-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TGSnXofiN3sJ8Lq7bh/nlzarShVS0Rm0zugrL72YaK/+6wqqoka/cmfNwIhNrCWO aZvuEtQg/S1+YFnAgKbDPg== 0000897069-96-000321.txt : 19960925 0000897069-96-000321.hdr.sgml : 19960925 ACCESSION NUMBER: 0000897069-96-000321 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960924 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHRISTIANA COMPANIES INC CENTRAL INDEX KEY: 0000020104 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC WAREHOUSING & STORAGE [4220] IRS NUMBER: 951928079 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-03846 FILM NUMBER: 96633910 BUSINESS ADDRESS: STREET 1: 777 E WISCONSIN AVE STE 3380 CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142919000 FORMER COMPANY: FORMER CONFORMED NAME: CHRISTIANA OIL COMPANIES DATE OF NAME CHANGE: 19711004 FORMER COMPANY: FORMER CONFORMED NAME: CHRISTIANA OIL CORP DATE OF NAME CHANGE: 19710420 10-K405 1 CHRISTIANA COMPANIES, INC. FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to Commission file number 1-3846 CHRISTIANA COMPANIES, INC. (Exact name of registrant as specified in its charter) A Wisconsin Corporation 95-1928079 (State of other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (414) 291-9000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock - $1.00 par Value New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value (based on September 13, 1996 closing price) of voting stock less stock owned by all executive officers and directors as a group: $38,514,602.12 Number of Shares of Common Stock Outstanding at September 13, 1996: 5,136,630 Documents incorporated by reference: Registrant's definitive Proxy Statement for its 1996 annual meeting of shareholders to be held on October 29, 1996, is incorporated by reference in Part III. The Exhibit Index is located on page 37. PART 1 Item 1. Business At June 30, 1996, Christiana is engaged in providing public refrigerated and non-refrigerated warehousing and logistic services; refurbishing and selling of residential housing in San Diego; and owning 1,948,731 shares of Energy Ventures, Inc. common stock representing 10.3% ownership of the then outstanding shares (see Note K, Subsequent Events, to the Consolidated Financial Statements). REFRIGERATED WAREHOUSING AND LOGISTICS Operations in this line of business have been conducted through two wholly owned subsidiaries, Wiscold, Inc. and The TLC Group, Inc. In fiscal 1996 the operations and management structure of these companies were combined to form Total Logistic Control, Inc. ("TLC"). On September 1, 1992, Christiana acquired the assets of Wiscold, Inc., a Wisconsin corporation, formed in 1915, which was engaged in providing public refrigerated warehousing services, vegetable processing and individual quick freeze (IQF) services, automated vegetable poly bag and bulk packaging services, and transportation services into and out of its facilities. On January 4, 1994, Christiana acquired The TLC Group, Inc., a Zeeland, Michigan-based firm engaged in providing fully integrated third party logistic services, including warehouse, distribution and transportation services in both refrigerated and non-refrigerated facilities. Total Logistic Control now provides full service public and contract warehousing and logistic services in all ranges of refrigerated and ambient temperatures. TLC's transportation and distribution services include full service truckload, less-than-truckload and pooled consolidation in both temperature controlled and dry freight equipment, dedicated fleet services and specialized store-door delivery formats. Transportation and logistic services are provided utilizing company-owned equipment as well as through carrier management services utilizing third party common carriers. Integrated logistic services generally combine transportation, warehousing and information services to manage the distribution channel for a customer's products from the point of manufacturer to the point of consumption. The Company also provides a full range of international freight management services, fully computerized inventory management, kitting, repackaging and just-in-time production supply services. TLC's customers consist primarily of national, regional and local firms engaged in food processing, consumer product manufacturing, wholesale distribution and retailing. During fiscal 1996, TLC's top 10 customers accounted for approximately 40% of total revenues. TLC serves approximately 1,250 customers. Total Logistic Control is the nation's seventh largest provider of public refrigerated warehouse services. All of the Company's refrigerated facilities with the exception of a downtown Milwaukee facility are modern and efficient single story buildings at dock height elevation and fully insulated. The downtown Milwaukee facility, known as Wisconsin Cold Storage, is a 10 story building originally constructed in the early 1900s. TLC's refrigerated distribution centers are: - Rochelle Cold Storage, located in Rochelle, Illinois, is TLC's newest and largest refrigerated facility, initially constructed in 1986. Currently this facility is comprised of 14,100,000 cubic feet of capacity after undergoing four capacity expansions in 1988, 1990, 1993 and 1996. All space is capable of temperatures of -20 degrees Fahrenheit to ambient. Rochelle Cold Storage is strategically located at the intersection of two main line East-West railroads, the Burlington Northern and the Chicago Northwestern, and the cross roads of two interstate highway I 39 and I 88. - Badger Cold Storage, located in Beaver Dam, Wisconsin, was originally constructed in 1975. Since 1975 this facility has undergone three freezer additions, the most recent in 1991, and today is comprised of 7,200,000 cubic feet of freezer storage space. Badger Cold Storage serves distribution related customers as well as vegetable and cranberry processors. This facility's unique capabilities involve value added services for vegetable processors including IQF, blanching, slicing, dicing and packaging operations. Badger's IQF tunnels have the capacity to freeze 85,000 pounds of product per hour. - Mohawk Cold Storage, located in Wauwatosa, Wisconsin, was originally constructed in 1954. There have been six expansions of this facility and today the Mohawk facility comprises 4,300,000 cubic feet of which 3,754,000 cubic feet is freezer capacity and 546,000 cubic feet is cooler space. This facility has multi-temperature refrigerated storage ranging from -20 degrees Fahrenheit to +40 degrees Fahrenheit and daily blast freezing capacity of 750,000 pounds. This location has a 7-car private rail siding. An additional 3 million cubic feet of company owned refrigerated and processing space adjacent to the Mohawk facility is leased on a long term basis to a third party retail grocery company. - Wisconsin Cold Storage is located in Milwaukee, Wisconsin. Constructed in the early 1900s, it has 1,000,000 cubic feet of storage capacity comprised of 900,000 cubic feet of freezer space and 100,000 cubic feet of cooler space. - Taylor Logistic Center, located in Holland, Michigan, has undergone a number of expansions over the years, with a major reconstruction in 1983 after a fire destroyed approximately 50 percent of the facility. Today, this refrigerated facility comprises 2,100,000 cubic feet of storage capacity of which 1,300,000 cubic feet is freezer capacity, 400,000 cubic feet is cooler capacity and 400,000 cubic feet is convertible capacity between freezer and cooler. Taylor services both distribution customers as well as blueberry growers in the West Michigan area. This location is situated on a CSX rail spur with two refrigerated rail docks. This facility is held under a long term lease. - Kalamazoo Logistic Center campus is located in Kalamazoo, Michigan, and has two distribution centers at this location. Facility #1 is a 3,300,000 cubic foot facility with 1,100,000 cubic feet of freezer capacity, 400,000 cubic feet of cooler capacity and 1,800,000 cubic feet of dry storage capacity. This location services a number of distribution customers in the Midwest and is strategically located at the I 94 and US 31 crossroads in Michigan, equal distance between Chicago and Detroit. - Facility #2 is located adjacent to Facility #1 and is comprised of 2,800,000 cubic feet of capacity. This facility contains 1,500,000 cubic feet of cooler capacity and 1,300,000 cubic feet of freezer capacity. Two large distribution customers utilize 75% of this space. These facilities are held under long term leases. - Also located at the Kalamazoo Logistic Center is a company owned 10,000 square foot transportation equipment maintenance center. Approximately 50% of TLC's fleet of over-the-road transportation units is domiciled in Kalamazoo, Michigan. In addition to the refrigerated distribution centers described above, TLC operates a national network of owned and leased dry (non-refrigerated) distribution centers comprising over 1.5 million square feet of storage capacity. Dry distribution centers are located in Zeeland (2), Grand Rapids (2) and Kalamazoo, Michigan; Munster, Indiana; South Brunswick, New Jersey; Sparks, Nevada; Atlanta, Georgia; and Bayamon, Puerto Rico. Competition in integrated logistic services is on both a national and local basis with a predominant emphasis on transportation services. At present, there are no direct competitors providing the full scope warehousing and transportation services across the full range of temperatures in TLC's market. However, each of TLC's individual business segments is highly fragmented with many local, regional and national competitors, especially in the transportation and dry warehousing industries. TLC's competitive edge is its ability to provide fully integrated logistic services designed to its customers' distribution needs and utilizing its network of strategically located refrigerated and dry distribution centers. TLC's revenues and earnings can be affected by changes in competitive pricing, particularly at the local level, harvest yields of certain vegetable and fruit crops grown in the Upper Midwest, and general economic conditions. TLC holds a trademark on its name and logo. No other trademarks, patents, licenses, franchises or concessions are considered material to its business. Expenditures for research and development and compliance with environmental regulation have not been, and are not anticipated to be, significant. ENERGY VENTURES, INC. The Company owns 1,948,731 shares of Energy Ventures, Inc. ("Energy Ventures" or "EVI") representing at June 30, 1996 an approximate 10.3% ownership interest (see Note K, Subsequent Events, to the Consolidated Financial Statements). The Company's holdings in Energy Ventures resulted from the June 30, 1995 merger of Prideco, a former majority owned subsidiary of the Company, with a subsidiary of EVI and a $13.2 million cash investment to purchase additional EVI shares in connection with the merger transaction. The Company accounts for its investment in EVI using the equity method (see Note B to the Consolidated Financial Statements). Energy Ventures, a New York Stock Exchange listed firm, is an international manufacturer and supplier of oilfield equipment and contract drilling services. The oilfield equipment segment manufacturers high performance tubulars and a complete line of artificial lift equipment as well as completion tools. Energy Venture's contract drilling segment consists of barge rigs used by major and large independent oil and gas companies for the exploration and development of natural gas primarily in the U.S. Gulf Coast area. Tubular products are provided through Energy Ventures' Grant Prideco tubular products division. This division's products consist of proprietary drill pipe and premium tubulars. Grant Prideco also designs, manufactures and markets proprietary premium threaded connections for tubing and casing used in oil and gas wells. Grant Prideco's products, particularly its premium tubulars, are used primarily in connection with natural gas exploration and production. Energy Ventures believes that Grant Prideco is the largest manufacturer and supplier of drill pipe in the world and is one of the largest manufacturers of premium tubulars in North America. Artificial lift and completion tool equipment is provided through Energy Ventures' newly formed EVI Oil Tools division through the consolidation of the Highland and Production Oil Tool businesses. EVI Oil Tools manufactures and services artificial lift and completion tool equipment and parts used for the production of crude oil. EVI Oil Tools provides a wide variety of proprietary and patented products. Energy Ventures believes that EVI Oil Tools is one of the two largest manufacturers and distributors of sucker rod lift equipment in the world. Energy Ventures further believes that in this class of lift, EVI Oil Tools provides the only integrated product line from the above ground equipment to the tools submersed in the producing reservoir. Contract drilling services are provided through Energy Ventures' Mallard drilling division. Mallard has 35 barge rigs operating in the U.S. Gulf Coast area or available for operation in that market. Mallard's domestic barge fleet is complemented by six offshore platform workover and drilling units. Internationally, Mallard operates one barge rig in Nigeria and has an agreement to acquire two additional barges which will be operated in Nigeria under a long term contract with a major oil company. Mallard also operates two platform rigs in Peru. Mallard owns four land rigs that are currently operated under contract in Argentina. Mallard owns a 49% interest in a joint venture that owns two land rigs in Peru. The principal customers of Energy Ventures are both domestic and international oil and gas companies and the companies that service them. Energy Ventures' business is highly competitive. Revenues and earnings can be affected by changes in competitive prices, fluctuations in the level of activity in major markets, general economic conditions and governmental regulations. Energy Ventures competes with a large number of companies, some of which have greater resources and more extensive and diversified operations. REAL ESTATE At June 30, 1996 Christiana owned 12 condominium homes in Villa Martinique located in the Tierrasanta section of San Diego, California. Tierrasanta is approximately 10 miles northeast of downtown San Diego. It is essentially a suburban community, built during the 1970s and early 1980s with a present population of about 20,000. Villa Martinique, originally developed and built by the Company, consists of 55 two-story, wood-frame and stucco, eight-plex condominium structures, for a total of 440 residential units. The project is between 15-20 years old. During fiscal 1996, the Company completed the sale of 71 condominium units as part of a phased program to refurbish and sell 366 company-owned condominium homes. This year's sales included 30 homes which were sold to a single buyer in as-is condition, without the Company incurring refurbishment expense. Real estate sales in fiscal 1996 generated pretax gains of $2,818,000 and produced $4,400,000 of after-tax cash flow. Since commencement of the retail sales program of 366 homes in August, 1991 through June 30, 1996, sales of 354 homes have been completed and an additional 8 homes were under contract for sale pending scheduled closings in the first quarter of fiscal 1997. PRIDECO Until June 30, 1995, Prideco was a 60% owned subsidiary of the Company. Prideco, headquartered in Houston, Texas, manufactured downhole tubular products used in the exploration and production of oil and gas wells. Prideco's products included drill pipe, drill collars, heavy weight pipe and premium casing. On June 30, 1995, Christiana completed a tax free merger of Prideco with Grant Acquisition Company, a wholly owned subsidiary of Energy Ventures, Inc. In the merger transaction Christiana exchanged its ownership in Prideco for 1,035,858 shares of EVI common stock. EMPLOYEES The following table shows the number of fulltime Christiana, Wiscold and TLC employees at the dates indicated. Fulltime Employees at August 31, 1994 1995 1996 Christiana 30 23 14 Wiscold 207 253 292 The TLC Group 316 413 389 Prideco* 277 - - --- --- --- TOTAL 830 689 695 ______________ * On June 30, 1995 Prideco was merged with an operating unit of Energy Ventures, Inc. (NYSE:EVI). The decrease in Christiana employees from 23 in 1995 to 14 in 1996 is due to the near completion of condominium refurbishment and sales activities in fiscal 1996. At August 31, 1996, Wiscold had 39 more fulltime employees than at the same date a year ago due to the expansion at Rochelle Cold Storage. The decrease in employees at The TLC Group is primarily related to initiatives to improve productivity in warehouse operations, the elimination of excess administrative overhead, and reductions in operating personnel in transportation. Item 2. Properties Refrigerated Warehousing Facilities At June 30, 1996, Total Logistic Control operated seven public refrigerated warehouse facilities located in Wisconsin (3), Michigan (3), and Illinois (1). Other than Wisconsin Cold Storage, located in downtown Milwaukee, TLC's refrigerated facilities are large single-story buildings constructed at dock height with full insulation and vapor barrier protection. Refrigeration is provided by screw-type compressors in ammonia-based cooling systems. The facilities are strategically located and well served by rail and truck. TLC's refrigerated warehouse facilities are described in the following table: Total Storage Space Location (cubic feet in Type of Facility millions) Rochelle, Illinois 14.1 Distribution Beaver Dam, Wisconsin 7.2 Production/Distribution Wauwatosa, Wisconsin 4.3 Distribution Holland, Michigan * 2.1 Distribution /Production Kalamazoo, Michigan * Building # 1** 3.3 Distribution Building #2 2.8 Distribution Milwaukee, Wisconsin 1.0 Distribution ---- TOTAL 34.8 ==== ______________ * Leased facility. ** Includes 1.8 million cubic feet of dry storage capacity. At both the Rochelle and Beaver Dam facilities the Company owns substantial additional acreage available for expansion. At June 30, 1996, TLC operated 10 public non-refrigerated or dry warehouse distribution facilities located in Michigan (5), Georgia, Indiana, Nevada, New Jersey and Puerto Rico. Zeeland Distribution Center II, located in Zeeland, Michigan and its recent expansion is a company owned facility. All other dry facilities are held under leases. Lease terms generally match underlying contracts with major customers served at each facility. These facilities are single story block or metal construction buildings. All dry facilities are constructed at dock height and are approved as food grade storage facilities. TLC's dry warehouse facilities are described on the following table:
Total Storage Space (sq ft. in Facility Location thousands) Type of Facility Zeeland Distr. Center I* Zeeland, MI 202 Public Zeeland Distr. Center II Zeeland, MI 220 Public Kraft Avenue Distr. Ctr.* Grand Rapids, MI 36 Public Grand Rapids Distr. Ctr. I* Grand Rapids, MI 97 Public Michigan Distr. Ctr. I* Kalamazoo, MI 88 Public Central Distr. Center * Munster, IN 571 Contract/Public East Coast Distr. Center I* So. Brunswick, NJ 200 Contract/Public West Coast Distr. Center I* Sparks, NV 152 Contract/Public Puerto Rico Warehouse* Bayamon, PR 30 Contract South East Distr. Center* Atlanta, GA 66 Public ----- TOTAL 1,662 ----- * Leased facility.
TLC owns and operates a 10,000 square foot truck maintenance facility located at the Kalamazoo Logistic Center. This facility is used for the maintenance of TLC transportation equipment. In addition, the facility is used to perform limited outside maintenance on non-TLC vehicles. Item 3. Legal Proceedings. None Item 4. Submission of Matters to a Vote of Security Holders. None Part II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters. The common stock of the Company is listed on the New York Stock Exchange. The table below sets forth the reported high and low sales prices as reported by the New York Stock Exchange for Christiana Companies common stock for quarters ended March 31, 1993 through September 13, 1996.
1996 1995 1994 1993 Quarter Ended Low High Low High Low High Low High March 31 22 1/4 24 3/4 30 1/8 31 3/4 25 1/2 27 5/8 29 7/8 36 June 30 20 1/8 24 1/4 25 1/8 30 24 5/8 34 5/8 24 29 7/8 September 30* 21 22 3/8 24 3/4 27 1/2 29 1/2 34 1/2 22 5/8 27 1/4 December 31 - - 22 28 1/4 30 34 1/4 22 7/8 29 3/8 * Ten weeks ended September 13, 1996.
At September 13, 1996, there were approximately 976 shareholders of record. There have been no dividends paid since 1981, and based on the Company's strategic business plan of reinvesting cash flow and acquisitions, none are anticipated in the foreseeable future. Item 6. Selected Financial Data. Selected Financial Data is provided under the caption "Five Year Financial Information" is included on page 34. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following table reflects the components of the Company's net earnings, after adjusting for minority interest, for each of the past three fiscal years:
Contribution to Net Earnings Fiscal Year Ended June 30 1996 1995 1994 Per Per Per $ Share $ Share $ Share (In thousands, except for per share data) Christiana, including Corporate $ 971 $0.19 $1,528 $0.29 $2,923 $0.55 Refrigerated Warehousing and Logistics 1,536 0.29 2,563 0.49 994 0.19 Energy Ventures * 1,096 0.21 -- -- -- -- Prideco, net of Minority Interest -- -- 971 0.18 741 0.14 Non-Operating Writedown -- -- -- -- (1,537) (0.29) ------ ----- ------ ----- ------- ----- Net Earnings $3,603 $0.69 $5,062 $0.96 $3,121 $0.59 ====== ===== ===== ===== ===== ===== _________ * Net of deferred taxes.
Fiscal Year Ended June 30, 1996 The Company's consolidated revenues for fiscal 1996 were $77,170,000 compared to $126,881,000 reported for fiscal 1995. Consolidated revenues in fiscal 1996 all of which were derived from the Refrigerated Warehousing and Logistics segment were lower this year due entirely to the June 30, 1995 merger of Prideco. Prior to the merger, Prideco's operations were included in Christiana's financial statements. In fiscal 1995, Prideco contributed $55,239,000, or 43.5% of the Company's consolidated revenues. In fiscal 1996, revenues of Christiana's operating business, Total Logistic Control, grew 8% to $77,170,000 compared to revenues of $71,642,000 for the previous year. The gain is primarily attributable to increased warehouse capacity and integrated logistic services. Selling, general and administrative expenses are lower by $4,208,000 compared to the previous year, of which approximately $3,800,000 is attributable to the deconsolidation of Prideco. Operating income for fiscal 1996 was $4,221,000 compared to $10,324,000 in fiscal 1995. The prior year included $4,225,000 from Prideco. Excluding Prideco and before non-recurring expenses of $310,000 associated with consolidating the operations of Wiscold and The TLC Group, operating income for fiscal 1996 was down $1,568,000 from the prior year to $4,531,000. The decline was the result primarily of lower vegetable processing and freezing volumes, increased labor expenses associated with the startup of high volume distribution accounts and high operating costs in transportation stemming from less than optimal utilization of equipment due to lower demand, high maintenance expense and price pressures related to general market conditions. In addition, during the year Total Logistic Control incurred expenses associated with the construction and initial occupancy of two new distribution centers without the benefit of concurrent revenues. Interest income in fiscal 1996 was $531,000, down from $942,000 the prior year due primarily to the use of $13,291,000 of cash to purchase additional Energy Ventures common stock in connection with the Prideco merger on June 30, 1995. The decline in interest expense of $1,746,000 in fiscal 1996 compared to the previous year is mainly related to the deconsolidation of Prideco which had $1,577,000 of interest expense in fiscal 1995. The Company's effective tax rate in fiscal 1996 increased to 40% from 37% primarily because of the absence of tax exempt interest and increased state taxes due to year to year changes in the relative state components of the Company's earnings. Consolidated net earnings for fiscal 1996 were $3,603,000 or $.69 per share, down $1,459,000 from net earnings in fiscal 1995 of $5,062,000 or $.96 per share. Before the effects of the consolidation charges, net income was $3,789,000 or $.73 per share, a decline of 25% compared to fiscal 1995. Equity in earnings of Energy Ventures totaled $1,096,000 after providing for deferred taxes. In fiscal 1995, Prideco's operations contributed net earnings of $971,000. Real estate sales in fiscal 1996 totaled 71 condominium homes contributing net earnings of $1,712,000 compared to sales of 48 homes last year which generated earnings of $1,850,000. In fiscal 1996, 30 homes were sold to a single buyer in an as-is condition without the Company incurring refurbishment expense. At year end, Christiana had 12 condominium homes available for sale, of which 8 were under contract awaiting scheduled closings during the first quarter of 1997. Fiscal Year Ended June 30, 1995 Christiana Companies consolidated revenues for fiscal 1995 increased 40.7% from $90,153,000 to $126,881,000 due primarily to higher volume in Refrigerated Warehousing and Logistics operations which in fiscal 1995 included The TLC Group for a full twelve month period versus six months in fiscal 1994, as well as increased demand for Prideco's downhole premium tubular products. Within the Refrigerated Warehousing and Logistics business segment in fiscal 1995, both Wiscold and TLC increased revenues on a comparable period basis through higher utilization of warehousing facilities, vegetable processing and IQF operations. Revenues within this segment increased 67.7%. Warehousing, rental and related expenses increased primarily due to increased volume at both Wiscold and The TLC Group as well as the inclusion of TLC for a full 12 month period. Prideco's revenues increased 19% in fiscal 1995 to $55,239,000 as it operated at virtually full capacity for much of the year. Increased demand for all of Prideco's products resulted from a sustained level of drilling activity throughout the year and the depletion of surplus inventories of used tubular products. Selling prices of Prideco's products were modestly higher, however increased steel prices more than offset these gains. Prideco's gross margin increased marginally from 14.2% in fiscal 1994 to 14.7% in fiscal 1995 due primarily to higher absorption factors resulting from near full capacity production levels. Product pricing in Prideco's industry was intensely competitive throughout fiscal 1995 reflecting the existence of significant excess manufacturing capacity. Rental revenues from Christiana's real estate operations were lower in fiscal 1995 due entirely to fewer units being available for rent as a result of planned vacating of units in preparation for sale. Consolidated earnings from operations were $10,324,000 in fiscal 1995 compared to $6,422,000 in fiscal 1994, reflecting a 60.8% increase. Growth in operating earnings was primarily attributable to higher volume in Refrigerated Warehousing and Logistics. Within this business segment both Wiscold and TLC had higher utilization of warehousing, vegetable processing and IQF capacity all of which generally produce higher marginal contribution with increased volume once breakeven levels have been surpassed. During the year Wiscold commenced a new poly bag vegetable packaging operation at its Beaver Dam facility. At Prideco, earnings from operations increased 31.2% compared to the previous year as a result of higher volume. On June 30, 1995, Christiana completed a tax free merger of Prideco, a 60% owned subsidiary, with Grant Acquisition Company, a subsidiary of Energy Ventures, Inc. In the merger transaction Christiana received 1,035,858 shares of EVI common stock in exchange for its ownership in Prideco. The investment in Energy Ventures, Inc. is accounted for under the equity method. Interest income was marginally higher in fiscal 1995 due to higher rates available on short term investments. Interest expense increased 30.5% in fiscal 1995 to $4,842,000 due primarily to the inclusion of TLC's operations for the full twelve months this year and to a lesser extent higher short-term interest rates during the year which impacted Prideco's borrowings, most of which were priced on a floating rate basis indexed to prime. Consolidated net earnings for the year ended June 30, 1995 were $5,062,000 or $0.96 per share compared to $3,121,000 or $0.59 per share for the previous fiscal year. Refrigerated Warehousing and Logistics contributed $2,563,000 or $0.49 per share versus $994,000 or $0.19 per share in fiscal 1994. The improvement in net earnings in fiscal 1995 was primarily attributable to improved utilization of Wiscold's warehousing, vegetable processing and IQF operations and to a lesser extent the inclusion of The TLC Group for a full twelve month period. Prideco contributed net earnings, after minority interest, of $971,000 or $0.18 per share compared to $741,000 or $0.14 per share contributed in fiscal 1994. Real estate sales in fiscal 1995 totaled 48 homes and contributed net earnings of $1,850,000 or $0.35 per share versus 84 home sales in fiscal 1994 which contributed net earnings of $3,369,000 or $0.63 per share. Christiana's effective tax rate decreased in fiscal 1995 to 37% from 38% last year primarily resulting from tax exempt interest. The following summarizes the unaudited consolidated pro forma operating results of the Company as if the merger of Prideco, the acquisition of EVI shares and the acquisition of The TLC Group had occurred at the beginning of the fiscal year ended June 30, 1994. Year Ended June 30 1995 1994 Revenues $71,642,000 $67,572,000 Net earnings 4,173,000 2,998,000 Earnings per share $.079 $0.56 Inflation in fiscal 1995 was a meaningful factor at Prideco which experienced a substantial increase in steel prices throughout the period. Due to competitive industry conditions these increases were not able to be entirely recovered in the selling price of Prideco's products. Financial Condition, Liquidity and Capital Resources Cash equivalents and short-term investments totaled $4,478,000 at June 30, 1996 compared to $3,197,000 at June 30, 1995. The Company's working capital at June 30, 1996 was $2,189,000 compared to $2,111,000 at June 30, 1995. Operating activities in fiscal 1996 provided cash of $8,563,000 derived primarily from net earnings, depreciation and amortization. Capital expenditures in fiscal 1996 totaled $19,715,000, the major components of which were: $11.4 million to construct and equip a new 3.5 million cubic foot refrigerated distribution and logistic center in Rochelle, Illinois; $2.2 million to construct and equip a new dry distribution center in Zeeland, Michigan; $2.3 million of transportation equipment additions and replacements, net of disposals; and $2.3 million in condominium home refurbishments. Financing activities in fiscal 1996 provided $3,648,000 consisting of $5.4 million of increased long term debt, net of repayments, issued to partially fund the two new warehouse additions. During fiscal 1996 the Company acquired 59,000 shares of its common stock in two transactions for a total cost of $1,236,000. The Company's balance sheet at June 30, 1996, reflects $23,631,000 as its carrying value for 1,948,731 shares of Energy Ventures common stock. At June 30, 1996 these shares had a market value of $63,334,000 or $32.50 per share. EVI has not paid dividends on its common stock since 1984 and it is anticipated, for the foreseeable future, that its earnings will be retained for the development of its business. During fiscal 1996 the Company refinanced a revolving credit agreement which was originally organized in 1994 to partially fund the acquisition of Wiscold, Inc. The Company established a new $40 million 5 year revolving credit agreement to fund the $11.4 million facility expansion in Rochelle, Illinois and to refinance the $29.8 million existing outstanding balance under the former agreement. Borrowings under the new revolving credit agreement are now unsecured and carry a 50 basis point lower rate of interest. At June 30, 1996 borrowings under this agreement totaled $35,248,000. At June 30, 1996, the Company had in place a $15 million unsecured line of credit for general corporate purposes. Borrowings under this line of credit bear interest on a floating rate of LIBOR plus 125 basis points or prime at the Company's option. At June 30, 1996, there were no borrowings under this facility. As otherwise described in this report, the Company has been engaged in refurbishing and selling its condominium homes. Sales of the remaining 12 homes whose refurbishment is substantially completed are anticipated in the first quarter of fiscal 1997. At June 30, 1996, 8 of the 12 homes available for sale were in escrow awaiting scheduled closings. The Company's current sources of capital include: cash generated from operations, the sale of 12 condominium homes, sale of existing mortgage portfolio, and borrowings under its revolving credit agreement and line of credit. The Company believes that current reserves of cash and short-term investments, access to existing credit facilities and internally generated cash from operations are sufficient to finance the projected cash requirements of its current operations. The Company continues to evaluate new acquisitions in areas strategic to existing operations as well as new lines of business. Future acquisitions may be funded through cash flow from operations, liquidation of mortgage notes receivable, liquidation of Energy Ventures stock, borrowings under its existing line of credit and other facilities, and equity issuance if desirable. As of June 30, 1996, the Company had no material capital commitments. Item 8. Financial Statement and Supplementary Data. See Index to Financial Information on page 16. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None Part III Item 10. Directors and Executive Officers of Registrant. The material in Section III of the 1996 Proxy Statement is incorporated herein by reference. Item 11. Executive Compensation. The material in Section IV of the 1996 Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The material in Section II and III of the 1996 Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. The material in Section IV of the 1996 Proxy Statement is incorporated herein by reference. Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. Financial Statement and Schedules: See Index on page 16. Exhibits: See Index on page 37. Reports on Form 8-K: Registrant filed a report on Form 8-K dated June 11, 1996 that disclosed the change in accounting for the investment in EVI. SIGNATURES Pursuant to the requirement of Section 13 of 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Christiana Companies, Inc. Date: September 13, 1996 By: /s/ Sheldon B. Lubar Sheldon B. Lubar, Chairman Pursuant to the requirements of the Securities Exchange Act of 1934 this 10-K report has been signed below on September 13, 1996 by the following persons on behalf of the Registrant and in the capacity indicated. Signature /s/ Sheldon B. Lubar Chairman, Chief Executive Sheldon B. Lubar Officer and a Director /s/ Gary R. Sarner President, Chief Operating Gary R. Sarner Officer and a Director /s/ William T. Donovan Executive Vice President, Chief William T. Donovan Financial Officer and a Director /s/ Raymond F. Logan Vice President- Real Estate and Raymond F. Logan a Director /s/ Betty J. White Treasurer, Controller and Betty J. White Assistant Secretary /s/ Nicholas F. Brady Director Nicholas F. Brady /s/ David J. Lubar Director David J. Lubar /s/ Albert O. Nicholas Director Albert O. Nicholas CHRISTIANA COMPANIES, INC. FINANCIAL INFORMATION FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K FISCAL YEAR ENDED JUNE 30, 1996 CHRISTIANA COMPANIES, INC. Index to financial information Page No. Consolidated Statements of Earnings for the years ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . 17 Consolidated Balance Sheets as June 30, 1996 and June 30, 1995 . . 18 Consolidated Statements of Shareholders' Equity for the years ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . 19 Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1995 and 1994 . . . . . . . . . . . . . . . 20 Report of Independent Public Accountants . . . . . . . . . . . . . 21 Notes to Consolidated Financial Statements . . . . . . . . . . . . 22 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 34 CHRISTIANA COMPANIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS Year Ended June 30 1996 1995 1994 Revenues: Product Sales $ - $55,239,000 $46,428,000 Warehousing, Rental and Related Services 77,170,000 71,642,000 43,725,000 ---------- ----------- ---------- 77,170,000 126,881,000 90,153,000 ---------- ----------- ---------- Cost and Expenses: Cost of Product Sales - 47,134,000 39,840,000 Warehousing, Rental and Related Expenses 65,418,000 57,684,000 35,136,000 Selling, General & Administrative Expenses 7,531,000 11,739,000 8,755,000 ----------- ----------- ---------- 72,949,000 116,557,000 83,731,000 ----------- ----------- ---------- Earnings From Operations 4,221,000 10,324,000 6,422,000 ----------- ----------- ---------- Other Income (Expense): Interest Income 531,000 942,000 896,000 Interest Expense (3,096,000) (4,842,000) (3,710,000) Gain on Sales of Real Estate 2,818,000 3,083,000 5,615,000 Equity in Earnings of Energy Ventures 1,745,000 - - Other Income (Expense), Net (208,000) (367,000) (3,316,000) ---------- ---------- ---------- 1,790,000 (1,184,000) (515,000) ---------- ---------- ---------- Earnings Before Income Taxes and Minority Interest 6,011,000 9,140,000 5,907,000 Income Tax Provision 2,408,000 3,394,000 2,256,000 ---------- ---------- ---------- Net Earnings Before Minority Interest 3,603,000 5,746,000 3,651,000 Minority Interest - (684,000) (530,000) ---------- ---------- ---------- Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000 ========== ========== ========== Earnings Per Share $0.69 $0.96 $0.59 ========== ========== ========== Weighted Average Number of Shares Outstanding 5,186,679 5,275,947 5,320,876 See notes to consolidated financial statements. CHRISTIANA COMPANIES, INC. CONSOLIDATED BALANCE SHEETS June 30 1996 1995 ASSETS Current Assets: Cash and Cash Equivalents $3,728,000 $ 375,000 Short-Term Investments 750,000 2,822,000 Accounts Receivable, Net 8,294,000 8,260,000 Inventories, Prepaids and Other 1,732,000 2,298,000 ---------- ---------- Total Current Assets 14,504,000 13,755,000 ---------- ---------- Long-Term Assets: Investment in Energy Ventures 23,631,000 21,886,000 Mortgage Notes Receivable 3,314,000 3,205,000 Rental Properties, Net 867,000 3,610,000 Fixed Assets, Net 81,283,000 71,104,000 Goodwill 5,749,000 5,906,000 Other Assets 1,670,000 2,276,000 ----------- ----------- Total Long-Term Assets 116,514,000 107,987,000 ----------- ----------- TOTAL ASSETS $131,018,000 $121,742,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 5,294,000 $ 2,774,000 Accrued Liabilities 4,072,000 5,347,000 Short-Term Debt 1,354,000 1,844,000 Current Portion of Long-Term Debt 1,295,000 1,679,000 ------------ ------------ Total Current Liabilities 12,015,000 11,644,000 ------------ ------------ Long-Term Liabilities: Long-Term Debt 44,013,000 38,256,000 Deferred Income Taxes 12,674,000 11,866,000 Other Liabilities 1,239,000 1,266,000 ------------ ------------ Total Long-Term Liabilities 57,926,000 51,388,000 ------------ ------------ Total Liabilities 69,941,000 63,032,000 ------------ ------------ Shareholders' Equity: Preferred Stock - - Common Stock 17,218,000 17,218,000 Treasury Stock at Cost (1,236,000) - Retained Earnings 45,095,000 41,492,000 ------------ ------------ Total Shareholders' Equity 61,077,000 58,710,000 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $131,018,000 $121,742,000 =========== =========== See notes to consolidated financial statements. CHRISTIANA COMPANIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (1) (2)
Additional Common Stock Treasury Stock Paid-in Retained Shares Amount Shares Amount Capital Earnings Total Balance, June 30, 1993 5,206,630 $5,207,000 - - $12,945,000 $33,309,000 $51,461,000 Issuance of Stock 234,269 234,000 - - 5,272,000 - 5,506,000 Net Earnings for the Year - - - - - 3,121,000 3,121,000 --------- --------- ------ -------- ---------- ---------- ---------- Balance, June 30, 1994 5,440,899 $5,441,000 - - $18,217,000 $36,430,000 $60,088,000 Repurchase of Stock (245,269) (245,000) - - (6,195,000) - (6,440,000) Net Earnings for the Year - - - - - 5,062,000 5,062,000 --------- --------- ------ -------- ---------- ---------- ---------- Balance, June 30, 1995 5,195,630 $5,196,000 - - $12,022,000 $41,492,000 $58,710,000 Purchase of Treasury Stock - - (59,000) $(1,236,000) - - $(1,236,000) Net Earnings for the Year - - - - - 3,603,000 3,603,000 --------- --------- ------ -------- ---------- ---------- ---------- Balance, June 30, 1996 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $45,095,000 $61,077,000 ========= ========= ====== ========= ========== ========== ========== (1) Preferred stock: $10 par value, 1,000,000 shares authorized, none issued. (2) Common stock: $1 par value, 12,000,000 shares authorized.
See notes to consolidated financial statements. CHRISTIANA COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended June 30 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000 Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities: Depreciation and Amortization 7,159,000 8,207,000 6,255,000 Gain on Sale of Assets (3,024,000) (3,213,000) (5,607,000) Deferred Income Tax (Benefit) Provision (1,084,000) 1,462,000 (483,000) Minority Interest - 684,000 530,000 Equity in Earnings of EVI (1,745,000) - - Changes in Assets and Liabilities: (Increase) in Accounts Receivable (34,000) (2,240,000) (2,436,000) (Increase) Decrease in Inventories (191,000) 2,566,000 (5,337,000) (Increase) Decrease in Prepaids and Other Assets 788,000 (485,000) 4,058,000 Increase in Payables and Accruals 3,091,000 396,000 779,000 ---------- ---------- ---------- Net Cash Provided By Operating Activities 8,563,000 12,439,000 880,000 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from (Purchase of) Short-Term Investments, Net Investments, Net 2,072,000 11,742,000 (11,064,000) Capital Expenditures (19,715,000) (10,931,000) (7,285,000) Business Acquisitions, Net of Cash Acquired - (13,291,000) (5,630,000) (Increase) Decrease in Mortgage Notes Receivable (109,000) 356,000 1,131,000 Decrease in Cash due to Merger of Prideco - (533,000) - Proceeds from Sale of Assets 8,894,000 6,954,000 11,538,000 ----------- --------- ---------- Net Cash Used In Investing Activities (8,858,000) (5,703,000) (11,310,000) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings (Payments) on Line of Credit, Net (489,000) 501,000 1,533,000 Stock Repurchase (1,236,000) (3,805,000) - Proceeds from Notes Payable 9,011,000 4,125,000 5,000,000 Payments of Notes and Mortgages Payable (3,638,000) (11,111,000) (4,983,000) ---------- ----------- ---------- Net Cash Provided By (Used In) Financing Activities 3,648,000 (10,290,000) 1,550,000 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,353,000 (3,554,000) (8,880,000) BEGINNING CASH AND CASH EQUIVALENTS, JULY 1 375,000 3,929,000 12,809,000 ---------- ---------- ----------- ENDING CASH AND CASH EQUIVALENTS, JUNE 30 $ 3,728,000 $ 375,000 $ 3,929,000 ========== ========== =========== Supplemental Disclosures of Cash Flow Information: Interest Paid $ 3,228,000 $ 4,612,000 $ 3,829,000 Income Taxes Paid $ 2,579,000 $ 2,950,000 $ 1,570,000 See notes to consolidated financial statements. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS BOARD OF DIRECTORS AND SHAREHOLDERS OF CHRISTIANA COMPANIES, INC.: We have audited the accompanying consolidated balance sheets of Christiana Companies, Inc. (a Wisconsin corporation) as of June 30, 1996 and 1995, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the years in the three year period ended June 30, 1996, as restated (See Note B). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with general accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Christiana Companies, Inc. as of June 30, 1996 and 1995, and the results of its consolidated operations and its cash flows for each of the three years in the period ended June 30, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Milwaukee, Wisconsin August 2, 1996 CHRISTIANA COMPANIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Three years ended June 30, 1996) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Description of Business: At June 30, 1996, Christiana is engaged in providing public refrigerated and dry (non-refrigerated) warehousing and logistic services; refurbishing and selling of residential housing in San Diego; and owning 1,948,731 shares of Energy Ventures, Inc. common stock which represented a 10.3% ownership interest at that date. Principles of Consolidation: The consolidated financial statements include the accounts of Christiana Companies, Inc., ("Christiana") and its majority-owned subsidiaries (together with Christiana referred to as the "Company"). All material intercompany transactions have been eliminated. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Short-Term Investments: As of June 30, 1996 and 1995, short-term investments are classified as "available for sale" and include U.S. Treasury securities maturing in less than one year. These investments are carried at market, which approximates cost. Accounts Receivable: Accounts receivable are presented net of a reserve for bad debts of $253,000, $120,000 and $94,000 at June 30, 1996, 1995, and 1994, respectively. The provision for bad debts was $227,000, $85,000 and $88,000 for the years ended June 30, 1996, 1995, and 1994, respectively. Deductions from the reserve were $94,000, $59,000 and $122,000 for the years ended June 30, 1996, 1995, and 1994, respectively. Investment in Energy Ventures, Inc.: At June 30, 1996, the Company owned 1,948,731 shares of Energy Ventures, Inc. (NYSE:EVI) which represented 10.3% of the then outstanding common stock. Based on the facts and circumstances associated with the Investment in EVI, including the Company's Board representation, and in accordance with the Accounting Principles Board Opinion No. 18 the Company accounts for this investment under the equity method of accounting. At June 30, 1996, these shares had a market value of $63,334,000. Mortgage Notes Receivable: At June 30, 1996, mortgage notes receivable, derived from condominium sales, totaled $3,314,000 and accrue interest at rates ranging from 6.5% to 9.125%. The principal balance of mortgage notes receivable matures as follows: Year Ended June 30 1997 $ 33,000 2000 $ 66,000 1998 54,000 2001 44,000 1999 129,000 Thereafter 2,988,000 During the years ended June 30, 1996 and 1995, mortgage notes receivable of $286,000 and $928,000, respectively, were sold or prepaid. Rental Properties and Fixed Assets: Rental properties, consisting principally of residential condominium homes, and fixed assets are carried at cost less accumulated depreciation, which is computed using both straight-line and accelerated methods for financial reporting purposes. The cost of major renewals and improvements are capitalized; repair and maintenance costs are expensed. A summary of the cost of rental properties and fixed assets and the estimated useful lives for financial reporting purposes is as follows: At June 30, Estimated 1996 1995 Useful Lives Rental Properties $ 1,029,000 $ 4,504,000 20-40 years Less: Accumulated Depreciation (162,000) (894,000) ---------- ---------- $867,000 $3,610,000 ========== ========== Fixed Assets: Land 3,416,000 3,416,000 - Machinery and Equipment 54,314,000 46,081,000 5-7 years Buildings and Improvements 41,394,000 34,033,000 30-32 years Construction-In-Progress 12,000 140,000 - Less: Accumulated Depreciation (17,853,000) (12,566,000) ---------- ---------- $81,283,000 $71,104,000 ========== ========== Goodwill: Goodwill is amortized on a straight-line basis over 40 years ($157,000 in 1996 and $214,000 in 1995). The accumulated amortization at June 30, 1996 and 1995 was $409,000 and $252,000, respectively. The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life may warrant revision or that the remaining balance of goodwill may not be recoverable. Other Assets: Other Assets primarily represent deferred charges and cash surrender value of officer's life insurance. At June 30, 1995, Other Assets included a partnership interest which represented 5% ownership in a Chicago office building. This asset was written down to $230,000 in 1994 to reflect its realizable value. Income Taxes: Deferred income taxes are provided on the temporary differences in the carrying values of assets and liabilities for financial reporting and income tax purposes. Earnings Per Share: Earnings per share is computed on the basis of the weighted average number of common shares outstanding. Cash and Cash Equivalents: The Company considers all highly liquid investments with original maturities of less than ninety days to be cash equivalents. Reclassifications: Certain reclassifications have been made in the 1994 and 1995 statements to conform with 1996 presentation. B. RESTATEMENTS: The Company has restated its previously issued June 30, 1995 financial statements to reflect adjustments required to account for the Company's investment in Energy Ventures, Inc. under the equity method of accounting instead of the cost method, as was previously reported. After reevaluating all of the facts and circumstances, the Company has determined that the equity method is the appropriate accounting for this investment under generally accepted accounting principles. The restated Consolidated Statement of Earnings for the year ended June 30, 1995 excludes the "Gain on Merger of Prideco" in the amount of $10,050,000 (pre-tax) that was originally reported, along with the related income tax effects. The restated June 30, 1995 Balance Sheet no longer reports the Investment in EVI as an available for sale security. Accordingly, the originally reported "Unrealized Investment Gain, Net of Tax" of $1,909,000 and the related deferred tax components have been removed from the restated June 30, 1995 Balance Sheet. The impact of the restatement is as follows: Year Ended June 30, 1995 Earnings Before Income Taxes and Minority Interest As previously reported $19,190,000 As restated $ 9,140,000 Net Earnings As previously reported $10,445,000 As restated $ 5,062,000 Earnings Per Share As previously reported $1.98 As restated $0.96 Shareholders' Equity As previously reported $66,002,000 As restated $58,710,000 C. ACQUISITIONS: On June 30, 1995, Prideco, Inc. ("Prideco"), a majority-owned subsidiary of the Company, merged with Grant Acquisition Company, a wholly-owned subsidiary of Energy Ventures, Inc. (NYSE:EVI). In the merger, the Company's shares of Prideco were converted into 1,035,858 shares of Common Stock, $1.00 par value, of EVI. Accordingly, the individual accounts of Prideco have been eliminated from the Company's June 30, 1995 Balance Sheet which reflects the effect of the merger. Prideco's results of operations are included in the Company's Consolidated Statement of Earnings through June 30, 1995, the date of the merger. Concurrent with the merger, the Company acquired an additional 912,873 shares of EVI common stock directly from EVI and the minority shareholders of Prideco for an aggregate cash price of $13,291,000. The 1,948,731 shares of EVI common stock acquired by the Company in the transactions referred to above represented 13.1% of the then outstanding shares of EVI common stock. On January 4, 1994, the Company acquired, by way of merger, The TLC Group, Inc., a Zeeland, Michigan-based firm which provides fully integrated logistic services including refrigerated and dry warehousing, transportation and information services. The purchase price consisted of approximately $5,630,000, the issuance of 234,269 shares of Christiana common stock, an 8% subordinated note in the amount of $1,764,000 and the assumption of its liabilities. As part of this acquisition, the assets of The TLC Group were revalued to their fair market value with the excess of purchase price over fair value amounting to $5,991,000 being recorded as goodwill. This acquisition was accounted for as a purchase and accordingly, the results of TLC's operations are included in the consolidated financial statements of the Company since the date of acquisition. During fiscal 1995, the Company repurchased the 234,269 shares issued in the TLC acquisition for $3,805,000 and a three year note in the amount of $2,286,000. The following summarizes the unaudited consolidated pro forma operating results of the Company as if the merger of Prideco, the acquisition of EVI shares and the acquisition of The TLC Group had occurred at the beginning of fiscal year 1994. Year Ended Year Ended June 30 June 30 1995 1994 Revenues $71,642,000 $67,572,000 Net Earnings 4,173,000 2,998,000 Earnings Per Share $0.79 $0.56 Pro forma results are not necessarily indicative of results that would have occurred had the purchase been made at the beginning of the respective period, or of results which may occur in the future. D. INDEBTEDNESS: The following is a summary of consolidated indebtedness: At June 30, 1996 1995 Christiana Corporate Notes Payable $ 2,286,000 $2,286,000 Wiscold, Inc. Revolving Credit Agreement 35,248,000 30,273,000 The TLC Group, Inc. Line of Credit 1,354,000 1,844,000 Notes Payable, Equipment Related 6,010,000 5,612,000 Subordinated Note 1,764,000 1,764,000 ---------- ---------- Subtotal 46,662,000 41,779,000 Less: Current Portion of Long- Term Debt (1,295,000) (1,679,000) Short-Term Debt (1,354,000) (1,844,000) ---------- ---------- Long-Term Debt $44,013,000 $38,256,000 ========== ========== Christiana has a $15,000,000 unsecured line of credit, renewable annually. Borrowings under this line bear interest at either the London Interbank Offered Rate ("LIBOR") plus 125 basis points, or prime at the Company's option. No compensating balances are required under the terms of this credit facility. Notes payable attributable to Christiana Corporate are amounts due as a result of repurchased common stock. Wiscold, Inc. has a new revolving credit agreement that provides for borrowings at June 30, 1996 up to $40,000,000. This new credit facility replaces a $44 million credit facility which was organized in conjunction with the acquisition of Wiscold. The new revolving credit was organized to partially fund the construction of a new refrigerated distribution center in Rochelle, Illinois and to refinance the former credit facility. Borrowings under this agreement mature on March 31, 2001 and bear interest, payable monthly at either LIBOR plus 125 basis points, or a floating rate at the bank's prime rate (6.7% at June 30, 1996) and are unsecured. At June 30, 1995 Wiscold's borrowings under its original revolving credit were priced at LIBOR plus 175 basis points or prime (7.10% at June 30, 1995) and were secured by Wiscold's assets. The new revolving credit agreement requires, among other things, that Wiscold maintain defined levels of net worth and debt service coverage and restricts certain of Wiscold's activities including limitation on new indebtedness and the disposition of assets. No compensating balances are required under the terms of this credit facility. In fiscal 1993, Wiscold entered into an interest rate swap agreement ("Swap") which effectively fixed the interest rate payable by Wiscold at 5.3% plus the LIBOR spread. The Swap was issued with respect to principal in the original amount of $30,000,000 declining with scheduled reductions and matures on December 31, 1997. At June 30, 1996, $20,750,000 of borrowings were covered by the swap thereby fixing the rate on this amount at 6.55%. The TLC Group has a bank line of credit which permits borrowings up to $5,000,000. Borrowings bear interest at either LIBOR plus 200 basis points, or the bank's prime rate, at TLC's option (7.48% and 8.06% at June 30, 1996 and 1995, respectively), and are secured by TLC accounts receivable. Notes payable relate to specific equipment purchases, primarily transportation and material handling equipment and a new distribution facility, and are secured by specified assets. These notes bear interest on both fixed and floating terms ranging from 6.375% to 9.37%. No compensating balances are required under the terms of these credit arrangements. TLC's subordinated note bears interest at 8% and was incurred in the redemption of a former shareholder's ownership coincident with the sale to Christiana. This obligation is guaranteed by Christiana. Future maturities of consolidated indebtedness are as follows:
Year Ended June 30 Wiscold TLC Group Christiana Total 1997 - $1,295,000 - $ 1,295,000 1998 $ 248,000 1,469,000 $2,286,000 4,003,000 1999 5,000,000 2,919,000 - 7,919,000 2000 5,000,000 212,000 - 5,212,000 2001 25,000,000 151,000 - 25,151,000 Thereafter - 1,728,000 - 1,728,000
The weighted average interest rate paid on short term borrowings, all of which was attributable to TLC, was 8.21% and 7.69% for fiscal 1996 and 1995, respectively. The carrying value of the Company's debt approximates fair value. E. INCOME TAXES: The Income Tax Provision consists of the following: Year Ended June 30 1996 1995 1994 Current Federal $3,029,000 $1,866,000 $2,372,000 State 463,000 66,000 367,000 Deferred (1,084,000) 1,462,000 (483,000) --------- ---------- --------- $2,408,000 $3,394,000 $2,256,000 ========= ========== ========= The components of Deferred Income Taxes are: At June 30 1996 1995 Deferred Tax Assets: Alternative Minimum Tax $1,255,000 $1,279,000 Other 1,431,000 817,000 --------- --------- Total Deferred Tax Asset $ 2,686,000 $ 2,096,000 --------- --------- Deferred Tax Liabilities: Condemnation Proceeds $ 5,259,000 $ 5,259,000 Tax Over Book Depreciation 7,311,000 6,752,000 Investment in Joint Venture - 1,730,000 Equity in Earnings of EVI 649,000 - Installment Sale 676,000 418,000 Other 1,083,000 1,313,000 ---------- ---------- Total Deferred Tax Liability $14,978,000 $15,472,000 ---------- ---------- Net Deferred Tax Liability $12,292,000 $13,376,000 ========== ========== A reconciliation of the statutory Federal income tax rate to the Company's effective tax rate follows: Year Ended June 30 1996 1995 1994 Statutory Federal Income Tax Rate 34% 34% 34% Increase (Reduction) in Taxes Resulting From: State Income Tax, Net 5 3 3 Municipal Bond Interest - (1) - Other 1 1 1 ---- ---- ---- 40% 37% 38% ==== ==== ==== F. EMPLOYEE BENEFIT PLANS: The Company has 295,000 shares of its common stock reserved for issuance under a stock option plan, which permits the granting of options as well as appreciation rights and awards. During fiscal 1996, options for a total of 100,000 shares were granted at an exercise price of $24.25. During fiscal 1995, options for a total of 5,000 shares were granted at an exercise price of $28.8125 per share. At June 30, 1996 and 1995, 23.5% and 27.4%, respectively, of total options granted were exercisable. The remaining options are exercisable over the next eight years. Changes in stock options outstanding are summarized as follows: Number of Exercise Price Options Per Option Balance, June 30, 1993 116,250 33.500 - 34.375 Options Granted 35,000 26.000 - 27.125 ------- --------------- Balance, June 30, 1994 151,250 26.000 - 34.375 Options Granted 5,000 28.8125 Options Canceled 5,000 27.125 ------- --------------- Balance, June 30, 1995 151,250 26.000 - 34.375 Options Granted 100,000 24.250 Options Canceled 7,500 27.125 - 34.375 ------- --------------- Balance, June 30, 1996 243,750 24.250 - 34.375 ======= =============== The Company has 401(k) plans covering Christiana, Wiscold and TLC employees. The costs under these plans have not been material. The Company does not provide post employment medical or life insurance benefits. G. COMMITMENTS: The TLC Group has operating leases for warehousing and office facilities. Rental expense under these leases was $5,479,000, $5,100,000 and $3,135,000 in fiscal 1996, 1995 and 1994, respectively. At June 30, 1996, future minimum lease payments under these operating leases are as follows: Year Ended June 30 1997 $ 4,896,000 1998 2,712,000 1999 2,471,000 2000 2,124,000 2001 1,894,000 Thereafter 13,682,000 H. ACCOUNTING STANDARDS: The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." The Company has adopted these statements effective July 1, 1996. The Company elected to adopt only the disclosure requirements of SFAS No. 123. The adoption of SFAS No. 121 is not expected to have a material impact on the financial statements. I. MARKET SEGMENT INFORMATION The Company was engaged in primarily two distinct lines of business, namely, the manufacture of industrial products and the operation of warehousing, logistic services and rental properties. On June 30, 1995, the Company's manufacturing segment, Prideco, was merged with a unit of Energy Ventures, Inc.
Year Ended June 30 1996 1995 1994 REVENUES Industrial Products $ - $ 55,239,000 $ 46,428,000 Warehousing and Rental Operations 77,170,000 71,642,000 43,725,000 ----------- ----------- ----------- Total $ 77,170,000 $126,881,000 $ 90,153,000 =========== =========== =========== EARNINGS FROM OPERATIONS Industrial Products $ - $ 4,226,000 $ 3,222,000 Warehousing and Rental Operations 5,580,000 7,533,000 4,858,000 Corporate Expenses (1,359,000) (1,435,000) (1,658,000) ----------- ----------- ----------- Total $ 4,221,000 $ 10,324,000 $ 6,422,000 =========== =========== =========== ASSETS Industrial Products $ - $ - $ 30,372,000 Warehousing and Rental Operations 98,370,000 91,992,000 95,538,000 Corporate 32,648,000 29,750,000 21,655,000 ----------- ----------- ----------- Total $131,018,000 $121,742,000 $147,565,000 =========== =========== =========== CAPITAL EXPENDITURES Industrial Products $ - $ 682,000 $ 979,000 Warehousing and Rental Operations 19,715,000 10,249,000 6,306,000 ----------- ----------- ----------- Total $ 19,715,000 $ 10,931,000 $ 7,285,000 =========== =========== =========== DEPRECIATION AND AMORTIZATION Industrial Products $ - $ 1,256,000 $ 1,240,000 Warehousing and Rental Operations 7,144,000 6,885,000 4,950,000 Corporate 15,000 66,000 65,000 ----------- ----------- ----------- Total $ 7,159,000 $ 8,207,000 $ 6,255,000 =========== =========== ===========
There were no intersegment sales. Corporate assets consist primarily of cash equivalents, short-term investments, marketable securities and residential real estate. J. ENERGY VENTURES, INC. SUMMARY FINANCIAL INFORMATION: The following represents summarized financial information for Energy Ventures, Inc. The Company's investment is accounted for under the equity method. Energy Ventures fiscal year ends on December 31, 1995. For more information regarding Energy Ventures' financial condition and operations, reference is made to the Energy Ventures Form 10-K filed with the Securities and Exchange Commission. Summarized Balance Sheets At December 31, (In Thousands) 1995 1994 Current Assets $249,574 $164,803 Noncurrent Assets 241,486 185,885 ------- ------- Total Assets $491,060 $350,688 ======= ======= Current Liabilities $ 97,116 $ 70,465 Noncurrent Liabilities 165,878 169,310 Stockholders' Equity 228,066 110,913 ------- ------- $491,060 $350,688 ======= ======= Summarized Income Statements For Year Ended December 31, 1995 1994 1993 (In Thousands) Revenues $ 351,587 $ 248,537 $246,017 Expenses (319,147) (229,068) (227,462) Other Expenses, Net (16,049) (13,021) (5,744) -------- -------- -------- Income Before Taxes 16,391 6,448 12,811 Taxes (5,080) (1,806) (4,864) -------- -------- -------- Income from Continuing Operations 11,311 4,642 7,947 Discontinued Operations, Net of Taxes - - (2,057) -------- -------- -------- Income before Extraordinary Item 11,311 4,642 5,890 Extraordinary Item - (3,784) - -------- -------- -------- Net Income $ 11,311 $ 858 $ 5,890 ======== ======= ======= The Company's share of undistributed net earnings of EVI included in retained earnings was $1,096,000 at June 30, 1996. K. SUBSEQUENT EVENTS: In July 1996, mortgage notes receivable of $1,305,000 were sold or prepaid. Principal proceeds received were approximately $1,284,000. In July 1996, EVI issued 3.45 million additional shares of stock at $31.125 raising $102 million of equity capital. The share issuance reduced Christiana's ownership percentage from 10.3% to 8.7%. The effect of this issuance will result in an increase in the Company's investment in EVI of approximately $6.7 million. This increase will be recorded through an increase to shareholders' equity, net of tax, during the first quarter of fiscal 1997. CHRISTIANA COMPANIES, INC. L. PARENT COMPANY ONLY STATEMENTS Following are the Parent Company only Condensed Balance Sheet, Statement of Operations and Statement of Cash Flows: Parent Company Only Statements Condensed Balance Sheet As of June 30, 1996 and 1995 At June 30, 1996 1995 ASSETS: Current Assets: Cash Equivalents and Short-Term Investments $ 4,444,000 $ 2,823,000 Accounts Receivable and Other Current Assets 1,309,000 1,590,000 Long-Term Assets: Investment in EVI 23,631,000 21,886,000 Investments in and Advances to Subsidiaries 34,071,000 34,418,000 Fixed Assets, Net 11,330,000 11,395,000 Other Assets 1,035,000 987,000 ---------- ---------- TOTAL ASSETS $75,820,000 $73,099,000 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable and Accrued Liabilities $ 1,884,000 $ 2,515,000 Long-Term Liabilities: Deferred Income Taxes 9,711,000 8,714,000 Other Liabilities 3,148,000 3,160,000 ---------- ---------- Total Liabilities 14,743,000 14,389,000 ---------- ---------- Total Shareholders' Equity 61,077,000 58,710,000 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $75,820,000 $73,099,000 ========== ========== CHRISTIANA COMPANIES, INC. Parent Company Only Statements Condensed Statement of Operations For the Years Ended June 30, 1996, 1995 and 1994 Fiscal Year Ended June 30, 1996 1995 1994 Revenues: Warehousing, Rentals and Related Services $11,432,000 $10,943,000 $9,600,000 ---------- ---------- ---------- 11,432,000 10,943,000 9,600,000 ---------- ---------- ---------- Costs and Expenses: Warehousing, Rentals and Related Expenses 7,692,000 6,682,000 4,506,000 Selling, General and Administrative Expenses 1,504,000 1,582,000 3,369,000 ---------- ---------- ---------- 9,196,000 8,264,000 7,875,000 ---------- ---------- ---------- Earnings From Operations 2,236,000 2,679,000 1,725,000 Other Income (Expense): Interest Income (Expense), Net (426,000) 2,000 163,000 Equity in Earnings of EVI 1,745,000 - - Other Income (Expense) (3,129,000) (2,683,000) (4,888,000) ---------- ---------- ---------- Total Other Income (Expense) (1,810,000) (2,681,000) (4,725,000) ---------- ---------- ---------- Earnings Before Income Taxes 426,000 (2,000) (3,000,000) Income Tax Provision (Benefit) 167,000 (648,000) (1,200,000) ---------- ----------- ----------- Net Earnings (Loss) Before Equity in Undistributed Net Earnings of Subsidiaries 259,000 646,000 (1,800,000) Equity in Undistributed Net Earnings of Subsidiaries 3,344,000 4,416,000 4,921,000 ---------- ---------- --------- Net Earnings $ 3,603,000 $ 5,062,000 $3,121,000 ========== ========== ========= CHRISTIANA COMPANIES, INC. Parent Company Only Statements Statement of Cash Flows For the Years Ended June 30, 1996, 1995 and 1994 Fiscal Year Ended June 30, 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 3,603,000 $ 5,062,000 $ 3,121,000 Adjustments to Reconcile Net Earnings to Net Cash Provided By (Used In) Operating Activities: Equity in Earnings of EVI (1,745,000) - - Equity in Undistributed Net Income of Subsidiaries (3,344,000) (4,416,000) (4,921,000) Depreciation and Amortization 859,000 828,000 762,000 Deferred Income Tax Provision 997,000 1,348,000 710,000 Net Changes in Assets and Liabilities (410,000) 1,868,000 (2,402,000) --------- --------- ---------- Net Cash Provided By (Used In) Operating Activities (40,000) 4,690,000 (2,730,000) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from (Purchase of) 2,072,000 11,742,000 (11,064,000) Short-Term Investments Capital Expenditures (793,000) (143,000) (583,000) Investment In Subsidiaries 3,691,000 (2,546,000) 5,183,000 Investment In Energy Ventures, Inc. - (13,291,000) - ---------- ----------- ----------- Net Cash Provided By (Used In) Investing Activities 4,970,000 (4,238,000) (6,464,000) CASH FLOWS FROM FINANCING ACTIVITIES: Stock Repurchase/Purchase of Treasury Stock (1,236,000) (3,805,000) - ---------- --------- ----------- Net Cash Used In Financing Activities (1,236,000) (3,805,000) - NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,694,000 (3,353,000) (9,194,000) BEGINNING CASH AND CASH EQUIVALENTS, JULY 1 1,000 3,354,000 12,548,000 ---------- ----------- ---------- ENDING CASH AND CASH EQUIVALENTS, JUNE 30 $ 3,695,000 $ 1,000 $ 3,354,000 ========== =========== ========== CHRISTIANA COMPANIES, INC. QUARTERLY FINANCIAL INFORMATION (unaudited)
Quarter Ended September December March June Total Fiscal 1996 Warehousing, Logistics and Rental Revenue $19,937,000 $19,651,000 $19,416,000 $18,166,000 $77,170,000 Earnings From Operations 2,053,000 1,053,000 810,000 305,000 4,221,000 Earnings Before Taxes 2,694,000 1,249,000 1,510,000 558,000 6,011,000 Net Earnings 1,638,000 760,000 918,000 287,000 3,603,000 Earnings Per Share $0.32 $0.14 $0.18 $0.05 $0.69 Fiscal 1995 Product Sales $12,900,000 $12,790,000 $14,221,000 $15,328,000 $ 55,239,000 Warehousing, Logistics and Rental Revenue 19,169,000 17,408,000 17,356,000 17,709,000 71,642,000 Earnings From Operations 3,973,000 2,355,000 2,007,000 1,989,000 10,324,000 Earnings Before Taxes and Minority Interest 4,391,000 1,850,000 1,425,000 1,474,000 9,140,000 Net Earnings 2,515,000 1,030,000 741,000 776,000 5,062,000 Earnings Per Share $0.46 $0.20 $0.14 $0.16 $0.96
FIVE YEAR FINANCIAL INFORMATION
Year Ended June 30 1996 1995 1994 1993 1992 Revenues: Product Sales - $ 55,239,000 $46,428,000 $29,299,000 $36,196,000 Warehousing, Logistics and and Rental Revenues 77,170,000 71,642,000 43,725,000 17,464,000 3,110,000 ---------- ----------- ----------- ---------- ---------- 77,170,000 126,881,000 90,153,000 46,763,000 39,306,000 Net Earnings 3,603,000 5,062,000 3,121,000 2,941,000 5,218,000 Earnings Per Share $0.69 $0.96 $0.59 $0.57 $1.01 Total Assets 131,018,000 121,742,000 147,565,000 122,832,000 85,894,000 Long-Term Liabilities 57,926,000 51,388,000 67,154,000 61,585,000 29,293,000 Shareholders' Equity 61,077,000 58,710,000 60,088,000 51,461,000 47,862,000
CHRISTIANA COMPANIES, INC. CORPORATE INFORMATION DIRECTORS Sheldon B. Lubar, Chairman and Raymond F. Logan, Vice Chief Executive Officer President - Real Estate Nicholas F. Brady, Chairman of David J. Lubar, President, Darby Advisors, Inc. Lubar & Co., Incorporated William T. Donovan, Executive Albert O. Nicholas, President Vice President and Chief of Nicholas Company, Inc. Financial Officer Gary R. Sarner, President and Chief Operating Officer OFFICERS Sheldon B. Lubar, Chairman and Raymond F. Logan, Vice Chief Executive Officer President - Real Estate Gary R. Sarner, President and Betty J. White, Treasurer, Chief Operating Officer Controller and Assistant Secretary William T. Donovan, Executive David E. Beckwith, Secretary Vice President and Chief Financial Officer TRANSFER AGENT AND REGISTRAR EXCHANGE LISTING Firstar Trust Company Christiana Companies, Inc. P.O. Box 2077 common stock is listed on the Milwaukee, Wisconsi 53201 New York Stock Exchange (Symbol CST). ANNUAL MEETING CORPORATE HEADQUARTERS Christiana Companies, Inc. Annual 777 East Wisconsin Avenue Meeting of shareholders will be Suite 3380 held at 9:00 a.m. on October 29, Milwaukee, WI 53202 1996 at the Galleria Conference Telephone: (414) 291-9000 Room, Firstar Center, 777 East Facsimile: (414) 291-9061 Wisconsin Avenue, Milwaukee, Wisconsin. Proxy material will be mailed to shareholders of record at September 13, 1996. CHRISTIANA COMPANIES, INC. EXHIBITS FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K FISCAL YEAR ENDED JUNE 30, 1996 INDEX TO EXHIBITS Exhibit No. Brief Description of Exhibit 3A Registrant's Articles of Incorporation as modified by Articles of Merger. Incorporated by reference to Exhibit 19 of Registrant's Form 10- Q for the quarter ended September 30, 1992. 3B Registrant's current bylaws. Incorporated by reference to Exhibit 19A of Registrant's Form 10-Q for the quarter ended September 30, 1992. 9 Voting Trust Agreement dated December 29, 1992 among Sheldon B. Lubar, as voting trustee, et al. Incorporated by reference to Exhibit 9 of Registrant's Form 10-K for the year ended June 30, 1993. 10A The Wiscold Asset Purchase Agreement, dated August 12, 1992, by and among The Christiana Companies, Inc., Tierrasanta, Inc., WI Acquisition Corp., Wiscold, Inc. and the equity holders of Wiscold, Inc. Incorporated by reference to Exhibit 2.1 of Registrant's Form 8- K dated September 15, 1992. 10B The Wiscold Amendment No. 1 to Asset Purchase Agreement, dated August 18, 1992, by and among Christiana Companies, Inc., Tierrasanta, Inc., WI Acquisition Corp., Wisconsin Refrigerated Services, Inc., Wiscold, Inc. and the equity holders of Wiscold, Inc. Incorporated by reference to Exhibit 2.2 of Registrant's Form 8- K dated September 15, 1992. 10C The Wiscold Revolving Credit Agreement, dated as of March 21, 1996, by Firstar Bank Milwaukee, N.A., Harris Trust and Savings Bank, Bank One, Milwaukee, NA, as the Banks and Firstar Bank Milwaukee, N.A. as Agent for the Banks to Wiscold, Inc. 10D Registrant's 1985 Stock Option Plan, as amended to date. Incorporated by reference to Exhibit 10B to Registrant's Form 10-Q for quarter ended December 31, 1992. 10E The TLC Group Agreement and Plan of Reorganization dated as of November 24, 1994 by and among Christiana Companies, Inc., TLC Acquisition Corp., TLC Group, Inc. and certain equity holders of TLC Group, Inc. Incorporated by reference to Exhibit 2.1 of Registrant's Form 8-K dated January 18, 1994. 10F The Prideco, Inc. Agreement and Plan of Merger dated May 22, 1995 by and among Prideco, Inc., the equity holders of Prideco, Inc., Energy Ventures, Inc. and Grant Acquisition Company and Amendment No. 1 thereto. Incorporated by reference to Exhibits 2.1 and 2.2 of Registrant's Form 8-K dated July 17, 1995. 10G Employment Agreement dated September 1, 1992 between Registrant and Gary R. Sarner. 10H Stock Option Agreement dated February 26, 1996 between Registrant and John R. Patterson. 19 Letter Agreement dated August 24, 1993 between Registrant and Raymond F. Logan. Incorporated by reference to Exhibit 19 of Registrant's Form 10-K for the year ended June 30, 1993. 21 Registrant's Subsidiaries. 27 Financial Data Schedule. EX-10 2 EXHIBIT 10C REVOLVING CREDIT AGREEMENT AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT Dated as of March 21, 1996 by and among WISCOLD, INC., as the Company and BANK ONE, MILWAUKEE, NA, FIRSTAR BANK MILWAUKEE, N.A., and HARRIS TRUST AND SAVINGS BANK as the Banks and FIRSTAR BANK MILWAUKEE, N.A. as the Agent for the Banks TABLE OF CONTENTS Page SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . 2 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Accounting and Financial Determinations . . . . . . . . . . 11 1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 11 1.4 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 2 AMOUNTS AND TERMS OF LOANS . . . . . . . . . . . . . . . . 12 2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 12 2.2 Interest After Default . . . . . . . . . . . . . . . . . . 14 2.3 Funding Procedures . . . . . . . . . . . . . . . . . . . . 14 2.4 Loan Account . . . . . . . . . . . . . . . . . . . . . . . 15 2.5 Payment on Nonbusiness Days; Payment Credit. . . . . . . . 16 2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 16 2.7 Effect of Regulatory Change. . . . . . . . . . . . . . . . 16 2.8 No Obligation to Extend or Forbear . . . . . . . . . . . . 16 SECTION 3 REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE COMPANY . . . . . . . . . . . . 17 3.1 Organization, Qualification and Subsidiaries . . . . . . . 17 3.2 Financial Statements . . . . . . . . . . . . . . . . . . . 18 3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . 18 3.4 Absence of Conflicting Obligations . . . . . . . . . . . . 18 3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.6 Absence of Litigation . . . . . . . . . . . . . . . . . . . 19 3.7 Accuracy of Information . . . . . . . . . . . . . . . . . . 19 3.8 Ownership of Property . . . . . . . . . . . . . . . . . . . 19 3.9 Federal Reserve Regulations . . . . . . . . . . . . . . . . 20 3.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.11 Investment Company Act . . . . . . . . . . . . . . . . . . 20 3.12 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . 20 3.13 Environmental Laws . . . . . . . . . . . . . . . . . . . . 21 3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 4 CONDITIONS PRECEDENT TO LOANS . . . . . . . . . . . . . . . 21 4.1 Initial Loans . . . . . . . . . . . . . . . . . . . . . . . 21 4.2 Subsequent Loans . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 22 5.1 Corporate Existence, Properties, Etc . . . . . . . . . . . 23 5.2 Maintenance of Property . . . . . . . . . . . . . . . . . . 23 5.3 Financial Statements . . . . . . . . . . . . . . . . . . . 23 5.4 Inspection of Properties and Records . . . . . . . . . . . 25 5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 25 5.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . 25 5.7 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.8 Environmental Compliance . . . . . . . . . . . . . . . . . 26 5.9 Fees and Costs . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 27 6.1 Sale of Assets, Consolidation, Merger, Etc . . . . . . . . 28 6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 28 6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 6.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 29 6.5 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 29 6.6 Loans, Investments . . . . . . . . . . . . . . . . . . . . 30 6.7 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 30 6.8 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . 30 6.9 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . 30 6.10 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 31 6.11 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 7 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 31 7.1 Events of Default Defined . . . . . . . . . . . . . . . . . 31 7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . 33 SECTION 8 RELATIONSHIP OF AGENT AND BANKS . . . . . . . . . . . . . 35 8.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . 35 8.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8.3 Action on Instructions of Banks . . . . . . . . . . . . . . 35 8.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 36 8.5 Application of Payments . . . . . . . . . . . . . . . . . . 37 8.6 General Immunity . . . . . . . . . . . . . . . . . . . . . 37 8.7 No Responsibility for Loans, Recitals, Etc . . . . . . . . 37 8.8 Employment of Agents and Counsel . . . . . . . . . . . . . 38 8.9 Reliance on Documents . . . . . . . . . . . . . . . . . . . 38 8.10 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 38 8.11 Agent's Reimbursement and Indemnification . . . . . . . . . 38 8.12 Rights as a Lender . . . . . . . . . . . . . . . . . . . . 39 8.13 Bank Credit Decision . . . . . . . . . . . . . . . . . . . 39 8.14 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 39 8.15 Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 40 9.1 Expenses and Attorneys' Fees . . . . . . . . . . . . . . . 40 9.2 Assignability; Successors . . . . . . . . . . . . . . . . . 40 9.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 40 9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 40 9.5 Counterparts; Heading . . . . . . . . . . . . . . . . . . . 40 9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 41 9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 41 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 42 9.9 Further Assurances . . . . . . . . . . . . . . . . . . . . 42 9.10 Conflicts and Ambiguities . . . . . . . . . . . . . . . . . 42 9.11 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 42 9.12 Submission to Jurisdiction . . . . . . . . . . . . . . . . 43 9.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 43 9.14 Assignments; Participations . . . . . . . . . . . . . . . . 43 9.15 CST Not a Party. . . . . . . . . . . . . . . . . . . . . . 44 List of Exhibits A Guaranty of TSI B Guaranty of WRS C Guaranty of CST D Reaffirmation of Guaranty of TSI E Reaffirmation of Guaranty of WRS F Reaffirmation of Guaranty of CST G Note H Opinion of Counsel List of Schedules 3.1 Subsidiaries 3.8 Requirements of Law 6.3 Permitted Liens AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made and entered into as of this 21st day of March, 1996, by and among WISCOLD, INC. (f/k/a WI ACQUISITION CORP.) (the "Company"), a Wisconsin corporation, which has its principal office at Suite 3380, 777 East Wisconsin Avenue, Milwaukee, Wisconsin, BANK ONE, MILWAUKEE, NA ("Bank One"), a national banking association, which has its principal office at ill East Wisconsin Avenue, Milwaukee, Wisconsin, FIRSTAR BANK MILWAUKEE, N.A. (f/k/a FIRST WISCONSIN NATIONAL BANK OF MILWAUKEE) ("Firstar"), a national banking association, which has its principal office at 777 East Wisconsin Avenue, Milwaukee, Wisconsin, and HARRIS TRUST AND SAVINGS BANK ("Harris Bank"), an Illinois banking corporation, which has its principal office at 111 West Monroe Street, Chicago, Illinois (individually, each of the banks shall be referred to as a "Bank," and collectively the banks shall be referred to as the "Banks"), and Firstar, as Agent for the Banks ("Agent"). RECITALS A. The Company, the Banks and the Agent entered into that certain Revolving Credit Agreement dated as of September 1, 1992, as amended pursuant to the First Amendment to Revolving Credit Agreement dated September 11, 1992 (the "Original Credit Agreement"). B. The Company has requested that the Banks extend to it a credit not to exceed $40,000,000. C. The Company has further requested that the Banks amend and restate the Original Credit Agreement as provided herein. The Banks have agreed to extend credit to the Company and to amend and restate the Original Credit Agreement upon all of the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the above recitals, the mutual agreements contained herein and other good and valuable consideration, the parties hereto agree as follows: AGREEMENT SECTION 1 DEFINITIONS AND TERMS 1.1 Definitions. As used in this Agreement, the following terms have the following meanings: "Affiliate" shall mean any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person for the purposes of this definition if the controlling Person directly or indirectly, either individually or together with (in the case of an individual) his spouse, lineal descendants and ascendants and brothers or sisters by blood or adoption or spouses of such descendants, ascendants, brothers and sister, owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise. "Agreement" shall mean this Amended and Restated Revolving Credit Agreement, as amended, supplemented or modified from time to time. "Borrowing Date" shall have the meaning assigned thereto in Section 2.1(d). "Business Day" shall mean a day other than a Saturday or Sunday on which banks are open for business in Milwaukee, Wisconsin and Chicago, Illinois, provided, however, that for purposes of LIBOR Rate Loans, the term "Business Day" shall mean only those days on which dealings in U.S. dollar deposits are carried out by U.S. financial institutions in the London interbank market. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Commitment" shall mean the obligation of the Banks to make aggregate Loans of up to the Loan Commitment to the Company and the separate and independent obligation of each Bank to make Loans to the Company in not more than the following amounts reduced ratably among the Banks as the Loan Commitment reduces: Bank One $12,000,000 Firstar $14,000,000 Harris Bank $14,000,000 "CST" shall mean Christiana Companies, Inc. (f/k/a The Christiana Companies, Inc.), a Wisconsin corporation. "CST Note" shall mean the nonrecourse promissory note of even date herewith from CST to the Company in the original stated principal amount of $25,500,000. "Current Debt" shall mean, with respect to the Wiscold Business Unit, all Indebtedness for borrowed money which by its terms or by the terms of any instrument or agreement relating thereto matures on demand or within one year (including any payment required because of the reductions of the Loan Commitment contemplated hereunder but excluding (i) the outstanding principal amount of the Loans to be paid on March 31, 2001 and (ii) the debt subordinated pursuant to the Subordination Agreement dated September 1, 1992, from CST in favor of the Banks and any other subordinated debt permitted under Section 6.2(b)(ii)) and is not directly or indirectly renewable or extendible at the option of the debtor to a date more than one year from the date of the creation thereof. "Default" shall mean an Event of Default or an event which with the giving of notice or the passage of time or both would constitute an Event of Default. "Employee Plan" shall mean any savings, profit sharing, or retirement plan or any deferred compensation contract or other plan maintained for employees of the Company and covered by Title IV of ERISA, including any "multiemployer plan" as defined in ERISA. "Environmental Law" shall mean any local, state or federal law or other statute, law, ordinance, rule, code, regulation, decree or order governing, regulating or imposing liability or standards of conduct concerning the use, treatment, generation, storage, disposal or other handling or release of any Hazardous Substance. "Environmental Liability" shall mean any and all liability arising under, resulting from or imposed by any Environmental Law. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations and published interpretations thereunder, in each case as in effect from time to time. "Event of Default" shall have the meaning assigned thereto in Section 7.1. "GAAP" shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all periods so as to properly reflect the financial condition, and the results of operations and changes in financial position, of a Person. "Government Authority" shall mean any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty" or "Guaranties" shall mean the guaranties of TSI, WRS and CST each dated September 1, 1992, copies of which are attached hereto as Exhibits A, B and C, respectively, of the Company's obligations to the Banks hereunder, including repayment of the Loans and payment and performance under the Related Documents (other than TSI's and WRS' guaranties). "Hazardous Substances" shall mean any pollutant, contaminant, waste or toxic or hazardous chemicals, wastes or substances, including, without limitation, asbestos, urea formaldehyde insulation, petroleum, PCB'S, air pollutants, water pollutants, and other substances defined as hazardous substances or toxic substances in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9061 et seq., Hazardous Materials Transportation Act, 49 U.S.C. Section 1802, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Toxic Substance Control Act of 1976, as amended, 15 U.S.C. Section 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C. Section 3251 et seq. , the Clean Air Act, 42 U.S.C. Section 1857 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq, Chapter 144 of the Wisconsin Statutes, or any other statute, rule, regulation or order of any Government Authority having jurisdiction over the control of such wastes or substances, including but not limited to the United States Environmental Protection Agency, the United States Nuclear Regulatory Agency, the Wisconsin Department of Natural Resources and the State of Illinois. "Indebtedness" shall mean at a particular time all liabilities or obligations of a Person which would, in accordance with GAAP, be included on the liability portion of a balance sheet, and shall include, to the extent not included under GAAP all (i) indebtedness for borrowed money; (ii) indebtedness for the deferred purchase price of property or services in respect of which the Person is liable, contingently or otherwise, as obligor or otherwise; (iii) any commitment by which the Person assures a creditor against loss, including contingent reimbursement obligations with respect to letters of credit; (iv) obligations which are evidenced by notes, acceptances or other instruments; (v) indebtedness guaranteed in any manner by the Person, including guaranties in the form of an agreement to repurchase or reimburse; (vi)obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which obligations the Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations the Person assures a creditor against loss; (vii) any unfunded obligation of the Person to an Employee Plan; and (viii) all liabilities secured by any Lien on any Property owned by the Person even though it has not assumed or otherwise become liable for the payment thereof. "LIBOR Index Rate" shall mean with respect to a LIBOR Rate Loan for any LIBOR Loan Period and determined for the Agent's portion of the LIBOR Rate Loan, the rate of interest per annum determined by the Agent to be the average offered rate for deposits in U.S. dollars for the applicable LIBOR Loan Period (rounded up to the next whole multiple of 1/100 of it) which appear on the Reuters Screen LIBO Page (or such other page on which the appropriate information may be displayed) , on the electronic communications terminals in the Agent's money center as of 11:00 a.m. (London time) for the day two Business Days prior to the first day of the applicable LIBOR Loan Period. If fewer than two offered rates appear for a Loan Period, then the applicable LIBOR Rate shall be the average of the rates per annum (rounded up to the next whole multiple of 1/100 of 1%) at which deposits for a period of time equal or comparable to the applicable LIBOR Loan Period in immediately available funds in United States dollars are offered to the Agent two Business Days prior to the beginning of such LIBOR Loan Period by at least four major banks in the London interbank eurodollar market as at or about 11:00 a.m. London time for delivery on the first day of such Loan Period. "LIBOR Loan Period" shall mean with respect to each LIBOR Rate Loan, the period commencing on the date of such Loan and ending one, two, three or six months thereafter, as the Company may elect in the notice of borrowing under Section 2.1(c), provided that (a) any LIBOR Loan Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless the LIBOR Loan Period would thereby be extended into the next calendar month, in which case the preceding Business Day, and (b) no LIBOR Loan Period shall extend beyond the Termination Date for the Loans. "LIBOR Rate" for any LIBOR Loan Period shall mean a rate per annum equal to the sum of (a) the quotient of the LIBOR Index Rate divided by the difference (expressed as a decimal) computed by subtracting the LIBOR Reserve Requirement from one, plus (b) the LIBOR Spread. "LIBOR Rate Loans" shall mean Loans for which the Company has selected the LIBOR Rate as the base rate of interest under Section 2.1. "LIBOR Reserve Requirement" shall mean, with respect to each LIBOR Loan Period, the stated rate of all reserve requirements (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such LIBOR Loan Period) that is specified on the first day of such LIBOR Loan Period by the Board of Governors of the Federal Reserve System for determining the reserve requirement with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board of Governors) applicable to the Bank with the highest reserve requirement. "LIBOR Spread" shall mean an amount equal to 1.25% per annum. "Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), deed of trust, charge, encumbrance, preference, priority, security interest or other security agreement or preferential arrangement of any kind or nature whatsoever including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction. "Loan Account" shall mean an account on the books of each Bank in which will be recorded pursuant to Section 2.4 Loans and advances made by the Banks to the Company, payments made upon such Loans and other debits and credits pertaining to the Loans or the Property. "Loan Commitment" shall mean an aggregate principal amount not to exceed $40,000,000 from the date hereof through March 31, 1998, $35,000,000 from April 1 , 1998 through March 31, 1999, $30,000,000 from April 1 , 1999 through March 31, 2000, and $25,000,000 from April 1 , 2000 through the Termination Date. "Loans" shall mean the loans to the Company pursuant to Section 2.1 evidenced by the Notes. "Make Whole Payment" shall mean an amount equal to the present value of (i) the interest that would have accrued on the amount prepaid at the applicable Term Rate, minus (ii) the interest that would have accrued on the amount prepaid at the Treasury Rate, discounted at the Treasury Rate. In both cases, interest will be calculated from the prepayment date to the maturity date of the applicable Term Rate Loan being prepaid. In no event shall the prepayment indemnification payment be less than zero. "Material Adverse Change" shall mean a Default or a material adverse change in the business, prospects or condition (financial or otherwise) of the Wiscold Business Unit or in the Property. "Material Subsidiary" shall mean, as of any time of determination thereof, any Subsidiary (i) whose assets or liabilities constitute five percent (5%) or more of the Wiscold Business Unit or (ii) whose net income constituted five percent (5%) or more of the Net Income of the Wiscold Business Unit for the then most recently completed fiscal year. "Maximum Available Commitment" shall mean at any particular time, an amount equal to the excess (if any) of the Loan Commitment, less the aggregate unpaid principal amount outstanding at such time of all Loans made by the Banks. "Net Income" shall mean, for any period, the net after-tax income (or net loss) of a Person on a consolidated basis determined in accordance with GAAP, without deducting interest accruing to CST on the Subordinated Debt and excluding the after tax effect of the sum of (a) any net earnings of any Subsidiary unavailable for the payment of dividends, (b) interest in any net earnings of Persons in which a Person has an ownership interest, other than Subsidiaries, not actually received, (c) gains or losses arising from a write-up of assets, (d) gains or losses arising from the acquisition of any securities of the Person or any subsidiary, (e) gains or losses (net of any tax effect) resulting from the sale of any capital assets, (f) amortization of any deferred credit arising from the acquisition of any Person or in the property or assets of any Person, (g) earnings of any Subsidiary prior to the date it became a Subsidiary, (h) earnings acquired by the Person or any Subsidiary through purchase, merger or consolidation or otherwise for any period prior to the date of acquisition, (i) proceeds of any life insurance policies payable to the Person or any Subsidiary. "Notes" shall mean the Notes described in Section 2.1(b) and any note(s) or obligations) issued in substitution, replacement or renewal thereof. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Permitted Liens" shall have the meaning assigned thereto in Section 6.3. "Person" shall mean an individual, partnership, corporation, firm, enterprise, business trust, joint stock company, trust, unincorporated association, joint venture, Government Authority or other entity of whatever nature. "Prime Rate" shall mean the interest rate publicly announced by Firstar from time to time in Milwaukee, Wisconsin as its prime rate for interest rate determinations, which is solely a reference rate and may be at, above or below the rate or rates at which the Firstar lends to other Persons. Any change in the Prime Rate shall become effective as of the opening of business on the day on which such change is publicly announced by Firstar . "Prime Rate Loans" shall mean Loans for which the Company has selected the Prime Rate as the base rate of interest under Section 2.1. "Property" shall mean any interest of any kind in property or assets, whether real, personal, mixed, tangible or intangible, wherever located, and whether now owned or subsequently acquired or arising and in the products, proceeds, additions and accessions thereof or thereto. "Pro Rata" shall mean ratably among the Banks in proportion to the ratio that their respective Commitments bear to the aggregate Commitment. "Purchase Agreement" shall mean the asset purchase agreement dated August 12, 1992 between the Company, TSI, CST and the Seller, a true and complete copy of which, including all schedules and exhibits thereto, was delivered by the Company to the Banks. "Reaffirmations" shall mean the Reaffirmations of the Guaranties of TSI, WRS and CST in the form of Exhibits C, D and E, respectively. "Regulatory Change" shall mean the adoption or amendment, after the date of this Agreement, of any federal or state law, regulation, interpretation, direction, policy, guideline or court decision applicable to a Bank or the London interbank eurodollar market which increases the cost to a Bank of making or maintaining the Loans or reduces the rate of return to a Bank (by reduction of principal, interest or otherwise) on the Loans by subjecting a Bank to any tax, duty or other charge with respect to the Loans, imposing any reserve requirement (except any reserve requirement reflected in the LIBOR Index Rate), affecting the treatment of any Loan for purposes of calculating the appropriate amount of capital to be maintained by a Bank or any corporation controlling a Bank, or imposing on a Bank any other condition affecting the Loans or a Bank's obligation to make the Loans. "Related Documents" shall mean the Notes, the Guaranties, the Reaffirmations of Guaranties and each other certificate, resolution, or other document required or contemplated to be made or addressed to the Agent or the Banks hereunder. "Related Transactions", shall mean (a) consummation of the transactions contemplated by the Purchase Agreement, (b) the purchase for cash of no less than $1,975,000 of common stock of the Company by TSI, (c) the purchase for cash of the Subordinated Debt by CST, (d) consummation of the initial transactions evidenced by the TSI Note and the CST Note, and (e) the execution of an employment agreement between the Company and Gary Sarner reasonably acceptable to the Banks. "Required Banks" shall mean Banks whose Commitments aggregate 100% of the aggregate Commitments. "Requirements of Law" shall mean as to any matter or Person, the Certificate or Articles of Incorporation and Bylaws or other organizational or governing documents of such Person, and any law (including any Environmental Law), ordinance, treaty, rule, regulation, order, decree, determination or other requirement having the force of law relating to such matter or Person and, where applicable, any interpretation thereof by any Governmental Authority. "Seller" shall mean the "Seller" under the Purchase Agreement, (f/k/a Wiscold, Inc). "Subordinated Debt" shall mean the $3,000,000 of subordinated debt of the Company purchased by CST as part of the Related Transactions. "Subsidiary" shall mean as to any Person, a corporation of which shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency that has not occurred) to elect a majority of the board of directors or other managers of such corporation are at the time owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. "Tangible Net Worth" shall be determined in accordance with GAAP and mean the excess, if any, of the assets of the Wiscold Business Unit over all liabilities of the Wiscold Business Unit, excluding (a) from assets of the Wiscold Business Unit any goodwill, patents, trademarks, trade names, copyrights, operating rights, organizational or developmental expenses, unamortized debt discount or expense, unamortized deferred charges, and other assets properly classified as intangible assets (including noncompetition covenants), and any write-ups of assets subsequent to the date of this Agreement, and (b) in the case of the Wiscold Business Unit, from liabilities, the Subordinated Debt. "Term Loan Period" shall mean with respect to each Term Rate Loan, the period commencing on the date of such Term Rate Loan and ending no earlier than three (3) years and no later than five (5) years after the date of such Loan, as the Company may elect in the notice of borrowing under Section 2.1(c), provided that (a) any Term Loan Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day and (b) no Term Loan Period shall extend beyond the Termination Date. "Term Rate" shall mean for any Term Loan Period a rate of interest per annum equal to (a) the Ask Yield, one Business Day prior to the first day of the Term Loan Period for the applicable Term Rate Loan, on U.S. Treasury Bills, Notes or Bonds, selected by the Agent, in its sole discretion, having a maturity comparable to or as close thereto as possible to the Term Loan Period of the applicable Term Rate Loan, plus (b) 1.40% per annum. "Term Rate Loans" shall mean Loans for which the Company has selected the Term Rate as the base rate of interest under Section 2.1. "Termination Date" shall mean March 31, 2001 or such earlier date on which the Loans shall terminate as provided in Section 7.2. "Treasury Rate" shall mean the Ask Yield, one Business Day prior to the date of prepayment, on U.S. Treasury Bills, Notes, or Bonds, selected by the Agent, in its sole discretion, having a maturity comparable to or as close thereto as possible to the Term Loan Period of the applicable Term Rate Loan being prepaid. "TSI" shall mean TIERRASANTA, INC. , a Delaware corporation, which is a wholly-owned Subsidiary of CST. "TSI Note" shall mean the promissory note dated September 1, 1992 from TSI to the Company in the original stated principal amount of $12,500,000. "UCC" shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of Wisconsin. "Wiscold Business Unit" shall mean the consolidated cold storage business, operations, assets and liabilities of the Company, WRS, TSI, and CST, including the business and assets acquired from the Seller pursuant to the Purchase Agreement and operated by the Company, WRS, TSI and CST from and after September 1, 1992. "WRS" shall mean Wisconsin Refrigerated Services, Inc., a Wisconsin corporation . 1.2 Accounting and Financial Determinations. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall be made on an unconsolidated basis so as to include only a Person and not its Subsidiaries, if any, in each such calculation and, to the extent applicable and except as otherwise specified in this Agreement, shall be made in accordance with GAAP; provided, however, that if any change in GAAP from those applied in the preparation of the financial statements referred to in Section 5.3 is occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the Accounting Principles Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions), the initial announcement of which change is made after the date hereof, results in a change in the method of calculation of financial covenants, standards or terms found in Section 6, the parties hereto agree to enter into good faith negotiations in order to amend such provisions so as to reflect such changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such changes as if such changes had not been made; and provided, further, that until such time as the parties hereto agree upon such amendments, such financial covenants, standards and terms shall be construed and calculated as though such change had not taken place. When used herein, the term "financial statement" shall include the notes and schedules thereto. 1.3 Interpretation. The words "hereof," "herein" and "hereunder" and words of a similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, Schedule and Exhibit references contained in this Agreement are references to sections, schedules and exhibits in or to this Agreement unless otherwise specified. Any reference in any Section or definition to any clause is, unless otherwise specified, to such clause of such Section or definition. 1.4 Other Terms. Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given to it under GAAP, and all other terms contained in this Agreement (and which are not otherwise specifically defined herein) shall have the meanings provided in the UCC to the extent the same are used or defined therein unless the context otherwise requires. Terms defined in other sections of this Agreement shall have the meanings set forth therein. SECTION 2 AMOUNTS AND TERMS OF LOANS 2.1 Revolving Loans. (a) Prior to the Termination Date and so long as no Default shall have occurred and be continuing, the Banks agree separately and independently (and not jointly), on the terms and conditions set forth in this Agreement, to extend to the Company revolving credit loans (the "Loans") from time to time in amounts not to exceed in the aggregate at any one time outstanding the Loan Commitment. Loans shall be made by the Banks Pro Rata. Subject to the terms of this Agreement, the Company may borrow, repay (in whole or in part) and reborrow the Loans prior to the Termination Date. (b) The Loans made by each of the Banks shall be evidenced by an amended and restated promissory note of the Company, in the form of Exhibit G hereto with appropriate insertions (individually, a "Note" and collectively, the "Notes"), payable to the order of that Bank. Each Note shall (i) be dated the date hereof, (ii) be stated to mature on the Termination Date, (iii) bear interest on the unpaid principal amount as provided herein, and (iv) be in the aggregate principal amount of each Bank's maximum Pro Rata share of the Loan Commitment, notwithstanding that the Company shall be obligated to pay only the unpaid principal amount thereof from time to time outstanding together with accrued interest thereon. (c) The Company will pay all accrued and unpaid interest on the Loans on the first day of each month. Prior to an Event of Default, interest shall accrue on the aggregate unpaid principal amount from time to time outstanding under the Notes at a rate per annum equal to (i) the LIBOR Rate on the LIBOR Rate Loans, (ii) the Prime Rate on Loans which are Prime Rate Loans and (iii) the Term Rate on Loans which are Term Rate Loans. Interest shall be computed and adjusted daily based on the actual number of days elapsed in a year of 360 days. All outstanding unpaid principal and accrued interest of the Loans shall be due and payable on March 31, 2001. The Agent may debit to the Company's Loan Account all interest payments when due without prior notice to or consent of the Company. (d) The Company may obtain Loans by making a request therefor to the Agent, orally or in writing. Such request shall specify a Business Day prior to the Termination Date on which such Loans are to be made (the "Borrowing Date"), shall be received by the Agent by Noon three Business Days before the Borrowing Date in the case of LIBOR Rate Loans and Term Rate Loans or otherwise by Noon of the Borrowing Date, and shall specify the amount of the Loans requested, whether the Loans are to be LIBOR Rate Loans or Term Rate Loans and, if so, the requested LIBOR Loan Period or Term Loan Period, as the case may be, provided, however, that within three days after any oral request for a Loan, the Agent shall receive from the Company a written confirmation in form acceptable to the Agent confirming the Company's Loan request, and the Banks' obligation to make further Loans hereunder shall be suspended until such confirmation has been received by the Agent. The Company shall be obligated to repay all Loans notwithstanding the failure of the Agent to receive such confirmation, and notwithstanding the fact that the person requesting the Loan was not in fact authorized to do so. Each Loan shall be in the principal amount of the lesser of (i) $500,000 or a multiple thereof or (ii) the Maximum Available Commitment; provided, however, that the Company may not request LIBOR Rate Loans in an amount less than $1,500,000 per request or Term Rate Loans in an amount less than $5,000,000 per request. The Agent shall promptly inform each Bank of each Loan request. Not later than 3:00 p.m. Milwaukee time on the Borrowing Date, each Bank shall make available to the Agent at its principal office in Milwaukee, Wisconsin, in immediately available funds, the amount of such Bank's Pro Rata share of such Loans. Upon receipt by the Agent of the amount of a Bank's Loan, and fulfillment of the conditions specified in Section 4.2, the Agent shall make available to the Company the amount of such Loan by promptly depositing the amount thereof in the general deposit account of the Company maintained at Firstar. (e) Loans which are not LIBOR Rate Loans may be converted into LIBOR Rate Loans by notice from the Company to the Agent in the form of, and meeting the requirements of, Section 2.1(d). Loans which are not Term Rate Loans may be converted into Term Rate Loans by notice from the Company to the Agent in the form of, and meeting the requirements of, Section 2.1(d). At the end of each respective LIBOR Loan Period, LIBOR Rate Loans shall become Prime Rate Loans unless and until the Company converts such Loans to LIBOR Rate Loans or Term Rate Loans. At the end of each respective Term Loan Period, Term Rate Loans shall become Prime Rate Loans unless and until the Company converts such Loans to LIBOR Rate Loans or Term Rate Loans. (f) Any Bank may require any LIBOR Rate Loans to be repaid and may refuse to make LIBOR Rate Loans in the event the Bank determines that (i) maintenance of the LIBOR Rate Loans would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or (ii) the interest rate on the LIBOR Rate Loans does not accurately reflect the cost of making such Loans. (g) In the event any Bank shall incur any loss, cost or expense (including, without limitation, any loss (including loss of profit), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired or contracted to be acquired by such Bank to fund or maintain LIBOR Rate Loans or the relending or reinvesting of such deposits or other funds or amounts paid or prepaid to such Bank), as a result of: (i) any payment of any LIBOR Rate Loans on a date other than the last day of the then applicable LIBOR Loan Period for any reason, whether before or after default, and whether or not such payment is required by any provisions of this Agreement; or (ii) any failure by the Company to borrow, continue or effect by conversion any LIBOR Rate Loans on the date specified in a notice given pursuant to this Agreement; then upon the demand of such Bank, the Company shall pay to such Bank such amount as will reimburse such Bank for such loss, cost or expense. If a Bank requests such a reimbursement it shall provide the Company with a certificate setting forth the computation of the loss, cost or expense giving rise to the request for reimbursement in reasonable detail and such certificate shall be deemed correct in the absence of manifest error. 2.2 Interest After Default. After an Event of Default, any amounts not paid when due to the Banks shall bear interest at the rate of 2% per annum in excess of the applicable rates set forth above; provided, that in the case of a LIBOR Rate Loan the maturity of which is accelerated, such LIBOR Rate Loan shall bear interest for the remainder of the applicable Loan Period, at a rate equal to 2% plus the higher of the rate on the LIBOR Rate Loan or the rate on Loans which are Prime Rate Loans. In no event shall the interest rate under the Notes exceed the highest rate permitted by law. 2.3 Funding Procedures. Unless the Company or a Bank, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Bank, the proceeds of a Loan or (ii) in the case of the Company, a payment of principal, interest or fees to the Agent for the account of the Banks, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Bank or the Company, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Bank, the federal funds rate for such day (as determined by the Agent) together with such other compensatory amounts as may be required to be paid by such Bank to the Agent (for its account) pursuant to the Rules for Interbank Compensation of the Council of International Banking or the Clearinghouse Compensation Committee, as the case may be, as in effect from time to time or (ii) in the case of payment by the Company, the interest rate applicable to the relevant Loan. A statement of the Agent submitted to the Company or any Bank with respect to any amounts owing under this Section 2.3 shall be conclusive, in the absence of manifest error. Notwithstanding the compensation set forth above, if any amount due is not in fact made available to the Agent by any Bank within three Business Days after the date of funding, the Agent shall be entitled to recover such amount, with interest thereon at the rate per annum then applicable to the Loans not made by such Bank until such amount is recovered, upon demand, from the Bank. Nothing in this Section 2.3 shall be deemed to relieve any Bank from its obligation to fulfill its Commitments hereunder or to prejudice any rights which the Company or the Agent may have against any Bank as a result of any default by that Bank hereunder. Moreover, the failure of one of the Banks to make any Loan shall not relieve any other Bank of its obligation to lend hereunder, and in no event shall such other Banks or the Agent be liable in any way whatsoever for such failure of any Bank to make any Loan hereunder absent a Default. 2.4 Loan Account. Each Bank will enter as a debit to the Company's Loan Account the aggregate principal amount of the Loans as disbursed or issued from time to time by that Bank. Each Bank shall also record in the Company's Loan Account, in accordance with the Bank's customary accounting practices, accrued interest and all other charges, expenses and other items properly chargeable to the Company hereunder or under the Related Documents to which the Company is a party; all payments made by the Company on account of indebtedness with respect to Loans, if any; and all other appropriate debits and credits. The debit balance of the Company's Loan Account shall reflect the amount of the Company's indebtedness to the Bank from time to time by reason of the Loans and other appropriate charges hereunder. On the written request of the Company, but not more frequently than once each month, each Bank shall render a statement of account of the Company's Loan Account, which statement shall be considered correct and accepted by the Company and conclusively binding upon the Company in the absence of manifest error unless the Company notifies a Bank to the contrary within 30 days of the mailing of such statement by a Bank to the Company. 2.5 Payment on Nonbusiness Days; Payment Credit. Whenever any payment to be made hereunder or under the Loans shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest on the Notes. Payments made by the Company to the Agent after 1:00 p.m. Central Time shall be credited on the next Business Day. 2.6 Prepayments. (a) Optional Prepayments. The Company may, at its option, at any time and from time to time, prepay the Loans in whole or in part together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in the principal amount of $150,000 or a multiple thereof. There shall be no prepayment premium except: (i) as provided in Section 2.1(g); and (ii) the Company shall upon prepayment or partial prepayment of any Term Rate Loan (whether upon mandatory or optional redemption, acceleration or maturity) pay the Agent, for the ratable account of the Banks, the Make Whole Payment on the date of such prepayment. The Company agrees that the Make Whole Payment constitutes a reasonable method of measuring the Banks' estimated loss in the event of a prepayment, that it is not a penalty, and that the Agent's determination of the Make Whole Payment, in the absence of manifest error, shall be conclusive, final, and binding on the Company. (b) Mandatory Prepayments. At any time that the aggregate principal amount of Loans outstanding hereunder exceeds the Loan Commitment, the Company shall immediately pay the amount of such excess in immediately available funds, together with interest accrued on the amount of the payment. 2.7 Effect of Regulatory Change. In the event of a Regulatory Change reasonably deemed by a Bank to be material and following notice by the Bank to the Company (reasonably soon after the Bank becomes aware of the effect of the Regulatory Change on the cost of making or maintaining the Loan) of such Regulatory Change, within ten days after demand from the Bank the Company shall pay to the Bank such amounts as will compensate the Bank for the increase in the cost of making or maintaining the Loans or the reduction in the rate of return to the Bank on the Loans resulting from the Regulatory Change. Notwithstanding the provisions of Section 2.7, the Company may prepay the Loans without premium in the event a Regulatory Change has occurred and is continuing which increases the cost of the Loans to the Company (including interest) by more than one percent (1%) per annum. 2.8 No Obligation to Extend or Forbear. The Company acknowledges and agrees that (i) the Banks, upon execution hereof, will have no duty or obligation of any kind to, and have made no representations of any kind or nature that they or any one of them will, extend credit or any other kind of financial accommodations to the Company after the Termination Date, or forbear from the exercise of any of their rights or remedies under this Agreement and the Related Documents after the date hereof, and (ii) the Banks may, in their sole discretion, exercise whatever rights and remedies the Banks may have under this Agreement and the Related Documents, and under applicable law, at any time. All Indebtedness and other obligations of the Company to the Agent and the Banks shall be due in full on the Termination Date without further demand. SECTION 3 REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE COMPANY In order to induce the Banks to enter into this Agreement and make the Loans as herein provided, the Company hereby represents, warrants and acknowledges to the Banks as follows: 3.1 Organization, Qualification and Subsidiaries. The Company and its Subsidiaries, TSI and WRS are each corporations duly organized and validly existing under the laws of the State of Wisconsin; CST is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware (provided that its state of incorporation may be changed to Wisconsin); and each of the Company and its Subsidiaries, TSI, WRS and CST has the corporate power and authority and all licenses, permits and franchises to own the assets and conduct the business of the Wiscold Business Unit, except to the extent failure to obtain or maintain any license, permit or franchise would not cause a Material Adverse Change. The Company and its Subsidiaries, TSI , WRS and CST are each duly licensed or qualified to do business and in good standing in all jurisdictions where failure to qualify could cause a Material Adverse Change. All of the issued and outstanding capital stock of the Company, TSI , WRS and CST has been validly issued and is fully paid and non-assessable except as provided in Section 180.0622(2)(b) of the Wisconsin Statutes. The Company is a wholly-owned Subsidiary of TSI . Except as set forth on Schedule 3.1 (a) the Company has no Subsidiaries, (b) the Company does not own, directly or indirectly, more than 1% of the total outstanding shares of any class of capital stock of any Person and (c) there are no outstanding options, warrants or other rights to subscribe for or purchase from the Company any capital stock of the Company or securities convertible into or exchangeable for capital stock of the Company. 3.2 Financial Statements. (a) The Company has furnished the Banks year-end audited financial statements of CST for its fiscal years ended June 30, 1995 and June 30, 1994, audited by Arthur Andersen & Co., and the financial statements prepared by CST for the six-month period ended December 31, 1995. All such financial statements (balance sheets, statements of earnings, statements of stockholders' equity, statements of changes in financial position and the notes and schedules thereto) are accurate and complete and were prepared in accordance with GAAP (except the interim financial statements are subject to normal year-end adjustments) consistently applied throughout the applicable periods, and present fairly the financial condition of CST as of such dates and the results of its operations for the periods then ended. There has been no material adverse change in the business, properties or condition, financial or otherwise, of the Wiscold Business Unit since the date of the latest of such statements. The Company's fiscal year ends on June 30. (b) The financial forecasts dated February, 1996 and furnished to the Banks by the Company were prepared in good faith on the basis of information and assumptions that the Company believed to be reasonable as of the date of such information, and which assumptions are believed to be reasonable as of the date hereof. 3.3 Authorization. The making, execution, delivery and performance of this Agreement and the Related Documents by the Company, CST, TSI and WRS have each been duly authorized by all necessary corporate action. The execution and delivery of this Agreement and the Related Documents, and the transactions contemplated hereby and thereby, is not and will not be subject to the approval or consent of any Government Authority. The Company has the corporate power and authority to borrow hereunder and the Company, CST, TSI and WRS each have the corporate power and authority to enter into the Related Documents to which it is a party. 3.4 Absence of Conflicting Obligations. The making, execution and performance of this Agreement and the Related Documents and compliance with their respective terms do not violate or constitute a default under any presently existing Requirements of Law or any covenant, indenture, lease, contract, agreement or instrument to which the Company or any of its Subsidiaries, CST, TSI or WRS is a party or by which it is bound. 3.5 Taxes. The Company and its Subsidiaries, TSI, CST and WRS have filed all federal, state, foreign and local tax returns which were required to be filed, except those returns for which the due date has been validly extended. The Company and its Subsidiaries, TSI, CST and WRS have paid or made provisions for the payment of all taxes owed, and no tax deficiencies have been proposed or assessed against the Company or its Subsidiaries, TSI, CST or WRS which could cause a Material Adverse Change. There are no pending or, to the knowledge of the Company, TSI, CST and WRS, threatened tax controversies or disputes as of the date hereof. The federal income tax liability for CST, on a consolidated basis, has been finally determined by the Internal Revenue Service and satisfied for all taxable years up to and including the taxable year ended June 30, 1990. 3.6 Absence of Litigation. None of the Company or its Subsidiaries, TSI, CST or WRS is a party to, nor so far as is known to the Company, TSI, CST or WRS is there any threat of, any litigation or administrative proceeding at law or in equity which would, if adversely determined, cause a Material Adverse Change, and, to the best of the knowledge of the Company, TSI, CST or WRS after diligent inquiry, there are no presently existing facts or circumstances likely to give rise to any such litigation or administrative proceeding. 3.7 Accuracy of Information. All information, certificates or statements given by the Company, TSI, CST and WRS to any of the Banks in, or pursuant to, this Agreement were accurate, true and complete in all material respects when given, continue to be accurate, true and complete as of the date hereof, and do not contain any untrue statement or omission of a material fact necessary to make the statements therein not misleading. There is no fact known to the Company, TSI, CST or WRS which can reasonably be expected to cause a Material Adverse Change which has not been set forth in this Agreement, the Related Documents or other documents, certificates or statements furnished to the Banks by or on behalf of the Company, TSI, CST and WRS in connection with the transactions contemplated hereby. 3.8 Ownership of Property. The Company and each of its Subsidiaries, TSI, CST and WRS each have good and marketable title to all of the Property of the Wiscold Business Unit, including, without limitation, the Property of the Wiscold Business Unit reflected in the balance sheets referred to in Section 3.2. There are no Liens of any nature on any of the Property of the Wiscold Business Unit except Permitted Liens. Except to the extent noncompliance could not reasonably be expected to cause a Material Adverse Change and except as set forth on Schedule 3.8, all Property useful or necessary in the business of the Company and the Wiscold Business Unit, whether leased or owned, is in good condition, repair and working order (ordinary wear and tear excepted) and, to the best of the Company's knowledge complies with all applicable Requirements of Law. The Company and its Subsidiaries, TSI, CST and WRS own (or are licensed to use) and possess all such patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, and copyrights necessary for the conduct of the businesses of the Wiscold Business Unit as now conducted without, individually or in the aggregate, any infringement upon rights of other Persons which could cause a Material Adverse Change. 3.9 Federal Reserve Regulations. The Company will not, directly or indirectly, use any of the proceeds of the Loans to: (a) purchase or carry more than $100,000 of any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. 221, as amended); (b) extend credit to other Persons for any such purpose or to refund indebtedness originally incurred for any such purpose; or (c) otherwise take or permit any action which would involve a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation of the Board of Governors of the Federal Reserve System. 3.10 ERISA. Except to the extent noncompliance would not cause a Material Adverse Change, the Company and its Subsidiaries, CST, TSI and WRS are in compliance with provisions of ERISA applicable with respect to the Wiscold Business Unit and (i) no "prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of the Code has occurred; (ii) there has not been any "reportable event" as defined in Section 4043 of ERISA; (iii) no "accumulated funding deficiency" as defined in Section 302 of ERISA (whether or not waived) has occurred; (iv) there are no unfunded vested liabilities of any Employee Plan administered by the Company; and (v) the Company and its Subsidiaries or the plan sponsor has timely filed all returns and reports required to be filed for each Employee Plan. 3.11 Investment Company Act. The Company is not (a) an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended, or (b) a "holding company" or a "subsidiary" of a "holding company" or an "affiliate" of a "holding company" or a "subsidiary" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 3.12 No Defaults. None of the Company, any Subsidiary or the Wiscold Business Unit is in default under or in violation of (i) any Requirements of Law except as set forth on Schedule 3.8, (ii) any indenture, deed, lease, agreement, mortgage, deed of trust, note or any other instrument to which the Company, any Subsidiary or the Wiscold Business Unit is a party or by which the Company, any Subsidiary or the Wiscold Business Unit is bound, or to which any Property is subject, or (iii) any Indebtedness, or if any such default or violation described in subsections (i) through (iii) exists, the failure to cure such default or violation would not result in a Material Adverse Change, or cause the termination of any material agreement with respect to the Wiscold Business Unit. 3.13 Environmental Laws. Except as set forth on Schedule 3.8, the business of the Company, its Subsidiaries and the Wiscold Business Unit, has been operated in full compliance with the Environmental Laws and none of the Company, any Subsidiary or the Wiscold Business Unit is subject to any Environmental Liability relating to the conduct of its business or the ownership of its Property which could reasonably be expected to cause a Material Adverse Change and no facts or circumstances presently exist which could reasonably be expected to give rise to such Environmental Liability. No notice has been served on the Company, its Subsidiaries, WRS, CST or TSI relating to the Wiscold Business Unit claiming any violation of Environmental Laws which could reasonably be expected to cause a Material Adverse Change, asserting Environmental Liability or demanding payment or contribution for Environmental Liability or violation of Environmental Laws except as set forth on Schedule 3.8. 3.14 Labor Matters. There are no labor disputes between the Company or any Subsidiary, CST, WRS or TSI and any of its employees which individually or in the aggregate, if resolved in a manner adverse to the Company or any Subsidiary, would result in a Material Adverse Change. SECTION 4 CONDITIONS PRECEDENT TO LOANS 4.1 Initial Loans. In addition to the terms and conditions otherwise contained herein, the obligation of the Banks to make the initial Loans is conditioned on the Banks receiving, prior to or on the date of such Loans, each of the following items in form, detail and content satisfactory to the Banks: (a) the executed Notes; (b) the executed Reaffirmations; (c) corporate borrowing resolutions, together with a certificate of the Secretary of each of TSI, the Company, CST and WRS as to the accuracy of a copy of the resolutions and Bylaws of each attached thereto and as to the incumbency of the officers of each of TSI, the Company, CST and WRS; (d) the opinion of counsel for the Company, TSI, CST and WRS in the form of Exhibit H; (e) for each of TSI, CST, the Company and WRS, a certificate of status and a certified copy of the Articles of Incorporation for the Company, issued by the Office of the Secretary of State of incorporation as of a recent date; (f) certificates of insurance evidencing the insurance required to be carried under this Agreement; (g) evidence satisfactory to the Banks that there are no Liens of record on the Property of the Company, TSI and WRS and on the Property of CST included in the Wiscold Business Unit, other than Permitted Liens (including UCC information searches in the names of the Company, TSI, WRS and CST of the filing records in the office of the Wisconsin Secretary of State and all other jurisdictions reasonably requested by the Agent); and (h) such additional supporting documents and materials as the Agent may reasonably request. 4.2 Subsequent Loans. In addition to the terms and conditions otherwise contained herein, the obligation of each of the Banks to make subsequent Loans is subject to the satisfaction, on the date of making each such Loan, of the following conditions: (a) All of the representations, warranties and acknowledgments of the Company contained in this Agreement shall be true and accurate on and as of the date of such Loan as if made on such date except to the extent the representations, warranties and acknowledgments relate solely to an earlier date, and each request for a Loan shall constitute an affirmation by the Company that such representations and warranties are then true and accurate; (b) There shall not exist on such date any Default; (c) The aggregate principal amount of all Loans outstanding, together with the amount of any Loan requested shall not exceed the Loan Commitment; and (d) The Agent shall have received executed loan requests for all Loans previously requested by the Company and the matters certified therein and herein shall have been true and correct on the date thereof and shall continue to be true and correct on the date of the requested Loans or other obligations. SECTION 5 AFFIRMATIVE COVENANTS From and after the date of this Agreement and until the Termination Date and the entire amount of principal of and interest due on the Loans and all other obligations to the Banks and the Agent are paid in full: 5.1 Corporate Existence, Properties, Etc. The Company shall and shall cause its Subsidiaries, TSI, CST and WRS to: (a) maintain its corporate existence, (b) maintain its licenses, permits, rights and franchises to the extent failure to maintain such rights and franchises would result in a Material Adverse Change, or cause the termination of any material agreement with respect to the Wiscold Business Unit; (c) comply in all material respects with all Requirements of Law; (d) not engage in any line of business other than any line of business now conducted and proposed to be conducted by the Wiscold Business Unit provided that CST may engage in any business apart from the Wiscold Business Unit that of the Company, its Subsidiaries, TSI and WRS; (e) pay before the same become delinquent and before penalties accrue thereon, all taxes, assessments and other government charges against it and any Property of the Wiscold Business Unit, and all other liabilities except to the extent and so long as the same are being contested in good faith by appropriate proceedings, with adequate reserves having been provided or to the extent failure to pay such liabilities would not result in a Material Adverse Change; and (f) maintain insurance with good, reputable and financially sound insurance underwriters for the Wiscold Business Unit of such nature and in such amounts as is customarily maintained by companies engaged in the same or similar business and such other insurance as may be required by law or as may be reasonably required in writing by the Agent. Each policy shall require the insurer to give the Agent 30 days' prior written notice of the modification, cancellation or nonrenewal of the policy. The Company will furnish to the Agent copies of all such insurance policies in compliance with the requirements of this paragraph on the date hereof and on each renewal date of such policies. 5.2 Maintenance of Property. The Company shall and shall cause its Subsidiaries, TSI, CST and WRS to : keep all Property useful and necessary in the business of the Wiscold Business Unit, whether leased or owned, in good condition, repair (ordinary wear and tear excepted), and working order and condition and from time to time make or cause to be made all needed and proper repairs, renewals, replacements, betterments and improvements so that the business carried on in connection therewith may be conducted to the best economic advantage at all times. 5.3 Financial Statements. The Company shall and shall cause its Subsidiaries, TSI, CST and WRS to: maintain a standard and modern system of accounting in accordance with sound accounting practice, and furnish to each of the Banks such information respecting the business, assets and financial condition of the Company and the Wiscold Business Unit as they may reasonably request and, without request furnish to each of the Banks: (a) within 45 days after the end of each of the first three quarters of the Company's fiscal year, financial statements for the Wiscold Business Unit on a consolidated basis only including the balance sheets for the Wiscold Business Unit as of the end of each such quarter and statements of income, retained earnings and cash flow of the Wiscold Business Unit for each such quarter and for that part of the fiscal year ending with such quarter, setting forth in each case, in comparative form, figures for the corresponding periods in the preceding fiscal year if available and a comparison of actual cash flow, income and capital expenditures with amounts budgeted for such period, all in reasonable detail and certified as true and correct, subject to review and normal year-end adjustments, by the chief financial officer of the Company; (b) as soon as available, and in any event within 90 days after the close of each fiscal year, a copy of the detailed annual audit report for such year and accompanying financial statements for CST as of the end of such year, containing balance sheets and statements of income, retained earnings and cash flows for such year and for the previous fiscal year together with supplemental consolidating schedules, with consolidating balance sheet and income statements for the Wiscold Business Unit and of CST other than the Wiscold Business Unit, as audited by an independent certified public accountant of recognized standing selected by CST and satisfactory to the Banks, which report shall be accompanied by (i) the unqualified opinion of such accountants to the effect that the statements present fairly, in all material respects, the financial position of CST as of the end of such year and the results of operations and cash flows for the year then ended in conformity with GAAP; and (ii) a certificate of such accountants stating that their review disclosed no Default or that their review disclosed a Default and specifying the same and the action taken or proposed to be taken with respect thereto; (c) with the financial statements described in (a) and (b) above, the certificate of the president or chief financial officer of the Company (i) to the effect that a review of the activities of the Company during such period has been made under his supervision with a view to determining whether the Company has observed, performed and fulfilled each and every covenant and condition in this Agreement and the Related Documents, and no Default has occurred (or if such Default has occurred, specifying the nature thereof and the period of existence thereof and the steps, if any, being undertaken to correct the same); and (ii) showing compliance with the covenants contained in Sections 6.8 and 6.9 and the computation thereof; and (d) promptly upon learning of the occurrence of any of the following, written notice thereof, describing the same and the steps being taken with respect thereto: (i) the occurrence of any Default, (ii) the institution of, or any adverse determination or materially adverse development in, any litigation, arbitration proceeding or governmental proceeding in which an adverse determination could cause a Default or result in the modification or termination of this Agreement or any Related Document, (iii) the occurrence of a "reportable event" under, or the institution of steps by the Company to withdraw from, or the institution of any steps to terminate, any Employee Plan as to which the Company may have liability in an amount of $250,000 or more, or (iv) any event which could reasonably be expected to cause a Material Adverse Change or have a material adverse effect on the ability of the Company to perform its obligations under this Agreement or the Related Documents. All financial statements referred to herein shall be complete and correct in all material respects and shall be prepared in reasonable detail and (except as otherwise provided above) on a (except for quarterly statements of cash flow) consolidated and consolidating basis in accordance with GAAP. 5.4 Inspection of Properties and Records. The Company shall and shall cause its Subsidiaries, CST, TSI and WRS to permit representatives of the Agent to visit any of the Property of the Wiscold Business Unit or the Company and examine any of the books and records and to discuss affairs, finances and accounts relating to the Wiscold Business Unit and the Company and each Subsidiary with its officers and independent certified public accountants (in the presence of an officer of the Company but only so long as such officer does not interfere with such discussions with the accountants), all at any reasonable time following reasonable notice and as often as may be reasonably desired, and facilitate such inspection and examination. The Company shall pay for the ordinary and necessary expenses incurred by the Agent in connection with any inspection pursuant to this Section, including travel and administration expenses incurred by representatives of the Agent. 5.5 Use of Proceeds. The Company shall use the entire proceeds of the Loans for general corporate purposes of the Company only. 5.6 Bank Accounts. The Company shall and shall cause its Subsidiaries to maintain all of their principal deposit accounts and operating accounts with the Banks. 5.7 Indemnity. The Company hereby agrees to indemnify each of the Banks and the Agent against any and all losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, costs and expenses of any kind or nature whatsoever, including reasonable attorneys' fees and expenses, incurred by any Bank or the Agent arising out of, in any way connected with, or as a result of (i) this Agreement or the Related Documents or the transactions contemplated hereby or the enforcement (including collection or disposition of Property) of any of the terms hereof or of the Related Documents, (ii) any acquisition or attempted acquisition of stock or assets of another Person or entity by the Company, (iii) the use of any of the proceeds of any of the Loans by the Company for the making, or furtherance of, any such acquisition or attempted acquisition, (iv) the execution and delivery of this Agreement by the parties hereto and the performance of their respective obligations hereunder, or (v) any claim, litigation, investigation or proceedings relating to any of the foregoing, whether or not any of the Banks or the Agent is a party thereto; provided, however, that such indemnity shall not apply to any such losses, claims, damages, liabilities or related expenses arising from (A) any breach by a Bank of its obligations under this Agreement, (B) any commitment made by a Bank to any Person other than the Company which would be breached by the performance of the Bank's obligations under this Agreement, or (C) any gross negligence or willful misconduct of a Bank. 5.8 Environmental Compliance. (a) The Company shall and shall cause its Subsidiaries, CST, TSI and WRS to obtain and maintain at all times throughout the term of this Agreement all permits, licenses and other authorizations required under Environmental Laws, and comply in all respects with all terms and conditions of the required permits, licenses and authorizations and all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in the Environmental Laws to the extent failure to obtain such authorizations or to comply with Environmental Laws would result in a Material Adverse Change; (b) The Company shall and shall cause its Subsidiaries, CST, TSI and WRS to notify the Banks promptly upon obtaining knowledge that (i) any real property or other facility previously owned or presently owned or operated by the Company, any Subsidiary, TSI or WRS or the Wiscold Business Unit is the subject of an environmental investigation by any Government Authority having jurisdiction over the enforcement of Environmental Laws, or (ii) the Company or any Subsidiary, TSI or WRS has been or can be reasonably expected to be named as a responsible party subject to Environmental Liability under any Environmental Laws. If the Company or any Subsidiary, TSI, CST or WRS is notified of any event described in (i) or (ii) above, the Company shall immediately undertake to hire a firm or firms of geotechnical engineers and/or environmental consultants approved by the Banks, which approval shall not be unreasonably withheld, to determine as soon as is practicably possible whether there has been a violation of an Environmental Law and the nature and extent thereof and the potential dollar liability of the Company and/or the Wiscold Business Unit, CST, TSI or WRS with respect thereto, and the Banks shall be provided with all studies and reports compiled by such firms as soon as such studies and reports become available; provided, that if any Government Authority shall undertake to make the determinations described above, the Company shall not be required to hire any engineers or consultants but shall provide the Banks with all reports and findings of such Government Authority as soon as such reports and findings are made available to the Company and shall fully cooperate with such Government Agency in the conduct of its investigation; and (c) The Company shall indemnify the Agent and the Banks against any and all losses, claims, damages, liabilities and expenses (including costs and reasonable attorneys' fees) incurred by the Agent or any of the Banks resulting from any violation of Environmental Law by the Company, Subsidiary or by any Property of the Wiscold Business Unit as well as any cost or expense incurred by the Agent or any of the Banks for the remediation of such condition. The foregoing indemnities shall remain operative and in full force and effect regardless of the termination of this Agreement, the consummation of the transactions contemplated by this Agreement, the repayment of the Loans made hereunder, the invalidity or unenforceability of any term or provision of this Agreement or of the Related Documents, any investigation made by or on behalf of the Banks or the Company, and the content or accuracy of any representation or warranty made under this Agreement. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS AGREEMENT, OR IN THE RELATED DOCUMENTS, OR IN THE ENFORCEMENT OF THIS AGREEMENT OR THE RELATED DOCUMENTS, SHALL CONSTITUTE OR BE CONSTRUED AS GRANTING OR PROVIDING THE RIGHT, POWER OR CAPACITY TO THE AGENT OR THE BANKS TO EXERCISE (a) DECISION MAKING CONTROL OF THE COMPANY'S COMPLIANCE WITH ANY ENVIRONMENTAL LAW, OR (b) DAY TO DAY DECISION MAKING OF THE COMPANY WITH RESPECT TO (i) COMPLIANCE WITH ENVIRONMENTAL LAWS OR (ii) ALL OR SUBSTANTIALLY ALL OF THE OPERATIONAL ASPECTS OF THE COMPANY, OTHER THAN COMPLIANCE WITH ENVIRONMENTAL LAWS. 5.9 Fees and Costs. The Company shall pay the Agent for its account its reasonable costs including, but not limited to, audit or inspection fees, interest rate swap fees and wire transfer or other charges pertaining to the transfer of funds. SECTION 6 NEGATIVE COVENANTS From and after the date of this Agreement and until the Termination Date and the entire amount of principal of and interest due on the Loans and all other obligations to the Banks are paid in full: 6.1 Sale of Assets, Consolidation, Merger, Etc. The Company shall not and shall cause each Subsidiary, TSI, CST and WRS to not directly or indirectly (a) sell, lease, transfer or otherwise dispose of Property of the Wiscold Business Unit having an aggregate net book value in excess of $1,000,000 in any fiscal year, whether in one or in a series of transactions, except to the extent proceeds result from a transaction with a Person who is not an Affiliate at fair market value as agreed upon by the Banks and are applied to pay the Loans and permanently reduce the Loan Commitment and except for disposal of obsolete equipment; (b) consolidate or merge with or into any other Person; (c) except with respect to the leases dated September 1, 1992 of real estate leased to the Company by TSI, enter into any agreement, directly or indirectly, to sell or transfer any Property, real or personal, used or useful in the business of the Wiscold Business Unit, and thereafter lease such Property or other Property which it intends to use for substantially the same purposes; (d) sell, issue or otherwise distribute any security of the Company, TSI or WRS, including any shares of capital stock, except as provided in the subordinated debt purchase agreement dated September 1, 1992 between the Company and CST and except that the Company may convert such subordinated debt to equity; or (e) create or permit any Subsidiary to create a new Subsidiary; or (f) permit any Subsidiary listed on Schedule 3.1 other than WRS to hold assets . 6.2 Indebtedness. The Company shall not and shall cause its Subsidiaries, TSI, WRS and CST with respect to the Wiscold Business Unit to not in any manner issue, create, incur, assume or otherwise become liable with respect to (or agree to issue, create, incur, assume or otherwise become liable with respect to) , or permit to remain outstanding, any Indebtedness except (i) Indebtedness to the Banks under this Agreement and the Related Documents; (ii) Indebtedness which has been subordinated to the Banks in form and substance satisfactory to the Required Banks (including the Subordinated Debt); (iii) liabilities (other than for borrowed money) incurred in the ordinary course of business which are not more than 90 days overdue, unless being contested in good faith and with due diligence; (iv) Indebtedness secured by Liens within the limitations permitted under Section 6.3; (v) Indebtedness disclosed in Section 2.1 of the Purchase Agreement; (vi) Indebtedness for deferred taxes, obligations owed to employees for services actually performed and unfunded liabilities pursuant to Employee Plans; or (vii) Indebtedness in an aggregate amount of not more than $1,000,000 in excess of the limitations prescribed by Sections 6.2(i), (ii), (iii), (iv), (v) and (vi). 6.3 Liens. The Company shall not and shall cause its Subsidiaries, TSI, WRS and CST with respect to the Wiscold Business Unit to not in any manner create or permit to be created or allow to exist any Lien except Permitted Liens upon or interest in any Property other than margin stock. For purposes herein, Permitted Liens shall mean: (i) liens for taxes, assessments, or governmental charges, carriers', warehousemen's, repairmen's, mechanics', materialmen's and other like liens, which are either not delinquent or are being contested in good faith by appropriate proceedings which will prevent foreclosure of such liens, and against which adequate cash reserves have been provided; (ii) easements, restrictions, minor title irregularities and similar matters which have no material adverse effect upon the ownership and use of the affected Property; (iii) liens or deposits in connection with worker's compensation, unemployment insurance, social security or other insurance or to secure customs duties, public or statutory obligations in lieu of surety, stay or appeal bonds, or to secure performance of contracts or bids, other than contracts for the payment of money borrowed, or deposits required by law as a condition to the transaction of business or other liens or deposits of a like nature made in the ordinary course of business; (iv) liens in favor of the Banks ; (v) conditional sales, purchase money mortgages or other title retention agreements on machinery and equipment acquired in the ordinary course of business and otherwise permitted to be acquired hereunder created at the time of the acquisition of such property solely for the purposes of securing the Indebtedness incurred to finance the cost of such property, provided no such Lien shall extend to any property other than the property so acquired and identifiable proceeds; and (vi) Liens described in Schedule 6.3. 6.4 Guaranty. Except for the Guaranties, the Company shall not and shall cause its Subsidiaries, TSI and WRS to not guaranty or otherwise in any way become or be responsible for obligations of any other Person, whether by an agreement to purchase the indebtedness of any other Person, or agreement for the furnishing of funds to any other Person through the purchase of goods, supplies or services (or by way of stock purchase, capital contribution advanced or loaned) for the purpose of paying or discharging the indebtedness of any Person, or otherwise, except for the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. 6.5 Dividends. The Company shall not and shall cause its Subsidiaries, TSI and WRS to not declare any dividends on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of, any shares of any class of stock, whether now or hereafter outstanding, or make any other distribution in respect thereof (including, but not limited to, the payment of management fees to any Affiliate), either directly or indirectly, whether in cash or property or otherwise. 6.6 Loans, Investments. The Company shall not and shall cause its Subsidiaries, TSI and WRS to not make or commit to make advances, loans, extensions of credit or capital contributions to, or purchase of any stock, bonds, notes, debentures or other securities of, or make any other investment in, any Person except: (a) accounts, chattel paper, and notes receivable, created in the ordinary course of business; (b) advances in the ordinary course of business to suppliers, employees and officers of the Wiscold Business Unit in an aggregate amount at any time outstanding of not more than $250,000; (c) investments in bank certificates of deposit (but only with FDIC-insured commercial banks having a combined capital and surplus in excess of $20,000,000), open market commercial paper maturing within one year sold by the money center of any of the Banks or having the highest rating of either Standard & Poors Corporation or Moody's Investors Services, Inc., U.S. Treasury Bills subject to repurchase agreements and short-term obligations issued or guaranteed by the U.S. Government or any agency thereof; (d) investments in open-end diversified investment companies of recognized financial standing investing solely in short-term money market instruments consisting of securities issued or guaranteed by the United States government, its agencies or instrumentalities, time deposits and certificates of deposit issued by domestic banks or London branches of domestic banks, bankers acceptances, repurchase agreements, high grade commercial paper and the like; (e) margin stock with a current market value not to exceed $100,000; provided, that for (a) through (d) above, each such investment has a maturity date not later than 180 days after the date of purchase or making thereof and, except for (b) above, upon the request of the Agent is pledged and delivered to the Agent. 6.7 Compliance with ERISA. The Company shall not and shall cause its Subsidiaries, TSI and WRS to not to the extent it would cause a Material Adverse Change, (a) terminate any Employee Plan; (b) engage in any "prohibited transaction" (as defined in Section 4975 of the Code) involving any Employee Plan; or (c) incur or suffer to exist any "accumulated funding deficiency" (as defined in Section 302 of ERISA). 6.8 Tangible Net Worth. The Company shall not permit Tangible Net Worth of the Wiscold Business Unit, for any fiscal quarter as of the end of such quarter, to be less than (a) $23,000,000 plus (b) 50% of Net Income for each fiscal year of the Wiscold Business Unit ending after June 30, 1996 on a cumulative basis. 6.9 Debt Service Coverage Ratio. The Company shall not permit the ratio of the Wiscold Business Unit's Net Income plus interest expense , taxes, depreciation expense and amortization expense to the interest expense and Current Debt, to be less than 1.30 to 1, for any fiscal quarter, tested at the end of each such quarter, calculated on a four- quarter rolling basis. 6.10 Affiliates. The Company shall not and shall cause its Subsidiaries, TSI and WRS to not permit any transaction with any Affiliate, except (a) on terms not less favorable than would be usual and customary in similar transactions with Persons who are not Affiliates, (b) the transactions permitted under the real estate leases dated September 1, 1992 between TSI and the Company, (c) the transactions contemplated by the subordinated debt purchase agreement dated September 1, 1992 between CST and the Company, (d) the transactions contemplated by the CST Note and the TSI Note, and (e) the transactions pursuant to the Management Agreement dated September 1, 1992 between the Company and CST, without amendment. 6.11 Leases. The Company shall not and shall cause its Subsidiaries, TSI and WRS to not pay or become liable with respect to any lease or rental of real or personal property, except for leases dated September 1, 1992 for rental of real property acquired from the Seller by TSI, provided that the terms thereof shall not be supplemented or amended in a manner adverse to the Company, except for any operating lease or rental obligation as lessee of personal property required in the business of the Wiscold Business Unit and entered into in the ordinary course of business. In no event will the aggregate annual obligations for leased or rented property of the Wiscold Business Unit exceed $1,500,000, excluding leases between the Company, TSI and WRS and CST (solely with respect to the Wiscold Business Unit). SECTION 7 DEFAULT 7.1 Events of Default Defined. The following events shall be "Events of Default" as used herein: (a) the Company shall fail to pay any Indebtedness to the Banks, including the Notes and amounts due under Sections 2.6 (b) and 5.9, when and as the same shall become due and payable, whether upon demand, at maturity or by acceleration or otherwise which default shall remain uncured for a period of five days; (b) the Company shall fail to perform the covenants contained in Sections 6.8 and 6.9 and such default shall continue for a period of ten days after the due date of the financial statements or officer's certificate showing the default ; (c) the Company shall fail to observe or perform or shall fail to cause its Material Subsidiaries, CST, TSI or WRS to perform any of the covenants, agreements or conditions contained in Sections 5.1(a), 5.4, 5.6, or any provision of Section 6 other than Sections 6.8 and 6.9; (d) the Company shall fail to observe or perform or the Company shall fail to cause its Material Subsidiaries, CST, TSI or WRS to observe or perform any of the other covenants, agreements or conditions contained in this Agreement, the Related Documents, the TSI Note, the CST Note, or the documents securing the TSI Note or the CST Note and such default shall continue for thirty days after written notice thereof is given by the Agent to the Company; (e) any representation or warranty made by the Company herein or in any certificate, document or financial statement delivered to the Banks pursuant hereto shall prove to have been incorrect in any material adverse respect as of the time when made or given; (f) a final judgment shall be entered against the Company, a Subsidiary, TSI or WRS which singularly or when added to another final judgment (or judgments) against the Company, a Subsidiary, TSI and WRS exceeds the aggregate amount of $250,000 or a final judgment shall be entered against CST which singularly or when added to another final judgment (or judgments) against CST could result in a Material Adverse Change, and such judgment (or judgments) shall remain outstanding and unsatisfied, unbonded and unstayed after thirty days from the date of entry thereof; (g) the Company, a Material Subsidiary, TSI, CST or WRS shall take or fail to take any action which constitutes an admission of inability to pay its debts as they mature; or make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or any trustee for it or a substantial part of its respective assets, or shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against it, in which an order for relief is entered or which remains undismissed for a period of thirty days or more; or it by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties, or shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of thirty days or more; (h) the Company, a Material Subsidiary, TSI, CST or WRS adopts a plan of liquidation of its assets; (i) the Company, a Subsidiary, TSI or WRS shall default (as principal or guarantor or otherwise) either in the payment of the principal of or interest on any other Indebtedness aggregating $250,000 or more, or CST shall default (as principal or guarantor or otherwise) either in the payment of the principal of or interest on any other Indebtedness and such default could result in a Material Adverse Change, or the Company, a Subsidiary, TSI, CST or WRS shall default with respect to any of the provisions of any evidence of such Indebtedness or any agreement under which such evidence of Indebtedness may have been issued, and such default shall continue for more than any period of grace, if any, specified in such instrument, unless the Company, a Subsidiary, TSI, CST or WRS is contesting such default in good faith and the Banks agree, that the Company, a Subsidiary, TSI, CST or WRS is so contesting such default; (j) any federal, state or local government agency or any geotechnical engineer or environmental consultant hired by the Company, TSI or CST shall determine that the potential uninsured liability of the Company, TSI or CST with respect to the assets of the Wiscold Business Unit or of the Company, TSI or WRS for damages caused by the discharge of any Hazardous Substance, including liability for real property damage or remedial action related thereto or liability for personal injury claims, exceeds $1,000,000 and the Company, TSI, CST or WRS is unable to provide for such liability in a manner reasonably acceptable to the Banks; (k) CST shall (i) cease to own a majority of each class of voting stock of TSI, (ii) default in the payment of the CST Note, (iii) default under the subordinated debt purchase agreement dated September 1, 1992 between CST and the Company or (iv) fail to observe to perform, or take any action to revoke, its Guaranty; (l) TSI shall (i) default in the payment of the TSI Note, (ii) fail to observe or perform, or take any action to revoke, its Guaranty, or (iii) cease to own a majority of each class of voting stock of the Company; or (m) WRS shall fail to observe or perform, or take any action to revoke, its Guaranty. 7.2 Remedies Upon Event of Default. (a) Upon the occurrence of an Event of Default specified in clauses 7.1(g) or (h) above, then, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) the Commitments and the obligations of the Banks to make any Loans hereunder shall automatically and immediately terminate; and (ii) the entire amount of unpaid principal of and accrued and unpaid interest on the Notes and the Indebtedness to the Banks and all other obligations to the Banks shall become automatically accelerated and immediately due and payable. (b) Upon the occurrence of an Event of Default specified in clause 7.1(a) above which is continuing, the Agent shall, upon the request of any Bank, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) immediately notify the Company and each of the Banks to terminate the Commitments and the Banks, obligation to make any Loans, and the same shall immediately terminate; and (ii) declare the entire amount of the unpaid principal of and accrued and unpaid interest on the Notes and the Indebtedness to the Banks and all other obligations to the Banks immediately accelerated, due and payable. (c) Upon the occurrence of an Event of Default specified in clauses 7.1(b), (c), (d), (e), (f), (i), (j), (k), (1) or (m) above which is continuing, the Agent shall upon the direction of Banks whose Commitments aggregate at least 51% of the aggregate Commitments, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) immediately notify the Company and each of the Banks to terminate the Commitments and the Banks' obligation to make any Loans, and the same shall immediately terminate; and (ii) declare the entire amount of the unpaid principal of and accrued and unpaid interest on the Notes and the Indebtedness to the Banks and all other obligations to the Banks immediately accelerated, due and payable. (d) In addition to the foregoing remedies upon the occurrence of an Event of Default and termination of the Commitment, the Agent shall have all of the rights and remedies provided to the Banks by the Related Documents, at law or in equity, and no remedy herein conferred upon the Agent or any Bank is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. In the event of any Default, the Company shall pay all costs and expenses which may be incurred by the Banks and the Agent with respect thereto, including reasonable attorneys' fees, and all such sums shall be and become a part of the Indebtedness of the Company to the Banks. In addition to and not in lieu of any other right or remedy they might have, the Agent or the Banks at any time and from time to time at their election may (but shall not be required to) do or perform or comply with or cause to be done or performed or complied with anything which the Company may be required to do or comply with and the Company shall reimburse the Agent and the Banks upon demand for any cost or expense which the Agent or the Banks may incur in such respect, together with interest thereon at the rate equal to the rate set forth in the Notes from the date of such demand until paid. No failure or delay on the part of the Agent or any Bank in exercising any right or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude other or further exercise thereof or the exercise of any other right or remedy. SECTION 8 RELATIONSHIP OF AGENT AND BANKS 8.1 Appointment. Firstar is hereby appointed Agent hereunder and under the Related Documents, and each of the Banks irrevocably authorizes the Agent to act as the agent of such Bank. The Agent agrees to act as such upon the express conditions contained in this Section 8. The Agent shall not have a fiduciary relationship in respect of any Bank by reason of this Agreement. 8.2 Powers. The Agent shall have and may exercise such powers hereunder as are specifically delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Banks, or any obligation to the Banks to take any action hereunder except any action specifically provided by this Agreement to be taken by the Agent. 8.3 Action on Instructions of Banks. (a) The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with written instructions signed by the Required Banks, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Banks and on all holders of Notes. The Agent may at any time 9.8 request instructions from the Banks with respect to any action or approval that, by the terms of this Agreement, the Agent is permitted or required to take or to grant, and if such instructions are requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any Person for refraining from any action or withholding any approval under this Agreement until it shall have received such instructions by the Required Banks; provided, however, that the Agent shall not in any event be required to comply with any instructions given it by the Required Banks if the Agent determines that such compliance would expose it to a material personal liability or is contrary to law or to the terms of this Agreement, but the Banks shall in all events indemnify the Agent from any action taken by it in accordance with the instructions of the Required Banks. No Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with instructions by the Required Banks. (b) Without limitation of the foregoing, the Agent shall not be required to take any action with respect to any Default except in accordance with Section 7.2 and this Section. The Agent shall be entitled to assume that no Default has occurred and is continuing unless the Agent has actual knowledge of such facts or has received notice from a Bank in writing that such Bank considers that a Default has occurred and is continuing, and which specifies the nature thereof. In the event that the Agent shall acquire actual knowledge of any Default, the Agent shall promptly notify (either orally or in writing) the Banks, and the Company of such Default, and, if directed by the Banks to the extent required under Section 7.2, the Agent shall take such action and assert such rights as are contemplated under this Agreement and the Related Documents. 8.4 Amendments. The Required Banks (or the Agent with the consent in writing of the Required Banks) and the Company may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions of this Agreement or the Related Documents or changing in any manner the rights of the Banks or the Company hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Banks: (a) Extend the maturity of any Note or reduce the principal amount thereof, or reduce the rate or change the time of payment of interest or fees thereon; (b) Reduce the percentage specified in the definition of Required Banks; (c) Extend the Termination Date, or increase the amount of the Commitment of any Bank hereunder except as provided in Section 9.14(b), or permit the Company to assign its rights under this Agreement; (d) Release any of the collateral under the Related Documents (except as provided in Section 6.1(a)); (e) Amend any provision of this Agreement requiring a Pro Rata sharing among the Banks; (f) Amend this Section 8.4; or (g) Amend Section 7 (Defaults) of this Agreement. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. 8.5 Application of Payments. All payments of principal and interest hereunder and under the Notes shall be made to the Agent in immediately available funds for the ratable account of the Banks. The Agent shall promptly distribute to each Bank, Pro Rata, the amount of (a) principal and interest received by the Agent, (b) each Bank's Pro Rata share of any fees, expenses or charges collected by Agent, and (c) all amounts received by the Agent upon realization from collateral for the Loans (including any insurance proceeds). Any payment in good funds to the Agent for the account of a Bank hereunder shall constitute a payment by the Company to such Bank of the amounts so paid to the Agent, and any Notes or portions thereof so paid shall not be considered outstanding for any purpose after the date of such payment in good funds to the Agent. All payments or prepayments of principal and interest shall be made Pro Rata in accordance with the amounts of the Notes then outstanding. In the event any Bank shall receive from the Company or any other source (other than the sale of a participation to another commercial lender to the extent permitted in Section 9.14(a)) any payment of, on account of, or for an obligation of the Company hereunder or under the Notes (whether pursuant to the exercise of any right of setoff, banker's lien, realization upon any security held for or appropriated to such obligation, counterclaim or otherwise) other than as provided above, then such Bank shall immediately purchase, without recourse and for cash, an interest in the obligations of the same nature held by the other Banks so that each Bank shall thereafter have a percentage interest in all of such obligations equal to the percentage interest which such Bank held in the Notes outstanding immediately before such payment; provided, if any payment so received shall be recovered in whole or in part from such purchasing Bank, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Company specifically acknowledges and consents to the preceding sentence. 8.6 General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Banks or any Bank for any action taken or omitted to be taken by it or them hereunder or in connection herewith except for its or their own gross negligence or willful misconduct. 8.7 No Responsibility for Loans, Recitals, Etc. The Agent shall not be responsible to the Banks for any recitals, reports, statements, warranties or representations herein or in any Related Document or be bound to ascertain or inquire as to the truth or accuracy of the statements or reports of the Company with regard to the performance or observance of any of the terms of this Agreement. 8.8 Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under the Related Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder. The Company shall be responsible for all costs and expenses of the Agent, including reasonable attorneys' fees of in-house and outside counsel but excluding attorneys' fees for litigation among the Banks to which the Company is not a party. 8.9 Reliance on Documents, Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 8.10 Inspections. At the request of the Banks from time to time, the Agent shall conduct its customary review of the Company's financial and collateral records and the collateral in accordance with Section 5.4. To assist each Bank in its own investigation of the Company and the collateral, each Bank may send representatives to accompany the Agent's personnel on such inspections. 8.11 Agent's Reimbursement and Indemnification. The Banks agree to reimburse and indemnify the Agent Pro Rata (i) for any amounts not reimbursed by the Company for which the Agent (as Agent and not as a Bank under this Agreement) is entitled to reimbursement by the Company under this Agreement or the Related Documents, (ii) for any other expenses incurred by the Agent on behalf of the Banks, in connection with the preparation, execution, delivery, administration and enforcement (including collection or disposition of Property) of this Agreement or the Related Documents and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any other document delivered in connection with this Agreement or the transactions contemplated hereby or the enforcement (including collection or disposition of Property) of any of the terms hereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Agent. 8.12 Rights as a Lender. Firstar shall have the same rights and powers hereunder as any Bank the same as though it were not the Agent, and the term "Bank" or "Banks" shall, unless the context otherwise indicates, include the Agent in its individual capacity. Firstar may accept deposits from, lend money to, and generally engage in any kind of banking or trust business with CST, TSI, the Company or any Subsidiary as if it were not the Agent. Each Bank acknowledges that the other Banks may continue to accept deposits from, lend money to, and generally engage in any kind of banking or trust business with CST, TSI, the Company or any Subsidiary independent of the Loans or this Agreement; provided, however, that the Company's or any Subsidiary's obligations to a Bank from such independent banking activities shall not be secured by the Property. Notwithstanding the foregoing or Section 8.5, any fees or other income received by any Bank directly from such independent banking activities are not to be shared with any other Bank or the Agent. 8.13 Bank Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Related Documents. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Related Documents. 8.14 Successor Agent. The Agent may resign at any time by giving written notice thereof to the Banks and the Company, and the Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Banks. Upon any such resignation or removal, the Required Banks shall have the right to appoint, on behalf of the Company and the Banks, a successor Agent. If no successor Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within thirty days after the retiring Agent's giving notice of resignation, then the retiring Agent may appoint, on behalf of the Company and the Banks, a successor Agent. Such successor Agent shall be one of the Banks or a permitted participant under Section 9.14 having capital and retained earnings of at least $25,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder arising after the date of retirement. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 8 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder. 8.15 Noteholders. The Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with the Agent, signed by such payee and in form satisfactory to the Agent. SECTION 9 MISCELLANEOUS 9.1 Expenses and Attorneys' Fees. The Company shall pay all reasonable fees and expenses incurred by the Banks and the Agent with respect to this Agreement, the Related Documents and the Loans granted to the Banks, and any amendments thereof, supplements thereto, or any other collateral documents connected therewith, including without limitation appraisal fees, environmental inspection fees and the reasonable fees of in-house and outside counsel in connection with the preparation and negotiation of this Agreement, the Related Documents and all amendments thereto (and any waivers of the terms and provisions thereof) and the consummation of the transactions contemplated herein, and protection or enforcement (including collection and disposition of Property) of the Banks, rights under this Agreement and the Related Documents, but excluding attorneys' fees for litigation among the Banks to which the Company is not a party. 9.2 Assignability; Successors. The Company's rights and liabilities under this Agreement are not assignable in whole or in part without the prior written consent of the Banks. The Banks' rights under this Agreement are not assignable without the consent of the Company except as provided in Section 9.14. The provisions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. 9.3 Survival. All agreements, representations and warranties made herein, in the Related Documents or in any document delivered pursuant hereto shall survive the execution and delivery of this Agreement and the Related Documents and the making of the Loans. 9.4 Governing Law. This Agreement and the Related Documents shall be governed by the laws of the State of Wisconsin. 9.5 Counterparts; Heading. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same agreement. The section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 9.6 Entire Agreement. This Agreement, the Exhibits attached hereto, and the Related Documents contain the entire understanding of the parties with respect to the subject matter hereof, and supersede all other understandings, oral or written, with respect to the subject matter hereof. No statement or writing subsequent to the date hereof purporting to modify, alter or amend any portion hereof, including the Company's obligation to pay the amount due hereunder (whether at maturity, by reason of acceleration or otherwise), shall be effective unless consented to in a writing, which makes specific reference to this Agreement, and which has been signed by the party against which enforcement thereof is sought and in accordance with Section 8.4. Any amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 9.7 Notices. All communications or notices required or permitted by this Agreement shall be in writing and shall be deemed to have been given or made when delivered in hand or sent by facsimile or three days after deposit in the mail. Communications or notices shall be delivered personally or by certified or registered mail, postage prepaid, or by facsimile and addressed as follows, unless and until either of such parties notifies the other in accordance with this section of a change of address: if to the Company: c/o Christiana Companies, Inc. Suite 3380 777 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Mr. William T. Donovan, Executive Vice President and Chief Financial Officer with a copy to: Foley & Lardner 777 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Mr. Emory Ireland if to the Agent: Firstar Bank Milwaukee, N.A. 777 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Ms. Caroline V. Krider, Vice President if to the Banks: Bank One, Milwaukee, NA 111 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Mr. Eric L. Thomas, Vice President Firstar Bank Milwaukee, N.A. 777 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Ms. Caroline V. Krider, Vice President Harris Trust and Savings Bank 111 West Monroe Street Chicago, IL 60603 Attn: Mr. Andrew K. Peterson, Vice President with copies to: Michael, Best & Friedrich 100 East Wisconsin, Suite 3300 Milwaukee, WI 53202-4108 Attn: Jonathan D. Kron, Esq. 9.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 9.9 Further Assurances. The Company agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Banks may at any time reasonably request in connection with the administration or enforcement of this Agreement or the Related Documents or in order better to assure and confirm unto the Banks their rights, powers and remedies hereunder. 9.10 Conflicts and Ambiguities. In the event of any ambiguity or conflict as between the terms of this Agreement, the Related Documents or any other document executed and delivered pursuant to this Agreement, the terms of this Agreement shall control. 9.11 Setoff. The Company agrees that the Banks and the Agent may, at any time after acceleration of the Loans, without prior notice or demand, set off, against any credit balance or other money now or hereafter owed it by any of the Banks, all or any part of the Company's obligations hereunder. 9.12 Submission to Jurisdiction. The Agent and the Banks may enforce any claim arising out of this Agreement or the Related Documents in any state or federal court having subject matter jurisdiction and located in Milwaukee, Wisconsin. For the purpose of any action or proceeding instituted with respect to any such claim, the Company hereby irrevocably submits to the jurisdiction of such courts. Nothing herein contained shall preclude the Agent or the Banks from bringing an action or proceeding in respect hereof in any other country, state or place having jurisdiction over such action. The Company hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any court located in Milwaukee, Wisconsin and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. 9.13 WAIVER OF JURY TRIAL. RACE PARTY HERETO EXPRESSLY (i) ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THIS RIGHT MAY BE WAIVED: (ii) HEREBY KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS AGREEMENT OR ANY RELATED DOCUMENT TO WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; (iii) ACKNOWLEDGES THAT THE WAIVER OF THE RIGHT TO TRIAL BY JURY IS NOT EFFECTIVE UNLESS SUCH WAIVER IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY WAIVING SUCH RIGHT; (iv) ACKNOWLEDGES THAT IT HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH COUNSEL AND OTHER ADVISORS OF ITS CHOICE, AND AFTER CONSULTING WITH SUCH COUNSEL AND ADVISORS, KNOWINGLY, VOLUNTARILY AND WITHOUT DURESS, COERCION, UNLAWFUL RESTRAINT, INTIMIDATION OR COMPULSION, ENTERS INTO THIS AGREEMENT, BASED UPON SUCH ADVICE AND COUNSEL AND IN THE EXERCISE OF ITS BUSINESS JUDGMENT; (v) ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT HAS BEEN ENTERED INTO IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED; AND (vi) ACKNOWLEDGES AND AGREES THAT IT HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT AND IS NOT RELYING ON THE OPINION OR ADVICE OF THE BANKS, THE AGENT OR ANY OF THEIR AGENTS OR REPRESENTATIVES IN ENTERING INTO THIS AGREEMENT. 9.14 Assignments; Participations. Any Bank may at any time sell to one or more banks or other entities who are affiliated with such Bank or who are approved in writing by the Company and the Required Banks ("Participants") participating interests in any Loan owing to such Bank, any Note held by such Bank, any Commitment of such Bank or any other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to a Participant, such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any such Note for all purposes under this Agreement and the Company and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. The Company agrees that if amounts outstanding under this Agreement or the Notes are due and unpaid, or shall have been declared to be or shall have become due and payable upon the occurrence of any Event of Default each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement or any Note to the same extent as if the amount of its participating interest were owing provided, that such right of setoff shall be subject to the obligations of such Participant to share with the Banks, and the Banks agree to share with such Participant, as provided in Section 8.5. The Company authorizes each Bank to disclose to any Participant and any such prospective Participant any and all financial information in such Bank's possession concerning the Company and its Subsidiaries which has been delivered to such Bank by or on behalf of the Company pursuant to this Agreement or which has been delivered to such Bank by or on behalf of the Company in connection with such Bank's credit evaluation of the Company and its Subsidiaries prior to becoming a party to this Agreement. 9.15 CST Not a Party. CST is not a party to this Agreement, and notwithstanding anything to the contrary herein, nothing contained in this Agreement shall be deemed to create any indebtedness, obligation or liability of CST to the Agent or any Bank. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. WISCOLD, INC. HARRIS TRUST AND SAVINGS BANK By /s/ William T. Donovan By /s/ Andrew K. Peterson William T. Donovan, Andrew K. Peterson, Vice President, Treasurer, Vice President and Secretary FIRSTAR BANK MILWAUKEE, N.A. FIRSTAR BANK MILWAUKEE, N.A., as Agent By /s/ Caroline V. Krider By /s/ Caroline V. Krider Caroline V. Krider, Caroline V. Krider, Vice President Vice President BANK ONE, MILWAUKEE, NA By /s/ Eric L. Thomas Eric L. Thomas, Vice President EX-10 3 EXHIBIT 10G EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT made as of the 1st day of September 1992 by and among WI Acquisition Corp., a Wisconsin corporation (which as promptly as practicable after the date hereof intends to change its name to "Wiscold, Inc.") ("Sub"), The Christiana Companies, Inc., a Delaware corporation and the parent company of Sub ("Parent") and Gary R. Sarner (the "Executive"). W I T N E S S E T H : WHEREAS, Parent, Sub and other subsidiaries of Parent are this day acquiring the business and substantially all of the property and assets (collectively, the "Business") of Wiscold, Inc., a Wisconsin corporation (the "Company"); WHEREAS, the Executive as been employed by the Company for many years, most recently as President of the Company; WHEREAS, Parent and Sub recognize that the Executive's contribution as an executive of the Company has been substantial and Parent and Sub desire to assure Sub of the Executive's employment to manage the portion of the Business acquired by Parent and Sub; and WHEREAS, the Executive is desirous of committing himself to serve as an employee of Sub on the terms herein provided. NOW, THEREFORE, in consideration of the covenants and agreements of the parties herein contained, and as an inducement to Parent and Sub to close the purchase of the Business, the parties hereto agree as follows: 1. Employment and Duties. Sub hereby agrees to employ the Executive as the President and Chief Executive Officer of Sub having equivalent responsibility to manage the portion of the Business acquired by Parent, all on the terms and conditions set forth herein, and the Executive hereby agrees to such employment on such terms and conditions. The Executive shall serve as a director or in such additional offices of Sub or any of its affiliates (including Parent) to which the Executive may be duly appointed or elected. The Executive shall perform such duties as are consistent with his position and responsibility described above as shall be assigned to him from time to time by the Board of Directors of Sub or, unless Parent waives such right by notice to Sub, by the Chief Executive Officer of Parent. The Executive agrees to devote his full business time and effort to the diligent and faithful performance of such duties. 2. Term. Subject to Section 4 hereof, the employment of the Executive by Sub as provided in this Agreement shall commence on the date hereof and shall continue through the period ending on the fifth anniversary of the date hereof (such period, as it may be extended from time to time hereunder, is herein referred to as the "Term"); provided, however, that the Term shall be automatically extended for one additional year unless at least three hundred sixty (360) days prior to the last day of the Term either (a) the Executive shall have delivered to Sub written notice that the Term shall not be extended, or (b) the Board of Directors of Sub or an executive officer of Parent shall have delivered to the Executive written notice that the Term shall not be extended. 3. Compensation. As compensation for his performance of services hereunder, Executive shall be entitled to receive an annual base salary at the rate of not less than One Hundred Fifty Thousand Dollars ($150,000) payable, as nearly as practicable, in equal semimonthly installments. The Executive's base salary shall be subject to annual review by the Board of Directors of Sub. The Executive shall be eligible to participate in a discretionary bonus plan which the Board of Directors of Sub will use its best efforts to develop and implement by December 31, 1992 and which will, among such other factors as the Board of Directors deems relevant, take account of the financial performance of the Business. The Executive shall also be entitled to receive such other benefits as are generally available to executive officers of Sub. 4. Termination of Employment. a. The Executive's employment shall terminate, or be subject to termination, prior to the term specified in Section 2 hereof, as follows: (i) Death. The Executive's employment hereunder shall terminate upon his death. (ii) Disability. In the event the Executive becomes physically or mentally disabled so as to become unable, for more than ninety (90) days in the aggregate during any twelve-month period, to perform his duties hereunder on substantially a full-time basis, or becomes so disabled such that it is reasonably likely that Executive will not be able to perform his duties on such basis for such period, Sub may, at its option, terminate the Executive's employment hereunder upon not less than twenty (20) days' written notice. (iii) Cause. Sub may, at any time, terminate the Executive's employment hereunder for Cause. For the purposes of this Agreement, Sub shall have "Cause" to terminate the Executive's employment hereunder upon (A) the Executive engaging in acts of fraud or dishonesty and resulting or intended to result, directly or indirectly, in gain to, or personal enrichment of, the Executive at the expense of Parent or Sub or any affiliate of Parent or Sub, (B) the violation of the Executive of any of the provisions of this Agreement or the Noncompetition Agreement (as hereinafter defined), or (C) the Executive's engaging in intentional misconduct which results in material injury, monetary or otherwise, to Parent or Sub or any affiliate of Parent or Sub (it being understood that no conduct on the Executive's part shall be considered "intentional" unless such conduct was not in good faith and without the reasonable belief that such conduct was in the best interests of Sub and its affiliates). (iv) Without Cause. Sub may, at any time, terminate the Executive's employment hereunder without cause and without the requirement of any reason or justification. (v) By Executive. Executive may, within thirty (30) days after a Change in Control, terminate his employment. A "Change in Control" shall be deemed to occur at any time that Parent and the affiliates of Parent who are entities own less than a 50% equity interest in the Business as the same may change hereafter, except that no Change in Control shall occur if at such time common stock of Sub is publicly traded unless a person and its affiliates other than Parent and its affiliates has the right to vote a greater percentage of the votes in elections for directors of Sub (but not less than 25% of the votes) than Parent and its affiliates. b. Cessation of Salary and Benefits after Termination. In the event of the termination of the Executive's employment, all payments of salary and benefits under Paragraph 3 hereof shall cease, and the Executive shall not be entitled to receive any compensation, payment (including damages) or benefits from any person on account of such termination, except as provided in the following sentence and except that (I) the Executive shall be entitled to receive those benefits which by their terms continue after termination of employment in accordance with the terms of such benefits applicable after termination of employment, and (ii) the Executive shall be entitled, upon notice given to Parent within thirty (30) days after such termination (sixty (60) days in the case of a termination under Paragraph 4 (a) (ii)), to purchase for cash any life insurance then maintained on the life of the Executive for which Sub is the beneficiary at a price equal to the sum of the net cash surrender value of such insurance at the time the purchase is made (which shall be as promptly as practicable after the Executive's notice) plus any premiums paid on such insurance during the relevant thirty (30) or sixty (60) day period; provided, however, that the Executive shall only be entitled to purchase such life insurance if he is living at the time the purchase is made; and provided, further, Executive's right to make such purchase shall be subject to the consent of any lender to Sub whose consent is required therefor. In the event of the termination of the Executive's emloyment pursuant to Paragraph 4(a) (iv) hereof, the Executive shall be entitled to receive, in lieu of any other compensation or payment (including damages) from any person as a result of such termination, (i) severance payments from Sub in an amount equal to the payments of his base salary that would have been made under Paragraph 3, at the time such payments would have been made, for the remaining portion of the Term at the time of such termination (such portion, the "Remaining Term") and (ii) the continuation for the Remaining Term of any medical insurance, disability insurance and life insurance benefits being provided to the Executive and his dependents at the time of such termination. It is understood that the payments and benefits to the Executive described in the preceding sentence shall not be reduced on account of any compensation that the Executive may earn after such termination of employment or any benefits provided to the Executive in connection with such compensation. 5. Notices. For the purposes of this Agreement, notices and all other communications under this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Gary R. Sarner 11430 W. Burleigh Street Wauwatosa, Wisconsin 53226 If to Parent or Sub: The Christiana Companies, Inc. 777 East Wisconsin Avenue Suite 3380 Milwaukee, Wisconsin 53202 Attention: Sheldon B. Lubar William T. Donovan With a copy of notice to Parent or Sub to: Jere D. McGaffey Foley & Lardner 777 East Wisconsin Avenue Suite 3600 Milwaukee, Wisconsin 53202 or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 6. Miscellaneous. No provisions of this Agreement may be amended unless such amendment, modification or discharge is agreed to in writing signed by the parties hereto. This Agreement, the Noncompetition Agreement and the Assignment of Noncompetition Agreement of even date herewith (collectively, the "Noncompetition Agreement") constitute the entire agreement of the parties on the subject matter hereof and no agreements or representations, oral or otherwise, expressed or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. This agreement shall be binding upon and inure to the benefit of Sub and its successors and assigns (Sub's right to assign this Agreement being subject to Executive's right to terminate his employment under Paragraph 4(a) (v) hereof), and Executive and his heirs, executors, administrators and legal representatives. Parent shall have no obligations under this Agreement, but it shall inure to the benefit of Parent and its successors and assigns. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Wisconsin applicable to contracts made and to be performed therein between residents thereof. This Agreement supersedes that certain Employment Agreement between the Company and the Executive dated January 1, 1990. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. /s/ Gary R. Sarner Gary R. Sarner WI Acquisition Corp. By: /s/ William T. Donovan William T. Donovan Vice President THE CHRISTIANA COMPANIES, INC. By: /s/ William T. Donovan William T. Donovan Vice President EX-10 4 EXHIBIT 10H STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT This Agreement is made February 26, 1996 in Milwaukee, Wisconsin, between Christiana Companies, Inc. ("Company") and John R. Patterson ("Optionee"). The Company desires, by affording Optionee an opportunity to purchase shares of its $1.00 par value common stock ("Stock") as hereinafter provided, to carry out the purpose of its 1995 Stock Option Plan ("Plan"). 1. Grant of Option. The Company hereby grants to Optionee the right and option ("Option") to purchase from the Company all or any part of a total of 100,000 shares ("Option Shares") of Stock on the terms set forth herein and in the Plan. 2. Plan. The Option is granted pursuant to the Plan, which is incorporated herein by reference, and Optionee's rights hereunder are subject to all of the restrictions and limitations contained in the Plan. Optionee acknowledges that he has received and read a copy of the Plan. Capitalized terms used herein, and not otherwise defined, have the same meaning as in the Plan. 3. Purchase Price. The purchase price of the Option Shares shall be $24.25 per share. 4. Term and Exercisability of Option. The term of the Option shall commence on the date hereof and expire on the tenth anniversary of the date hereof. The Option may be exercised, however, only with respect to the following number of shares of Stock during the respective periods of time set forth opposite such number of shares (provided that the Optionee is still then employed), unless otherwise set forth in paragraph 6 or otherwise determined by the Committee: Period of Exercisability Number of Cumulative Shares From To and Including 20,000 2/26/97 2/26/2006 40,000 2/26/98 2/26/2006 60,000 2/26/99 2/26/2006 80,000 2/26/2000 2/26/2006 100,000 2/26/2001 2/26/2006 Except as provided in paragraph 5, the Option may not be exercised unless Optionee has been continuously employed from the date hereof to the date of such exercise. Optionee shall not have any of the rights of a stockholder with respect to any Option Shares except to the extent that such shares have been issued upon exercise of the Option. 5. Extensions of Right to Exercise. Except as provided in the next sentence, if Optionee's employment is terminated for any reason, the Option, to the extent then exercisable as provided in the table in paragraph 4 or as accelerated pursuant to paragraph 6, shall remain exercisable after such termination for a period of (a) three months after termination but not after the term hereof, with respect to all portions of the Option being exercised which constitute an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), or (b) 12 months after the termination but not later than the term hereof, with respect to all portions of the Option which constitute a nonqualified stock option. If Optionee's employment is terminated because he dies or becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code, the Option, to the extent then exercisable as provided in the table in paragraph 4 or as accelerated pursuant to paragraph 6, shall remain exercisable after such termination for a period of 12 months (but not after the term hereof) by him or by his estate, personal representative or beneficiary who has acquired the Option by will or by the laws of descent and distribution. 6. Acceleration of Exercisability. (a) Notwithstanding the schedule of exercisability set forth in paragraph 4, the Option shall become immediately exercisable for all Option Shares not yet acquired if (A) the Optionee's employment is terminated as a result of (i) the Optionee's involuntary termination by the Company without "cause"; (ii) the Optionee's "permanent and total disability" within the meaning of Section 22(e)(3) of the Code; (iii) the Optionee's death; or (iv) voluntary termination by the Optionee for "good reason"; or (B) the Lubar family reduces its beneficial ownership of the Stock of the Company by reason of a sale of Stock by member(s) of the Lubar family or as a result of a sale or merger of the Company, in either case, resulting in a change in excess of 20% in the Lubar family's beneficial ownership of the then outstanding Stock of the Company. For purposes of this Agreement, termination by the Company for "cause" shall mean termination by the Company as a result of conduct of the Optionee involving a criminal offense injurious to or not in the best interests of the Company, fraud, dishonesty or moral turpitude, as determined by the Committee or the Company's Board of Directors, and termination for "good reason" means voluntary termination by the Optionee as a result of (i) a significant reduction in Optionee's responsibilities or authority while employed; (ii) a change by the Company of the location of Optionee's primary office site to a location more than 20 miles from the Company's current office site in the Zeeland, Michigan area; or (iii) a reduction in Optionee's base salary. (b) Notwithstanding the schedule of exercisability set forth in paragraph 4, if the Optionee voluntarily terminates his employment without good reason, the Option shall be exercisable for all Option Shares then otherwise subject to purchase in accordance with the schedule of exercisability in paragraph 4, plus such additional number of Option Shares with respect to which the Option would have otherwise been exercised if the termination occurred two years after the actual date of termination. 7. "Employment" Defined. References to Optionee's "employment" or being "employed" are to his employment by the Company or a Subsidiary or an Affiliate. 8. Method of Exercise. The Option shall be exercised by written notice to the Company, stating the election to exercise the Option and the number of shares as to which it is being exercised. Such notice shall be accompanied by payment of the full purchase price of such shares in cash or shares of stock valued at their Fair Market Value on the date of exercise, and, subject to the terms of this Agreement, the Company shall deliver a certificate representing such shares as soon as practicable after such notice has been received. 9. Securities Law Compliance. The Option Shares have not been and are not intended to be registered under the Securities Act of 1933 or any state securities law, and it is intended that the acquisition of such shares by Optionee shall be exempt from registration as a "private placement" or the like. Optionee recognizes that for that reason (among others) the immediate disposition of Option Shares after the acquisition thereof may be impossible or impractical. Optionee hereby represents that any shares purchased upon exercise of the Option will be purchased for investment and not with a view to the distribution thereof. If requested by the Company, he will also submit a written statement, in form and content satisfactory to counsel for the Company, of the type customarily required of purchasers of securities in non-public transactions. 10. Notices. Any notice given by Optionee shall be sent to the Company at Suite 3380, 777 East Wisconsin Avenue, Milwaukee, Wisconsin or such other address as the Company shall have designated in writing to him. Any notice given by the Company to Optionee shall be delivered personally or sent to his address then shown on the Company's records. 11. Benefit. This Agreement shall be binding upon and inure to the benefit of the heirs, legatees, distributees and personal representatives of Optionee and the successors in interest of the Company. 12. ISO; NOO. The Option is intended to the maximum extent allowable to meet the requirements for "incentive stock options" under Section 422 of the Code and this Agreement shall be interpreted in accordance with that intent; provided, however, that to the extent that the aggregate Fair Market Value (as determined on the date hereof) of Option shares with respect to which this Option may be exercised for the first time under paragraphs 4 or 6 in any calendar year exceeds $100,000 in contravention of Section 422(d) of the Code, the Option for Option Shares in excess of such amount shall be treated as a nonqualified stock option not entitled to the benefits of an incentive stock option meeting the requirements of Section 422 of the Code. IN WITNESS WHEREOF, the parties have signed this Agreement on the day and year first above written. CHRISTIANA COMPANIES, INC. /s/ John R. Patterson By: /s/ William T. Donovan John R. Patterson, Optionee William T. Donovan, Executive Vice President EX-21 5 EXHIBIT 21 LIST OF SUBSIDIARIES CHRISTIANA COMPANIES, INC. EXHIBIT 21 - SUBSIDIARIES This exhibit sets forth all of Registrant's corporate subsidiaries at June 30, 1996 and the state of incorporation of each. All subsidiaries doing business do so under their own corporate name, and all are included in the Consolidated Financial Statement. All subsidiaries are directly or indirectly 100% owned by Registrant. Jurisdiction of Name Incorporation Christiana Community Builders California CST Financial, Inc. Delaware Martinique Holdings, Inc. California Tierrasanta, Inc. Delaware The TLC Group, Inc. Michigan Wiscold, Inc. Wisconsin EX-27 6 FINANCIAL DATA SCHEDULE
5 1 YEAR JUN-30-1996 JUL-01-1995 JUN-30-1996 3,728,000 750,000 8,547,000 253,000 439,000 14,504,000 100,165,000 18,015,000 131,018,000 12,315,000 43,713,000 17,218,000 0 0 45,095,000 131,018,000 0 77,170,000 0 72,949,000 208,000 227,000 3,096,000 6,011,000 2,408,000 3,603,000 0 0 0 3,603,000 .69 .69
-----END PRIVACY-ENHANCED MESSAGE-----