in each case setting forth in comparative form the corresponding
figures for the same period and portion of the next preceding fiscal year, all
in reasonable detail and certified by a principal financial officer of the
Company, subject to year-end
44
<PAGE>
and audit adjustments;
ii. as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated (and, if otherwise prepared,
consolidating) balance sheets of the Company and its Subsidiaries as at the end
of such year, and the related consolidated statements of income, stockholders'
equity and cash flows for such year, in each case setting forth in comparative
form the corresponding figures for the next preceding fiscal year, all in
reasonable detail and, in the case of the consolidated financial statements of
the Company and its Subsidiaries, accompanied by the report on such consolidated
financial statements by KPMG Peat Marwick L.L.P. or other independent certified
public accountants of recognized national standing selected by the Company,
which report (i) shall state that the audit of such accountants in connection
with such consolidated financial statements has been conducted in accordance
with generally accepted auditing standards and that such accountants believe
that such audit provides a reasonable basis for their opinion, (ii) shall
include the opinion of such accountants that such consolidated financial
statements present fairly in all material respects the consolidated financial
position of the Company and its Subsidiaries as at the end of such fiscal year
and the consolidated results of operations and cash flows for such fiscal year,
in conformity with generally accepted accounting principles, except as otherwise
specifically set forth in such report, and (iii) shall not be qualified by
reason of any limitation on the scope of the audit.
45
<PAGE>
iii. upon request, copies of all reports (including, without
limitation, audit reports and so-called management letters) or written comments
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit in respect of the
financial statements or the accounts of the Company or any Subsidiary made by
such accountants;
iv. upon request, copies of (i) all press releases issued by the
Company or any Subsidiary, and all such notices, proxy statements, financial
statements, reports and documents as the Company shall send or make available
generally to its stockholders or as any Subsidiary shall send or make available
generally to its stockholders other than the Company, and (ii) at such time as
the Company shall be subject to the reporting requirements under the Exchange
Act, all periodic and special reports, documents and registration statements
(other than on Form S-8) which the Company or any Subsidiary furnishes or files,
or any officer or director of the Company or any of its subsidiaries furnishes
or files with respect to the Company or any of its Subsidiaries, with the
Securities and Exchange Commission (the "Commission") or any securities
exchange;
v. such other material information relating to the Company and its
Subsidiaries as shall be furnished to any bank or any other lender to the
Company or any of its Subsidiaries or any other holder of any privately placed
securities issued by the Company or any of its Subsidiaries or as from time to
time may reasonably be requested;
46
<PAGE>
vi. such information as is required to be delivered by the Company to
you or any subsequent holder of the Common Stock and any prospective purchaser
thereof in accordance with Rule 144A under the Securities Act or any successor
regulation or rule thereunder; and
vii. no later than 90 days after the end of each fiscal year of the
Company, an annual budget prepared on a quarterly basis for the Company and its
Subsidiaries for the fiscal year (displaying anticipated balance sheets and
statements of income, stockholders' equity and cash flows), and any revisions of
such annual budget, and within 45 days after any quarterly period in which there
was a material adverse deviation from such annual budget, an Officers'
Certificate specifying the nature and period of such deviation and what action
the Company has taken, is taking and proposes to take with respect thereto.
You are hereby authorized to deliver a copy of any financial statement or
any other information delivered to you pursuant to this Agreement, including
without limitation any delivered pursuant to this Section 8, to the National
Association of Insurance Commissioners, to any rating agency, to any regulatory
body having jurisdiction over you, or to any Person in connection with any
judicial or administrative proceeding or inquiry or in connection with any
transfer or proposed transfer of the Common Stock.
After the date the Company becomes subject to the reporting requirements of
either Section 13 or Section 15(d) of the Exchange Act, the Company will file
with the Commission, so long as you shall hold any Common Stock or any Common
Stock issued upon exercise of any warrants, the
47
<PAGE>
reports referred to in paragraph (c)(1) of Rule 144 under the Securities Act, or
any successor regulation or rule thereunder.
The Company will keep at its principal executive office a true copy of the
Transaction Documents and any other agreements pursuant to which the Company or
any of its Subsidiaries has or has agreed to borrow money or issue securities as
at the time in effect, including all exhibits hereto and thereto and all
amendments and waivers in respect hereof and thereof, and will cause the same to
be available for inspection at such office during normal business hours by any
holder of any Common Stock or any Common Stock issued upon exercise of any
warrants.
9. Inspection. The Company will permit any Person designated by any holder
of Common Stock or of Common Stock issued upon exercise of any warrants, on
reasonable notice and at such holder's expense, to visit and inspect any of the
properties of the Company and its Subsidiaries, to examine its and their books
of account (and to make copies thereof and take extracts therefrom) and to
discuss its and their affairs, finances and accounts with, and to be advised as
to the same by, its and their officers, all at such reasonable times and
intervals as such holder may desire; provided that the rights granted pursuant
to this Section 9 may be exercised by any Purchaser so long as it or any of its
Affiliates owns one percent or more of the Common Stock.
10. Amendment and Waiver. Until the purchases of Common Stock to be made
hereunder and under the Other Stock Purchase Agreements shall have been made,
any term, covenant, agreement or condition of this Agreement may be amended, or
compliance therewith may be waived, by written instrument signed by the Company
and two-thirds of the Purchasers (based on the number of
48
<PAGE>
shares to be purchased).
11. Communications. All communications provided for herein shall be
delivered or mailed addressed as follows:
i. If to the Company, at:
TRANSMONTAIGNE OIL COMPANY
370 17th Street
Republic Plaza, Suite 900
Denver, CO 80208
Attention: Harold R. Logan, Jr., Executive
Vice President/Finance
with a copy to:
Nick Nimmo, Esq.
Holme Roberts & Owen, LLC
1700 Lincoln, Suite 4100
Denver, CO 80203
ii. If to any of the Purchasers, at the appropriate address of such
Purchaser set forth in Schedule 1(b) attached hereto.
The address of the Company may be changed at any time and from time to
time and shall be the most recent such address furnished in writing by the
Company to you and to each other Person who is the holder of any shares of
Common Stock. Your address for any purpose hereof or of any other Person who is
the holder of Common Stock may be changed at any time and from time to time and
shall be the most recent such address furnished in writing by you or such other
Person to the Company.
Any communication provided for herein shall become effective only upon
and at the time of receipt by the Person to whom it is given, unless such
communication is mailed by certified mail or reputable overnight courier, in
which case it shall be deemed to have been received on (a) the fifth
49
<PAGE>
business day following the mailing thereof, or (b) the day of its receipt, if a
business day, or the next succeeding business day, whichever of (a) or (b) is
earlier.
12. Survival of Representations and Warranties, etc. All
representations and warranties contained herein or made in writing by or on
behalf of the Company or the Subsidiaries in connection with the transactions
contemplated hereby and by the Other Stock Purchase Agreements shall (i) survive
the execution and delivery of this Agreement, for a period of five years, except
with respect to any claims asserted in writing to the Company prior to the end
of said five-year period and (ii) may not be relied upon by any party for any
purpose other than the purchase of the shares of Common Stock set forth opposite
the Purchaser's name on the applicable portion of Schedule 1(b). The covenants
contained herein shall survive the execution and delivery of this Agreement
until the earlier of (A) the fifth anniversary of the date hereof and (B) such
time as the Company becomes subject to the reporting requirements of either
Section 13 or Section 15(d) of the Exchange Act.
13. Successors and Assigns; Rights of Other Holders.
i. This Agreement shall bind and inure to the benefit of and be
enforceable by the Company and you, successors to the Company and to those
Persons who are your successors and assigns, and, in addition, shall inure to
the benefit of and be enforceable by each holder from time to time of any Common
Stock who, upon acceptance of such Common Stock, shall be deemed, without
further action, to have become a party to this Agreement so as to be entitled to
enforce the provisions and enjoy the benefits hereto. This
50
<PAGE>
Agreement is not assignable by the Company except by operation of law.
ii. If and so long as any Person other than you shall hold any of the
outstanding Common Stock, the Company will furnish to each such Person as many
copies of this Agreement (including all amendments, supplements, waivers and
consents in respect thereof), certified by the Secretary or an Assistant
Secretary of the Company, as any such Person may reasonably request.
14. Purchase for Investment. You represent and warrant that you have been
furnished with all information that you have requested for the purpose of
evaluating your proposed acquisition of Common Stock, (b) that you are an
accredited investor, (c) that you are a resident of the state set forth on
Schedule 1(b), (d) that your proposed acquisition of Common Stock does not
exceed twenty percent of your net worth (net worth includes home, furnishings
and automobiles) and (e) that you will acquire the Common Stock to be purchased
by you for your own account (or for any other Person for which you are acting as
nominee as previously disclosed to the Company) and not with a view to or for
sale in connection with any distribution in any manner that would violate
applicable securities laws, but without prejudice to your rights to dispose of
the Common Stock to be purchased by you or a portion thereof to a transferee or
transferees, in accordance with such laws if at some future time you deem it
advisable to do so. The acquisition of the Common Stock by you at the Closing
shall constitute your confirmation of the foregoing representations and
warranties. You understand that the Common Stock is being sold to you in a
transaction which
51
<PAGE>
is exempt from the registration requirements of the Securities Act and that the
Company is relying, to the extent applicable, upon your representations and
warranties contained herein.
15. Governing Law; Jurisdiction. This Agreement and the Common Stock
issued pursuant hereto, including the validity hereof and thereof and the rights
and obligations of the parties hereunder and thereunder and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder shall be construed in accordance with, and be governed by the laws of
Delaware. The Company hereby consents to service of process, and to be sued, in
the States of Delaware, Colorado or New York and consents to the jurisdiction of
the courts of Delaware, Colorado or New York and the United States District
Courts for Delaware, Colorado or New York, as well as to the jurisdiction of all
courts from which an appeal may be taken from such courts, for the purpose of
any suit, action or other proceeding arising out of any of its obligations
hereunder or under any such security or with respect to the transactions
contemplated hereby or thereby, and expressly waives any and all objections it
may have as to venue in any such courts. The Company further agrees that a
summons and complaint commencing an action or proceeding in any of such courts
shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it at its address set forth in Section 11 or
as otherwise provided under the laws of the States of Delaware, Colorado or New
York. Notwithstanding the foregoing, the Company agrees that nothing contained
in this Section 15 shall preclude the institution of any such suit, action or
other proceeding in any jurisdiction other than
52
<PAGE>
the States of Delaware, Colorado or New York.
16. Miscellaneous. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning thereof. This
Agreement embodies the entire agreement and understanding between you and the
Company and supersedes all prior agreements and understandings relating to the
subject matter hereof. In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. This
Agreement may be executed in any number of counterparts and by the parties
hereto on separate counterparts but all such counterparts shall together
constitute but one and the same instrument.
17. Definitions. The terms defined in this Section 17, wherever used and
capitalized in this Agreement shall, unless the context otherwise requires, have
the following respective meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Officers' Certificate" shall mean a written certificate executed by
the president and the secretary of the Company, attesting to the accuracy and
completeness
53
<PAGE>
of the factual representations made in one or more of the Transaction Documents
or as to such other matters as may otherwise be reasonably requested by a
Purchaser in connection therewith.
"Person" shall mean an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated organization or a government or any
agency or political subdivision thereof.
"Subsidiary" shall mean any corporation or partnership fifty percent
(50%) or more (by number of votes) of the voting stock or partnership interest
of which is owned by the Company or by one or more of its Subsidiaries.
54
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/_____________________________________
DONALD H. ANDERSON
55
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
/s/
By:
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/
- ----------------------------------
FREDERICK W. BOUTIN
56
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/
- -------------------------------------
ROBERT W. BRADBERRY
57
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
A.G. EDWARDS, CUSTODIAN
FOR THE ROBERT W. BRADBERRY IRA ACCOUNT
By: /s/
(Title)
58
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
COLORADO TMOC LIMITED LIABILITY COMPANY
By: /s/
(Title)
59
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/
- --------------------------------------
LARRY C. CLYNCH
60
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/
- -------------------------------------
CORTLANDT S. DIETLER
61
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
FIRST RESERVE SECURED ENERGY ASSETS FUND,
LIMITED PARTNERSHIP
By: /s/
(Title)
62
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
FIRST RESERVE FUND VI,
LIMITED PARTNERSHIP
By: /s/
(Title)
63
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
FIRST RESERVE FUND V-2,
LIMITED PARTNERSHIP
By: /s/
(Title)
64
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
FIRST RESERVE FUND V,
LIMITED PARTNERSHIP
By: /s/
(Title)
65
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
Cortlandt S. Dietler,
Chairman, Chief
Executive Officer and
President
/s/
- -------------------------------------
RICHARD E. GATHRIGHT
66
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
JAMES GROSFELD
67
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
FREDERIC C. HAMILTON
68
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------, CUSTODIAN
FOR THE ELAINE B. KEEGAN IRA ACCOUNT
By: /s/
(Title)
69
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
KAY C. KILBY
70
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
HAROLD R. LOGAN, JR.
71
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
WATERWAGON & CO., NOMINEE FOR
MERRILL LYNCH GROWTH FUND FOR
INVESTMENT AND RETIREMENT
By: /s/
(Title)
72
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------, CUSTODIAN
FOR THE JAY A. PRECOURT IRA ACCOUNT
By: /s/
(Title)
73
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
GEORGE A. WIEGERS
74
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
A.G. EDWARDS, CUSTODIAN
FOR THE GARY G. WILLIAMS III IRA ACCOUNT
By: /s/
(Title)
75
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such counterparts to the Company.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/
---------------------------------
Cortlandt S. Dietler,
Chairman, Chief Executive Officer
and President
/s/
- ---------------------------
GARY G. WILLIAMS III
76
<PAGE>
Schedule 1(b)
The Purchasers
<TABLE>
<CAPTION>
Purchaser No. of Shares Purchase
Price
<S> <C> <C>
Donald H. Anderson 10,000 $55,000
101 Coulter Place
Castle Rock, Colorado 80104
(713) 627-4650
Frederick W. Boutin 10,000 $55,000
TransMontaigne Oil Company
370 17th Street, Suite 900
Denver, CO 80202
(303) 605-1675
Robert W. Bradberry 5,000 $27,500
One West Mountain
Fayetteville, Arkansas 72701
A.G. Edwards, Custodian
for the Robert W. Bradberry IRA Account 5,000 $27,500
26 West Center Street
Fayetteville, Arkansas 72701
(800) 521-5762
Colorado TMOC Limited Liability Company 100,000 $550,000
Attn: Frederick R. Mayer
1700 Lincoln Street, #5000
P. O. Box 5083
Denver, CO 80217-5083
(303) 832-3131
Larry C. Clynch 10,000 $55,000
Continental Ozark, Inc.
280 North College, #500
Fayetteville, Arkansas 72701
(501) 521-5565
</TABLE>
77
<PAGE>
<TABLE>
<S> <C> <C>
Cortlandt S. Dietler 187,862 $1,033,241
TransMontaigne Oil Company
370 17th Street, Suite 900
Denver, CO 80202
(303) 605-1798
First Reserve Secured Energy Assets Fund,
Limited Partnership 46,696 $256,828
Attn: John A. Hill
475 Steamboat Road
Greenwich, CT 06830
(203) 625-2503
First Reserve Fund VI,
Limited Partnership 400,414 $2,202,277
Attn: John A. Hill
475 Steamboat Road
Greenwich, CT 06830
(203) 625-2503
First Reserve Fund V-2,
Limited Partnership 186,776 $1,027,268
Attn: John A. Hill
475 Steamboat Road
Greenwich, CT 06830
(203) 625-2503
First Reserve Fund V,
Limited Partnership 93,389 $513,639.50
Attn: John A. Hill
475 Steamboat Road
Greenwich, CT 06830
(203) 625-2503
Richard E. Gathright 30,000 $165,000
Continental Ozark, Inc.
280 North College, #500
Fayetteville, Arkansas 72701
(501) 444-3536
James Grosfeld 80,910 $445,005
20500 Civic Center, Suite 3000
Southfield, Michigan 48076
(810) 827-1700
</TABLE>
78
<PAGE>
<TABLE>
<S> <C> <C>
Frederic C. Hamilton 100,000 $550,000
Hamilton Oil Company, Inc.
1560 Broadway, Suite 2200
Denver, Colorado 80202
(303) 863-3000
Elaine B. Keegan IRA Account 1,500 $8,250
TransMontaigne Oil Company
370 17th Street, Suite 900
Denver, Colorado 80202
(303) 605-1684
Kay C. Kilby 5,000 $27,500
TransMontaigne Oil Company
370 17th Street, Suite 900
Denver, CO 80202
(303) 605-1685
Harold R. Logan, Jr. 50,000 $275,000
TransMontaigne Oil Company
370 17th Street, Suite 900
Denver, CO 80202
(303) 605-1676
Waterwagon & Co., Nominee for 3,117,000 $17,143,500
Merrill Lynch Growth Fund for
Investment and Retirement
c/o Merrill Lynch Asset Management
Attn: Stephen Johnes
Equity Fund Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(609) 282-2611
Jay A. Precourt IRA Account 20,000 $110,000
Tejas Gas Corporation
1301 McKinney, Suite 700
Houston, Texas 77010
(713) 951-3400
George A. Wiegers 80,910 $445,005
230 Bridge Street
Vail, Colorado 81657
(970) 476-0878
</TABLE>
79
<PAGE>
<TABLE>
<S> <C> <C>
A.G. Edwards, Custodian
for the Gary G. Williams IRA Account 2,500 $13,750
26 West Center Street
Fayetteville, Arkansas 72701
(800) 521-5762
Gary G. Williams 2,500 $13,750
Continental Ozark, Inc.
280 North College, #500
Fayetteville, Arkansas 72701
(501) 444-3536
TOTAL $4,545,456 $25,000,008
</TABLE>
80
<PAGE>
Exhibit 4.3(a)
Joinder Agreement
81
<PAGE>
Exhibit 4.3(b)
Registration Rights Agreement
82
<PAGE>
Exhibit 4.3(c)
Antidilution Rights Agreement
83
<PAGE>
Exhibit 4.3(d)
Agreement to Elect Directors
84
<PAGE>
Exhibit 4.3(e)
Consent of Stockholders
85
<PAGE>
Exhibit 4.7
Opinion of Holme Roberts & Owen LLC
86
<PAGE>
Schedule 5.3(a)
COMMON STOCK OWNERSHIP AFTER CLOSING
87
<PAGE>
Schedule 5.3(b)
STOCK OPTIONS
88
<PAGE>
Schedule 5.4
Subsidiaries
<TABLE>
<CAPTION>
Company Name Entity Type Owned By
<S> <C> <C>
TransMontaigne Oil Company
Continental Ozark, Inc.
COZ Pipeline Inc.
Continental Ozark, Inc. Corporation 100%
COZ Pipeline, Inc. Corporation 100%
Norco Pipeline, Inc. Corporation 100%
Razorback Pipeline Co. Partnership 60%
COZ Terminaling, Inc. Corporation 100%
Continental Ozark Holdings, Inc. Corporation 65%
Continental Ozark Trading Co. Corporation 100%
</TABLE>
89
<PAGE>
Exhibit 10.7
ANTIDILUTION RIGHTS AGREEMENT
THIS ANTIDILUTION RIGHTS AGREEMENT (this "Agreement"), dated as of April 17,
1996, is by and between TRANSMONTAIGNE OIL COMPANY, a Delaware corporation (the
"Company"), and WATERWAGON & CO., Nominee for Merrill Lynch Growth Fund for
Investment and Retirement ("Merrill Lynch").
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have the
following meanings:
Common Stock means the common stock of the Company, par value $,01 per share.
Percentage Ownership means the percentage of the outstanding shares of Common
Stock (assuming the conversation into Common Stock of any outstanding shares of
Convertible Securities but not including any Option Shares) owned by Merrill
Lynch.
Original Percentage Ownership means 15.0%.
Specified Event means any issuance by the Company of any shares of Common Stock
or any Convertible Security, other than Option Shares.
Convertible Security means any evidence of indebtedness, shares of stock (other
than Common Stock) or other securities of the Company directly or indirectly
convertible into or exchangeable for Common Stock.
Option Shares means shares of Common Stock or a Convertible Security issuable
but not yet issued by the Company under any stock option, equity incentive,
stock bonus, stock purchase, employee benefit, profit sharing, 401(k),
retirement or similar plan.
Exercise Price shall mean the lower of (i) the average of the last daily sale
prices of the Common Stock (as reported by the Wall Street Journal) for the
twenty (20) consecutive trading days commencing on the thirtieth trading day
prior to the Specified Event Date, or (ii) the last daily sale price of the
Common Stock (as reported in the Wall Street Journal) on the last trading day
prior to the exercise of the
<PAGE>
Antidilution Rights; provided, however, that in the case of an underwritten
public offering, Exercise Price shall mean the price of the Common Stock sold to
the public in such offering, less the amount of any commission received by the
underwriters.
Specified Event Date means the earliest of (i) the occurrence of a Specified
Event, (ii) disclosure by the Company that it has executed and delivered a
definitive agreement requiring that a Specified Event occur, subject only to
normal closing conditions, or (iii) disclosure by the Company that it has
reached an agreement-in-principle providing for, or is engaged in negotiation
which it considers likely will result in an agreement-in-principle or agreement
providing for, a Specified Event.
ARTICLE II
GRANT OF ANTIDILUTION RIGHTS
SECTION 2.1. Right to Acquire Additional Shares. Merrill Lynch shall have the
option to acquire at the Exercise Price that number of shares of Common Stock
(the "Additional Shares") which, after giving effect to the occurrence of the
Specified Event and such acquisition, will restore the Percentage Ownership of
Merrill Lynch to its Original Percentage Ownership. The Company represents and
warrants that the Additional Shares will be duly authorized, validly issued,
fully paid and nonassessable.
SECTION 2.2. Notice of Issuance. The Company shall notify Merrill Lynch of the
occurrence of a Specified Event not less than 15 days before such Specified
Event; provided, however, that if the Specified Event is the exercise of an
option to acquire Common Stock, the Company shall notify Merrill Lynch promptly
after receiving notice of such exercise; provided, however, that the Company
shall not be required to give notice more frequently than quarterly of any
exercise during the previous quarter of an option to acquire fewer than 50,000
shares of Common Stock.
SECTION 2.3. Exercise of Antidilution Rights. The Antidilution Rights may be
exercised during the 90 day period after a Specified Event has occurred;
provided, that in the event that such ninetieth day is not a day on which the
Company is open for business, the Antidilution Rights may be exercised until
5:00 p.m. on the next day thereafter that the Company is open for business.
Merrill Lynch may exercise the Antidilution Rights by providing notice to the
Company at the principal office of the Company, together with payment in full of
<PAGE>
the Exercise Price for all of the Additional Shares then being purchased (which
may be by wire transfer to an account specified by the Company).
SECTION 2.4. Registration. If the Specified Event that gives rise to the
issuance of Additional Shares to Merrill Lynch hereunder is a sale of Common
Stock that is registered under the Securities Act of 1933 (except for sales
registered under Forms S-8 or S-4 or other forms that would not be appropriate
to register the issuance of the Additional Shares), then the Company shall use
its best efforts to register the sale of the Additional Shares to Merrill Lynch
in such registration. If the managing underwriter or underwriters of such
registration advise the Company in writing that in its or their opinion the
number of shares proposed to be sold in such registration exceeds the number
which can be sold, or adversely affects the price at which the shares are to be
sold in such offering, the Company will include in such registration only the
number of shares which, in the opinion of such underwriter or underwriters can
be sold in such offering without so affecting such price. The shares so included
in such registration shall be apportioned (i) first, to the shares to be issued
with respect to the Specified Event, (ii) second, to the Additional Shares, and
(iii) third, pro rata among other shares of Common Stock included in such
registration, in each case according to the total number of shares of Common
Stock requested for inclusion by said selling securityholders, or in such other
proportions as shall mutually be agreed to among such selling securityholders.
SECTION 2.5. Unregistered Additional Shares. If the issuance of Additional
Shares to Merrill Lynch hereunder is not registered, (i) the certificates for
the Additional Shares will bear a legend indicating that they have not been
registered and restricting their transfer except in accordance with applicable
securities laws, and (ii) in its notice of exercise of its option to acquire
Additional Shares, Merrill Lynch shall make investment representations to the
Company in the following form:
The undersigned represents and warrants (a) that the undersigned has been
furnished with all information that the undersigned has requested for the
purpose of evaluating the proposed acquisition of Common Stock, (b) that the
undersigned is an accredited investor, (c) that the undersigned is a resident of
the state of New Jersey, and (d) that the undersigned will acquire the Common
Stock to be purchased by the undersigned for the account of the undersigned and
not with a view to or for sale in connection with any distribution in any manner
that would violate applicable securities laws, but without prejudice to
<PAGE>
rights of the undersigned to dispose of the Common Stock to be purchased by the
undersigned or a portion thereof to a transferee or transferees, in accordance
with such laws if at some future time the undersigned deems it advisable to do
so. The acquisition of the Common Stock by the undersigned shall constitute
confirmation by the undersigned of the foregoing representations and warranties.
The undersigned understands that the Common Stock is being sold to the
undersigned in a transaction which is exempt from the registration requirements
of the Securities Act of 1933 and that the Company is relying, to the extent
applicable, upon the representations and warranties contained herein.
SECTION 2.5. Stockholders Agreement Legend. All certificates for Additional
Shares shall bear such restrictive legends as are required by the Stockholders
Agreement dated May 10, 1995 between the Company and certain of its
stockholders, including Merrill Lynch.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telex, facsimile or similar writing)
and shall be given to such party at its address or telex or facsimile number set
forth on the signature pages hereof or such other address or telex or facsimile
number as such party may hereafter specify in writing to the other for the
purpose by notice to the party sending such communication. Each such notice,
request or other communication shall be effective (i) if given by telex or
facsimile, when such message is transmitted to the number set forth on such
signature pages or such other number as a party may specify in writing to the
other or (ii) if given by any other means, the earlier of, (x) when delivered by
hand to the address set forth on such signature pages or such other address as a
party may specify in writing to the other or (y) five business days after the
mailing of such notice by certified mail.
SECTION 3.2 Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person other than the parties to
this Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision
contained herein. This Agreement constitutes the entire agreement and
<PAGE>
understanding, and supersedes and terminates all prior agreements and
understandings, both oral and written, between the parties hereto relating to
the subject matter hereof.
SECTION 3.3 Waiver. Any party hereto may, without binding any other party, by
written notice to another party (a) extend the time for the performance of any
of the obligations or other actions of such other party under this Agreement;
(b) waive compliance with any of the conditions or covenants of such other party
contained in this Agreement; and (c) waive or modify performance of any of the
obligations of such other party under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein.
Neither the waiver by any party hereto of a breach of any provision hereof or
any preceding or succeeding breach nor the failure by any party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder nor shall it be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
SECTION 3.4 Amendment. This Agreement may be amended, modified or supplemented
only by a written instrument executed by the Company and by Merrill Lynch.
SECTION 3.5 Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or Merrill Lynch.
SECTION 3.6 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 3.7 Pronouns. Whenever the context may require any pronoun used herein
shall include the corresponding masculine, feminine or neuter forms.
SECTION 3.8 Attorneys Fees. In the event of a dispute concerning the provisions
of this Agreement which results in litigation, arbitration or other dispute
resolution proceedings the parties agree that the legal fees and other expenses
of the prevailing party shall be borne by the other, non-prevailing parties to
the dispute.
<PAGE>
SECTION 3.9 Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
SECTION 3.10 Counterparts. This Agreement may be executed in any number of
counterparts or separate number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company and Merrill Lynch have executed this Agreement
as of the day and year first above written.
TRANSMONTAIGNE OIL COMPANY
By: /s/
Its:
Notices:
Cortlandt S. Dietler
Chief Executive Officer
P.O. Box 5660
Denver, CO 80127
Telephone No.: 303/595-3331
Facsimile No.: 303/595-0480
WATERWAGON & CO., Nominee for
Merrill Lynch Growth Fund for
Investment and Retirement
By: /s/
Notices:
c/o Merrill Lynch Asset Management
Attn: Stephen Johnes
Equity Fund Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Telephone No.: (609) 282-2611
Facsimile No.: (609) 282-1471
<PAGE>
Exhibit 10.8
AGREEMENT TO ELECT DIRECTORS
THIS AGREEMENT TO ELECT DIRECTORS (this "Agreement"), dated as of April 17,
1996, is by and among TRANSMONTAIGNE OIL COMPANY, a Delaware corporation (the
"Company"), and the FIRST RESERVE INVESTORS listed on the signature pages
hereof.
WHEREAS, the First Reserve Investors own 6,582,830 shares of common stock, $.01
par value, of the Company (the "Common Stock"); and
WHEREAS, pursuant to a Stockholders Agreement dated May 10, 1995 (the
"Stockholders Agreement"), the First Reserve Investors have the right to elect
two directors to the Board of Directors of the Company by; and
WHEREAS, the Stockholders Agreement will terminate by its own terms at such time
as the Common Stock is registered under the Securities and Exchange Act of 1934
and is being traded on a nationally recognized exchange or the Nasdaq National
Market; and
WHEREAS, the parties wish to provide for the appointment of two directors to the
Board of Directors of the Company by the First Reserve Investors after
termination of the Stockholders Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.1. Board of Directors. From and after termination of the Stockholders
Agreement, the First Reserve Investors and the Company hereby agree to take, at
any time and from time to time, all action necessary (including, without
limitation, voting the Common Stock owned by them, calling special meetings of
stockholders and executing and delivering written consents) to cause two
directors designated by the First Reserve Investors from time to time to be
elected to the Company's Board of Directors. The First Reserve Investors hereby
designate John A. Hill and William E. Macaulay as their initial nominees for
directors. The Company shall cooperate fully in connection with any vote to
elect as promptly as possible any persons designated by the First Reserve
Investors in accordance with this Agreement. In the event of a disagreement
within the First Reserve Investors group as to any person who the First Reserve
Investors wish to designate for its seats on the Board of Directors, unless
otherwise agreed by the various First Reserve Investors, a majority vote, by
shares of Common Stock held, of the First Reserve Investors shall resolve the
disagreement.
<PAGE>
SECTION 1.2. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telex, facsimile or similar
writing) and shall be given to such party at its address or telex or facsimile
number set forth on the signature pages hereof or such other address or telex or
facsimile number as such party may hereafter specify in writing to the Secretary
of the Company for the purpose by notice to the party sending such
communication. Each such notice, request or other communication shall be
effective (i) if given by telex or facsimile, when such message is transmitted
to the number set forth on such signature pages or such other number as a party
may specify in writing to the Secretary of the Company or (ii) if given by any
other means, the earlier of, (x) when delivered by hand to the address set forth
on such signature pages or such other address as a party may specify in writing
to the Secretary of the Company or (y) five business days after the mailing of
such notice by certified mail. A single notice to the First Reserve Investors
shall be deemed to be notice to all First Reserve Investors at the same address.
SECTION 2.3. Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person other than the parties to
this Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision
contained herein. This Agreement constitutes the entire agreement and
understanding, and supersedes and terminates all prior agreements and
understandings, both oral and written, between the parties hereto relating to
the subject matter hereof
SECTION 2.4. Waiver. Any party hereto may, without binding any other party, by
written notice to another party (a) extend the time for the performance of any
of the obligations or other actions of such other party under this Agreement;
(b) waive compliance with any of the conditions or covenants of such other party
contained in this Agreement; and (c) waive or modify performance of any of the
obligations of such other party under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein.
Neither the waiver by any party hereto of a breach of any provision hereof or
any preceding or succeeding breach nor the failure by any party to exercise any
right or privilege hereunder shall be deemed a waiver of
<PAGE>
such party's rights or privileges hereunder nor shall it be deemed a waiver of
such party's rights to exercise the same at any subsequent time or times
hereunder.
SECTION 2.5. Amendment. This Agreement may be amended, modified or supplemented
only by a written instrument executed by the Company and by the First Reserve
Investors.
SECTION 2.6. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or any First Reserve Investor.
SECTION 2.7. Term. This Agreement shall be effective from and after termination
of the Stockholders Agreement and shall terminate and no longer be binding on
the parties hereto at such time as the First Reserve Investors own less than 10%
of the Common Stock.
SECTION 2.8. Limited Liability of Partners. Notwithstanding any other provision
of this Agreement, neither the general partner nor the limited partners nor any
future general or limited partner of any First Reserve Investor shall have any
personal liability for performance of any obligation of such First Reserve
Investor under this Agreement in excess of the respective capital contribution
of such general partner and limited partners to such First Reserve Investor.
SECTION 2.9. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 2.10. Pronouns. Whenever the context may require any pronoun used herein
shall include the corresponding masculine, feminine or neuter forms.
SECTION 2.11. Attorneys Fees. In the event of a dispute concerning the
provisions of this Agreement which results in litigation, arbitration or other
dispute resolution proceedings the parties agree that the legal fees and other
expenses of the prevailing party shall be borne by the other, non-prevailing
parties to the dispute.
SECTION 2.12. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only
<PAGE>
and shall not affect the meaning or interpretation of this Agreement.
SECTION 2.13. Counterparts. This Agreement may be executed in any number of
counterparts or separate number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the Company and each First Reserve Investor have executed
this Agreement as of the day and year first above written.
TRANSMONTAIGNE OIL COMPANY
By: /s/
Its:
Notices:
Cortlandt S. Dietler
Chief Executive Officer
P.O. Box 5660
Denver, CO 80127
Telephone No.: 303/605-1798
Facsimile No.: 303/605-1671
FIRST RESERVE INVESTORS:
FIRST RESERVE SECURED ENERGY
ASSETS FUND, LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By: /s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
<PAGE>
FIRST RESERVE FUND VI,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By: /s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
FIRST RESERVE FUND V-II,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By: /s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
FIRST RESERVE FUND V,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
<PAGE>
By: /s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
<PAGE>
Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April
17, 1996, is by and among TRANSMONTAIGNE OIL COMPANY, a Delaware corporation
(the "Company"), and the entities listed on the signature pages hereof (the
"Institutional Investors").
WHEREAS, the Company and the Institutional Investors are parties to a
Stockholders Agreement dated as of May 10, 1995 (the "Stockholders Agreement")
that, among other things, provides for registration rights for certain
stockholders of the Company, including the Institutional Investors; and
WHEREAS, the parties wish to provide for registration rights for the
Institutional Investors in addition to the registration rights contained in the
Stockholders Agreement.
NOW, THEREFORE, in consideration of the aforesaid and the mutual promises
hereinafter made, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" shall mean the Board of Directors of the Company.
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York City, New York,
Boston, Massachusetts or Fayetteville, Arkansas are authorized or obligated by
law or executive order to close.
"Commission" means the Securities and Exchange Commission or any other
Federal agency from time to time administering the 1933 Act or the Exchange Act.
"Common Stock" means all of the shares of the Company's $.10 par value
Common Stock which may be issued and outstanding from time to time.
"Common Stock Equivalent" means any other securities of any Person
convertible into or exchangeable or exercisable for Common Stock (whether at the
option of such Person or of the holder of such securities).
"Company" has the meaning set forth in the Introduction to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Person" means an individual, a corporation, a partnership, a joint
venture, a trust, an unincorporated organization or any other entity or
organization, including a government, a political subdivision or an agency or
instrumentality thereof.
"Registrable Securities" means any shares of Common Stock now owned or
hereafter acquired by an Institutional Investor and any shares of Common Stock
which may be issued or distributed in respect of such Common Stock by way of
concession, stock dividend or stock split or other distribution,
recapitalization or reclassification, but with respect to such shares of Common
Stock, only so long as such shares sold are "Restricted Securities." A share of
Common Stock shall be deemed to be a "Restricted Security" until such time as
such share (i) has been effectively registered under the 1933 Act pursuant to a
registration statement with respect to the sale of such share and disposed of in
accordance with such registration
<PAGE>
statement or (ii) has been distributed to the public pursuant to Rule 144 (or
any similar provision then in force) under the 1933 Act, (iii) it shall have
been otherwise transferred, new certificates for it not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of it shall not require registration or qualification of
it under the 1933 Act or any state securities or blue sky law then in force, or
(iv) it shall have ceased to be outstanding.
ARTICLE II
REGISTRATION AND RELATED RIGHTS
SECTION 2.1. Company Registration.
2.1.1 Right to Piggyback on Registration of Common Stock and Common
Stock Equivalents. Subject to Section 2.1.3, if at any time the Company proposes
to register any Common Stock under the 1933 Act in connection with the offering
of such Common Stock on any form other than Form S-4 or Form S-8 or any form
substituting therefor (except for a registration in connection with an exchange
offer of securities solely to existing securityholders of the Company) (a
"Piggyback Registration"), the Company shall each such time promptly give each
Institutional Investor prior written notice of such determination no later than
45 days prior to the proposed filing date of such registration statement. Any
Institutional Investor wishing to register all or any portion of the
Institutional Investor's Registrable Securities must give written notice to the
Company of intent to participate no less than 15 days after the receipt of such
notice. Upon receipt of such written request of any such Institutional Investor,
the Company will use its best efforts to effect the registration under the 1933
Act of all Registrable Securities which the Company has been so requested to
register by the Institutional Investors. Notwithstanding the fact that a
Piggyback Registration requested pursuant to this Section 2.1 involves an
underwritten public offering, any Institutional Investor holding Registrable
Securities requesting to be included in such registration may elect, in writing
at least three Business Days prior to the effective date of the registration
statement filed in connection with such registration, not to register such
Registrable Securities in connection with such registration.
2.1.2 Selection of Underwriters. If the Company in its sole
discretion decides a Piggyback Registration shall
<PAGE>
be underwritten, the Company shall have sole discretion in the selection of any
underwriter or underwriters to manage such Piggyback Registration.
2.1.3 Priority on Piggyback Registrations. If the managing underwriter or
underwriters of a Piggyback Registration (or in the case of a Piggyback
Registration not being underwritten, holders of a majority of the Registrable
Securities being registered by the Institutional Investors) advise the Company
in writing that in its or their opinion the number of Registrable Securities
proposed to be sold in such Piggyback Registration exceeds the number which can
be sold, or adversely affects the price at which the Registrable Securities are
to be sold in such offering, the Company will include in such registration only
the number of Registrable Securities which, in the opinion of such underwriter
or underwriters (or the Institutional Investors, as the case may be) can be sold
in such offering without so affecting such price. The Registrable Securities so
included in such Piggyback Registration shall be apportioned (i) first, to any
shares of Common Stock that the Company proposes to sell, (ii) second, pro rata
among any shares of Common Stock that any Institutional Investors propose to
sell, and (iii) third, pro rata among other shares of Common Stock included in
such Piggyback Registration, in each case according to the total number of
shares of Common Stock requested for inclusion by said selling securityholders,
or in such other proportions as shall mutually be agreed to among such selling
securityholders.
SECTION 2.2. Demand Registration Rights.
2.2.1 Right to Demand. If, at any time after the later of (i) the date on
which the Common Stock is registered under the Exchange Act following a public
offering of Common Stock or (ii) December 1, 1997, any one or more of the
Institutional Investors holding Registrable Securities representing ten percent
(10%) or more in aggregate of the Common Stock (assuming conversion or exercise
of all Common Stock Equivalents into Registrable Securities at the then
conversion price or exercise price) makes a written request (the "Request
Notice") to the Company for registration with the Commission under and in
accordance with the provisions of the 1933 Act of all or part of the Registrable
Securities then owned by such Institutional Investor or Institutional Investors
then owning Registrable Securities (a "Demand Registration"), the Company shall
thereupon, as expeditiously as possible, use its best efforts to file a
registration statement with the Commission and have the registration statement
declared effective
<PAGE>
by the Commission; provided, however, that the number of Registrable Securities
as to which such request is made shall represent not less than five percent of
the outstanding Common Stock and Common Stock Equivalents. Within 10 days after
receipt of such request, the Company will serve written notice (the "Notice") of
such registration request to all Institutional Investors who hold Registrable
Securities, and the Company will include in such registration all Registrable
Securities of such Institutional Investors with respect to which the Company has
received written requests for inclusion therein (also "Request Notices") within
20 days after the giving of the Notice. All Institutional Investors requesting
registration of their Registrable Securities pursuant to this Section 2.2.1 will
specify the aggregate number of Registrable Securities to be registered and will
also specify the intended methods of disposition thereof. Each Institutional
Investor shall be entitled so to request or participate in a request for four
Demand Registrations (the last of which shall be a shelf registration to be
effective for not less than 180 days (the "Shelf Registration")) filed with and
declared effective by the Commission, the expenses of which shall be borne by
the Company in accordance with this Agreement, and no more than one Demand
Registration may be requested in any 12 month period; provided, however, that
if, following the effective date of any registration statement filed pursuant to
a Demand Registration, any Institutional Investor included in a Demand
Registration pursuant to this Section 2.2.1 elects, by giving written notice to
the Company not later than 90 days after such effective date, not to dispose of
its Registrable Securities because of a material adverse change in the business,
condition (financial or otherwise), assets or prospects of the Company and its
subsidiaries, taken as a whole, or a material adverse event with respect to the
Company and its subsidiaries, taken as a whole, not disclosed in the final
prospectus for the Demand Registration, then such Demand Registration shall not
count as one of the Demand Registrations permitted hereunder unless Registrable
Securities representing five percent or more of the Common Stock, including
Common Stock Equivalents, are sold pursuant to such Demand Registration within
90 days of the effective date of the registration statement and prior to the
occurrence of such material adverse event.
If at the time of any Request Notice (i) the Company is engaged in a
registered public offering as to which the Institutional Investors had the right
to include their Registrable Securities as a Piggyback Registration or which was
made on Form S-4, (ii) the Company is engaged in any other activity outside of
the ordinary course of business, such as a merger, consolidation,
recapitalization or acquisition which, in the good faith judgment of
<PAGE>
the Board, would be materially and adversely affected by the requested
registration, or (iii) the Board makes a good faith determination that the
public disclosures required to be made in the requested registration statement
would have a material and adverse impact on the business, financial condition or
prospects of the Company, the Company may at its option direct that such request
be delayed for a period of not more than ninety (90) days, which right to delay
may be exercised by the Company only one time for each Demand Registration for
all Institutional Investors.
The Company shall have the same rights to Piggyback Registration on a
Demand Registration as an Institutional Investor would have in a Piggyback
Registration permitted under Section 2.1 hereof.
2.2.2 Selection of Underwriters. If a requested registration pursuant to
this Section 2.2 involves either a firm or best efforts underwritten offering,
the Institutional Investor(s) initially giving a Request Notice with respect to
a proposed Demand Registration pursuant to this Section 2.2 shall have sole
discretion to select any underwriter or underwriters to manage such Demand
Registration under this Section 2.2.
2.2.3 Effective Registration Statement. A registration requested pursuant
to this Section 2.2 will not be deemed to have been effected unless it has
become effective; provided, that if, within 75 days after it has become
effective (135 days in the case of the Shelf Registration), the offering of
Registrable Securities pursuant to such registration is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court, such registration will be deemed not to have been
effected. Notwithstanding the preceding sentence, if any such stop order is
rescinded, the effective period shall continue upon such rescission and be
extended by the number of days by which such stop order reduced the effective
period.
2.2.4 Priority on Demand Registrations. If the managing underwriter or
underwriters of a Demand Registration advise the Company in writing that in its
or their opinion the number of Registrable Securities proposed to be sold in
such Demand Registration exceeds the number which can be sold, or adversely
affects the price at which the Registrable Securities are to be sold, in such
offering, the Company will include in such registration only the number of
Registrable Securities which, in the opinion of such underwriter or underwriters
(or the Institutional Investors, as the
<PAGE>
case may be), can be sold in such offering without so affecting such price. The
Registrable Securities so included in such Demand Registration shall be
apportioned (i) first, pro rata among the Registrable Securities of the
Institutional Investors who have made requests to be included in such Demand
Registration and (ii) second, pro rata among other shares of Common Stock
included in such Demand Registration, including any shares proposed to be sold
by the Company in such Registration.
2.2.5 Additional Rights. If the Company at any time grants to any other
holders of Common Stock or Common Stock Equivalents any rights to request the
Company to effect the registration under the 1933 Act of any such shares of
Common Stock on terms more favorable to such holders than the terms set forth in
this Agreement, the terms of this Agreement shall be deemed amended or
supplemented to the extent necessary to provide the Institutional Investors with
the same more favorable terms. The Company shall not grant any other person
rights to register securities of the Company on terms which could restrict in
any way the ability of the Company fully to perform its obligations to the
Institutional Investors pursuant to this Agreement.
SECTION 2.3. Registration Procedures. It shall be a condition precedent to
the obligations of the Company and any underwriter or underwriters to take any
action pursuant to this Article IV that the Institutional Investors requesting
inclusion in any Piggyback Registration or Demand Registration (a
"Registration") shall furnish to the Company such information regarding them,
the Registrable Securities held by them, the intended method of disposition of
such Registrable Securities, and such agreements regarding indemnification,
disposition of such securities and the other matters referred to in this Article
IV as the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company. With respect to any
Registration which includes Registrable Securities held by an Institutional
Investor, the Company will, subject to Sections 2.1 and 2.2:
2.3.1 Prepare and file with the Commission a registration statement on the
appropriate form prescribed by the Commission within 60 days after the end of
the period within which requests for registration may be given to the Company,
file with the Commission any necessary amendments to the registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective; provided, however, that at
least five business days before filing a registration
<PAGE>
statement or prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of the registration
statement, the Company will furnish to the holders of the Registrable Securities
covered by such registration statement and the underwriter or underwriters, if
any, copies of or drafts of all such documents proposed to be filed, which
documents will be subject to the reasonable review of such holders and
underwriters, if any, and the Company will not file any registration statement
or amendment thereto or any prospectus or any supplement thereto or any
documents required to be incorporated by reference therein to which holders of a
majority of the Registrable Securities covered by such registration statement or
the underwriters, if any, shall reasonably object;
2.3.2 Prepare and file with the Commission such amendments and post-
effective amendments to such registration statement and any documents required
to be incorporated by reference therein as may be necessary to keep the
registration statement effective for a period of time as necessary to complete
the offering which period shall be not less than 90 days (or 180 days in the
case of the Shelf Registration) (or such shorter period which will terminate
when all Registrable Securities covered by such registration statement have been
sold or withdrawn, but not prior to the expiration of the time period referred
to in Section 4(3) of the 1933 Act and Rule 174 thereunder, if applicable);
cause the prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act (or
any successor rule); and comply with the provisions of the 1933 Act applicable
to it with respect to the disposition of all Registrable Securities covered by
such registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus;
2.3.3 Furnish to such Institutional Investor, without charge, at least one
conformed copy of the registration statement and any post-effective amendment
thereto, upon request, and such number of copies of the prospectus (including
each preliminary prospectus) and any amendments or supplements thereto, and any
exhibits or documents incorporated by reference therein as the Institutional
Investor or underwriter or underwriters, if any, may request in order to
facilitate the disposition of the securities being sold by the Institutional
Investor (it being understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by the Institutional Investor
covered by the
<PAGE>
registration statement and the underwriter or underwriters, if any, in
connection with the offering and sale of the securities covered by the
prospectus or any amendments or supplements thereto);
2.3.4 Immediately notify such Institutional Investor, at any time when a
prospectus relating thereto is required to be delivered under the 1933 Act, when
the Company becomes aware of the happening of any event as a result of which the
prospectus included in such registration statement (as then in effect) contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements therein (in the case of the prospectus or any
preliminary prospectus, in light of the circumstances under which they were
made) not misleading and, as promptly as practicable thereafter, prepare and
file with the Commission and furnish a supplement or amendment to such
prospectus so that, as thereafter delivered to the Institutional Investors (a
reasonable number of such amended and supplemented prospectuses having been
delivered to the Institutional Investors), such prospectus will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
2.3.5 Use its best efforts to cause all securities included in such
registration statement to be listed, by the date of the first sale of securities
pursuant to such registration statement, on each national securities exchange or
market on which the Common Stock is then listed or proposed to be listed by the
Company, if any;
2.3.6 Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible moment;
2.3.7 Subject to the time limitations specified in paragraph (b) above, if
requested by the managing underwriter or underwriters or such Institutional
Investor, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or underwriters of the
Institutional Investor reasonably requests to be included therein, including,
without limitation, with respect to the number of shares being sold by the
Institutional Investor to such underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect to any
term of the underwritten offering of the securities to be sold in such offering;
and make all required filings of such prospectus supplement or
<PAGE>
post-effective amendment as soon as practicable after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
2.3.8 As promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a registration statement,
deliver a reasonable number of copies of such document to such Institutional
Investor;
2.3.9 Prior to the date on which the registration statement is declared
effective, use its best efforts to register or qualify, and cooperate with such
Institutional Investor, the underwriter or underwriters, if any, and their
counsel in connection with the registration or qualification of, the securities
covered by the registration statement for offer and sale under the securities or
blue sky laws of each state and other jurisdiction of the United States as such
Institutional Investor or managing underwriter or underwriters, if any, requests
in writing, to use its best efforts to keep each such registration or
qualification effective, including through new filings, or amendments or
renewals, during the period such registration statement is required to be kept
effective and to do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Securities
covered by the applicable registration statement; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
2.3.10 Enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions customarily taken by
registrants as sellers of a majority of such Registrable Securities or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
2.3.11 Obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the underwriters, if any,
shall reasonably request;
2.3.12 Make available for inspection by any Institutional Investor holding
Registrable Securities covered by
<PAGE>
such registration statement, by any underwriter participating in any disposition
to be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such underwriter,
all pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
2.3.13 Cooperate with such Institutional Investor and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
securities to be sold under the registration statement, and enable such
securities to be in such denominations and registered in such names as the
Institutional Investor or the managing underwriter or underwriters, if any, may
request; and
2.3.14 Use its best efforts to cause the securities covered by the
registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc., as may
be necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities.
The Institutional Investors, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.3.4, will
forthwith discontinue disposition of the securities until the Institutional
Investors' receipt of the copies of the supplemented or amended prospectus
contemplated by this Section 2.3.4 or until they are advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and have
received copies of any additional or supplemental filings which are incorporated
by reference in the prospectus, and, if so directed by the Company, each
Institutional Investor will, or will request the managing underwriter or
underwriters, if any, to, deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Institutional Investor's
possession, of the prospectus covering such securities which is current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time periods mentioned in Section 2.3.4 shall be extended by the
number of days during the period from and including any date of the giving of
such notice to and including the date when each seller
<PAGE>
of securities covered by such registration statement shall have received the
copies of the supplemented or amended prospectus contemplated by Section 2.3.4
hereof or the Advice.
In connection with any Registration, the Company shall be required to
retain an independent outside counsel that is sophisticated in securities law
matters and that is reasonably satisfactory to a majority of those Institutional
Investors that have shares of Common Stock included in such Registration.
2.4. Registration Expenses. In the case of any Registration, the Company
shall bear all of the costs and expenses of such Registration (including,
without limitation, the expenses of preparing any registration statement,
Commission and state "blue sky" filings, registration and qualification fees,
the cost of providing any legal opinion or "cold comfort" letters requested by
the Institutional Investors, and printing costs); legal fees or expenses of one
counsel selected by the Institutional Investors (such counsel being subject to
the reasonable approval of the Company) for the Institutional Investors,
provided, however, that the Company shall not be responsible for registration or
qualification fees or underwriter's discounts or commissions that are
attributable to the Registrable Securities of an Institutional Investor.
SECTION 2.5. Indemnification and Contribution.
2.5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Institutional Investor, its officers, directors and agents
and each Person who controls (within the meaning of the 1933 Act and the
Exchange Act) such Institutional Investor, including, without limitation, any
general partner or manager of any thereof, against all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus in which such Institutional Investor is
participating or in any document incorporated by reference therein or any
omission or alleged omission to state therein a material fact necessary to make
the statement therein (in the case of the prospectus or any preliminary
prospectus, in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by, based upon or contained in
any information with respect to such Institutional Investor furnished in writing
to the Company by such Institutional Investor expressly for use therein;
provided, however,
<PAGE>
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Institutional Investor from
whom the Person asserting such loss, claim, damage or liability purchased the
securities if it is determined that it was the responsibility of such
Institutional Investor to provide such Person with a current copy of the
prospectus and such current copy of the prospectus would have cured such loss,
claim, damage or liability. The Company will also indemnify underwriters (as
such term is defined in the 1933 Act), their officers and directors and each
Person who controls such persons (within the meaning of the 1933 Act) to the
same extent as provided above with respect to the indemnification of the
Institutional Investors.
2.5.2 Indemnification by the Institutional Investors. In connection with
any Registration in which an Institutional Investor is participating, such
Institutional Investor will furnish to the Company in writing such information
and affidavits with respect to such Institutional Investor as the Company
reasonably requests for use in connection with any registration statement or
prospectus and agrees to indemnify and hold harmless the Company, its directors,
officers and agents and each Person who controls (within the meaning of the 1933
Act and the Exchange Act) the Company against any losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue statement of a
material fact or any omission to state a material fact necessary to make the
statements in the registration statement or prospectus or preliminary prospectus
(in the case of the prospectus or preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information or affidavit such Institutional Investor furnished in writing to the
Company by such Institutional Investor expressly for use therein; provided,
however, that the amount recoverable by the Company from an Institutional
Investor under this indemnification provision shall not exceed the amount of net
proceeds received by the Institutional Investor from the sale of Registrable
Securities hereunder; and provided, further, that the indemnity agreement
contained in this Section 2.5.2 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action arising pursuant to a registration
under Article IV if such settlement is effected without the consent of the
Institutional Investor (which consent shall not be unreasonably withheld). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the prospective sellers, or any of
their respective Affiliates, directors, officers or controlling Persons and
shall
<PAGE>
survive the transfer of such securities by such seller.
2.5.3 Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest may exist between such indemnified and indemnifying party, permit the
indemnifying party to assume the defense of such claim, jointly with any other
indemnifying party similarly notified to the extent it may elect, with counsel
reasonably satisfactory to the indemnified party. The failure to so notify the
indemnifying party shall relieve the indemnifying party from any liability
hereunder with respect to the action to the extent that such failure materially
prejudices the indemnifying party; provided, however, that any such failure
shall not relieve the indemnifying party from any other liability which it may
have to any other party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels.
2.5.4 Contribution. If for any reason the indemnification provided for in
the preceding Sections 2.5.1 and 2.5.2 is unavailable to an indemnified party as
contemplated by the preceding Sections 2.5.1 and 2.5.2 for any reason, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnified party and the indemnifying party, but also the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. Notwithstanding the foregoing, if the
<PAGE>
indemnifying party is an Institutional Investor, any contribution pursuant to
this Section 2.5.4 shall be several and not joint, and shall be limited to the
amount of net proceeds received by such Institutional Investor from the sale of
Registrable Securities hereunder.
2.5.5 Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 2.5 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
1933 Act.
SECTION 2.6. Exchange Act Reports. The Company agrees that at all times
after it has filed a registration statement pursuant to the requirements of the
1933 Act relating to any class of equity securities of the Company, it will use
its best efforts to file in a timely manner all reports required to be filed by
it pursuant to the Exchange Act to the extent the Company is required to file
such reports. Upon request of an Institutional Investor, the Company will
furnish the requesting Institutional Investor with such information as may be
necessary to enable such Institutional Investor to effect sales pursuant to Rule
144A. Notwithstanding the foregoing, the Company may deregister any class of its
equity securities under Section 12 of the Exchange Act or suspend its duty to
file reports with respect to any class of its securities pursuant to Section
15(d) of the Exchange Act if it is then permitted to do so pursuant to the
Exchange Act and rules and regulations thereunder.
SECTION 2.7. Restrictions on Public Sale by Holder of Securities.
2.7.1 To the extent not inconsistent with applicable law, any
Institutional Investor whose Registrable Securities are included in a
Registration agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, including a
public sale pursuant to Rule 144 under the 1933 Act, during the 14 days prior
to, and during the 180-day period beginning on, the effective date of such
registration statement (except as part of such Registration), but only in an
underwritten public offering and only if and to the extent requested by the
managing underwriter or underwriters.
<PAGE>
2.7.2 Each Institutional Investor agrees that, in the event the Company
files a registration statement under the 1933 Act with respect to an
underwritten public offering of any shares of Common Stock or Common Stock
Equivalent, such Institutional Investor will not effect any public sale or
distribution of any Common Stock owned by it (other than as part of such
underwritten public offering) within 7 days prior to, and during the 180-day
period beginning on, the effective date of such registration statement and the
Company hereby also so agrees and agrees to use its best efforts to cause, as
the managing underwriters may require, each other holder of any equity security,
or of any security convertible into or exchangeable or exercisable for any
equity security, of the Company purchased from the Company (at any time other
than in a public offering) to so agree.
SECTION 2.8. Participation in Registrations. No Institutional Investor may
participate in any Registration hereunder unless such Institutional Investor (a)
agrees to sell the Institutional Investor's securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements, and (b) completes and executes all questionnaires,
powers of attorney, underwriting agreements and other documents customarily
required under the terms of such underwriting arrangements.
SECTION 2.9. Remedies. Each Institutional Investor shall have the right
and remedy to have the provisions of Sections 2.1 and 2.2 specifically enforced
by any court having jurisdiction in the event that the Company breaches such
provisions, and the Company shall reimburse such Institutional Investor for the
reasonable costs of the expenses for counsel for such Institutional Investor
incurred in connection with such proceeding.
SECTION 2.10. Other Registration Rights. The Company will not grant any
Person any demand or piggyback registration rights with respect to the Common
Stock of the Company, including Common Stock Equivalents, except that the
Company may grant piggyback registration rights ("new rights") that (i) are not
in conflict or inconsistent with, or grant rights more favorable than, the
rights of the Institutional Investors set forth in this Agreement, (ii) do not
entitle such Person to be included in any Registration, and (iii) provide that
the Institutional Investors have a piggyback right upon the exercise of such new
rights and shall be included in such registration statement on an equal basis
with the shares being registered pursuant to the exercise of the new rights.
<PAGE>
ARTICLE III
MISCELLANEOUS
SECTION 3.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telex, facsimile or similar
writing) and shall be given to such party at its address or telex or facsimile
number set forth on the signature pages hereof or such other address or telex or
facsimile number as such party may hereafter specify in writing to the Secretary
of the Company for the purpose by notice to the party sending such
communication. Each such notice, request or other communication shall be
effective (i) if given by telex or facsimile, when such message is transmitted
to the number set forth on such signature pages or such other number as a party
may specify in writing to the Secretary of the Company or (ii) if given by any
other means, the earlier of, (x) when delivered by hand to the address set forth
on such signature pages or such other address as a party may specify in writing
to the Secretary of the Company or (y) five business days after the mailing of
such notice by certified mail. If more than one Institutional Investor specified
the same address for such notices, then a single notice to such address shall be
deemed to be notice to all Institutional Investors at that address.
SECTION 3.2 Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person other than the parties to
this Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision
contained herein. This Agreement constitutes the entire agreement and
understanding, and supersedes and terminates all prior agreements and
understandings, both oral and written, between the parties hereto relating to
the subject matter hereof.
SECTION 3.3 Waiver. Any party hereto may, without binding any other party,
by written notice to another party (a) extend the time for the performance of
any of the obligations or other actions of such other party under this
Agreement; (b) waive compliance with any of the conditions or covenants of such
other party contained in this Agreement; and (c) waive or modify performance of
any of the obligations of such other party under this Agreement. Except as
provided in the preceding sentence, no action taken pursuant
<PAGE>
to this Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants or
agreements contained herein. Neither the waiver by any party hereto of a breach
of any provision hereof or any preceding or succeeding breach nor the failure by
any party to exercise any right or privilege hereunder shall be deemed a waiver
of such party's rights or privileges hereunder nor shall it be deemed a waiver
of such party's rights to exercise the same at any subsequent time or times
hereunder.
SECTION 3.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company and by
Institutional Investors owning two thirds or more of the Common Stock held by
the Institutional Investors at the time of such amendment.
SECTION 3.5 Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or any Institutional Investor.
SECTION 3.6 Limited Liability of Partners. Notwithstanding any other
provision of this Agreement, neither the general partner nor the limited
partners nor any future general or limited partner of any Institutional Investor
shall have any personal liability for performance of any obligation of such
Institutional Investor under this Agreement in excess of the respective capital
contribution of such general partner and limited partners to such Institutional
Investor.
SECTION 3.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF DELAWARE WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 3.8 Pronouns. Whenever the context may require any pronoun used
herein shall include the corresponding masculine, feminine or neuter forms.
SECTION 3.9 Attorneys Fees. In the event of a dispute concerning the
provisions of this Agreement which results in litigation, arbitration or other
dispute resolution proceedings the parties agree that the legal fees and other
expenses of the prevailing party shall be borne by the other, non-prevailing
parties to the dispute.
<PAGE>
SECTION 3.10 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
SECTION 3.11 Counterparts. This Agreement may be executed in any number of
counterparts or separate number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company and each Institutional Investor have
executed this Agreement as of the day and year first above written.
TRANSMONTAIGNE OIL COMPANY
By:/s/
Its:
Notices:
Harold R. Logan, Jr.
Executive Vice President/Finance
P.O. Box 5660
Denver, CO 80127
Telephone No.: 303/595-3331
Facsimile No.: 303/595-0480
YORKTOWN INVESTORS:
YORKTOWN ENERGY PARTNERS, L.P.
By: DR ASSOCIATES III, L.P.
its General Partner
By: DILLON, READ & CO. INC.
its General Partner
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: Bryan H. Lawrence
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
YORKTOWN ENERGY PARTNERS II, L.P.
By: DR ASSOCIATES III, L.P.
its General Partner
<PAGE>
By: DILLON, READ & CO. INC.
its General Partner
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: Bryan H. Lawrence
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
<PAGE>
LEXINGTON PARTNERS III, L.P.
By: DILLON, READ & CO. INC.
its General Partner
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: David W. Niemiec
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
LEXINGTON PARTNERS IV, L.P.
By: DRMC, INC.
its General Partner
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: David W. Niemiec
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
<PAGE>
DILLON, READ & CO. INC.
as Nominee
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: David W. Niemiec
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
DILLON, READ & CO. INC.
as Agent
By:/s/
Notices:
535 Madison Avenue
New York, NY 10022
Attention: David W. Niemiec
Telephone No.: 212/906-7000
Facsimile No.: 212/644-6956
WATERWAGON & CO., Nominee for
Merrill Lynch Growth Fund for
Investment and Retirement
By:/s/
Notices:
c/o Merrill Lynch Asset Management
Attn: Stephen Johnes
Equity Fund Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Telephone No.: (609) 282-2611
<PAGE>
Facsimile No.: (609) 282-1471
MASSMUTUAL INVESTORS:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
Its:
Notices:
1295 State Street
Springfield, Massachusetts 01111
Attention: Richard C. Morrison
Telephone No.: 413/744-6064
Facsimile No.: 413/744-6127
THE FOLLOWING IS THE SIGNATURE LINE AND LEGEND FOR MASSMUTUAL CORPORATE
INVESTORS:
MASSMUTUAL CORPORATE INVESTORS
By:
Its:
The foregoing is executed on behalf of MassMutual Corporate Investors, organized
under a Declaration of Trust, dated September 13, 1985, as amended from time to
time. The obligations of such Trust are not personally binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the trust's property only shall be bound.
Notices:
<PAGE>
1295 State Street
Springfield, Massachusetts 01111
Attention: Richard C. Morrison
Telephone No.: 413/744-6064
Facsimile No.: 413/744-6127
THE FOLLOWING IS THE SIGNATURE LINE AND LEGEND FOR MASSMUTUAL PARTICIPATION
INVESTORS:
MASSMUTUAL PARTICIPATION INVESTORS
By:
Its:
The foregoing is executed on behalf of MassMutual Participation Investors,
organized under a Declaration of Trust, dated April 7, 1988, as amended from
time to time. The obligations of such Trust are not personally binding upon, nor
shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the trust's property only shall
be bound.
Notices:
1295 State Street
Springfield, Massachusetts 01111
Attention: Richard C. Morrison
Telephone No.: 413/744-6064
Facsimile No.: 413/744-6127
<PAGE>
MASSMUTUAL CORPORATE VALUE PARTNERS
LIMITED, A Grand Cayman Island
Corporation
By: MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
Its Investment Manager
By:
Its:
Notices:
1295 State Street
Springfield, Massachusetts 01111
Attention: Richard C. Morrison
Telephone No.: 413/744-6064
Facsimile No.: 413/744-6127
<PAGE>
FIRST RESERVE INVESTORS:
FIRST RESERVE SECURED ENERGY
ASSETS FUND, LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By:/s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
FIRST RESERVE FUND VI,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By:/s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
<PAGE>
FIRST RESERVE FUND V-II,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By:/s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
FIRST RESERVE FUND V,
LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as Managing General Partner
By:/s/
Managing Director
Notices:
475 Steamboat Road
Greenwich, CT 06830
Attention: Bruce M. Rothstein
Telephone No.: 203/661-6601
Facsimile No.: 203/661-6729
TRAVELERS INVESTORS:
THE TRAVELERS INSURANCE COMPANY
By:
Its:
Notices:
One Tower Square
<PAGE>
Hartford, CT 06183-2030
Attention: John F. Gilsenan
Telephone No.: 203/277-6849
Facsimile No.: 203/954-5243
THE TRAVELERS INDEMNITY COMPANY
By:
Its:
Notices:
One Tower Square
Hartford, CT 06183-2030
Attention: John F. Gilsenan
Telephone No.: 203/277-6849
Facsimile No.: 203/954-5243
THE TRAVELERS LIFE AND
ANNUITY COMPANY
By:
Its:
Notices:
One Tower Square
Hartford, CT 06183-2030
Attention: John F. Gilsenan
Telephone No.: 203/277-6849
Facsimile No.: 203/954-5243
THE PHOENIX INSURANCE COMPANY
By:
Its:
Notices:
One Tower Square
Hartford, CT 06183-2030
Attention: John F. Gilsenan
Telephone No.: 203/277-6849
<PAGE>
Facsimile No.: 203/954-5243
<PAGE>
Exhibit 21
TransMontaigne Oil Company
List of Subsidiaries
<TABLE>
<CAPTION>
Name of Subsidiary State of Organization Trade Names
- --------------------------------- --------------------- --------------------------
<S> <C> <C>
Continental Ozark Holding, Inc. Arkansas None
Continental Ozark, Inc. Arkansas None
COZ Pipeline, Inc. Arkansas None
COZ Terminaling, Inc. Arkansas Razorback Terminaling Co.
K123 Corporation Colorado None
NORCO Pipeline, Inc. Arkansas None
Razorback Pipeline Company Delaware None
Republic Natural Gas Company Kansas None
Sheffield Gas Processors, Inc. Colorado None
Sheffield Operating Company, Inc. Nevada None
</TABLE>
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
-------------------------------
To the Board of Directors and Stockholders
TransMontaigne Oil Company:
We consent to incorporation by reference in the registration statement (No. 333-
04405) on Form S-8 of our report dated June 20, 1996, relating to the
consolidated balance sheets of TransMontaigne Oil Company and subsidiaries as of
April 30, 1996 and 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years ended April 30, 1996 and
1995, the seven months ended April 30, 1994 and the year ended September 30,
1993, which report appears in the April 30, 1996 annual report on Form 10-K of
TransMontaigne Oil Company.
KPMG Peat Marwick LLP
Denver, Colorado
August 7, 1996
<PAGE>
Exhibit 24
Power of Attorney
Each person whose signature appears below does hereby make, constitute and
appoint each of Cortlandt S. Dietler and Frederick W. Boutin as such person's
true and lawful attorney-in-fact and agent, with full power of substitution,
resubstitution and revocation to execute, deliver and file with the Securities
and Exchange Commission, for and on such person's behalf and in any and all
capacities, this Annual Report on Form 10-K and any and all amendments thereto,
with all exhibits thereto and other documents in connection therewith, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done as fully
to all intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact or agent or each
person's substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
/s/ Cortlandt S. Dietler August 5, 1996
-------------------------- -----------------------
Cortlandt S. Dietler Date
Chairman, President, Chief Executive Officer, Director
/s/ Harold R. Logan, Jr. August 5, 1996
-------------------------- -----------------------
Harold R. Logan, Jr. Date
Executive Vice President/Finance, Treasurer, Director
Chief Financial Officer
/s/ Frederick W. Boutin August 5, 1996
------------------------- -----------------------
Frederick W. Boutin Date
Senior Vice President, Chief Accounting Officer
/s/ Richard E. Gathright August 2, 1996
-------------------------- -----------------------
Richard E. Gathright Date
Executive Vice President, Director
/s/ John A. Hill August 5, 1996
-------------------------- -----------------------
John A. Hill Date
Director
/s/ Bryan H. Lawrence August 2, 1996
-------------------------- -----------------------
Bryan H. Lawrence Date
Director
/s/ William E. Macaulay August 2, 1996
--------------------------- -----------------------
William E. Macaulay Date
Director
/s/ Edwin H. Morgens August 5, 1996
--------------------------- -----------------------
Edwin H. Morgens Date
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED APRIL 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 38,403,234
<SECURITIES> 0
<RECEIVABLES> 20,905,812
<ALLOWANCES> 0
<INVENTORY> 23,609,136
<CURRENT-ASSETS> 84,393,794
<PP&E> 24,926,309
<DEPRECIATION> 6,461,244
<TOTAL-ASSETS> 120,962,976
<CURRENT-LIABILITIES> 28,741,955
<BONDS> 0
0
0
<COMMON> 1,933,117
<OTHER-SE> 55,886,074
<TOTAL-LIABILITY-AND-EQUITY> 120,962,976
<SALES> 0
<TOTAL-REVENUES> 533,106,747
<CGS> 0
<TOTAL-COSTS> 526,557,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,864,100
<INCOME-PRETAX> 4,810,716
<INCOME-TAX> 192,747
<INCOME-CONTINUING> 4,617,969
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,617,969
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
